Study finds plans to cut benefit cap to £20,000 will make many areas of south-east, south-west and some northern cities unaffordable

Unemployed families will not be able to afford to live in large parts of England as the government’s benefit cap plans threaten at least 100,000 households with homelessness and poverty, research finds.



The cap, introduced by the coalition in April 2013, limits the total benefits families can receive to £26,000 and has so far hit relatively few households; mostly those in high-rent areas of London.



But plans to reduce the cap to £20,000 (£385 a week), or £23,000 (£442) in London, would mean that large parts of the south-east and south-west, and some northern cities, would be unaffordable for many more families when it is introduced next April, data compiled by the housing charity Shelter shows.



The upshot will be more families with too little money for absolute basics for children, like food and warmth Alison Garnham, Child Poverty Action Group

Whereas previously the most expensive London postcodes, such as Chelsea and Islington, were affected, in the near future areas such as Portsmouth and Luton would be out of reach for unemployed families who are reliant on housing benefit.

MPs will vote on the plans on Monday evening when the welfare reform and work bill has its second reading.

Labour, which has been split over whether to support the cap, has tabled an amendment to the bill, after rejecting initial calls from its acting leader, Harriet Harman, to abstain. Despite the amendment, some of its MPs may still vote against the bill, which charities have called “a tax on the poorest of the poor”.

The chancellor, George Osborne, writing in the Guardian, has urged “progressive” Labour members to vote with the government on the bill.

The cap will be debated alongside other measures, such as a four-year freeze on working-age benefits, a limit on child tax credits to the first two children, and the repeal of child poverty laws.

Separate research by Citizen’s Advice predicts that of the estimated 90,000 new households expected to be immediately affected by the lower cap, at least 35,000 will be affected indefinitely. With larger families facing shortfalls of £100-£200 a week, many will face food poverty, rent arrears and eviction.

About 22,000 households are affected by the benefit cap.

The Shelter research shows that:



Families with two young or same-gender children in a two-bedroom flat are currently affected by the cap only in parts of London. But under the lower cap, the entire capital would be off limits as well as more than half the housing areas of England, including Manchester, Leeds and Birmingham.

The cap would affect families with two older children who need separate bedrooms (a three-bedroom home) in more than three-quarters of England’s housing areas, including those that had never previously been considered expensive, such as Coventry, Liverpool and Peterborough.

Lone parents with two children who need a three-bedroom home would be affected in 39% of housing areas, compared with just 8% of areas under the £26,000 cap. These include areas such as Southend and Luton.

Capped households will face a shortfall of £50 a week in more than one in six of England’s 152 housing districts – known as Broad Rental Market Areas – and by more than £100 in one in 12 areas.

The analysis suggests that already capped families from high-rent areas, such as London, who have been rehoused outside the capital to previously cheaper places, such as Milton Keynes and Luton, may find themselves facing eviction again under the lower cap.

Roger Harding, Shelter’s director of communications, policy and campaigns, said: “The benefit cap isn’t just impacting on very expensive postcodes anymore, we’re talking about places like Portsmouth and Basingstoke being off-limits to small, struggling families who need some support.”

Charities say it is difficult to estimate how many families will be made homeless or forced to move as a result of the cap, although they say the number will rise. Much will depend on the extent to which government temporary housing support grants for families affected by welfare reform – for which £800m has been earmarked over the next five years – helps to prevent evictions.



The government has yet to publish its own impact assessment of the lower benefit cap policy. However, a leaked Department for Work and Pensions memo in May suggested 40,000 more children would sink below the poverty line as a result of the cap.

The government has previously justified the welfare cap on the grounds of “fairness” because in principle no jobless household should get more in benefit income than the £26,000 earned by the average working family. It argues that the cap will incentivise people to move into work and lead to financial savings of £500m over the next five years.

A DWP spokesperson said: “The benefit cap provides a clear incentive for people to move into work and ensures we have a welfare system that is fair for those who need it and those who pay for it.”

However, the government’s own evaluation of the current cap has shown that it only had a marginally positive effect in getting people off benefits and into a job, while charities say net savings to the public purse are likely to be minimal once the costs of housing support grants, homelessness and providing employment skills support to capped tenants are factored in.

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Affected households can escape the cap by getting a job, moving into a smaller home or relocating to areas with lower rent. But Shelter’s research shows that families may have to move long distances to find an affordable home, while in some areas even the option of downsizing into an overcrowded one-bedroom flat is unaffordable.

Alison Garnham, the chief executive of Child Poverty Action Group, said the government had set the cap at an arbitrary level that penalised families who passed its own needs tests for benefits. “It’s tantamount to a tax on the poorest of the poor. And the upshot will be more families with too little money for absolute basics for children, like food and warmth.”

In March, the supreme court ruled that the £26,000 cap was in breach of the UK’s international obligations on children’s rights. The court’s deputy president, Lady Hale, said: “Claimants affected by the cap will, by definition, not receive the sums of money which the state deems necessary for them adequately to house, feed, clothe and warm themselves and their children.”