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Nearly 550,000 people currently considered too sick to work face losing financial support if radical changes go ahead

Daniel Boffey, policy editor Sat 23 Nov 2013 20.30 GMT

The fate of nearly 550,000 benefit claimants currently deemed unfit for work due to serious illnesses such as cancer is in the balance as it emerged that Iain Duncan Smith is planning a radical change to the welfare system.

The work and pensions secretary is pushing to scrap a part of the benefits system that helps sufferers of recent illnesses get back into employment. These individuals are covered by the term "work-related activity group" (WRAG) and are regarded as being capable of work in the future. They are paid benefits if they carry out training or practice interviews.

However, the Observer understands that Duncan Smith wants to disband the group, currently made up of 546,770 people. Such a move would require an overhaul of the whole benefits system, say experts.

The cabinet minister is said to be concerned that only half of claimants in WRAG are coming off benefit within three years, and that hundreds of millions of pounds are being tied up in administration of the benefit, including the work capability assessments and appeals process.

Anne Begg MP, the Labour chairwoman of the cross-party work and pensions select committee, said her fear was that the vulnerable people in that group would be forced to join the dole queue and be at the mercy of the sanction system, under which claimants lose benefits if they do not attend enough interviews or make efforts to find a job.

She said: "My concern is that, if he gets rid of the WRAG group and says all these people are fit to work, that will turn them into job support allowance claimants. Then we have all these people who they are wasting money on trying to get into work, who are realistically never going to get into work and whose condition will be made worse.