35,000 more families face benefit cap next year

• new DWP figures show over 300,000 children in households already capped 
• call to scrap the cap as costs bite

Around 35,000 more families could have their benefits capped next April, leaving them with a growing gulf between their income and rising costs, new Child Poverty Action Group (CPAG) analysis shows.

DWP figures published today show 120,000 households were already subject to the benefit cap in February 2022, 86% (103,000) of them families with children. Because their benefits are capped, these families saw no increase in their income at all when most benefits were increased by 3.1% last April when inflation hit 9% – leaving them with a real-terms income cut of £2,070 in London and £1,800 outside the capital. They also lost out on the temporary £20 weekly increase in universal credit introduced at the start of the pandemic. 

The cap limits the amount of benefit that low-earning or non-working households can receive to £23,000 per year in London and £20,000 outside the capital. The cap hasn’t been increased since it was introduced in 2013 and was lowered to its current level in 2016. While the cap has remained frozen since November 2016, the cost of living has risen by 18% since then. The Chancellor has committed to uprating benefits next April, but unless the cap is removed, the rise will take an estimated 35,000 additional families to the capping threshold overnight – so they will see little or no increase in their incomes to help them cope with higher costs. In total, 150,000 families will miss out on the rise because they will be capped next April, exposing them to ever more acute hardship.

The cap takes no account of localised high housing costs and doesn’t recognise that many families with children face higher living costs. Had it been uprated with inflation since 2016, benefit awards would be £4,220 higher than they are now in London and £3,670 higher outside the capital; around half (49%) of this real-terms loss in value happened in the year from April 2021 – April 2022..

The Chancellor’s emergency £650 cost of living payment for all benefit claimants will only mitigate three quarters of the increases in energy bills. 

Today’s DWP statistics show:

• 41,000 London households are capped; 79,000 households outside London are capped.
• 67% of capped households (80,000) are single-parent families, 19% (23,000) are couple-parent families.
• The estimated average monthly amount of universal credit lost due to the cap is £236 for households which contain children. But some lose out on far more - 15% of capped households lose out on over £400 a month.
• 53% (54,000) of capped families with children have a child under 5 and 22% (23,000) of capped families have a child under 2.

Chief Executive of Child Poverty Action Group Alison Garnham said:

The cost of living crisis shows that the benefit cap is broken, and needs to go. It has always forced families to live on much less than they need, but as prices spiral the effects are brutal and over 300,000 children are among its casualties.

In his cost-of-living support package the Chancellor recognised that families subject to the cap face the same cost pressures as everybody else. By the same logic, the cap must be removed to help the worst off families stay afloat. Next April’s uprating must be available to every family on benefits, as a bare minimum layer of protection against dramatically higher living costs.

Many capped families are unable to escape the cap by taking a job or extending their working hours, because they have very young children. Most people subject to the cap have been assessed by the DWP as not 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 with a single income.

Note: This press release initially referenced 298,000 children already affected by the benefit cap in February 2022. The correct figure is at least 300,108. This data error occurred due to the differences in age categories between the published data for universal credit and housing benefit.

Notes to Editors:

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

Today’s DWP statistics are 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.

Universal credit claimants are exempt from the benefit cap if they earn at least the equivalent of working 16 hours at the minimum wage (currently £658 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.

CPAG press office: 07816 909302