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."


More on This Story

The BBC is not responsible for the content of external Internet sites


This entry is now closed for comments

Jump to comments pagination
  • rate this

    Comment number 200.

    Cameron, But You have not sacked anyone yet.
    That's why you have not stopped spending Money like the last Labour Government.

    To many paper pushers still employed.

  • rate this

    Comment number 199.

    I have heard there's a 6 month job 700 miles away. Would anyone currently in employment be happy doing this commute themselves?

  • rate this

    Comment number 198.

    "There should also be a cap on Rents "

    Quoted by someone who never researched the effect of rent controls. UK tried rent controls for nearly 70 years. Rent controls created Rachman and a shortage of private rented housing.

    BTL landlords are running a business which is my they are entitled to deduct costs of business (including bank interest) from rental income and get taxed on net.

  • rate this

    Comment number 197.

    A lot of people seem to be missing the fact the vast majority of people will not be won't be getting anything remotely like £500 a week.
    Jobseekers Allowance is £71.70 for over 25s. Unless you qualify for other benefits that is it.

    Don't be fooled into thinking everyone out-of-work is living it up on £500 a week, they're not!

  • rate this

    Comment number 196.

    Who cares what IDS said, the government has done the right thing by capping the out of control benefits in this country. They should go further and have a max child benefit and a rule that you have to accept a job if offered or benefits stopped. When will the left wing cloud cuckoo land residents wake up and realise WE CAN'T AFFORD IT! Plus look at what benefits reliance has done to our society.

  • rate this

    Comment number 195.

    @ 161. CodeDebugger

    there is not 2.5 million jobs for the unemployed


    No, but there are 500,000. When there are actually zero jobs available the 'there are no jobs' defence will have merit. Until then, start with one of the 500,000 and work your way up - like everyone else has too.

    The real shame of all this is it is our children that will have to pay down this entitlement driven debt.

  • rate this

    Comment number 194.

    I can't see that anyone on a maximum benefit of £26,000 net is going to walk into a £33,000 job inclusive of income tax and national insurance. It's easier to take the money and run. As taxpayers, the rest of us are comprehensively stuffed.

  • rate this

    Comment number 193.

    £18,200 tax free, wish I was on that as it is more than most hard working people get.

  • rate this

    Comment number 192.

    "134.Mister Point
    Is this what the government think is the minimum cost of living these days? "

    No, that's what the Mail wants you to believe. Very few, a few of thousand (mostly in London), are affected by the cap, The vast majority of the benefit spending, after pensioners, goes directly to landlords. High housing costs with low wages is the financial problem, not the unemployed.

  • rate this

    Comment number 191.

    How is it IDS is able to pull more figures from his backside and go unchallenged by the BBC?
    We know this "poll" was only ever going to have one conclusion - I mean I made a poll yesterday and apparently 98% of the public think IDS is scum. Not my words, it was the poll you see.

    Let's see how these figures were arrived at. What work are these people now in? Where did 12k jobs suddenly come from

  • rate this

    Comment number 190.

    Just noticed too people saying similar to me that the cap is near to their take home pay after tax, or they wish this wish they could take home this amount after tax, I just wish I could this before tax was taken I am a long way off and I don't get any top up benefits either as I am not entitled to them, why if we dont get this average living wage?

  • rate this

    Comment number 189.

    148, well said and bang on the button. This idea of demonizing people on benefits and cutting the benefits is a ploy that's being used for a couple of reasons: number 1 reason is to save money by picking on the most vulnerable in society. Reason number 2 is to provide a never ending source of cheap slave labor for fatcat bosses to prey on with no decent job conditions or security etc. Pathetic.

  • rate this

    Comment number 188.

    The modern (Beveridge Report) Welfare State wasn't invented to support everyone - only those who genuinely couldn't help themselves. This seems to have suffered mission-creep and now covers far more people than was intended.

    I'm not sure a cap is the answer, but means testing seems to be a bridge too far.

    But this isn't a bottomless pit - and it's our money being shovelled out!

  • rate this

    Comment number 187.

    People have to live within their means and having to live on benifits doesn't mean luxury benifits of the latest 60" 3D tv, sky tv etc.
    But this cap does not go far enough as a couple we earn £1500 a month and get by comfortably. So £500 a week is way too much, cut it in half.

  • rate this

    Comment number 186.

    A step closer to the welfare system being a safety net that it is suppose to be!

  • rate this

    Comment number 185.

    About time. We've all had to make financial sacrifices in the past few years, but every time I see families on benefits they have Sky TV, endless mobile phone conteracts and a house full of pets.

  • rate this

    Comment number 184.

    I take home a bit more than £500 a week and I have to say it is great knowing that virtually no 'Job Seeker' or 'Lone Parent' is getting more than me. Driving home tonight past my local estate will be a much a much more pleasant experience. Well done Government and keep it up.

  • rate this

    Comment number 183.

    £26,000 cap for a couple? Wish I could get anywhere near that. I earn £14,400 a year before deductions and spend almost £4000 of that on fuel to get to work.
    Guess I'm the stupid one, why should I work so hard and travel for a few hours each day to earn very little, when I could go on benefits and not worry until the household income gets to £26,000 Good message from the government

  • rate this

    Comment number 182.

    @144 - While municipal infrastructure would need to improve along with the increases in housing stock, I'd wager that those costs are lower than the expense of subsidising rent in a shortage situation.

  • rate this

    Comment number 181.

    Reverend Duncan Smith was an officer in the military.

    Nannied and cotton wooled by the state? What does he know about life in gainful employment??

    Nothing at all, judging by his personal record. But he does know all about moralising to others.

    The hypocrital clergy were always telling others what to do but never doing a stroke of work themselves?


Page 64 of 73


More Business stories



BBC © 2014 The BBC is not responsible for the content of external sites. Read more.

This page is best viewed in an up-to-date web browser with style sheets (CSS) enabled. While you will be able to view the content of this page in your current browser, you will not be able to get the full visual experience. Please consider upgrading your browser software or enabling style sheets (CSS) if you are able to do so.