Row over '£2.5bn cuts' to sickness benefit

Critics have accused the Tory-Lib Dem coalition of targeting the most vulnerable in its quest to find drastic savings in public spending.

Chancellor George Osborne signalled last week he wanted to shave an extra 4 billion from the bill for state help – on top of 11 billion cuts made in June's emergency Budget.

He gave no details of where the axe would fall, but a letter leaked to a national newspaper showed in June he had agreed a deal to reduce the Employment and Support Allowance by 2.5 billion.

Labour said cuts on that scale to the replacement for Incapacity Benefit could only be made by taking cash from the genuinely sick and disabled in what it dubbed "vicious cuts on the poorest".

Disability charity Scope said it would put a "vital lifeline" at risk.

But Chief Secretary to the Treasury Danny Alexander yesterday insisted things had "moved on" since the letter was written – part of hard-fought negotiations with Work and Pensions Secretary Iain Duncan Smith.

While Labour had left the Government with no choice but to make "significant" cuts in benefits to balance the books, they would be made in a "fair" way, he said.

"Yes of course we are looking for significant savings in the welfare system. Savings that are fair; savings that encourage people to get out to work," he said.

He added: "Things have moved on since June in the sense that Iain Duncan Smith has published an excellent consultation paper looking at much wider and more radical reform.

"I would argue that the failure to reform welfare, the failure to help people back into work, was one of the most catastrophic failures of Labour's time in office."

Mr Duncan Smith is seeking up front investment for reforms aimed at making everyone better off in work than on benefits – which he says will save money in the longer term.

However his camp – which was previously forced to deny a serious rift with the Chancellor – insisted he would not approve any cuts in return which affected anyone judged "too poorly to work".

Scope chief executive Richard Hawkes said: "The Government's promise to ensure fairness in the budget cuts is undermined by the revelation of its plans to cut 2.5 billion of support to disabled people.

"Claiming employment and support allowance is not a 'lifestyle choice' for disabled people, but a crucial lifeline that enables them to participate in society."

Mr Osborne said last week that he wanted to use the benefit cuts to stop anyone seeing worklessness as a "lifestyle choice".

RNIB head of campaigns Steve Winyard said: "ESA should provide vital support to blind and partially-sighted job seekers who face major occupational and attitudinal barriers to obtaining paid work.

"But increasing numbers are being excluded from the benefit and these cuts can only make things worse."

Acting Labour leader Harriet Harman said: "The way that the Conservatives, supported by the Lib Dems, are falling over themselves to make cuts in public spending means that that's a threat to the economy and jobs, it's a threat to public services, and now we see, with the latest leak, that it's actually a threat to the most vulnerable and even disabled people."