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Housing Benefit

Work and Pensions written question – answered on 8th June 2011.

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Photo of Stephen Timms Stephen Timms Shadow Minister (Work and Pensions)

To ask the Secretary of State for Work and Pensions if he will estimate the cost to the Exchequer of exempting from the total household benefit cap households where no adult is subject to any work-related requirements for universal credit or out-of-work benefits under the provisions of the Welfare Reform Bill in each of the next five financial years.

Photo of Chris Grayling Chris Grayling The Minister of State, Department for Work and Pensions

The spending review 2010 announced that from 2013 we will introduce a cap on the total amount of benefit that working-age people can receive so that households on out-of-work benefits will no longer receive more in welfare payments than the average weekly wage for working households. The benefit cap is intended to promote fairness between those in and out of work and to increase incentives for people to move into work or increase their hours of employment.

On its introduction we estimate that household benefit payments will be capped at around £500 per week for couple and lone parent households and around £350 per week for single adult households.

If the benefit cap were applied as described in the spending review the savings to the Exchequer are estimated to be £225 million in 2013-14 and £270 million in 2014-15.

If households where no adult is subject to any work-related requirements were excluded from the benefit cap, savings would fall to approximately £190 million in 2013-14 and £230 million in 2014-15. Figures for 2015-16 and beyond are not available.

Analysis of those affected by the benefit cap has been modelled using survey data—as such there is a degree of uncertainty around the results.

Note that estimates above are based on the current benefit system including changes announced in the spending review 2010, but excluding universal credit. The estimated savings from the benefit cap in universal credit will depend upon final detailed design issues regarding the treatment of in-work households.

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