Thousands of benefits claimants face seeing their entitlement cut from April 2024 despite the 6.7 percent raise announced in the chancellor’s recent Autumn Statement.

Despite the government’s efforts to address the cost of living crisis with a significant benefits increase, the static nature of the benefit cap undermines these efforts

The decision to not raise the benefit cap will adversely impact many UK families.

With over 85,000 households already constrained by the benefit cap, these new changes will only exacerbate their financial challenges, leaving many without the full extent of support they critically need, experts have warned.

The cap is determined according to an applicant’s circumstances, taking into account their location, whether or not they have children and whether they are applying as a single person or as part of a couple.

Experts at Spencer Churchill explained that with over 85,000 households already constrained by the benefit cap, these new changes will only exacerbate their financial challenges, leaving many without the full extent of support they critically need.

Currently set at £22,020 per year outside London and £25,323 in London, the cap disconnects the link between actual need and financial assistance provided, particularly affecting families in high-cost living areas, they said.

The firm said: “The unchanged benefit cap, amidst a 6.7 percent increase in benefits, poses a paradox in our welfare system.

“While the cap aims to encourage employment, it fails to account for the diverse and often complex circumstances of those receiving benefits, especially in regions like London where the cost of living is substantially higher.

“At Spencer Churchill, we recognise the critical role of welfare in supporting the vulnerable. However, the benefit cap, particularly in its current state, risks leaving thousands without sufficient aid.

“An average loss of £53 per week due to the cap is a significant amount for families struggling below the poverty line.”

“The benefit cap’s inflexibility in the face of rising living costs is a pressing concern. While the government has introduced measures like a £94bn cost of living support package, the cap’s rigidity still affects many, particularly those in high-cost areas.

“This calls for a reevaluation of the cap to ensure it aligns more closely with the realities of living expenses across the UK.”

The cap typically applies to people aged between 16 and state pension age and in receipt of any of the following payments:

The Child Poverty Action Group (CPAG) has cautioned that Jeremy Hunt’s decision not to raise the benefit cap – the total amount people of working age in need can claim – in tandem with payments, as he did in his 2022 statement, will mean that the increase he did announce will actually serve to push more people beyond the cap’s threshold.

If the cap places people in difficult positions, the government advises them to contact the DWP or their local council as soon as possible.

For more information on the benefit cap, people can visit the UK government’s website or Citizens Advice.