Advisers urge ministers to review benefit cap in wake of coronavirus

The government’s own expert welfare advisory group has called on ministers to review the benefit cap, amid evidence that the controversial policy has left tens of thousands of low-income claimants without vital extra financial help during the coronavirus lockdown.

A letter to the work and pensions secretary, Thérèse Coffey, from the Social Security Advisory Committee (SSAC) said that although the Department for Work and Pensions (DWP) had done “remarkable” work to support claimants during the crisis, ministers needed to address several “rough edges” to its policies, including the benefit cap.

The SSAC also called for the £90-a-month uprating of universal credit and tax credits announced by the chancellor in March to help with living costs related to Covid-19 to be extended “as soon as possible” to hundreds of thousands of people on older unemployment benefits who did not receive the cash boost.

“We are of the strong view that it is increasingly untenable for this group of claimants to be excluded and to continue to have a lower level of income than those in receipt of universal credit and working tax credit,” the committee, which is formally sponsored by the DWP, said.

The letter was also critical of DWP advice that left some self-employed people worse off after losing existing benefits in lockdown when they were wrongly told to apply for universal credit as their incomes dropped. Many were refused universal credit, but prevented from reclaiming their original benefits by DWP rules.

It comes amid rising concern from charities and opposition parties that policies such as the benefit cap and the two-child benefit limit have left the poorest households struggling to cope with the increased cost of food and energy bills during the pandemic.

Estimates suggest that around 108,000 families – including 90,000 families already capped – will not see any of the chancellor’s cash boost because it takes them over the benefit cap limit, enabling the DWP to claw it back. In one case, a capped claimant has taken legal action after she was left worse off by the chancellor’s uprating.

The benefit cap was intended to “incentivise” unemployed claimants to get a job by limiting their total household benefits to £23,000 a year (£442 a week) in London and £20,000 a year (£385 a week) outside the capital. People can escape the cap if they get a job or work more hours.

The SSAC letter pointed out that this was currently likely to be difficult: “Claimants would normally have the option to move into paid work or to move home to avoid the impact of the benefit cap, but neither of these are realistic choices for many people at the current time.”

It said the DWP had claimed it was administratively too difficult to safely uprate jobseeker’s allowance (JSA) and employment and support allowance (ESA). However, ministers should “ensure that this group of claimants … are brought up to the same level as those in receipt of universal credit as soon as it is possible to do so”.

Labour’s Jonathan Reynolds, the shadow work and pensions secretary, said ministers should heed the committee’s words: “There is no justification for failing to uprate JSA and ESA In line with UC and the benefit cap should be scrapped – it’s clearly impossible to work more hours or move to cheaper housing during the crisis.”

The SSAC’s membership includes policy experts from organisations such as the Institute for Fiscal Studies and the Joseph Rowntree Foundation, as well as former DWP officials.