Benefit cap will hit part-time workers, admit ministers

By staff writers
23 Jan 2012

The government has admitted that its household benefits cap will apply to part-time workers as well as to unemployed people.

Although the admission was made some time ago, the point has been overlooked by most commentators and reporters. The Child Poverty Action Group (CPAG) drew attention to it today (23 January), as ministers struggled to force the measure through a sceptical House of Lords.

Work and Pensions Secretary Iain Duncan Smith says that the new measure will prevent any household from receiving more than £26,000 in benefits. He has justified this by pointing out that it is the average household income and arguing that unemployed people should not receive more than working people.

But CPAG today said that the biggest myth about the proposed change is that it would apply only to out-of-work benefit claimants.

Ministers have confirmed that it will apply to any family working up to 23 hours per week.

This means that families who are not in receipt of any out-of-work benefits could be hit by restrictions to tax credits, housing benefit or council tax benefit – even if earnings are their primary source of income.

Campaigners also point out that a £26,000 cap on benefits cannot be compared to average household income, because a working family earning that amount could still claim child benefit on top. Bishops in the House of Lords have proposed an amendment to exempt child benefit from calculations for the cap.

CPAG have listed five other ‘myths’ about the benefit cap.

They include the perception that claimants have more money than working people. They point out that most of those hit by the cap are in private rented households. They say "it is the landlords who get the cash". Housing benefit is often paid directly to landlords rather than claimants.

They said that the cap does nothing about the “root problem”, of a lack of social housing and rising private rents.

Other 'myths' include the notion that disabled people will be excluded. Given the government determination to cut the cost of Disability Living Allowance by 20 per cent, fewer people will receive disability benefits that exempt them from the cap.

The government claim that there will no be social impact, but CPAG say that this is also a myth, as the cap will give families an incentive to split up. The charity also disputes claims that the policy will deliver fiscal savings, arguing that rising homelessness will lead to greater costs in other areas.

According to CPAG, the final 'myth' is that this is a new policy. They point to a similar rule in place in the 1970s, which “proved unfair and unworkable and was eventually abolished”.

"The household benefit cap policy is built on a foundation of myths,” said CPAG’s Alison Garnham, “But the 210,000 children affected will face harsh realities of severe poverty and homelessness”.

CPAG is one of a number of charities to have spoken out against the benefits cap. Others include Shelter and Church Action on Poverty.

Rev Paul Nicholson, chair of the Zacchaeus 2000 Trust, drew attention to the links between poverty and mental ill-health as he warned of a possible increase in mental health problems.

[Ekk/1]

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