Incapacity benefit has become one of this year's favourite scare stories. Hardly a day passes without a new headline deploring its soaring costs and the rising numbers of claimants who get "something for nothing", at the expense of decent, hardworking taxpayers. We are told that we are footing an outrageously escalating bill for 2.4 million people, a million of whom shouldn't be on the benefit at all, and each successive work and pensions minister vows to be more ruthless than the last.

The true picture is somewhat different. The unreported version, which can be culled from Department for Work and Pensions (DWP) data, is that only 1.4 of the 2.4 million actually receive any payment, the rest get national insurance credits only, and numbers have been falling since 2003. The basic benefit is worth barely £3,000 a year. After two small rises in the first year there is no further increase, other than index-linking. All those who get the benefit have to pass a rigorous "personal capability assessment" (PCA) with doctors appointed by the DWP; and they can be re-examined at any time. The audited estimate of fraud is under 1 per cent - the lowest of any part of the social security system.

Nonetheless, the 2007 Welfare Reform Act is now being implemented across the country. It replaces support, as of right, for illness/disability (one of the planks of our rapidly disappearing welfare state) with a new, conditional employment and support allowance. Claimants are held on a basic allowance until it is confirmed that their capability for work is limited. This is determined by a "work capability assessment" tougher than the old PCA. Those deemed capable of one day returning to work (and the arbiters are health professionals rather than doctors) must engage in a series of "work-focused" interviews and activities. These include, among other things, "condition management", which in practice is likely to consist of group sessions loosely based on cognitive behavioural therapy. All this brings an additional slice of benefit that can, however, be cut for those who do not engage in it without "good cause" - a potential loss of 40 per cent of income. Ultimately, any whose capability for work remains limited through failing to follow medical advice, or "any prescribed rules of behaviour", face a period of disqualification. (A further provision of the act, to be piloted in nine areas, is that people served with Asbos - antisocial behaviour orders - can face cuts in their housing benefit for refusing local authority offers "to help address any problem behaviour".)

A main selling point of the reform was the great savings it would bring. It would staunch the outflow of benefits and get many people into jobs where they would pay tax and provide for their old age. This government's cherished goal is an employment rate of 80 per cent of the working-age population - though it is difficult to find any reasoned argument in support of this since our present rate of 75 per cent is, with Canada's, the highest in the world. The government accepts that employers must be paid to take on people with an illness record and, for the time being, it has pledged not to cut the benefits of existing claimants. Any immediate savings, therefore, can only come from bumping as many as possible off the benefit, shaving future benefit levels (already well in hand), and making it harder for newcomers to get it in the first place. Delivery is being farmed out to private agencies paid by results - which means, of course, the setting of targets. The next few years will be a bad time to have a crippling accident or succumb to a serious disease, particularly a psychiatric or neurological one that does not have obvious outward symptoms.

Blaming the "cheats"

The reform of incapacity benefit has been over ten years in the making, leaving in its wake a dense trail of commissioned reports. A curious thing about this voluminous material is how little information it contains on the actual health conditions for which benefit is paid. This is no accident, for the reformers long ago made up their minds that claimant numbers are too high, therefore a large proportion - usually put between a third and a half, but lately upped to 70 per cent in some quarters - must be spurious. An appeal to history is repeated like a mantra that, back in 1979, only 700,000 claimed the old sickness/invalidity benefits. Since then, money has been poured into the NHS while health care, living standards and longevity have improved beyond all expectations. People must be healthier, which proves that huge numbers are exploiting a slack and obsolete system. Who is to blame, apart from outright cheats? It can only be the self-indulgent, who fancy themselves sicker than they really are, and complacent GPs who let them think they are too ill to work.

Crucially, the reformers bracketed illness with disability. The disability lobby had long argued that "disability" was a discriminatory label imposed by society, and it was bent on removing the barriers to work that excluded those so labelled and kept them in poverty. But the bracketing brought confusions - for those with disabilities may be extremely fit (consider the disabled athlete), whereas the able-bodied can be extremely ill. More confusion arises with conditions such as "stress", "anxiety" and "chronic fatigue" that sound trivial. As for "back pain", how unreasonable is it to take time off sick for something best dealt with by a stiff upper lip and the odd aspirin? It is easy for those in good health to pooh-pooh such things, agreeing with the government that "Work is the best therapy".

