Benefit claimants who refuse to take jobs offered to them will have their handouts automatically cut

Welfare recipients who refuse to take a job will automatically have their handouts cut as part of return-to-work plans rolled out by Jeremy Hunt.

Treasury sources said measures in the budget will “significantly increase” the number of financial sanctions imposed on those who failed to attend job interviews or refused job offers.

Employment agencies have been able to reward people who refuse to take a job for some time, but this is rare.

New funding will allow the Ministry of Work and Pensions to automate referrals, although a final decision on withdrawing benefits will still be made by employment office staff.

“The current system is not a real deterrent,” says a source. “There are a lot of people right now who can be punished for not taking a job, but don’t. Automation is going to change that.’

The new plan to go back to work follows months of work from employment and pension secretary Mel Stride (pictured)

Those who have turned down a job offer may have their benefits reduced for three months, or up to six months if they received a similar sanction in the previous year.

Budget changes will also mean that people will have to keep looking for more work unless they already work at least 18 hours a week – up from 12 hours last year.

Ministers believe the changes could help get 200,000 people back to work, alleviating the recruitment crisis fueling immigration.

And 2.5 million people who are chronically ill or incapacitated for work will also receive new support when looking for work. Mr Hunt said the steps were part of a plan to ‘break down barriers that prevent people from working’.

He added: ‘Independence is always better than dependence, so we believe that those who can work should do so.

“Thus, sanctions will be more severely applied to those who fail to meet strict job-search requirements or choose not to take up a reasonable job offer.”

The chancellor said there are currently seven million working-age adults out of work – seven times the number of job vacancies in the economy.

Ministers believe that only about a million are really unable to carry out any work.

The new plan to return to work follows months of work from employment and retirement secretary Mel Stride.

A source close to Mr Stride said he felt the benefits system should be ‘fair but firm’ for those claiming state grants.

“His opinion is that we should do everything we can to provide opportunities to help people find work,” the source said.

“But as part of the social contract with the state, if you refuse to take those opportunities, then you should feel the full force of the sanctions regime.”

The DWP sees great opportunities to get sick and disabled people back to work, given the developments in the field of working from home and technology.

People with long-term back problems and psychological problems receive extra health support.

Employment agencies have been able to reward people who refuse to take a job for some time, but this is rare

And ministers will abolish the notorious assessment of work capacity, which requires people to demonstrate poor health in order to claim benefits. Instead, they will be encouraged to focus on the work they could be doing.

Anyone who receives the Personal Independence Allowance may continue to claim it even if they find a job.

The DWP insisted last night that employment office staff would still have the final say on whether anyone would lose their benefits.

A spokesman said: “We have not been and will not automatically apply sanctions.

“To help our job coaches, we’re exploring how automation can improve the speed and accuracy of sanction referrals.”