Benefit cap leaving families with as little as £3 after rent

• Impact of cap spreading fast across UK - lone parent with 3 children will be capped in 95% of England and Wales, compared to 60% in 2023
• Number of capped families up from 28,000 in 2013 to 124,000 today

Families are being left with next to nothing to live on after paying rent – £3 a week in the worst cases – because of the benefit cap, new analysis shows. 

The cap – which is different from the two-child limit* – restricts the total amount of benefit non-working households and those earning less than the equivalent of 16 hours a week at the minimum wage can receive, regardless of their need. The cap overrides the amount that the DWP assesses a household to need.

Households with children, and particularly families with high rents, are disproportionately affected by the cap. This is because these families have higher unavoidable costs and therefore higher social security entitlement which means they are more likely to reach the cap threshold.

Child Poverty Action Group’s (CPAG) analysis shows the cap leaves an Inner London lone parent with three children renting a private sector, three-bedroom home, with £3 to live on after she’s paid her rent. The post-rent disposable income for the same capped family in other areas of the country are shown in the table below:

Table 1: Selected local rental areas and weekly entitlement after housing costs for a lone parent of three children 

Note: Author’s calculations from benefit and local housing allowance rates 

Many capped families left with very low post-rent incomes are forced to apply for local authority emergency support but awards are discretionary, or rely on support from foodbanks to survive. Many go into rent arrears, risking homelessness.

Single parents are disproportionately likely to be capped because it is harder for them to work and earn above the cap threshold while caring for children single-handedly. 

Commenting on CPAG’s findings, chief executive of the charity Alison Garnham said:

'The benefit cap is one of the harshest hangovers from austerity, punishing families for their unavoidable costs and leaving them with next to nothing to live on.The government’s forthcoming child poverty strategy must remove the policy – along with its evil twin the two-child limit - or thousands more children will be stranded in deep poverty.'

More and more families are being capped because the cap threshold has been largely frozen since 2016 while the cost of living has risen sharply and rents in particular have skyrocketed.**

The latest official statistics show that 124,000 households with nearly 300,000 children are affected by the cap - up from 28,000 families in 2013 when the cap was brought in.

Removing the cap would reduce the depth of poverty for 300,000 children at a cost of £300 million.

Case Study:

One London couple with two very young children have been benefit capped since the husband had to stop work because he has a short-term health problem. He was on a zero hours contract and as well as working was studying two days a week to be a mechanic. He is waiting for an operation which has been cancelled once and can’t work until the operation has been done. After rent is paid to their housing association, the family has only £573 to live on per month. They are having to use a food bank and have accrued council tax arrears. 'We are in a very bad situation', the mother says. 'I never thought I would live in this situation.'

Notes to editors:

A short briefing on CPAG’s benefit cap analysis, including case studies, 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 (1) households not in paid work and (2) households with earnings of less than the equivalent of 16 hours a week at the minimum wage. The cap threshold is the same regardless of whether there are children in the household and if there are, how many.

Households can escape the cap by earning more than the equivalent of 16 hours a week at the minimum wage. 69% of capped households are single parents. Many capped single parents struggle to escape the cap by working more than 16 hours per week at the minimum wage because they are caring for children single-handedly.

** The cap threshold is set at £423.46 a week for households outside of London, and £486.98 for those in London. The cap threshold has been frozen since 2016 except for in 2023, when it was uprated with inflation. 

Scotland and Northern Ireland have introduced measures to fully mitigate the impact of the benefit cap. 

CPAG media contact: Jane Ahrends 07816 909302