Piggybank News

June 4, 2013

The effect of the benefit cap on large families…

I just got off the phone to a lady from the Milton Keynes Council housing team.  We were discussing one of my tenants specifically and the likely effect of the benefit cap on large families in the area.

For those who are unaware, one of the changes to benefits legislation which the government has brought in is a benefit cap.  This is designed to ensure that people are not claiming so much money that they are better off on benefits than in work and was at least partially in response to media reports of very large families living in “millionaires mansions” at the tax payers expense.  It does not apply to families where at least one person is working more than 16 hours a week but of course it would affect very many part-time workers as well as those entirely dependent on benefits.

The cap is placed on ALL benefits which means that whilst benefits are continuing to be worked out based on need, size of family etc; there is a maximum amount per week which can be awarded regardless of this. For families this is £500 per week.

The DWP has identified those families within the borough who are likely to be affected and the Housing Team are extremely busy contacting them all and trying to assist them in working out a new budget.  As part of this process they are recommending that the rent paid should be no more than 30% of their income.

If you work this out at the top income level of £500 per week this means that affordable rent can only be a maximum of £650pcm compared to the current 4 bedroom LHA rate in Milton Keynes of £950pcm and the 3 bedroom rate of £750pcm.  (ie such families will only be able to afford an average 2 bedroom house)  I presume that this scenario is playing out in a similar way across the country.

Is anyone else concerned by this?

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