Rishi Sunak has warned that taxes will have to rise unless the ballooning bill for long-term sickness benefits is tackled.
The Prime Minister said the rising number of people out of work was damaging the economy as he pledged a crackdown on welfare payments.
As Labour failed to match his plan, Mr Sunak warned that the public faced a choice between a “more rigorous” benefits system and higher taxes.
His remarks came as Mel Stride, the Work and Pensions Secretary, said one in 10 Britons were set to be on the highest disability payments by 2028.
On Monday, ministers set out plans to overhaul Personal Independence Payments (PIPs), which are handed out as a top-up to sickness benefits.
They are worth up to £740 a month and paid to people who struggle with “daily living tasks” and mobility in order to cover the extra costs they face.
But a huge rise in claims by people with mental health conditions such as anxiety and depression has sparked fears that the system is being exploited.
Mr Sunak said that in too many cases, especially those involving mental health, money was being paid out based on “unverifiable claims”.
“I want to move towards something that is more rigorous, more objective, and potentially has more medical evidence that needs to be provided,” the Prime Minister told ITV News. “Because ultimately, otherwise everyone’s going to suffer paying higher taxes, and the economy’s going to suffer as well.”
Ministers are considering stripping cash payments from sufferers of some conditions, such as anxiety, and replacing them with vouchers for treatments.
In a consultation, officials said research showed that many recipients of PIPs used them to cover regular household expenditure such as bills. “We also know that some disabled people view their PIP award as compensation for being disabled rather than as an award for extra costs,” they said.
But the plans have sparked concerns among some Tory MPs that the Government will be attacked for demonising the sick and disabled.
Stephen McPartland, the MP for Stevenage, said the 2.6 million Britons on long-term sickness benefits “will be absolutely terrified”. Calling for extra cash for mental health treatments, he said: “A lot of those people will feel that this is just about providing some kind of cuts to services.”
Labour said it would read the details of the announcement, but the party has previously said its plan for getting more people back to work lies in fixing the NHS.
Alison McGovern, the shadow employment minister, said the Government’s plan was “a huge admission of the Tory failure on the NHS, in that it takes as its starting point the fact that people today simply cannot get the treatment and the care that they need”.
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