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Reduced benefit cap would make many areas off-limits for larger families

Many parts of England will become off-limits for larger families on benefits when the overall benefit cap is lowered, according to analysis from the Chartered Institute of Housing (CIH).

The government is planning to reduce the cap from £26,000 to £23,000 (or £440 a week for families with children).

CIH’s UK Housing Review briefing, which is being launched tomorrow (Tuesday 23 June) at Housing 2015, CIH’s annual conference and exhibition, analyses the amount of money that couples will have left to pay their housing costs if they are affected by the cap.

Couples with three children would receive £110 a week (see notes to editors, 4) – which is not enough to meet the average rent for a three-bedroom housing association home anywhere in the Midlands or the south of England, and even in many areas in the north. For single parents, the impact would not be quite so severe, because of their slightly lower basic living allowances, but those with three children would still find average housing association rents beyond them in London and most of the south east of England.

Families would be unable to turn to the private rented sector because it is more expensive – figures from the Valuation Office Agency show that the rent for a three-bedroom home is at least £500 per month in every region of England.

Welfare reform is already driving poorer families out of the private rented sector in parts of London.  The number of people claiming housing benefit in the private rented sector has fallen by about a third in Westminster and Kensington & Chelsea between March 2011 and February 2015, and by 11.5 per cent across inner London as a whole.

The government announced that it would be going ahead with proposals to reduce the benefit cap in the Queen’s Speech last month, as part of the Full Employment and Welfare Benefits Bill.  The reduction will significantly increase the number of people affected while only contributing a small amount to the £12 billion in annual welfare savings the government is planning to make – the Institute for Fiscal Studies estimates it would save around £100 million a year. 

The current cap mostly affects families with four or more children (57 per cent of all cases), and households in London (45 per cent of all cases). The latest figures show that 23,000 households are subject to the £26,000 limit; it is estimated that the reduced cap could quadruplethat number.

The policy aims to encourage people to find work but CIH said lowering the cap could actually make it more difficult if people are forced to move long distances away from their current home to find a place they can afford, because they would be cut off from their support network of family and friends.  Research carried out by the organisation in 2013 in Haringey found that just one in ten households affected had managed to secure a job.

Deputy chief executive Gavin Smart said: “People affected by the current cap already face significant barriers to finding work, including a lack of job seeking skills and affordable childcare.  Our UK Housing Review briefing shows that lowering the cap would make huge swathes of the country unaffordable for larger families on benefits.  Where will these people go?  Being forced to move large distances away will make it even harder to find work, because they could be cut off from the support network they rely on for childcare for example.” 

He added: “The social housing sector is already struggling to cope with demand. I fear we will see increasing levels of homelessness, with already vulnerable people being subjected to even more risk.

“Ultimately, if the government really wants to tackle the housing benefit bill, it needs to commit to building more genuinely affordable homes. We have failed to build the number of homes we need for decades which means that the cost of housing is becoming unaffordable for more and more people, increasing the numbers who rely on the benefits system to make ends meet. Action to restrict entitlement to benefits is at best a stop gap measure and at worst increases poverty and misery for already poor and vulnerable people. Long-term, effective action would focus on increasing our housing supply not further restricting access to our already insufficient and inadequate supply of homes.”

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