Last week the Government’s much anticipated welfare cap came into effect – having been fought every step of its passage through the Houses of Parliament by Labour (along with every other welfare reform measure), this reform will now ensure that no one can earn more off benefits than the average working family income. The cap is about fairness – fairness for the taxpayer but also fairness for those previously trapped by Labour on welfare.
Under Labour the welfare system actually perpetuated worklessness with people finding themselves able to go back to work – but unable to see the financial incentive. Indeed, far from seeking to reform the welfare state allowed to develop under the last Government, Labour’s answer announced last week is to go even further by making uncapped welfare support a ‘human right’.
The Government’s cap applies to combined income from the main out-of-work benefits – Jobseeker’s Allowance, Income Support, Employment Support Allowance and Housing Benefit – for working age households to around the average level they would expect to earn in employment which is currently £26,000. That is the same as a pre-tax salary of £35,000.
The welfare bill currently stands at £95 billion (excluding pensions) - £1 in every £8 spent by the Government – following a sixty per cent hike in welfare spending under the previous Government. It is of little wonder, therefore, that 74 per cent of the population support the cap and believe that it will ensure more people move off benefits and into work – this belief is supported by the fact that 12,400 people have already moved from benefits into work and a further 32,300 have taken up employment support.
I am conscious that there has been significant scaremongering by the Labour Party on this issue but the fact is that this Government is supporting those who can work and providing for those who cannot work. As such, I can confirm that those receiving disability benefits are exempt from the cap in recognition of the extra costs they incur. In addition, anyone receiving a pension as a war widower is exempt, along with all pensioners because this cap is designed to get people back into employment – so it is only right that it is limited to those of working age.
Given that the target of the benefit reform is to ensure that work pays, Ministers have also exempt every person receiving Working Tax Credit. It means that anyone who has chosen to take on a low income job over state benefits will be totally exempt from the benefits cap.
The cap represents the Government's clearest intention yet - that if you are able to work, then it will back you all the way. Never again will a jobseeker need to spend hours in front of a JobCentre Plus computer trying to figure out whether they will be better off in work – they will.
Henry Smith MP