Please Note: This Article is 5 years old. This increases the likelihood that some or all of it's content is now outdated.

The benefit cap is providing an incentive for more people to move into work, with over 22,000 people now having their benefits capped.

With the benefit cap fixed and £26,000 per household and a Conservative pledge to bring this down to £23,000 next, this could affect some landlords with tenants on Housing Benefit. There is also the possibility in the near future that this benefit will be abolished for the under 25s.

According to a recent government press release the benefit cap continues to provide a clear incentive to work, with over 22,000 people who had their benefits capped moving into work, reducing their Housing Benefit claim or no longer claiming Housing Benefit at all, according to new figures published today (14 May 2015).

The benefit cap will limit the amount of benefits a household can receive to £500 a week for couples or lone parents, and £350 a week for single adult households. A cap of £26,000 a year for out-of-work families is the equivalent of a salary of around £34,000. Before the cap, there was no upper limit on benefit claims, with 300 of the highest claiming families getting over £10 million in benefits every year.

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The Conservatives in a pre-election pledge said they will bring the benefit cap down to £23,000 in the future.

Iain Duncan Smith, Work and Pensions Secretary, says:

“As well as restoring fairness to the system, and saving the taxpayer money, these figures show the benefit cap provides a clear incentive to people to get into work.

“By putting an end to runaway benefit claims, and introducing a system which guarantees you will always be better off in work, thousands of people who have been affected by the cap are gaining the financial security and esteem that comes with a job and a pay packet.

“Since the cap was introduced in April 2013, around 58,700 households have had their benefits capped – 35,600 of those households are no longer subject to the cap, with nearly 22,400 of them moving into work, reducing their Housing Benefit claim, or no longer claiming Housing Benefit at all.”

Recent government research shows that the cap is motivating people to find work. Such as:

  • 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
  • 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

The press release (14 May 2015) says: “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.”

Please Note: This Article is 5 years old. This increases the likelihood that some or all of it's content is now outdated.

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