If the cap’s too tight to fit…

The Government’s approach to “making work pay” is digging some of the UK’s poorest households even deeper into poverty, writes Mark Cantrell — and it’s the children who are proving the poorer for it

Image courtesy of Pixabay

CHILDREN are bearing the brunt of a housing and social security crisis that is tightening its grip on some of Britain’s poorest families.

The last few years have seen the UK Government undertake a series of policy shifts intended to restructure and scale-back levels of welfare assistance it provides to hard-up households.

This welfare reform agenda, however, has taken place in a context of stagnating wages, rising general living costs, cuts to public services, high rents, and a critical lack of social housing that is genuinely affordable for those on low incomes.

Politically, the Government justifies its approach in terms of a need to reduce public spending and to “make work pay”, but its programme has not been without some strident criticism and controversy. Away from the cut and thrust of debate, however, it has become more than evident that children are far from shielded from the impact of policies aimed at their parents.

In April 2013, the Government imposed a cap on the amount of money a household could receive in benefits during any one year. The move was aimed explicitly at people claiming a range of out-of-work benefits, including those intended to help with housing costs.

Originally, the limit was set at £26,000 a year for couples (£18,500 for a singleton) but in November 2016, the Department of Work & Pensions (DWP) introduced a lower cap, restricting support households could receive to an upper limit of £23,000 in Greater London (reflecting the capital’s higher rents) and £20,000 elsewhere.

We know from the DWP’s own statistics, published earlier this month (August 2017) that the vast majority of capped households are home to children, many of them of pre-school age. Furthermore, many are single-parent households deemed exempt from a requirement to seek work due to their parental responsibilities.

In other words, setting aside the pertinent issue of in-work poverty in the UK, the cap is tightening the screws on those the Government itself considers are currently ill-placed to take on employment.

Collateral damage

BETWEEN the introduction of the original cap in April 2013 and May 2017, the DWP’s figures show that 150,000 households had their benefits capped. Unsurprisingly, the number increased in the wake of the lower limit introduced from November 2016.

By May some 54% or 81,000 households had moved off the cap but 68,000 households remain capped: 1,900 more than was recorded in the previous quarterly release in February 2017. The DWP explains this is because more households were capped for the first time (15,000) than moved off the cap (13,000). Of those households that remain capped, the DWP’s figures reveal that:

  • 93% (63,000) include children
  • 83% (56,000) have between one and four children
  • 71% (48,000) are single-parent families
  • Of these, 78% (37,000) are home to at least one child aged under five, including 35% (17,000) with a child under two years as of May 2017

Child benefit and child tax credits both fall under the remit of the cap, so families in receipt of these benefits are “more likely” to exceed the limit, according to the DWP. Other benefits that fall under the cap include Housing Benefit, Local Housing Allowance, Job Seekers Allowance (JSA), Income Support, Universal Credit, and certain disability benefits.

The DWP’s August figures don’t cover households claiming Universal Credit, which is currently being rolled out across the UK. This is a new welfare benefit intended to consolidate a number of payments into one, supposedly simplifying the system. The true figure for capped households is therefore likely higher still. That said, in terms of benefits claimed, the latest release shows that:

  • 17% (12,000) of capped households were claiming JSA as of May 2017. This is the main benefit paid to those deemed capable of seeking employment and indeed are required to do so as a condition of receiving the benefit
  • 50% (34,000) were claiming Income Support
  • 15% (10,000) were claiming Employment & Support Allowance
  • 92% (62,000) were claiming Child Tax Credits

Under the original cap, the issue mainly impacted London, but the reduced limit has not only seen the number of capped households rise in the capital, it has also seen its impact spread to towns and cities across the UK. Manchester, for example, has seen the number of capped households rise from 227 to 932; Birmingham’s figure has shot up from 638 to 3,079; in Cardiff 729 households are capped where once it was 187; and in Glasgow, it’s risen to 668 from 118. In London, 15,700 households have now had their benefits capped.

