Benefit cap

The benefit cap is a British Coalition government policy that caps the amount in state benefits that an individual household can claim per year. The benefit cap was introduced at £26,000 per year (£500 per week) which is the average income of a family in the UK. For single people with no children it was set at £18,200 per year (£350 per week). The level of the benefit cap was subsequently lowered following an announcement in the July 2015 United Kingdom budget. From Autumn 2016 it was reduced to £20,000, except in London where it was reduced to £23,000.

The benefit cap was announced in the October 2010 Spending Review by the Coalition Government and was contained in the Welfare Reform Act 2012 and the Benefit Cap (Housing Benefit) Regulations 2012. It started being introduced in April 2013 and was fully implemented by September 2013. By 2014 a total of 36,471 households were having their payments reduced by the benefit cap, of which 17,102 were in London.

The policy was a facet of the Coalition government's wide-reaching welfare reform agenda which included the introduction of Universal Credit and reforms of housing benefit and disability benefits.

Affected benefits:

The following are the total benefits that individual households are limited to.

Concern was expressed that the 2016 reduction in the cap would seriously increase poverty and homelessness among affected families and would affect over 300,000 children. Research by the Chartered Institute of Housing (CIH) indicated that the number of families affected would be higher than the government expected and warned that continuing the policy would make Theresa May’s promise of a “society fairer for families” harder to achieve. Terrie Alafat of the CIH feared that many families could face poverty following a redundancy or ill health. She said: “This could have a severe impact on these families, make housing in large sections of the country unaffordable and risk worsening what is already a growing homelessness problem”. Imran Hussain of the Child Poverty Action Group said: “A lower benefit cap is crueller and more damaging for children". Once the reduction had come into force, fears were expressed that children's life chances would be affected.

The Conservative Party supported the benefit cap which was announced by George Osborne at the 2010 Conservative Party conference.

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