35,000 households are likely to have their benefit capped this month as their grace period for exemption comes to an end

Child Poverty Action Group urges government to scrap the cap, pointing out that doing so would cost less than the 'Eat Out to Help Out' scheme

35,000 households are likely to have their benefit capped this month as their grace period for exemption comes to an end, the Child Poverty Action Group (CPAG) has said.

In Capped in the New Year, CPAG highlights that the coronavirus (COVID-19) pandemic meant that hundreds of thousands of households’ earnings fell below the earnings threshold which prevents the benefit cap being applied. As a result the number of households affected by the benefit cap doubled from 79,000 in February 2020 to 170,000 in August 2020.

In addition, while a nine month grace period exempts those who were previously working from having the cap applied - providing they earned over £604 per month in the previous 12 months - for many who lost their jobs or had their hours reduced at the start of the pandemic, that grace period is due to end this month.

As a result, CPAG estimates that - 

• 35,000 households (77 per cent of which are households with children) are likely to be capped when their grace period expires this month;
• a further 41,000 households are likely to be capped in the first few months of 2021, as their grace period expires from January to March; and
• households with children are set to lose on average £62 per week.

Calling therefore for the benefit cap to be scrapped, CPAG points out that this would only cost £500 million - less than the cost of the 'Eat Out to Help Out' scheme - and that -

'Removing the benefit cap would lift 50,000 children out of poverty (most families would be substantially below the poverty line even with the cap lifted). A further 100,000 children would be pulled out of deep poverty (below 50 per cent of median income) and 150,000 out of very deep poverty (below 40 per cent of median income). This would make a big difference to some of the poorest households in the country in their time of need.'

For more information, see Capped in the New Year from cpag.org.uk