TWO out of three incapacity benefit recipients are not entitled to the payment, a government adviser has claimed.
David Freud, a City banker and welfare adviser to James Purnell, the new work and pensions secretary, said up to 1.9m people may be claiming money to which they are not entitled, at a cost to the taxpayer of billions of pounds.
Freud also suggested that nearly 200,000 beneficiaries may be working illegally on the black market.
“When the whole rot started in the 1980s, we had 700,000 [claimants],” Freud said in a newspaper interview. “I suspect that’s much closer to the real figure than the figure we’ve got now.”
He added: “The system sends 2.64m people into a form of economic house arrest and encourages them to stay at home and watch daytime television. We’re doing nothing for these people.”
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The Conservative Party today called for independent medical checks for all incapacity benefit claimants.
Shadow work and pensions secretary Chris Grayling said the Government had lost control of the welfare system.
“The Government needs to get to grips with this problem now and the best way of doing so would be an independent medical check for everyone.”
Freud’s words came ahead of a major overhaul of the welfare state ordered by Gordon Brown, the Prime Minister.
Purnell, appointed last month to replace Peter Hain, insisted there would be “no free-riding” on the benefit system.
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Freud, a former vice chairman of the City bank UBS, produced a report on reforming welfare when Tony Blair was prime minister.
He added that the bar had been set too low for claimants to obtain the benefit, which is worth £81.35 a week, saying the tests for entitlement were “ludicrous”.
The Department for Works and Pensions assesses whether incapacity benefit claimants are physically or mentally incapable of work.
Claimants are sometimes referred to a doctor who applies tests such as whether they can walk up and down stairs, what weights they can lift and how well they can cope with pressure and other people.
This October, the department is introducing a new test designed to toughen the assessments. It will seek to ensure that a claimant’s mental function is measured in the same way as physical function and will require more evidence that a claimant is unable to work.
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The benefit’s higher payments made it more enticing than the unemployment benefit, Freud told the Daily Telegraph.
“You get more money and you don’t get hassled, you can sit there for the rest of your life,” he said.
“It’s ludicrous that the tests are done by people’s own GPs - they’ve got a classic conflict of interest and they’re frightened of legal action.”
In total, Freud said there were 3.1m people not working — when recipients of jobseeker’s allowance are included — and the government could get nearly half of those back to work.
He proposes to put the private sector in charge of the long-term unemployed, paying them fees for placing people in work for three or more years, and nothing if they fail.
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Kate Green, chief executive of the Child Poverty Action Group, said that British rules on claiming incapacity benefit were already among the tightest in the world, and fraud levels were low.
She disputed Freud’s assertion of a conflict of interest in medical assessments: “To receive incapacity benefit you have to go through a stringent medical test by a doctor who is not your own medical practitioner at a Medical Assessment Centre,” she said.
“Disabled people are desperate for genuine help and support to find suitable employment in a climate of employer prejudice. Sanctions will only cause greater hardship for them and their children.”