New benefit cap of £500 a week rolled-out across Britain

Major changes are taking place to the benefit system from today. Here is what you need to know.

The amount of benefits people living in England, Scotland and Wales can claim will be capped from today.

Couples and lone parents will receive no more than £500 a week, while the amount available for single people will be capped at £350.

The changes have been introduced as part of a complete overhaul of the benefits system in the UK.

Iain Duncan Smith, the Work and Pensions Secretary, said the changes would return fairness to the welfare state and to make sure those on benefits aren’t receiving more money than those in employment.

The benefit cap

Jobseeker’s Allowance, Child Benefit and Housing Benefit are three of the major payments which will count towards the new cap.

It is meant to reflect the average UK income and will act as an incentive for people to work, instead of allowing people to become dependent on welfare payments, Duncan Smith says.

The Government will also save £110 million a year once the changes are in place.

It has already been introduced in the four London boroughs of Bromley, Croydon, Enfield and Haringey and will be rolled-out across the country between 15th July and 30th September

Unfair housing costs

Critics have hit back at the Government and say the cap doesn’t address underlying issues with housing costs and unemployment.

As house prices vary significantly across the country, they say the cap doesn’t account for those living in areas such as London or the South East of England who face greater living costs.

For example Ruth Davison, director for the National House Federation (NHF), says she thinks Housing Benefit should be made exempt from the cap. This is because many people across the country won’t be able to pay their rent because of the changes.

Exemptions to the benefit cap

There are some exceptions to the benefit cap. If someone in a household qualifies for Working Tax Credit, for example, the cap won’t apply.

Those receiving any of the following benefits will also be exempt: Disability Living Allowance, Personal Independence Payment, Attendance Allowance, Industrial Injuries Benefits, Employment and Support Allowance or a War Widow’s or War Widower’s Pension.

How will benefit payments change?

The Department for Work and Pensions (DWP) is contacting everyone who will be affected by these changes. There is also a calculator on the DWP website which will tell you exactly how your payments will be altered.

The cap will be applied to the total amount the people in a household earn from a number of benefits including: Bereavement Allowance, Child Benefit, Child Tax Credit, Housing Benefit, Maternity Allowance and Jobseeker’s Allowance.

Do you think the benefit cap is fair and sustainable? Do you think Housing Benefit should be exempt? Let me know in the comment box below.

More on benefits:

Should well-off pensioners give back their benefits?

How can pensioners in the same situation get different benefits?

Tenants' rights and where to go for help

Saving in a pension? You are as well off on benefits

More people turning to Housing Benefit to help pay rent

What to do if you're made redundant