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.

Policy

Cap on household welfare

Affected benefits:

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

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

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. 1 2 3 "'Thousands' hit by government benefit cap now in work". BBC News. 2014-02-06.
  2. 1 2 Benefit cap's polling success paves way for tough 2015 promises » Spectator Blogs
  3. ↑ Chorley, Matt (2014-01-13). "Benefits cap could be slashed, IDS reveals". Daily Mail (London).
  4. ↑ http://www.bbc.co.uk/news/business-33429390
  5. ↑ Labour MPs should oppose the welfare cap – here's why | James Bloodworth | Comment is free | theguardian.com
  6. ↑ "Government 'could breach its own welfare spending cap'". BBC News. 2014-06-20.
  7. ↑ "MPs approve annual welfare cap in Commons vote". BBC News. 2014-03-26.
  8. ↑ Porter, Andrew (2010-10-04). "Conservative Party Conference: George Osborne announces benefit cap". The Daily Telegraph (London).
  9. ↑ New Statesman | A very modest Lib Dem rebellion on the benefits cap
  10. ↑ New Statesman | Labour welfare cap rebels: the full list
  11. ↑ "BBC News - Liam Byrne: Labour supports regional benefit cap". bbc.co.uk. Retrieved 2014-04-17.
  12. ↑ http://www.disabilityrightsuk.org/news/2016/january/carers-allowance-recipients-be-exempt-benefit-cap
  13. 1 2 "33,000 Families Have Benefits Capped". Daily Mail (London). 2014-01-09.
  14. ↑ "New Statesman | The questions Labour needs to answer about its regional benefit cap". newstatesman.com. Retrieved 2014-04-17.
  15. ↑ The Guardian (London) (20/07/2015) Lower benefit caps 'will exclude poor families from large parts of England'
  16. 1 2 Benefits cap will have catastrophic effect on families, court will hear | Society | theguardian.com
  17. ↑ http://www.disabilityrightsuk.org/hurley-and-others-v-secretary-state-work-and-pensions-2015
  18. ↑ George Eaton (2013-10-23). "The benefit cap isn't working for the poor, but that was never the aim". New Statesman. Retrieved 2014-04-12.
  19. ↑ "The benefit cap is 'a blunt instrument'". The Children's Society. Retrieved 2015-11-25.
  20. ↑ James Bloodworth (26 March 2014). "Labour MPs should oppose the welfare cap – here's why". theguardian.com. Retrieved 17 April 2014.
  21. ↑ Phillip Inman (2013-03-19). "Spending cap won't tackle causes of welfare dependency, say critics". The Guardian. Retrieved 2014-04-17.

External links

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