1. ITV Report

How the Government's Welfare Cap will work

MPs have voted overwhelmingly in favour of the government's Welfare Cap, bringing a ceiling to the amount the Treasury can spend on social security.

There was cross party support for the plans, with 520 MPs voting in favour of the cap.

Work and Pensions Secretary Iain Duncan Smith has lead the Coalition's welfare reforms. Credit: Dave Thompson/PA Wire/Press Association Images

Here is how it will work:

  • The cap limits overall spending on benefits to £119.5bn in 2014/15.
  • It does not include the state pension or Jobseeker's Allowance.
  • It is different to the Benefits Cap, which limits the amount a household can receive from social security to £26,000 a year.
  • The Chancellor will have to set total welfare spending at the beginning of each Parliament - MPs will have to approve any extra spending on top of this.
  • The total annual welfare spend will go up year-on-year in line with forecast inflation. The Treasury projects it will hit £126.7bn by 2018/19.

Here is a full run-down of all the benefits covered under the new cap:

  • Housing Benefit (except HB passported from JSA)
  • Winter Fuel Payments
  • Personal Tax Credits
  • Child Benefit
  • Tax-Free Childcare
  • Disability Living Allowance
  • Employment and Support Allowance
  • Incapacity Benefit
  • Income Support
  • Attendance Allowance
  • Statutory Adoption Pay
  • Statutory Maternity Pay
  • Statutory Paternity Pay
  • Universal Credit (except payments to jobseekers)
  • Bereavement benefits
  • Carer’s Allowance
  • Financial Assistance Scheme
  • Industrial injuries benefit
  • In work credit
  • Maternity Allowance
  • Pension Credit
  • Personal Independence Payment
  • Return to Work Credit
  • Severe Disablement Allowance
  • Social Fund - Cold Weather Payments
  • Christmas Bonus

And these are the benefits which will not be limited:

  • State Pension (basic and additional)
  • Jobseeker's Allowance and its passported Housing Benefit
  • Universal Credit payments subject to full conditionality and with zero income
  • Transfers within government (e.g. Over-75s TV licences)
  • Benefits paid by individual government departments

More on this story