More than 11,000 households claim benefits worth more than higher rate taxpayers' earnings
09:50 GMT, 7 May 2012
Iain Duncan Smith: The Work and Pensions Secretary said the amount being claimed on benefits was 'absurd'
More than 11,000 households are raking in benefits that are at least the equivalent of a higher rate taxpayers’ 47,000 salary, it has been revealed.
The figure was disclosed by Work and Pensions Secretary Iain Duncan Smith before letters are sent to households this week explaining a new cap on benefits under which no one can claim more than the average annual working wage of 26,000.
The cap comes into force next April and aims to remove the disincentive to work that leaves many of the unemployed better off on benefits.
Mr Duncan Smith said: ‘For more than ten years Labour let the benefits bill soar, and these figures show the scale of the problem.
‘It is absurd that people are able to claim as much on benefits as a higher rate taxpayer earns.
‘The welfare state should work as a safety net and then support people to financial independence.
‘That is why I am writing to benefit recipients, to let them know that we will be working with them over the coming year to give them every support to find work and become self-sufficient.
'Our welfare reforms will make sure a life in work always pays more than a life on benefits, and are a clear illustration that this Government is on the side of people who work hard, do the right thing and aspire to a better life.’
The 11,000 households exposed by Mr
Duncan Smith enjoy benefits of more than 34,000 a year, equating to a
gross wage of 47,000. This is enough to put most employees into the
higher rate 40p tax band.
This week the Government will write to
67,000 households that could be affected by having their benefits
reduced to the 26,000 limit, spelling out the support available to find
'A basic issue of fairness': David Cameron
According to official figures, at least 100 families on benefits are living in luxury homes, with many receiving housing handouts of about 5,000 per month – enough to fund a 1million mortgage.
Households exempt from the cap include those where there are people in work and claiming working tax credits, and families that are deemed to be very vulnerable – including war widows and those claiming disability living allowance.
People who have lost their job but were employed for 12 months or more prior to claiming benefits will have nine months’ grace before the cap applies.
Jonathan Isaby, of the TaxPayers’ Alliance, said: ‘Many taxpayers struggling to make ends meet will find it incredibly unfair that some people are drawing more in benefits than they’ve ever actually earned themselves.
‘The welfare system needs to provide a safety net for the poorest and most vulnerable in society, but these figures demonstrate that the current system has got out of control and that the Government’s proposed benefits cap needs to be introduced as a matter of urgency.’
The Prime Minister has also said it is ‘time to call time’ on excessive benefits. David Cameron said in January: ‘It’s a basic issue of fairness. Should people really be able to earn more than 26,000 just through benefits alone
‘I don’t believe they should. And I think the overwhelming majority of people in the country would back that view.’
Ministers will overhaul the tax and benefits system from October next year, when a universal credit will be introduced to simplify the system and replace swathes of tax credits and benefits.
They claim it will ensure that no one will be better off on benefits than in work, removing the so-called ‘cliff edge’ where those who take on part-time work end up worse off as benefits are removed.
But critics have warned that families affected by the benefits cap could lose their homes, as around 44 per cent of those set to be hit are living in social housing.
David Orr, of the National Housing Federation, said: ‘The letters will come as a shock to many vulnerable families. The overall benefit cap is a crude measure that fails to reflect the stark differences in housing costs across the country caused by the desperate shortage of affordable housing.’
He called on councils to share information they had on who could be affected so that housing associations could offer help. ‘With under a year to go before many people start losing their homes, there’s no time to lose,’ he added.
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