NEW FIGURES FROM THE DWP show the number of households subject to the benefit cap has jumped by 13 per cent since November, reaching 200,000 at February 2021.

The households concerned are likely to have been capped because they have lost jobs or working hours to Covid-19 and their wages have dropped below the earnings exemption threshold.  But with the impact of the pandemic still being felt, few will be able to find replacement earnings to become ‘uncapped’.  Average losses are £62 per week for capped families.

The cap limits the total amount of benefits low-earning or non-working claimants can receive.  Universal credit claimants are exempt from it if they earn £617 a month.  Claimants get a nine-month grace period in which they are exempt from the cap if they have earned more than £617 a month in the previous year.

Among the newly capped are Covid-19 job casualties who initially qualified for a grace period but who have since seen their grace period expire, bringing them within scope of the cap at a time when new jobs or additional working hours remain hard to find.  The number of capped households will go on rising as the grace periods of different cohorts of Covid job casualties expire.

The number of capped households has more than doubled since the start of the pandemic, with most of the increase in London, and the majority of capped households are families with children.

The figures released on 22 June show:

  • 83 per cent of capped households (166,000) are families, 59 per cent are single parent families.
  • The estimated average weekly amount of benefit lost through capping is £62 for households which contain children (£73 for couple-families, £57 for single parent families).
  • 49 per cent of capped families have a child under five and 19 per cent of capped families have a child under two.

Child Poverty Action Group (CPAG) is calling on the Government to abolish the cap. Alison Garnham, Chief Executive of CPAG said: “The benefit cap has always been an unjust punishment for families. Most families affected by it can’t work to escape it – often because they are looking after young children or can’t find affordable childcare they can combine with work and single parenting.

“Thousands more households who have lost jobs to Covid-19 are now subject to the cap even though in the pandemic it is much harder to find ways to replace their lost earnings and become exempt.  Especially in areas with high rents, capped families are losing large amounts of social security support and that is disastrous for the children concerned.  The Government must abolish the benefit cap to prevent more children from being damaged by impoverishment.”

The level of the benefit cap has not been revised since 2016 so the shortfall in the social security support that capped families receive, compared to what they need, has grown accordingly. The level of the cap is set at £23,000 per year for couples/lone parents in Greater London (regardless of the number of children) and £20,000 for couples/lone parents outside the capital.

The cap has not incentivised work – less than five per cent of people have moved into work because of it. This is unsurprising since the vast majority of capped households are not earning below the threshold by choice but because they face high barriers to work – particularly difficulties finding and paying for childcare – and most are not required to work.

Abolishing the cap would lift 100, 000 children out of deep poverty (below 50 per cent of median income) and 170,000 out of very deep poverty (below 40 per cent of median income) at a cost of only £575 million.

* The new DWP figures are here.

* Read a Child Poverty Action Group briefing on the figures here.

* Source: Child Poverty Action Group