Benefits cap leads to more people in work, says government


Iain Duncan Smith "This is about saving money and changing a culture"

More than 12,000 people have moved into work after being told about the benefits cap, the government says.

The cap, on the total amount of benefits that non-working people aged 16 to 64 can receive, has begun rolling out across England, Scotland and Wales.

Couples and lone parents will now not receive more than £500 a week, while a £350 limit applies to single people.

But critics say the changes will hit parts of the country unfairly, and will not tackle underlying problems.

Those in work who also claim benefits, are not affected by the cap.

"What the job centre staff have told us is that they've seen a genuine increase [in people looking for work] since they've alerted people that they're likely to be in the cap," said the Work and Pensions Secretary Iain Duncan Smith, who has spearheaded these changes.

He argues the current level of benefit discourages people from looking for work.

"We will always be there to support those who need help but the days of blank cheque benefits are over," he said.

The Department for Work and Pensions (DWP) said that 12,000 claimants had found jobs over the last year, after being contacted by job centres.

The job centres warned them they might have their benefits capped if they did not find employment.


Key payments including jobseeker's allowance and child and housing benefit count towards the cap.

The Department for Work and Pensions estimates about 40,000 households will be affected.

Liam Byrne "The truth is that there is a huge loophole in the benefit cap"

Critics say the cap fails to tackle underlying issues, such as the difficulty of finding work, the cost of housing and regional differences.

The National Housing Federation (NHF) agrees with the principle that those on benefits should not earn more than those in work, but it argues that the cap does not work in London and the south-east, where rents are high.

Those affected by the cap have their housing benefit reduced.

"In many parts of the country, families won't be able to pay high private rents because of the cap," said Ruth Davison of the NHF.

"There will be more demand for than ever for affordable housing, particularly in Greater London where nearly half (49%) of the people affected by the benefit cap live."

The cap will be completely implemented by 30 September, and will then become part of the Universal Credit system.

Highcharts graph
Once a month

The cap, not yet law in Northern Ireland, is said to reflect the average working household income.

It has already been implemented in four London boroughs - Haringey, Enfield, Croydon and Bromley - since April.

Start Quote

The cap is outrageous. It seems unfair that I contribute, but when I need it, it gets taken away.”

End Quote Geoff Parker-Chance Benefits claimant

The benefits cap applies to people receiving jobseeker's allowance, child benefit, child tax credits, housing benefits and other key support from the government.

There is no cap on people who receive Disability Living Allowance or its successor, the Personal Independence Payment, as well some other benefits, such as industrial injuries benefit or a war widow or widower's pension.

"The benefit cap returns fairness to the benefits systems," Mr Duncan Smith said. "It ensures the taxpayer can have trust in the welfare system and it stops sky-high claims that make it impossible for people to move into work.

"The limit of £500 a week ensures no-one claims more in benefits than the average household and there is a clear reason for people to get a job - as those eligible for Working Tax Credit are exempt."

About £95bn a year is currently paid out in benefits to families of working age.

The government hopes the cap will save about £110m in the first year, and £300m over the next two years.

Moving out

The four local authorities where the cap has been introduced say they are struggling to introduce the measures.

One of them, Haringey, said it was given £1.8m by the government in the first year, to help with the transition, and ease cases of hardship.

But it estimates that this year alone it will have to add £2m of its own money to pay for the changes, which it said is not sustainable in the longer term.

One alternative is for families to move to areas where housing costs are lower.

"We will have to consult on what that means on potentially requiring families to move outside London, which I think is very difficult," said Claire Kober, the leader of Haringey Council.

Rebecca is a Sunday school teacher in Haringey, who may be affected by the cap when transitional support runs out.

She told the BBC she would not want to move away.

"I think moving out from my community will be missing me. If they move me out, I will start from zero," she said.

Geoff Parker-Chance, from Clacton in Essex, has worked for most of his life, but has been claiming benefits for the last year.

He believes the new system is unfair.

"The cap is outrageous," he told the BBC. "It seems unfair that I contribute, but when I need it, it gets taken away."


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  • rate this

    Comment number 20.

    The Office for National Statistics has already told IDS that there is no way that he could give a figure for the number of people encouraged into work due to the benefits cap. He has just carried on, however, and repeated the untruth regardless. Perhaps this article should refer to the ONS advice to him!

