Welfare Reform Bill – Clause 94: The Benefits Cap

The government’s Welfare Reform Bill aims to overhaul the benefits system and reduce ‘welfare dependency’.

The bill started its passage through Parliament 16 February 2011 in the House of Commons. Having completed all the stages there, it went to the House of Lords on 16 June 2011. Following a number of defeats in the House of Lords that were subsequently overturned by the Commons, Peers debated the bill again on 14 February. They agreed all but one amendment on cutting payments to specific council tenants with one spare bedroom. The bill now has to go back to the House of Commons, where it is likely that the change will be reversed.

The bill’s origins and provisions

The Welfare Reform Bill follows the November 2010 White Paper, ‘Universal Credit: welfare that works’, which set out the government’s proposals for reforming welfare to improve work incentives, simplify the benefits system and tackle administrative complexity. In that document the government made it clear that they were determined to reform the benefit system to make it fairer, more affordable and better able to tackle poverty, worklessness and welfare dependency.

The bill will introduce a ‘Universal Credit’ that will replace a range of existing means-tested benefits and tax credits for people of working age, starting from 2013. The bill also makes other significant changes to the benefits system, in particular it:

• Introduces Personal Independence Payments to replace the current Disability Living Allowance
• restricts Housing Benefit entitlement for social housing tenants whose accommodation is larger than they need
• up-rates Local Housing Allowance rates by the Consumer Price Index (CPI)
• amends the forthcoming statutory child maintenance scheme
• limits the payment of contributory Employment and Support Allowance to a 12-month period
• caps the total amount of benefit that can be claimed to £26,000.

London Councils' role

London Councils has been lobbying on the bill to improve its provisions in relation to London. The issues of concern include:

• Reflecting London’s higher costs, especially in childcare costs and ensuring that the amount varies according to costs in that area
• Making the case for a regional benefit cap – the cap in London should be related to wage levels in the region
• London Councils is opposed to the proposals to localise Council tax benefit.

The Welfare Reform Bill - briefings from London Councils

London Councils produced a number of briefings to accompany the Welfare Reform Bill as it passed through parliament. Please see the accompanying links below for further information.