Latest Public Sector News

15.04.13

Benefit cap trial begins today

A trial of the benefits cap roll-out has begun in four London boroughs today, in a bid to save around £110m from the benefit bill each year.

Couples and lone parents will have their benefits capped at £500 a week, with single people limited to £350 in Haringey, Enfield, Croydon and Bromley. The cap is set to be rolled out across England, Scotland and Wales between July and September.

The cap will affect Jobseekers’ Allowance, income support, and child and housing benefits, but not disability benefits.

Speaking last week, work and pensions secretary Iain Duncan Smith said: “The benefit cap sets a clear limit for how much support the welfare state will provide.

“But it's also a strong incentive for people to move into work and even before the cap comes in we are seeing thousands of people seeking help and moving off benefits.

“We have a very clear message: ‘We will provide support to those who need it, but the days of outrageous claims giving people incomes far above those of working families are over’.”

Employment minister Mark Hoban, speaking on Radio 4’s Today programme, said: “I’ve been talking to advisers, talking to people who’ve been implementing these changes, and there is a very clear message I get, from talking to them, is that this has provided a spur to people, to get them think about getting into work, whereas perhaps in the past they haven’t.”

Figures released by the DWP last week suggested the number of people to be hit by the cap had fallen from 56,000 to 40,000, with thousands of claimants finding work through JobCentre Plus.

But Jonathan Portes, director of the National Institute of Economic and Social Research and a former chief economist at the DWP, said there was “no evidence at all” that the cap had affected people's behaviour. He added: “It may be that the benefit cap has indeed had the effect that Iain Duncan Smith would like it to have. That is perfectly possible but without doing the analysis – and it has not been done – you simply cannot say that and you shouldn't say it.”

Shadow chancellor Ed Balls said: “The benefits bill is rising under this Government because our economy is flatlining, inflation is rising and unemployment is high. The best way to get the benefits bill down is to get our economy growing strongly and get people back to work.”

Chris Goulden, head of poverty at the Joseph Rowntree Foundation, added: “Some of the country's poorest families must find £140 extra from their strained household budgets to pay council tax for the first time. Making up the shortfall will be beyond most, with working hours under pressure and benefits falling behind inflation. This tax hike will push people into poverty or cause more hardship for already very poor households, taking money from families who had little to start with.”

Anne Marie Carrie, from the charity Barnado’s, said: “If the Government is to meet its legal duty to eradicate child poverty by 2020, it must review the cap on benefits increases and act now to support those families struggling to provide for their children by helping them to afford to work and manage the rising costs of living.”

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