Incapacity benefit faces axe

Incapacity benefit claimed by 2.7 million people is to be scrapped, the Government will announce today.

Launching the most radical social security reform since the last election, Work and Pensions Secretary Alan Johnson will tell MPs he aims to cut the number of claimants by a million. But he will also promise higher payments for those deemed genuinely disabled or who try to find work.

The changes follow concern that millions of people have been signed off onto sickness benefits because they are malingerers or to cut artificially the unemployment rate.

Armed with research showing that many claimants simply give up any ambition to become productive taxpayers, Mr Johnson is expected to say the term "incapacity" will be dropped because it implies recipients need never work again.

His pledges are another example of Labour moving into traditional Conservative territory in the run-up to the election. Opposition parties accused the Government of chasing headlines.

Under Mr Johnson's five-year plan, two new benefits will be introduced. About eight out of 10 new claimants will go onto a system paying a flat rate of around £55 unless they try to find work.

Those who join programmes designed to ease them back into jobs will get at least £20 a week more. If they get a job, they will get a top-up to their salaries of £40 for a few months.

Ministers believe the extra payments will be recouped when people become taxpayers. The current system is blamed for encouraging people to stay on benefits for life, as payments rise from a ?55.90 starting rate to £66.15 after six months and ?74.15 after a year.

Research shows people who have been on incapacity benefit for two years usually stay on it until they die.

A second new benefit will cover those who are so debilitated by ill health or disability they can never work again, such as cancer patients. They will get well over £75. Only two out of 10 or fewer claimants are expected to qualify.

The cost of "bad back benefit" has soared over the past two decades even though the population has got healthier.

Shadow work and pensions secretary David Willetts said: "This is classic Blairism. It sounds good, but the Prime Minister has made these promises before and hasn't delivered."