4 Nov 2016

A new harsher benefit cap is expected to remove hundreds of pounds of support every month from the homes of almost a quarter of a million children when it comes into force from Monday [7 November 2016], figures from The Children’s Society show.

The Government’s plan to cap support for out-of-work households at £23,000 a year in London and £20,000 in the rest of the country will, in total, take up to £17m per month from 88,000 of the UK’s poorest households, which are home to about 244,000 children.

It means the measure, which was approved by Parliament in March this year under former Chancellor George Osborne’s austerity plan, is likely to hit almost three times more children than adults. And it means that, based on relative population sizes, children are nine times more likely to be affected than working-age adults.

The new cap, which will replace the existing £26,000 national cap, follows repeated squeezes on the income of poorer families and represents a further real-term cut in support to children living in poverty.

Because a significant proportion of many families’ benefits currently go on housing costs there are fears that the new harsher cap could lead to more families being made homeless and forced to move away from their children’s friends and schools.

Even if families are able to stay in their homes they will be forced to reduce their household budgets in such a way that children will inevitably be adversely affected. There are already 3.9m children living in poverty across Britain and the new cap is likely to cause that total to rise. Children’s health, well-being and mental health could all be put at risk.

Of the 88,000 households estimated to be impacted by the new cap, almost three-quarters (64,000) will be affected for the first time and will see their benefits cut by an average of £39 per week. The remaining 24,000 households, whose benefits were already reduced by the original cap in 2013, will see an average further reduction of £62 per week.

The average loss across all families affected will be £60 per week or £260 a month – the difference for many between just about managing and spiralling into problem debt or homelessness.

While some families will be fortunate enough to escape the cap by taking on extra hours or moving into work, many others are likely to struggle and The Children’s Society is concerned that children will end up paying the price for situations beyond their control.

At the same time as penalising parents who have been unable to find work, the Government is also pushing ahead with plans to cut support for low income working families under Universal Credit, reducing the positive incentives for families to move into employment. This means that the Government’s assumption that significant numbers of capped households will move into work is likely to be wide of the mark.

Matthew Reed, Chief Executive of The Children’s Society, said: “Given the Prime Minister’s aspiration of making Britain a country that works for everyone, it is deeply disappointing that the Government is pushing ahead with an ongoing agenda of cuts to financial support for children in low-income families. Making savings by cutting help for the poorest children is unnecessary and unfair.

“This is a blunt instrument trying to solve a complex problem. The policy is targeted at workless adults, but the reality is that children are considerably more likely than adults to lose out and there is nothing fair about trying to balance the books on the backs of poor children.

“We fully support efforts to make work pay, but it is not right to achieve this by putting more children on the breadline. Even at this late stage we would urge ministers to exclude children’s benefits from the cap so that children and their already struggling families do not suffer even more hardship.

“At the same time the Government should provide better incentives for families to move into work by reversing recent cuts to support for working families in Universal Credit.”

Notes to Editor

  • The harsher cap will be rolled out across the UK from 7 November. It may take effect in different local authority areas on different dates.
  • The benefit cap for families with children will be reduced from £26,000 per year to £23,000 in London and £20,000 in the rest of the country. The caps are lower for single adults without children. 
  • The reduced cap is expected to hit 88,000 households (see page 2 of the Government’s impact assessment here). The Children’s Society estimates that this will impact 244,000 children nationally.
  • The weekly reduction in overall value of benefits being received by households is estimated to be £4m. (64,000 households affected x £39 p/w average reduction = £2.5m weekly reduction in overall value of benefits; 24,000 households affected x £62 p/w average reduction = £1.5m weekly reduction in overall value of benefits. Total = £4m weekly reduction in overall value of benefits, equivalent to £17.3m monthly reduction).
  • The Children’s Society is a national charity that runs local services, helping children and young people when they are at their most vulnerable, and have nowhere left to turn. We also campaign for changes to laws affecting children and young people, to stop the mistakes of the past being repeated in the future. Our supporters around the country fund our services and join our campaigns to show children and young people they are on their side.

Media enquiries

For more information, please call The Children’s Society media team on 020 7841 4422 or email media@childrenssociety.org.uk. For out-of-hours enquiries please call 07810 796 508.