A lower benefits cap will hit the least well-off

By staff writers
January 29, 2015

Cutting benefits for the least well-off doesn’t help people move into work – evidence shows it just makes them poorer, says Helen Barnard, programme manager at the Joseph Rowntree Foundation.

She writes: "As the 100-day countdown to the general election begins, David Cameron has today announced that the benefit cap would be cut from £26,000 to £23,000 if the Conservatives win.

"The PM said he is determined to ensure benefits are not seen as a “lifestyle choice”, and also proposed to scrap housing benefit for 18 to 21-year-olds. The Government estimates that around 100,000 jobless households could see their incomes squeezed.

"However, research by the Institute of Fiscal Studies (IFS) suggests that benefit capping changes very few “lifestyle choices” – it simply makes people in poverty poorer. A study published by the IFS last month, that was carried out for the Department for Work and Pensions (DWP), shows that a large majority of people who experienced benefit capping as a result of 2013's welfare reforms neither moved into work nor moved house – the intentions of the reforms. Many experienced very large reductions in income.

"The research also confirms that all the families affected have either a large number of children or high rents, and often both. About 27,000 families were affected once the reforms were fully rolled out in later 2013. That is less than one per cent of working-age families receiving housing benefit. But the average loss was £70 per week per family.

"The analysis suggests around 2,000 families who were claiming benefits in May 2013 had someone move into paid work 12 months later in response to the cap. This is measured by how many started to claim Working Tax Credit so it’s possible that some of those affected by the cap might already have been working but not claiming Working Tax Credit and others might have started working but not enough to claim Working Tax Credit or have not chosen to claim.

* Read the full JRF blog here: http://www.jrf.org.uk/blog/2015/01/benefit-cap

* 'Coping with the cap', Institute for Fiscal Studies (ISF, December 2014): http://www.ifs.org.uk/publications/7482

* Poverty and Social Exclusion: http://www.poverty.ac.uk

* Ekklesia is a member of the 'Who Benefits?' campaign: http://www.whobenefits.org.uk/

* More on benefits issues from Ekklesia: http://www.ekklesia.co.uk/benefits

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