HUNDREDS of thousands of people could see reductions in sickness benefits payments of £5000 a year under a major welfare system overhaul being drawn up by Labour ministers.
Liz Kendall, the UK Government’s Work and Pensions Secretary, is preparing changes which have been dubbed the biggest overhaul of the welfare system for more than a decade, The Times reports.
The changes would remove the ability of the long-term sick to receive benefits without any requirements, and Kendall is also likely to reduce financial incentives that can see them paid twice as much as jobseekers.
People with mental health conditions will also find it harder to claim separate disability benefits in what has been dubbed the biggest package of changes to the welfare system for more than a decade.
A range of options is understood to be under consideration, although none have yet been agreed.
Under one option being considered, the universal credit “limited capability for work or work-related activity” category would be abolished, which would require claimants to make preparations for work and see them lose about £5000 a year.
Ministers also want to scrap the work capability assessment used to approve incapacity benefits and align the system more closely with assessments for personal independence payments (PIP), separate disability benefits that are paid regardless of whether or not someone can work.
PIP payments are also expected to be overhauled and it remains unclear whether the most severely disabled would be given higher awards to compensate for the loss of disability benefits.
Those with mental health conditions such as depression and anxiety are likely to find it harder to claim.
Ministers have reportedly told business leaders that changes to PIP thresholds and eligibility will be the first priority in spending cuts in March.
Options being looked at include one-off payments for some instead of a regular income and means testing. However, vouchers for specific equipment or aids instead of cash payments have been ruled out.
Kendall (above) has insisted that the present system is “broken” and that change is needed to help get people back to work and grow the economy.
However, she is under pressure from the Treasury to find billions of pounds in savings in the coming weeks as Chancellor Rachel Reeves hopes to avoid further tax rises.
A government source told The Times: “The Tories failed on welfare because they failed on work. This Labour government recognises that many sick and disabled people want to work, given the right support, but are unfairly shut out.
“We will bring forward big reforms that help more people into work, protect the most vulnerable, and boost growth – while putting the benefits bill on a more sustainable footing.”
