107,000 families facing winter costs with benefits capped

• 32,000 hit by both cap and two-child limit

New DWP figures out today show 107,000 families are facing escalating costs as winter bites with their benefits capped. 56,000 have kids aged under five. And more than 32,000 of these capped families (over 110,000 children) are also subject to the two-child limit policy according to new FOI-based estimates from the Nuffield Foundation-funded Benefit Changes and Larger Families project.

Child Poverty Action Group (CPAG) and the Larger Families project warn that the combined impact of these two policies is forcing families to make impossible choices as winter living costs surge. A new Larger Families briefing details the hardship already experienced by families subject to both the cap and the two-child limit which pushes children even deeper into poverty.

Families with young children are particularly exposed to the cost-of-living crisis as they face higher energy costs – especially as temperatures plummet – but the government’s response to date has failed to recognise this through its emergency cost-of-living payments which are flat-rate and offer no more to those with children than those without children.

And while the government defends the benefit cap on the grounds that it creates a work incentive, with today’s DWP figures showing over half of capped families (52 per cent) contain children under 5 and 23 per cent contain children under two, it is clear that affected families’ capacity to reach the earnings threshold to escape the cap is considerably limited when they have young children to look after. Meanwhile, even if families subject to both the cap and the two-child limit could earn enough to be exempt from the cap, the two-child limit would continue to be applied, leaving them without up to £2,935 per year in support for their third or subsequent child.

The benefit cap limits the amount of benefits that non-working or low-earning households can receive. Currently the limit is £384 a week for families outside London, and £442 a week for those in London. From April the cap will be uprated by 10.1 per cent, in line with other benefits. This will be the first time the cap has been uprated since it was introduced in 2013 and it will remain considerably below its original value.

The two-child limit restricts child allowances in universal credit and tax credits worth £2,935 per year to the first two children in a family unless the children were born before 6th April 2017 when the policy came into force.

Kitty Stewart from the Larger Families project said:

These policies are pushing households with very young children deeper into poverty. This is especially worrying because we know that the early years of childhood are a critical time for children’s development. Many of the parents we have spoken to face considerable barriers to work, including health issues in the family as well as having very small children. Our social security system is letting them down just at the time they most need support.

Child Poverty Action Group chief executive Alison Garnham said:

The children behind today’s statistics need food and warmth like all kids. But with the two-child limit and benefit cap, government will ignore their needs this winter. The policies make it almost impossible for parents to provide the basics. If all children matter – not just some – these cruel policies must be removed before they damage more young lives.

Notes to editors:

Based on the response to its FOI request, the Larger Families project estimates that 32,327 households are affected by both the benefit cap and the two-child limit. These households contain at least 110,000 children. A briefing from the Benefit Changes and Larger Families research study which reveals the impact of both policies on families is here. See Appendix for methodology and full figures.

The benefit cap, introduced in 2013 and lowered in 2016, applies to working-age households who earn less than £658 a month (equivalent to working 16 hours a week at the National Living Wage). The cap limits the total amount of benefit income a family can receive, with an exemption if anyone in the household receives disability benefits.

Today’s DWP figures on households affected by the benefit cap are here. They show that 123,000 households are capped including 107,00 families with children. A total of 308,000 children are affected by the cap. 70 per cent of all capped households (86,000) are single-parent families. The estimated average monthly amount of benefit lost due to the cap is £234 for households which contain children. But some lose out on far more – 16,000 households with children lose out on over £400 a month.

In April, for the first time the cap will be uprated. This will not compensate for the failure to uprate since 2013 – the cap would need to increase by a further £942 a month outside of London and £666 in London to reverse the loss in values since 2013.

The two-child limit restricts means-tested child-related benefits to the first two children in a family, for all new births since 6 April 2017. The only exemptions to the two-child limit are for multiple births, children adopted or in care and children conceived as a result of rape or coercion. The policy affects 360,000 families with 1.3 million children. It is one of the biggest drivers of rising child poverty.

The Benefit Changes and Larger Families is a major Nuffield Foundation-funded research programme investigating the impact of the two-child limit and benefit cap on families with three or more children. It is a collaboration between the universities of York, Oxford, the London School of Economics, and Child Poverty Action Group. More information on the Benefit changes and larger families project is available here: Benefit changes and larger families.

Child Poverty Action Group works on behalf of the more than one in four children in the UK growing up in poverty. The charity uses its understanding of what causes poverty and the impact it has on children’s lives to campaign for policies that will prevent and solve poverty – for good. It provides training, advice and information to make sure hard-up families get the financial support they need and carries out high-profile legal work to establish and protect families’ rights. More information is available here: cpag.org.uk.

The Nuffield Foundation is an independent charitable trust with a mission to advance social well-being. It funds research that informs social policy, primarily in Education, Welfare, and Justice. It also funds student programmes that provide opportunities for young people to develop skills in quantitative and scientific methods. The Nuffield Foundation is the founder and co-funder of the Nuffield Council on Bioethics, the Ada Lovelace Institute and the Nuffield Family Justice Observatory. The Foundation has funded this project, but the views expressed are those of the authors and not necessarily the Foundation. Visit www.nuffieldfoundation.org.

CPAG press contact: Jane Ahrends 07816 909302.