What happens if homeless families are hit by the benefit cap?

The number of homeless families is going up and the number of affordable homes is going down. In order to avoid disaster, councils are stepping in to ensure that Britain’s children don’t sleep on the streets.

But as local authority budgets shrink, the task of keeping children out of the cold becomes that much harder.

Last month we showed how this essential job is being made even more difficult. The benefit cap limits the amount of support that some households can receive. Councils rely on a form of housing benefit to help them house homeless families. And a quirk in the rules means that this funding is also hit by the benefit cap. This means that the benefit cap is taking another bite out of the funds available to councils to help families in an emergency. As a result, struggling councils are having to resort to more desperate measures to keep children safe – such as moving families across the country or putting more families in B&Bs and other shared accommodation.

But the benefit cap has another pernicious effect on homeless families. Temporary accommodation should be just that – a dry place to stay while you look for a home. But the benefit cap is preventing homeless families getting back on their feet and finding a proper home.

What is the benefit cap?

The benefit cap limits the total amount of benefits that some families can claim. This is currently set at £500 per week. But the government want to reduce this further to £440 in London, and £385 elsewhere. When a household’s total benefits hits this limit, the amount of housing benefit they can get is reduced. This happens even if it means they can’t afford a basic home.

The high cost of housing means that some families are already hitting the cap, and losing support. If the benefit cap is lowered further, more families in more places will see their support cut. Even small families living in areas with modest rents are in the firing line – like a family of four in Northampton or a single parent with a young baby in Poplar. The government estimates that 120,000 more households will be hit by the lower cap. Many of these will be currently or previously homeless.

How does it prevent homeless families from getting back on their feet?

Families on housing benefit, even those in work, often struggle to find a landlord who will accept them as tenants. Families who have less housing benefit than they need to pay the rent, because they have been hit by the benefit cap, are seen as even riskier. The shortage of affordable housing coupled with more and more people being priced out of homeownership means that benefit capped homeless households are at the back of a very long queue for both social and private rented properties.

And with the new benefit cap hitting families across the country, families can struggle to find a home that they can afford, even if they move far away. The new cap would hit families across the South, East and West and in most northern cities. Even if they can find something available, a move might not be possible. Or might lead to their situation getting even worse. Long distance moves can be damaging to families, and particularly children. We know that homeless families can be even more reliant on family members, friends and children’s schools at this time – particularly for childcare and routes into work.

What happens when homeless families are hit by the cap?

All this leads to families becoming trapped in temporary accommodation for long periods. This might mean years in poor accommodation, or frequent moves with just 24 hours-notice. Not only are thousands of children growing up in limbo. Less emergency accommodation is available for newly homeless households.

The benefit cap is intended to get families to a position where they move into work. It does the opposite for homeless families. Homeless families need time and support to find a settled place to live so they can apply for work, knowing that they won’t need to up-sticks and move every few months.

Shelter believes that newly homeless households should be exempt from the benefit cap for a limited period, to enable them to find a settled home.

The Welfare Reform Bill is the right opportunity to repair this unintended consequence of the benefit cap – and we urge the government to take this opportunity, and help homeless households.

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One Comment
  1. Shelter has campaigned for higher taxes on landlord. The new tax is designed to drive landlord out of business.

    Housing Benefit has has been frozen for several years. Landlord will not be able to increase rents to cover taxes.

    The Government wants to have their cake (tax) and eat it (freezing housing benefit).

    The policy is designed to make those on housing benefit homeless, so working tenants can buy up ex-rental properties.

    It is the end of the BTL!

    It is unlikely any Government will reverse the BTL tax, as it would seem to be helping landlords.

    I don’t think many landlord understand the tax bombshell,

    Osborne has been keen on pension funds getting into the BTL, however, they wont be interested in renting out to people on benefits.

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