Labour to oppose national benefit cap plan

Shadow work and pensions secretary Liam Byrne tells the BBC Labour wants a cap set locally instead of nationally

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Labour will oppose the government's plans for an overall cap on household benefits when MPs debate them next week, Liam Byrne has said.

The shadow work and pensions secretary told the BBC Labour wanted a cap set locally - instead of the government's national limit of about £26,000-a-year.

The Welfare Reform Bill returns to the Commons for debate next week - after a series of defeats in the Lords.

Ministers say they are determined to get their changes through Parliament.

And Work and Pensions Secretary Iain Duncan Smith, who is heading the government's drive to reform welfare in England, Scotland and Wales, told BBC One's Andrew Marr Show that having a regional cap - without regionalising benefits more generally - risked creating a "chaotic mess".

'Rush to judgement'

Labour says it supports the principle of a benefit cap on benefits for working-age households - but last week its peers backed a Lords amendment which would exclude child benefit from the cap.

Mr Byrne told BBC One's Sunday Politics that was because the party wanted the policy to be returned to the Commons for debate.

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.

He said the national cap of £500-a-week, equivalent to the average working household's salary, would "backfire" and it would be better to have a regional cap that "is actually going to work in practice".

Labour has argued that the plans as they stand risk pushing up the bill for the taxpayer, by making people who could no longer afford their rent homeless and entitled to be rehoused.

On Sunday Mr Byrne said a local cap would "work much better".

But he would not put a figure on what it might be and would not say whether it should be higher than £26,000-a-year in London.

Instead he said, that should be referred to an independent commission to work out, rather than politicians plucking "an arbitrary figure out of the air".

Iain Duncan Smith says the government will stick to its original plans for benefit reforms.

He said: "If you want to send a signal that you are better off in work than on benefits, wouldn't it make much more sense to have localised caps in different parts of the country because we know there are different levels of housing benefit in different parts of the country?"

But Mr Duncan Smith stressed he was determined to press ahead with his plans for welfare reform - despite six defeats in the House of Lords.

He told BBC One's Andrew Marr Show the benefit cap was "overwhelmingly popular" with voters across the political spectrum and was based on "fairness" - ensuring that it paid to work, and protecting low paid workers who were paying taxes to support the system.

He added: "I do say this to the Labour Party. If they really want a regional cap, then that must mean they want regionalising of benefits as well because you can't have one without the other.

"I'm happy to have a debate about that with them, if that's where they want to go, but you can't detach one and just say we'd like a bit of this but not the other, because that would make the whole system a chaotic mess."

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