Press release

People are moving into work as a result of the benefit cap

This was published under the 2010 to 2015 Conservative and Liberal Democrat coalition government

The benefit cap is providing a clear incentive to work, new DWP research proves.

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The benefit cap is providing a clear incentive to work, new research from the Department for Work and Pensions proves today (15 December 2014). It has long been suspected that the benefit cap was having a positive impact on people’s lives, compelling them to find work, and the publications now show this is undoubtedly the case.

As part of the government’s long-term economic plan the benefit cap was introduced so that people on out-of-work benefits do not receive more than the average hardworking family earns.

The research shows that:

  • those who would be impacted by the cap are 41% more likely to go into work than a similar group who fall just below the cap’s level, but 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

  • before the benefit cap fewer than 300 of the highest claiming families got over £9 million in benefits every year – the cap is preventing this and saving millions of pounds a year

  • 38% 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 – 2 in 5 (40%) of those who said they had looked for work because of the cap in February actually entered employment by August

Work and Pensions Secretary Iain Duncan Smith said:

We know that the benefit cap has had a real impact in changing attitudes and behaviours, and now we have evidence showing that our welfare reforms are encouraging people into work.

By putting an end to runaway benefit claims and introducing a system which guarantees you will always be better off in work, we are incentivising people find employment. Every month hundreds of people who have been affected by the cap are making the positive move into work – gaining the financial security and esteem that comes with a job and a pay packet.

As part of our long-term economic plan, we’ll continue to support people to break free from welfare dependency so they can look forward to a better, more secure future for themselves and their families.

In London where the highest number of people are subject to the benefit cap, scare stories claimed that people would be pushed out of the capital. In actuality, of those capped households living in inner London that moved, 84% continued to live in the central boroughs. In London there is also larger likelihood of capped households moving into work with those in scope for the cap being 70% more likely to go into work than their equivalents just below the cap.

One interviewee in the research said:

It gave me the shock of my life. But it’s given me the kick I need. I can see what the gentleman was saying, why should we pay for your lifestyle. We should want to work. We shouldn’t sit on our backsides watching Jeremy Kyle. I genuinely do want to work.

More about the benefit cap

Introduced in April 2013 the benefit cap is set at a rate of no more than £500 a week for couples and families and £350 for single people – £500 a week is equivalent to a salary of £34,000 a year after tax.

Over 50,000 households have had their benefits capped since April 2013 and since then 23,900 are no longer impacted – 12,000 because they have found work or are no longer claiming Housing benefit at all.

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Published 15 December 2014