Welfare Reform Act 2012

96 Benefit cap

(1) Regulations may provide for a benefit cap to be applied to the welfare benefits to which a single person or couple is entitled.

(2) For the purposes of this section, applying a benefit cap to welfare benefits means securing that, where a single person’s or couple’s total entitlement to welfare benefits in respect of the reference period exceeds the relevant amount, their entitlement to welfare benefits in respect of any period of the same duration as the reference period is reduced by an amount up to or equalling the excess.

(3) In subsection (2) the “reference period” means a period of a prescribed duration.

(4) Regulations under this section may in particular—

(a) make provision as to the manner in which total entitlement to welfare benefits for any period, or the amount of any reduction, is to be determined;

(b) make provision as to the welfare benefit or benefits from which a reduction is to be made;

(c) provide for exceptions to the application of the benefit cap;

(d) make provision as to the intervals at which the benefit cap is to be applied;

(e) make provision as to the relationship between application of the benefit cap and any other reduction in respect of a welfare benefit;

(f) provide that where in consequence of a change in the relevant amount, entitlement to a welfare benefit increases or decreases, that increase or decrease has effect without any further decision of the Secretary of State;

(g) make supplementary and consequential provision.

(5) In this section the “relevant amount” is an amount specified in regulations.

(6) The amount specified under subsection (5) is to be determined by reference to estimated average earnings.

(7) In this section “estimated average earnings” means the amount which, in the opinion of the Secretary of State, represents at any time the average weekly earnings of a working household in Great Britain after deductions in respect of tax and national insurance contributions.

(8) The Secretary of State may estimate such earnings in such manner as the Secretary of State thinks fit.

(9) Regulations under this section may not provide for any reduction to be made from a welfare benefit—

(a) provision for which is within the legislative competence of the Scottish Parliament;

(b) provision for which is within the legislative competence of the National Assembly for Wales;

(c) provision for which is made by the Welsh Ministers, the First Minister for Wales or the Counsel General to the Welsh Assembly Government.

(10) In this section—

• “couple” means two persons of a prescribed description;

• “prescribed” means prescribed in regulations;

• “regulations” means regulations made by the Secretary of State;

• “single person” means a person who is not a member of a couple;

• “welfare benefit” means any prescribed benefit, allowance, payment or credit.

(11) Regulations under subsection (10) may not prescribe as welfare benefits—

(a) state pension credit under the State Pension Credit Act 2002, or

(b) retirement pensions under Part 2 or 3 of the Social Security Contributions and Benefits Act 1992.