Benefit cap ‘failing to achieve its aims’

The coalition government's benefit cap will struggle to meet its aims of encouraging people into work and saving taxpayers' money, suggests an early report from the Chartered Institute of Housing.

The report is based on a study in the north London borough of Haringey, which was one of four boroughs chosen to implement the benefit cap as part of a first phase roll-out from April 2013.

Key findings

The benefit cap policy is 'some way from meeting' all its objectives, and will face significant barriers to doing so.
Capped households are still receiving other financial support that takes them above the limit. In particular, nearly all receive help to cover 80 per cent of their council tax bill, and nearly 50 per cent get discretionary help with rent payments.
Only a few capped households have so far secured 16 or more hours employment each week. There is evidence the benefit cap is changing attitudes to work: but for many claimants there are still significant barriers to gaining employment, particularly a lack of job-seeking skills, problems with the availability and affordability of childcare, and a lack of knowledge of how to access childcare.
Savings have been made to the benefits bill (around £60,000 a week). However, there is evidence of 'cost shunting' between national government budgets, and from national government to local authorities and voluntary organisations. This includes the increased expenditure on discretionary payments to help affected households pay their rent (around £960,000 to date), and the increase in intensive support provided to help claimants deal with the effects of the cap.
People who are already marginalised in society are disproportionately affected by the benefit cap. Without interventions to offset the impact, social disadvantage is likely to grow over time. Over 2,300 children live in households whose income has been capped. The effects on these children could include instability in education, increasing tensions within the home, sudden relocation and loss of social and educational opportunities or networks.
The feared mass evictions and relocation of benefit recipients to cheaper parts of the country have not yet materialised (though they are visible on the horizon). But many claimants are currently relying on discretionary housing payments to remain where they are and this will be unsustainable in the longer term because the scale of claims will exceed council budgets.