A man has set himself on fire outside a Birmingham jobcentre after what reports suggest was an argument over benefit payments.

The 48-year-old unnamed man is understood to have doused himself in flammable liquid and tied himself to railings after a dispute inside the Jobcentre Plus in the Selly Oak area on Thursday.

Police arrived at the scene and extinguished the fire after the jobcentre was evacuated.

The man was later taken to hospital with burns to his legs.

A source with links to staff at the centre told the Guardian the man had been recognised by the staff as vulnerable with outstanding health issues but had recently been found fit to work precipitating a move from one benefit to another. This had caused payment delays.

An unnamed witness who spoke to the Birmingham Mail said: "The guy came into the jobcentre with petrol and made threats, so they evacuated the whole building. I think it was something to do with a payment he had not received.

"He tied himself to the railings and tore open the bottom of his trousers. You could smell the fumes from the liquid he used, but the police arrived by the time he had set himself alight and they managed to put him out quite quickly.

"He would have to have been very desperate to have done something like that. It's shocking that somebody could have been driven to those depths."

West Midlands police said the man was undergoing a mental health assessment.

A spokesman for the PCS union, which represents staff at the centre, said: "While we still don't know the full circumstances, it's tragic and very sad that anyone could be driven to such a desperate act."

The incident follows an attempted suicide in a Liverpool benefits office earlier this year.

Earlier this month the Guardian revealed that senior Department for Work and Pensions (DWP) managers had sent a note to all staff warning that they take the "utmost care and sensitivity" when dealing with claimants, as a result of "difficult changes which some of our more vulnerable customers may take some time to accept and adjust to".

The email added: "Very sadly, only last week a customer of DWP attempted suicide" – which it added was "said to be the result of receiving a letter" informing him that his sickness benefit would be cut off.

Last year disability campaigners warned ministers that flaws in work capability assessments which determine the level of support and benefits people are entitled to, would lead to some mentally ill people taking their own lives.

The Guardian understands that internal DWP figures do not suggest a rise in such incidents in recent months.

The DWP said that it was now a matter being investigated by the police.