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Wed, 30 September 2020

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Number of households hit by benefit cap rockets 93% amid coronavirus pandemic

Number of households hit by benefit cap rockets 93% amid coronavirus pandemic

The number of households subject to the benefit cap increased by 93% during the coronavirus pandemic (PA)

4 min read

The number of households hit by the Government's benefit cap has soared by 93% amid the coronavirus pandemic, new figures have revealed.

Department for Work and Pensions data shows more than 150,000 households had had their benefits capped as of May 2020, an increase of 74,000 on the previous quarter up to February.

And a huge spike in the number of Universal Credit claimants as a result of the economic hit from Covid-19 saw the number of capped households claiming the benefit rise by 77,000 - a jump of 164%.

Single parents are among those worst hit, with 52,000 households with a child under five seeing their income capped.

Overall, 84,000 households had their benefits capped for the first time between March and May this year - during the peak of the pandemic - and 86% of those currently capped include children.

Labour has previously called for the cap to be suspended, along with the Institute for Fiscal Studies and Child Poverty Action Group and said the Government's "failure to listen" meant 150,000 families are now £248 a month worse off on average. 

Shadow Employment Minister Seema Malhotra said: “These figures must serve as a wake-up call to the Government. Labour has repeatedly called on the Government to scrap the benefit cap to avoid the picture we are seeing today. 

“This is a policy that is pushing children and families into poverty. With around eight job seekers for every vacancy, rising to 20 per vacancy in some parts of the country, this is a Government totally out of touch with the reality of people’s lives."

The frontbencher said ministers should target support at those most in need, "rather than pursuing a one size fits all approach". 

"Ending the benefit cap would put much needed cash into the pockets of Britain’s poorest families, helping them through this crisis without a devastating increase in household debt," she added.

The cap limits a household's total annual benefits, including housing costs, to £20,000 a year - or £23,000 in London.

'BROKEN WELFARE SYSTEM'

The policy has been branded "cruel" by Lib Dem leadership contender Layla Moran, who said it was pushing thousands of children into poverty.

She added: "At the outset of the crisis, the chancellor said we will be judged by our capacity for compassion. Ministers are failing abysmally at that test.

"We need to seize this moment to fix the broken welfare system and introduce a Universal Basic Income so no-one is left behind."

The Government announced earlier this year that Universal Credit claimants would receive an extra £1,000 this year to help deal with the ecnomic fallout from Covid-19.  

But critics argue the cap, coupled with a huge surge in welfare applications, effectively cancels out any financial boost for benefit claimants. 

Child Poverty Action Group chief executive Alison Garnham described it as "nonsensical".

"It's an arbitrary limit that’s applied irrespective of needs. In a pandemic it is egregious," she said.  

"People who’ve lost earnings or jobs because of Covid-19 are finding that they’ve also lost significant amounts of their social security support because of the cap.  That isn’t right. The cap is causing intense hardship yet in the pandemic most routes for escaping it are closed off so families are left without a life raft.

“The cap hits hardest the very families who are least able to avoid it – single parents with very young kids who even in normal times can’t just get a new job , increase their working hours or up sticks to cheaper housing – precisely because they are caring for very young children.  In a pandemic their chances of escaping the cap are extremely limited or non-existent."

Ms Garnham said it left parents on low wages with "no wriggle room".

"It’s a terrible poverty trap," she added. "The cap should be lifted so that every parent can meet their children‘s needs in the pandemic and beyond it.  

“We should not be further impoverishing vulnerable children because their parents live in high rent areas and for very real and practical reasons are unable to work more hours or move house to escape the cap.”

The DWP claims the cap provides an incentive for benefit claimants to find work.

A spokesperson said: "The benefit cap, up to the equivalent salary of £28,000 in London, ensures fairness for hard-working taxpaying households and a strong work incentive, whilst providing a much needed safety net of support. 

“We remain committed to helping the most vulnerable in society, which is why we currently spend more than £95 billion a year on the benefits system, supporting more than seven million people.”

Universal Credit claimants with household earnings of at least £604 in an assessment period, which can include statutory sick pay, employer sick pay and earnings from self-employment, will be exempt from the cap, the department has said. 

In some cases, Universal Credit claimants could be offered a nine-month ‘grace period’ where their benefit will not be capped if they have a "sustained work record" with monthly earnings of at least £569 for the last year.

 

 

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