Cap on welfare spending


The government also introduced a cap on the total amount it can spend on certain social security benefits (including tax credits and child benefit) in the five years from 2016-17. The cap was set at £114.6 billion for 2017-18. 


However, an Office for Budget Responsibility (OBR) assessment showed that relevant welfare spending was expected to breach the cap for three out of five years. 


Changes to the operation of the welfare cap were subsequently set out in an autumn update to the Charter for Budget Responsibility published in January 2017. Relevant welfare spending must now be within the cap and a 3% margin in 2021-22 and the cap will only be considered at the first budget or first update of each new Parliament.