Long-term sick will need to look for jobs and may have DWP benefits cut in major overhaul

A jobcentre plus sign
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People on long-term sickness benefits may be required to look for work and could see their payments cut under an overhaul of the welfare system, according to reports.

Hundreds of thousands of people could see reductions in sickness benefits payments. And people with mental health conditions will also find it harder to claim separate disability benefits under a package of reforms, which would represent the biggest changes to the welfare system for more than a decade.

A government source said: "The Tories failed on welfare because they failed on work. This Labour government recognises that many sick and disabled people want to work, given the right support, but are unfairly shut out. We will bring forward big reforms that help more people into work, protect the most vulnerable, and boost growth – while putting the benefits bill on a more sustainable footing."

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Despite the source's reassurance the most vulnerable will be protected, it is understand Keir Starmer will be pitched into a bitter fight with his party over the changes, reports the Mirror. However, work and pensions secretary, Liz Kendall, insists the present system is "broken" and change is needed to help people get back to work and grow the economy.

Ms Kendall is under intense pressure from the Treasury to find billions of pounds in savings in the coming weeks. She is poised to present the Government's blueprint for reform ahead of the spring statement, slated for March 26.

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And Chancellor Rachel Reeves is desperate to avoid having to hold an emergency tax-raising budget in March to meet fiscal rules that are under threat from higher borrowing costs, reports The Times. It also says a package is due to be finalised in the next two weeks to convince the Office for Budget Responsibility that the benefits bill can be brought under control.

Under one option being considered, the Universal Credit “limited capability for work or work-related activity” category would be abolished, which would require claimants to make preparations for work and see them lose about £5,000 a year. It is understood ministers want to scrap the work capability assessment used to approve incapacity benefits and align the system more closely with assessments for personal independence payments (PIP), separate disability benefits that are paid whether or not someone can work.