Child Poverty Action Group (CPAG) data reveals that about 35,000 additional families might have their benefits capped in April 2023, leaving them with a widening gap between their income and escalating expenses.
In February 2022, 120,000 households were already subject to the benefit cap, with 86 percent (103,000) of those being families with children.
Because their benefits are capped, these families experienced no income rise when most benefits were boosted by 3.1% last April when inflation reached 9%, leaving them with a real-terms income reduction of £2,070 in London and £1,800 outside of the city.
In addition, they lost out on the temporary £20 weekly boost in universal credit that was implemented at the beginning of the epidemic.
The annual benefit cap for low-income or unemployed households is £23,000 in London and £20,000 outside of the city.
The limit has not been raised since its inception in 2013 and was reduced to its present level in 2016. Since November 2016, the limit has been fixed, yet the cost of living has increased by 18 percent.
The Chancellor has pledged to boost benefits in April 2023, but unless the limit is repealed, the increase will bring an estimated 35,000 extra families to the capping threshold overnight, leaving them with little or no income gain to assist them deal with rising expenses.
In all, 150,000 families will be deprived of the increase since it will be limited in April of next year, subjecting them to even greater suffering.
The cap does not take into account regionally high housing costs, nor does it recognise that many families with children suffer increased living expenses.
Had it been adjusted for inflation since 2016, benefit payouts would be £4,220 greater in London and £3,670 higher outside of the city; over half (49 percent) of this loss in real terms occurred between April 2021 and April 2022.
The £650 emergency cost of living allowance provided by the Chancellor to all benefit recipients will only alleviate three-quarters of the increase in energy prices.
Chief Executive of Child Poverty Action Group Alison Garnham said: “The cost of living crisis shows that the 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 over 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.”
Due to the fact that many capped families have very young children, they are unable to avoid the restriction by finding a job or increasing their working hours.
The DWP has determined that the majority of those subject to the cap are not obligated to look for work.
It is particularly difficult for single parents to attain the salary threshold that exempts them from the restriction, given that they are the primary breadwinners and must typically pay childcare expenditures with a single income.