Battle over plan to cap benefits ahead of Commons vote

Cash Increases in benefits have cost £6.3bn since the start of the 2008 recession, Iain Duncan Smith says

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It is unfair for benefits to rise at a faster rate than wages, the work and pensions secretary has said ahead of a key Commons vote on capping benefits.

Figures highlighted by Iain Duncan Smith show jobless benefits rose 20% in the last five years, compared with an average 12% rise in private sector pay.

He said benefits should no longer automatically increase with inflation.

But Labour opposes the cap and said jobseekers allowance had failed to keep pace with wages over the past 10 years.

MPs are due to debate legislation on Tuesday which is designed to break the link between benefit rises and inflation.

Instead there will be a three-year cap of 1% - which is below the expected rise in the cost of living - on most working-age benefits and tax credits for three years from 2013/14.

Child benefit, housing benefit and universal credit will be capped for two years from 2014/15.

Labour, which will fight the 1% cap, says that jobseekers allowance has risen by 32% over the past decade, whereas wages have gone up by 36%.

'Tightening belts'

These are not new figures from either the government or the Labour Party.


The figures are complex but the government's central argument is simple.

Ministers ask: why should benefits rise quicker than wages?

And they are relishing the row.

They think it leaves the opposition arguing against the interests and instincts of "strivers" - or hard-working voters.

Labour says those strivers will be hit too.

They cite a think tank report saying more than two-thirds of working-age households affected by the policy are in work.

Before long the debate will come to the House of Commons.

But both sides know it's vital for them to persuade the public at large that they have got this right.

BBC political correspondent Ross Hawkins said: "Both sides know it's vital for them to persuade the public at large that they have got this right."

Chancellor George Osborne told MPs in his Autumn Statement last month that the incomes of those on out-of-work benefits had risen "twice as fast as those in work" over the last five years.

Mr Duncan Smith said that working families had been tightening their belts after years of pay restraint while watching benefits rise - and that, he said, was not fair.

Increases had cost the taxpayer £6.3bn since the start of the 2008 recession, he said.

"The welfare state under Labour effectively trapped thousands of families into dependency as it made no sense to give up the certainty of a benefit payment in order to go back to work.

"This government is restoring fairness to the system and universal credit will ensure it always pays to be in work."

Shadow work and pensions secretary Liam Byrne said cuts to tax credits had pushed millions of working families into poverty and now meant thousands of part-time workers were "better off on benefits".

'Not justified'

Mr Byrne told BBC Radio 4's The World at One: "The lion's share of the savings from this bill will actually come from people's tax credits - on top of the £14bn that has already been carved out of tax credits, this bill is going to take about another £4bn out.

"Now that's going to hit hard-working people very hard and at a time when you're giving a £40,000 tax break to Britain's millionaires, that just doesn't seem justified."

He said Labour would reverse the cut in the top rate of income tax from 50p to 45p.

But Conservative Party chairman Grant Shapps told the same programme the top rate tax cut was a "red herring" and pointed to the removal of millions of people on lower pay from income tax.

He said taxpayers should not feel that they are having to pay for people on benefits to get a higher increase than people actually working.

"This is an argument about fairness and what Labour need to work out is if they're going to say: 'Well, we don't agree with this, we think that these benefits should carry on going up twice the speed of average earnings'. That's fine. How are they going to pay for it?"

As tensions rise ahead of the vote next week, Lib Dem leader and deputy PM Nick Clegg also entered the debate, telling The Times that Labour was "learning the tricks of opposition" but "to oppose everything is to offer nothing and the country will not be duped".

He said opposing the 1% benefits cap meant Labour "believe welfare claimants should see a bigger rise than the 1% that public sector workers will get on their wages - which they support".


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  • rate this

    Comment number 481.

    In a perfect world everyone would have a great job they loved and a great wage/standard of living.. we aren't in a perfect world.. I spent all last year out of work (claimed no benefits as we could just about get by on my wifes wages but we didn't go out, had no holiday etc etc..). The Gov. can't magic jobs or more money. Bottom line is you have to do what you can to get through its not Disney !

  • rate this

    Comment number 480.

    Is the Tory morality this: you only get what you work for?

    If so all wealth not earned by the current owners hard work shoud be used by the government for benefits to the poor. And "work" means 8 hours a day of effort that exhausts your body and mind, not picking up the phone to your broker once a month to see how the pile is growing.

    Tories; You can't have it both ways!!!

  • rate this

    Comment number 479.

