Today, the Department for Work and Pensions (DWP) has published the most recent set of statistics on the number of households affected by the benefit cap. The number of households affected by the benefit cap (up to May 2020) has almost doubled when compared to the previous quarter – 154,000 households are now affected by the benefit cap compared to 79,000 in February 2020. Of the total number of households affected, the vast majority are families with children (87 per cent) with single parent families disproportionately affected (62 per cent). It is worth noting that the actual figure is likely to be higher as many more households will have lost employment between May-July.
There are three main ways that families may become subject to the cap as a consequence of the Coronavirus:
- The increases to universal credit (UC) standard allowance and local housing allowance (LHA) rates: uprating the UC standard allowance by £20 a week and increasing LHA rates to the 30th percentile will mean that families who were already on benefits and were close to the level of being capped will be newly affected by the cap as a result of these increases. This means that these households will not receive the full increase in benefits, despite the fact that they face the same financial pressures as other families.
- Families who were previously on benefits but are now not deemed to be working or earning enough: families who were previously claiming benefits but were working a sufficient number of hours / earning enough to reach the threshold at which they are exempt from the cap (16 hours a week in most cases) may find themselves newly capped if they have lost a job or their hours have dropped. Some of these workers will be protected by the ‘grace period’ which means claimants will not be capped for the first nine months if they are newly unemployed, however this relies on a consistent work history over the past year which many existing claimants may not have.
- Families claiming benefits for the first time: 2.7 million households have claimed UC since the beginning of March. In the absence of better data about who these new claimants are, it is difficult to know how many of these households will be affected by the benefit cap. Some households will be temporarily exempt because of the grace period, although analysis has shown that of the households that do not qualify for the grace period, the majority could be hit by the cap.