Ministers may face revolt over disability benefit cuts

The Govenment moved yesterday to head off a backbench rebellion over its planned reform of benefits for the long-term sick and disabled in an attempt to reduce the £6.7bn a year cost of the programme.

The Govenment moved yesterday to head off a backbench rebellion over its planned reform of benefits for the long-term sick and disabled in an attempt to reduce the £6.7bn a year cost of the programme.

Alan Johnson, the Secretary of State for Work and Pensions, insisted that the reforms, to be announced this week, would not be about cutting benefit rates.

But the design of the benefits would have to change, he said. "It sends out a strong signal that those receiving it are incapable of working. This must be wrong, when nine out of 10 people coming on to the benefit say they expect to work again.

"The trouble is that the longer people stay off work the less likely they are to work again. After two years, people are more likely to leave the benefit by dying or retiring than by moving into work."

The Government wants to change the benefit, which currently increases the longer a person remains on it, into a flat- rate payment to give claimants a stronger incentive to work.

The idea will be included in a five-year plan for the Department of Work and Pensions to be unveiled by Mr Johnson. It will form part of a Welfare Reform Bill to be promised in Labour's election manifesto and introduced shortly after the election as part of a drive to show that the Blair government has not run out of steam.

Mr Blair, who has been accused of not matching his reformist rhetoric with action, is determined to halt the rising bill for incapacity benefit before he leaves Downing Street.

Some 2.7 million people claim the benefit, which is worth £55.90 a week for the first 28 weeks and £66.15 for between 28 and 52 weeks, when it rises to £74.55. Higher payments are made to people of pensionable age who became unfit for work before the age of 35.

One government source said: "The way the benefit is structured is perverse. It gives people an incentive to remain on the scheme rather than get back to work. That has got to change." Mr Johnson has resisted pressure from Downing Street to impose a time limit for remaining on the benefit. Some Blair aides wanted claimants to be moved on to the less generous Jobseeker's Allowance for the unemployed at that stage but the proposal was judged too draconian and arbitrary.

However, many Labour MPs will be uneasy about the proposed cuts. In 1999, 67 Labour MPs voted against amove to means-test incapacity benefit. Mr Blair could struggle to get his new plans through the Commons, especially if his majority is reduced at the next election.

The Government will try to sugar the pill for Labour MPs by presenting its package as "tough and tender". The switch to a flat-rate benefit at the lower end of the current scale is expected to apply to new rather than existing claimants.

Ministers will expand the Pathways to Work scheme, based on contact every month with a personal adviser during the first eight months of the claim, when people can most readily be helped back to work, and a return-to-work credit worth up to £40 a week. The Government, which has promised to extend it from 10 per cent of the country to a third, will signal that it will eventually go nationwide.

According to the DWP, about one million people on incapacity benefit want to work and rehabilitation and physiotherapy services will be expanded to help them do so. GPs will be urged not to "sign off" workers and use the benefit as a form of early retirement.