The government's declared mission is to "liberate" claimants, to bring them into its "reformed, coherent welfare state for the 21st century". It seeks to overturn a culture based on the "medical model" of illness that allows them to "drift" on to long-term benefits without realising that "symptoms, feeling unwell, sickness and incapacity are not the same" - hence the appeal of cognitive behavioural therapy, which it understands as a treatment that will talk the sick into believing they can lead normal lives.

Doctors - so often the refuge of desperate people trying to find out what is wrong with them - should as far as possible be excluded from the process. Even those working for the DWP have opinions that are "unfounded, of limited value and counter-productive", while GPs are "unaware of the importance of work, the absence of which leads to depression, poor health, higher rates of suicide and mortality, poverty, and social exclusion". (The quotations are from a 2005 study from the Unum Provident Centre for Psychosocial and Disability Research at Cardiff University, whose ideas and rhetoric infuse the reform. Unum Provident is an American firm, the largest disability insurance company in the world, which is currently in litigation in different countries for refusing to pay out on some of its policies.) A private agency has now taken over the running of its first GP surgery here, and doctors dealing with disability living allowance are advised not to invite patients to explain how their condition affects them.

Features of the reform are familiar from other policy areas. First, a demonisation of a needy or vulnerable group, followed by a rebranding: so claimants become not even "clients" but "customers" (as in the just published "Commissioning Strategy" document); incapacity benefit becomes employment and support allowance; sick notes are redrafted for doctors to certify, not what patients can't but what they can do. Next come "partnerships", on an unchallenged assumption that the public sector has failed. The new system is farmed out to for-profit or non-profit-making agencies paid by results. This entails targets, and where targets are set, sanctions follow, for any who "fail to recover".

There are features of the new programme that look intelligent and humane, doubtless owing much to the efforts of the disability lobby. They include a longer and more flexible bridging period (and a back-to-work grant) between benefits and work, and a broader view of "work- focused" activities. The crunch will come with those described as not able or prepared to engage "because [of] the nature and severity of their health condition, or more a matter of attitudes, perceptions and expectations which may or may not be accurate . . . It is a question of what the claimant cannot do vs what they will not do."

For the reform stakes everything on a gamble: that a large proportion of claimants, present and to come, are fit enough to work. There seems no way of proving or disproving this, other than trying it out, at the risk of much waste of public money, and much personal grief. Deliberate rejection of the "medical model" deprives us of all we might have learned (from the wealth of data available) of the impact of illness on our society.

I have scratched my head long and hard over this reform (among other things sending out lengthy submissions to all concerned during the long consultation phase in 2005-2006) because so much in its theory and rhetoric contradicts my own experience: of chronically and seriously ill family members and friends, of several years as a Mind volunteer, and further years of peripheral involvement in action groups for chronic fatigue conditions. All this has indelibly impressed me with the courage of many who live with horrible complaints, the sheer hard work involved in their day-to-day coping, their relentless search for any amelioration, let alone cure, often at costs hard to spare from limited resources.

I have witnessed, too, and at close quarters, the hurt and stress of living difficult lives as people have to do, in a perpetual culture of disbelief and threat, where some of the most valiant are blamed for their conditions and conflated with the alleged "can't work, won't work" unemployed. For the message of the reform that comes across, for all its fashionable rhetoric, is that a person is valued only as a productive unit. Compassionate cases aside, those too ill to work are outside society and money spent on them is wasted. Sickness, disablement and inability to work have no place in a modern society - they can't and shouldn't be afforded.

No one pretends that illness is not a blight, imposing personal and social costs going far beyond the financial; but - pace the government - no one as yet knows how to remove it from the human condition. Why waste valuable time and resources on an ill-founded reform, when they could instead be used to further understanding of the real impact of illness on our society?

Alison Ravetz is a professor emeritus of Leeds Metropolitan University who writes on housing policy and welfare reform