22 February 2014

Does the Benefit Cap help people get jobs?

Before the Benefit Cap was introduced, a small minority of welfare claimants got quite large payments. Typical reasons were having lots of children and living in an area with high rents. The Benefit Cap set a limit on the total weekly benefit of £350 (single people) or £500 (couples). The stated aim of the policy is "fairness" the idea being that claimants should not be able to get more than the average working person.

It's also claimed to provide an incentive to get into work - as soon as member of the household starts working, the capping stops.

So does this "incentive" work? My eye was caught by this exchange in the House of Commons on 13 Jan 2014
4. Andrew Bridgen (North West Leicestershire) (Con): What recent estimate he has made of potential savings to the public purse arising from implementation of the benefit cap. [901896]

The Secretary of State for Work and Pensions (Mr Iain Duncan Smith): Capping benefit at average earnings is forecast, by reducing the large benefit amounts previously paid to households, to save £85 million this year and around £140 million next year. What is more, some 19,000 potentially capped claimants have moved into work, where paying tax and national insurance contributions brings a further benefit to the Exchequer.
Iain Duncan Smith is telling us how much less benefit he expected to pay out because of the policy. He also  claims the credit for the 19,000 potentially affected people who started work.

He's made this sort of claim before and attracted criticism from the UK Statistics Authority,

I wanted to see if he'd got his evidence right this time. So I asked via a Freedom of Information request.

The answer was interesting. He was relying on Jobcentre Plus activity regarding claimants who have been identified as potentially impacted by the benefit cap

It tells us "Jobcentre Plus has helped around 19,000 claimants identified as living in potentially capped households into work" but wisely limits the claim with "The figures for those claimants moving into work cover all of those who were identified as potentially being affected by the benefit cap who entered work. The statistics are not intended to show the additional numbers entering work as a direct result of Jobcentre Plus support"

So we can be reasonably certain that 19,000 potentially affected people got jobs but we can't  be sure why they did that. Maybe they looking for work anyway and succeeded. Perhaps support from JCP helped them get jobs.

What looks more questionable is the suggestion by Iain Duncan Smith that the Benefit Cap moved 19,000 people into work. Also, not all of those 19,000 will have earned enough to pay tax and national insurance. 

So the evidence is rather weak

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