Last week, MPs debated keeping the £20 a week uplift to Universal Credit beyond the end of March. With so many families’ incomes destroyed by the economic tsunami unleashed by the pandemic, it’s been a lifeline for the many thousands struggling to stay afloat.
But tens of thousands of people who rely on Universal Credit will soon face the terror of further financial support being stripped away too. The reason? The infamous benefit cap.
In 2013, the benefit cap was conceived as a policy to encourage people to find work. But instead, it has caused misery and hardship for countless families.
The cap places a limit on the amount of total benefits any household can receive in a year.
But the policy seems to have forgotten our housing emergency, which is all about expensive rents and a chronic lack of social housing – so it is usually housing costs that tip families above the benefit cap limit. This pushes people into debt and rent arrears as they battle to make ends meet.
Ultimately, this puts them at risk of eviction and homelessness. The cap takes no account of a person’s rent or family size. A single mother in Brighton with two children faces the same cap as two parents with three children in Bradford.
On top of that, despite soaring rents, the cap has remained frozen since 2016. This means the sums are even more ludicrous, with the amount people now receive in benefits coming nowhere near their cost of living, driving many into destitution.
So why is this an issue now? Many people in regular employment before Covid-19 struck were awarded a nine month grace period before having their benefits capped. The grace period is to give someone breathing space to get back on their feet and to find work. Once this time is up, the only way to escape having your benefits capped is by earning at least £604 a month.
Yet every day, job losses and rising unemployment hit the headlines. The Office for Budget Responsibility expects unemployment to rise to a peak of 7.5% by the middle of this year, equating to 2.6 million people – the highest level for eight years.
And this month, the grace period is over for tens of thousands of people. While sadly the pandemic is not.
Only those lucky enough to have found new jobs during the pandemic will escape this sudden blow to their already meagre finances.
Polly Neate is CEO of Shelter.