The cap applies to people aged between 16 and 64 and means that couples and lone parents will not receive more than £500 a week, while single people with have a £350 limit. It is designed to reflect average working income, and ensure that those claiming benefits are not better off than people in work.
Jobseekers Allowance, Housing Benefit and Child Benefit will all be counted towards the cap.
According to Department for Work & Pensions estimates, around 40,000 households will be affected. It is expected to save £300m over the first two years.
Work and Pensions Secretary Iain Duncan Smith said the cap was ‘fair and reasonable’ and would help rebalance the welfare system. ‘This is part of a process of getting people back to work who had previously had difficulty or given up’, he told the BBC.
But Ruth Davison, director of the National Housing Federation, said the cap would leave many families facing some difficult choices.
‘In many parts of the country, families won’t be able to pay high private rents because of the cap. There will be more demand than ever for affordable housing, particularly in Greater London where nearly half (49%) of the people affected by the benefit cap live,’ she said.
‘Families could face the stark choice of cutting back on essentials or having to move away long distances from their support networks to look for cheaper places to live. Until we see a long-term affordable house building programme that will drive down the price of rents for everybody, housing costs should be removed from the cap.’
