Tough new rules for incapacity benefits planned

THE GOVERNMENT is to risk fresh controversy over welfare reform by bringing in tough rules for newly-disabled people who want to claim incapacity benefit.

People on statutory sickness leave will have to prove they are unfit to work after six weeks instead of the present six months. The move will worry many Labour MPs, more than 50 of whom voted against the Government this month over its plans to restrict incapacity benefit (IB) for new claimants.

Under the new scheme, each GP surgery or hospital would have a "job retention officer", who would try to find the IB applicant suitable work.

David Blunkett, the Education and Employment Secretary, and Margaret Hodge, the Minister for the Disabled, believe that too many claimants are written off as unable to work because they do not have to see their GP until they want to transfer to IB after their six months on sickness leave.

"About 3,000 people sign on incapacity benefit every week. But only 10 per cent of these people ever return to work.

"We have to have an automatic intervention early when they are still on sickness leave because it is difficult to get people back into work once they have fallen into the benefit dependency trap," a senior Government source said yesterday.

He added that the time limit of six weeks would give people enough time to recover from their initial illness but was soon enough to help them before they felt dislocated from work.

Ministers hope the measure could save up to pounds 10bn in benefits if they meet their target of getting 200,000 potential claimants back into work early.

However, the scheme will be seen by groups representing the disabled and rebel Labour backbenchers as further evidence that ministers are determined to slash the pounds 100bn annual welfare bill at any cost.

Many MPs already feel bruised after Alistair Darling pushed through proposals to means-test IB under the Welfare Reform and Pensions Bill which became law last week.

But the scheme, which would involve several Government departments working together, would have the support of insurance companies, who are increasingly concerned about "absenteeism" at work. Minister want to start running five or six pilots next year.

A related scheme under consideration would involve so-called "entrepreneurial brokers" who would be contracted from the private sector to find work for disabled people whoare already on benefits.