Benefits bill capped at £119 billion

Total spending on most benefits and tax credits will be capped at £119.5 billion in 2015-16, the Chancellor of the Exchequer has announced in his 2014 Budget speech.
 
The so-called 'welfare cap' was originally proposed in the 2013 Spending Round. It excludes spending on state pensions and 'automatic stabilisers' (mainly jobseeker's allowance and its passported housing benefit). The level of the cap will rise in line with forecast inflation to £122 billion in 2016-17, £124.6 billion in 2017-18 and £126.7 billion in 2018-19.
 
The coalition government said the cap will 'ensure that significant increases in spending do not go uncorrected'.
 
The Child Poverty Action Group commented: 'Announcing a cap for social security spending without a plan to address the root causes of low pay, high rents and high childcare costs, simply forces the most vulnerable in society to pay the price for inaction'.
 
The Social Market Foundation think tank said the cap would do little to help the ostensible aim of 'making work pay' and was likely to 'create obfuscation' on important policy decisions rather than forcing governments to confront them – for example, over the growing housing benefit bill for people in rented accommodation.
 
The opposition Labour Party supported the cap in the House of Commons, though around 13 of its backbench MPs voted against.
 
SourceBudget 2014, HC 1104, HM Treasury, TSO
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Publication date: 
Mar 19 2014