The Impact of the Benefit Cap.
The Welfare Reform Act 2012 provided for a cap on total household benefits. The cap limits the total benefit a household can receive to £500 per week for a family and £350 per week for a single person with no children. The difference between a claimant’s total benefit and the Cap level is subtracted from Housing Benefit, or from support for housing costs under Universal Credit. The Cap was initially piloted in four London boroughs from April 2013 and was then implemented in all local authority areas in Great Britain by spring 2014.
The Parliamentary work and Pensions committee reported on the effects of the benefit cap last year. I copy some of their evidence below.
The current conservative government does not plan to act on any of this. Instead the plan is, if re-elected, to further reduce the total amount people can receive in benefits, regardless of the widespread and serious problems this is causing to vulnerable people and families.
The impact of the Benefit Cap on affected tenants
96. As of January 2014, 38,600 households had been affected by the Cap. Those most likely to be capped were families with several children, and those who live in high rent areas or expensive accommodation (such as temporary accommodation). Almost half of all capped households, 47%, were in London. Of households subject to the Cap in January 2014: 60% contained between one and four children and 36% contained five or more children. 59% were single-parent households with children.
97. Witnesses expressed concerns regarding the large proportion of income that affected households were losing. The average loss differed between different areas. In Newcastle, the average loss among the 56 affected households was £48pw, with six households losing in excess of £100pw (reducing their Housing Benefit to less than 50p weekly). Z2K, a London-based charity, found that tenants were losing between £5 and £500pw, with an average loss of £91pw. According to the DWP, 22% of all capped households are losing more than £100 per week as of January 2014.
98. The Chartered Institute of Housing, and Haringey Council, were concerned that reductions in income arising from the Cap could lead to poverty for affected claimants. They were particularly concerned about the effect the Cap could have on levels of child poverty. The Children’s Society provided calculations, illustrating the way in which the Cap might affect the poverty level of families in private rented housing under Universal Credit:
Table 3: Disposable income after cap applied for out of work couple with average private rental sector rent for relevant property sizes
|Average PRS rental prices||Disposable income after cap applied||Poverty line (after housing costs deducted)|
99. Witnesses told us that some tenants affected by the Benefit Cap were being made homeless as a result of accruing unmanageable levels of arrears. Yvette Burgess of the Coalition of Care and Support Providers in Scotland said that placing homeless people in the private sector had become more difficult and expensive for local authorities because the Benefit Cap had reduced the range of affordable properties. The London Borough of Brent said that it was having to look “further afield” for affordable accommodation. However, moving people out of London could cause increases in rents in other areas: according to Z2K, private sector rents were starting to go up in areas such as Enfield where inner-London based local authorities were placing people.
100. There is evidence that some private sector landlords have specifically been evicting or ending tenancies of people on Housing Benefit because of fears they might be affected by the Cap. The London Borough of Brent reported that evictions of private sector tenants due to the Benefit Cap were causing an increase in homelessness. Joanna Kennedy of Z2K said that currently around 18% of private sector landlords were renting to tenants on Housing Benefit, while two years ago the proportion was closer to a third. She cited a survey which found that “57% of landlords actively said that they would not take Housing Benefit tenants”.
The parliamentary committee report goes on to itemise the effect of the cap on disabled people and carers, on its especial effect on people forced to live in expensive temporary accommodation as a result of homelessness, and to dispute the number of people the government claims has gone into work as a result of the cap.
Access this report through the House of Commons Website here http://www.publications.parliament.uk/pa/cm201314/cmselect/cmworpen/720/72007.htm