Coronavirus: Number of families hit by benefit cap doubles in three months during pandemic

The number of families having their incomes cut by the government's benefit cap doubled in just three months during the first wave of coronavirus, official statistics show.

As of May 2020 150,000 households had their social security payments capped by the policy, a 93 per cent increase from the previous quarter.

There was also a 500 per cent increase in new households being hit by the cap for the first time – suggesting many people are feeling its sting for the first time.

The policy leaves families unable to pay their rent, with 2018 research showing two thirds covered for six months or more go into arrears with their landlords. It also disproportionately affects ill and disabled people.

The government claims the benefit cap is an incentive to work, but unemployment is set to rocket in the aftermath of the pandemic as businesses shutter or scale back staffing to cope with lockdown, social distancing regulations, and economic recession.

Chancellor Rishi Sunak has now begun to unwind his furlough scheme and transfer costs of supporting laid-off workers onto employers, with the new state support set to disappear entirely in the autumn.

Jon Sparkes, chief executive at homelessness charity Crisis, said the cap needed to be immediately suspended to prevent a wave of homelessness.

“With each passing day comes new job losses as the impact of the pandemic is felt. These figures show thousands of people are turning to the benefits system to break their fall, only to discover that the benefit cap is cutting them off from vital support," he warned.

“Despite ongoing assurances that the benefit cap grace period would protect people newly claiming, we know that people on low incomes aren’t getting this support, which is leaving many worrying about how they are going to pay their rent or put food on the table for their children.

“If we are to avoid a wave of people from losing their homes through no fault of their own, it’s vital that the government immediately suspends the benefit cap so that people have the means to stay afloat. Otherwise we risk all the good work to protect people being undone.”

The Child Poverty Action Group’s chief executive Alison Garnham today added: “The benefit cap has always been nonsensical because it’s an arbitrary limit that’s applied irrespective of needs. In a pandemic it is egregious. People who’ve lost earnings or jobs because of Covid-19 are finding that they’ve also lost significant amounts of their social security support because of the cap. That isn’t right. The cap is causing intense hardship yet in the pandemic most routes for escaping it are closed off so families are left without a life raft.

“The cap hits hardest the very families who are least able to avoid it – single parents with very young kids who even in normal times can’t just get a new job , increase their working hours or up sticks to cheaper housing – precisely because they are caring for very young children. In a pandemic their chances of escaping the cap are extremely limited or non-existent.

“Parents on low wages have no wriggle room – if they receive universal credit and earn less than £604 a month they’re capped but if they earn more than £616 they lose free school meals. It’s a terrible poverty trap. The cap should be lifted so that every parent can meet their children‘s needs in the pandemic and beyond it.

“We should not be further impoverishing vulnerable children because their parents live in high rent areas and for very real and practical reasons are unable to work more hours or move house to escape the cap.”

The average amount of money lost from the cap £58 per week. Of all households capped, 87 per cent (133,000) are families, and 62 per cent are single parent families.

The cap is £13,400 a year for single adults outside Greater London and £15,410 a year inside London. The corresponding figures for families are £20,000 and £23,000. Most households who hit the cap do so because of housing benefit, which is often paid directly to landlords.

Seema Malhotra, Labour’s Shadow Employment Minister, said ending the cap would help the poorest families in the country.

“These figures must serve as a wakeup call to the Government. Labour has repeatedly called on the Government to scrap the benefit cap to avoid the picture we are seeing today," she said.

“This is a policy that is pushing children and families into poverty. With around eight job seekers for every vacancy, rising to 20 per vacancy in some parts of the country, this is a Government totally out of touch with the reality of people’s lives.

“The Government must target support at those most in need, rather than pursuing a one size fits all approach. Ending the benefit cap would put much needed cash into the pockets of Britain’s poorest families, helping them through this crisis without a devastating increase in household debt.”

Layla Moran, one of the contenders in the Liberal Democrats' ongoing leadership contest, said: "These figures should act as a wake-up call to the government. Their stubborn refusal to review the cruel cap on benefits is pushing thousands of children into poverty.

"At the outset of the crisis, the chancellor said we will be judged by our capacity for compassion. Ministers are failing abysmally at that test.

"We need to seize this moment to fix the broken welfare system and introduce a Universal Basic Income so no-one is left behind."

A DWP 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, whilst providing a much needed safety net of support."