Hit by the household benefit cap: Forcing people to live on less than they need
While much focus is on the two-child benefit cap. We reveal how it is a cap on household benefits which is just as cruel.
Sophie hadn’t even heard of the household benefit cap when it hit her. But then she knew.
The 28-year-old from Blackpool had worked since she was 16, as a special needs teacher in a primary school and then as a carer.
She was living with her son, now four, and her youngest sister, to whom she was a guardian. She was working four days a week and receiving Universal Credit when she gave birth to her daughter last April.
Sophie had to explain to officials that her sister was looked-after, meaning she was exempt from the two-child benefit cap. But in July, when she was finally back-paid the benefits she was entitled to for her daughter, she was hit with the household benefit cap – meaning a loss of £400 a month.
Because she had always worked and had some savings Sophie had previously managed to get by. Suddenly she had barely a penny in her bank account.
“I knew nothing about the cap,” says Sophie. “That’s £400 a month you’re losing out on with another body who needs nappies and clothes, and she’s gluten free, which costs a bomb.”
What’s worse is that the DWP later told her it had miscalculated her payments, and needed to take a further £44 off her each month.
“I messaged them and said I can’t physically afford that. I can’t afford to be a penny worse off,” she says. “I’ve had to borrow money off people to buy a bus pass so I can take my son to and from school.”
Sophie isn’t alone in knowing little about the household cap, which limits the benefits any family can receive to £22,020 a year outside London, or £25,323 in London. For single people the cap is set at £14,753 outside London, and £16,967 in London.
While much attention this year has focused on the two-child benefit cap, the hardship caused by the household cap has gone under the radar. And yet it affects 123,000 households across the country, according to the Child Poverty Action Group, 71 per cent of them lone parents with children.
It traps families in deep poverty, says CPAG, and has a disproportionate impact on survivors of domestic abuse and on children.
“The benefit cap rides roughshod over a long-established principle of the social security system, which is to link entitlement to need,” says CPAG chief executive Alison Garnham, adding that over a third of people on Universal Credit who are subject to the cap are assessed by the DWP as not required to look for a job because they are caring for very young children.
“It forces families to live on less than they need, trapping more than 300,000 children in deep poverty.
“Worst hit are households in areas with high rents, larger families and single parents who can’t work more to escape being capped.”
Shortly after becoming Chancellor in the coalition government in 2010, George Osborne proposed the benefit cap – a policy Margaret Thatcher’s government rejected for fear of causing poverty and unpopularity - with the words: “If someone believes that living on benefits is a lifestyle choice, then we need to make them think again.”
But if he maintained his purpose was to encourage people into work, critics say the performative cruelty of welfare cuts was demonstrated by the fact that the household benefit cap was actually cut from £26,000, in line with median earnings, to £20,000 outside London in the years after its introduction in 2013. It only rose again for inflation in 2023 but is still lower than in 2013. But by 2016 only 5 per cent of people affected had moved into work, according to the Institute for Fiscal Studies.
In joint research between CPAG, Shelter and Women’s Aid last year, the charities argued that the benefit cap drives homelessness by making family homes unaffordable, particularly for larger families in London and the South East.
They said affordable privately rented housing for families affected by the benefit cap is “practically non-existent” and local authorities called on to assist families fearing homelessness were having to resort to temporary accommodation, which is “very unstable, harmful to health and incredibly disruptive”.
The joint research also found a disproportionate effect on survivors of domestic abuse, many of whom live in temporary accommodation after fleeing and may have had to give up a job as a result – or were prevented from working in the first place by their abuser and then struggle to overcome barriers to employment. They may even be discouraged from leaving an abuser because they know they might be capped.
A brutal trap
“The household benefit cap is brutal and traps families in homelessness and poverty, including women and children who’ve fled domestic abuse,” says Shelter chief executive Polly Neate. “The cap makes it almost impossible to afford private rents or even social housing, which is increasingly scarce, so even with the help of the council, it’s difficult to escape homelessness.
“As a result, families are spending months and even years in temporary accommodation, often crammed into a single room, living out of suitcases, not knowing if they’ll be uprooted and moved miles away overnight. Kitchens and bathrooms are shared with strangers and children have no space to play or do their homework.”
Even if the problem is concentrated in London and the South East, and other areas where rents are particularly high, it still harms thousands of families elsewhere, including The Lead’s northern patches. In some areas the cap even puts social housing rents out of reach because it’s set so low.
In Calderdale, 244 families had the Universal Credit part of their benefits capped in a snapshot figure for August 2024 (numbers for those claiming only housing benefit are not available). In Teesside it was 790 families.
