Universal Credit is a payment designed to help people to cover the cost of day to day living when their finances might otherwise be a stretch. The payment is made available to individuals who have been out of work, on a low income, or unable to work. Each month, Britons can expect to receive a sum according to their circumstances and what they have been assessed as requiring.
The benefit cap may not affect someone’s payments, however, for the first nine months, which is known as the ‘grace period’.
One group, however, has suggested COVID-19 could be the cause of many people missing out in this way.
The Child Poverty Action Group (CPAG) has said newly capped households are likely to fall into the benefit cap due to losing jobs or working hours, which means their wages have dropped below what is known as the earnings exemption threshold.
The major concern, though, arises with the fact many are still unable to find replacement earnings due to the continual impact of the pandemic.
Figures from the Department for Work and Pensions (DWP) showed the number of households now subject to the benefit cap has jumped by 13 percent since November.
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This means that by February 2021, the number of households affected reached 200,000 - 180,000 of which were Universal Credit claimants.
CPAG has estimated average losses accumulated by the benefit cap are £62 per week for capped families.
After the end of the nine month grace period, the Government has said the amount of Universal Credit a person receives will usually go down.
Alison Garnham, Chief Executive of Child Poverty Action Group (CPAG), commented on the matter.
She said: “The benefit cap has always been an unjust punishment for families.
“Most families affected by it can’t work to escape it - often because they are looking after young children or can’t find affordable childcare they can combine with work and single parenting.
“Thousands more households who have lost jobs to COVID-19 are now subject to the cap even though in the pandemic, it is much harder to find ways to replace their lost earnings and become exempt.
“Especially in areas with high rents, capped families are losing large amounts of social security support and that is disastrous for the children concerned.
“The Government must abolish the benefit cap to prevent more children from being damaged by impoverishment.”
CPAG has argued the cap should be scrapped due to these reasons, and because it has not “incentivised work”.
The group said less than five percent of individuals have moved into work because of it.
A DWP spokesperson said: “The benefit cap, up to the equivalent salary of £24,000, ensures fairness for hard-working taxpaying households and a strong work incentive, while also providing a much needed safety net of support. The proportion of households impacted remains low in comparison to the overall number claiming Universal Credit even after the temporary uplift to Universal Credit and increases to Local Housing Allowance rates.”
What are the Benefit Cap amounts?
The benefit cap outside Greater London is:
- £384.62 per week (£20,000 a year) for couples
- £384.62 per week (£20,000 a year) for single parents whose children live with them
- £257.69 per week (£13,400 a year) for single adults
The benefit cap inside Greater London is:
- £442.31 per week (£23,000 a year) for couples
- £442.31 per week (£23,000 a year) for single parents whose children live with them
- £296.35 per week (£15,410 a year) for single adults
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