Benefits claimants will not be able
to receive more from the state than the average working household earns
under a tough new £26,000-a-year cap launched today.
David Cameron said it was a ‘big day for benefits reform’ as the cap was imposed in the first areas ahead of the nationwide rollout from this summer.
Larger families and those living in the London are expected to be hardest hit by the decision to limit benefits to £500-a-week for couples and single parents and £350 for single people.
The policy has proven hugely popular in Downing Street polling, with the Prime Minister saying ‘amazingly’ Labour oppose the idea of insisting handouts should not be higher than average incomes in homes where someone goes out to work.
The changes are being introduced to cut Britain’s vast welfare bill and bring the level which can be claimed on benefits into line with average earnings.
The average household will lose £93-a-week.
Mr Cameron wrote on Twitter: ‘A big day for welfare reform as we pilot a cap on benefits equal to the average wage. Amazingly Labour oppose it.’
Half of the 56,000 affected affected by the cap are lone parents while 39 per cent are couples with children.
One in 10 families have more than six children and almost half of all those hit by the cap live in Greater London.
'It will provide clear incentives for people to get into employment and will give taxpayers the assurance that high claims out are no longer possible.
'We have also ensured vulnerable people are protected with clear exceptions for people claiming disability benefits.
'But 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 hard working families are over.'
The cap, expected to save £275
million in 2013-14, covers out-of-work benefits such as Jobseekers
Allowance, plus Housing Benefit, Child Benefit and Child Tax Credit.
However, there are exemptions if someone in the household receives Working Tax Credit, Disability Living Allowance, Personal Independence Payment, Attendance Allowance, Industrial Injuries Benefits and War Widows and War Widowers pension.
From today the cap comes into force in the four London boroughs of Croydon, Bromley, Haringey and Enfield.
National roll-out will begin in July, with the policy coming fully into force in October as part of wider reforms to combine a raft of benefits into a single Universal Credit.
Mathew Oakley, head of economics and
social policy at right-leaning think tank Policy Exchange, said:
'£26,000 a year is an awful lot of
money. For this reason, it is completely right to assess what level of
support taxpayers are willing to give to any one family.
'We also need to remember that unconditional support is still available to those on disability benefits that the government does not expect to work: they are exempt from the cap.'
Ministers claim the prospect of the cap being introduced has already acted as a spur to encourage the jobless in the London pilot areas to find work, with 8,000 fewer people affected than planned.
Employment minister Mark Hoban said: ‘Over the course of the last few months we’ve been working with families affected by the cap - Job Centre Plus and local councils - and what we have seen is 8,000 people go into work, and we’ve seen fewer people affected by the benefit cap.
‘So,
whereas back in July we thought 56,000 families would be affected, now
it’s 40,000 families,’ he told BBC Radio 4’s Today programme.
‘I think what people want to see is a benefits system that’s fair, that’s affordable, and that encourages people into work. These reforms help deliver that.’
But some charities have warned people affected with struggle to make up the short fall in the income, and could be forced to move away from the area in which they live.
Fiona Weir, chief executive of the Gingerbread charity for single parents, said: 'Half of those affected by the benefit cap will be single parents and we are deeply concerned about the impact this will have on families and communities.
'The cap doesn’t begin to tackle the underlying problems of the shortage of low-cost social housing and the difficulties that single parents face in finding family-friendly jobs, affording childcare and making work pay.
'More than twice as many children than adults will be affected by the cap. We fear that many children will be pushed deeper into poverty or uprooted from their communities, schools and family networks as a result.'
Opponents have also questioned the use of the figures to suggest the cap is already working.
Jonathan Portes, the National Institute of Economic and Social Research and a former chief economist at the Department for Work and Pensions, said there was ‘no evidence at all’ that the cap had affected people's behaviour.
‘The actual analysis published by the Department for Work and Pensions makes it quite clear that they do not attempt to analyse any impact of behavioural change and that there is as yet no evidence one way or the other that there is behavioural change,’ he said last week.
But the DWP said that it had followed the correct procedures in publishing the data.
‘The original forecasts were based on impact assessments last year and have now been updated due to further developments," a spokesman said.
‘We have followed the correct procedures for publishing this data by our statisticians and it is available for anyone to study. Claims to the contrary are utterly unfounded.’
Stephen Timms, Labour’s shadow
employment minister, said: 'For all the Tory rhetoric, the true picture
of this Government is one of economic failure.
'They are having to borrow £245 billion more than they planned, not to pay for the investment needed to grow our economy, but to pay for more welfare spending caused by high unemployment.
'We desperately need a change of direction. Labour has called for a compulsory jobs guarantee to give the long-term unemployed a job, which they will have to take up or lose their benefits.'
