Research and analysis

Research summary: findings from the mixed methods longitudinal evaluation

Updated 11 May 2023

Findings from the mixed methods longitudinal evaluation

Authors

Julia Griggs, Hannah Jones, Tanya Basi and Hannah Piggott

Policy Overview

In April 2013, the Government introduced a cap on the total amount of benefit that most working-age households could receive; so that, broadly, households on out-of-work benefits no longer received more in welfare payments than the average weekly wage after tax for working households. The cap limited the combined sum that a household may receive in benefits to £500 a week for families/couples and £350 a week for single people without dependent children.

In the 2016 Welfare Reform and Work Act, the benefit cap for working-age claimants was lowered and tiered, based on where claimants lived and whether they had a partner and/or resident children. The new cap launched in November 2016 with the phased roll-out completed by February 2017^{[footnote 1]}. The lower cap meant that the maximum households could receive in benefits ranged from £257.69 a week for single claimants without resident children, living outside London (£13,400 a year), to £442.31 a week for families with children living in Greater London (£23,000 a year).

There are exemptions from the cap for vulnerable claimants; for example, those in receipt of Personal Independence Payments (PIP) or Disability Living Allowance (DLA); as well as for Carer’s Allowance introduced in November 2016 and its equivalent in UC.

Research Context and Aims

In January 2017, the Department for Work and Pensions (DWP) commissioned NatCen Social Research, an independent research organisation, to conduct an evaluation of the lower benefit cap.

The aim of this study was to evaluate the effects of the new lower benefit cap on affected claimants’ behaviours towards employment, its wider impacts (for example, on housing choices) and to better understand the driving forces behind different responses to the cap.

Within this, to:

• assess the effectiveness of the policy in meeting its aims as an increased work incentive
• explore how the policy is operating
• understand what affects the policy has had on local authorities (LAs) and local support agencies

It is important to note that the benefit cap was implemented at the same time as a wider raft of welfare reforms, so impacts from the cap cannot be entirely separated out from the effects of these other changes.

This report is also published alongside an econometric impact evaluation of the benefit cap.

Methodology

The study used a mixed method design, employing both quantitative and qualitative approaches to explore and answer the above research questions.

1. Survey

Wave one:

Conducted approximately seven months after implementation of the new cap.

Sample: claimants affected by the lower cap (n=1,804).

Wave two:

Conducted approximately 13 months after implementation of the new cap.

Sample: wave one survey respondents who agreed to take part at wave two (n=844).

2. Qualitative research

Sample: Local authority, Jobcentre Plus and local support agency staff within six sampled local authorities.

Local authorities were sampled using the following primary criteria:

• geography
• stage of UC roll-out
• number of claimants affected by the lower cap
• increase in claimant numbers compared to the previous cap

Forty-two interviews were carried out between 25th July and 15th November 2017.

3. Administrative data

Survey data at both waves was combined with an extract of administrative data held by DWP (where respondents had given permission for data linkage), to supplement survey responses with up-to-date information on cap amount and rent levels.

Key Findings

Whether still affected by the cap: Relatively few claimants (29 per cent) were no longer capped at the point of the wave two survey.

• where they were no longer affected this was most frequently because they had moved into work or started claiming one of the benefits which exempted them

Employment: The number of respondents in employment increased significantly between the two survey waves, but the number of claimants making or planning work-related changes had fallen over time.

