Jeremy Hunt has unveiled more severe benefit sanctions while announcing harsher measures for people on out-of-work disability benefits.

The Tory Chancellor boasted of his plans to increase sanction penalties which the government said last week would involve people losing access to free NHS prescriptions and legal aid.

Despite widespread concerns from charities, Mr Hunt ploughed ahead with the controversial plans at the Autumn Statement on Wednesday. In the "biggest welfare reform in a decade" he said claimants who do not find a job within 18 months will be forced to undergo "mandatory" work placements.

Those failing to comply with the rules face having their benefits cut off completely. He said: "If they choose not to engage with the work search process for six months we will close their case and stop their benefits".

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On disability benefits, he said it was "wrong economically and wrong morally" that every year more than 100,000 people were signed onto benefits with no requirement to look for work because of sickness or disability.

The Chancellor said: "We will reform the fit note process so that treatment rather than time off work becomes the default." He said the Work Capability Assessment - the test used to determine whether someone is "fit for work" - will be reformed to reflect the "availability of home working" post-Covid.

He added: "And we will spend £1.3 billion over the next five years to help nearly 700,000 people with health conditions find jobs."

The changes will only apply to new claimants from 2025 and the Office for Budget Responsibility says it could increase employment by just 10,000.

The Disability Benefits Consortium - a national coalition of more than 100 charities - described the plan as a "cynical attack on disability benefits (which) will have a devastating impact on those on the lowest incomes".

Co-chair Anastasia Berry said just one in 10 jobs advertised this year has offered home-working as an option, and described access to health and care support, "which could keep people in work for longer, including mental health and social care", as becoming "increasingly strained".

James Taylor from the disability equality charity Scope added: "Today the Chancellor doubled down on a plan that will ramp up sanctions and demonises disabled people".

Dr Sarah Hughes, the chief executive of Mind, said: “This Autumn Statement is a backwards step for the UK, which people with mental health problems will feel sharply. "Changes to the way people are assessed to be well enough to work are brazenly motivated by a desire to save money, driven by baseless assumptions about disabled people and hugely stigmatising.

"The reality is that the vast majority of people with mental health problems want to work but are consistently let down by poor support across the board. The UK government must urgently rethink these plans."

The Chancellor also abandoned plans to clobber families with a cut to Universal Credit. He said the payments will increase by September's 6.4% rate of inflation rather than October's lower rate the Tories had been threatening.

The Labour MP Debbie Abrahams - a member of the Work and Pensions Committee - welcomed the decision to increase benefits, but said the Autumn Statement "will be remembered as one where the Government chose to target disabled people for their latest scapegoat".

She added: "The changes to the work capability assessment will instill a wave of fear and anxiety amongst the people who a caring Government ought to be supporting."

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