A government cap limiting benefits to £500 per week will increase labour market participation, the government claims. The cap will limit individuals to £350 every week in total government benefits for housing and income, and families at £500 in overall assistance.
The change in policy reportedly will not affect people claiming benefits while still in jobs. Government officials claim that the change in policy is designed to reduce spending and encourage a greater number of people to participate in the labour market, which has suffered as a growing number of people lose employment.
The Department for Work and Pensions reported last year that 12,000 people had found jobs after claiming unemployment benefits, indicating that the employment opportunities for Britain’s out of work are improving. The changes to benefits will affect over 40,000 households, according to a DWP estimate.
Critics of the benefits cap claim that a reduction in public assistance will hit families with small children the hardest, although supporters of the policy change claim that it will improve labour market participation. The Work and Pensions Secretary, Iain Duncan Smith, has noted that the current benefits discourage people from searching for jobs.
Opponents believe that the reduction in public assistance will cause some families to struggle as rents increase across the nation. The cap primarily affects individuals in London, where almost half of the people affected by the change reside. The changes to policy will come into effect at the end of September across the nation.
The government believes that the cap will reduce its spending by over £110 million in the first year, with a £300 million reduction in spending to follow over two years. Four London authorities have already introduced £500 public assistance caps, but have reported that enforcing them has been difficult due to high rental rates.
