The DWP gave an update on the Benefit Cap to a small group of local authorities. The key messages are summarised below.
- The benefit cap will be reviewed annually, and uprated at the Ministers discretion. It is not clear whether the uprating will be in line with inflation, or remain linked to median incomes.
- The DWP’s latest estimates are that the cap will affect 67,000 households. The DWP will carry out analysis at the household level and will therefore be able to identify and notify in advance those household affected by the cap. Local authorities will be notified in advance of all households within their constituency that are affected by the cap.
- The DWP have identified a number of options available to households affected by the cap, that will make them less likely to relocate. The first of these isfinding work at 16+ hours per week (24+ for couples) which will exempt them from the cap. Under Universal Credit we assume that this would likely be converted into a Gross income level of the same number of hours multiplied by the minimum wage.
- Other options identified include reducing ‘non-rental expenditure’, re-negotiating rent levels and accessing discretionary housing payments.
- The DWP recognise that work won’t be a realistic option for all households affected by the cap, and acknowledge the risk that perverse incentives may come into play around couple formation or DLA claims. They believe these will affect a minority of cases, households will be supported as the cap comes into force.
- Households making a new claim who are affected by the cap will have a nine month grace period, within which they will be supported to find work and re-enter the labour market.
- The DWP continued to use estimates of £500 per week for couples and £350 per week for single people.
Over half of all households affected will be in Greater London. A further breakdown on the families affected by region will be available here soon. If you have any questions, please post them here and we will update you as we learn more.