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The Chartered Institute of Housing is the independent voice for housing and the home of professional standards

'Benefit cap is fundamentally unfair.'

08/05/2018


As the government releases its latest statistics showing the harsh impact of the benefit cap, CIH's David Pipe says it must consider raising or removing it.

Last week the government released the latest statistics showing the impact of the £20,000 benefit cap (£23,000 in London).

The data shows that as of February 2018 there were 65,000 households whose housing benefit or universal credit was being reduced as a result of the cap. This has reduced only slightly since the previous count of 67,000 in November.

But beneath this headline figure, it is the detail of which types of households are capped and how much income they are losing as a result that really warrants attention. Once again those numbers confirm several fundamental problems with the policy.

The stated aim of the benefit cap is to encourage more people into work. However the statistics reveal that slightly more than half of all those who are capped (52 per cent) are receiving income support. This means that they are either lone parents with a child under the age of five or they are caring for disabled relative. This is a group that, according to the government’s own rules, would not normally be required to look for work.

A further 15 per cent of capped households are receiving employment and support allowance, meaning that they are not currently fit for work. And so, taking these two groups together, it is absolutely clear that a policy which is intended to push more people to move in to work is in fact being applied mainly to those who are not currently able to so. Incredibly only a 19 per cent of those who are capped are receiving job seekers allowance.

Furthermore, the benefit cap is extremely punitive. 44 per cent of capped households have seen their income reduced by more than £50 per week, while 14 per cent are losing more than £100 per week. These are enormous loses, which a low income family can not possibly be expected to absorb.

The statistics do not show how many of these families are currently receiving a discretionary housing payment (DHP) but many are only likely to be able to sustain a tenancy for as long as they continue to receive one. If your housing benefit has been reduced all the way down to a nominal 50p per week, which is the case for many of the worst affected families, it will of course be completely impossible to rent any kind of accommodation in any part of the country without a DHP.

In practice this means that costs are often simply being shunted from one budget to another while families are being left at the mercy of a system that is entirely discretionary. There are no guarantees that they will get the support that they need and if they do get it, it is likely to be time-limited with a need for them to reapply at regular intervals. Most worryingly of all, if their DHPs run out before they are able to move in to work they will be in danger of facing severe hardship and perhaps homelessness.

93 per cent of capped households include children, with the largest group being three child families, and it is these children who could feel the affects of the cap most acutely. When we carried out our own research, speaking directly to households whose benefits had been capped, we found families who had gone without food or heating, who had been forced to rely on foodbanks or who could not afford to buy basic clothing for their children.

Ultimately the benefit cap is supposed to be about fairness but the latest statistics show that it is fundamentally unfair. It is supposed to incentivise work but most of those affected are simply not able to move in to employment right now. Yet many will be facing very large drops in income and, unless the government is prepared to think again and either raise the cap or remove it entirely, the consequences could be severe.

David Pipe is policy and practice officer at CIH.


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