Number of families hit by Benefit Cap trebles

By Paul Morrison
May 6, 2017

The benefit cap was lowered in November 2016, and as a result, the latest statistics published yesterday ( 5 May 2017) show that the number of families hit has tripled: 280,000 people live in families hit by the Benefit Cap. 200,000 of those people are children. Although the policy’s stated intention is to encourage adults to increase the hours they work, those affected are overwhelmingly children.

The cap is heavily focused on children. You are more than eight times less likely to be hit by the Benefit Cap if you are an adult than if you are a child. One in every 72 children is affected by the Benefit Cap, but if you are an adult your chances of being hit plummet to one in 625.

How the Cap works

The Department for Work and Pensions (DWP) assesses how much each family needs by looking at, amongst other things, its earnings, savings, family size and rent. Families whose needs are greater than £20,000 [1] go without. In reality, families who need such high levels of benefit live in high rent areas and/or have two or more children.

The Government’s own research indicates that the families affected are likely to increase arrears and debt and cut down on essential spending such as food.

The cap increasingly affects typical family types

The old benefit cap limit tended to affect families looking after an unusually large number of children. Now most commonly affected family type has three children. The number of children affected in these families has increased 6.5 fold – to over 80,000. Unlike the two-child rule for tax credits, there are no exemptions to the benefit cap for multiple births or kinship carers. 

Some disabled people are exempt from this arbitrarily determined cap but most people assessed by a doctor and the DWP as so unwell that they shouldn’t be asked to look for work are not exempt. Indeed, around 15 per cent of families capped are judged to be too unfit to work.

Only 16 per cent of families capped are unemployed and therefore fit and available for work

The stated aim of the benefit cap is to “incentivise” work. The great majority of families who are hit by the cap are not required to look for work because the DWP acknowledges their caring responsibilities are too great or their health is too bad. These families are nonetheless “incentivised” to work by large benefit reductions to themselves and their children.

Only 16 per cent of families capped are unemployed and therefore receiving benefits while fit and available for work. A similar number are assessed as unfit to work and the remainder are mainly looking after young children under five or sick relatives.

Importantly, many capped families are already working part-time. Broadly a single parent must work 16 hours a week to be exempt and a couple must work 24 hours a week, so those working fewer hours are hit by the cap.

To be clear, a single parent with a new baby, who may well be signed off her part time job by a doctor, will be “incentivised” to work more by reducing her family’s benefits. DWP research makes it clear that this is likely to lead to reduced food spending and increased rent arrears and/or debt. It is unsurprising that these incentives very rarely have the desired effect.

The Cap and Work

The statistical release features prominently the fact that many of the families that have been capped since 2013 are now in work (around 20 per cent). It is unfortunate that it does make clear that for the most part this is not the effect of the cap.

The Government’s own research indicates that most moves into work would have happened with or without the cap being in place. DWP looked at the families who lost the smallest amounts of money due to the benefit cap and found a marginal (4.7 per cent) increase in the number of families moving into work. Other researchers looked at families that lost larger amounts of money and found that increasing poverty makes people less likely get into work.

The overall effect on job outcomes of the benefit cap has not been studied. But it is clear the effects either way are not great – largely because the families being capped are prevented by their health or caring responsibilities from getting work, and with or without a benefit cap they move into work when those circumstances change.

My objection to this cap is that the benefit system should be designed to meet a family’s basic needs, and that it is morally repugnant to “incentivise work” by impoverishing children. The policy denies people the dignity and respect that all people made in the image of God should receive. The latest statistics show that scale of harm done mainly to children by abandoning this principle, and to no good effect. Whoever win the election needs to look again.

[1] £23,000 in London and this is reduced by one-third in a single household without dependents.

Apologies that part of this important article got truncated when it was first published. 

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© Paul Morrison. Researcher of UK social security policy, writing in personal capacity.
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