Study identifies more than 330,000 youngsters who will lose out in policy that will take £300m out of pockets of affected families in first full year

More than 330,000 children from low-income families in Great Britain will be hit by Conservative plans to reduce the benefit cap, the government’s own impact assessment (pdf) has concluded.

The policy will take an estimated £300m out of the pockets of the affected families in its proposed first full year of operation in 2017-18, costing those who are hit an average of £63 per household each week.

Ministers want to cut the cap on benefits payments of £26,000 a year per household to £23,000 in London and £20,000 in the rest of the country.

Lower benefit caps 'will exclude poor families from large parts of England' Read more

The Department for Work and Pensions (DWP) impact assessment was released to coincide with the second reading of the welfare bill, which the Commons passed by 308 votes to 124, a government majority of 184. Forty-eight Labour MPs voted against the second reading of the bill, rather than abstain as the party’s interim leader Harriet Harman had recommended.

The impact assessment also notes that:

• Single mothers will be hit hardest as a group by the cap – constituting 59% of those affected by the change.

• More than three-quarters of the households affected will be aged between 25 and 44.

• As many as 37% of those affected may be ethnic minority households – although the study says this cannot be precisely quantified.

The DWP estimates that the cap will save £300m in cash terms in 2017/18, rising to £480m in 2021. But it admits that it has not yet modelled the costs of supporting those families affected.

The assessment states that the policy will build on the existing cap and go on to deliver “further positive change”, strengthening work incentives and providing fairness for taxpayers while ensuring the presence of a “reasonable safety net of support for the most vulnerable”.

The government’s impact assessment comes as new research shows that 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.



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 the plans to reduce the limits 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.

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.

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 Citizens 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 so indefinitely. With larger families facing shortfalls of £100-£200 a week, many will face food poverty, rent arrears and eviction. About 22,000 households in total are affected by the benefit cap.

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 – help to prevent evictions.

Prior to the publication of the government’s impact assessment on Monday, in May a leaked DWP memo suggested that 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.

Imran Hussain, director of policy at Child Poverty Action Group, said: “The government’s own analysis shows the majority of households affected by the benefit cap are lone-parent households and the main victims are children – they’re nearly seven times more likely to be hit by it than adults. Children are innocent. Why should they be deprived of the basic necessities of life because the government wants to send a message to adults? They haven’t done anything wrong and cannot do anything about their circumstances. It’s a cruel, costly and damaging policy.”

A DWP spokesperson said: “These figures don’t take into account any expected behavioural change, such as entering work. We know that many people who have had their benefits capped move into work, reduce their housing benefit claim or are no longer claiming housing benefit at all.”

However, the government’s own evaluation of the current cap has shown that it had only 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.

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.”

• This article was amended on 23 July 2015. An earlier version referred to England in the first paragraph, where Great Britain was meant.