The benefit cap was originally introduced by the coalition government as a device to supposedly “restore fairness” to the benefits system by limiting total household benefit income to no more than the average working family income of £26,000 a year. Emboldened by the cap’s apparent popularity with the public, the Conservatives changed the law earlier this year to lower it to £20,000 (£23,000 in London). The new cap will be rolled out across the UK between now and February, affecting about four times as many households as its predecessor.
Between 88,000 and 116,000 struggling UK households on average will lose £60 a week, though in some cases it could be as high as £150 a week. For many there will be no choice: they cannot work or are unable to find it, and as a result face hunger, impoverishment and homelessness. Many of those who have been unable to escape the cap have simply been unable to work – and have only managed to pay the rent by cutting back drastically on living costs or going into debt. Local authorities are increasingly worried that the cap, in its bigger and more punitive form, will trigger a surge in rent arrears, ill health, and homelessness.
The Institute for Fiscal Studies estimated that only 5% of the 80,000 households hit by the first cap moved into employment as a result. A study published in the summer by Oxford city council in partnership with the DWP found that cutting people’s benefits reduced their chances of moving into work because dealing with the additional pressures of poverty eroded their capacity for job seeking. Other studies have suggested that most of those who have moved off the cap into a job were close to working anyway, leaving those further from the job market deeper in debt and despair.
The work and pensions secretary, Damian Green, has said the government’s benefits cap, which will be lowered from Monday, costing almost 90,000 of Britain’s poorest families more than £2,000 a year, is a “real success”. And for employers who have found their tax burden decreased, it has indeed been a success…at the cost of increased poverty.