Question to the Department for Work and Pensions:

To ask the Secretary of State for Work and Pensions, whether her Department plans to treat the ULEZ car and motorcycle scrappage scheme grant payment as savings in respect of applications for means-tested benefits; and if she will ensure that those payments are not treated as savings in the context of the wider benefits of that scheme.

Transport for London’s Ultra Low Emissions Zone Scrappage Scheme payments would for the purposes of means-tested benefits be treated as capital. However, they would only impact on a person’s entitlement if – together with any other capital they might have – they brought their overall capital above one of the relevant lower capital limits.

Within working-age means-tested benefits (Universal Credit, Housing Benefit, Income Support, income-based Jobseeker’s Allowance, income-related Employment and Support Allowance) the lower capital limit is £6,000. In Universal Credit, which is calculated monthly, capital above £6,000 reduces entitlement by £4.35 for every whole or part £250 above £6,000. In the other working-age means-tested benefits, which are calculated weekly, capital above £6,000 reduces entitlement by £1 for every whole or part £250 above £6,000. Entitlement to working-age means-tested benefit usually ends where capital is above £16,000 (the upper capital limit.)

With regard to State Pension Credit and Housing Benefit for people over pension age, the lower capital limit is £10,000. Capital above £10,000 reduces entitlement by £1 for every whole or part £500 above £10,000. There is no upper capital limit applying to State Pension Credit. There is however an upper limit of £16,000 for people over pension age receiving Housing Benefit.

The capital limits set out above strike a balance between protecting less well-off people and protecting the taxpayer, whilst at the same time recognising the conscientious efforts of people who have built up capital. Whilst it is important to encourage saving, it has never been thought right for capital to be ignored and therefore it is also reasonable there should be capital limits above which benefits are not available. The limits ensure that the help which comes from taxpayers, many of whom are themselves on low incomes and have limited capital, is directed to people who need it most.