Firstly, apologies for the long delays in posting things here.  It’s being a busy time, as you’d expect around welfare reform.  I’ve been particularly busy updating our Future Benefits Model (FFBM) with the April 2014 benefit rates and rules and getting the known changes and indexations for the next five years plugged in.  Now done thankfully, despite a major problem with Excel 2013 and an add-in, which took a long time to track down.

That gave me time to watch yesterday’s perfomance by Iain Duncan-Smith when, again, the possibility of lowering the amount of the cap was raised (cough!).  I”ve already looked at this  back in September and modelled a lot of the impact here.

What doesn’t seem to have been noticed is that they’ve already done this.  When I was updating the benefits rates in the FFBM something odd appeared in the uprating circular.

The current cap, which only applies to Housing Benefit is set at £500 a week for couples and lone parents and £350 a week for single people. The new rate, shown above, for Universal Credit keeps the effective £500 a week for those with children (the Universal Credit rates are shown monthly) but couples without children are moved from the £500 rate to the lower £350 figure.

That means their cap level goes from £26,004 a year to £18,204. That should satisfy some of those baying for the lower cap yesterday.

Is it likely to be a drafting error as the text is very specific in describing who it applies to and must have been positively changed to the new wording?  It appears in the same way in the written ministerial statement of December 9th by Steve Webb MP and in the downloadable tables on the gov.uk website.  No correction has been made to these.

It would be a change to the existing regulations for Universal Credit which, as shown below, apply the higher cap to couples.

If it’s intentional we may expect an amendmendment to this effect unless a deal of fuss arises. It would apply to few people, even when couples begin to appear in Universal Credit, because without children there will normally be a limit to lower one-bedroom rates of benefit. The weekly amount of benefit for a couple in 2014 / 2015 is £113.70 for current benefits and only a few pence different for Universal Credit. That leaves £236.30 of benefit before capping applies.

Most of those getting higher rates of benefit are likely to escape the cap because of the disability exclusions.

Housing will be the main contributor to extra support needs. From our Housing Affordability Tables (which you can download from the link at the top of the page) it will be seen that only three areas have a private tenancy LHA limit higher than £236.30 for one bedroom – Central London, Inner North London and Inner East London on the 2013 / 2014 rates. The highest mean social rents by authority for one bedroom properties are just under £100.

It’s also worth noticing that none of the cap levels have increased this year so the real value of benefits for those capped goes down again and more people will be caught by the cap.