The Household Benefit Cap: understanding the restriction of benefit income in Britain

Abstract

Britain’s Household Benefit Cap restricts the amount of benefit income unemployed households can receive. In this article, it is examined using material held at the UK’s National Archives recording debates about a proposal to introduce a similar policy – a benefit limit – in the first Thatcher Conservative government elected in 1979. It was rejected, but the Household Benefit Cap was introduced three decades later. The article locates debates about, and the practice of restricting benefit income, in perennial social security concerns with the financial incentive to do waged work. The article argues that while there are material differences that help explain the different policy outcomes in 1980 and 2010, they can primarily be explained by changing ideas about the roles of social security policy, including the development of the ‘incentive paradigm’ concerned with manipulating behaviour; a loss of concern with the hardship that would come with the introduction of a benefit restriction and a view that institutions other than the state are better placed to address poverty and buttress work incentives.

A resource‐based perspective on the regulatory welfare state: Social security in the United Kingdom

“…A separate assessment carried out shortly afterwards highlighted the analogous regulatory intention of activating additional claimant resources primarily by encouraging claimants to work more hours or by renegotiating their rent in situ (Department for Work and Pensions 2012b). This is an important regulatory purpose and further underlines what Grover (2022, pp. 3–4) points out as one of the most important concerns over social security policy and the cap mechanism, which relates to how it “might act to encourage or discourage people to commodify, to sell, their labour power.” Commodification suggests claimant resources form part of the fabric of the regulatory system since the more hours worked the more financial resources will be accumulated and mobilized to meet welfare needs.…”

“…There is a similar dynamic operating in other areas of the welfare system relating to possessions and labor. It is well documented, for example, that the benefit cap and benefit sanctions have left many households unable to afford adequate food and necessities (Grover, 2022; Patrick, 2014; Williams et al, 2016). Moreover, the gradual establishment of Universal Credit has been linked empirically to rising food bank usage, with Reeves and Loopstra (2021) revealing that when the Universal Credit case load rises from month to month there is also an increase in the number of food parcels distributed.…”

“…This controversial measure was the centerpiece of the government's efforts to reduce the budget deficit (Fenton‐Glyn, 2015). The cap has as one of its primary aims the inducement of “behavioral responses” from recipients and the incentivization of work (Kennedy et al, 2016; see Grover, 2022), with the basic premise being that a person should not be provided with more money when out of work than what they could reasonably expect to earn from employment. Importantly, it is a measure that interferes with a claimant's “possessions.” In the Supreme Court case of R (on the application of SG and others (previously JS and others)) (Appellants) v Secretary of State for Work and Pensions (Respondent) (2015, UKSC 16), it was confirmed, when deciding whether the housing benefit regulations were unlawful, that although the cap had a legitimate and justifiable aim it was nevertheless an interference with a recipient's possessions within Article 1 of Protocol 1 of the European Convention on Human Rights.…”

Explaining the abolition of the wage stop in the UK

“…As a consequence and to address such concerns, six months after wage stop's abolition, the SBC informed regional controllers of the point at which it financially paid for workless people to be in wage-labour.43 Three years later the DHSS commissioned a longitudinal study of unemployment. It partly focused upon work incentive issues (Clark, 1978) and was conducted in a broader social security policy environment to which concerns with such issues were central (Grover, 2022).…”