Benefit Cap – Why the DWP is so wrong and 800,000 children affected

255,000 households will be affected by the reduced overall benefit cap containing at least 800,000 children and at least double the DWP estimate of a mere 126,000 households with 330,000 children, which is bad enough in and of itself.


Here I say why and again unlike the DWP I say so in detail using hard numerical fact.

How can my estimate of the households affected by the benefit cap just for the regions at 197,000 be 71,000 higher than the DWP estimate for the regions AND London?

I set out some very detailed analysis which gave a figure of 197,000 or so households just for the regions and the DWP estimate for all of GB to include London are just 126,000 households.  My figure of 197,000 or so was very detailed and evidence-based and I still maintain is a cautious or low figure just for the regions alone on which Jules Birch commented that it was too

Joe Halewood has used the DWP housing benefit statistics to come up with an even higher estimate. He puts the numbers at 198,000 households and 654,000 children – and that is just outside London and using pretty conservative assumptions about the number of households that will be exempt them from the cap.

This huge variation has played on my mind and frankly annoyed the hell out of me.  I know the DWP is incompetent and I know they have a political imperative to estimate as few as possible given the reduced caps will see children evicted and made homeless.

DWP estimates are notoriously inept.  The 670,000 for the bedroom tax sees 464,000 affected and the benefit cap would affect 56,000 at £500 pw they said yet it averaged 25,700 in the last year and the latest actual figure is just 23,097.

I remind everyone of the last time I said the DWP figures were wildly wrong which was the pre 1996 issue in the bedroom tax from late 2013 early 2014 which saw IDS, Freud and the DWP obstinately stating it would be between 3,000 and 5,000 households at most.  I said it would be 40,000 and ten times the DWP average estimate and was proven right. 

I could easily rest on my laurels and past performance of proving DWP incompetence (and political chicanery) over their misguided welfare reforms policies.  Yet I have this necessity to prove I am right anyway (!) and especially when the consequence is the horrors of seeing three-quarters of a million children made homeless.  That alone demands this benefit cap policy is properly considered and the frankly half-arsed DWP impact assessment is seen for the fiction it is.

One of us is wrong, and it is not me and I am pretty confident that I know where the DWP has gone wrong as the only methodology that can arrive at their 126,000 household estimate is a patently false one.

It appears that DWP has done the calculations for London and then extrapolated the current percentage to the rest of the country to arrive at a projected figure of 126,000. Yet London has already reached a tipping point with the £500 per week cap as the majority of household types that can be affected by the cap are already affected by it in the capital: Whereas as I demonstrate below my home city of Liverpool will see TWELVE more household types affected by the cap reduction than are affected now with the current £500 pw cap.

This is typical of all the regions which will see so many more household types affected than currently and why the vast majority (78%) of all affected by the benefit cap will be OUTSIDE London!

Explaining the DWP error

The latest figures for February 2015 show 23,097 households affected at the £500 cap and of these, 46% are in London and 54% in the rest of the country (GB) combined.

If the DWP project that 57,389 London households will be affected then following that (flawed) logic it would mean that 68,811 households – the other 54% will be affected in the regions giving a 126,000 total.

This is the only method I can see for the DWP estimate yet this is fundamentally flawed.

The rest of GB is subject to a £20,000 cap which is one factor yet the biggest factor is that the reduction in the caps will radically alter the current percentage and will see the current London percentage fall to about 22% of the total number of households affected from the current 46% as London has already reached this tipping point.

The current £500 cap sees just over 2 households affected in the regions for every 2 households affected in London.  Yet the reduced caps will see 11 households affected in the regions for every 2 London households affected.

This also means the national total of affected households is my 197,000 plus the DWP London estimate of 57,389 and becomes 255,000 households affected and double the DWP 126,000 total estimate which has been arrived at using the current percentage split which is a fundamental error by DWP.

One way to explain this is to look at the household types who will be affected in a 3 bed property at a social rent level.


