Benefit cap understates average earnings

The £500 a week benchmark used by the coalition government to set its household benefit cap is significantly lower than the level of average earnings, a freedom of information request has revealed. Net median earnings for 2011-12 (the most recent year available) were £564 a week for working-age households.

The disclosure is significant because the main political justification for the £500 figure is that it is designed to ensure no household can receive more in benefits than it would receive (on average) through earnings from work. On this basis, it appears that those households subject to the cap are being hit by a benefit cut of around £64 a week, or over £3,300 a year, for which there is no rationale.

Source: Letter from Department for Work and Pensions (to Child Poverty Action Group), 23 July 2013
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Publication date: 
Aug 8 2013