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| London boroughs prepare for impacts of lowered benefit cap | London boroughs prepare for impacts of lowered benefit cap |
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| London has a special relationship with the government’s benefit cap. When introduced in 2013 it had by far its widest impact in the capital, thanks to our famously high housing costs and resulting high levels of housing benefit. On Monday, the cap was lowered. The reduction was less in London than everywhere else, but even so it is estimated that this will easily double the number of households here affected by it. The Institute for Fiscal Studies (IFS) calculates that the 8,400 being pinched by the cap before the change will increase to 19,000 losing some money as a result. London Councils, the body representing the capital’s 33 local authorities, thinks the figure likely to be well on its way to 25,000. | |
| In London, the cap has been reset from £26,000 a year to £23,000. That is the total amount in benefits that can now be paid to a couple or to a single person whose children live with them in London. For single adults without children the maximum is £15,410. Let’s apply some context. The last census put the number of households in London at 3.27 million and it will have increased since then, so the cap affects only a very small percentage of the city’s population. That said, £23,000 a year does not buy a life of luxury. The median London household income is more than than £39,000. The mean is around £52,000 (much higher than the median because of very high earners). A recently calculated minimum income standard for a London couple with two young children is around £25,000. Families that must get by on £23,000 don’t find it easy to make ends meet. | In London, the cap has been reset from £26,000 a year to £23,000. That is the total amount in benefits that can now be paid to a couple or to a single person whose children live with them in London. For single adults without children the maximum is £15,410. Let’s apply some context. The last census put the number of households in London at 3.27 million and it will have increased since then, so the cap affects only a very small percentage of the city’s population. That said, £23,000 a year does not buy a life of luxury. The median London household income is more than than £39,000. The mean is around £52,000 (much higher than the median because of very high earners). A recently calculated minimum income standard for a London couple with two young children is around £25,000. Families that must get by on £23,000 don’t find it easy to make ends meet. |
| London Councils believes that single parent households will comprise the majority of those made worse off and that three-quarters of all affected households will contain children. In a briefing to members, they also point out that the government’s own impact assessment anticipates that women will be disproportionately hurt. A majority of capped households are described as “likely to lose less than £50 a week (£216 a month),” while “a sizeable minority (around 44%) will lose more than this”. | London Councils believes that single parent households will comprise the majority of those made worse off and that three-quarters of all affected households will contain children. In a briefing to members, they also point out that the government’s own impact assessment anticipates that women will be disproportionately hurt. A majority of capped households are described as “likely to lose less than £50 a week (£216 a month),” while “a sizeable minority (around 44%) will lose more than this”. |
| What does the cap achieve? It reduced benefit spending nationally in 2015-16 by a very puny £65m. But the government maintains that imposing it has created an incentive for claimants to find jobs. Being employed for more than 16 hours a week or, if a couple, for 24 hours a week combined, exempts claimants with children from the cap and means they qualify for working tax credits. The IFS says there is “fairly robust evidence” from government figures that about 5% of people nationally affected by the original cap moved into work and an even smaller fraction responded to it by moving house. In the capital, however, as of May, nearly 35% of all London households capped since the policy was introduced have taken jobs, according to London Councils - the highest of any UK region - with many boroughs running schemes to help people find them. | What does the cap achieve? It reduced benefit spending nationally in 2015-16 by a very puny £65m. But the government maintains that imposing it has created an incentive for claimants to find jobs. Being employed for more than 16 hours a week or, if a couple, for 24 hours a week combined, exempts claimants with children from the cap and means they qualify for working tax credits. The IFS says there is “fairly robust evidence” from government figures that about 5% of people nationally affected by the original cap moved into work and an even smaller fraction responded to it by moving house. In the capital, however, as of May, nearly 35% of all London households capped since the policy was introduced have taken jobs, according to London Councils - the highest of any UK region - with many boroughs running schemes to help people find them. |
| Another part of the answer to the cap will be boroughs dispensing discretionary housing payments to help local tenants struggling to pay their rent in the short to medium term if the social consequences look particularly severe - a house move that would result in a vulnerable child having to change to an unfamiliar school, for example. London Councils say that boroughs have increasingly relied on these payments (in 2015-16, 41% of them were made in Greater London) which are made available by central government, but that they have a diminishing capacity for allocating it from pots that aren’t getting any fuller. They’ve also been helping capped claimants manage their money better. | Another part of the answer to the cap will be boroughs dispensing discretionary housing payments to help local tenants struggling to pay their rent in the short to medium term if the social consequences look particularly severe - a house move that would result in a vulnerable child having to change to an unfamiliar school, for example. London Councils say that boroughs have increasingly relied on these payments (in 2015-16, 41% of them were made in Greater London) which are made available by central government, but that they have a diminishing capacity for allocating it from pots that aren’t getting any fuller. They’ve also been helping capped claimants manage their money better. |
| But London Councils believes the lowered cap is bound to place greater pressure on the housing and benefit services of local authorities and, in its own words, “likely to result in greater demand for temporary accommodation for homeless households”. There are already over 50,000 households in temporary dwellings in the capital, including 4,600 who’ve been capped (see page 26 here). Evidence is being gathered and discussions are underway with the government about the next discretionary housing payment budget and the devolution of the work and health programme - the coming successor to the work programme - to London so that better results can be achieved. The prime minister may have changed, but the wheels of austerity grind on. | But London Councils believes the lowered cap is bound to place greater pressure on the housing and benefit services of local authorities and, in its own words, “likely to result in greater demand for temporary accommodation for homeless households”. There are already over 50,000 households in temporary dwellings in the capital, including 4,600 who’ve been capped (see page 26 here). Evidence is being gathered and discussions are underway with the government about the next discretionary housing payment budget and the devolution of the work and health programme - the coming successor to the work programme - to London so that better results can be achieved. The prime minister may have changed, but the wheels of austerity grind on. |