Lower benefit cap comes into effect

A cap to reduce the cap on benefits from £26,000 a year to £20,000 a year in the UK has come into force.

The cuts were included as part of 12 billion in welfare cuts announced in former chancellor George Osborne's Budget in July last year. It came under considerable opposition by campaigners and unions.

It is estimated that the benefits cap is set to affect 88,000 households primarily with high rents or large families.

Under the new cap, those living in the UK outside of Greater London will receive a maximum of:£384.62 per week (£20,000 a year) for a couple; £384.62 per week (£20,000 a year) for single people whose children live with them; and £257.69 per week (£13,400 a year) for single people who do not have children or whose children do not live with them.

For those living in Greater London boroughs the new cap is: £442.31 per week (£23,000 a year) for a couple; £442.31 per week (£23,000 a year) for single people whose children live with them; and £296.35 per week (£15,410 a year) for single people who do not have children or whose children do not live with them.

Damian Green, the current Work and Pensions Secretary, maintained that the move would incentivise more people into employment while offering free childcare offers and structuring benefits to make the transition as easy as possible.

However, David Finch, senior economic analyst at the Resolution Foundation, highlighted: “The combination of long-term productivity failings, higher inflation, lower than expected wage growth and more immediate welfare cuts mean that millions of low and middle income households could face a parliament of flat or falling living standards,"

A spokesman for the Department for Work and Pensions said: "We are committed to helping lone parents into a job which fits in around their caring responsibilities, which is why we are doubling the amount of free childcare available.

"We know that work is the best route out of poverty, and there are now record numbers of lone parents in work. The benefit cap provides a clear incentive to move into a job, even if it is part time, as anyone eligible for working tax credits is exempt.

"Even with the new cap, lone parents can still receive benefits up to the equivalent salary of £25,000, or £29,000 in London."