Benefit Cap

Chris Stephens Excerpts

Tuesday 1st March 2022 Commons Chamber

[David Linden]

Ever since its introduction in 2013, the benefit cap has limited the support that some of the most vulnerable people in our constituencies receive. Based on the latest figures from the Department for Work and Pensions, as of August 2021, 180,000 households have had their benefits capped, including over 6,400 households in Scotland, and are receiving on average £54 per week less in support than they would if the cap was not in place.

Perhaps the most counterproductive aspect of the cap is the fact that the people who require the highest level of support are the most likely to be affected, which is not only unjust but simply does not make sense. Why reduce the amount of support that the most vulnerable people in our society require? On top of that, the vast majority of households affected by the cap are exempt from working to increase their income, either because they have a disability or because they have childcare responsibilities. It is a Catch-22 situation for so many people on benefits: they are unable to work to increase their income and they have their benefits cut regardless.

[Chris Stephens (Glasgow South West) (SNP)]

Is my hon Friend, my good friend, as concerned as I am that having the benefit cap in place is leading to—he has outlined the figures—an increase in food insecurity across these islands, and that the pressures on food banks, pantries and citizen supermarkets will be immense because of the actions of the Government?

--- Later in debate ---

[David Rutley]

The internal assessments we have produced—and we have produced several—showed that UC does help more people get into work. At the moment, in an economic environment where there are record vacancies, which I will touch on later, we are helping more people get into work.

The benefit cap was introduced as part of a strategy to reform the system of benefits for people of working age. The cap limits the combined sum of prescribed welfare benefits that households may be entitled to. The aims of the benefit cap policy are: to incentivise behaviours; to encourage people to work and to reduce long-term dependency on benefits; and to introduce greater fairness in the welfare system between those receiving out-of-work benefits and those in work, by putting in place a reasonable limit on the amount a household can receive in welfare benefits. For context, let me say that about four in 10 households earn less than the annual benefit cap’s limits of £23,000 in London and about £20,000 in the rest of Great Britain. The final aim is to make the system more affordable, better balancing the burden on taxpayers. Let us not forget that households can still receive benefits up to the equivalent salary of £24,000—or £28,000 in London.

We continue to protect vulnerable claimants for whom work may not currently be a viable option. In recognition of the additional costs related to a disability, households are exempt from the cap if someone is receiving disability living allowance or a personal independence payment. UC claimants who receive the limited capability for work-related activity element—that phrase is a bit of a mouthful—or employment and support allowance claimants in receipt of the support component are also exempt from the cap.

The Government recognise and appreciate the vital contribution made by carers, which is why there are exemptions for those entitled to carer’s allowance, the carer’s element in UC and guardian’s allowance. Households in receipt of UC are exempt from the cap if their earnings reach just £617 a month, to help encourage people into work. Those who still receive housing benefit are also exempt if they are entitled to working tax credits. Eligible childcare costs that are repaid through UC payments are exempt from the cap. That also supports people getting into work and progressing in employment.

I also want to support those with a strong recent work history who find themselves without work or whose earnings reduce. As a result, the benefit cap is not applied for nine months for those receiving UC where the claimant, their partner or ex-partner has received at least the benefit cap earnings threshold of £617 in each of the previous 12 consecutive months.

I should also remind the House that the proportion of capped households remains low in comparison with the overall working-age benefit case load, at 2.7% across Great Britain. In Scotland, the proportion is even lower, at 1.1%. In the last quarter, to August 2021, on average 710 households every week moved off the cap through increasing their earnings or starting work. There is a statutory duty to review the benefit cap levels once in each Parliament; the country has been through very challenging times, which has delayed that statutory review, but it will happen at the appropriate time in this Parliament, to be determined by the Secretary of State. When the Secretary of State decides to undertake that review, which must currently happen by December 2024, she will consider the national economic situation and any other matters she deems vital at that time.

[Chris Stephens]

rose—

[David Rutley]

I will give way to the esteemed member of the Work and Pensions Committee.

[Chris Stephens]

The Minister is being very generous. Can he tell us then, with the assessments the Department is doing of the benefit cap, whether it will do further assessments alongside its much-awaited review on the drivers of food bank use and food aid provision, which the House has waited 18 months for the Department to place in the Commons Library?

[David Rutley]

That report will come forward—I think there have been exchanges between the Committee and the Secretary of State’s office—but we are talking here about a statutory requirement, which certainly will happen during the course of this Parliament. As the hon. Gentleman, a well-respected member of the Committee, will be aware, we have gone through very uncertain times; we must ensure that review is done when we have the proper body of evidence and at the right time. I am sure he will seek to hold the Secretary of State to account during that process, as he rightly should as a member of the Select Committee.

There is clear evidence that work, particularly full-time work, substantially reduces the likelihood of being in poverty. Children living in workless households were around six times more likely to be in absolute poverty before housing costs in 2019-20 than those where all adults worked. At a time of record vacancies, we are not only focusing on getting people into jobs, but taking action to boost the take-home pay of lower-income working households by giving nearly 2 million families an extra £1,000 a year through our cut—