David Cameron said it was a ‘big day for benefits reform’ as the cap was imposed in the first areas ahead of the nationwide rollout from this summer.
Larger families and those living in the London are expected to be hardest hit by the decision to limit benefits to £500-a-week for couples and single parents and £350 for single people.
The policy has proven hugely popular in Downing Street polling, with the Prime Minister saying ‘amazingly’ Labour oppose the idea of insisting handouts should not be higher than average incomes in homes where someone goes out to work.
The changes are being introduced to cut Britain’s vast welfare bill and bring the level which can be claimed on benefits into line with average earnings.
The average household will lose £93-a-week.
Mr Cameron wrote on Twitter: ‘A big day for welfare reform as we pilot a cap on benefits equal to the average wage. Amazingly Labour oppose it.’
Half of the 56,000 affected affected by the cap are lone parents while 39 per cent are couples with children.
One in 10 families have more than six children and almost half of all those hit by the cap live in Greater London.
'The days of outrageous claims giving people incomes far above hard working families are over'
Work and Pensions Secretary Iain Duncan Smith said: 'The benefit cap is a key part of our reforms to restore fairness to the welfare state.
Iain Duncan Smith
'It will provide clear incentives for people to get into employment and will give taxpayers the assurance that high claims out are no longer possible.
'We have also ensured vulnerable people are protected with clear exceptions for people claiming disability benefits.
'But 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 hard working families are over.'
The Prime Minister said the start of the changes marked a big day for the governments moves to overhaul Britain's welfare system
The benefits cap is part of a raft of changes the government is introducing to curb steep rises in the UK's benefits bill
However, there are exemptions if someone in the household receives Working Tax Credit, Disability Living Allowance, Personal Independence Payment, Attendance Allowance, Industrial Injuries Benefits and War Widows and War Widowers pension.
From today the cap comes into force in the four London boroughs of Croydon, Bromley, Haringey and Enfield.
National roll-out will begin in July, with the policy coming fully into force in October as part of wider reforms to combine a raft of benefits into a single Universal Credit.
More than half of the 56,000 families affected
by the benefits cap have four or more children, according to estimates
by the Department for Work and Pensions
'We also need to remember that unconditional support is still available to those on disability benefits that the government does not expect to work: they are exempt from the cap.'
Ministers claim the prospect of the cap being introduced has already acted as a spur to encourage the jobless in the London pilot areas to find work, with 8,000 fewer people affected than planned.
Employment minister Mark Hoban said: ‘Over the course of the last few months we’ve been working with families affected by the cap - Job Centre Plus and local councils - and what we have seen is 8,000 people go into work, and we’ve seen fewer people affected by the benefit cap.
Ministers claim 8,000 fewer people will be affect by the benefits cap than first thought after more people found work
‘I think what people want to see is a benefits system that’s fair, that’s affordable, and that encourages people into work. These reforms help deliver that.’
But some charities have warned people affected with struggle to make up the short fall in the income, and could be forced to move away from the area in which they live.
Fiona Weir, chief executive of the Gingerbread charity for single parents, said: 'Half of those affected by the benefit cap will be single parents and we are deeply concerned about the impact this will have on families and communities.
'The cap doesn’t begin to tackle the underlying problems of the shortage of low-cost social housing and the difficulties that single parents face in finding family-friendly jobs, affording childcare and making work pay.
'More than twice as many children than adults will be affected by the cap. We fear that many children will be pushed deeper into poverty or uprooted from their communities, schools and family networks as a result.'
Opponents have also questioned the use of the figures to suggest the cap is already working.
Jonathan Portes, the National Institute of Economic and Social Research and a former chief economist at the Department for Work and Pensions, said there was ‘no evidence at all’ that the cap had affected people's behaviour.
‘The actual analysis published by the Department for Work and Pensions makes it quite clear that they do not attempt to analyse any impact of behavioural change and that there is as yet no evidence one way or the other that there is behavioural change,’ he said last week.
But the DWP said that it had followed the correct procedures in publishing the data.
‘The original forecasts were based on impact assessments last year and have now been updated due to further developments," a spokesman said.
‘We have followed the correct procedures for publishing this data by our statisticians and it is available for anyone to study. Claims to the contrary are utterly unfounded.’
Almost nine in 10 of those affected by the cap have children, the DWP said
'They are having to borrow £245 billion more than they planned, not to pay for the investment needed to grow our economy, but to pay for more welfare spending caused by high unemployment.
'We desperately need a change of direction. Labour has called for a compulsory jobs guarantee to give the long-term unemployed a job, which they will have to take up or lose their benefits.'