Changing lives

GIVEN the high instance of child-rearing households caught up by the cap, the DWP’s figures have understandably provoked the ire of the Child Poverty Action Group (CPAG). The charity has called for the cap to be abandoned, if only for the children’s sake.

“The benefit cap is a cruel policy that’s been mis-sold to the public,” said Imran Hussain, CPAG’s Director of Policy, Rights & Advocacy. “Ministers say the benefit cap is about getting the unemployed into work, but their own figures show only 17% of households hit by it are in that position. The vast majority of households made poorer by the benefit cap are led by adults whom the rest of the benefits systems accepts cannot work because they are lone parents, often with very young children, or cannot work due to illness or disability.”

That may be so, but the Government, perhaps naturally enough, latched onto the figures as a ‘good news story’; statistical ‘proof’ that its welfare policies are working. The Secretary of State for Work & Pensions, David Gauke, said the figures demonstrated that the cap was a “real success”.

“[B]ehind these figures are thousands of people who are now better off in work and enjoying the benefits of a regular wage,” he added. “With record levels of employment and over three quarters of a million vacancies at any one time, even more people have the opportunity to change their lives for the better.”

The Secretary of State’s stance may arguably be somewhat misplaced, given the instance of in-work poverty in the UK, and the rise of so-called zero hours contracts, which are not without controversy. According to the anti-poverty thinktank, the Joseph Rowntree Foundation (JRF), there are around 7.4 million people, including 2.6 million children, living in working households — but who remain locked in poverty.

In its annual state-of-the-nation report, Monitoring Poverty & Social Exclusion, released in December 2016, it revealed that of all the people in poverty, a record high of 55% were actually in work. Since 2010/11, in-work poverty has claimed an extra 1.1 million people, demonstrating that work doesn’t always pay.

A move into work, then, may not necessarily have brought the beneficial effects ministers like to present as a given. That aside, the DWP’s figures point to only 42% (34,000) of those 81,000 no-longer-capped households having moved into work; so a lot of households are missing out on Gauke’s proclaimed opportunity for betterment.

Gauke’s party-line optimism certainly doesn’t wash as far as CPAG’s Hussain is concerned. “The cap may be impoverishing more and more young families, and putting parents who the DWP knows can’t work through untold stress, but it isn’t helping people into work,” he added.

“We already know the impact on work incentives of the cap is relatively small. The Government’s own evaluation showed about 16% of people moved into work shortly after being capped and that 11% of people would have moved into work anyway. [These] figures underline this by showing that as children get older, fewer parents are capped, suggesting that parents are already highly motivated to work, but often it’s just not feasible with pre-school kids.

“This is a huge increase in the number of families sucked into the scope of the cap. Families affected have their incomes cut dramatically yet most can’t just take a job to escape the cap. Nor, in most cases, can they just up sticks to cheaper accommodation because more often than not there isn’t any. And there is only so much families can cut back … The time for discontinuing the policy has now come.”

Meanwhile, Katie Schmuecker, Head of Policy the JRF, said: “The benefit cap hits lone parents and those with pre-school children hardest. It makes people who are already struggling poorer, while doing little to tackle the reasons that benefit spending is so high in the first place.

“In November, the Government brought in a new, lower cap and introduced a different rate for inner London. This latest set of figures shows the impact of these decisions. As well as increasing the number of families facing the cap, from 20,000 in November to 68,000 today, households affected by the cap are now spread throughout the country.

“The Government’s own evaluation showed that the benefit cap has had only a small impact on people moving into work. This is perhaps not surprising given that those most affected have very young children. To make a serious, long-term reduction to the benefits bill the Government must tackle the high cost of housing. The Government should scrap the benefits cap and instead focus on addressing the serious lack of genuinely affordable housing.”

Squeezed out

HOUSING is a crucial point. The cost of keeping a roof over one’s head has become a major burden; pushing even households on moderate incomes to the brink of poverty. Homeownership has declined from its 2003 peak of 71% to 63% last year, as young first-time buyers have increasingly found themselves priced out of the market.