• twenty-three per cent reported being in employment at wave two; this included a small number of claimants who had found work in the preceding 13 months and were no longer subject to the cap. The proportion of claimants in employment had increased significantly (from 16 per cent) at wave one
• just under a quarter of respondents reported having made a change regarding work (either looking for work or increasing hours/earnings) at wave two; this showed a significant drop from 33 per cent at wave one
• those capped by larger amounts (more than £50 per week) were more likely to make employment changes initially, but this was no longer a significant association in the longer term. (See Multiple Impacts below for related findings)
• although a very large minority of claimants (45 per cent) had future plans to search for work or change their current employment, this was also significantly smaller than at wave one (51 per cent)
• patterns in employment-related behaviours over time – an increase in employment, coupled with a drop in active behavioural change regarding work, may indicate that claimants who are closer to the labour market (i.e. more work-ready) have already made the changes necessary to move into work
• claimants who reported more significant barriers to employment, such as a long-term health condition, or caring responsibilities, may be less able, and therefore less likely, to see work as a viable option. These claimants face difficult decisions about how to manage the reduction in their household income

Housing: Only small numbers of capped claimants had moved house by wave two and moves that had taken place were generally over short distances.

• the small number of claimants in temporary accommodation or becoming homeless remained stable between waves; however there was significant movement in and out of these groups, suggesting housing instability for some claimants
• this is further evidenced by the proportion of claimants who reported being in rent arrears (35 per cent at wave two)
• the decrease in the numbers attempting a housing change between the two survey waves mirrors the trend in the proportion making changes to employment
• similar to those making employment changes, it is likely that the group of claimants who were most motivated and best placed to alter their housing situation will have done so by wave two
• when there was a desire to move to another property, capped claimants faced considerable barriers (lack of affordable properties) to a successful move

Other impacts:

• claimants reported experiencing wide ranging impacts as a result of the benefit cap, for example, reduced spending on essential and non-essential items and impacts on health and wellbeing
• however, the proportion of respondents highlighting these impacts had fallen between the two survey waves
• this difference runs counter to the large proportion of claimants who reported a worsening in the financial impact of the cap between the wave one and two surveys
• the qualitative strand of the research highlighted a similar range of financial and other impacts experienced by capped claimants, though there were mixed views on how directly related these were to the lower cap

Multiple impacts: With regard to how responses to the cap can overlap:

• six per cent of claimants made (or tried to make) changes to both their employment and housing situation as a result of the lower cap at wave two
• in contrast, 62 per cent of respondents had not made changes to either
• the remaining 32 per cent reported changes to either their employment or housing situation
• the proportion of claimants reporting multiple changes fell between the two survey waves, suggesting that claimants better able to make adjustments to their employment and housing circumstances (e.g. to find a job or to move to less expensive housing) will have done so in the first months of being affected by the lower cap
• those capped by a larger amount were more likely to make employment and housing changes initially, but this was no longer a significant association in the longer term. Instead, 13 months after being capped, the key factor that was associated with making changes to housing and/or employment was whether the claimant felt the financial impact of the cap had got worse compared to six months ago

Type of benefit: There were significant differences in the impact of the cap on housing and employment changes by the type of benefit received (HB or UC) at wave two which were not in evidence at wave one:

• UC claimants were more likely to be employed and to have made changes in relation to work than respondents claiming Housing Benefit
• in contrast, those claiming HB were more likely to have changed or tried to change their housing situation in response to the cap than UC claimants

In addition to differences in terms of these key impacts, UC claimants were:

• more likely to report higher earnings; although this is connected to the fact that UC claimants were clustered in London, where earnings are higher than in other parts of Britain
• less likely to be in receipt of DHPs, or to be aware of them
• more likely to have borrowed money, but less likely to report impacts on health as a result of the benefit cap
• less likely to have accessed support in relation to the benefit cap, and more likely to say they had an unmet support need than HB claimants. However, UC claimants appeared to be making greater use of existing links with JCP than HB claimants

Geography: Analysis showed few significant differences in outcomes or changes in behaviour by region, suggesting that claimants living in Britain were largely affected by the cap in the same way.

However, claimants living in London were more likely to report:

• increasing their working hours or moving to temporary accommodation as reasons for no longer being affected by the cap
• planning to make employment changes in the next six months
• having made or attempted a change to their housing circumstances

1. For more information on the rollout of the lower cap across local authorities, see official statistics available here: https://www.gov.uk/government/collections/benefit-cap-statistics ↩