Posted: 07 November 2016

The new benefit cap – will children end up paying the price?

From 7 November 2016, the Government will be lowering the benefit cap for out of work households. 

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The new plans will cap support at £20,000 (£23,000 in London), replacing the existing £26,000 national cap. Families are expected to lose an average of £60 per week or £260 a month – for many this will be the difference between just about managing and being placed at risk of homelessness. This decision will mean that up to £17 million will be taken from 88,000 of the UK’s poorest households, home to about 244,000 children.

A real-term cut in support to children living in poverty

There are already 3.9 million children living in poverty across Britain - this figure is likely to rise following the introduction of the new cap placing a substantial risk on the health, well-being and mental health of many children.    

A significant proportion of families benefits currently go on housing costs meaning the cap will make housing unaffordable for many, making homelessness or relocation away from family and friends a likely outcome. This will result in huge disruptions to family life with many children having to move schools and develop new social networks. Our recent research into problem debt taught us that money worries often leave children feeling unhappy with their lives. Therefore, we are concerned about the increased levels of stress, anxiety and depression that children across the country will likely face.

Even if families are able to stay in their homes they will be forced to reduce their spending to such an extent that children will inevitably be negatively affected. Parents already struggling to make ends meet will find it even harder to afford basic necessities such as food, heating and school uniforms. 

Incentive to work?

The Department of Work and Pensions have said that the benefit cap will help get more people into work as moving on to working tax credits will make them exempt from the cap. While some families may be lucky enough to take advantage of this, many others will be likely to struggle. Our work with families across the country tells us that many families would like to begin work or take on more hours, but for reasons such as childcare commitments and the lack of opportunities in their local areas many are not able to. We are worried that children will end up paying the price for situations that are completely beyond their control.

The Government is also moving forward with plans to cut support for low income working families under Universal Credit. Low paid working families are at risk of losing up to £200 a month as a result of the changes; this will further reduce any positive incentives for parents to move into employment. Therefore, it is likely that fewer households than originally suggested by the Government will move into work following the introduction of the new cap. 

Moving forward

Even at this late stage, we are urging ministers to exclude children’s benefits from the cap. Children should not have to pay the price for the Government’s attempts to balance the books.

By Hannah Chetwynd - Policy team
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