News | Published August 07 2020

Covid-19 sees rise in families hitting benefit cap

Between February and May, the number of families hitting the benefit cap for individual households increased by 93 per cent as the effects of the Covid-19 pandemic took hold.

Figures suggest that 154,000 households reached the benefit cap in May, the BBC reports.

The Department for Work and Pensions said that an “unprecedented increase of 665 per cent in the number of newly Universal Credit capped households” had become apparent during the February to May period.

52,000 people currently at the limit are single parents with at least one child under the age of five.

The cap for family households in London stands at £23,000 per year, equating to £1,916.17 per month. Claimant families outside the capital will be provided with up to £1,666.67. For single individuals, those amounts are set at £1,284.17 for Londoners and £1,116.67 for those elsewhere.

The limits act as an incentive for those paying large amounts of rent in affluent areas to move to places where rent is less expensive, or aspire to get into better paid jobs.

However, the pandemic and ensuing lockdown has severely hampered employment opportunities and led to redundancies, yet people have still been impacted by the caps despite additional hardship.

The government has increased some benefit payments during the pandemic but has previously ruled out the prospect of increasing the cap.

The government has upped Universal Credit payments by £20 per week between April 2020 and March 2021, but Work and Pensions secretary Therese Coffey has remained unmoved on abandoning the cap during the period.

Coffey’s decision came even though households who reached the cap in May lost on average around £57 per week in benefits. 26 per cent of claimants affected were reported to have lost between £50 and £100 in a week, while three per cent lost out on £200 or more.

Jon Sparkes, chief executive of the Crisis charity, said: "These figures show thousands of people are turning to the benefits system to break their fall, only to discover that the benefit cap is cutting them off from vital support.

"If we are to avoid a wave of people from losing their homes through no fault of their own, it's vital that the government immediately suspends the benefit cap so that people have the means to stay afloat."

Calling for an end to the cap, Labour shadow employment minister Seema Malhotra said it was “pushing children and families into poverty”.

Malhotra added: "The government must 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."

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Authored by

Alexander Bridge-Wilkinson
Junior Editor
August 07 2020

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