Government suffers Lords defeat over benefit cap plan

 

Baroness Tanni Grey-Thompson, Baroness Tonge and Margot James MP tell the BBC's Norman Smith what they think of the outcome

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The government has been defeated in the Lords in a vote on its plans for a £26,000-a-year household benefit cap.

Lib Dem, Labour and crossbench peers backed a bishop's amendment by 252 to 237 that child benefit should not be included in the cap.

Critics argued that imposing the same cap on all families, regardless of size, would penalise children.

The government said it was "very disappointed" and the vote "clearly flies in the face of public opinion".

Earlier the government defeated another amendment proposed by Labour to exempt people considered at risk of homelessness from the cap.

Analysis

If implemented in its current form, the government's benefit cap will save £290m next year, with 67,000 families losing on average £83 a week.

It's not a vast amount of money in the context of a welfare budget that runs to tens of billions of pounds, but its significance goes wider for the government.

First, ministers believe that they are in the same place as a significant portion of public opinion.

Second it reinforces the government's central policy aim of getting more people off benefits and into work by, they would say, encouraging a change in behaviour.

Thirdly it puts pressure on Labour, who know they can't oppose the cap outright, but have ended up having to criticise the implementation, a much less clear-cut position.

For the Lib Dems, this is difficult.

They believe their role is to soften Tory zeal when it comes to the benefits system.

Picking a fight, along with the bishops, also helps to create the fabled "definition" the party needs to secure its identity.

But if no real concessions are wrung, then they could end up looking impotent.

The annual cap would come into force for working age families in England, Scotland and Wales from 2013.

The government was defeated three times on votes on other parts of its flagship Welfare Reform Bill two weeks ago.

But Work and Pensions Secretary Iain Duncan Smith has said any defeats will be overturned when the legislation returns to the Commons.

The amendment on child benefit was put down by Bishop of Ripon and Leeds, the Rt Rev John Packer.

He said child benefit was "a universal benefit" and it was "wrong to see it as being a welfare benefit".

"It's a benefit which is there for all children, for the bringing up of all children and to say that the only people who cannot have child benefit are those whose welfare benefits have been capped seems to me to be a quite extraordinary argument."

He said the cap "failed to differentiate between households with children and those without" and child benefit was "the most appropriate way to right this unfairness".

But Mr Duncan Smith said excluding child benefit would make the cap "pointless" - as it would raise the amount families could receive to an average of about £50,000 a year.

He said he wanted to be "fair" to taxpayers on low wages, who were supporting families in homes they themselves could not afford.

Homelessness

Enver Solomon, policy director at The Children's Society, said it was "delighted" with the results of the vote, arguing it was "totally unfair that a small family with a household income of £80,000 a year receive it, yet a large family with a benefit income of £26,000 are excluded".

Welfare Reform Bill

  • Has completed its Commons stages and is now in the Report (penultimate) stage in the Lords
  • Ministers have already said they they will overturn Lords defeats in Commons
  • Unless and until agreement on differences is reached the bill is likely to "ping-pong" between the Lords and Commons

"The government must not ignore the fact that the Lords have spoken out to defend the plight of some of the country's most disadvantaged children," he said.

The Centre for Social Justice, a think tank set up by Mr Duncan Smith in 2004, said the result was "peculiarly out of line with public opinion".

Executive director Gavin Poole said: "Opponents in the House of Lords have missed a crucial opportunity to support the benefit cap, a policy which would bring about positive welfare reform."

Labour said its peers would support the bishop's amendment after their own was rejected by 250 votes to 222.

The Labour amendment would have exempted people who would be considered "threatened with homelessness" under the cap - and obliged to be rehoused by their local council.

In the Commons, Mr Duncan Smith accused the Opposition of saying they were in favour of a cap on benefits - while tabling a "wrecking amendment".

"They can't weasel their way out of it and say they are in favour on the one hand and against on the other," he said.

Labour says it supports the cap, but as it stands it could end up costing the taxpayer more if 20,000 families have to be rehoused.

'Transitional arrangements'

Benefit cap proposals

  • From April 2013, the total amount of benefit that working-age people can receive will be capped so households on out-of-work benefits will not receive more than the average household weekly wage.
  • Applies to combined income from the main out-of-work benefits - Jobseeker's Allowance, Income Support, and Employment Support Allowance - and other benefits such as Housing Benefit, Child Benefit and Child Tax Credit, Industrial Injuries Disablement Benefit
  • Exemptions for households in receipt of Working Tax Credit, Disability Living Allowance or its successor Personal Independence Payment, Constant Attendance Allowance and war widows and widowers.
  • Forecast to save £290m in 2013-14 and £330m in 2014-15.

