From 15th April 2013 the Cap is imposed by Housing Benefit Offices 'capping' the award of Housing Benefit for those claimants affected. On 19th December 2012 the DWP announced that this will not be the 'big bang' approach as expected but starts in just four Local Authority areas - Croydon, Haringey, Bromley and Enfield, and then is rolled out from 15th July to other areas by the end of September 2013. Click here to see the letter sent by the DWP to Local Authority Chief Executives.
From October 2013 it will be applied to all new claims for Universal Credit including those migrated from existing benefits. It appears that (initially at least) it will not be applied to Universal Credit claimants in the Pathfinder areas.
Please see our Benefit Cap leaflet - if you would like a supply please contact us - email@example.com.
The Government believes the Benefit Cap will:
- act as an incentive to work, ie by limiting the amount of benefit that households out of work will receive. it will be more likely they will be better off on entering work;
- promote greater fairness in the welfare system between those out of work on benefits and tax payers in employment, by preventing households on out of work benefits from receiving a greater income from benefits than the average weekly wage;
- reduce benefit expenditure and help tackle the financial deficit.
Four families are taking legal action through Judicial Review proceedings against the government. Their lawyers are arguing that the government did not take proper account of the impact of the Cap on women, children, the disabled, racial and religious minorities, and carers .Womens Aid has provided evidence of the impact on families who have fled domestic violence. More information here
For information on who will be affected
by the Cap, how
the Cap will work
, the impact
it will have and ideas to minimise
this, please click on the links.
Chris Grayling, Minister for Employment is quoted as saying during a debate in the House of Commons: 'Of course people on lower incomes can receive housing benefit, but I am not aware that it is paid to families earning £35,000 a year. Surely that is the point. We are setting a dividing line
However many families earning £35,000 a year do get substantial amounts of benefit, including Housing Benefit.
Take a couple with three children, and earning £35,000 gross a year. Assuming 2012/13 rates, £1,000 pa council tax and an affordable rent of £140.00 a week:
£20.25 Child Tax Credit per week
£47.10 Child Benefit
£25.78 Housing Benefit per week
£93.13 total weekly £4,842.76 annually
This is in addition to the £26444.45
Net salary after tax and NI.
What goes around comes around!
This is not the first time a Government has considered limiting benefits to wages. This policy idea has in fact been tried and failed once before. The ‘wage stop’ in force during the 1970s was a similar policy which aimed to cap benefits at the level of average wages. It proved unfair and unworkable and was eventually abolished. For more information on the wage stop, see this speech by Robin Cook who successfully campaigned for its abolition.