Town halls to administer Osborne's benefits cap

4 Oct 10
Councils are to be charged with implementing the benefits cap announced by Chancellor George Osborne today
By Lucy Phillips in Birmingham

4 October 2010

Councils are to be charged with implementing the benefits cap announced by Chancellor George Osborne today.

In his keynote address to the Conservative Party conference in Birmingham, Osborne revealed that out-of-work families are to have their benefits capped at the level of average household income. This is estimated to be £500 a week by 2013, when the change will come in.

Osborne said money would go to families who need it ‘but no more money than to families who go out to work’. He added: ‘That is what the British people mean by fair – and we will be the first government in history to bring it about.’

The cap will apply to the combined income from Jobseeker’s Allowance, Income Support, housing and council tax benefits and child benefit and tax credits. One-off benefits such as social fund loans and non-cash benefits such as free school meals will not be affected.

Households with a disabled resident or a war widow will be exempt from the cap.

Until the single Universal Credit benefit is introduced, local authorities will have to make the cap work. They will be asked to assess the total benefit income of all new and existing housing benefit claimants and reduce housing benefit accordingly to ensure claimants receive no more than the cap.

Central government will provide councils with some extra resources to fund this. Full costings will be set out in the Spending Review.

Osborne also announced that child benefit will be withdrawn from families which include a higher-rate taxpayer, ie someone earning more than £43,875 per annum. This change is also set to come in from 2013 and will affect 1.2 million households. It is estimated that it will save £1bn a year.

Osborne told Conservative delegates that he believes in public services, but added: ‘The first truth is that unless we reform our public services, they will decline.

‘We saw over the past ten years that more money without reform was a recipe for failure. Less money without reform would be worse.

‘Our public services were designed for the 1950s, controlled from the centre, delivered only by government, and with no choice for the families who use them. Unreformed, they simply cannot respond to the needs and expectations of today.

‘There are millions of hard-working, talented and creative people who have dedicated their careers to our public services. We must liberate them to be all that they can be.’

Looking forward to the October 20 Comprehensive Spending Review, the chancellor said it would ‘put this country’s finances on a sustainable path for years to come’.

He added: ‘The world has confidence in the plans we have set out. Vigilant at all times we remain – but there is no panic, no daily dread of the bond market, no paralysing fear that our credit rating could be lost. Instead a clear-sighted, resolute vision of the course we must stick to through the continuing storm.’

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