BBC News: Incapacity benefits to be cut

Chancellor George Osborne has signalled that sickness benefits will be targeted in a summer spending review aimed at cutting the £155bn deficit.

He said he wanted to protect those in "genuine need" while encouraging those who could work, to do so.

Over 2.5m people are on incapacity benefit or employment support allowance - costing about £12.5bn a year.

Labour's Yvette Cooper said the plans were simply benefit cuts, not reform, as they would not help people get jobs.

The government has said that NHS and foreign aid spending will be protected as it seeks to tackle Britain's budget deficit, but other government departments face 25% real terms cuts.

'Trade off'

Mr Osborne has said that figure could be reduced, if more savings can be found in the welfare budget - on top of the £11bn cuts he has already outlined.

Speaking at the G20 summit in Toronto, he said there would be a "trade-off" between cuts in benefits and cuts in public services such as the police, defence and schools.

He identified incapacity benefit and its successor, employment and support allowance, as possible areas for savings.

The Conservatives pledged during the election campaign not to reduce benefits for the elderly, such as pension credit, free bus passes, television licences and the winter fuel payment.

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