Osborne under fire over second plan to cut disability payments

Following his 11bn benefits squeeze in the Budget last week, Mr Osborne said he was now looking to achieve further savings from the Employment and Support Allowance (ESA) – which is replacing Incapacity Benefit – and Housing Benefit.

Speaking to reporters in Toronto before leaving the G20 summit, Mr Osborne said he wanted to ensure that those in "genuine need" were protected while encouraging those able to work to do so.

The move was attacked by campaigners who said that the disabled had already been hit once by plans announced in the Budget to restrict the payment of the Disability Living Allowance, which will cut more than 1bn.

Richard Hawkes, chief executive of disability charity Scope, said: "We know that changes need to be made to the benefits system.

"However, the current medical tests used to reassess people and move them into work are inherently flawed.

"We fear that simply speeding this process up will mean that corners will be cut, disabled people's needs will not be met and the Government will fail to achieve its aims.

"This is the second attack on vital support for disabled people in two weeks following the changes to Disability Living Allowance in the so-called 'fair' emergency Budget."

The proposed ESA changes – expected within days – again highlighted tensions with the coalition, with a Liberal Democrat minister warning there must be no "perverse incentive" to declare people fit for work when they were not.

Home Office Minister Lynne Featherstone said that past attempts to get people off allowances like incapacity benefit had a mixed record.

She said her experience as a local MP was that the "re-assessment" of people claiming had been variable at best.

"We need to be sure that there is no perverse incentive to determine that someone can work when they cannot."