In an interview with today’s Daily Telegraph, the Work and Pensions Secretary says that he is determined to introduce radical reforms to disability benefits which will see more than two million claimants reassessed in the next four years.

Iain Duncan Smith says that the number of claimants has risen by 30 percent in recent years “rising well ahead of any other gauge you might make about illness, sickness, disability”. Losing a limb should not automatically entitle people to a pay-out, he suggests.

The cost of disability living allowance, which is intended to help people meet the extra costs of mobility and care associated with their conditions, now outstrips unemployment benefit and will soon be £13 billion annually.

Under the reform plans, the existing benefit will be replaced with a simpler “more focused” allowance and only those medically assessed to be in genuine need of support will continue to qualify.

An official impact assessment of the plans, released this month, reveals the scheme will cut benefit payments by £2.24 billion annually – and lead to about 500,000 fewer claimants.

The rigorous new process being introduced by Mr Duncan Smith could lead to those without limbs, including former soldiers, having their payments reduced as their everyday mobility is not undermined by their prosthetic limbs.

The Work and Pensions Secretary says: “It’s not like incapacity benefit, it’s not a statement of sickness. It is a gauge of your capability. In other words, do you need care, do you need support to get around. Those are the two things that are measured. Not, you have lost a limb…”

The reform of disability benefits will be the next major challenge in the Government’s welfare reform programme and is expected to lead to high-profile protests from disability campaigners.

Tony Blair was forced to abandon a plan to reduce disability benefits after people in wheelchairs chained themselves to the gates of Downing Street.

Mr Duncan Smith says that the current system has been exploited and abused because of political fear over reforming a benefit for the disabled.

His department will now replace Disability Living Allowance (DLA) with a new benefit called Personal Independence Payment (Pip) which will have tighter criteria and a simpler approval system.

“We are creating a new benefit, because the last benefit grew by something like 30 percent in the past few years,” he said. “It’s been rising well ahead of any other gauge you might make about illness, sickness, disability or for that matter, general trends in society.

“A lot of that is down to the way the benefit was structured so that it was very loosely defined…Second thing was that in the assessment, lots of people weren’t actually seen. They didn’t get a health check or anything like that.

“Third problem was lifetime awards. Something like 70 per cent had lifetime awards, (which) meant that once they got it you never looked at them again. They were just allowed to fester.”

Ministers are currently consulting on the new eligibility criteria which will be announced in the autumn but they now appear keen to begin discussing publicly the need for reform.

Hundreds of thousands of people are expected to lose the benefits which are worth up to £120 a week. Others will have them cut while some of the most severely disabled Britons are expected to be awarded higher benefits. The mentally ill may also benefit from the changes.

Each of the two million people of working age claiming the benefit will have to see a medical expert and everyone will have been assessed by 2016. There are then expected to be regular reassessments. Currently, only about half of claimants have ever been medically assessed.

Mr Duncan Smith is also working on plans to encourage and help more disabled people to return to work. Many people wrongly believe that they will lose their disability benefits if returning to work, but they are not means tested. However, officials believe that other benefit bills may fall if more disabled people return to work once the new system is explained personally to them.

The changes only affect people of working age, not children and pensioners.

The planned assessments for disability benefits are similar to those underway for incapacity benefit. The Government is currently in the process of reassessing millions of incapacity benefit claimants and has judged that almost 80 percent are either fit for work immediately or in the future.

The level of potential abuse in the incapacity benefit system has shocked ministers, who now believe that many people are also being wrongly categorised as “disabled” by the benefits system.

The Work and Pensions Secretary said: “It’s like incapacity benefit, we’ve got to be careful because these are vulnerable people. There has been a lot of nonsense talked about it in the last few months, lots of letters asking about it. It’s now just beginning to seep in what we are doing. There are all sorts of scaremongering going on about how we are getting rid of it, slashing it, cutting it. The reality is that for the most part that’s not true.”

He added: “There is a big difference between what Tony Blair tried to do and what we are doing. Tony Blair’s government tried to attack DLA, just to restrict it. We’re not doing that. What we’re saying is we need to address DLA’s problems, to reform it. We are creating a new benefit, which we think will be better. We are actually reforming this process to improve it.”

THE DAILY TELEGRAPH