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.

Homelessness and mental health conditions to be supported by hardship fund

Jobseekers who are homeless or suffering from a mental health condition will now be able to access hardship payments immediately after a benefit sanction.

Work and Pensions Secretary Damian Green has announced that jobseekers who are homeless or suffer from a mental health condition will now be able to access hardship payments immediately if they receive a benefit sanction.

Department for Work and Pensions

Although the majority of jobseekers do everything expected of them, sanctions are a necessary and long-standing part of the welfare system. They ensure that those who are able to get into the workplace are making every effort to get into the workplace, and that appropriate action is taken otherwise.

Hardship payments act as a safety net to cover day-to-day living costs, and are issued immediately to individuals who are sanctioned and meet certain criteria like having children, or a long-term health condition. Other jobseekers cannot claim payments for the first 14 days of a sanction.

The criteria will now extend immediate access to homeless people and individuals with a mental health condition.

The change is expected to help around 10,000 people over 4 years from 2017/18 to 2020.

Work and Pensions Secretary Damian Green said:

Sanctions are an important part of the benefits system, but it’s right that people with mental health conditions as well as those who are homeless have immediate access to hardship payments should they need it.

We want our jobseekers to focus on getting into work and enjoying the dignity and security of a good job.

Our plan to help the most vulnerable into work is a key step towards building a great meritocracy where all that matters is the talent you have and how hard you are prepared to work.

Benefit sanctions are only used in a very small percentage of cases, and the number of sanctions has fallen substantially in the last year. On average in each month during this time, more than 96% of Jobseeker’s Allowance claimants were not sanctioned.

This news follows on from the launch of the Work, health and disability: improving lives green paper earlier this month to help more people with long term conditions reap the benefits of work and improve their health, as part of the government’s ambition to halve the disability employment gap.