£26,000 a year benefits cap comes into effect nationwide

14th July 2013

The benefits cap of £500 a week on people of working age has started to come into effect across England, Scotland and Wales today, following a pilot in four London boroughs.
The £500 weekly cap applies to couples and lone parents – single people will be capped at £350. The Government says the limit, which will result in thousands of families in high-rent areas losing cash from their benefits, is to ensure that people do not get more from the benefit system than the average working family gets paid.

The cap includes jobseekers’ allowance and housing benefit, but many people are exempt from the cap if they get certain types of payment at the moment – Disability Living Allowance, Personal Independence Payment, Attendance Allowance, Industrial Injuries Benefits (and equivalent payments as part of a war disablement pension or the Armed Forces Compensation Scheme), the support component of the Employment and Support Allowance, or a War Widow’s or War Widower’s Pension. If a household contains anyone qualifying for Working Tax Credit, they are also exempt.

The roll-out, which begins today (15 July 2013), will be complete by September 30.
Work and pensions secretary Iain Duncan Smith said: “The benefit cap returns fairness to the benefits systems. It ensures the taxpayer can have trust in the welfare system and it stops sky-high claims that make it impossible for people to move into work.
“The limit of £500 a week ensures no-one claims more in benefits than the average household and there is a clear reason for people to get a job – as those eligible for Working Tax Credit are exempt.”

The cap, while high-profile, will actually not save that much money compared to the other welfare reforms and freezes: about £110m a year, according to the BBC.

The cap will apply to the following benefits:
Bereavement Allowance
Carer’s Allowance
Child Benefit
Child Tax Credit
Employment and Support Allowance (not the support component)
Guardian’s Allowance
Housing Benefit
Incapacity Benefit
Income Support
Jobseeker’s Allowance
Maternity Allowance
Severe Disablement Allowance
Widowed Parent’s Allowance (or Widowed Mother’s Allowance or Widows Pension from before 9 April 2001)