FOI data debunks benefit cap 'work incentive'

Just over a third (34%) of people on universal credit who are subject to the benefit cap – which the Government claims incentivises work – are assessed by the DWP as not required to look for a job because they are caring for very young children, new FOI data for Child Poverty Action Group (CPAG) shows. A further 18% are already in work but don’t earn enough to reach the threshold for the cap to be lifted.

The charity says the new FOI data debunks the DWP’s defence of the cap as an encouragement to work – since so many of the very same families it caps it also assesses as not required to take a job.

The cap limits the benefit income of households who earn less than £658 a month. Claimants escape the cap if they can earn more or if they get certain disability benefits.

The FOI data reveals that of the 111,000 capped households on universal credit, 38,000 are exempt from job-search requirements because they are caring for children aged under three. Another 21,000 are already working but earning too little to be exempt.

The benefit cap pushes households into deep poverty by cutting their benefit income by, on average, £230 a month. Of the total 123,000 households subject to the cap – through either universal credit or housing benefit – 106,000 (87%) are households containing children including 56,000 (46%) with a child aged under 5. A total of 309,000 children are affected by the benefit cap.

Chief executive of Child Poverty Action Group Alison Garnham said:

Our data demonstrates the fallacy that the benefit cap is a work incentive. How can it be when so many households caught by it are unable to take a job because of young children? It doesn’t incentivise work, it leaves children hungry. The Government’s position on the cap is incoherent. It must be removed before it harms more young lives.

Dr Kitty Stewart, Associate Professor at the London School of Economics who researches child poverty said:

The benefit cap removes vital support from families just when they need it most. These figures show the policy makes no logical sense – it urgently needs to be removed before it does further damage to children’s lives.

It is particularly difficult for single parents to earn enough to escape the cap as they need to reach the earnings threshold and cover childcare costs singlehandedly. 86,000 (70%) households affected by the cap are single parent families including 19,000 that contain a child under 2.

Alisha, a single mum, is unable to work enough hours to escape the cap because her employment options are restricted by school hours and childcare availability.

There’s nothing I can do, I can’t fix this situation; even if I put this one in childcare and try to get a job, I can still only get a job three days a week while the other two are in pre-school, there isn’t enough hours there; and again I still have to do the school run.

Another single parent is working part-time. Her earnings vary from month to month and some months she is subject to the benefit cap. When this happens she has as little as £50 left in universal credit after paying the rent.

The £658 threshold to escape the cap is equivalent to the monthly earnings of someone working 16 hours a week at the national living wage. But many low earners are paid on a four-weekly cycle. This means that when universal credit entitlement is assessed, only one pay cheque for four weeks' earnings is counted in a calendar-month assessment period, even though a claimant's earnings taken over a calendar month are enough to be exempt from the cap.

Faduma is a single mum in this situation. She loses £320 a month through the benefit cap despite working 16 hours a week because she is paid on a 4-weekly basis. If she worked one more hour a week her earnings would pass the threshold but the agency she works for says there is nothing available.

They told me … if you look [for] one hour extra, you’re not gonna get benefit capped … I told [the agency] but they said it’s a waiting list, when we get more jobs available we can give it to you, and I’m just waiting.

Esme (not her real name) is a single parent in a similar situation. She leaves her oldest child to care for her other children so she can work 16 hours a week. Despite her best efforts, she's still subject to the benefit cap because she’s paid four-weekly.

The government recently announced that the benefit cap will be uprated in April by 10.1%, in line with inflation. This will mean that capped households can gain from annual benefit uprating for the first time since the cap was implemented in 2013.

But the benefit cap has not increased since it was introduced in 2013 and, in 2016, it was lowered even further. Even after April’s uprating the benefit cap will still be £225 a month lower in real terms than it was in 2016 (and £260 lower for families in London) due to it being frozen in previous years.

Notes to editors:

The case studies in this press release are from across the UK. A short CPAG briefing on the data, with case studies from CPAG’s Early Warning System and the Benefit changes and Larger Families Project is here.

The benefit cap limits the amount of benefits that non-working or low-earning households can receive to £384 a week for families outside London, and £442 a week for those in London. The Scottish government announced in February that it has allocated £8.6 million in direct support for people affected by the UK benefit cap in Scotland, mitigating the cap as fully as possible using discretionary housing payments

The FOI data, reproduced in the table below, shows the ‘conditionality regime’ of capped households who are on UC. The conditionality regime is used by DWP to determine which claimants are required to actively seek work, which claimants are already working, and which claimants are not expected to seek work.

Universal credit claimants who undergo a Work Capability Assessment and are found to have ‘limited capability for work and work-related activity’ are exempt from the benefit cap. The main reason for a benefit capped claimant to be in the ‘no work requirements’ conditionality group is because they are the primary carer of a child aged under one.

The number of households capped on universal credit by conditionality regime of primary claimant, August 2022, Great Britain

CPAG press contact: Jane Ahrends, [email protected], 07816 909302