Iain Duncan Smith “This is about saving money and changing a culture”
A cap on the total amount of benefits that people aged 16 to 64 can receive has begun rolling out across England, Scotland and Wales. Couples and lone parents will now not receive more than £500 a week, while a £350 limit applies to single people. The cap is part of the government’s overhaul of the benefits system, the biggest since the 1940s. Key payments including jobseeker’s allowance and child and housing benefit count towards the cap. Changes to the benefit system have been spearheaded by Work and Pensions Secretary Iain Duncan Smith, who argues the current level of benefit, discourages people from looking for work.
Critics say the cap fails to tackle underlying issues, such as the difficulty of finding work, the cost of housing and regional differences. The National Housing Federation (NHF) agrees with the principle that those on benefits should not earn more than those in work, but it argues that the cap does not work in London and the South-East, where rents are high. Those affected by the cap have their housing benefit reduced. The NHF wants to see housing costs removed from the cap, which will be completely implemented by 30 September.
The cap, not yet law in Northern Ireland, is said to reflect the average working household income. It has already been implemented in four London boroughs – Haringey, Enfield, Croydon and Bromley – since April. The benefits cap applies to people receiving jobseeker’s allowance, child benefit, child tax credits, housing benefits and other key support from the government. There is no cap on people who receive Disability Living Allowance or its successor, the Personal Independence Payment, as well some other benefits, such as industrial injuries benefit or a war widow or widower’s pension.
About £95bn a year is currently paid out in benefits to families of working age. The government hopes the cap will save about £110m in the first year, and £300m over the next two years.
The four local authorities where the cap has been introduced say they are struggling to introduce the measures. One of them, Haringey, said it was given £1.8m by the government in the first year, to help with the transition, and ease cases of hardship. But it estimates that this year alone it will have to add £2m of its own money to pay for the changes, which it said is not sustainable in the longer term. One alternative is for families to move to areas where housing costs are lower.