Department for Work and Pensions
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Government gives one year’s notice of benefit cap

Letters are being sent this week to households who may be affected by the benefit cap, Minister for Welfare Reform Lord Freud has announced.

Letters will set out the intensive help that will be provided to get people into work as well as exemptions to the cap, online help and an information helpline.

The benefit cap comes into effect in April 2013 and will limit the amount of benefit couples and lone parent households can receive to around £500 a week or £26,000 a year – the equivalent of the average household income after tax or a gross household salary of £35,000.

Benefit claims for single people will be limited to around £350.

Lord Freud said:

“These reforms will restore integrity and fairness to a system that is failing the very people it was supposed to help.

“We are now writing to all claimants who are affected by the benefit cap setting out the exemptions and offering intensive advice on a supported return to work for those who are affected - but our message is clear, from April 2013, the state will no longer pay households more than the average wage in benefits.”

The benefit cap will not affect a household if a member qualifies for Working Tax Credit, increasing the incentive to find work.

People affected by the benefit cap will receive personalised support to find work from Jobcentre Plus or their local Work Programme and Work Choice provider.

People who have lost their job but were employed for 12 months or more prior to claiming, will have 9 months before the benefit cap applies to them.

The benefit cap will also not apply to people who claim Disability Living Allowance, Constant Attendance Allowance and Industrial Injuries Disablement Benefits, recognising the extra costs they face.

People who receive a War Widow’s or Widower's Pension will be exempt, as a part of the Government’s commitment to those serving or who have served in the Armed Forces and to their dependents.

The Government has also provided councils with a £120m fund to help people renegotiate rents or specific cases that need additional help with moving costs or other arrangements.

Notes to editors:

1.   The benefit cap will not apply to households where a person, their partner, any children they are responsible for and who live with them, qualify for Working Tax Credit or receive any of the following benefits:

  • Disability Living Allowance
  • Personal Independence Payment
  • Attendance Allowance
  • Constant Attendance Allowance
  • Employment and Support Allowance, if paid with the support component
  • War Widows or Widower's Pension
  • Industrial Injuries Disablement Benefit

2.   One-off payments e.g. Social Fund Loans and non-cash benefits, for example Free School Meals, will not be included in the assessment of benefit income.

3.   The following benefits all count when working out how much a person can get a week:

  • Bereavement Allowance
  • Carer’s Allowance
  • Child Benefit
  • Child Tax Credit
  • Employment and Support Allowance (except where it is paid with the support component)
  • Guardian’s Allowance
  • Housing Benefit
  • Incapacity Benefit
  • Income Support
  • Reduced Earnings Allowance
  • Jobseeker's Allowance
  • Maternity Allowance
  • Severe Disablement Allowance
  • Widowed Parent’s Allowance
  • Widowed Mother’s Allowance
  • Widow’s Pension
  • Widow’s Pension Age-Related

4.   From October 2013, tax credits and benefits including Jobseeker’s Allowance, Employment and Support Allowance, Income Support, Working Tax Credit, Child Tax Credit, Housing Benefit and Income Support will start to be merged into a single Universal Credit payment.

This means people will receive a single payment each month which will help ensure they will be better off in work than on benefits.

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