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200,000 households on Universal Credit hit by benefits cap

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Around 200,000 families on Universal Credit and housing benefit are missing out on average £62 a week because they have had their benefits capped.

Figures from the Department for Work and Pensions (DWP) show a 13 per cent increase in the number of households that had their benefits capped between November 2020 and February 2021.

The benefit cap is a limit on the total amount of benefit that most, but not all, working age people can get.

It is currently £23,000 per year if you’re a couple or single parent in London and £20,000 if you live outside the capital.

The data shows 43,000 households had their benefits capped for the first time between November 2020 and January this year, a 30% jump compared to the previous quarter.

Universal Credit claimants get a nine month ‘grace period’ from the cap if they’ve lost their job and now earn less than £617 a month.

Among the newly capped are people who lost their jobs due to the Covid pandemic who initially qualified for a grace period but who have since seen their grace period expire.

The charity Child Poverty Action Group (CPAG) says the estimated average amount of benefit lost through capping is £62 a week for households with children and £57 for single parent families.

It is calling for the government to abolish the cap.

Alison Garnham, chief executive of CPAG, said: “The benefit cap has always been an unjust punishment for families. Most families affected by it can’t work to escape it – often because they are looking after young children or can’t find affordable childcare they can combine with work and single parenting.

“Thousands more households who have lost jobs to Covid-19 are now subject to the cap even though in the pandemic it is much harder to find ways to replace their lost earnings and become exempt.

“Especially in areas with high rents, capped families are losing large amounts of social security support and that is disastrous for the children concerned. The Government must abolish the benefit cap to prevent more children from being damaged by impoverishment.”

The benefit cap was introduced in April 2013 and was initially applied to housing benefit and subsequently to Universal Credit. The cap level was set initially at £26,000 per year for families and £18,200 per year for single adults with no children but reduced to the current levels in November 2016.

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