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Number of families hit by benefit cap more than doubled during pandemic

As the number of people claiming Universal Credit soared in lockdown, so did the number of households whose incomes were hit by the benefit cap
The benefit cap was affecting 180,000 households by November 2020

The number of households that had their incomes limited by the benefit cap soared by more than 137 per cent during the pandemic, according to “disgraceful” new Government figures.

Up to 76,000 households were affected by the benefit cap in February 2020, before Covid-19 hit the UK. By November 2020, the number impacted had soared to 180,000. 

The policy – introduced in 2013 to ensure no one receives more than the minimum wage equivalent as benefits – limits the amount of money someone can receive from the state per year.

The benefit cap “breaks the link between what you need and what you get,” a Child Poverty Action Group spokesperson said. 

A household can be assessed by the DWP to need a certain amount of money to live, but receive less than that if that is more than the limit set by the law.

“One of the stated aims of the cap is to incentivise people to move into work. But many people affected by the cap are not expected to work because of disability or ill-health, or because they have very young children,” the spokesperson added.

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Around 3,800 households had their incomes capped by £200 or more per week. Around 39,000 people – 26 per cent of all households impacted by the policy – were capped by between £50-£100 per week.

“It is disgraceful that the number of families hit by the benefit cap continues to rise,” said Seema Malhotra MP, Labour’s shadow minister for employment.

“Almost all of the capped households include children. And the figures don’t include those who will have seen their grace period end, so it is likely to be much higher.”

Malhotra said the Conservatives were “hitting families with a triple hammer blow of Universal Credit cuts, council tax rises and pay cuts”.

There were children living in nearly 85 per cent of capped households up to November last year, with families losing out on an average £55 per week – down from August, when the average cut was £57 per week.

The cap is set at £20,000 per year for families outside London, or £13,400 per year for single adults. That limit rises to £23,000 per year for families inside London, and £15,410 for single adults.

People receiving Universal Credit make up the majority – 86 per cent – of households hit by the benefit cap, while people claiming housing benefit account for the remaining 14 per cent.

The number of people claiming Universal Credit nearly doubled last year to six million, as lockdown restrictions sent the UK economy into its deepest recession since records began.

But the benefit cap policy meant the Universal Credit claimants among those 76,000 people would not have been able to receive the £20-per-week increase introduced at the start of lockdown to help people through the crisis.

London households are most affected by the policy, with 6.1 per cent having their benefit income limited in November 2020. That drops to 1.3 per cent in Scotland, where the benefit cap has the least impact proportionally.