What is it?
The Benefit Cap places a cap on the maximum amount of benefits that an out of work or under-employed household can receive. The Cap is £500 per week for a single parent or couple, and £350 per week for a single person. This means that if the combined total of your benefits is more than £500/£350, the difference will be deducted from your Housing Benefit, and you will receive less money towards your rent.
Which benefits are included?
- Income Support
- Jobseekers Allowance
- Employment and Support Allowance (Work-related Activities Group)
- Incapacity Benefit
- Housing Benefit
- Child Tax Credits
- Child Benefit
- Carer’s Allowance
Will the Cap apply to me?
If you or your partner is receiving Working Tax Credits, you will NOT be affected. In order to get Working Tax Credits you must work for 16 hours if you are single and 24 hours if you are in a couple.
If you, your partner or a dependent child are receiving Disability Living Allowance (at any rate or component) you will NOT be affected. However, if the person receiving Disability Living Allowance is an adult child or other adult family member, you will still be affected.
If you or your partner is in the Support Group of Employment and Support Allowance, you will NOT be affected.
If you or your partner is receiving Pension Credit or another pensioner benefit, you will NOT be affected.
If you stop working or lose your job, but were working and not claiming an out-of-work benefit for 50 of the last 52 weeks, you will be given 9 months ‘grace period’ before the Cap applies to you. However, the ‘grace period’ starts from when you stopped working, so those who lost their job over 9 months ago, will not receive a ‘grace period’.
When will it happen?
The Benefit Cap is starting in Bromley, Croydon, Haringey and Enfield from the 15th of April 2013. It will then be rolled out across London and the rest of the UK, sometime over the summer. It will take local authorities around 8 weeks to cap everyone.
In due course almost all benefits will be replaced by one single payment of benefits called Universal Credit, which will change the assessment of how the Cap applies, although the principles will remain the same. Universal Credit will come in from October 2013 but most people already on benefits will not be affected until 2014 at the earliest.
Which groups of people are most likely to be affected?
Large families and/or those living in expensive private accommodation will be affected first. People in temporary accommodation will also be affected because their rents are likely to be high. Around 60,000 households will be affected, with about half of those in London.
What can I do?
The easiest way of escaping the Cap is to enter employment and start receiving Work Tax Credit. If you cannot access Working Tax Credit, Disability Living Allowance or the Support Group of ESA, you are faced with limited choices:
- You can move to cheaper accommodation, probably outside of London or in another borough.
- Approach your local authority and make a homelessness application, but be aware that the law has changed and they can now force you to accept a private tenancy, which must be in an area you can afford. You will NOT be intentionally homeless if you can no longer afford your rent because of the Cap.
- Cut back on household essentials and live on less money, but this will depend on how much you have deducted.
- Apply for a short term Discretionary Housing Payment from your local authority Housing Benefit Department, which might cover the shortfall until you can access one of the benefits above, move to alternative accommodation, enter employment or otherwise escape the Cap.
If you went into temporary accommodation before the 9th of November 2012, or if you or another close family member is severely disabled, the local authority should NOT be able to force you to accept a private tenancy. If you are in expensive temporary accommodation they will have to move you to cheaper accommodation or into a hotel or bed & breakfast, in order to make your home affordable. This may mean that they have to place you outside of London, but you will remain ‘homeless’ and be able to move back when they find you permanent accommodation.
Get advice and help
Z2K specialises in working with people affected by changes like these. We are here to help and can provide you with advice, and if necessary with casework assistance, such as writing letters to the Council or applying for a Discretionary Housing Payment. Contact us to find out more.