Time is running out as welfare reform mitigations face another ‘Cliff Edge’

The Cliff Edge Coalition is once again urgently calling for legislation to be passed to extend the welfare reform mitigations package. Without new legislation, mitigations will end in March 2021.The Coalition is further calling for this legislation to close loopholes in the existing arrangements which have left thousands unprotected from the benefit cap and bedroom tax. 

The Minister for Communities has committed to extending the existing mitigation beyond March and to closing the bedroom tax and benefit cap loopholes. The funding to do so has been allocated in the Department for Communities’ Draft 2021–22 budget.  However, until new legislation is passed, people will continue to fall through these loopholes.

Benefit Cap Loophole

Benefit cap mitigation payments are only paid to claimants with children. These families also need to have been claiming benefits in 2016 in order to get the extra payment. This means that many families, who started claiming benefits after 2016, are not getting any extra help.

At last count over 1,000 families subject to the cap were not getting any mitigation payment. While the statistics are not yet available, the Coalition are concerned that this number has risen steeply, because

• the benefit cap exempts people from the cap if they have received a certain level of earnings in the previous 9 months
• COVID-19 led to huge job losses and a sharp increase in claims for Universal Credit
• the 9-month grace period ended in December 2020 for the 46,000 people who claimed UC for the first time in March 2020.

Families subject to the benefit cap lose an average of £200 per month and in some cases, that figure is significantly higher. Housing Rights is working with a family with four children who started claiming benefits in 2018. They lose £800 per month as a result of the benefit cap, leaving them with a total income after housing costs that was 68% below the poverty line.

Bedroom Tax Loophole

Most social tenants will receive an extra payment if their Housing Benefit or Universal Credit is reduced by the Bedroom Tax.

However, they will lose this extra payment if they move to a different social tenancy and continue to have more bedrooms than they need. In September 2020 social landlords estimated that 227 households were impacted by this loophole. These households lose an average of £50 per month, leading to significant arrears and ultimately increasing their risk of housing stress and homelessness.

Strengthening the mitigations package

The Cliff Edge Coalition strongly welcomed the Minister’s commitment to close these loopholes, but called for legislation to be passed urgently to stop more people falling through the mitigation safety nets.

The Coalition have welcomed the Minister for Communities’ commitment to reviewing the mitigations package, as well as the commitment to strengthening the mitigations package in the New Decade New Approach agreement. There are new challenges to deal with, including Universal Credit, the two-child limit and cuts to housing benefits in the private rented sector. However we are deeply concerned about the lack of funding in the draft 2021-22 budget to enhance welfare reform mitigations. The Coalition has written to Executive Ministers to voice this concern and is calling for funding to be secured in order to strengthen the mitigations package. Indeed, the need for strengthened mitigations to protect people from the impact of the Universal Credit 5 week wait, the two-child limit and cuts to housing benefits in the private rented sector has been brought into even sharper focus by the pandemic.