INCAPACITY benefit will be scrapped and all claimants put through a tough new disability test to find the estimated 2m people able to work, under plans unveiled yesterday.

And a new “work for dole” scheme will force anyone claiming jobseekers’ allowance for one year to carry out community work – such as picking up litter and removing graffiti – or be stripped of the benefit.

Back-to-work schemes will be run by multi-national companies paid by results, despite evidence of “unethical” behaviour abroad where firms were accused of cutting corners to boost profits.

The shake-up – immediately praised by the Conservatives as a “straight lift” of their policies – promises the most dramatic crackdown on Merseyside’s so-called “welfare culture” since Labour came to power.

There are 128,270 IB claimants across the region, a legacy of the industrial meltdown of the 1980s when the unemployed were pushed on to sickness benefits to keep the jobless count down.

The blackspot is Knowsley, where 13.6% of the working population claims IB, followed by Liverpool (13.3%), Halton (11.4%) and St Helens (11.2%).

Last year, the Government announced a new, stricter work capability assessment (WCA) would be introduced for new IB claimants from this October.

But Work and Pensions Secretary James Purnell has now gone further, by extending that test to all 2.7m existing claimants over three years from 2010.

It will remove IB –or employment support allowance (ESA), as it will be renamed – from those who can walk more than 400 metres, stand for 30 minutes or climb 12 steps without the aid of a banister.

Mr Purnell told MPs: “In the past, people were able – in many cases encouraged – to spend a lifetime on benefits. Once they had signed on, the welfare system all too often switched off.”

Nearly 267,000 heroin and crack users on benefits will lose their money unless they own up to their drug problems and accept treatment.

Backbench Labour opposition will focus on the proposal to hand £50,000 “payment-by-results” contracts to private firms.

Yesterday, Walton MP Peter Kilfoyle warned: “Payment by results means these firms will be motivated by profit, not the welfare of the people concerned.”

Tory spokesman Chris Grayling immediately pledged Conservative support.

Mr Grayling told Mr Purnell: “Since these are Conservative proposals, we will certainly support them.”