Numbers affected by benefit cap grow as effects of Covid hit home

The number of households affected by the benefit cap has risen significantly since November, official figures show.

The number jumped by 13 per cent to reach 200,000 in February, a spike a leading charity blamed on people losing jobs or working hours during the pandemic. The Child Poverty Action Group (CPAG) estimates that abolishing the cap would lift 100,000 children out of deep poverty (defined as below 50 per cent of median income) – and cost £575 million - while average losses for capped families are £62 per week.

Alison Garnham, chief executive of CPAG, said the policy was an “unjust punishment” for families.

Most of those families affected by it cannot work to escape it, she said, often because they are looking after young children or can’t find affordable childcare.

The latest figures showed “thousands more households who have lost jobs to Covid-19 are now subject to the cap even though in the pandemic it is much harder to find ways to replace their lost earnings and become exempt,” she said.

“Especially in areas with high rents, capped families are losing large amounts of social security support and that is disastrous for the children concerned.  The government must abolish the benefit cap to prevent more children from being damaged by impoverishment.”

The cap, brought in when David Cameron was prime minister, limits the total amount of benefits claimants can receive.  But Universal credit claimants are exempt if they earn £617 a month.  They are also afforded a nine-month ‘grace period’ if they have earned more than £617 a month in the previous year. CPAG believe the latest figures include families who initially qualified but have now seen their grace period run out. The charity warns that this means the number of capped households will go on continuing to rise as more and more people who lost their jobs during the pandemic find their nine month reprieve expires.

The latest figures also show that more than 83 per cent of capped households are families, while 59 per cent are single parent families.

The level of the cap, which has not changed since 2016, is set at £23,000 per year for those in greater London and £20,000 outside.

a Department for Work and Pensions spokesperson said: “The benefit cap, up to the equivalent salary of £28,000 in London, ensures fairness for hard-working taxpaying households and a strong work incentive, while also providing a much needed safety net of support.

“The proportion of households impacted remains low in comparison to the overall number claiming Universal Credit even after the temporary uplift to Universal Credit and increases to Local Housing Allowance rates.”