Incapacity benefit and housing benefit will be scrapped to generate £9bn of cuts to benefits under plans agreed by the Chancellor and Iain Duncan Smith, secretary of state for work and pensions.
The Times has reported that Duncan Smith and Chancellor George Osborne have finally reached an agreement on benefit reform following months of negotiation.
Incapacity benefits and housing benefit will be among those merged into a single benefit which Duncan Smith claims will guarantee that everyone is better off in work than on benefits. The reforms could slash £9bn from the benefit bill a year, a large chunk of which the Treasury has agreed to give Duncan Smith up front to finance the changes, The Times said.
In June Osborne said he would phase in a medical assessment for disability living allowance, which caused concern with disability groups because Osborne said it would be modelled on the controversial work capability assessment.
The Treasury’s plans had cast doubt over whether Duncan Smith would be given enough money to finance his reform of benefits.
Disabled people’s organisations cautiously welcomed the reforms. They said simplification was desirable but reforms would have to take account of disabled people’s needs.
“It cannot be a one size fits all benefit,” said Rebecca Rennison, senior policy officer at Leonard Cheshire Disability. She said the government would need to invest heavily in training of staff.
Neil Coyle, director of policy at Disability Alliance, said that he doubted IT systems required to run the new benefit could be completed within three years as the department of work and pensions wants. He added: “The reforms require a level of data sharing that has traditionally been difficult for government departments.
Sue Bott, chief executive of the National Centre for Independent Living, said: “I wonder if these saving will happen, based on the fact that people are more likely to claim if they better understand the simplified system.”
The Times said the changes will be formally announced at next week’s Tory party conference.