  • rate this

    Comment number 19.

    I think the Conservatives are doing a brilliant job in tough times, it's about time someone made it more beneficial to work than not to work.

  • rate this

    Comment number 18.

    Sickningly perverse rhetoric from an extemely hypocritical man. Of course there should be a benefit cap. There should also be a cap on Rents so that Landlords cannot swallow up benefits . There should be a Cap on MPS Pay and on Banking Bonuses. " Helping people of beeifits" migh be best served by creating an economy where living wages actually exist. I detest this wicked man.

  • rate this

    Comment number 17.

    6.Legal Alien
    "...make....the South-West an upper class ghetto"

    The South west an Upper Class ghetto?
    Bloody Hell - Have you ever been here?

  • rate this

    Comment number 16.

    wonder where the money is going with this cap propyl into mps pockets so they get there rise

  • rate this

    Comment number 15.

    Dear Government,

    This is not something to proud about a reduction in spending is nominal to all the missing tax receipts from the countless loopholes you have. Reduce these and start generating more income, that will plug your deficit.

  • rate this

    Comment number 14.

    I am a middle manager professional who has been working for 20 years full time, have a mortgage, wife and 2 kids to support and dont earn that much, if its a cap to force people to work then it should be at about £10k, not the average wage.

  • rate this

    Comment number 13.

    A benefit cap set at the equivalent of £35k is a lot of money. I wish I was on £500 a week after tax!

    I have to choose where I live based on how much I earn, how many kids I can afford to sulport. Its not unfair to ask those in receipt of benefits to make similar choices.

  • rate this

    Comment number 12.

    And media / government persecution and blame for the financial crash continues.

    Doesn't serve any purpose, doesn't create any employment and the real small group of scroungers aren't reading and watching the news and don't care anyway.

    No, aimed squarely at the intelligent, low paid employed so they thank their lucky stars and don't get any ideas about raising the minimum wage or striking.

  • rate this

    Comment number 11.

    This is a great idea! All benefit claimants should be made to wear a cap so that they can be identified at a distance.

  • rate this

    Comment number 10.

    As a pensioner with no benefits of any sort a sum of of £26000 would make me feel rich beyond the dreams of avarice.

  • rate this

    Comment number 9.

    This stinks. It has all the hallmarks of the Tories appealing to the Daily Mail end of the party. Taking money from some of the most vulnerable in our society to patch up the mess made by the Tories' rich banker friends. Disgraceful.

    And it probably won't work any way. Most of the people on benefits don't want to stay on them, despite what the right wing press would have us believe.

  • rate this

    Comment number 8.

    £500 a week is still too much. There are plenty of people who work hard and earn less than this - they're paying tax to fund a lifestyle for others that they themselves can't afford. This is not right.

  • rate this

    Comment number 7.

    That 'Cap' is dangerously close to what I take home after taxes from my paying job. No wonder people weren't bothering to work if they could make more by doing nothing.

  • rate this

    Comment number 6.

    Great idea - squeeze the vulnerable even more so we can give politicians a raise, hedge funds a tax break and cut millionaires tax rates. Genius!

    While we're at it, let's make London and the South-West an upper class ghetto. Perfect!

  • rate this

    Comment number 5.

    0.07%of the total welfare budget in savings...its hardly worth talking about.

  • rate this

    Comment number 4.

    i dont earn £500 a week after taxes and still manage to pay my bills, rent and have spare for beer. No wonder we have a culture of reliance in this country, cut it back even more! Benefits are supposed to be a safety net not a lifestyle choice!

  • rate this

    Comment number 3.

    Work? IDS? Your joking...

    They have been put on the new 'full time' A4E contracts, so they are off the job seekers books, or they are in part time work (which disables anyone being able to afford private rent FACT) The sooner this government is voted OUT in 2015 the better. Fail

  • rate this

    Comment number 2.

    Some genuinely needy people will be hit hard by this, but on the whole, its long overdue and will send out the right message.

    Don't make live choices which you cant afford, and take responsibility for your actions and lives, which includes paying for your own life choices.

    Nobody should earn more than minimum wage for sitting about doing nothing, especially when its by choice.

  • rate this

    Comment number 1.

    How do they know these people found jobs because of the threat of the cap? More likely the temporary seasonal hiring period is here. Manipulated/incomplete statistics, I suspect


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