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Lower overall benefit cap 2016

Key points

  • Government reduced the overall benefit cap from 7 November 2016. We projected this would mean that the 10,500 families already affected by the benefit cap would lose another £58 per week.
  • A further 20,000 households are projected to be affected by an income cut of up to £58.
  • In Camden, Islington and Hammersmith & Fulham a workless family paying the lower quartile rent would have less than £100 remaining to cover the other costs of the household such as food and fuel.

Prospect of lower overall benefit cap across London

What does the graph show?

Government plans to reduce the overall benefit cap to £23,000 a year (£442 a week) in London were introduced on 7 November 2016. In 2015, we projected that this would mean that the 10,500 families already affected by the benefit cap would lose another £58 in income a week, and a further 20,000 households will be affected by an income cut of up to £58. With the lower cap, it is estimated that the number of households affected in London could triple by 2017/18.*

We do not know yet how these affected households will respond to the lower cap, which affects families where no adult is currently in paid employment. The graph above shows how this lower cap will affect workless families living in London. The line shows how the maximum benefit income a workless household could claim after paying the lower quartile rent in each borough for a two-bedroom property (the minimum size requirement of any household containing children). It shows that the lower quartile rent in Kensington & Chelsea and Westminster is already higher than the benefit cap. In Camden, Islington and Hammersmith & Fulham a workless family paying the lower quartile rent would have less than £100 remaining to cover the other costs of the household such as food and fuel.

The bars on the graph show the number of workless lone parents living in the private rented sector and claiming housing benefit in each borough. This is the family type most likely to be affected by the cut: their rent level will depend on the market and their ability to enter work will depend on the availability of childcare. In Enfield there are 3,000 such families; if they paid the lower quartile rent they would have an income of £190 remaining; in Croydon there are 2,300 such families potentially living on £210 a week. The London Minimum Income Standard shows that a lone parent with one child in London needs an income of £270 a week after housing costs to reach a minimum socially acceptable standard of living. A lone parent affected by the overall benefit cap will have less than this if they pay the lower quartile rent in any London borough.

Data used

Stat-Xplore, DWP for February 2015 and Private Rental Market Statistics, VOA for 2014-15.

  • DWP's July 2015 Impact Assessment estimated that the number of capped households in GB could reach 126,000 in 2017/18 with 23% of them living in London.

** www.trustforlondon.org.uk/research/minimum-income-standard-for-london/

Indicator last updated: 7 November 2016