Press release

Benefit cap: 950 households a month move into work, stop claiming Housing benefit or reduce their claim

Around 31,000 households who had their benefits capped have moved into work, reduced their Housing Benefit claim or no longer claim it.

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Based on new figures published today, that’s an average of around 950 a month – or 44 every working day. Of that 31,000, over 20,000 have moved into work.

The figures come as the UK’s labour market enjoys bumper growth – with a record number of people in work and wages continuing to rise.

The number of vacancies is also at a record high at more than three-quarters of a million – providing more opportunities for people to move off benefits and into work.

Work and Pensions Secretary, Iain Duncan Smith, said:

Our welfare reforms have all been about supporting people back to work, and restoring fairness to the benefits system.

The benefit cap is one example – and ends the perverse trap that used to exist, where it was often more worthwhile for people to remain on benefits than go out to work.

Alongside Universal Credit, this reform ensures that people are better off in employment and so acts as a powerful incentive to move into work. Today’s figures show its success, with significant numbers of people doing just that – taking advantage of the near record number of opportunities available in the UK economy.

The benefit cap, which continues to provide a clear incentive to work, limits the amount of benefits a household can receive to a maximum of £26,000 a year, the equivalent of a salary of £34,000 a year.

Under new measures announced at the Summer Budget 2015, the benefit cap will be reduced to £23,000 in Greater London, and £20,000 elsewhere in the country, better reflecting the circumstances of many hardworking families.

Since the cap was introduced in April 2013, around 70,000 households have had their benefits capped. 49,000 of those households are no longer subject to the cap, with over 20,000 of them moving into work, and a further 10,000 reducing their Housing Benefit claim, or no longer claiming Housing Benefit at all.

The government has also provided local authorities with £500 million of funding to support people transitioning to our welfare reforms, with a further £870 million to be provided over the course of this Parliament.

To increase the incentives for claimants to move into work, households where someone is entitled to Working Tax Credit are exempt from the benefit cap. All households with someone, including a child, in receipt of a disability-related benefit are also exempt from the benefit cap recognising the extra costs disability can bring.

Currently 98% of households in receipt of Carer’s Allowance who have a benefit income above the cap are exempt from the cap. This government values the contribution carers make and recently announced that an exemption from the benefit cap for recipients of Carer’s Allowance will be brought in later this year.

More information

Since its introduction in April 2013, these statistics show the number of households who have:

  • moved into work
  • had a reduction in their Housing Benefit
  • moved off benefits altogether

Research has shown that the cap is motivating people to find work.

Those impacted by the cap are 41% more likely to go into work than a similar group who fall just below the cap’s level, and this trend didn’t exist before the cap was in place – indeed those with higher weekly benefit used to be less likely to move into work.

Thirty eight per cent of those capped said they were doing more to find work, a third were submitting more applications and 1 in 5 went to more interviews.

Where households said they intended to seek work because of the cap in February 2014 (45%), by August the vast majority of them (85%) had done so.

Two in five (40%) of those who said they had looked for work because of the cap in February actually entered employment by August.

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Published 5 February 2016