The overall picture above reveals that the reduced cap in London will only begin to affect the 1 Parent 3 Child household type and if on ESA whereas in the South East and especially Surrey, Hertfordshire, Berkshire and other high rent areas the new £20k cap will affect the 1 Parent 2 Child household if on ESA and all larger household types above this.

South East e.g. Windsor – the 1P2C-E household receives £254.04 per week in ESA, Child Benefit and Child Tax Credit.  The £20k cap and £384.62 pw cap means the maximum housing benefit they can receive is £130.58 pw and a 3 bed social rent property in Windsor has a typical £145 per week level.  The 1P2C-E household thus loses £15 or so per week – and all larger household sizes have a higher cut and rent shortfall and will be affected by the £20k cap

Islington – the same 1P2C-E household receives the same £254.04 pw yet the cap is £442.31 pw and means they can receive up to £188.27 pw in housing benefit and a 3 bed social rent property is £145 per week there as in Windsor yet is not affected

The next larger household in the 2P2C-E receives £295.79 pw and can receive up to £146.52 in housing benefit which also covers the £145 pw rent in Islington and again is not affected by the cap. The next larger household is the 1P3C-J household who receives £292.19 per week and can receive £150.12 pw in housing benefit and is also not affected in Islington

Yet the next larger household in the 1P3C-E household receiving £321.24 leaving just £121.07 as the maximum housing benefit and £24 pw less than the £145 pw 3 bed social rent level in Islington.

So we see at a social rent Windsor and many other places in the South East the new benefit cap affects all households from the lone parent with two children upwards yet in Inner London the cap only begins to affect the lone parent with three children if they are on ESA.

South East et al?

Cambridge, Welwyn, Stevenage, Dacorum, Winchester, South Bucks, Chiltern, Three Rivers, St Albans, East Hampshire, Vale of White Horse, Uttlesford, Bracknell Forest, Hertsmere, Waverley, Brentwood, Epping Forest, West Berkshire, Guildford, and more are all local authority areas that see a 3 bed social rent exceed the £130.58 pw maximum HB payable to the social tenant household of 1 Parent 2 children on ESA.

This is a huge difference when it comes to numbers of HB claimants as 3 or more children is 11.6% of all working-age households claiming HB yet the same for 2 or more households increases to 27.1% and almost triples in number.

That explains why a far greater percentage of capped households will be in the regions rather than London and the current percentage of 46% London to 54% regions will alter to 22% London and 78% in the regions.

To return to the table we see that the 2P2C-E household is affected by the new cap in the lowest rent areas such as the North West and 2P2C-E households will receive £88.83 as the maximum HB against a typical £95 per week 3 bed social rent level; yet in London the cap only begins to hit the 2 household larger size of 1P3C-E.

London’s tipping point?

London’s other two affected groups in affordable (sic) rent and private rent already sees a 2 bed property be financially toxic with the £500 pw cap figure.  A £260 pw average for a 2 bed AR property is common if not a low figure and already hits the 1P2C-E household in London and the 1P1C in a 2 bed private rental.  In simple terms the £500 pw cap already affects the vast majority of families in the capital.

By contrast a low rent area such as my home city of Liverpool at the £500 per week cap only starts to affect the 2P4C household in the PRS, yet the reduction to £384 pw will affect the 1P2C-E household.

In Liverpool as an example of a low rent area, the new cap will affect the following households that the current £500 pw cap does not:

  • 1P2C-E,
  • 2P2C-J,
  • 2P2C-E,
  • 1P3C-J,
  • 1P3C-E,
  • 2P2C-J,
  • 2P2C-E,
  • 1P3C-J,
  • 1P3C-E,
  • 2P3C-J,
  • 2P3C-E,
  • 1P4C-J

That is TWELVE additional household types that the current £500 pw cap does not affect!

That starkly illustrates how the capital has already reached a tipping point with the £500 pw cap yet a low rent area such as Liverpool will see 12 more household types affected by the reduction and means that the vast majority of households affected by the cap will be in the regions and no longer in London.

In London the cap reduction to £23,000 sees an increase in the amount of the reduction rather than capturing (that) many more households as the £500 pw cap already captures most households.  According to DWP figures as I have extrapolated London households affected will increase from the current 10,520 figure to 57,389 or a 5.45 fold increase.

