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The welfare cap

Published Monday, March 21, 2016

This policy limits the total amount that Government can spend on certain benefits, including tax credits and housing benefit. Not to be confused with the household benefits cap which limits the amount individual households can receive.

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The welfare cap is a limit on the amount that Government can spend on certain social security benefits in the five years from 2016/17.

The Government introduced the cap in Budget 2014 and Office for Budget Responsibility (OBR) first reported on whether the cap had been met or exceeded alongside the Autumn Statement 2014.

 

Alongside the Spending Review/Autumn Statement 2015, the OBR announced that the Government would breach the cap in three of the next five years.

 

The operation of the cap, the actions required from the Treasury and consequences if the cap is exceeded are outlined in the Charter for Budget Responsibility.

This policy had been longed planed, with Budget 2011 stating that the Government was “considering options for strengthening control” over this type of spending

 

Welfare cap vs. the household benefit cap

The welfare cap on specified elements of social security spending is not to be confused with the household benefit cap – introduced in 2013 – which limits total household benefits at £500 per week for a family and £350 per week for a single person with no children (subject to certain exemptions). See our note on The Household Benefit Cap (SN06294) for more on this. 

Commons Briefing papers SN06852

Author: Chris Rhodes

Topics: Benefits policy, Economic policy, Public expenditure

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