Welfare cap
The Welfare Cap also known as the Benefit Cap[1] is a British Coalition government policy contained in the Welfare Reform Act 2012 that caps the amount in state benefits that an individual can claim per year as well as the amount of overall welfare spending. The benefit cap is set at £500 per week / £26,000 per year which is the average income of a family in the UK.[2] Conservative Ministers have stated that the cap is 'under review' and could be lowered in future.[3] From April 2017 the welfare cap will be reduced to £23,000 in London and £20,000 elsewhere in the United Kingdom.[4]The 'welfare cap' is one facet of the Coalition government's wide-reaching welfare reform agenda which includes the introduction of Universal Credit and reforms of housing benefit and disability benefits.
Contents
Policy
Cap on household welfare
Affected benefits:
- Bereavement Allowance
- Carer’s Allowance
- Child Benefit
- Child Tax Credit
- Employment and Support Allowance
- Guardian's allowance
- Incapacity Benefit
- Income Support
- Maternity Allowance
- Severe Disablement Allowance
- Widowed Parent's Allowance
Cap on Total Welfare Spending
According to the 2014 Budget the 'cap' will be set at £119.5bn in 2015/16 and will increase to £126.7bn by 2018/19.[5] However, housing benefit and Job Seekers Allowance is not included in the overall cap on welfare spending.In June 2014 leaked internal documents suggested that the Coalition government could breach its own welfare spending cap.[6] This was confirmed in the 2015 Spending Review.
Positions of political parties
The welfare cap has supported by nearly all Members of Parliament passing by 520-22.[7]
Conservatives
The Conservatives support the welfare cap which was announced by George Osborne at the 2010 Conservative Party conference.[8]
Liberal Democrats
The Liberal Democrats supported the benefit cap but a notable rebel was Sarah Teather MP who described the policy as "immoral and divisive".[9]
Labour
Labour supported the welfare cap but 13 Labour MPs rebelled including Tom Watson and Dianne Abbott.[10] Previously the Labour Party had expressed support for a regional cap on benefits rather than a national one without expressing a view on where the cap should be set and without stating whether the cap should be higher in London where rents are highest.[11]
Public opinion
Opinion polling shows strong support for the benefit cap. A poll carried out in July 2013 showed that 73% support the policy and only 12% oppose the policy.[2]
Exemptions
Those who work enough hours to claim working tax credits are not subject to the benefit cap.[1]
In 2016 it was announced that those in receipt of Carer's allowance would be exempt from the benefit cap.[12]
Impact
The welfare cap will impact 33,000 families.[13] The Coalition Government predict that the policy will save £225m.[1] Half of those affected by the benefit cap live in London where rents are 61% higher than the national average.[14] Unemployed families in wealthier areas will be unable to afford to stay in their homes and could face homelessness.[15]
Legal challenges
The welfare cap has been the subject of a number of legal challenges.
2013
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In November 2013 the High Court rejected a judicial review of the benefit cap brought by public interest lawyers acting on behalf of a victim of domestic violence. Women's right's and domestic abuse charities have argued that the benefit cap may force domestic abuse victims to return to the home of their abusers.[16]
2015
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In Hurley v Secretary of State for Work and Pensions the benefit cap was successfully challenged on the grounds that it discriminated against carers.[17]
Reaction
Critical
George Eaton argued in the New Statesman magazine that "the cap is less a serious act of policy than a political weapon designed to trap Labour on the wrong side of the argument".[18]
The Guardian have argued that because the cap applies regardless of family size larger families will be disproportionately affected.[16] Before the introduction of the cap, The Children's Society estimated 140,000 children (1.04% of children in the UK) and 60,000 adults would be affected.[19]
Chris Goulden of the Joseph Rowntree Foundation has criticised the way in which the cap is more likely to include benefits claimed by the poorest in society:
"there is more spending that is not in the welfare cap (albeit virtually all state pension) than is within the cap. Overall, 30% of spending from within the welfare cap is on the richest half of society but 40% of the protected spend"[20]
Faiza Shaheen of the New Economics Foundation think-tank has argued that the welfare cap will not tackle the underlying causes of welfare dependency.[21]
Positive
Some right-wing critics have argued that the cap is too high. The Daily Mail newspaper note that an individual would require a take home income of £35,000 to enjoy an income of £26,000. Conserative MP David Ruffley has argued for a welfare cap of £20,000.[13]
References
- ↑ 1.0 1.1 1.2 Lua error in package.lua at line 80: module 'strict' not found.
- ↑ 2.0 2.1 Benefit cap's polling success paves way for tough 2015 promises » Spectator Blogs
- ↑ Lua error in package.lua at line 80: module 'strict' not found.
- ↑ http://www.bbc.co.uk/news/business-33429390
- ↑ Labour MPs should oppose the welfare cap – here's why | James Bloodworth | Comment is free | theguardian.com
- ↑ Lua error in package.lua at line 80: module 'strict' not found.
- ↑ Lua error in package.lua at line 80: module 'strict' not found.
- ↑ Lua error in package.lua at line 80: module 'strict' not found.
- ↑ New Statesman | A very modest Lib Dem rebellion on the benefits cap
- ↑ New Statesman | Labour welfare cap rebels: the full list
- ↑ Lua error in package.lua at line 80: module 'strict' not found.
- ↑ http://www.disabilityrightsuk.org/news/2016/january/carers-allowance-recipients-be-exempt-benefit-cap
- ↑ 13.0 13.1 Lua error in package.lua at line 80: module 'strict' not found.
- ↑ Lua error in package.lua at line 80: module 'strict' not found.
- ↑ The Guardian (London) (20/07/2015) Lower benefit caps 'will exclude poor families from large parts of England'
- ↑ 16.0 16.1 Benefits cap will have catastrophic effect on families, court will hear | Society | theguardian.com
- ↑ http://www.disabilityrightsuk.org/hurley-and-others-v-secretary-state-work-and-pensions-2015
- ↑ Lua error in package.lua at line 80: module 'strict' not found.
- ↑ Lua error in package.lua at line 80: module 'strict' not found.
- ↑ Lua error in package.lua at line 80: module 'strict' not found.
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