Yet in the rest of GB the number of households affected rises from the current 12,573 to 197,000 or a 15.7 fold increase as so many more household types are affected by the £20,000 cap which are not currently affected as the Liverpool example above shows.

That is why the DWP figures are so wrong and why the total numbers of households hit by the reduced caps in all of GB will exceed 255,000 households and more than double the simply wrong DWP projection of 126,000.   Those 255,000 or so households will contain around 845,000 children and who will be affected by the reduced cap and at severe risk of homelessness.

When the pre 1996 bedroom tax issue arose which Peter Barker found and I merely publicised it may front page news in the Guardian and other national newspapers and was reported on Sky and BBC News.  Yet this lone voice attracted ridicule in the housing media as the CIH said at most 12,500 as did the NHF and others said at most 20,000 would be affected and of course it reported the 3,000 to 5,000 DWP estimate.  I stuck to my guns and was able to say I told you so.

My benefit cap estimates use the same hard factual evidence base of official data and sees, Jules Birch excepted, the same ridicule and scorn for my 197,000 or so estimate in the regions.  This issue is much more serious than 40,000 households getting back £14 pw for 11 months.  It is one of an average £75.73 reduction and 5 times that amount and will without question see three-quarters of a million children put at severe risk of homelessness.  The two simply do not compare and the benefit cap is so much more important and what the hell use is my saying I told you so after this horror comes to pass?!

Many within housing which is where the benefit cap will hit are still of the errant notion that London as it has higher rent levels MUST see more people affected there than in the regions.  That assumption is patently false as the above numbers reveal and that assumption as right as it may appear superficially, has to go.  Given assumption and hard numerical fact there is only one choice and that is the latter.

Maybe the G15 and the other London based housing ‘great and good’ such as the NHF are prepared to believe the woeful DWP estimate as they see relatively little change in the cap reduction to £442.31pw in the capital and they also assume this means the 57,000 or so London households affected means it will be the 126,000 DWP estimate as it appears about right based on their false assumption that London must have more households affected.

That assumption needs to go too and they need to look at cold hard numerical facts unless the London HAs are perfectly happy to evict and replace a £145 pw social rent with a £300+ per week affordable (sic) rent level which more than makes up for any eviction and other costs with the £7,500 extra income per year this gives!

Yet in that London-based cabal of the ‘great and good’ of social housing is the NHF who purport to represent the other 83% of housing associations outside of the capital for whom the reduced benefit cap will see a huge increase in arrears and eviction costs that will NOT easily be recovered by increasing a 3 bed social rent level of £95 per week up to a 3 bed AR one of £120 pw. – A mere £1250 per year added income from AR not the £7,500 per year extra the London-based HAs can expect.  Or 1 in 6 NHF members are fine and dandy yet the other 5 in every 6 are well and truly shafted financially!

The attitude of Genesis Housing Association in not developing any more social or affordable (sic) rent properties could be seen in that light to be one of it is not our problem and let the local councils deal with the financially toxic benefit households of 2 or more children?  Perhaps, yet I still believe Genesis is right in the current climate of RTB2 and Pay More to Stay and other reforms in NOT developing as housing associations are not a branch of government to keep producing leaves despite the ‘welfare freeze’ conditions that the Conservatives dictate.

Finally, my 197,000 or so regional household estimate IS a cautious one and it excludes the significant ESA factor which sees the household receive £29.05 more per week in income and thus £29.05 per week less in the maximum HB payable.  That factor alone and the prevalence of ESA over JSA as the base welfare benefit – 1.14m HB claimants get ESA and 0.395m get JSA – could easily add a further 20,000 households to that total in the regions.  It also does not include any affordable (sic) rent calculations in the regions and that too will increase the number though by no more than 2,000 households in the regions.

It is way past time that due consideration was given to evidenced-based figures with the benefit cap – something that the DWP has not done and the consequences of my being right are horrific.







7 thoughts on “Benefit Cap – Why the DWP is so wrong and 800,000 children affected

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