Benefit Cap

Lord Fink Excerpts

Wednesday 2nd July 2014 Lords Chamber

Asked by

[Lord Fink]

To ask Her Majesty’s Government how many people have moved from benefits into work as a result of being subject to, or being warned that they might be subject to, the benefit cap.

[The Parliamentary Under-Secretary of State, Department for Work and Pensions (Lord Freud) (Con)]

Jobcentre Plus worked with potentially capped claimants from April 2012. By November the next year, 19,000 claimants in potentially capped and capped households moved into work, although we do not know to what extent those were additional moves or normal claimant churn. Since the cap was live, more than 5,700 households—around 40% of those who were capped but are no longer capped—are now exempt from the cap due to moving into work and claiming working tax credits.

[Lord Fink (Con)]

My Lords, I thank my noble friend the Minister for that comprehensive Answer, but will he confirm—

[Noble Lords]

He is reading.

[Lord Fink]

Will he confirm that, for people who are potentially subject to the cap, work always pays? Are there any leading indicators of behavioural changes in people who are potentially subject to the cap?

[Lord Freud]

There are two ways in which the cap works to incentivise people to go to work. One is that people who qualify for working tax credit are exempt from it, but there is another way, in that anyone doing even small amounts of work will be capped by a lesser amount because it serves to reduce the level of the cap and effectively allows them to keep their earnings. Clearly, one always has to be very careful to distinguish causation from correlation, but in a survey conducted by MORI a quarter of capped claimants said that they had looked for work because of the cap and 45% said that they would look for work in the next 12 months because of it.