The IFS and the benefit cap

Published: 7th Nov 2016

In brief

Claim

The IFS said the new benefit cap “almost exclusively affects families with large numbers of children or very high rents or both.”

Conclusion

This is incorrect. The IFS said this about the benefit cap as it was introduced in 2015. It has said the new, lower cap will be less concentrated on households with lots of children and affect more people outside London where rents are lower.

“The Institute for Fiscal Studies (IFS) economic think tank said the new benefit cap would 'almost exclusively affects [sic] families with large numbers of children or very high rents or both.'”

Mirror, 7 November 2016

This isn’t correct.

When the IFS said this, it was commenting on the effects of the benefit cap before changes to it came into force today.

From 7 November the maximum that people can claim in total for certain benefits will be lowered to £23,000 for families in London, or £20,000 outside London. For single people without children it will be £15,410 per year in the capital and £13,400 in the rest of the country.

The IFS says that two key changes will take place regarding the people it affects.

The first is that “its impact will be somewhat less concentrated on households with lots of children”.

The second is that it is now much more likely that the Benefit Cap will affect families outside of London. Under the previous cap, 42% of households affected were in London. From today the benefit cap will affect a lot more people than before, but a smaller proportion of that total (22%) will live in London.

Why are there changes to the types of families affected?

The IFS’s analysis found that families with lots of children or high rents were more affected than any others previously because “there is almost no other way to be getting so much in benefits”. It said that more than half of households previously affected had at least four children, and so received more in Child Benefit.

As 42% of all households affected were in London, they had high rents and so received more in Housing Benefit than other households.


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