Low-income households denied coronavirus support by benefit cap

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  • May 24, 2020
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Benefits have increased for the poorest households but the Department for Work and Pensions has kept the cap at the same level.
Photograph: Kirsty O’Connor/PA

Tens of thousands of poor households are being denied extra support designed to ease the impact of the coronavirus pandemic, after being hit by the government’s benefit cap.

The number of low-income households affected by the cap in London has doubled since the crisis started, according to analysis seen by the Observer. Households already at the cap when the crisis hit have been missing out on £320 a month in additional support. For private renters with children, this is £532 a month. A further 22,000 households are now at the cap and are missing out on an average of £185 a month.

It has led to an outcry that there is now a two-tier system, in which workers on the government’s furlough scheme have access to far more support than some of those reliant on welfare. Sadiq Khan, the London mayor, is calling for the cap to be increased during the pandemic.

The government introduced new help for those claiming universal credit, however, the cap was not increased or suspended.

New research by the Policy in Practice consultancy, commissioned by City Hall, found that there were 44,300 households affected by the cap in April. This could rise to 63,700 by next year as more people are forced to make a claim.

Khan said: “This will leave families unable to pay their rent and other essential bills, and ultimately at risk of homelessness.”

Deven Ghelani, director of Policy in Practice, said: “With people out of work due to coronavirus and trapped by high housing costs it makes sense to suspend it [the benefit cap] at least for the duration of this crisis.”

Torsten Bell, director of the Resolution Foundation thinktank, said: “We’re rightly paying wages up to £2,500 a month where someone’s employer furloughs them, but a single person without work has support capped at less than half of that.”

A DWP spokesperson said: “We are doing whatever it takes to ensure people are supported through these unprecedented times, including injecting £6.5bn into the welfare system, rolling out income protection schemes, mortgage holidays and additional support for renters.

“About 2.5 million households receiving universal credit will benefit straight away from the £20-a-week increase in the standard allowance.”