I’m not very hopeful that the Commons won’t reverse all the Lords’ changes on Wednesday. In fact I’m sure that they will. Nonetheless I thought I’d run our Future Benefits Model (FFBM) to see the effects of leaving Child Benefit (ChB) out of the cap; and here are the results.

If we take the capping proposals applied to the current benefits scheme first – this is the situation where Local Authorities cap Housing Benefit (HB) – then with ChB in the cap the way in which capping affects different sized families out of work looks like this:

Current Benefit Scheme capped by HB

The rent is based on £86.54 (if you want to know why, download my paper here) so that’s the maximum cap which will be applied. The chart shows the effect of different numbers of children, from 1 to 10, on total income.

If we look at what happens to these families when they move onto Universal Credit, the chart is quite different.

Because the cap applies to much more of the income in the UC example we see the £500 a week figure applying, once five children are reached in this example, and nothing extra is awarded as the numbers of children increase.

If ChB is removed from the cap then the charts look like this. First the current system capping HB only.

It can be seen that some families are lifted clear of the cap by the exclusion of ChB.

The effect on capping in UC looks like this.

Again some families are lifted away from the cap and in the worst cases the cap leaves them with over £100 a week more than the rigid £500 a week cap. Each extra child brings with them the Child Benefit, albeit frozen for three years and reducing in real value.