170,000 households hit by benefit cap

Published on: 
26 November 2020

Official figures out today show the number of households subject to the benefit cap has reached 170,000, an increase of 8% since May 2020. Most of the increase is in London. The cap limits the total amount of benefits low-earning or non-working households can receive.

Most of these capped households are capped as a result of Covid-19, either because:

  • their working hours have been cut or they have been furloughed on a percentage of their usual pay because of Covid-19, so they cannot reach the £604.59 monthly earnings threshold at which universal credit claimants are exempt from the cap
  • they have lost their job
  • they are newly capped because the Covid-19-related increases in Universal Credit and in Local Housing Allowance rates mean their benefit income now reaches or exceeds the £20,000 or £23,000 per year cap limit. These people will not benefit from the full value of upratings – (their shortfall being dependent on how close they were to the cap limit before the uprates took effect).

The charity is calling on the Government to - at a minimum - suspend the benefit cap during the pandemic.

Alison Garnham, Chief Executive of the charity Child Poverty Action Group (CPAG) said:

"The Government’s principal aim for the benefit cap was that it should incentivise work but if that was ever a sound rationale, in a pandemic it has become obsolete. Families are being capped at a time when the shrinking labour market leaves them little or no hope of finding extra hours or new jobs to escape the cap. More than half of families affected by the cap have a child aged five or younger. They are losing crucial support just as we enter a coronavirus recession. That isn’t right. At a minimum the cap should be suspended during the pandemic so that the lowest income parents can meet their children‘s basic needs.”

Households who were capped before Covid-19 have gained nothing from the Government’s decision to uprate Universal Credit and Local Housing Allowance rates as part of its Covid-19 emergency support package. Yet these households have faced the same extra financial pressures as other claimants because of the pandemic.

Today’s figures show:

43% of capped families have a child under 5 and 17% of capped families have a child under 2.

85% of capped households (143,000) are families, 61% are single parent families.

The estimated average weekly amount of benefit lost through capping is £62 for households which contain children (£73 for couple-families, £57 for single parent families).

The level of the benefit cap hasn’t been revised since 2016 so the shortfall in the social security support that capped families receive, compared to what they need, has grown accordingly. The level of the cap is set at £23,000 for couples/lone parents in Greater London (regardless of the number of children) and £20,000 for couples/lone parents outside the capital.

Notes to Editors:

Today’s DWP figures are here: https://www.gov.uk/government/statistics/benefit-cap-number-of-household...

The benefit cap limits how much social security support is paid to people out of work or with very low earnings.

For universal credit claimants the cap is applied when claimants earn less than £604.59 a month (April 2020 to March 2021 figure – equivalent to working 16 hours a week at the 'national living wage' for over-25s).

For ‘legacy benefit’ claimants, who receive housing benefit, the cap is applied to single parents if they work less than 16 hours per week, to couple-parents if they work less than 24 hours between them, and to single people with no children if they work less than 30 hours.

CPAG press office: 07816 909302