Conservatives Propose Major Reform to Household Benefit Cap to Save £1bn Annually

The Conservatives say they would stop some households being able to get unlimited benefit payments, by reforming the household benefit cap. The cap is a limit on the total amount of benefit payments most working age people can receive. However, there are exemptions for people on some benefits, including Personal Independence Payment (Pip), and for households on universal credit which earn £881 or more a month. If they win power, the Tories have said they would only exempt households from the cap if all adults who can work do so, while receiving benefits such as Pip would no longer be an automatic exemption. The party said its proposals would deliver at least £1bn of savings annually. Conservative leader Kemi Badenoch said the plans would "stop those who abuse the system getting almost unlimited welfare payments". A total of 111,000 households in Great Britain are affected by the cap, according to the latest government figures. However, the Tories said more than 2.3 million households were claiming benefits above the cap due to exemptions, including work. The level of the cap depends on whether someone lives in or outside Greater London, whether they are single or part of a couple, and whether someone has children. For example, for a couple living outside Greater London, the cap is £1,835 per month. The measure was introduced under the Conservative-Liberal Democrat coalition in 2013, with the aim of increasing the incentive to work and reducing long-term dependency on benefits. However, critics argue that limiting the amount part-time, low-income or out-of-work households can receive in benefits traps families in poverty. While the cap also applies in Northern Ireland, there is a system of supplementary payments to mitigate the impact on families with children. Under the Tory proposals, where a couple can both work, they would both have to work at least 16 hours a week to be exempt from the household benefit cap. Where there is only one person who can work, they would need to work 16 hours a week - the same as at present. Under the current system, where one member of the household receives an exempting benefit - such as Pip or Employment and Support Allowance (ESA) - then the whole household's benefits are uncapped. The Tories said they would change this so if a member of a household receives one of these exempting benefits, the cap is no longer automatically lifted. Instead, their exempting benefit alone will be given as a specific top-up. The party is also pledging to continue to review how the cap is applied. Badenoch said: "Welfare must always be there for those who need it most, but it should never discourage work or reward dependency. The Conservatives believe in fairness, and that means those on welfare should have to make the same choices about their family as those who are not." The Tories have proposed £23bn of savings from the welfare bill, through a package of measures including restricting benefits to UK citizens and ending access to sickness benefits for less serious mental health conditions. The party has also promised to reinstate the two-child benefit cap, which was scrapped by the government in April. That measure - which is separate to the household benefit cap - meant parents could only claim universal credit or tax credits for their first two children. The government proposed restricting eligibility for disability benefits last year, but ended up largely dropped its own plans after a revolt by Labour MPs. However, it says it is saving £1bn by cutting the amount that new claimants can receive for the health-related element of universal credit by up to 50%. Meanwhile, the government says its scrapping of the two-child benefit cap will lift 450,000 children out of poverty.