Hours after confirming that the controversial £26,000 per annum (£500 per week) benefits cap for couples and single parents is being rolled out nationwide, Chancellor of the Exchequer George Osborne has indicated he is giving consideration to lowering the cap even further.
Treasury sources say that if the current cap proves successful in getting people back to work, it could be lowered by a further £6,000 to £20,000 p.a. or £384 per week.
The benefits cap, which was introduced in the London boroughs of Haringey, Enfield, Croydon and Bromley in April, applies to people receiving Jobseeker’s Allowance, Child Benefit, Child Tax Credits, Housing Benefit and other key support from the Government. It does not apply to people who receive Disability Living Allowance or its successor, the Personal Independence Payment, or some other benefits, such as Industrial Injuries Benefit or a War Widow or Widower’s Pension.
Those in receipt of Working Tax Credits are not affected by the cap, but it will apply to those who get £59.75 a week Carer’s Allowance, to help them look after someone with “substantial needs”, and people in receipt of Employment and Support Allowance.
Speaking to BBC Breakfast on Monday, Work and Pensions Secretary Iain Duncan Smith has defended the current benefits cap of £500 a week, saying “a very, very significant number” of people had gone out to work in affected households within the four London boroughs where the cap has already been implemented. He added: “What the jobcentre staff have told us as we have been going round is that they have seen a genuine increase since they have alerted people to the fact that they are likely to be in the cap.
“This is both about saving money and, more particularly, about changing a culture that had left families, particularly large families, finding it easy and a reality for their lives to stay out of work on taxpayers’ benefits.”
Mr Duncan Smith said the “greatest effect” of the benefits cap would be in London and the South East.
“The key principle behind this all over the country is that those who work, those who are trying to do the best in their households, do not see others who are down the road, who are on benefits, on welfare, actually getting more than they do,” he said.
Speaking on BBC Radio 4’s Today programme on Monday, Mr Duncan Smith rejected suggestions that jobs were not available for claimants who wanted to go back to work.
“The private sector has been providing jobs. Every week something like half a million new jobs are in the jobcentres and out in the universal job match that we have now produced.
“I believe that we are already seeing people go back to work who were not going to go back to work until they were informed of the cap. I believe that this will show, as we go forward, that people who were not seeking work are now seeking work because that is the way to avoid the cap.”
Mr Duncan Smith said he was right to claim that benefit claimants subject to the new welfare cap were being forced into work, despite being criticised by the government statistics watchdog for making the assertion.
The work and pensions secretary said: “I have a belief I am right,” as he published polling showing how popular the measure was with the public. He also denied claims that families subject to a cap would be made homeless, arguing that “the homelessness figures have hardly moved at all”.
Duncan Smith was criticised by the Office for National Statistics (ONS) for claiming the cap had led to 8,000 people finding work. He was told by the ONS it was not possible to find any causal link between the cap and those finding work.
Refusing to acknowledge that 8,000 finding work since the cap is not quite the same as 8,000 finding work because of the cap, an unrepentant Duncan Smith told Today’s listeners: “You cannot absolutely prove those two things are connected – you cannot disprove what I said. I believe this to be right. I believe we are already seeing people going back to work who were not going back to work until this group were capped.”
He hit back at presenter John Humphrys, who challenged him over comments by the leader of Haringey Council – where the scheme had been piloted – who said that 740 families in the borough had been severely financially disadvantaged by the cap but only 34 family members had found work.
“What you are doing – as always happens in the BBC – you are seeking out lots of little cases from people who are politically motivated to say that this is wrong,” he said.
In a separate development, Conservative party chairman Grant Shapps has suggested child-related benefits for unemployed parents should be capped at two children. The minister also suggested unemployed people aged under 25 should be denied housing benefit so they continued to live with their parents for longer.
Talking to the Mail, Mr Shapps said: “Welfare should not be a way of life.
“If you are a working family and you have another child, you know it’s going to mean quite a severe impact on your living costs. Yet in the welfare system, it’s almost turned on its head, so additional children are actually recognised, with no limit.”
Addressing the housing benefit proposal, he added: “A young person who’s out of work is given an advantage over a young person who’s in work when it comes to moving away from their parents because of housing benefit.
“So there’s a bizarre incentive which means if you’re not in work you can more easily move out and get your own place. That is a matter of basic fairness.”
