The Welfare Reform Act gives the Government the power to cap the total benefits to which a single person or couple is entitled.
How is the cap calculated?
The cap is set at the average (median) net earnings for a working household, currently £500 per week (£26k per annum) for couples and lone parents, and £350 per week for single people without children.
Which benefits are included?
The following benefits are included in the cap:
- Bereavement Allowance
- Carer’s Allowance
- Child Benefit
- Child Tax Credit
- Employment and Support Allowance (contribution-based and income-related) except where the Support Component has been awarded
- Guardian’s Allowance
- Housing Benefit
- Incapacity Benefit
- Income Support
- Jobseeker’s Allowance (contribution-based and income-based)
- Maternity Allowance
- Severe Disablement Allowance
- Universal Credit
- Widowed Parent’s Allowance
- Widow’s Benefit
The cap will not include one-off payments, non-cash benefits and passported benefits, such as free school meals, nor will it include Council Tax Benefit. The childcare element of Universal Credit will also be excluded.
Who will be affected?
Recent statistics show the number of capped households to be in the region of 30,000.
The cap is targeted at out-of-work-families, those in receipt of Working Tax Credit are exempt. Also exempt are households where a member of the household is claiming Disability Living Allowance (DLA) or the Personal Independence Payment (PIP), Attendance Allowance, Constant Attendance Allowance, Industrial Injuries Benefit, or the support component of Employment Support Allowance. However, this exemption does not apply if it is a non-dependent member of the household who is in receipt of DLA or Attendance Allowance, for example if parents are caring for an adult disabled child. War widows and widowers will also be exempt.
How much will people lose?
The Department of Work and Pensions estimates that affected households lose an average of £93 a week, 20% of those affected are expected to lose more than £150 a week.
Will the cap be calculated weekly or monthly?
The cap will be calculated weekly until a claimant migrates to Universal Credit, at which point the cap will be calculated monthly, as with their monthly Universal Credit payment.
Weekly rates (Housing Benefit)
Couples and lone parents - £500
Single persons without children - £350
Monthly rates (Universal Credit)
Joint claimants and single claimants with children - £2167
Single claimants without children - £1517
How much is available through Discretionary Housing Payments for those affected by the benefit cap?
£65m in 2013-14 and £35m in 2014-15 has been allocated to the Discretionary Housing Payments budget to help families affected by the benefit cap.
Find out more
Read our briefings on the Welfare Reform Act.