In Teesside, Middlesbrough is the most deprived local authority area in the country, according to the 2015 Index of Multiple Deprivation and measured by the proportion of neighbourhoods that fall within the 10 per cent most deprived in the country. Hartlepool is also in the 10 per cent most deprived, while Redcar and Cleveland, Stockton-on-Tees and Darlington are in the top 20 per cent.
“The household benefit cap is an awful policy that drives vulnerable tenants into poverty,” says Tom Zagoria, chair of Housing Action Teesside. “Tenants already find that Local Housing Allowance is set so low they need to use other benefits to pay their rent. This cap means those in a big family just can't afford to cover the basics - it must be scrapped.”
CPAG and Shelter are also calling for the end of the household cap but ministers have long believed – with some justification from polling – that there are votes to be had in being tough on benefits.
The suggestion that DWP secretary Liz Kendall is planning further cuts to disability benefits to placate the bond markets only adds to this. Nevertheless, stung by the revolt over its failure to end the two-child benefit cap, Keir Starmer has set up a child poverty taskforce, with a strategy to be published in spring. Under current legislation, the household cap isn’t due to be reviewed until 2027.
“It is illogical and unjust to acknowledge that families with higher costs in high-rent areas deserve more financial support to help meet these costs, and then issue a flat-rate cap limiting this entitlement,” says Garnham.
“If the government's pledge to take 'bold action' on child poverty means anything, this cruel policy must be abolished before it pulls more children into its net. The government's upcoming child poverty strategy is the obvious time to do this.”
Neate adds: “If the government is serious about tackling child poverty, we need immediate action to help the record 161,500 children that are growing up homeless. The household benefit cap must be urgently scrapped so families can move on from damaging temporary accommodation into a settled home.”
In Blackpool, Sophie believes welfare policy should take people’s individual circumstances into account, which the household cap fails to do. The cap has just come to an end for her as her sister has moved out, having reached 18. She’s about to return to work as The Lead speaks to her, and believes that could bring better times.
But when she told the DWP about the hardship of the extra £44 a month, she was given nothing more than an offer of help with budgeting advice and the contact details of charities. Her sister was able to give her some money when she moved out, which has gone on bills and the renewal of zoo memberships – among her only affordable options for a family day out.
“I don't do anything for myself these days. I don't get my hair done, I don't wear make up anymore. I can't afford it. I pride myself on knowing that my kids are fed well and dressed well.”
Blackpool South’s Chris Webb says that tackling child poverty is a key mission for the government and for him as a Labour MP. In 2022-2023, 43.7 per cent of children in Blackpool were living in poverty.
“The impact on our children is profound, and it’s clear that the current system isn’t working for them,” he says. “The government is committed to understanding this multifaceted problem which the overall benefit cap is clearly part of.
“My constituents who are hit by the cap are those who need the support the most - victim-survivors of domestic abuse, single parents, and those with a high number of dependants.
“The cap was introduced by the Tories in 2013 and is bound up in the harmful rhetoric of ‘Benefits Britain’ that was pervasive at that time. This government represents more compassionate politics and I believe there is political support for scrapping it.”
Webb has asked Kendall what assessment she has made of the effect of the household benefit cap on families with children living in poverty, on single parent family and survivors of domestic abuse. And he has launched his own child poverty survey, supported by the End Child Poverty Coalition.
He says the responses it receives can feed into the taskforce’s work. “I am confident this will include a robust plan to tackle child poverty once and for all and hope this includes scrapping the benefits cap.”
What can be done?
The government’s Child Poverty Taskforce comprises officials from the Department for Work and Pensions, the Department for Education, the Ministry of Housing, Communities and Local Government and HM Treasury. It intends to draw on “findings from wider external engagement events in all regions and nations of the UK including bringing in the perspectives of families and children themselves. You can give your views by emailing ChildPoverty.Secretariat@cabinetoffice.gov.uk. In Blackpool South, take part in MP Chris Webb’s survey at his website.
About the author: Kevin Gopal is a Manchester-based journalist who has returned to freelancing after editing Big Issue North from 2007 until its closure in 2023. Prior to that he was assistant editor of Chinese community magazine SiYu, international editor of Pharmaceutical Executive, and deputy editor of North West Business Insider before freelancing widely on business, politics and policy for a number of titles. He is a leader in residence in journalism at the University of Central Lancashire.
At The Lead we believe in finding progressive solutions to society’s problems, and that includes exposing where we feel systems just aren’t working. We’re campaigning for the government to scrap the two-child benefit cap and also for their to be fairer sick pay for workers. We’ve also written about how the DWP itself needs to be radically reformed, as Hannah Fearn argues.
We also regularly report on how Blackpool - in The Blackpool Lead, our title dedicated to the town - is working to tackle having some of the most deprived wards in the country. It’s part of our commitment to in-depth news and features across the North of England in The Lead North.
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