A London borough has warned that the £3,000 benefit cap cut could have a devastating effect on its most disadvantaged households.
Islington Council has conducted research on the new £23,000 benefit cap, expected to be announced by George Osborne in the emergency Budget on 8th July, which reveals that almost 600 families in the borough would be impacted, in addition to the 250 already struggling due to the current cap.
The Council also believes that up to 1,000 more children in the area will be affected by the new cap, while larger families are at risk of eviction from their homes.
Islington says that cut could also result in a further £1.6m in lost housing benefit and Local Housing Allowance (LHA).
At a Council meeting last week, the issue of the benefit cap was raised in a written question.
In response, the Council’s Executive Member for Finance and Performance, Councillor Andy Hull, warned that reducing the cap could quickly cause private landlords to evict large families.
The cost of temporary accommodation in local properties with over one bedroom is also likely to be above the cap, which could increase homelessness in the borough, Hull also cautioned.
He says: “According to the Government, the benefit cap is meant to reflect the average income. But average earnings haven’t dropped by £3,000, so why are they cutting this support from families who need it?
“This national, one-size-fits-all policy takes no account of local realities. Rents in London are much higher than elsewhere, and yet the same caps and cuts apply.
“With such a shortage of affordable housing in the capital, cutting the benefit cap won’t drive down rents; it will just drive people into poverty.”
Hull also warned about the Council’s ability to support more households who may struggle to manage.
He says that the Government is currently reducing Islington’s budget for Discretionary Housing Payments (DHPs) from £1.35m in 2014-15 to £989,000 in 2015-16, despite the fact that there is likely to be a rise in demand for DHPs as a result of the cap.
Furthermore, the Council expects it will have to increase the amount of IMAX welfare advisors and iWork employment coaches, who help support those affected by the benefit cap, by 50%, costing £110,000 per year.
Hull continues: “For Islington, the Government cutting the benefit cap will mean huge losses of around £1.6m in housing benefit; likely to translate into a big rise in tenants’ arrears.
“At a time when the Council’s budget is stretched to breaking point, we can’t guarantee to cover the loss. We call on the Government to stop this cut in its tracks.
“Failing that, we need the Government to provide us with additional DHP funds to help us cover the shortfall.”
Hull concludes: “We will do our best to support struggling families in our community, but there’s a limit to our ability to shoulder the burden of Government cuts and shield residents from their impact.”1