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7 April, 2020 Open access

Government should temporarily raise or remove the benefit cap, says Institute for Fiscal Studies

Without reform, many of the 76,000 families subject to the cap, and some people who have moved out of work, won't gain from benefit increases announced in response to the coronavirus outbreak

The Institute for Fiscal Studies (IFS) has called on the government to temporarily raise or remove the benefit cap.

In a new briefing, If the cap doesn't fit?, the IFS highlights that -

'A substantial package of measures has been announced in response to the Covid-19 outbreak to support public services, household incomes, and employers. A key part of this has been temporary increases in the generosity of the benefit system, in particular a £1,000 increase in the standard allowances in universal credit, with equivalent increases for claimants who have not yet moved across to universal credit, and restoring the link between housing benefit and the 30 percentile of local rents for most private sector tenants, both for one year.'

However, the IFS says that, due to the current benefit cap, some families are not reached by the temporary increase in the safety net, including most of the 76,000 families already subject to the cap, and those people who have moved from work without having been continuously employed for 12 months prior to that (and who therefore don't qualify for a 39-week exemption from the cap).

Commenting on the issue, IFS deputy Director Robert Joyce said -

'The government has implemented a substantial temporary increase in the generosity of the welfare safety net. But the overall cap on how much a working-age family can receive in benefits will mean that those increases will not benefit most of the around 76,000 families who were already capped on the eve of the crisis, as well as a small fraction of the large number who appear to have lost employment during the crisis. At the present time encouraging families to move into paid work, or to cheaper housing, is less of a priority. The government should therefore temporarily raise or remove the cap.'

For more information, see If the cap doesn't fit? from ifs.org.uk