Osborne Indicates Incapacity Benefits ‘To Be Cut’

Ministers have signalled that incapacity benefits will be targeted in a summer spending review aimed at cutting the £155bn deficit.

Chancellor George Osborne said he wanted to protect those in “genuine need” while encouraging those who could work, to do so.

Over 2.5m people are on incapacity benefit or employment support allowance – costing about £12.5bn a year.

Labour’s Yvette Cooper said it was a “return to the Thatcherite 80s”.

The government has said that NHS and foreign aid spending would be protected as it seeks to tackle Britain’s budget deficit, but other government departments face 25% real terms cuts.

‘Trade off’

Mr Osborne has said that figure could be reduced, if more savings can be found in the welfare budget – on top of the £11bn cuts he has already outlined.

Speaking at the G20 summit in Toronto, he said there would be a “trade-off” between cuts in benefits and cuts in public services such as the police, defence and schools.

He identified incapacity benefit and its successor, employment and support allowance, as possible areas for savings.

The Conservatives pledged during the election campaign not to reduce benefits for the elderly, such as pension credit, free bus passes, television licences and the winter fuel payment.

Mr Osborne said: “We have given very specific commitments on some and we have not given specific commitments on others.

“That is what I want to be part of the spending review over the summer. It is a trade-off and some of these benefits are very much larger than most government departments.

“We have got to look at all these things, make sure it protects those in genuine need, protects those with disabilities and protects those who can’t work but also encourages those who can work into work. That is the purpose behind our welfare reform.”

‘Readiness for work’

Housing benefit, which costs £21bn a year, has already been targeted – with new caps on the amount people can claim.

And in the Budget tax credits were reduced, child benefit was frozen for three years and medical tests introduced for the disability living allowance from 2013.

In the coalition deal between the Conservatives and the Liberal Democrats, there was a plan to reassess all claimants of incapacity benefit and its successor, the employment and support allowance, for their “readiness to work”.

Those deemed fit to get a job would be moved onto Jobseeker’s Allowance instead – amounting to a cut in benefits and a requirement to seek work.

The Conservatives have argued that one in five incapacity claimants is fit for work – about half a million people. Before the election they suggested that could save £200m a year.

BBC political correspondent Norman Smith said that privately the government’s view was that many more than half a million could be transferred to Jobseeker’s Allowance.

‘Ghettos of poverty’

For Labour, Ms Cooper told the BBC the government appeared to be going for “arbitrary targets to cut spending instead of actually a sensible process driven by the medical evidence to try to get as many people as possible back into work”.

She accused the government of cutting support for the disabled in the Budget and said its policies amounted to a “return to the Thatcherite 80s”.

Equalities minister Lynne Featherstone has also expressed concern at the proposals.

Writing on her blog, the Lib Dem MP said: “The previous Labour government tried to get people off such allowances and my experience as a local MP from surgery is that the ‘re-assessment’ of people claiming has been variable at best.

“We need to be sure that there is no perverse incentive to determine that someone can work when they cannot. We also need to be sure that those carrying out the assessment are good at it.”