Freeze on benefit cap will leave poorest households £65 worse off from April as costs spiral

Households subject to the benefit cap will from April be battling the cost of living crisis £65 worse off than they would be if they were not capped, unless the cap is uprated, new analysis from Child Poverty Action Group (CPAG) finds. One hundred and twenty thousand households who are already capped will get no extra help with soaring costs when benefits are uprated in April. Another 35,000 who will be newly capped in April will receive only some of this increase because of the cap.

The vast majority (94%) of currently capped households are only capped because the level of the cap has been frozen for six years, CPAG’s analysis finds.

The cap limits the total amount of benefits low-earning and non-working households can receive – to £383 a week for households outside London, and £442 a week for those in London. It was introduced in 2013, lowered to its current level in 2016 and hasn’t changed since then. As a result, the number of capped households has risen over time, while those who were already capped have experienced a growing gulf between their income and rising costs.

Capped households are some of the poorest families across the country. An average capped couple with 2 children is £150 a week below the poverty line. Removing the cap would mean an additional £65 a week, on average, in the pockets of capped households, invaluable in the current cost of living crisis. The benefit cap would only cost £500 million to remove – 0.2 per cent of total spending on social security.

Had the cap been increased with inflation from its implementation, in 2023/24 it would be £640 a week, £200 a week higher that it is now in London and £260 a week higher outside of London. This year alone, the gap between the actual cap and an uprated cap will grow by £60 a week.

Child Poverty Action Group is calling on the new Prime Minister to abolish the cap – a move that would be a lifeline for affected families in the cost of living crisis. The charity’s chief executive Alison Garnham said:

The benefit cap is cruel and irrational at the best of times - many parents subject to it can’t escape it by working more because they are caring for very young children and housing costs are completely out of their control. But in the current crisis its effects will be truly catastrophic for hundreds of thousands of children, pushing many into deep poverty. It is early days for the new government and scrapping the cap would send a clear signal to families that the PM is on their side – there can be no doubt that leaving it in place will damage the lives of children up and down the country. It must be abolished before it harms more children.  

Notes to editors:

Read CPAG’s short briefing on the benefit cap here.

The benefit cap affects households which earn less than £658 a month. Households which were recently and consistently earning above the threshold, and some households where a person is disabled or a carer are exempt.

When it was introduced in 2013, the cap was £500 a week for couples and families with children. It was £350 a week for single adult households. In autumn 2016 the level of the benefit cap was further reduced to £383 a week for households outside London, and £442 a week for those in London (for single adults it became £258 a week outside of London and £295 a week in London).

The results presented here are based on UKMOD version A3.5+. UKMOD is maintained, developed and managed by the Centre for Microsimulation and Policy Analysis (CeMPA) at the University of Essex. The process of extending and updating UKMOD is financially supported by the Nuffield Foundation (2018-2021). The results and their interpretation are the author’s sole responsibility.

Costings, depth of poverty and average amount lost calculations are for financial year 2023/24 and the poverty measure used is relative after housing costs (AHC).

CPAG press office: 07816 909302.