The Department for Work and Pensions (DWP) is applying its controversial benefit cap to tens of thousands of households in the run-up to Christmas, new statistics reveal. The policy, which limits the total amount of state support working-age people can receive, is currently affecting 119,000 households, the vast majority of whom are claiming Universal Credit.
Scale and Stability of the Cap
Official DWP data shows the overall number of capped households has remained broadly stable since May 2025. However, a deeply concerning detail emerges: 82% of these benefit-capped households include children, meaning parents face a financially strained festive period. Separately, a smaller group of around 340 households are having their benefits capped through the legacy Housing Benefit system.
On average, the monthly reduction for these families is £249, slightly down from £256 in May 2025. In numerical terms, 1.7% of working-age households on Universal Credit are now subject to the cap, a marginal decrease from 1.8% earlier in the year. The dynamics of the cap are fluid; between May and July 2025, while 23,000 households were newly capped, a larger number of 40,000 managed to move off the cap, often by increasing their earnings from work.
How the Benefit Cap Works
Introduced for Housing Benefit in April 2013 and later extended to Universal Credit in April 2016, the benefit cap sets a maximum limit on the total welfare payments a working-age household can receive. If a claimant's calculated benefits exceed this limit, their payments are reduced accordingly. While most claims are now managed under Universal Credit, a residual number of working-age people can still claim Housing Benefit, where the cap also applies.
Public Understanding and Additional Support
The complexity of the benefits system is highlighted by recent research into public awareness. A study found that only 44% of people had a reasonable idea of typical Universal Credit rates. Furthermore, research from Citizens Advice indicated that just 35% of people correctly knew that the UC health element for those with limited capacity for work provides less than £500 per month for additional costs.
This pre-Christmas application of the cap underscores the ongoing tension between welfare policy and the cost-of-living crisis. For the tens of thousands of households affected, particularly those with children, the festive season will be overshadowed by a significant reduction in their income.
