Unit 4 Macro: Public Social Spending and the Welfare Cap

The UK Coalition government has introduced a controversial welfare cap - imposing a maximum on the total social security spending per year for each family. The welfare cap limits households to £26,000 a year. Couples and single parents receive no more than £500 a week in benefits, while the limit for single people is £350, although there are some exemptions.

The cap is designed to ensure that benefits payments do not exceed the income of the average working household and is designed both to cut total welfare spending and as part of a strategy of improving incentives for people to actively look for and take paid work.

Critics argue that a welfare gap does little or nothing to address deeper underlying problems such as the soaring cost of renting property and the lack of affordable child care.

Social spending varies greatly across different countries. The Economist live chart below looks at some of these differences.

Ian Duncan Smith defends the welfare cap

Is the Welfare Revolution Working? (Channel 4 News)

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