Cameron promises crackdown on incapacity benefit

Tory leader to unveil US-style welfare-to-work scheme that would see payments reduced or cut altogether

Thousands of sick and disabled people would see their incapacity benefit payments cut by 20 a week under an American-style "tough love" welfare policy to be unveiled by David Cameron on Tuesday.

He will promise that a Tory government would force all 2.64 million people on the benefit to undergo a "fit for work" test. Those capable of work will be transferred immediately to the less generous jobseekers' allowance for the unemployed and will have to look for work to keep that.

Claimants who have the potential to work will be referred to private firms and voluntary groups with expertise in getting people into jobs, which will help them prepare to return to employment. They will have a free hand over their methods and will be paid by results.

The Tories insist that disabled people who are incapable of work will continue to receive incapacity benefit. They will be able to volunteer for one-to-one help from the welfare-to-work scheme. But those with a "non-permanent condition" will have to repeat the "fit for work" test regularly.

Mr Cameron wants to make welfare a key battleground at the next general election. He believes his party can outflank Labour by producing more radical reforms and will accuse the Government of failing to live up to its rhetoric about change. But his proposals will provoke controversy. They are modelled on tough welfare-to-work schemes in US states such as Wisconsin, where benefits are withdrawn from people who refuse to seek work. Although the number of claimants has dropped dramatically, critics say that up to one in three of those who lose their benefits have to rely on emergency handouts from charities.

The Tories' hardline approach to the sick and disabled will also extend to single mothers. At present, they lose their entitlement to income support when their youngest child reaches 16. The Tories want lone parents to work part-time when their youngest child goes to primary school and to go full-time when the child transfers to secondary school.

Mr Cameron will accuse Labour of abandoning people on incapacity benefit, some one million of whom are said to want to work. Mental illnesses such as depression have replaced industrial injuries as the main reason for new claims. The number of under 25s claiming has risen by more than 50 per cent, and 6,600 people aged 16 and 17 receive the benefit.

The Tories say the new "fit for work" test will be funded by scrapping unsuccessful employment programmes and that payment by results for welfare-to-work providers would save money that could be spent on ending a bias against couples in the tax credit system.

Chris Grayling, the shadow Secretary of State for Work and Pensions, said: "It's time to take tough action against those who are deliberately staying at home and claiming benefits rather than going back into work. We think that if you get a reasonable job offer, you should take it and if you don't, then you can't expect to be able to carry on claiming out-of-work benefits."

He added: "Under Gordon Brown we have seen millions of people coming into the country to work. Yet it's still possible for many British people to stay at home on benefits, and not go back to work. That simply doesn't make sense."

Peter Hain, the Secretary of State for Work and Pensions, said: "Our approach is based on social justice and full employment, and our policies are firm, fair, funded and deliverable. The Tories' policies are deeply reactionary, unfair, unfunded and undeliverable. They are basically saying that everyone on benefits is a scrounger and will be frogmarched into a job or will have their benefits cut off."