Number of households hit by benefit cap in Luton rises by almost half – as government announces £5 billion cut to welfare

A housing justice charity said the benefit cap is pushing households into homelessness, warning welfare cuts "risk exacerbating this problem".

It comes as the Government announced reforms to the welfare system, which include a reduction to the health element of Universal Credit – a benefit aimed at helping people on a low income or those who are out of work, that is usually spent on housing costs, childcare and other living costs.

New Department for Work and Pensions figures show 794 households receiving Universal Credit in Luton had their income capped in November 2024 – up 46 per cent from 543 a year earlier.

The current benefit cap levels, which apply to both Universal Credit and Housing Benefit, were last increased in April 2023.

They stand at £22,020 per year for families with children across Britain, and £25,323 for those in Greater London.

Nationally, 113,000 households had their benefits capped in November 2024 – up 47 per cent from 77,000 a year earlier.

Of those, 112,000 (98 per cent) were capped on Universal Credit and 1,800 (2 per cent) on Housing Benefit.

Separate figures show there were 7.5 million people claiming Universal Credit in Britain in January.

The Government said it will introduce an above-inflation rise to the standard Universal Credit allowance by 2029-30 – adding £775 in cash terms annually.

But the health element allowance will be almost halved for new claimants from April next year while those already claiming will have their amount frozen until 2029-30.

Polly Neate, chief executive of Shelter, said: "With a record number of children homeless and too many families at breaking point, struggling to balance soaring housing and living costs, we cannot continue to turn a blind eye to the solutions."

A Government spokesperson said: "Poverty is a scar on our society, which is why we’re taking action to give people the tools they need to build long-term stability and get into good jobs through our Get Britain Working White Paper."

They added, the Government is increasing and adapting a series of welfare benefits for those who need it the most, which includes an above-inflation rise to the standard Universal Credit allowance.

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