Cutting benefits does not make people more likely to find work, Government-backed study finds

'Conventional wisdom suggests taking money off benefit claimants acts as a financial incentive to get a job. Our analysis says that the opposite is in fact true'

Charlie Cooper
Whitehall Correspondent
Monday 06 June 2016 08:24
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Research showed cuts had pushed claimants further into poverty and debt
Research showed cuts had pushed claimants further into poverty and debt

Cutting a person’s benefits does not make them more likely to find work, a government-backed study has found - undermining a key justification for the Department of Work and Pension’s controversial welfare reforms.

The local project, carried out by Oxford City Council and DWP itself, indicated that for every pound docked from a long term jobless claimant’s income through housing benefit cuts, the chances of finding work reduced by two per cent.

The 230 people involved in the project were affected by cuts to their housing benefit as a result of the benefit cap, the bedroom tax or reductions in local housing allowance.

Ministers have said that the benefit cap for workless claimants delivers an incentive to find work, and DWP said it disagreed with the report’s conclusion.

But its authors said that cuts had pushed claimants further into poverty and debt, which along with the high cost of childcare was restricting the time they had to seek work.

The benefit cap for working age households is set to be lowered later this year from £500 a week to £442 a week in London and £384 outside London, affecting 120,000 households, with leaked ministerial advice documents indicating that tens of thousands of children could be pitched into poverty. Claimants can get exemptions if they receive working tax credits.

DWP said that its own national evaluation of the benefit cap found claimants subject to it were 41 per cent more likely to find work than households whose incomes came in below the cap. The study, carried out in 2014, found that 40 per cent of capped households avoided the penalty by finding work.

However, the Oxford project, which ran for a year up to June 2015, casts doubt on some of its findings.

It concluded: “Conventional wisdom suggests that taking money off benefit claimants (eg by sanctions or cutting benefit rates) acts as a financial incentive to get a job. Our analysis says that the opposite is in fact true, at least for this project cohort."

“Higher benefit losses may correlate with higher rent and larger families, and financial hardship; as childcare and debt are established barriers to work, it is perhaps unsurprising that customers with higher benefit losses are less rather than more likely to get into or back into work.”

A DWP spokesperson said: “Our welfare reforms are incentivising work.”

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