Promoting fairness? Lowering the benefit cap will push more families into poverty

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This autumn the benefit cap will be cut, squeezing low-income families even further and pushing more people into poverty. The Welfare Reform & Work Act 2016 lowers the cap to £23,000 per annum for families (or £15,410 for single claimants) in London and £20,000 for families (or £13,400 for single claimants) outside of London. There are currently 3.9 million children living in poverty. Projections from the Institute for Fiscal Studies suggests that child poverty could rise by 50 per cent by 2020. Tightening the cap and taking away more support from low-income households will have a devastating effect on families and children.

The benefit cap uncovered

Whereas the existing benefit cap was justified by the Government as being linked to the average earnings, the 2016 Act removes this link and sets the cap according to arbitrary figures in primary legislation. In addition to reducing the cap to below the average earnings, the Act grants the Secretary of State the power to lower, or increase, the cap at any time depending on the national economic situation and ‘other relevant factors’.

The Department for Work and Pensions (DWP) claims that the benefit cap improves work incentives and promotes fairness between those on out of work benefits and taxpayers. This is a dubious assertion. The benefit cap affects in-work families, as well as those out of work. Two thirds of children in income poverty live in a household where at least one parent works.

This is not to say that in-work families are more deserving than out-of-work families: all should be entitled to a reasonable level of support based on needs. Capped benefits include child benefit, child tax credit and housing benefit and the lower cap will see families struggling to maintain housing security and being able to provide basic care and nutrition for their children. On the face of it, not very fair at all.

The benefit cap disproportionately affects women with children. This was challenged in SG and Others, where the Supreme Court agreed that the cap discriminates against women under Article 14 of the European Convention on Human Rights. Three out of five judges held that the benefit cap did not unlawfully discriminate against women as the discrimination was justified. The justification largely based on the fact the cap was in line with average earnings. In Lord Kerr’s dissenting speech he said “it cannot possibly be in the best interests of children affected by the cap to deprive them of the means to provide them with adequate food, clothing, warmth and housing, the basic necessities of life.”

The Government has failed to consider the comments made in SG with regards to the best interests of the child and impact of the benefit cap. Instead households face a lower cap estimated to affect a further 90,000 families in the UK and if the cap wasn’t enough bad news, there is a freeze on social security benefits and tax credits for the next four years and a very unpleasant and draconian “two child rule” that will come into force early next year.

How we can help

The DWP has started sending out letters with information on the reduced benefit cap however, it has not yet published a schedule for the roll out. The cap is likely to be implemented in a staged process from late autumn.

We are looking for test cases to challenge the benefit cap. If you are an adviser and have clients currently affected by the cap, we would like to hear from you. You can contact us by completing the referral form here. Alternatively you can email us directly at Testcases@cpag.org.uk.


Related Publication

OUT NOW - NEW Welfare Benefits and Tax Credits Handbook 2017/18Welfare Benefits & Tax Credits Handbook 2017-2018

Known as the 'adviser's bible' CPAG’s Welfare Benefits and Tax Credits Handbook is the essential and best-selling guide to all benefits and tax credits.

Our definitive guide to all benefits and tax credits is an essential resource for all professional advisers serious about giving the best and most accurate advice to their clients. 

With detailed information on all the recent changes to the social security system, including the latest on the roll-out of universal credit, the right to reside test and the sanctions regime, the Welfare Benefits and Tax Credits Handbook provides comprehensive advice about entitlement in 2017/18.

Order your copy online

Upcoming events for 2017

Two Child Limit – Implementation, Challenges and the Policy Context Two Child Limit – Implementation, Challenges and the Policy Context

London Thursday 22 June 2017 

This seminar will examine the two child limit in tax credits and means-tested benefits and its inevitable impact on child poverty.

Click here to book your place and for more information


Welfare Rights Conference 2017Welfare Rights Conference 2017

Universal Credit – Understanding and Managing the Risks for Families 

Manchester Thursday 7 September 2017
London Thursday 14 September 2017

This year's conference focuses on the very real risks facing families as the roll out of Universal Credit continues.

Click here to book your place and for more information


Some of our Training courses

Benefits for students
Thursday 8 June 2017, 10:00-16:30, London
£138 voluntary organisations, £195 statutory/other organisations, CPD hours: 5
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Challenging ESA Decisions
Friday 9 June 2017, 10:00-16:30, London
£138 voluntary organisations, £195 statutory/other organisations, CPD hours: 5
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Universal credit
Tuesday 13 June 2017, 10:00-16:30, Manchester
£138 voluntary organisations, £195 statutory/other organisations, CPD hours: 5
More information - Book now

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