The £500 a week benefit cap is now in place across the country and a major welfare reform has been successfully delivered, the government announced today (27 September 2013).
The benefit cap restores fairness to the benefits system and ensures a clear line on how much working age benefits can now provide.
For couples and lone parents, it limits benefit payments to £500 a week – the average working household earnings – and to £350 a week for single adults.
The cap is in place for existing appropriate claimants and from now on all new claims will be subject to the cap.
Secretary of State for Work and Pensions Iain Duncan Smith said:
Benefits should be a safety net – but not something that gives claimants an income out of reach of many hard-working families.
We have now successfully delivered a cap on benefits so that out-of-work households know they can no longer claim more than the average family earns and we have returned fairness to the benefits system.
We want to help people find a job and move away from benefits, and so those facing a cap are getting extra support at the Jobcentre while those eligible for working tax credits are exempt from the cap altogether.
So far teams at Jobcentre Plus have helped around 15,300 potentially capped claimants into work and this support will continue.
It is expected that 40,000 households will have their benefits capped.
The benefit cap will apply to combined income from the main out-of-work benefits, Jobseeker’s Allowance, Income Support, and Employment and Support Allowance, and other benefits such as Housing Benefit, Child Benefit and Child Tax Credit and Carer’s Allowance.
The benefit cap will not affect a household if a member is entitled to Working Tax Credit, increasing the incentive to find work.
In recognition of their additional needs, all households which include somebody who is receiving the following benefits will be exempt from the cap:
- Disability Living Allowance
- Personal Independence Payment
- Industrial Injuries Benefit
- War Disablement Pension and the equivalent payments from the Armed Forces Compensation Payments Scheme
- Attendance Allowance
- the support component of Employment and Support Allowance
People who receive a War Widow’s or Widower’s Pension will be exempt, as a part of the government’s commitment to those serving or who have served in the Armed Forces and to their dependants.
There will be a ‘grace period’ during which the benefit cap will not be applied for 39 weeks to those who have been continuously in work for the previous 12 months.
The cap will only apply to people of working age, so income from Pension Credit will not count towards the cap.
Potentially affected claimants were first contacted in April 2012 with offers of support from Jobcentre Plus.
The benefit cap started with 4 London boroughs in April 2013 and the national implementation started in July.
National implementation of the benefit cap was managed over a 10-week period split into 2 groups of council areas.
The first group of council areas included all local authorities with 275 households or fewer affected. The second group, which started in August, covered local authorities with 276 or more households to be capped.
Read more about the benefit cap
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