UK benefit cap leads to 20,000 people finding work

More than 20,000 people whose benefits have been capped have subsequently found work, the government has said, as it paves the way for far deeper cuts in welfare in the months ahead.

David Cameron announced this week that one of the first actions of his new government would be to reduce the maximum sum a household can claim annually in benefits from £26,000 to £23,000.

The chancellor, George Osborne, has promised to reduce the welfare bill by a further £12bn by 2017-18.

Announcing the latest figures, Iain Duncan Smith, work and pensions secretary, said since the cap had been introduced in April 2013, about 58,700 households had had benefits capped.

However, 35,600 of those were no longer subject to it. Some 22,400 of those had moved into work, reducing their housing benefit claim, or were no longer claiming housing benefit.

Mr Duncan Smith said the figures showed that the benefit cap provided "a clear incentive to people to get into work".

The department for work and pensions quoted figures, drawn from work by the Institute for Fiscal Studies, showing that those affected by the cap were 41 per cent more likely to enter employment than a similar group that fell just below the cap's level.

The IFS found that the trend had not existed before the cap was put in place and that those with higher weekly benefit income had previously been less likely to move into work.

The DWP said that almost one in four of those capped had said they were doing more to find work, a third were submitting more applications and one in five attended more interviews.

Two out of five of those who said they had looked for work as a consequence of the cap were employed six months later, said DWP.

The welfare cap has proved very popular with voters, with substantial numbers supporting a cap below the new level of £23,000.

The original level of £26,000 was set to ensure no family could receive more in benefits than the average household income.

However, critics have argued that the stricture is overly harsh because working families earning at that level would additionally receive in-work benefits.

Nor has it saved much money for the Exchequer because of the small number of families affected. The IFS pointed out that the cap had shaved a tenth of 1 per cent off the £94bn annual bill for all benefits excluding payments to pensioners.

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