Disabled people will be hit with more than £9bn in welfare cuts over the next five years, a think tank has warned.
Demos suggests the government's plans will see 3.6m disabled people and carers lose about £9.2bn by 2015.
It said moving those on incapacity benefit who were reassessed as fit to work to jobseeker's allowance would account for half of the losses.
The government said people who were too sick or disabled to work would continue to receive the support they needed.
More than 2.5m people are on incapacity benefit or its successor, employment support allowance, costing about £12.5bn a year.
Although the extent of the welfare cuts will be announced in the comprehensive spending review later this month, the government has already said it will reassess all claimants of incapacity benefit for their "readiness to work".
Pilots are due to start in Burnley and Aberdeen next week, with a national roll-out scheduled for early next year.
Those deemed fit enough to work will be moved on to jobseeker's allowance (JSA) instead.
Demos calculated the impact of moving 500,000 people from incapacity benefit to JSA would amount to a loss of £4.87bn.
It says this will mean less money for the individual and less one-on-one support to help them find work.
It argues the move will result in more disabled people being trapped in long-term unemployment and this will ultimately cost the taxpayer far more than at present.
Inflation measure
Minister for Employment Chris Grayling said the new Work Programme would ensure everyone who could work would get the help and support they needed.
"We know that many of the people trapped on incapacity benefits could and do want to work, but the current system doesn't allow them to," he said.
"That's why we'll be reassessing everyone claiming incapacity benefits, starting in Burnley and Aberdeen on Monday and the rest of the country from spring next year.
“Start Quote
With such dramatic losses on the horizon, how will the government be able to 'protect' the people who need support the most?”
End Quote Richard Hawkes Disability charity Scope
"Those found too sick or disabled to work won't be expected to, and will continue to receive the help and support they need."
The Demos report also points to the government's decision to link benefits, except the state pension, to the lower consumer prices measure of inflation.
It says this will mean less money for a range of benefits, including carers' allowance and disability living allowance.
The report, called Destination Unknown, warns that by 2015, families with disabled children will lose more than £3,000 each and disabled adults whose partner is a full-time carer will also lose about £3,000.
In a series of recommendations, Demos calls on the government to allow disabled people to take a lump sum of housing benefit to enable them to buy their own home, giving them more financial control.
The report also says ministers should reform the work capability assessment, introduced by Labour in 2008, to assess psychological, social and practical barriers to employment, rather than just medical difficulties.
'Social exclusion'
Former Labour minister Kitty Ussher, director of Demos, said the government's welfare reforms threatened to "exclude people further".
Richard Hawkes, chief executive of disability charity Scope, said the figures were "alarming".
"With such dramatic losses on the horizon, how will the government be able to 'protect' the people who need support the most?" he said.
"Without them, hundreds of thousands of disabled people will be forced into a cycle of long-term unemployment, poverty and social exclusion. That is not only bad for disabled people but also bad for the public purse.
"Disabled people must not be pushed even further backwards in our society by the pursuit of deficit reduction."
PDF version A pilot scheme is underway to reassess claims for incapacity benefit or employment support allowance with the aim of moving people considered to be fit enough to work on to jobseeker's allowance. The first areas to be tested are Burnley in England and Aberdeen, Banff, Peterhead and Fraserburgh in Scotland.
The assessment will use a points-based system where people – excluding the severely disabled or terminally ill – will be given points relating to certain aspects of their incapacity and anyone getting fewer than 15 points will be considered as able to work and encouraged to move into a part-time job. If the trials are successful, the idea is that everyone in the UK claiming either of the two benefits will have to take a medical examination.
Employment minister Chris Grayling said: "It's nothing short of a scandal that so many people were simply cast aside to a lifetime on benefits, wasting their talents and potential and costing the taxpayer almost £135bn. While some of these people will be genuinely too sick to work, there will be others who through no fault of their own were told by the state that they were better off on the sick and then left behind – this stops now."
Sophie Corlett, director of external relations at the mental health charity Mind, commented: "Over half of all benefit claimants have a mental health problem, so it should go without saying that any fitness-to-work test should thoroughly assess mental health and whether it presents a barrier to work and coping in the workplace. However, many people with mental health issues have found that the impact of their condition on their ability to work is barely recognised."
Many IB claimants have already undergone reviews and are also in receipt of DLA, which involves further assessment and subsequent reviews.
Is it beyond HMG's imagination to realise the distress caused by these tests when, to the disabled, their lives are "normal" (for them) only to be forced to come yet again to terms with how far from "normal" their disability causes their lives to be?
Surely an IB claimant who also receives DLA should be exempted from further checking? Isn't it possible to co-relate these two separate benefits albeit two departments are involved, if not in the name of common decency and consideration, then in efficiency?
Jock.
Jock, you describe the system as it used to operate. If you were in reciept of High Rate Care of Disability Living Allowance and qualified for Incapacity Benefit. There was an exemption to reassessment of your Incapacity Benefit and the Personal Capability Assessment, the forerunner of the Work Capability Assessment.
The last government changed this and removed the exemption under the auspices that the new Employment and Support Allowance and testing regime, the Work Capability Assessment, was testing what could be done. This being a different focus on the previous system.
Many agree the exemption should remain in place.
Over the few years we have been doing this work it surprised us how many people were reassessed and didn't know they were exempt and if the lack of knowlege on the part of the DWP.
Incapacity benefit claimants in north-east Scotland and Burnley in Lancashire are to be the first to be reassessed ahead of UK-wide welfare reform.
Those deemed fit enough to work, using a points-based system, will be moved to the jobseeker's allowance.
The reassessment was designed to end the one-size-fits-all approach to those with illness and disabilities.
More than 2.5m people claim the benefit or its successor, employment support allowance, costing £12.5bn yearly.
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Eventually everyone claiming incapacity benefit will have to undergo a medical examination to assess their physical and mental abilities.
It will work on a point-based system. For example, a person who cannot sit comfortably for more than 30 minutes will score seven points.
Anyone who scores below 15 points in total will be deemed fit for work and placed on jobseeker's allowance, which in some cases could result in a reduction in benefit of about £25 a week.
'Scandal'
Those judged capable of limited work will be supported back into part-time employment.
The government has said that the high number of people on long-term sickness benefit showed the system was not working.
Employment Minister Chris Grayling, who will launch the scheme in Burnley on Monday, said: "It's nothing short of a scandal that so many people were simply cast aside to a lifetime on benefits, wasting their talents and potential and costing the taxpayer almost £135bn [since 2000].
"While some of these people will be genuinely too sick to work, there will be others who through no fault of their own were told by the state that they were better off on the sick and then left behind - this stops now."
Terminally ill people and the most disabled will not be expected to look for work.
Test concerns
The pilot scheme will also affect claimants in Aberdeen, Banff, Peterhead and Fraserburgh.
In Aberdeen more than 8,000 residents claim incapacity benefit - some 60% for five years or more.
Mental health charity Mind has already questioned the effectiveness of the test, claiming that it does not "distinguish accurately which people can work and which people can't."
Sophie Corlett, Mind's director of external relations, said: "Over half of all benefit claimants have a mental health problem, so it should go without saying that any fitness-to-work test should thoroughly assess mental health and whether it presents a barrier to work and coping in the workplace.
"However, many people with mental health issues have found that the impact of their condition on their ability to work is barely recognised."
The charity called for "vocational and health-related support to get them ready for a job again".
The full extent of the welfare cuts will be announced in the comprehensive spending review later this month.
http://www.bbc.co.uk/news/uk-politics-11510726