Life on £4 a day: the harsh reality of the benefit cap

Low-income families are trying to survive on as little as £4 per person per day because of the benefit cap, studies show. The cap, introduced in 2013, limits the amount of welfare support working-age families can receive.

This policy is trapping families in a cycle of poverty, according to studies by the London School of Economics. Many are forced into overcrowded, damp and often rat-infested homes they can’t afford, even though they’re the cheapest in their area.

One family of eight was forced to share a three-bedroom home, with a four-year-old child sleeping in a baby cot. Another family of five was left with just £500 a month after rent.

Scrap the caps

The study’s researchers concluded the benefit cap needs to be scrapped to prevent families falling into deeper financial trouble. They say it’s left households reliant on food banks and trapped at the whim of private landlords.

Campaigners have long been calling for an end to the two-child limit, which data shows contributes to rising child poverty levels. The two-child cap means parents can only claim child tax credit or universal credit for up to two children.

So far, the Labour government hasn’t succumbed to pressure to end the two-child cap, despite some of it coming from their own MPs.

But the reports says scrapping the two-child limit alone wouldn’t be enough to lift families out of poverty since they’d still be hit by the benefit cap.

What’s the benefit cap?

The highest amount of benefit support you’re entitled to depends on whether:

• you live inside or outside London
• you’re single or in a couple
• your children live with you

You can find the exact caps for different circumstances on the government’s website. 

Does the cap apply to me?

If you get any of the following benefits, the cap could apply to you:

• universal credit
• bereavement allowance
• child benefit
• child tax credit
• employment and support allowance
• housing benefit
• incapacity benefit
• income support
• jobseeker’s allowance
• maternity allowance
• severe disablement allowance
• widowed parent’s allowance

But there are exceptions. You’re not affected by the cap if you or your partner:

• get working tax credit
• get universal credit because you can’t work due to a disability or health condition
• get universal credit because you care for someone with a disability
• get universal credit and you and your partner earn £793 or more a month combined, after tax and National Insurance

There are other situations which mean you aren’t affected by the cap, for example if you, your partner or a child you’re responsible for gets adult disability payments, armed forces compensation, a carer’s allowance or child disability payments. Read the full list of situations which make you exempt from the benefit limit.

Help if you’re affected

Discretionary housing payments

If you’re not able to get enough support to cover rent and housing costs, you could apply for a discretionary housing payment (DHP).

DHP help is available in England and Wales for those affected by the benefit cap, the removal of the spare room subsidy and local housing allowance rates.

It can help you cover a shortfall in your rent, a rent deposit or any rent you need to pay in advance of moving home. DHPs can’t be used to cover your council tax.

To be eligible, you have to be currently getting either housing benefit or the housing element of universal credit. You can contact your local council to apply.

If you’re about to become homeless

In England, your council has to help you if you’re homeless or are about to become homeless in the next eight weeks.

For example, if:

• you’ve received a section 21 notice
• your landlord is threatening to evict you
• you can’t afford to live in your home

Ask your local council for help if you’re in any of these situations.

Do you need advice?

If you’re out of pocket because of the benefit cap, we can help by giving you free debt advice online or you can give us a ring. Whether you need budgeting help, advice on your benefit entitlement or information on debt solutions, we’re here for you.

All advice is free and impartial. Some debt solutions are also free, some have a fee.