100,000 benefit-capped families face ‘monumental’ real-terms income cut as prices soar

Published on: 
22 March 2022

  • £1,840 cut for London capped families
  • £1,600 outside London

Families subject to the benefit cap will see the real value of their benefits fall by a monumental £1,840 per year in London and £1,600 outside the capital from April when inflation is expected to reach 8%, new analysis from Child Poverty Action Group (CPAG) shows.

DWP statistics out today show 100,000 families were subject to the cap in November. Almost all of these families are already in deep poverty but in April, when most benefits will be increased by only 3.1% on current plans, capped households will see no increase in their benefits at all.

The gap between their income and rising living costs will become unmanageable for many capped families who are already taking on debt to get by, CPAG warns. The charity is calling on Government to remove the cap immediately to prevent acute hardship in capped households as prices soar.

The cap limits the total amount of benefits low-earning or non-working claimants can receive, to £23,000 per year in London and £20,000 outside the capital. It doesn’t recognise that many families with children face higher living costs and takes no account of localised high housing costs. What’s more, the level of the cap has been frozen since 2016, while the cost of living has risen by around 19%, pushing capped families deeper into poverty over time.

Today’s DWP statistics show:

  • 28,000 London capped families will see the real value of their benefits cut in real terms from April by £1,840; 77,000 capped families outside London will see a fall of £1,600
  • 20% of capped households (25,000) are couple-parent families, 65% are single parent families.
  • The estimated average monthly amount of benefit lost due to the cap is £235 for households which contain children. But some lose out on far more -15% of capped families lose out on over £400 a month
  • 54% of capped families have a child under 5 and 22% of capped families have a child under 2

Chief Executive of Child Poverty Action Group Alison Garnham said:

The benefit cap is a cruel policy at the best of times, forcing families the most in need to get by on the least. But as costs increase dramatically it is a gut punch, abandoning thousands to financial misery. The losses involved for these families are huge. Government must remove the cap before it damages more children’s lives.”

Many capped families are unable to escape the cap by taking a job or working more, because they have very young children and are therefore not able (and not required) to work, or work longer hours. Most people subject to the cap have been assessed by the DWP as not being required to look for work. For single parents it is particularly difficult to reach the earnings threshold at which claimants are exempt from the cap, since they are sole breadwinners and often have to cover childcare costs.

Regional breakdown of capped households

  Total households capped Total households with children capped
North East 3,100 3,000
North West 9,500 9,300

Yorkshire and The Humber

6,800 6,700

East Midlands

5,100 5,000

West Midlands

10,100 9,900

East of England

11,800 11,100
London 42,300 28,200

South East

19,600

17,500

South West

6,700 6,600
Wales

3,700

3,700
Scotland 4,000 3,900
Total

122,700

104,900

 

Notes to Editors:

A short briefing on today’s DWP statistics and CPAG’s analysis is here.

The benefit cap restricts total benefit awards (including for housing costs) to £20,000 a year for families outside of London and £23,000 a year for those in London, regardless of the family’s needs.

Introduced in 2013, the benefit cap was initially linked to the average wage but was subsequently lowered so that it now bears no relation to it.

UC claimants are exempt from the benefit cap if they earn £617 or more per month, if they or their partner are not expected to work or prepare for work by the DWP because of a disability or health condition or if they care for someone with a disability.

In addition to pressing Government to remove the benefit cap, CPAG has joined other organisations working with low-income families to call for benefits to be uprated in line with April’s inflation rate, now expected to be 8%.

CPAG press office: 07816 909302