More than 30,000 UK households will lose up to £62 per week as Universal Credit cap exemption ends

Thousands of people receiving Universal Credit will soon see their benefits capped, as an exemption introduced at the beginning of the coronavirus pandemic comes to an end.

Numerous new claimants of Universal Credit were given a nine month period during which benefits would not be capped.

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What is the benefit cap?

The benefit cap limits the total amount of benefits that non-working and low earning households can receive.

Claimants are exempt from the cap if they earn at least £604 a month (which is equivalent to working 16 hours a week at the 'national living wage') or if they receive some disability benefits.

An estimated 35,000 households which started claiming Universal Credit in March are expected to be affected, with average benefit losses of £62 per week for households with children.

A further 41,000 further households with grace periods which ended in the first three months of 2021 will also be hit by the cap, said the Child Poverty Action Group (CPAG).

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‘Nasty surprise for more than 30,000 households’

Alison Garnham, chief executive of the charity, argued that the benefit cap should be “suspended” in order to protect vulnerable families.

Ms Garnham said, “At the end of a terrible year, there is another nasty surprise for more than thirty thousand households who have lost income to Covid-19 and who will have their benefits capped in the Christmas period and beyond it.

"Many more will follow in their wake as Covid-driven unemployment rises. These families will lose crucial social security support despite the fact that, since coronavirus struck, they have had no realistic prospect of earning more in order to become exempt from the cap.

"In effect they have had no escape route from the cap and the oncoming recession is unlikely to leave them any more room for manoeuvre.

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“The benefit cap has always been irrational because it takes no account of the number of children in a household so families, especially those in areas where housing costs are high, are disproportionately affected by it.

"The cap is increasing child poverty and in the context of a coronavirus recession is transparently nonsensical and wrong. At a minimum it should be suspended immediately to prevent the most vulnerable families from being pulled further into poverty.”