Iain Duncan Smith is to signal a further crackdown on welfare in a speech suggesting that changes to the benefit system have lowered unemployment.

The Conservative might promise to lower the benefit cap from £26,000 to nearer to £18,000 in its general election manifesto.

The work and pensions secretary is set to tell an audience in London that ‘the number of households where nobody had ever worked doubled’ under Labour and that welfare reform is ‘changing our country for the better’.

His speech will come following reports suggesting that the Conservatives might promise to lower the benefit cap from £26,000 to nearer to £18,000 in its general election manifesto.

‘Fixing society at the same time as the economy, matching a firm economic settlement to a firm social settlement; and in so doing putting this country on a path to a more productive, more dynamic, and ultimately a more contented, future,’ he will say.

Mr Duncan Smith will claim that immigration to the United Kingdom has been a ‘supply and demand issue’.

He will say: ‘Businesses needed the labour and because of the way our benefit system was constructed, too few of the economically inactive took the jobs on offer.’

Mr Duncan Smith will add that the economy will never be able to ‘hold its own’ unless ‘British families play a full productive part in that plan’.

Ahead of his speech, Rachel Reeves, shadow work and pensions secretary, said Mr Duncan Smith’s benefit reforms were ‘in chaos’. ‘Millions of taxpayers money has been wasted on the £12.8bn universal credit which less than 7,000 people are claiming,’ she alleged.

‘David Cameron’s government has failed to control social security spending and is set to overspend on welfare by a staggering £13bn. Under Iain Duncan Smith, housing benefit spending is rising, not falling,’ she said.