Work and Pensions secretary Liz Kendall (pictured) said the savings that will fully come into force by 2030 are needed because the current benefits system is “failing the very people it is supposed to help and holding our country back”.

One in 10 people of working age were claiming a sickness or disability benefit and 2.8 million people were out of work because of long-term sickness, Kendall added in the Commons yesterday. 

Labour will make it harder to claim a key disability benefit called a personal independence payment, administered to more than 3.6 million people, where payments vary depending on the severity of a person’s disability. 

Among a range of other restrictions, the welfare department will also make changes to universal credit, paid to 7.5 million people, abolishing incapacity top-ups to claimants under 22. However, the basic rate of universal credit will rise. 

Generation Rent deputy chief executive Dan Wilson Craw urged the government to rethink these plans. 

Wilson Craw said: “Research shows just 9% of private rented homes are accessible, meaning many renters living with a disability are forced to pay inflated rents due to a lack of choice, or live in homes that aren’t suitable for their needs.  

“Many renters use their personal independence payments to supplement their rent, meaning these changes could lead to them being forced out of their homes.  

“If disabled renters are forced out because of unaffordable rents, they are unlikely to find suitable housing that meets their specific needs.” 

Propertymark added that housing allowances should keep pace with the cost of living. 

Propertymark chief executive Nathan Emerson pointed out: “Alongside the focus on getting more people into work and supporting young people, good and secure housing plays a vital role too.  

“The UK government must not lose sight of the need to adequately set local housing allowance rates as we know this provides vital support to those that need it and makes it easier for tenants in the private rented sector to access and sustain their tenancies.” 

Thinktank the Institute for Fiscal Studies called the moves on welfare “a fundamental break from the past”. 

IFS associate director Tom Waters said: “This package is a fundamental break from the past few decades of welfare policy.  

“The increase in basic out-of-work support, while not very large, is the biggest permanent real terms rise since at least 1980.  

“With it is promised even higher support in the period shortly after job loss in the form of contribution-based unemployment insurance.

“At the same time, the health-related benefit system will be tightened, cut, and entitlement will no longer depend upon whether you can work or not.  

“The hope is more employment and fewer people in the disability and incapacity benefit system.  

“The risk is that it’s precisely the individuals receiving health-related benefits that are least responsive to financial incentives to work, and perhaps most in need of extra financial support.”