– CSR….. &.. DWP

Department for Work and Pensions

To provide a fair and affordable platform for the introduction of the Universal Credit the Spending Review also announces a package of reforms to the existing welfare system which will deliver net AME savings of £7 billion a year by 2014-15, including by:

• Capping household benefit payments from 2013 at around £500 per week for couple and lone parent households and around £350 per week for single adult households, so that no family can receive more in welfare than median after tax earnings for working households. All Disability Living Allowance claimants, War Widows, and working families claiming the working tax credits will be exempt from the cap;

• Withdrawing Child Benefit from families with a higher rate taxpayer from January 2013 so that people on lower incomes are not subsidising those who are better off, saving £2.5 billion a year by 2014-15; and

• Controlling the costs of tax credits by:

• Reducing the percentage of childcare costs that parents can claim through the childcare element of the Working Tax Credit (WTC) from 80 per cent to its previous 70 per cent level in April 2011, saving £385 million a year by 2014-15;

• Changing the eligibility rules so that couples with children must work 24 hours a week between them, with one partner working at least 16 hours a week in order to qualify for the WTC, saving £390 million a year by 2014-15;

• Freezing the basic and 30 hour elements of the WTC for three years from 2011-12, saving £625 million a year by 2014-15; and

• Increasing the child element above indexation by a further £30 in 2011-12 and £50 in 2012-13, in addition to the £150 and £60 increases provided at the June Budget. This will ensure that the overall outcome of the Spending Review will have no measurable impact on child poverty in the next two years.

• Time limiting contributory Employment and Support Allowance for those in the Work Related Activity Group to one year, to improve work incentives while protecting the most severely disabled and those with the lowest incomes, saving £2 billion a year by 2014-15;

• Increasing the age threshold for the Shared Room Rate in Housing Benefit from 25 to 35. This will ensure that Housing Benefit rules reflect the housing expectations of people of a similar age not on benefits, saving £215 million a year by 2014-15;

• Reducing spending on Council Tax Benefits by 10 per cent and localising it, saving £490 million a year from 2013-14, while protecting the most vulnerable. In addition, the Government will provide greater flexibilities to local authorities to manage pressures on council tax from the same date;

• Removing the mobility component of Disability Living Allowance for people in residential care, where such costs are already met from public funds, saving £135 million a year by 2014-15;

• Freezing the maximum Savings Credit award in Pension Credit for four years, thereby limiting the spread of means testing up the income distribution and saving £330 million a year by 2014-15;

• Helping homeowners facing difficulties by extending for a further year the temporary change to the Support for Mortgage Interest scheme, to reduce the waiting period for new working age claimants to 13 weeks and increase the limit on eligible mortgage capital to £200,000, both of which were due to expire in January 2011;

• Making permanent the temporary increases to Cold Weather Payments provided in the past two winters, at a cost of £50 million a year, so that eligible households receive £25 for each seven day cold spell recorded or forecast where they live; and

• To ensure dignity in retirement, the Government will uprate the basic State Pension by a triple guarantee of earnings, prices, or 2.5 per cent, whichever is highest.