Iain Duncan Smith’s officials developed plans to cap benefits at £21,000-a-year, marking a much tighter cap than the annual cap currently being rolled out across the country, the Huffington Post UK can reveal.
Following a Freedom of Information request, the Department for Work and Pensions revealed that it had thrashed out proposals for a far harsher limit than the £26,000-a-year cap. The proposed cap would financially constrain an extra 90,000 people.
“It’s normal to give ministers options,” a DWP spokesperson explained.
The Tories are set to gather in Manchester for their party conference from 29 September to 2 October, coming as the £500-a-week cap is set to complete its national roll-out.
Meanwhile, George Osborne is said to be considering bringing the £500-a-week cap down further if it proves successful, as Tory backbenchers argue a reduction to £20,000 a year (around £384-a-week) would save £840 million a year from the welfare budget.
The revelation that DWP officials had sketched out proposals for lower benefit caps has been met with delight by Tory backbenchers, with Priti Patel MP telling HuffPostUK: “The current benefits cap is a welcome initiative but it is absolutely right that the DWP examines the options to lower the benefits cap further.
“Many working families have to get by on take home pay significantly below £26,000 and if they can do it then there’s no reason to stop the cap being reduced.”
However, critics have warned that the proposed £21,000 cap shows that ministers “don’t believe in the welfare state”.
Labour MP Teresa Pearce, who is part of the Commons Work and Pensions Committee, told HuffPostUK: “The proposal is worrying and shows that ministers don’t believe in the welfare state. It’s a system you pay into when you don't need it so its there when you do.”
The £21,000 cap was proposed in the run up to DWP officials rolling out the £26,000 cap, which is set to come into effect nationally by the end of September. This would mean single parents would receive up to £275 a week in payment rather than £350 a week, while couples’ welfare payments would be reduced from £500 to £400 a week.
According to DWP analysis, the £400-a-week cap would save over £400 million a year. However, officials write that legislative complications mean “savings would be unlikely before April 2015 at the earliest”.
An alternative proposal for a £23,400 cap, with couples paid £450 a week, in line with average earnings. However, DWP officials warn that the move would add “significant pressure” and force more people to rely on housing benefit.
“We would be requiring Local Authorities to deal with significantly increased caseloads. The increased caseloads would also bring pressure on DWP administrative systems which have been set up to cope with a lower caseload,” the analysis reads.
The Department has stressed that the lower benefit cap proposals were not current government policy.
A spokesperson said: “The level of the cap has been set at £26,000 – so claimants do not receive more in benefits than the average working household earns – and no other levels are currently being considered, or have been, since the roll out."
However, the DWP refused to rule out whether a lower benefit cap could be introduced in the future, with a spokesperson saying: "There are no plans to set the cap at another level."