Rising cost of incapacity benefit

The annual cost of paying benefits to people "on the sick" is now higher than the estimated cost of staging the London Olympics, it was reported.

Figures provided to Panorama on BBC One by the Department for Work and Pensions show the annual bill for paying incapacity benefits, including associated housing benefit and council tax benefit, has reached £16 billion. The cost of staging the 2012 Olympics is estimated at less than £10 billion.

And an expert has warned the Government it will need to create tens of thousands of jobs in Britain's former industrial heartlands if it is to get anywhere near its target of a million off benefits and back to work.

Professor Steve Fothergill of Sheffield Hallam University told the broadcaster even job creation schemes may not be enough. Professor Fothergill, whose team have just interviewed more than 3,000 incapacity benefit claimants for a major research project, warns nearly two thirds of claimants have no skills or qualifications at all.

The academic discovered that in the incapacity benefit hotspot of Merthyr Tydfil in south Wales - where nearly one in five of working age population is on the sick - more than three thousand new jobs would have to be created. Across the south Wales valleys 35,000 new jobs would be required.

Employment & Welfare Reform Minister Stephen Timms said he did not believe getting people "off the sick" would lead to an increase in the unemployment figures as those on incapacity benefit simply shifted from one benefit to another.

Department of Health figures show that people who are on incapacity benefit for one year are likely to stay there for eight. Once they have been there for two years or more, they are more likely to die or retire than work again.

Official figures say nine out of 10 of those who come on to incapacity benefit want to come back to work. Many complain of conditions such as back and neck pain, depression or heart and circulatory problems, which the Government believes do not make long-term unemployment inevitable.

A new medical test for incapacity benefit claimants is set to be introduced in October this year. It will assess what an individual can - rather than cannot - do.

Everyone applying for the new allowance will have to take the test, and it is estimated half of those will not pass. It will replace the current personal capability assessment, which is weighted more towards a person's physical disability and bases itself around assessing people's incapability for work.