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Maximum benefits income to be capped

Gareth Morgan
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So the Chancellor says:

“So I can announce today that for the first time we will introduce a limit on the total amount of benefits any one family can receive.

And the limit will be set according to this very simple principle:

Unless they have disabilities to cope with, no family should get more from living on benefits than the average family gets from going out to work.

No more open ended chequebook.

A maximum limit on benefits for those out of work.

Set at the level that the average working family earns.

Money to families who need it – but not more money than families who go out to work.

That is what the British people mean by fair – and we will be the first Government in history to bring it about.”

The BBC says:

“The cap will apply to the combined income from jobseekers’ allowance, income support, employment support allowance, housing benefit, council tax benefit, child benefit and child tax credit.

It would also would include carer’s allowance and industrial injuries disablement benefit - although it would not include one-off benefits such as social fund loans and non-cash benefits such as free school meals or working tax credits.

All households with a disability living allowance claimant will be exempted from this measure, as would war widows.”

[ Edited: 4 Oct 2010 at 03:18 pm by Gareth Morgan ]
shawn mach
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John Birks
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Considering the speech and not the headlines.

George Osborne “Unless they have disabilities to cope with, no family should get more from living on benefits than the average family gets from going out to work.”

The cap would more than likely be £380 per week which is the reported £26k after tax for a single earner.

[ Edited: 5 Oct 2010 at 11:27 am by John Birks ]
Gareth Morgan
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It’s going to be administered by HB departments, according to reports, who will deduct HB downwards to meet the cap.

What happens to large families with mortgages is going to be interesting.

Vonny
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A rough estimate of a couple with four kids in Swansea (using 4 bed lha rate and a disability premium) came up with loosing £35 approx a week and this is a relatively low rent area - the impact on higher rent areas will be bad - but the daily mail will not be complaining about this one (RIP universal benefits)

nevip
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A couple with 5 school age children in private rented accommodation (with Liverpool LHA rates and depending on the level of council tax) would currently get anything from between 44K-48K from JSA/CTC/LHA/CTB/CB.  Down to 26K is a big slash in income in times of high unemployment.

Single parents on 45K will lose child benefit whereas a couple each on 40K will not.  Seems true to form for the Tories.  Pick on the usual targets.  Nothing changes.

And all the shillyshallying nonsense from Tory ministers on tv last night that this is not means testing because no-one will have to complete complex claim forms.  Any system which awards a benefit according to a persons means is means testing.  If it looks like a duck, walks like a duck and talks like a duck then its a b****y duck!

John Birks
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Vonny - 05 October 2010 11:08 AM

A rough estimate of a couple with four kids in Swansea (using 4 bed lha rate and a disability premium) came up with loosing £35 approx a week and this is a relatively low rent area - the impact on higher rent areas will be bad - but the daily mail will not be complaining about this one (RIP universal benefits)

Shouldn’t include the DP as disabled households would not face the same regime (according to George.)

I did however, try two adults, two kids, three beds, LHA rate of £149.59 (current rates)

http://www.stockport.gov.uk/services/benefits_advice/benefits/lha/localhousingallowancerates

And the £380 is a reduction of about £30 on what they could expect.

Then again LHA is to be reduced anyway which may bring the figure down prior to the cap.

Pete C
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If it really is going to be calculated from annual rather than weekly income how would they work out annual income in advance, would HB have to be paid ‘on account ’ like tax credits until reconcilliation at the end of the financial year?

[ Edited: 5 Oct 2010 at 01:57 pm by Pete C ]
Vonny
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I had read that dla was not included - we will have to wait and see about the detail and how premiums will be affected - think of all those double sdp’s

Pete C
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Sorry for my post above, I’m not sure where I got the idea that it was going to be calculate annually from!

John Birks
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Pete C - 05 October 2010 11:58 AM

Sorry for my post above, I’m not sure where I got the idea that it was going to be calculate annually from!

The Credit bit?

A system could be devised where the dept add up all you’ve had over the years and deduct from your estate (if any.)

The remainder being distributed as you intended?

Dolge
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The Tory news release makes it clear that it is receipt of DLA only that will exempt a household. So it will include a household with DP (or rather, by 2013, one or two WRAC’s) but no DLA, and CP (say for an aged parent with a household elsewhere). Council Tax Benefit is included in the total. Given this it is not difficult to come up with scemarios, in most parts of the country, where a family with 3-4 kids in private rented accommodation, or with a substantial mortgage, would fall foul of the rule. Furthermore the limit is movable with median earnings - which could head down rather than up. Cuts already proposed to LHA will work the opposite way however.

Overall probably not safe to assume this will be a London only problem. But the premise of the proposal is wrong since an in-work family in comparable circumstances would also be likely to receive significant state support. Except that the universal credit will by then be replacing Tax Credit for people in work, with a much higher taper…

Richard Atkinson

1964
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Plus, surely it will be an administrative nightmare? Seems to me that any gain will be far outweighed in implementation costs.

John Birks
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1964 - 05 October 2010 03:17 PM

Plus, surely it will be an administrative nightmare? Seems to me that any gain will be far outweighed in implementation costs.

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[ Edited: 6 Oct 2010 at 10:31 am by John Birks ]