The Government’s benefits cap will struggle to meet its objectives of saving taxpayers’ money and encouraging people into work, a report has found.
The Chartered Institute of Housing (CIH) studied the results of the cap in Haringey, one of four London boroughs chosen as pilot areas for the scheme.
It found that 747 households saw their benefits cut between April 15 and August 16 because they were above the cap threshold.
The report found that just 10% - 74 of the households affected by the cap - were able to find work to avoid their benefits being cut, while 11 households increased their working hours to avoid the cap.
Almost 50% claimed extra payments from the council to help them pay their rent, which the CIH said “both shunts costs between national and local government budgets and masks the true impact of the cap until those discretionary payments run out”.
The amount lost by the households hit by the cap ranged from 15p to £374.50 a week, the CIH said, with 51% of claimants losing £50 to £199 a week.
About 2,300 children were affected by the cap, with larger families experiencing the highest loss.
The cap, which was rolled out across the country from July, limits benefits that people can receive to £500 a week for families with children or £350 a week for those without children.
The report said that while the cap is changing attitudes towards employment, “for many claimants there remain significant barriers to finding work, including the lack of job seeking skills and affordable childcare”.
It also found that marginalised people in society were disproportionately affected by the cap, that wider welfare reforms such as the council tax reduction scheme had hit at the same time and further reduced household incomes, and benefits claimants needed intense support to help them respond to the cap and move into work, which fall upon local authorities.
Report shows failings
Grainia Long, chief executive of the CIH, said: “The Government said the benefit cap would save money and encourage people into work, but this report shows it is far from achieving both of those aims in one of the worst affected areas.
“There have been whispers that the Government is considering lowering the cap or increasing the amount of hours people must work to avoid it. Unless ministers commit to increasing support for people looking to get back into work and funding for childcare this would be very dangerous.
“Ultimately, the Government must do more to tackle the UK’s housing crisis. The reason that the housing benefit bill is so high and that so many people are affected by the benefit cap is that we are simply not building enough homes to accommodate our growing population.”
Claire Kober, leader of Haringey Council said: “This research shows that the benefit cap has failed in its main objectives.
“Only a few households have been able to get back into work and, while the government may be making some savings, the real costs are just being passed to local councils already under enormous financial pressure.
“People still need a lot of support to get training or back into work and spiralling housing costs mean there is a long way to go before anyone could claim the benefit cap is working.”
The cap covers the main out-of-work benefits - Jobseeker’s Allowance, Income Support, and Employment and Support Allowance - and other benefits such as Housing Benefit, Child Benefit and Child Tax Credit and Carer’s Allowance.
A spokesman at the Department for Work and Pensions said: “This research relies on early and limited data from a single council and completely ignores the fact Jobcentre Plus has helped 16,500 claimants nationally into work who were potentially affected by the benefit cap.
“We do not recognise this report as providing a sound or reliable picture of the reform.
“The benefit cap is helping to return common sense to the welfare system by placing a fair limit of £500 a week on the amount a household on benefits can receive.”
Work and pensions minister Mike Penning said the report was “fundamentally flawed” and criticised the BBC - which featured the story prominently in some early morning news bulletins - for its coverage.
“Interestingly only the BBC and The Guardian bothered to call us about this because the research is flawed,” he told the BBC Radio 4 Today programme.
“It is a fair policy and it is much too early for the BBC and the institute to be writing this off.”
Presenter Justin Webb said: “We’re only merely reporting what they did.
“We’re not accepting it by reporting it, you know perfectly well we’re not.”
Mr Penning said: “I don’t understand why we are looking at something so early on in one very restricted London area, which just happens to be Labour-controlled, which is said not to be working.
“Let’s let this go out throughout the country and let the BBC report the facts, not actually flawed data.”