In February 2017 the Work and Pensions Committee launched an
inquiry into the Benefit cap, which
could not continue due to the General Election. The Committee is
now re-launching the inquiry. In written evidence to that
inquiry before it stalled, the DWP said the benefit cap pursues
three aims:
i) Secure
the economic well-being of the country by reducing spending on
benefits and encouraging positive behavioural changes;
ii) Impose
a reasonable limit on the total amount which a household can
receive in welfare benefits to promote a fair and healthy society
and maintain public confidence in the welfare system; and
iii) Incentivise
work to reduce poverty and increase economic prosperity.
The cap is intended to incentivise behavioural change amongst
claimants and secure savings for the Exchequer. The re-opened
inquiry seeks to establish 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? Are there unintended
consequences (either positive or negative) of the cap?
The benefit cap limits the total amount of benefits and tax
credits payable to a working-age household. It was first
announced in the 2010 Spending Review and was rolled out in 2013.
The cap originally limited payments to £500 per week (£26,000
p.a.) for a family and £350 per week (£18,200 a year) for a
single person with no children.
In the Summer Budget 2015, the Government reduced the cap to
£442.31 per week or £23k for a household in Greater London,
£15,410 for a single peron, and £384.62 per week or £ 20k for a
household living outside Greater London, £13,400 a year for a
single person.
The rollout of the lower cap in winter of 2016-17 caused the
total number of affected households to over treble from 20,000 in
November 2016 to over 70,000 five months later in March 2017. As
of February 2018, 64,800 households are affected. The lower cap
has also increased the geographical spread of affected claimants.
Affected households are typically those with larger numbers of
children, and higher housing costs. Exemptions apply for in-work
households, those with certain disability or incapacity benefit
entitlements (PIP, DLA, ESA support group) or recipients of
Carer’s Allowance, Guardian’s Allowance and UC carer’s element.
Rt Hon MP, Chair of the Committee
said: “People can escape the benefit cap if they move
into work. But for the cap to achieve its aim of encouraging
people into work, it must be paired with the right resources to
ensure this is a realistic option within reach of all those
affected. Where it is not, we need to understand why, and ask
whether the benefit cap should operate.”
The Committee now invites evidence in this re-opened inquiry, on
any or all of the following points
- How have
claimants responded to the lower benefit cap?
- What
difficulties are claimants experiencing in adjusting to the cap?
- What is the
effect on claimants who are not subject to jobsearch
conditionality in the benefits they claim?
- What are the
cap’s knock-on effects on other public spending, such as local
authority expenditure?
- What are the
consequences for Discretionary Housing Payments (DHPs) and what
impact does the use of DHPs have on behavioural change?
- To what extent
is the benefit cap achieving its aims and what steps could be
taken to improve this?
