Almost 600 more local households to be hit by government plan to cut benefit cap, warns Islington Council

• Government plan to lower benefit cap by £3,000 will hit approximately 575 more Islington households.
• This is on top of the 250 Islington households already affected by the current cap, who will all get hit again as well.
• Up to 1,000 more Islington children are likely to be affected.
• The move will result in an additional £1.6m in lost benefits.
• Risks of child poverty and homelessness both likely to increase.

The Government’s proposed plan to cut the benefit cap by £3,000 a year (e.g., from £26,000 to £23,000 per family) will hit almost 600 additional households in the borough, Islington Council warns.

Modelling carried out by the council shows that a £3,000 reduction to the annual benefit allowance will hit an estimated extra 575 households across the borough – on top of some 250 households already affected by the current cap, bringing the total to over 800 households affected.

The cut is expected to result in a further £1.6 million in lost Housing Benefit and Local Housing Allowance. Figures produced by the council show this could impoverish up to 1,000 more Islington children in a borough that already has one of the highest rates of child poverty in the country.

The issue of a further cut to the benefit cap, and the impact this would have upon residents, was raised in a written question at a full council meeting last night. In response, Islington Council's executive member for finance and performance, Cllr Andy Hull, has warned that cutting the cap could quickly lead to private landlords evicting large families. As the cost of temporary accommodation in local properties with more than one bedroom is also likely to be above the cap, this could increase homelessness in the borough.

Cllr Hull said today: “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.”

Cllr Hull voiced serious concern about the council’s capacity to support more households who may struggle to cope. The Government is currently cutting Islington Council’s budget for Discretionary Housing Payments – short term grants designed to help people who are struggling to meet their housing costs – from £1.35m in 2014/15 to £989,000 in 2015/16. But reducing the benefit cap will mean more demand for Discretionary Housing Payments, not less. In addition, the Council estimates it would have to increase the number of IMAX welfare advisors and iWork employment coaches working to support those affected by the benefit cap by 50%, at a further cost of £110,000 a year.

Cllr Hull added: “For Islington, the Government cutting the benefit cap will mean huge losses of around £1.6 million 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 Discretionary Housing Payment funds to help us cover the shortfall. 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.”

The Chancellor is expected to set out the detail of the Government’s cut to the benefit cap in his budget statement on 8 July 2015. Islington Council will publicise how residents can access support after that announcement.