Minister stands up to Blair over benefit cuts

Tony Blair has become locked in a dispute with the newest member of his Cabinet over welfare payments to the sick and disabled.

Tony Blair has become locked in a dispute with the newest member of his Cabinet over welfare payments to the sick and disabled.

Downing Street is considering setting a time limit on the period during which anyone, however badly disabled, can continue to claim incapacity benefit, estimated to be costing £7.7bn a year.

The idea is being vigorously opposed by the new Secretary of State for Work and Pensions, Alan Johnson, who was appointed to the job less than three months ago with a remit to help to reduce the number of people claiming benefits.

A meeting on Thursday between Mr Johnson and the Cabinet Office minister Ruth Kelly, representing the Prime Minister, ended in deadlock.

Mr Blair has made cutting the cost of incapacity benefit one of the main points of his domestic agenda; the money saved is to be used to increase pensions.

Ms Kelly, who has been tipped for promotion after the general election, has told friends she now suspects that her chances of being elevated to the Cabinet depend on whether she can deliver what the Prime Minister wants.

There are 2.7 million Britons claiming incapacity benefit. The Government has embarked on an expensive programme to assign each a personal adviser to assist in the hunt for work, with penalties for those who fail to co-operate. The number of new claimants has also been reduced, enabling Labour to claim that they have "stabilised" the numbers, which trebled while the Conservatives were in power.

When it was in opposition, Labour accused Tory ministers of encouraging claimants to sign themselves off sick, so that they could be taken off the official count of the number of unemployed. There are suspicions that incapacity benefit is still seen as an attractive option for the long-term unemployed.

Long-term incapacity benefit is worth more than income support, and is unusual in that the payments go up over time. One option now put forward by Downing Street is that there should be only one rate. Another is that after a fixed period, claimants would be taken off incapacity benefit and put on to income support instead, at less cost.