Jenny Pennington
Jenny Pennington

By Jenny Pennington

The benefit cap: real misery for no good purpose

We recently received some good news about a bad policy. Back in June, the High Court found that the household benefit cap is unlawful in its current guise. The benefit cap restricts the amount that an out of work household can receive in benefits to £442 a week for families in London and £385 for families elsewhere in the country.

Shelter intervened in the case to raise our concerns that the cap is putting families at risk of homelessness. The High Court was concerned at its impact and ruled that it was unlawful for the cap to apply to single parents with children under two. You can read the full judgement here and read more about the case, and the arguments made here and here. While the case is live, the cap continues to apply in the same way.

Disappointingly, the government has now confirmed that it is appealing the verdict. While we gear up for the next stage in the case, now feels a good time to go over the policy, and explain why we are so keen to see change.

A disaster foretold

From the cap’s inception, Shelter has warned that it is a populist policy, with dangerous consequences. More recently, we showed that the new, lower cap (introduced from November 2016) would make it practically impossible for many people who can’t work to find somewhere they can afford to live. Despite this hardship, the Government’s own research finds that the policy does not achieve its stated aim (encouraging people into work) in 95% of cases.

The impact laid bare

We now have data that shows how the new, lower cap, is operating. We can see that that the lower cap affects three times as many households (59,000 households in England) as the original policy. More than 10,000 of them are losing more than £100 each week. This is particularly hard as the cap targets households who are already struggling to remain in their homes and who have no other income to fall back on. Due to other cuts to housing benefits, they may already face major shortfalls between their income and the cost of renting a home.

As well as causing homelessness, the cap makes it harder for homeless families to get back on their feet. Households who have been helped into temporary accommodation are still caught by the cap. In fact, homeless households are more than four times as likely to have their benefits capped than other households claiming housing benefit. They also lose more on average.

As a result, the cap is actively working against government attempts to tackle homelessness. In total, the cap takes £18.9 million a year from homeless households in England. This serves to almost totally negate the new funding recently committed by government to help people facing homelessness and the councils trying to help them.

A consensus for change?

Shelter intervened in this case because our services deal with the damage this illogical policy causes every day. Strikingly, even the judge was moved to say how the evidence put before him showed that the policy was not just unlawful, but cruel. And pointlessly so. The final paragraph of his judgement reads:

The cap is also in opposition to the government’s own agenda. The government’s Housing White Paper committed them to ‘helping people now…by doing more to prevent homelessness and to help households currently priced out of the market’. Currently, the cap is doing the reverse.  If the new government is committed to tackling homelessness, it must take urgent action to review this policy.

Until then, Shelter will continue to support this case through the courts, and to expose the real misery this cap is causing; for truly no good purpose.

 

Homelessness and the benefit cap in numbers

England

Number of homeless households affected: 3,606
Percentage of capped households who are homeless: 6%
(Percentage of all housing benefit claimants who are homeless) 1.4%
Average weekly reduction in homeless households’ benefits: £100.74

 

London

Number of homeless households affected: 2,453
Percentage of capped households who are homeless: 19%
(Percentage of all housing benefit claimants who are homeless) 4.7%
Average weekly reduction in homeless households’ benefits: £104.71

 

Sources The number of homeless households affected by the cap is from data provided by local authorities in England following a data request made by Shelter in February 2017. Data was received from 306 out of 325 local authorities (a 94% response rate). Therefore the full number of homeless households affected by the benefit cap is likely to be higher. The proportion of all housing benefit claimants who are homeless is from data provided by the Department for Work and Pensions following a data request made by Shelter in March 2016.

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