As predicted by many critics, the government’s benefit cap is struggling to deliver its objectives of saving taxpayers’ money and encouraging people into work, according to the first major study on the cap’s implementation published today (23 October 2013).
The conclusions follow research led by the Chartered Institute of Housing (CIH) into the initial impact of the cap in Haringey – one of four London boroughs chosen by the government to implement the cap early.
It comes on top of criticism that the cap is arbitrary and unjust.
Just 10 per cent of households affected in Haringey were able to find work to avoid seeing their benefits cut, the report shows.
Research shows that 747 households in the borough saw their benefits cut between April 15 and August 16, 2013 because they were above the cap threshold, which limits total benefits to £500 per week for families with children, or £350 per week without children.
The amount lost ranged from 15p to £374.50 per week – with 51 per cent of affected claimants losing £50-£199 each week. Around 2,300 children were affected by the cap, with larger families experiencing the highest loss.
Of those 747 households affected, only 74 (10 per cent) were known to have moved into work, while 11 increased their hours sufficiently to avoid the cap. While there is evidence that the cap is changing attitudes to employment, for many claimants there remain significant barriers to finding work, including the lack of job seeking skills and affordable childcare.
In addition, nearly 50 per cent of capped households claimed Discretionary Housing Payments from the council to help them pay their rent. This both shunts costs between national and local government budgets and masks the true impact of the cap until those discretionary payments run out.
In-depth interviews with a number of claimants affected and advisors involved in the cap’s implementation also show:
People who are already marginalised in society are disproportionately affected by the cap.
Wider welfare reforms, such as the introduction of the Council Tax Reduction Scheme, have hit at the same time as the cap and further reduced household incomes.
There is very little evidence of tenants being able to negotiate reduced rents with landlords as a result of the cap.
Three private landlords in Haringey have already forced tenants out in response to the cap.
Discretionary Housing Payments have allowed many claimants to cover rent shortfalls and stay in their homes, but this will be unsustainable in the long term because the scale of the claims will exceed council budgets.
Many claimants need intensive and personalised support to help them respond to the cap and move into employment, so local authorities and other agencies will need to consider the resourcing of this.
CIH chief executive Grainia Long commented: “The government said the benefit cap would save money and encourage people into work, but this report shows it is far from achieving both of those aims in one of the worst affected areas.
“There have been whispers that the government is considering lowering the cap or increasing the amount of hours people must work to avoid it. Unless ministers commit to increasing support for people looking to get back into work and funding for childcare this would be very dangerous.
“Ultimately, the government must do more to tackle the UK’s housing crisis. The reason that the housing benefit bill is so high and that so many people are affected by the benefit cap is that we are simply not building enough homes to accommodate our growing population.”
Claire Kober, Leader of Haringey Council, added: “This research shows that the benefit cap has failed in its main objectives. Only a few households have been able to get back into work and, while the government may be making some savings, the real costs are just being passed to local councils already under enormous financial pressure.
“People still need a lot of support to get training or back into work and spiralling housing costs mean there is a long way to go before anyone could claim the benefit cap is working.”
Churches and charities, including the Christian think-tank Ekklesia, were among those raising concerns about both the unfairness and impracticality of the government's benefit cap when it was pushed through parliament.
* Chartered Institute of Housing: http://www.cih.org/