An overall cap on government spending on benefits will start in 2015, the Chancellor George Osborne has announced in his Autumn Statement. The idea of a 'welfare spending' cap was first put forward by the Chancellor earlier in the year in his 2013 Budget.
- The cap will apply to all social security and personal tax credits expenditure for the UK, except for pensions and the most cyclical elements of spending (in particular, jobseeker's allowance). Over £100 billion of expenditure will be within the scope of the cap.
- The precise level of the cap will initially be set in the 2014 Budget, but will be reviewed thereafter at the beginning of each Parliament. The cap will not apply for the first year in order to give the coalition government time to implement further spending cuts before then, including those already in the pipeline.
- The independent Office for Budget Responsibility (OBR) will assess the government’s performance against the cap once a year alongside the Autumn Statement. The OBR will also report annually on trends in and drivers of capped expenditure.
- If the government wants to change the level of the cap during the Parliament this will trigger a debate and a vote in the House of Commons. If the government breaches the cap this will also trigger a Commons debate and vote.
Source: Autumn Statement 2013, Cm 8747, HM Treasury, TSO
Links: Autumn Statement | Distributional analysis | Hansard | HMT press release | CPAG press release | JRF press release | Oxfam press release | Guardian report (1) | Guardian report (2) | Telegraph report