Benefit cap will struggle to save taxpayers’ money
Published by Max Salsbury for 24dash.com in Central Government and also in Finance, Local Government, Regulation
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The government’s benefit cap will struggle to save taxpayers’ money and encourage people into work, according to the first major study on its implementation.
Published today, the research led by the Chartered Institute of Housing into the impact of the cap in Haringey reveals that only 10% of households affected by the cap in the borough have been able to find work.
And nearly 50% of capped households have claimed discretionary housing payments from the council to help them pay their rent, shunting costs between national and local government budgets.
Nearly 750 households saw their benefits cut between April and August this year because they were above the cap threshold of £500 per week for families with children, or £350 per week without children.
The amount lost ranged from 15p to £374.50 per week, with 51% of affected claimants losing £50-£199 each week.
Of the 747 households affected, only 74 (10%) were known to have moved into work, while 11 increased their hours sufficiently to avoid the cap. While the research found evidence that the cap is changing attitudes to employment, for many claimants there remain significant barriers to finding work, including the lack of job seeking skills and affordable childcare.
Interviews with claimants and advisors found:
- People who are already marginalised in society are disproportionately affected by the cap.
- Wider welfare reforms, such as the introduction of the council tax reduction scheme, have hit at the same time as the cap and further reduced household incomes.
- There is very little evidence of tenants being able to negotiate reduced rents with landlords as a result of the cap. Three private landlords have already forced tenants out in response to the cap.
- Discretionary housing payments have allowed many claimants to cover rent shortfalls and stay in their homes, but this will be unsustainable in the long term because the scale of the claims will exceed council budgets.
- Many claimants need intensive and personalised support to help them respond to the cap and move into employment, so local authorities and other agencies will need to consider the resourcing of this.
CIH chief executive Grainia Long said: “The government said the benefit cap would save money and encourage people into work, but this report shows it is far from achieving both of those aims in one of the worst affected areas.
“There have been whispers that the government is considering lowering the cap or increasing the amount of hours people must work to avoid it. Unless ministers commit to increasing support for people looking to get back into work and funding for childcare this would be very dangerous.
“Ultimately, the government must do more to tackle the UK’s housing crisis. The reason that the housing benefit bill is so high and that so many people are affected by the benefit cap is that we are simply not building enough homes to accommodate our growing population.”
Claire Kober, Leader of Haringey Council said: “This research shows that the benefit cap has failed in its main objectives.
“Only a few households have been able to get back into work and, while the government may be making some savings, the real costs are just being passed to local councils already under enormous financial pressure.
“People still need a lot of support to get training or back into work and spiralling housing costs mean there is a long way to go before anyone could claim the benefit cap is working.”
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