The cap would be £500 a week - equivalent to the average wage earned by working households after tax - for families and £350 a week for single adults without children.

On Monday the government revised up its estimate of how many households would be affected - from 50,000 to 67,000, although the amount of money they would lose was revised down from £93-a-week to £83-a-week. More than half of those affected live in London.

There have been suggestions that some "transitional arrangements" could be introduced for families affected by the cap.

Mr Duncan Smith said most of those affected were people who had never worked - and had no incentive to do so because they were living in expensive properties which they would have to move out of if they lost their housing benefit entitlement.

Bishop of Ripon and Leeds, the Rt Rev John Packer: "It is wrong to see child benefit as being a welfare benefit"

He has rejected suggestions children could be pushed into poverty by the cap or that some families would be left homeless.

Former Lib Dem leader Lord Ashdown said he would vote against the plans unless there were measures to cushion the impact on those affected.

And former Lib Dem chief whip Lord Kirkwood argued that a cap allowed ministers arbitrarily to "over-ride" people's rightful benefit entitlements and insisted: "I don't think it's safe to grant ministers these powers."

The changes would affect England, Wales and Scotland. Northern Ireland has its own social security legislation, but it is expected that what is approved at Westminster would be introduced there too.

How two families' weekly welfare benefits compare

Source: Benefits totals provided by DWP; BBC calculations based on figures from Direct Gov, HMRC

Family size

Family of five Family of 12

No. families affected by policy

13,400

190

Housing benefit (based on rent in Barnet, N London)

£340

£400

Child benefit

£47.10

£140.9

Child tax credit

£157.88

£501.83

Other benefits (ESA/JSA)

£133.91

£134.27

Weekly total

£678.89

£1,177

 

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  • rate this
    0

    Comment number 937.

    the length of the comments allowed on this site is pathetic.

  • rate this
    0

    Comment number 936.

    Here's one for I.D.S you want to make welfare reforms, try closing the loophole that allows companies to abuse the welfare system by contracting some employees to 16 hours a week, knowing the rest would be made up with tax credits. every little helps eh
    As for the chief executives of publicly owned companies who award themselves huge sums of public money, cap their bonus.
    Just a thought.

  • rate this
    +1

    Comment number 935.

    Hang on......Baroness Tongue (?) said "what is public opinion anyway?" and "We in government..." Was she voted in? Nope. And Tanni Grey-Thompson, an ex-athlete? She may have an opinion, but does that allow either of these to vote down a government proposition? No it doesn't. They are not elected people and therefore, should have no power, unless they wish to be part of a public referendum.

  • rate this
    +1

    Comment number 934.

    926.
    Clarkey I'm sorry but you are looking at the effect, not the cause.
    Instead of demonising all benefits claimants, we should be looking at
    why the basic pay does not cover cost of travelling to work &
    allow workers an acceptable standard of living in comparison to benefits.
    We are currently seeing stage 2 of forcing down pay levels, increased
    unemployment was stage 1. Any ideas on stage 3?

  • rate this
    0

    Comment number 933.

    Scroungermum

    Yes times are very tough - and what? We are all in same boat. Do you just want to give up work? What if we all were so selfish? If we were all so selfish and all became scroungers, there would be no money to scrounge - because those benefits are the fruit yielded by the labour of others. Nobody has the right to wealth if not by the sweat of their own brow. Reality check

  • rate this
    +2

    Comment number 932.

    #927: It would be wholly unrealistic to make changes to tax codes retrospective - if for no other reason than it would make any form of financial planning (personal or business) impossible. The truly straightforward answer is to radically simplify the tax system and to reduce the tax burden on everyone, such that there would be neither need nor opportunity to exploit complex avoidance loopholes.

  • rate this
    +3

    Comment number 931.

    915.
    Clarkey I agree with you totally: but let us use the same level of vigor to pursue both sets of scroungers. Should we fail to be even handed with both, we will never ever have the right to say we are all shouldering the problems, or that we have a fair and just society.

  • rate this
    0

    Comment number 930.

    Those who do not work always can advise best on how the economy should work...have you noticed that?

