Benefit Cap inquiry launched

The Work and Pensions Select Committee wants to find out how it affects British households

Following on from the reopening of its Universal Credit inquiry, the Work and Pensions Commons Select Committee has announced an inquiry into the benefit cap and how it affects British households.

The Committee, chaired by the Rt Hon Frank Field MP, invites written submissions addressing the following points:

  • The cap is intended to incentivise behavioural change amongst claimants and secure savings for the Exchequer. To what extent is it achieving that?
  • To what extent has claimant behaviour responded to the cap, through moving into work, moving house etc? What effect does the lower cap have on incentives, what are the barriers to behavioural change and how can they be overcome?
  • Does the cap address high underlying rates of housing benefit and child maintenance in a fair way?
  • What are the consequential costs of the cap for other public spending, such as that by local authorities?
  • What are the consequences for Discretionary Housing Payments (DHPs) and what impact does use of DHPs have on behavioural change?
  • Are there unintended consequences (either positive or negative) of the cap?

GOV.UKComments from Work and Pensions Committee’s members

Rt Hon Frank Field MP, Chair of the Committee, said:

“Quite often when the Government reduces a benefit, the justification given is that it will incentivise work, and obviously encouraging and supporting the strivers is a laudable goal. People can escape the benefit cap if they move into work. The Government needs to be challenged to put much more resources in helping families whose benefits are going to be in cut in this way to know that there is an exit and one which they might be able to grasp soon.”

Karan Buck MP, Member of the Committee said:

“The Government’s argument for the Benefit Cap is that it will incentivise work. Set against this is the fact that many of those affected have been found to be incapable of work. Neither does the cap reflect the reality of housing, even of homeless households. The Committee will want to look at the actual impact the cap is having, who is affected and how it interacts with other factors, from health to housing.”

How to submit your evidence

The deadline for written submissions is Friday 7 April 2017.

Submit your views through the Benefit cap inquiry page

Source: Turn2US

Lower benefit cap comes into effect

Government Changes to the benefit cap came into effect on 7 November 2016, reducing the total amount of benefits a household can receive.

A new benefit cap came into effect from 7 November 2016, meaning the total amount workless households can receive in benefits will be limited to £20,000 across the UK or £23,000 within Greater London.

Before the benefit cap, there was no limit on the amount households could claim in state support, which often left no incentive for people to find work.

The Government says that the benefit cap is based on a clear principle that work should always pay more than welfare. The evidence shows that since its introduction in April 2013, the benefit cap has provided a clear incentive for those who can work to move off welfare and into the security of a job. New figures show that almost 23,500 households who previously had their benefits capped have moved into employment.

Benefit Changes

Secretary of State Damian Green said:

Each statistic represents a person who has moved into employment and can now enjoy the security and dignity that work brings.

By making sure that those people who are out of work are faced with the same choices as those who are in work, the benefit cap has been a real success.

By lowering the cap today, we are ensuring the values of this government continue to chime with those of ordinary working people and delivering on our commitment to make sure work pays more than welfare.

The lower cap delivers on this government’s commitment to put work at the centre of the welfare system, ensuring it remains fair to both the taxpayers who pay for it and to those people who need it.

Anyone eligible for Working Tax Credit remains exempt from the cap, providing a clear incentive to move into work. People claiming Carer’s Allowance, Guardian’s Allowance, and most disability benefits are also exempt from the cap, ensuring those who cannot work are supported.

The new lower cap will be phased in across the country from 7 November 2016, and will be fully implemented by local authorities by January 2017. All claimants potentially affected by the new lower cap have been contacted by the government and local authorities ahead of these announced changes. This ensures they are aware of the help and support that is on offer, such as budgeting support, opportunities to learn new skills and help with childcare costs.

The department is also working closely with local authorities. To support those affected by the benefit cap changes, over £1 billion of Discretionary Housing Payments will have been provided to local authorities by the end of this parliament.

Benefit cap amounts

The new benefit cap is set at £20,000 a year outside London and £23,000 in Greater London to reflect higher rent costs. For single people without children, the cap is £15,410 in Greater London and £13,400 elsewhere.

More information

The new lower benefit cap will be fully implemented across the country by January, in phases, beginning from 7 November 2016. Anyone working and receiving Working Tax Credit will be exempt from the cap, as will households where someone receives Disability Living Allowance (DLA), Personal Independence Payment (PIP), or the support component of Employment and Support Allowance (ESA). Those claiming Carer’s Allowance or Guardian’s Allowance are exempt from the new cap, in recognition of the valuable contribution they make to society.