the unnecessary interference of the state

At my place of work, we have a good history of employing the disabled, even before any of the legislation was put in place. There are, however several things that concern me about the situation.
We currently have two disabled people working with us; the first one- for the sake of argument lets call him Stephen- is a little slow upstairs but he’s fit and strong and he works hard. Stephen doesn’t get paid for the work he does. He gets an allowance from the government (i.e. Paid for by you and I) which will be affected if he gets paid for the work he does. What the hell is wrong with this country? He may be disabled but he is more than capable of doing a job of work, so why is the system set up to penalise him for doing so? Well, it doesn’t penalise him as such but the company we work for gets his work for free and, in effect, his coworkers are paying his wages.
Wouldn’t it be simpler to deduct whatever he earns from his benefits? He is a valued member of our team and a big help, ideally he could even work full time and earn his own money. And why the hell not? Just because he has a disability is no reason to keep him as a burden to the taxpayer when he is willing and capable of supporting himself.

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