    While everyone is obsessing about the bottom quartiles relative poverty and where it is derived from , the far higher wage inflation that has occurred in the top quartile - which is all profit derived from spending has continued to outstrip both benefits and wages in the bottom end.

  • rate this

    Comment number 478.

    Just a thought,maybe the people who started this problem (bankers gambling any all the money). Should be forced to 'pay back to society'.
    I think this will be the only way they will ever be taken seriously or trusted again.
    What about getting the lovely bankers to pay for real training old fashioned ,apprenticeships .Leading to real jobs after a few years training. (Just let me dream).

  • Comment number 477.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • rate this

    Comment number 476.

    Would sonebody please explain to mr Duncan-Smith what it is like to live in the real world especially if you are in any way disadvantaged. Mr D/S was born into a privelieged family, spent many years in an army environment where he didn't even have to think for himself, and finally he is enjoying a very cossetted life (at our expense) as an MP! the man is an absolute disgrace & should be removed!!

  • rate this

    Comment number 475.

    Tying blame the low paid,unemployed,sick & disabled again your disgrace,when most us know it the government capping or freezing public sector wages,& the tories M8s private sector bosses & owners paying below living wages.While Smith & MPs like U scrounging of the country with outrageous expenses claims what was it £90,000 in 2009 Smith for 6 months work

  • rate this

    Comment number 474.

    I think scrap all benefits! If people want money they should be given a temporary job by government, it's better to pay someone to do some work that benefits us all than sit at home making everyone feel angry. If you don't want to work... starve

  • rate this

    Comment number 473.

    No one has mentioned the disabled benefit, (no one dares) up again this year, with a Christmas bonus for all, anyone working get a bonus?

  • rate this

    Comment number 472.



    Milk 4 pints 99p

    Beans 34p

    Loaf of bread 49p

    etc etc.

    Don't buy brands and don't pay for million £ bonuses via those brands.

    453.Flabby Pandas

    As he IDS, beats his teddy every night sobbing "why why wasn't I prime minister"

  • Comment number 471.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • rate this

    Comment number 470.

    I notice Labour failed to point out that it was during their period in control that job seekers had failed to keep pace with wages
    But, now that the Tories want to change it they are up in arms. what a joke.

  • rate this

    Comment number 469.

    I would like to see the establishment of a wage ombudsman. There is too much opportunity for business to pay minimal wages to skilled or semi-skilled workers, simply because they need a job. If the salaries/wages attached to all advertised vacancies went through an independent ombudsman, it could be deemed to be fair, taking into account regional adjustments.

  • rate this

    Comment number 468.

    The other part of the problem is the lack of widespread home ownership for the unemployed and working poor. The way to square the circle is to provide bricks and morter and allow the poor to build their own houses and houses for the working poor. Paying people money to be idle with benefits is just stupidity on a grand scale. It can be done, in Scandinavia 95% of homes are in private ownership.

  • rate this

    Comment number 467.

    IDS is trying to turn the working poor against the jobless poor. The fact is life is going to get very hard for both, and IDS is hoping we're not intelligent enough to realise that the real people we should be angry with is the government and their rich friends. We need more full time jobs with living wages, and until we have enough of them it's no use just saying we need to make work pay.

  • rate this

    Comment number 466.

    2 Hours ago
    Can gas, electric and fuel increases be limited to inflation as well.
    No, Windmills & Solar Panels require a rebuild the National Grid, that is expensive, then we pay rather large subsidies for the Windmills & panels to be installed and run. That's a major reason why you are paying through the nose for energy.

  • rate this

    Comment number 465.

    and do you know the funniest

    They are stopping the child benefit where a single earner earns more than 55k but:

    1. A couple earning 100k combined will keep
    2. If you own a limited company and use tax avoidance schemes you will keep (most MP's have these)
    3. If you are married to an EU worker paid from EU you will still keep.
    4. If an immigrant and never paid tax in UK you still keep.

  • rate this

    Comment number 464.

    Vote Labor!!! Gimme Gimme Gimme!!!! Anyone with more than me is evil!!! Gimme Gimme Gimme

  • Comment number 463.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • rate this

    Comment number 462.

    "jobless benefits rose 20% in the last five years, compared with an average 12% rise in private sector pay" - but not executive or bankers pay. Both well exceed the 12%.

    @410. bekki - you don't say if she is on benefits or not, nor do you say if she receives CSA or has a boyfriend - do you know? Whilst I sympathise with your situation, more information would have meant more anecdotal value.


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