Tens of thousands of Britain’s poorest families risk missing out on a huge boost to their income next year under Rishi Sunak’s £15billion scheme to ease the cost of living crisis through to the benefit limit.
Benefit payments are set to rise by 10% from April, the Chancellor has confirmed, but more than 120,000 households will lose out unless ministers raise the cap on how much they can receive from the state.
Experts have warned that unless the government acts, more families, many of whom have children under five, will hit the cap on payments.
Carl Emmerson, deputy director of the Institute for Fiscal Studies (IFS), said that if ministers planned to make benefits more generous, to cope with spiraling inflation, “the ceiling on benefits would almost certainly have to rise to reflect that”.
Alison Garnham, chief executive of the charity Child Poverty Action Group, said she welcomed Mr Sunak’s announcement that people in the system would receive the one-off £650 payment awarded to millions of households. “But in the longer term, as prices rise, these families will remain trapped by the ceiling in an impossible position,” she said.
Ministers did not raise the cap during the Covid pandemic, despite raising a benefit, Universal Credit, by £20 a week. The result for many households was that much of the hike was recouped almost immediately.
First introduced by George Osborne as part of his austerity measures, the benefit cap is a limit on the total amount that most adults below retirement age can receive.
It currently stands at £20,000 a year, or £13,400 for single adults without children. A slightly higher limit of £23,000 per year, or £15,410, applies in Greater London.
But a recent briefing note for MPs noted that although most of the benefits and tax credits included are linked to the rate of inflation, the cap itself was never increased. Instead, it has remained at the same amount since 2016.
Mr Emmerson said that as Ministers had reinvented the welfare system with the introduction of Universal Credit, which is designed to allow beneficiaries to keep more of the money they earn, ” I have no idea what benefit ceiling is really necessary”. ”.
In fact, “we’re okay with people having slightly more children in cheap parts of the country and we’re okay with people having slightly higher housing costs as long as they don’t are not children,” he added. “What we don’t like is people who have a lot of kids in expensive parts of the country.”
A spokesman for Sadiq Khan, the Mayor of London, warned that despite Thursday’s announcement it would still mean tens of thousands of low-income Londoners would still have their money “unnecessarily cut off”.
The Child Poverty Action Group warns that most affected families have a child under the age of five. “It is their development and their future that is now at stake,” Ms Garnham said, adding that lifting the cap could lift around 50,000 children out of poverty in one fell swoop.
The latest statistics, for November, show that more than 120,000 households are subject to the cap. This figure represents a decrease of more than 50,000 households compared to the previous quarter. The drop coincided with the withdrawal of the temporary £20-a-week increase in Universal Credit, which ended in early October.
A spokesman for the Department for Work and Pensions said: ‘We are keeping the cap under review and any revisions would align with the timing of benefit increase decisions, with changes taking effect the following April.’