The number of households in Britain whose benefits are capped has more than doubled since the start of the year, new figures show.
There were 168,400 households subject to the cap on benefits as of August 2020, the Department for Work and Pensions (DWP) said.
This is up from around 77,913 households in February – before the coronavirus pandemic took hold – and an 8% rise on the previous quarter.
Some 58,000 households had their Universal Credit capped for the first time, the DWP figures show.
Charities said it is not right that struggling families are being penalised when they have little to no chance of finding extra work or new jobs, and are calling for the cap to be suspended.
The cap limits the total amount of benefits low-earning or non-working households can receive.
There has been no change to the policy in light of the pandemic, but the Government has introduced temporary emergency measures for other benefits which provide an exemption from the cap.
The Child Action Poverty Group (CPAG) said most of the capped households were capped as a result of Covid-19 due to their working hours being cut, being furloughed, or losing their job.
Others may have been newly capped because the uplift in Universal Credit and Local Housing Allowances may have pushed them over the cap limit.
CPAG chief executive Alison Garnham said: “The Government’s principal aim for the benefit cap was that it should incentivise work but if that was ever a sound rationale, in a pandemic it has become obsolete.
“Families are being capped at a time when the shrinking labour market leaves them little or no hope of finding extra hours or new jobs to escape the cap.”
The figures show that roughly 85% of capped households are families, and 61% are single parent families.
Some 43% of capped families have a child under five, and 17% have a child under two.
Jon Sparkes, Crisis chief executive, said the figures show “just how dire the situation is for people who’ve lost their job and are now battling to pay their rent”.
He continued: “Despite assurances that the nine-month grace period would protect people who’ve just lost their jobs from having their benefits capped, we know that for thousands of people this much-needed respite will be coming to an end right before Christmas, leaving many worrying about how they’re going to keep a roof over their head or put food on the table.
“With the jobs market showing little sign of improvement, we urgently need the Government to extend the grace period so that families don’t start the new year with the very real threat of eviction.
“We also need to see people rough sleeping exempt from the cap so that councils can move people out of expensive emergency accommodation quickly, and into safe and secure homes they can afford.”
Seema Malhotra, Labour’s shadow minister for employment, said: “It is devastating to see the number of families hit by the benefit cap is still rapidly rising, with more households across the country being pulled into hardship.
“The Chancellor said this week that our economic emergency has just begun. The Government should try telling that to families being hit by the benefits cap at a time when people need the support the most.
“To help families struggling to get by this Christmas, the Government must scrap the cap now.”
A DWP spokesman said: “Since March, the number of Universal Credit claimants has risen by three million people, with more households coming into scope for the benefit cap, which is up to the equivalent of a £28,000 salary, ensuring fairness for taxpayers whilst providing a strong safety net to support the most vulnerable.”