MPs have announced their intention to re-launch an inquiry into the Government’s controversial benefit cap policy, after the investigation was halted due the last General Election.
The benefit cap limits the total amount of benefits and tax credits payable to a working-age household. It was first announced in the 2010 Spending Review and was rolled out in 2013. The cap originally limited payments to £500 per week (£26,000 p.a.) for a family and £350 per week (£18,200 a year) for a single person with no children.
In the Summer Budget 2015, the Government reduced the cap to £442.31 per week or £23k for a household in Greater London, £15,410 for a single person, and £384.62 per week or £ 20k for a household living outside Greater London, £13,400 a year for a single person.
The rollout of the lower cap in winter of 2016–17 caused the total number of affected households to over treble from 20,000 in November 2016 to over 70,000 five months later in March 2017. As of February 2018, 64,800 households are affected. The lower cap has also increased the geographical spread of affected claimants.
Affected households are typically those with larger numbers of children, and higher housing costs. Exemptions apply for in-work households, those with certain disability or incapacity benefit entitlements (PIP, DLA, ESA support group) or recipients of Carer’s Allowance, Guardian’s Allowance and UC carer’s element.
The policy has come under fire from poverty campaigners and political opponents, who claim it unfairly penalises those who face the greatest barriers to employment and risks plunging more families and children into poverty.
Recent figures published by the Department for Work and Pensions (DWP) show that single parents, in particular, are disproportionately affected by the cap. According to DWP figures, 72% (43,000) of affected households who had their Housing Benefit capped at May 2018 were single-parent families. 33,000 of these (76%) were single parents with a child under the age of five, while 13,000 (31%) had a child under two years of age.
The Chartered Institute of Housing says the Benefit Cap is “disproportionately punishing people who will find it most difficult to escape by finding work”
“Seven out of 10 households who had their housing benefit capped are single-parent families, and more than three quarters of those have a child under five”, says CiH chief executive Terrie Alafat.
“Another 15 per cent are receiving employment and support allowance, meaning that they are not currently fit for work”, he added.
Alison Garnham, Chief Executive of Child Poverty Action Group, said: “The benefit cap is a cruel and misguided policy that has affected more than 560,000 children so far.
“The government claims that the main aim of the benefit cap is to incentivise work. But half of lone parents affected have a child under the age of three and are not expected to look for work.
“This means that the benefit cap is both cruel and ineffective in supporting people into work.”
Commenting on the re-launch of the inquiry, Frank Field MP, Chair of the Work and Pensions Select Committee, said: “People can escape the benefit cap if they move into work. But for the cap to achieve its aim of encouraging people into work, it must be paired with the right resources to ensure this is a realistic option within reach of all those affected.
“Where it is not, we need to understand why, and ask whether the benefit cap should operate.”
The DWP has championed the policy as a “welfare reform success”, highlighting figures that show 49,000 formerly capped people have moved into work
“The benefit cap ensures fairness in the system by asking people on benefits to make the same financial choices as people in work”, said Work and Pensions Secretary Esther McVey MP.