Families given one-year notice of benefit cap

The benefit cap comes into effect in April 2013 and will limit the amount of benefits that couples and lone-parent households can receive to around £500 a week or £26,000 a year.

The government argues this figure is the equivalent of the average household income after tax – or a gross household salary of £35,000.

Letters from the welfare minister Lord Freud are being sent to households that may be affected by the benefits cap. They will set out the support available to help people get into work and outline exemptions to the cap.

“These reforms will restore integrity and fairness to a system that is failing the very people it was supposed to help,” Freud said.

“We are now writing to all claimants who are affected by the benefit cap setting out the exemptions and offering intensive advice on a supported return to work for those who are affected - but our message is clear, from April 2013, the state will no longer pay households more than the average wage in benefits.”

The benefit cap will not affect households in which a family member qualifies for working tax credit, a measure the government argues will increase the incentive for families to find work. ?

Parents who have lost their job but were employed for at least 12 months prior to claiming will have nine months' grace before the benefit cap applies to them. The benefit cap will also not apply to anyone claiming disability living allowance.

In addition, one-off payments such as Social Fund loans and non-cash benefits, for example free school meals, will not be included in any assessments of families’ benefit income.

From October 2013, tax credits and benefits including jobseeker’s allowance, income support, working tax credit, child tax credit, housing benefit and income support will start to be merged into a single universal credit payment.

According to the Department for Work and Pensions, people will receive a single payment each month designed to help make sure they are “better off in work than on benefits”.