Channel 4 Dispatches examines hidden consequences of Benefit Cap

20 March 2017

Three months after the full rollout of the Government’s new Benefits Cap, Channel 4 Dispatches investigates some of the unintended consequences of the clampdown.

The Government says the cap isn’t about money, although this year it expects to save £155m because of it. Instead, it is about making things fairer – by bringing benefits into line with average family earnings. In London, the maximum families can now receive is £23,000; outside the capital, it’s £20,000.

Housing charity Shelter says that the new cap is pushing many families below the Government’s own poverty line. It’s carried out new research for Channel 4 Dispatches which reveals that a two-parent family with two children sharing a two bedroom privately rented property, in the bottom third of the market, would end up at least £100 a week below the poverty line in almost 50 per cent of the country - including the major job creating areas such as London, Leeds, Bristol, Manchester and Birmingham.

A family with two older children unable to share a bedroom and who therefore needed a three bedroom home would fall £150 per week below the poverty line in almost 60 per cent of the country.

Shelter’s findings show that families of this size will increasingly be capped and unlikely to be able to afford the cost of renting privately. Once a family becomes homeless councils have an obligation to house them, and that can be in expensive temporary accommodation

Councils have been given £185m this coming financial year to ease the impact of welfare reforms, with £67.5m expected to be used to help families who’ve been capped. Caroline Nokes, the Department for Work Pensions Minister responsible for the cap, thinks local authorities have enough money to deal with the impact, telling Channel 4 Dispatches: “Local authorities have been given £1bn to the end of this parliament in DHPs [Discretionary Housing Payments] to help those who are in most need. What we are encouraging people to do is make the right choice to move into work.”

One authority receiving Discretionary Housing Payments is Lewisham, which has received £1.5m from the Government. However, at the same time, £2.5m has been cut from capped families budgets this year, leaving a £1m shortfall.

Lord Kerslake, President of the Local Government Association and former head of the civil service and permanent secretary at the Department for Communities and Local Government tells Channel 4 Dispatches that shortfalls like this will have a financial impact on public services:

Local Authorities have to find the extra money from other services or alternately they have to ration what’s available with the consequent impact on those families.   If they find extra money from services, then that impacts on things like care for the elderly or indeed refuse collection or leisure services. There’s no way round this issue. Unless you can avoid the cost you’re simply moving it from central government to local government. So perhaps the only potential winners are those who provide temporary accommodation.”

www.channel4.com/dispatches