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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 excluding from the amount liable for the total household benefit cap (a) child benefit, (b) child tax credit, (c) child-care costs and (d) any amount of the universal credit awarded in respect of children 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.

Estimates suggest that excluding (a) child benefit from the calculation of the household benefit cap would reduce savings to approximately £115 million in 2013-14 and £140 million 2014-15, while excluding (b) child tax credit would reduce savings to approximately £40 million in 2013-14 and £50 million in 2014-15. Figures are not available for 2015-16 and beyond.

Working tax credit recipients (including those receiving child care support through WTC) are excluded from the benefit cap, therefore excluding support paid for (c) child care costs through working tax credit from the benefit cap will have no impact on the overall savings.

The information requested in section (d) is not available as the estimated savings from the benefit cap in universal credit will depend upon final detailed design issues regarding the treatment of in-work households.

Note that estimates above are based on the current benefit system including changes announced in the spending review 2010, but excluding universal credit.

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.

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