Social housing provision, meanwhile, has practically collapsed, meaning there is little or no new homes to replace what has been lost historically to privatisation policies such as right to buy. It’s a commonly accepted figure that Britain needs to be building around 250,000 new homes a year to even begin catching up with the country’s housing need, but over the last few years it has managed little more than half that figure annually.

Little wonder, then, that private renting has grown to become the second largest tenure, as it mops up the ‘exiles’ from these other forms of major housing provision.

The UK’s housing situation adds a dark twist to the Government’s welfare reform agenda: with so many households precariously balanced, there’s the concern that the cap — like other reforms — risks nudging families into the pit of homelessness. Indeed, for many families and individuals, the risk of losing their home has become a dreadful reality.

Earlier in the summer, the Local Government Association (LGA), which represents 350 councils in England and Wales, revealed that its member authorities were struggling to cope with a rising demand from families looking for emergency accommodation after becoming homeless.

Councils have a statutory duty to rehouse households deemed unintentionally homeless and in priority need, such as those with children, but often those seeking assistance may find themselves in temporary accommodation until a permanent home can be found. This is disruptive and stressful for children and adults alike, but it’s the youngsters most at risk of becoming damaged by the experience.

The number of children placed in temporary accommodation with their families has risen by a third over the last three years, according to the LGA’s report, Housing our Homeless Households. All told, councils are currently providing temporary housing for 120,540 children. That’s a net increase of 32,650 or 37% since the second quarter of 2014–906 more children every month.

The LGA chose to illustrate these shocking statistics with the analogy of an extra secondary school’s worth of children every month. On average there are 946 pupils in such an institution, which kind of brings the number home, unlike the children themselves. Unsurprisingly, the cost to councils has risen accordingly. It is feared that local authorities will face a funding shortfall of some £5.8 billion by 2020 if nothing is done to tackle the problem at its roots.

“When councils are having to house the equivalent of an extra secondary school’s worth of pupils every month, and the net cost of funding for temporary accommodation has trippled in the last three years, it’s clear the current situation is unsustainable for councils, and disruptive for families,” said Councillor Martin Tett, the LGA’s housing spokesperson.

“Councils are working hard to tackle homelessness, with some truly innovative work around the country. We now need the Government to support this local effort by allowing councils to invest in building genuinely affordable homes, and taking steps to adapt welfare reforms to ensure housing remains affordable for low income families.”

Councils, via the LGA, have long-been lobbying Government to empower them to build more homes. Some restrictions have been loosened, enabling some to get back on the building site, at least on a small scale. Hurdles remain, however, such as limits imposed on what councils may borrow to invest in building homes.

England’s local authorities have not been major housebuilders for decades, many were encouraged, some would say forced — or gladly gave up — their role as landlords, losing homes through the policy of right-to-buy, introduced in the 1980s, or through the programme of stock transfer. This latter programme saw entire stocks transferred to the quasi-private ownership of housing associations in the late 90s and the first decade of this century.

A lack of council homes is now being felt the length and breadth of the country, biting particularly hard in London and a few other ‘hotspots’; welfare reform is serving up the pickle, as the housing crisis chews its way through life chances.

“Homelessness has been steadily rising in all its forms since 2010 and we fear that the benefit cap could make things even worse,” said Terrie Alafat, chief executive of the Chartered Institute of Housing (CIH).

“[The DWP’s] figures show that almost half of the households affected are losing more than £50 a week, which is likely to make it tough for people to afford their bills, rent and potentially even basic necessities. Almost three-quarters are single parent families, many with very young children — these are people who may find it incredibly difficult to escape the cap by finding work, given the cost of childcare and lack of flexible employment options.

“We think the Government should take a step back and review welfare policies such as the benefit cap to make sure they are not obstructing housing policies designed to make sure people can access a decent home at a price they can afford.”

Until then, sadly, children will continue to become collateral damage in what amounts to a political war against welfare.

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Mark Cantrell

Mark Cantrell

A UK writer and journalist, Mark Cantrell is also the author of two novels: Citizen Zero and Silas Morlock. Read more of his work at tykewriter.wordpress.com