Joined-up economics to end the two-child cap

Since Capital Letters was created, we have been calling for a fairer and more economically connected benefits policy.

We campaigned for an increase in Local Housing Allowance (LHA) to help the thousands of Londoners stuck in Temporary Accommodation (TA) into a safe, secure and affordable home. However, we also campaigned for a commensurate rise in the Benefit Cap – including the two-child cap – so that the LHA increase didn’t inadvertently cause homelessness, as families hit the top of their benefits and couldn’t afford the rent shortfall.

LHA rates were increased.

The benefit cap was not.

We are extremely hopeful that the Governments Child Poverty Strategy, due to be published in the spring, will address the two-child benefit cap. ‘The Times’ reported that the taskforce working on the strategy “would consider ending the two-child limit”.

The two-child limit and the benefit cap combined, are both preventing families who are experiencing homelessness finding a safe, secure, and affordable place to live, and more worryingly, the two benefit caps risk of making more families homeless.

We need a joined-up holistic economic policy that includes benefits and housing connecting the Treasury, DWP, MHCLG, all departments involved in the lives of people who need us the most.

London boroughs collectively spend £90m a month on TA, the effect of dissonate policies. The benefit cap traps some families in TA. It’s like squeezing a balloon moving the air around to achieve savings in one area, increasing spending in another… There is only one pot of money but competing departmental targets have resulted in policy that keeps squeezing the balloon in apparently random ways.

There are long term unintended economic consequences – If a child spends time living in insecure TA, their education outcomes are worse than a similar child who lives in secure housing, health outcomes are worse, employment outcomes are worse, their life-long economic outcome could be worse, and that costs the economy. This isn’t just about increased benefit reliance but about what that person can’t add to society – lost income tax, increasing reliance on the NHS, lost tax on savings, with a reduced disposable income there’s lost VAT… However, people aren’t economic entities, they are people and a child who spends time living in insecure TA may not achieve their full potential, their dreams, their whole life could be affected by their childhood of not knowing when they would have to move… again.

That’s the biggest loss.

As a socially responsible, not-for-profit housing organisation we are calling on the Government to have a joined-up, cross departmental approach to not just benefits, but the whole of the economy and, as a start, we would welcome the removal of the two-child cap.

Sue Edmonds, CEO Capital Letters