Cap means there will be no cost-of-living increase for thousands on benefits
Around 35,000 more families could have their benefits capped next April, leaving them with a growing gulf between their income and rising costs, new analysis by Child Poverty Action Group (CPAG) shows.
In Scotland 4,000 households are affected by the arbitrary limit to benefit entitlements.
DWP figures published this week show 120,000 households were already subject to the benefit cap in February 2022, 86% (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% last April when inflation hit 9% – 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 hasn’t 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% 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 cap takes no account of localised high housing costs and doesn’t 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%) of this real-terms loss in value happened in the year from April 2021 – April 2022.
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.
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.