The shake-up is expected to put a greater emphasis on reducing economic inactivity by helping people to stay in work despite their illnesses

A major overhaul of Personal Independence Payment (PIP) is set to be announced in weeks, the DWP has confirmed.

The shake-up of PIP and other disability and incapacity benefits is expected to shift the focus from economic inactivity to employment, looking at how people with health conditions can find work or stay in their existing jobs.

Labour’s Health and Disability Green Paper will be unveiled before the Chancellor’s spring statement on March 26, the Government has confirmed.

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Questions have been raised over why PIP claims are rising – by 58 per cent according to DWP Permanent Sir Secretary Peter Schofield – when this does not reflect a general increase in sickness and disability.

At a meeting of the all-party Work and Pensions Committee, Damien Egan (Labour MP for Bristol North East) asked Sir Peter: “We all know about the increase in the number of people on health-related benefits, and that is projected to increase further. The House of Lords Economic Affairs Committee did a short study, and as part of that there is a UK household longitudinal survey.

“That says that although health benefits have gone up, there is not an increase in the number of people who are ill and sick in the general population. I would be interested to know what your thoughts are on that and on what is causing this drive.”

Sir Peter responded: “I think there are a number of things going on there, and I read the study with interest. It is difficult to see whether there is a link or whether there isn’t a link. I think they are saying that they are not seeing the same increase in certain aspects of interface with the health system, but we are certainly seeing those numbers coming in through into PIP and ESA.

“We have seen a 58 per cent increase in claims to PIP, and it is pretty static in the proportion of those who are assessed as being eligible for the benefit. We are seeing people coming through the door who are eligible for PIP and that support, so the connection to the health service is a difficult one, and it is something we need to keep looking at.”

He added: “What it does bring in is a question about whether we are delivering health and disability benefits in a way that has the right impact in terms of supporting those who most need it but also encourages people out of economic inactivity and into work.

“How do we encourage people to stay in work when they develop a health condition? How do we encourage people as they navigate the benefits system not to talk about what they cannot do but to talk about what they can do? How does the benefits system encourage that?”

Confirming the timeframe for the upcoming reforms of DWP disability and incapacity benefits, Sir Peter added: “We have a Green Paper that the Government will be launching on health and disability this side of the end of March, so before the next OBR forecast, which is March 26.

“That will set out the Government’s proposals for how we could reform the system going forward.”

It means details of the changes will be known within five weeks. The proposals are likely to be subject to a consultation – typically lasting 12 weeks – before they are implemented.

He added: “Alongside that, we had the launch of the Keep Britain Working review group, led by Sir Charlie Mayfield, which is looking at how employers can work with us to help people through adjustments to stay in work when they develop health conditions.

“What we are really looking at here is how we support economic growth by reducing the number of people in our country who are economically inactive and bringing them closer to the labour market.”

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