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 440.

    410 Rubbish mate none of the poltical elite Labour,Tory & Liberal care what I & people like me think or they would not have let this situation happen. Secondly I am quite happy with my life & thirdly I do believe in the concept of a welfare system for the old & sick. The current one has become a way of life for some people & that is wrong.

  • rate this

    Comment number 439.

    384. AndyC555 -You are 100% correct, its tax payers money earned by you and me. But the simple fact is the biggest abuse of public money in recent times has been the bank bailouts and two wars that have cost Billions as well as the money splashed out on cannibals and extremists in Syria. Its funny how the Mail and Sun wont raise those issues of public watse?

  • rate this

    Comment number 438.

    No one seems to mention the fat cats and their slave wages.

    If wages went up at the same rate as directors pay, then people on benefits wouldn't be getting as much as people in work, and people in work wouldn't need top up benefits.

    Don't demonise the poor, fight the greed of the rich.

  • rate this

    Comment number 437.

    @397. The banks haven't "taken" anything. The Gov't bought shares in them and will sell them at a profit as to do otherwise is political suicide.

    Of course, that doesn't help the damage which has been caused by liquidity remaining tight, but this myth of evil bankers "stealing billions" is as ridiculous as blaming benefit claimants for "stealing billions".

    At least the banks will pay it back!

  • rate this

    Comment number 436.

    This doesn't mean people are finding jobs that can support their families, it just means they are forced to find jobs that can make up for the money they're losing in the benefits cut.

    It's still not sustainable or useful employment.

  • rate this

    Comment number 435.

    Being quite frank, I think this is a kick in the teeth for those who currently work. A £26K cap is insulting to those who work all the hours available and get a lot less than this whilst others are given this on a plate.
    these benefits are still more than anyone will earn so will achieve nothing in the long term.

  • Comment number 434.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • rate this

    Comment number 433.

    On this disgusting Nick & Margaret "harass the unemployed" ghoul show there was a working woman babbling on about how she works 60 hours a week.

    I really felt like punching the monitor.

    IDIOTS like this are the problem. And of course she's obsessed that the unemployed people had more than her.


  • rate this

    Comment number 432.

    North/South divide. Live in North = lower rents, but very little work to be found and at very poor pay levels. People used to go to London to find work. Now they would have to live on the street.
    The cap will make rents in the south unaffordable for a large family. Effectively Tory social cleansing . Shift (dare I say it ) the Plebs out . Away from friends,family and support networks.

  • rate this

    Comment number 431.

    No one seems that bothered by the work based benefits that support a large number of jobs in this country. We used to have nationalised unprofitable industries, now we have state subsidised jobs provided by either uneconomic businesses or those exploiting the tax system to bolster profits - that is a bigger scandal and greater cost than this trumped up social cleansing IDS seems fixated on.

  • rate this

    Comment number 430.

    I earn the minimum wage and work full time with no tax credits allowed, will this mean as the living wage seems to be set now at £26000 that my pay will increase from c£11500 to £26000? No thought not! Shall I now give up work and claim everything I can as I only have 8 years until retirement? Seems tempting.

  • rate this

    Comment number 429.

    @ 370 & 371
    You have absolutely no idea of how insulting and hurtful your comments are. Shame on you.

  • rate this

    Comment number 428.

    Cut the public sector fat cat salaries and pensions - ciil servants, teachers etc.. - before benefits.

  • rate this

    Comment number 427.

    The principle is correct but the level has not been set at the right rate. Large numbers of familties live on way less than £26k NET PAY - the level should be revised down to about £15k net which amounts to about £25k gross - and even that is being generous. Those in receipt of benefit should be required to work in a manner which would save society money thus partly paying for the benefits.

  • rate this

    Comment number 426.

    @ 407. mekajinn

    2.5 million unemployed... about 275,000 vacancies... you do the maths... it really isn't difficult.


    Your figures are wrong (in fact way off) but I've done the calculations anyway - the result it that there are 275,000 people not in work that could be. You have convinced me - it must be better out of work than in work for some. Thanks for clarifying.

  • rate this

    Comment number 425.

    @410 Da Happy Londoner

    A very enlightened perspective. Not like some of these other tory-loving

  • rate this

    Comment number 424.

    Wow, what radical concepts:

    - People who can work, should work.
    - And parents should support their own kids.

    Blimey, they will never catch on in Labour luvvie land though.

    "More champers Tony, before me march in protest!"

  • rate this

    Comment number 423.

    In principle I agree with a benefits cap but citing "being told about the benefit cap" as the reason for 12,000 more people being in work shows just how out of touch the government are.

    Have they considered the possibility that most people (admittedly not all) on benefits are fair, genuine, honest and normal people who do want to work, are trying to find work, and just trying to make ends meet?

  • rate this

    Comment number 422.

    Dear Gov,

    12,000 is about as significant in the world of statistics as 0.3% economic growth - in other words negligible.

    How are you getting on with the big one; tax avoidance?

    The wood AND the trees.

  • rate this

    Comment number 421.

    Hapless journalists fooled by simplistic statistics yet again. 12,000 people in this group have moved into work. How many would have moved into work before the cap was introduced?


Page 52 of 73


More Business stories



Try our new site and tell us what you think. Learn more
Take me there

Copyright © 2015 BBC. 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.