Government rolls out benefit cap despite local authority warnings about slashed incomes, a lack of work and a flawed strategy
As the £500-a-week cap on household benefits is rolled out across major cities such as Manchester, Birmingham and Cardiff, Iain Duncan Smith has rejected criticism and claimed that changes are “long overdue”.Yet new research by the Local Government Association (LGA) suggests that IDS’ reforms will not have the work-incentivizing impact intended. Only one in eight households facing welfare cuts will be able to find work, according to a study using data to forecast likely outcomes.
And under a quarter of the 1.18million English households where no one works will be able to mitigate the impact of the reforms either by moving to a cheaper property or finding a job. The rest will see their incomes fall.
The latest government reform sees families’ total claims capped at £500 a week – equivalent to the average take-home pay of £26,000 – with welfare claims for single people limited to £350 per week.
“These changes are long overdue,” said Duncan Smith, insisting a principle was at stake. “Benefits should not pay more than the average wage. It’s not fair to hard working families or the people it trapped on benefits.
“The cap means people who fall on hard times still get the support they need, including help to get into work. People who are eligible for Working Tax Credit are also exempt from the benefit cap, so this gives people a very clear reason to move into work.”
Duncan Smith also claimed the number affected by the overall benefit cap is “small”. His department estimates about 40,000 households across the country will be hit.
The LGA, however, claims local authorities will be forced to cut spending on infrastructure and social care to support the very worst-off: families losing out through the government’s welfare reforms.
The LGA’s latest report also raises doubts about the effectiveness of Iain Duncan Smith’s universal credit scheme, which aims to ensure claimants are always better off working, by suggesting it was “unlikely to significantly increase employment”.
National Housing Federation lead manager Lizzie Clifford said the introduction of the benefit cap in big cities will hit families with children hardest, and that the poorest could not be blamed for the high cost of housing. She urged the government to remove all housing costs from the cap, at least until a better answer to high-rent woes can be found.
“Those affected could face the stark choice of cutting back on essentials like food and heating or having to move long distances to look for cheaper places to live,” said Ms Clifford.
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