Benefit cap will hit 116,000 of poorest families, say experts

More than 116,000 of the poorest households in the UK will be hit by the extended benefit cap, putting many at risk of homelessness, housing experts have predicted.

Nearly 320,000 children live in households likely to be affected by the cap introduced from 7 November. In some cases families will lose up to £115 a week, pushing them into deeper poverty.

The cap rollout, which will be completed by the end of January 2017, limits total household benefits to £23,000 (£442 a week) in London and £20,000 outside the capital (£385 a week).

Terrie Alafat, chief executive of the Chartered Institute of Housing (CIH), said: “We are seriously concerned that this could have a severe impact on these families, make housing in large sections of the country unaffordable, and risk worsening what is already a growing homelessness problem.”

The lowering of the cap from the previous £26,000 level will mean a big rise in both the number of households hit by the cap penalty, as well as an increase in the types and locations of those affected, according to the CIH.

Unlike the benefit cap introduced in 2013, which mainly hit households in high-rent areas such as London and the handful of families with five or more children, the extended cap will have an impact on families in all areas of the country.

The cap will see “average” sized families affected in even those parts of the country with the cheapest housing, such as Wales and north-east England. For example, a couple with three children outside London will have £50.80 a week left for housing costs after out-of-work benefits are taken into account. In Leeds, where a three-bedroom property at local allowance rates costs £151.50, this would leave them with a shortfall of £100.70. In Northampton a similar family would face a shortfall of £89.04 a week, and £75.78 in Leicester.

A couple outside London with two children would have £117.92 a week for housing costs. In Reading, however, a two-bedroom property would cost £188.33 per week. leaving a shortfall of £70.41. The same family would face a shortfall of £38.46 in Southampton and £33.58 in both Bristol and Milton Keynes.

The Department for Work and Pensions (DWP) has argued that the benefit cap acts as an incentive to get people into work because moving on to working tax credits gains an exemption from the cap.

“We are committed to helping people who are able to work into jobs and the benefit cap provides a clear incentive to move into employment for those who can. Anyone eligible for working tax credits, carer’s allowance and most disability benefits are exempt from the cap.

“The benefit cap restores fairness to the system and the new limit will ensure that the amount that people on out-of-work benefits can claim better reflects the circumstances of many working families in the country.”

However, a DWP-backed study in Oxford published in June found that cutting benefit entitlements made it less likely that unemployed people would get a job. The CIH study, using official DWP data, provides a higher estimate of total numbers of children affected than the official impact assessment in August, which identified 244,000. The DWP said it did not recognise the CIH figure, although it is closer to the DWP’s original estimates from 2015.

Alafat said the new cap could put many families at serious risk of losing their homes and would make housing in significant parts of the country unaffordable for those affected. “The results of our research are extremely worrying,” she said. “It shows that the reduction in total benefits is going to hit some of the most vulnerable families of all sizes across England, Scotland and Wales.

“These families will lose out when the cap comes into effect from 7 November and in many cases will straight away face a substantial gap between their rent and the help they receive to pay for their housing.

“Worryingly, our analysis shows many families could be one redundancy or a period of ill health away from being in this situation. We are seriously concerned that this could have a severe impact on these families, make housing in large sections of the country unaffordable and risk worsening what is already a growing homelessness problem.

“This is a measure which seriously risks undermining the government’s commitment to making society fairer for families in Great Britain and we suggest that they look at this urgently.”