COMMONS

Government refuses to free 82% trapped under benefit cap

15 May 2019

The Work and Pensions Committee publishes the Government’s response to its report on the Benefit cap, as final ruling is passed down by the Supreme Court in a combined case originally brought against DWP by two single mums.

The Committee’s original report found that over four fifths   - 82% -  of households currently hit by the benefit cap have already been assessed by the Department as not being required to work or even to look for it – despite work being the main route of escape from the cap.

This includes people with disabilities or health conditions, and single parents of young children. It said Government must take these 82% out of scope of the benefit cap, and only apply it to the 18%  that DWP has assessed as capable and expected to look for work – i.e. those actually able to escape the cap.

As Chair Frank Field noted at the time, “benefits are being cut with the aim of driving people into work, but four in five people bearing this cut aren’t expected to work. What genius in government thought this one up?”

The Government response published today has a new, more welcome tone, but is disappointing in substance, rejecting once again the Committee’s key recommendations.

Rt Hon Frank Field MP, Chair of the Committee, said

“I couldn’t have put it  better than Lady Hale in her original ruling: the prejudicial effect of the cap is obvious and stark. As we on the Committee have argued repeatedly, families affected by the cap will, by definition, receive an income that is far short of what they need to house, feed, clothe and warm themselves and their children - and that’s if you believe benefits are at that “adequate” level in the first place.

“Just as we thought the persistence with this policy could not become any more shocking, the Government has kept on fighting a ruling from the highest court in the land which found that it cannot possibly be in the best interests of children affected by the cap, to deprive their family of the means to cover the basic necessities of life.”

Key points from the Government response published today include:

  • The Department has rejected the Committee’s central recommendation that the cap should only be applied to claimants it expects to be actively seeking work – it argues that the aims of the policy still apply and were scrutinised and extensively debated in Parliament. It does not engage with the report’s arguments that there is little evidence that the cap is achieving these objectives, and goes on to cite the number of lone parent households that have moved off the cap as proof that it is possible to escape the cap—despite agreeing in the following recommendation that the number of households moving into work cannot be directly attributed to the cap.
  • The Department has accepted the Committee’s recommendations on the way that it reports the stats on the cap’s effectiveness.  It has agreed that households moving into work can’t be attribute to the cap and to always provide context when using these figures, likewise with the relative and absolute increases.  However, as noted above this has not been followed in its response to the central recommendation.
  • Increasing cap limits - The Department plans to publish results of its impact assessments in Autumn 2019,  it said the cap limits will be reviewed “in due course following publication of this evaluation and in the fullness of this Parliament”
  • The Department has rejected the recommendation to exempt claimants in temporary accommodation from the cap,  but agrees it may be appropriate to “look further into this complex area”. It says it will do this following the completion of its evaluation into the impact of the cap.
  • It has rejected both recommendations related to the cap’s potential “deeper bite” under Universal Credit, where it can eat into all of a household’s income (not just housing costs as in the existing system), including into money meant for children or people currently too ill to look for work:
    - on the recommendation on ring-fencing elements in Universal Credit, the Department cites practical difficulties
    - it has also rejected the recommendation to find a solution for claimants who are unfairly capped because of when their paydays fall – in its defence it says it has been “applying the legislation correctly and does not accept there is any error or a need to compensate claimants who have had the cap applied”
  • Discretionary Housing Payments  – the Department says it and external organisations are already conducting research into the effectiveness of DHPs, and again its own research will be published in Autumn 2019. It says it cannot re-allocate unspent DHP funds due to accounting restrictions.
  • Cost-benefit analysis – it does not accept the recommendation to complete a full cost-benefit analysis after the Committee noted that the DHP system’s “circular process of transferring public money    from    one    budget    to    another— a    straightforward administrative  issue  for  the  Department—fails  to  consider  the  huge impact  on  families,  who  are  left  relying  on  less  stable  support”  - but says it will explore whether a wider cost benefit analysis is “necessary and feasible” following the completion of its DHP evaluation.

Further information

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