Cameron spells out plans to cut incapacity benefit claims

.6 million claimants face stringent tests and possible £25 reduction per week

More than 500,000 people currently judged too sick to work will have their benefits cut by £25 a week under plans for a radical overhaul of the welfare system to be set out today by the Conservatives. All 2.6 million claimants of incapacity benefit will be required by an incoming Tory government to take rigorous medical tests to see whether they could hold down a job.

The Conservatives believe one in five will be assessed as well enough to work and will be switched to Jobseeker's Allowance. Their weekly income would fall from £89.90, the current basic rate of long-term incapacity benefit, to £64.30, the current rate for JSA claimants aged over 25. It is estimated that cutting the amount of money going to former incapacity benefit claimants will save £600m over the three years it will take to carry out the testing programme.

David Cameron, the Tory leader, said yesterday: "Some of those people cannot work and must be helped, for we are a compassionate society and we must look after those people. But many people could work and there are some who, with some tailored help, could work."

Under the proposals, most people who have been unemployed for more than six months would be required to take training courses. Private firms would be hired to prepare the unemployed for work and paid according to their success in finding them jobs. The projected savings will be used to pay for the up-front costs of a national Work Programme, which will replace Labour's flagship New Deal initiative.

In an attempt to ease concerns over mounting unemployment, the Conservatives will also announce the creation of an extra 100,000 apprenticeships and training places a year to increase skills levels. They would also expand the work experience programme to include 50,000 more young people a year.

The plans were drawn up by Sir David Freud, a former adviser to Gordon Brown's Government and now a Tory frontbench welfare spokesman.

It is hoped the package will break a long-term cycle of dependency that has grown up over the last decade. However, there remain doubts as to whether such an ambitious jobs and training programme will be able to have any sort of impact with unemployment surging towards three million.

Mr Cameron yesterday said a "really massive Get Britain Working programme" would be the centrepiece of his party's conference.

"Labour are now the party of unemployment; I want the new Conservative Party to be the party of jobs and opportunity and at the heart of it is a big, bold and radical scheme to get millions of people back to work," he said.

"If we don't deal with it, it is not just bad for those people who are unemployed now, there is a danger that short-term unemployment becomes long-term unemployment and builds up massive problems for our families and for our country in the future.

Yvette Cooper, the Work and Pensions Secretary, dismissed the proposals as a rehash of Labour plans without the money required to pay for them.

She stated: "David Cameron still can't answer the big question on unemployment: how can he possibly help people into work if he wants massive cuts in investment in the middle of a recession destroying hundreds of thousands of jobs?"

The architect: David Freud, Sigmund's great-grandson

David Freud' defection from the Government to the Tories in February was a major coup for David Cameron. It is also a decision that looks set to hand Sigmund Freud's great-grandson one of the most important ministerial briefs available after the next election.

Sir David's City career had been controversial at times. He was associated with the flotations of Eurotunnel and EuroDisney, both of which cost investors dear. While Tony Blair tempted him out of retirement in 2006 to work on welfare reform, his proposals to privatise services for the long-term unemployed later found favour with the former Pensions Secretary, James Purnell.

However, frustrated with the Government's apparent unwillingness to embrace his reforms in full, Sir David was compelled to join the Tory shadow welfare team. With unemployment set to be a major issue for the next administration and the Tories holding a double-digit lead in the polls, he is now in the prime position to press ahead with the measures.