    The rich have more right not to pay extra tax than the poor man has to whinge about benefits that proceed from the rich mans earnings. Socialism eradicates work ethic and peoples' drive for success.

  • rate this
    +1

    Comment number 929.

    923 - I do voluntary work at the hospital and in school, I cannot find paid work that gives me all the kids holidays off. I grow veg to eat!
    924 - this country IS a joke
    925 - correct, & the gov need to address this and fast. The riots were bored unemployed kids, the country's going to pot. The gov just want to sit on their ar*es handing in their expenses sheets and change nothing!

    Night all. X

  • rate this
    +2

    Comment number 928.

    #924: It can equally be said that the UK is suffering from a culture in which self responsibility and self reliance are absent and often denigrated. What is more immoral than voluntary welfare-dependency of those who expect, based on assertion of non-existent "rights", to have their wants and needs taken care of through the work of others?

  • rate this
    0

    Comment number 927.

    The answer is quite straight forward! Change the law and make it retrospective. Every law which any government makes can be made retrospective, unless it is seen to interfere with their (and I include all political parties in this) donors, benefactors and shady operators. No one earning money in the UK should be allowed to hide their earnings offshore to avoid tax investigation.

  • rate this
    +3

    Comment number 926.

    924.Dr Bob Matthews

    How is ammoral for working people to protest that some folks on benefits have a higher income than themselves, without lifting a finger or getting off of the sofa?

    Don't start name calling and using the tired old Daily Mail cliche just because people disagree with you.

  • rate this
    +1

    Comment number 925.

    @ 919. Scroungermum , glad I made you chuckle ,although I was hoping for more of a full blown belly laugh ;).
    I can see the point you are making, but perhaps you put your point across in the wrong way , yes the system is wrong and it needs changing ... but the point is that it should not be that it is more financially viable to stay unemployed than to work.

  • rate this
    -3

    Comment number 924.

    Well I knew that this wise decision by the Lords would produce venom from the Daily Mail & nasty party supporters.The UK is a disgrace, me, me, me, why is he getting more than me.The present government is playing its usual game of divide & rule and from what I've read on here, the more greedy & more ignorant are lapping it up. This country is a joke, no moral compass, no compassion, sad really.

  • rate this
    0

    Comment number 923.

    @Scroungermum
    Have you no respect for yourself or others that support you? Are you so selfish that you take take & never consider actually having to work-even if that means getting no more -or very little more than on the benefits system. My wife went back to work 3 days per week after 3rd child and although not financially better off...we work to eat. You get a sense of price from doing that.

  • rate this
    +1

    Comment number 922.

    Are these people on drugs or something? Reading Chris Grayling's remarks, i'm thinking, social cleansing.
    I D S says he has overwhelming support, Nah! " its popular and its the right thing to do" R.A.T.F.L
    you never trust anyone who says, Trust Me. " it would save something in the region of 600 m." or is that steal. If i was a cynic i'd be thinking good time to bury some bad news. Lets see.

  • rate this
    0

    Comment number 921.

    @ 912. Dr Bob Matthews, glad you agree, I hate freeloaders whether they be rich or not. The tax of those rich persons should be looked at and criminal charges bought if needed.

    Sorry about delay in reply but am now only allowed to comment here once every 10 mins. (a form of censorship methinks, pehaps they are hoping I'll get bored with the wait) 8)

  • rate this
    0

    Comment number 920.

    #912: Yes, those who evade tax must be brought to book (and I believe that one of this government's first actions was to allocate resources to HMRC to do so). However, how do you propose that those who have legally paid no more than the minimum required of them should be "made to pay and (be) prosecuted"? How can anyone be prosecuted for *not* committing a criminal offence?

  • rate this
    +2

    Comment number 919.

    Tanglewood -thank you, someone finally understood the point i was trying to make. If the gov lower the payouts and make it financially viable and NECESSARY to work, then (if the jobs are there) a heck of a lot of people would get off their bums -me included. Chris, "troll" is my new favourite word, you make me chuckle. All I'm saying is the benefit system is easy to get into but not easy to leave.

  • rate this
    +2

    Comment number 918.

    @Dr Bob Matthews,
    I realise that the rich very often evade taxes BUT I don't think the prosperous man should have to pay more than anyone else. It's wrong that we are taxed on our produce, rather than dividing cost per capita. It doesn't encourage one to prosper if you're penalised. There is no reason to tax beyond this, if the money wasn't wasted on freeloading wasters. Love....Capitalist Pig

 

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