800,000 claimants face losing their incapacity benefit – The Times, Friday 10 September 2010

800,000 claimants face losing their incapacity benefit – The Times, Friday 10 September 2010*

George Osborne: said to be demanding up to £10 billion more from the £170 billion social security budget

Jill Sherman Whitehall Editor

Hundreds of thousands of people are likely to lose sickness benefits under a new assault on the welfare state, The Times has learnt.

The Treasury is considering means-testing incapacity benefit — given to those considered too sick to work — a change under which 800,000 people on modest to high incomes would lose it altogether. The entitlement, which is available to those who have paid national insurance contributions, costs the taxpayer more than £6.5 billion a year and goes to more than 2.5 million people.

Millions of disabled and sick people have been on the benefit — which is between £68 and £96 a week — for years and are able to stay on it until they retire, irrespective of their income or that of their partner.

Disability and poverty groups warned yesterday that means-testing would fly in the face of the principle of paying national insurance to fund benefits. They argued that the disabled and mentally ill were becoming the main victims of the Treasury’s spending cuts.

“It would be grossly unfair if someone who had worked for over 30 years and had paid [national insurance] throughout suddenly found the benefit taken away at the moment they needed it,” said Sue Royston, social policy officer for Citizens Advice.

Iain Duncan Smith, the Work and Pensions Secretary, has agreed to £11 billion savings a year. But George Osborne, the Chancellor, is said to be demanding up to £10 billion more from the £170 billion social security budget. Mr Osborne indicated yesterday that he had already identified £4 billion affecting those on “out-of-work benefits”.

“People who think it’s a lifestyle choice to just sit on out-of-work benefits — that lifestyle choice is going to come to an end. The money won’t be there,” he said.

One Whitehall official told The Times that means-testing incapacity benefit, which could save up to £2 billion a year, was being considered. “We are seeking more on incapacity benefit,” he conceded. “If more cuts are made to the welfare budget we should be able to reduce the bigger cutbacks to other Whitehall departments.”

Other benefits under threat include those going to pensioners, such as winter fuel payments and TV allowances, which could save £2.7 billion if scrapped.

Under the latest plans being considered, those on incapacity benefit — or employment and support allowance, which is replacing it — would receive it for a time-limited period of six months to a year. After this, those on higher incomes — generally those with working partners — would lose the benefit, and those on lower incomes would lose part of it. Those on the lowest incomes would still receive income support.

Mrs Royston argued that people would lose all entitlement to incapacity benefit if their partner had an income of about £8,000 a year or had savings of more than £16,000, if the present rules for other means-tested benefits were applied.

“This is causing enormous concern,” she said. “If someone who has worked for years became seriously ill and his partner earned over £150 a week, he would get nothing, despite his contributions.”

Treasury officials believe that many people remain on sickness benefits until they retire even if they could do some type of work.

Figures from the Office for National Statistics, published this week, show that in more than 840,000 households all members of the household over 16 are too sick to work. In a further 612,000 households, at least one member is too sick to work.

The Government is already clamping down on payments to the disabled and has pledged to introduce more rigorous medical tests for all incapacity benefit claimants by next March, but the Department for Work and Pensions (DWP) is already having trouble finding enough doctors to carry out the checks.

The severely disabled, who receive disability living allowance to help to pay for carers, are also facing medical tests for the first time.

Sources at the DWP yesterday made it clear that negotiations were still going on but did not rule out reducing or scrapping benefits for those on higher incomes. “We are presently looking at a range of options for welfare reform and any decisions will be made in the context of the spending review,” a spokesman said. “Our reforms will ensure that the most vulnerable in our society are protected.”

Richard Hawkes, the chief executive of Scope, the disability charity, condemned the plans to means-test incapacity benefit, claiming that people would be denied the support they had paid for.

“People will effectively be penalised for working hard, saving and contributing to society,” Mr Hawkes said. “The Government has made much of its commitment to ensuring that the impact of cost savings is spread fairly, but this feels like another example of disabled people bearing the brunt of cuts.”

*No link provided as The Times is now behind a paywall.