Benefit cap will hit single mothers and minorities

Moves to impose an annual limit on benefit payments to the unemployed will affect single mothers and ethnic minorities hardest, the Government's own analysis of the controversial policy has concluded.

Ministers have provoked anger over the plan, which caps the total household benefits to families where no-one works at £500 a week (£26,000 a year) for couples and £350 a week (£18,200 a year) for lone adults.

The Department of Work and Pensions (DWP) calculates 60 per cent of those hit will be single parents and 30 per cent from ethnic minorities.

The planned cap was announced at last year's Conservative conference by the Chancellor George Osborne, who argued it could not be right for families on benefit to receive more than the average household income. He argued that the scheme was crucial to get a grip on Britain's soaring welfare bill, which last year stood at £192bn.

However, Liberal Democrat and Labour opponents have vowed to try to defeat it in the Lords next month, while charities warn it will increase levels of poverty. Critics will seize on an impact assessment carried out by the DWP into the policy, which is planned to come into force in 2013.

The clampdown will have a disproportionate effect on ethnic minorities, it acknowledges, calculating they represent 30 per cent of the estimated 50,000 households whose incomes will be cut. The DWP said they will be heavily affected as Asian families on average have larger households than other ethnic groups.

It added that 60 per cent of claimants whose benefit will be reduced will be single women, almost all of whom are bringing up children.

The department's research also warned that the cap will make some parts of the country unaffordable for families who depend on housing benefit. The calculations emerged a month after a leaked letter from the private office of the Communities Secretary, Eric Pickles, warned that the policy risked making 40,000 families homeless.

A DWP spokeswoman said: “The Government believes it is not fair that people who are in work can earn less than those who are on benefits. However, we have always said that we will look at the sort of help available for those people in particularly difficult circumstances.”