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 1460.

    The benefit that is actually being capped (as its the only benefit big enough to reach the cap) is housing benefit which doesn't end up in the claimants pocket but their landlords pockets, IF it results in pushing exhorbitant rents down thats a good thing. What I object to is it being marketed as cutting exhorbitant benefits paid to "scroungers living the life of Reilly on benefits", its not

  • rate this

    Comment number 1459.


    'The problem isn't high benefits, its low wages.'

    Not only that, but unsustainably high housing costs in large parts of this country. Brought about by the Tories 'Right to Buy' policy in the 80s, coupled with a lack of new housing at the same time.

  • rate this

    Comment number 1458.

    wheres the jobs

  • rate this

    Comment number 1457.

    This Government is stupid. You can not blame people for living in expensive homes when it is offered to them by the councils who refuse to rehouse them and send them to expensive private homes. stupid policy is going to fail. watch this space. Who will suffer ? we need an Arab summer or the army should take over like in Egypt and arrest Ian Duncan for causing fear and hardship on innocent poor.

  • rate this

    Comment number 1456.

    superal1966 will lead to many families threatened with homelessness being offered social housing...

    Actually what's been happenning is people being offered housing over 100 miles away, as far as leeds. Social cleansing of london will be the result of this cap.

    Also should I wonder why the editor's picks are all in favour of mass homelessness, and against most of the comments here?

  • rate this

    Comment number 1455.

    I cannot believe the volume of people who are not reading the comments before they post. How many times do we have to declare that earning 26k on JSA is not feasible for the majority of claimants? Don't get sucked into the media spin machine - it is creating a false impression in people's minds, in order to increase the governments/IMF's stranglehold around the throats of the most vulnerable.

  • rate this

    Comment number 1454.


    the government have refused to bring in any form of rent control as this would hurt Tory party supporters there is no way they would do that

    This is why they set the cap at 26k the benefit claimant gets £3728.92 to £7800 a year to live on and pay council tax the rest goes to the landlord in rent

  • rate this

    Comment number 1453.

    26k is the top rate or maximum annual benefit payout , not the standard rate so stop comparing your salaries (if you are working) with it as many claimants don't get anywhere near that amount. IDS keeps telling people to get off benefitsand in to work, but there is a fundamental problem in that there are only 500,000 vacancies but 2,500,000 unemployed which he won't acknowledge.

  • rate this

    Comment number 1452.

    The problem isn't high benefits, its low wages.

    The division of the working poor against the unemployed poor is a classic conservative ploy.

    Why do we always compare ourselves against those closest to us. What about the insanely wealthy individuals who pay little or know tax?

    I doubt the working poor and the unemployed poor will ever see beyond the way they are manipulated. Tragic.

  • rate this

    Comment number 1451.

    Tories are busy finding little ways that won't affect their squeezing money out of us in order to try and appeal to certain sections of the pop who they hope might vote for them.Last week,it was trying to get smokers "on-board",thinking that all Plebs are smokers.Now it's Benefit Cap:it'll save hardly anything in Budget terms but Tories think it's a vote winner. Roll on 2015. Eton Rich-Boys OUT !

  • rate this

    Comment number 1450.

    I have to travel an hour each way a day to work. I earn just £13,143 a year. Surely anyone on benefits above this amount are making a mockery of what I am earning. I am not entitled to nor receive any benefits

  • rate this

    Comment number 1449.

    1438.board....I work for a major bank and don't get paid 26k! I manage to survive on less than that amount, so why should someone simply be handed this money just for sitting at home doing very little? perhaps wages should be increased?

    Eureka! Your last sentence is what we should be tackling. You could always mess up for a 'golden handshake.' Or is that for the select few who do it big time?

  • rate this

    Comment number 1448.

    considered the possibility that the 12000 were already seeking work & would have got jobs regardless of any DWP letter they received - typical 'Daily Mail style' misuse of statistics. Also note thefigures were produced by DWP not the ONS who normally publish Govt stats & make sure they're done properly

  • rate this

    Comment number 1447.

    I read throughout the comments that poverty is affecting a high percentage of our children and adults too. Poverty surely is relative. Those who live in central Africa and the like they live in real poverty. We do not. We go to Tesco's still and have a few beers, maybe ciggies and every year we just have to have a holiday. We say when we are in poverty because we still want those luxuries.

  • rate this

    Comment number 1446.

    1438. board

    I don't understand why you have been marked down as you have hit the nail on the head.

    Instead of attacking the Welfare State, we should be focusing on increasing wages. The Tories are Robin Hood in reverse; why should so few make so much at the expense of the masses.

    The Welfare State allows people to 'get by'. Wages need to be increased to allow people to enjoy living.

  • rate this

    Comment number 1445.

    @1430. Knut Largerson
    In her declining Years Baroness Thatcher regretted snatching Milk from children.
    What will IDS regret?
    She sold of the utility companies, council houses, anything she could to buy votes and look where all that's taken us. This load of Tories have the same mentality, the only difference is that Thatcher didn't do U-turns!!

  • rate this

    Comment number 1444.

    I'm not sure what is worse, that people exploit the system or that it has been constructed to allow exploitation.

    It should never be that a life on benefits is more financially rewarding than a life of work. To take home £500 a week you would need to earn £35k. Well above the £26k average and far above the £12-16k median wage.

    Excluding disability benefits should be equal to the median wage.

  • rate this

    Comment number 1443.

    @430 i totally agree with you being in a similar situation myself

    I dont agree with the dont pay in dont pay out view, as a young person (18-24) it was hard enough trying to get my first job against more experienced workers, i feel that it should be pay in pay out once past the age of 24 but before that i think people need the support

  • rate this

    Comment number 1442.

    444 - the £500 includes child benefit, housing benefit and job seekers allowance. Someone on minimum wage gets minimum wage, housing benefit and child benefit. Minimum wage is what £7/hr = £280/week, JSA is what £80/week. Minimum wage IS BETTER OFF.

  • rate this

    Comment number 1441.

    As always, they bully the poor, and then have the gall to blame the victims for it!
    How long have we been waiting for action on the billions in corporation tax owed by multi-nationals, which the government is happy to ignore?


Page 1 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.