Tories plan to save £350m by benefit reform

The Tory party gave a first glimpse of its "pre-manifesto" for the general election yesterday, with plans to save £350m a year by reforming the incapacity benefit system.

The Tory party gave a first glimpse of its "pre-manifesto" for the general election yesterday, with plans to save £350m a year by reforming the incapacity benefit system.

David Willetts, the party's social security spokesman, unveiled proposals aimed at tackling the £8bn-a-year benefit budget and getting more people back to work.

Incapacity benefit is one of the fastest growing areas of the welfare state, with the number of claimants rising from one million in 1985 to 2.3 million in 1999. According to the most recent figures, more than 80 per cent of claimants are on the benefit for more than a year and 49 per cent for more than four.

Tory research has found that private insurers get three-quarters of their disabled claimants back into independence within five years. Private insurers tend to be better at getting people the physiotherapy and medical aids they need at an early stage in their treatment.

Under Mr Willetts's scheme, a centralised disability fund would be created to pay out incapacity benefit and buy medical treatment aimed at helping people get fit for work. The public body would be given powers to enable it to purchase physiotherapy and occupational therapy for claimants as well as physical aids.

The scheme would cost £100m in the first year but Mr Willetts said that there would be a saving of more than £350m a year within five years if only a fraction of people went back to work earlier than at present.

Mr Willetts said disabled people had had a "raw deal" from the Government's means testing of incapacity benefit and other measures. Manyclaimants of the benefit were keen to return to work, he said, but they received very little help from the state and the vast majority never worked again.

"Disabled people are losing out because government programmes for them are rigidly divided between departments. We want to break down those barriers and move towards a single fund to help disabled people," Mr Willetts said.

"We will consult widely with representatives of disabled people on this scheme. We believe this new flexibility will help disabled people back into work and enable them to escape dependency on benefit."

Mr Willetts said reducing dependence and helping disabled people back to work was just as important as the savings incorporated in the proposals. He said: "We want to help those on incapacity benefit by ensuring faster, better assistance in finding suitable employment. We can learn from the private sector, which is much more successful at ending long-term dependency."