AROUND 35,000 MORE FAMILIES across the UK could have their benefits capped next April, leaving them with a growing gulf between their income and rising costs, new Child Poverty Action Group (CPAG) analysis shows. In Scotland 4000 households are affected by the arbitrary limit to benefit entitlements.

Department for Work and Pensions (DWP) figures published on 21 June show 120,000 households were already subject to the benefit cap in February 2022, 86 per cent (103,000) of them families with children. Because their benefits are capped, these families saw no increase in their income at all when most benefits were increased by 3.1 per cent last April when inflation hit nine per cent – leaving them with a real-terms income cut of £1,800 (£2070 in London). They also lost out on the temporary £20 weekly increase in universal credit introduced at the start of the pandemic.

The cap limits the amount of UK benefits that low-earning or non-working households can receive to £20,000 (£23,000 in London). The cap has not been increased since it was introduced in 2013 and was lowered to its current level in 2016.

While the cap has remained frozen since November 2016, the cost of living has risen by 18 per cent since then. The Chancellor has committed to uprating benefits next April, but unless the cap is removed, the rise will take an estimated 35,000 additional families to the capping threshold overnight – so they will see little or no increase in their incomes to help them cope with higher costs. In total, 150,000 families will miss out on the rise because they will be capped next April, exposing them to ever more acute hardship.

In Scotland people affected by the benefit cap can apply for a  discretionary housing payment from their local authority, but there is no guarantee that all households will get this support. The Scottish government has committed to work with local authorities to mitigate the UK benefit cap ‘as fully as it can’

The cap takes no account of localised high housing costs and does not recognise that many families with children face higher living costs. Had it been uprated with inflation since 2016, benefit awards  would be up to £3,670 higher than they are now (£4,220 in London); around half (49 per cent) of this real-terms loss in value happened in the year from April 2021 – April 2022.

The new DWP statistics show:

  • 41,000 London households are capped; 79,000 households outside London are capped
  • 4000 households in Scotland are capped
  • 67 per cent of capped households (80,000) are single-parent families, 19 per cent (23,000) are couple-parent families.
  • The estimated average monthly amount of universal credit lost due to the cap is £236 for households which contain children. But some lose out on far more  –15 per cent of capped households lose out on over £400 a month
  • 53 per cent (54,000) of capped families with children have a child under five and 22 per cent (23,000) of capped families have a child under two.

:John Dickie, Director of the Child Poverty Action Group (CPAG) in Scotland said: “The cost of living crisis shows that the UK government’s benefit cap is broken, and needs to go. It has always forced families to live on much less than they need, but as prices spiral the effects are brutal and across the UK more than 300,000 children are among its casualties.

“In his cost-of-living support package the Chancellor recognised that families subject to the cap face the same cost pressures as everybody else. By the same logic, the cap must be removed to help the worst off families stay afloat. Next April’s uprating must be available to every family on benefits, as a bare minimum layer of protection against dramatically higher living costs.”

Mr Dickie continued: “Here in Scotland there is an urgent need for the Scottish government to press ahead with its commitment to mitigate the cap and put in place the guidance, resources and accountability needed to ensure as few children in Scotland suffer from the policy.”

Many capped families are unable to escape the cap by taking a job or extending their working hours, because they have very young children. Most people subject to the cap have been assessed by the DWP as not required to look for work. For single parents it is particularly difficult to reach the earnings threshold at which claimants are exempt from the cap, since they are sole breadwinners and often have to cover childcare costs with a single income.

* Read: Falling Further Behind: Hardship among benefit capped families as prices rise here.

* Source: Child Poverty Action Group