Benefit Cap Forcing Families to Live on £44/week - new research

• 10 years in – benefit cap forcing families to live on £44 a week
• Cap spreading across the UK
• Anniversary call to axe the cap that traps 250,000 children in deep poverty

Ten years since the benefit cap was introduced across Britain, new research shows families affected by the policy have as little as £44 a week to live on after they’ve paid housing costs.

The research, from Child Poverty Action Group (CPAG), shows in the ten years since the policy was introduced, the number of families affected by it has grown substantially as benefits have risen, albeit by less than inflation, while the cap has stayed frozen for the best part of a decade. 

When it was introduced in 2013, only a handful of families in areas of particularly high housing costs were affected by the cap and lost only small amounts of their benefit to it. But now, a lone parent with three children would be capped in over half of rental areas across the country, the research finds. While for those families that would have been capped previously, the amount of benefits that families lose when the cap is applied, has grown substantially.

The cap limits the amount of social security support that households with no work or low earnings can receive and overrides the amount that the DWP assesses a family to need. The cap is the same for a family of two as a family of five, meaning that households with children who rent their homes and therefore have higher costs are affected most deeply by the flat-rate of the cap. Lone parents are also disproportionately likely to be capped because they face higher barriers to work and struggle to meet the earnings threshold to escape the cap.

In Scotland the Scottish government has committed to mitigate the impact of the benefit cap as fully as possible. Households are still capped as elsewhere in the UK, but anyone eligible for a discretionary housing payment who applies because they are affected by the cap should be awarded one. 

Amounts lost to the cap:

The amount of benefit entitlement that capped families lose out on has grown because benefits have risen, albeit by less than inflation, while the cap was frozen for the best part of a decade. Even outside London, some families are losing out on support worth as much as £100 per week because their entitlement to housing support pushes them further above the cap. 

Post-cap disposable income:

In London (where the cap is set higher than elsewhere), a lone parent with three children could have just £44 a week left to live on after paying the rent because of the benefit cap. If that family was able to access their full entitlement, they would have £276 per week to live on instead.

As the area with highest rents, London leaves capped families with the lowest disposable income after housing costs are paid. But the impact of the cap has spread much further in the last decade as rents have risen across the country while the cap has been frozen leaving capped families everywhere with very little to live on after rent is paid. For example, in Guildford a capped lone parent with three children has only £106 per week to live on after her housing costs are paid; the same parent in Brighton and Hove has just £147; in Oxford she’d have £170; in Bristol £204.

CPAG calls on all political leaders to commit to removing the benefit cap in order to substantially reduce the depth of poverty for the 250,000 children living in households affected by it.

Chief executive of Child Poverty Action Group Alison Garnham said:

The government is at its most illogical with its benefit cap – the Department of Work and Pensions assesses families’ needs, determines their entitlement, then slaps a flat-rate cap on that entitlement, denying families what the department itself says they need. So needs don’t get met, entitlements aren’t paid and 250,000 children are trapped by the cap in deep poverty. No family should have to live on £44 a week. There is no rhyme or reason to the benefit cap and it is deeply harmful to children. All political leaders must commit to scrapping it before it pulls more children into its net.

Notes to editors:

CPAG’s short briefing on its new research is here.

The benefit cap, introduced in 2013, restricts the total amount of support a working-age household can receive from the social security system for households with no work and households with earnings of less than the equivalent of 16 hours a week at the minimum wage. There are some exemptions and people with recent earnings are not immediately capped. For households with children the cap is set at £486.98 per week in London and £423.46 outside the capital. People with recent earnings are not immediately capped and those receiving certain disability and carer’s benefits are exempt (a full list of exemptions is available here). The cap was lowered in 2016 and then frozen until April 2023 when it rose (with inflation) for the first time since its introduction. Although the recent increase is welcome, it does not undo a decade of real cuts to the cap threshold.

Although the Government claims the cap is a work incentive, just over a third (34%) of people on universal credit who are subject to the cap are assessed by the DWP as not required to look for a job because they are caring for very young children and a further 18% are already in work but do not earn enough to reach the threshold for the cap to be lifted. IFS research found that the vast majority of capped households who found work, would have done so even in the absence of the cap. 

CPAG’s analysis is based on Broad Rental Market Areas (the 192 local rental areas across Britain). CPAG’s calculations assume that rent equals the LHA rate as this is the amount the government thinks should be provided for low-income households of different sizes in different areas. In practice however, rent will often not equal the corresponding LHA rate. If rent is below the LHA rate, the household will only be entitled to a housing element equal to their rent. If rent is above or equal to the LHA rate, the household will receive the maximum LHA rate.

More than 1 in 3 children in poverty live in privately rented accommodation, where the housing element of social security is determined by Local Housing Allowance (LHA) rates – i.e. LHA determines the maximum amounts claimants of universal credit and housing benefit can receive in housing support for private rented properties of different sizes within specified areas.

The 10 year anniversary of the introduction of the benefit cap falls on Saturday 15 July 2023.

CPAG media office: 07816 909302.