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 421.

    Since benefits are linked to inflation, those on benefits are no better off than they were years ago.

    The stupid people are the private sector employees who moan but won't stand up for themselves. When the employer says jump, they ask 'how high?'.

    Lets all keep scrabbling for the crumbs from the rich man's table...

  • rate this

    Comment number 420.

    Provide a job,provide a fair wage,provide some hope!

  • rate this

    Comment number 419.

    lots of unemployed on here today, you are computer literate and have spare time spend it looking for work not getting annoyed on here

  • rate this

    Comment number 418.

    Tax credits subsidize big business and big business deliberately exploit this via low wages, increasing profit and shareholder dividend.

    The Tories 'claim' to support the living wage yet have no intention of increasing the minimum wage they so vehemently opposed in opposition.

    IDS is merely the panto villain, Camerons puppet and disposable.

  • rate this

    Comment number 417.

    Nonsense, benefits represent the minimum to get by on. About £3,600 a year. If you have an income of £20,000 (£65.000 for an MP plus expenses) then you have slack you can cut into.

    But at the bottom, there is simply no money to spare - unless of course you take the view that benefits are overly generous.

  • rate this

    Comment number 416.

    People, please do some research
    The 1% increase amounts to around 75p a week more
    Broadband is needed because the job centres require claimants to use their web sites for job search and box ticking - cheap broadband is a fallacy (you have to include line rental in that )
    You could queue & get it free from libraries, for my area thats a £5.60 bus ride, say 3 x week; a lot out of £70.00

  • rate this

    Comment number 415.


    The government sets the minimum wage, but how many companies could REALLY afford to pay everyone at least the minimum living wage? I'd be interested to find out, because even Starbucks didn't actually make any profits in the last few years - while you can argue this was due to creative accounting the fact is, if those numbers were worse, the Starbucks's would close and the jobs would go.

  • rate this

    Comment number 414.

    Never a truer word was said.

  • rate this

    Comment number 413.

    I agree, this is clearly a loophole in the system and we will never solve our unemployment problem until it is closed. Benefits should not be a luxury but a temporary shelter until individuals are re-employed. The culture of benefits in this country needs to change so future generations are not also trapped in the cycle of benefit dependency.

  • rate this

    Comment number 412.

    1 Hour ago

    A single teenage mother who has never worked a day in her life will get a LOT more in benefits than someone who went out to work in a factory/mill/mine every day for the last 20 years.
    Where are these factory/mills/mines you are talking about?
    I will tell you where the far east !
    Where the TORIES put them so now we scrabble for MACJOBS & fight each other.

  • rate this

    Comment number 411.

    FrankFisher wrote: "I'd like, for once, the legions of parasites who come on here demanding free money, to say THANK YOU to those of us who pay to keep them in fags and big tellies."


    How about forcing all the parasites that have lived here for generations to do the same thing?

    Or is that somehow different? Not "daily mail" enough for you perhaps?

  • rate this

    Comment number 410.

    Me and a friend live on the same street in almost identical houses, she is a single mum and has no job, I work full time. She goes out every weekend, has a 50 inch tv,iphone,new leather sofas,sky,gets her hair & nails done, has a holiday every year, redecorates the house etc I have a freecycle sofa, no tv, no hols etc commuting costs cripple my wages but without a child benefits are not liveable.

  • rate this

    Comment number 409.

    Ah the Labour Party! - so wages haven't kept up with inflation over the last 10 years? Ha Ha - make it since about 2000, & who was in power? Those cynical B's drove wages down by importing workers so they didn't have to create a Prices and Incomes policy, the very thing that destroyed the Labour Govts of the 70''s. Labour needs to change its name, they have no interest in Workers/Labour.

  • rate this

    Comment number 408.

    Years of irresponsible spending by Labour led to an over-inflated public sector and totally unaffordable welfare state. Unfortunately people in this country got used to a certain way of life under that regime and are obviously taking a big hit now that things are being scaled back to a more sustainable level. It is Labour who are to blame for letting everyone down - the mess has to be cleared up!!

  • rate this

    Comment number 407.

    Im on ESA having lost my job four years ago through ill health. I worked for 24 years. I dont smoke, drink, have Sky and take £9.50 Sun holidays in a caravan park. I go to college and volunteer. We are not all layabouts and scum. And yes, my benefits went up slightly lasy year, but then I was told I would have to find another £12 a week rent due to council cuts.

  • rate this

    Comment number 406.

    382. ScubaaCynic No i think your missing the point, its underemployment as well as unemployment, poor pay, massive immigration (to build up companies vast profits on the back of wage stagnation for the lower paid) and a real lack of investment. IDS wont tackle the real issues because he is too scared to do so, instead he goes after easy targets. Limit Migration and tackle the Liveable wage issue.

  • rate this

    Comment number 405.

    The stark future reality is lower out of work benefits & also much lower in work benefits. It is also lower average wages, which are presently decreasing but the continued excessive income increases of top 10% pervert average earnings figure to spin/promote a higher "average" figure.

    Thats the reality of UK economy earning in 2018 what it earned in 2008.
    More suffering to come, much needless.

  • rate this

    Comment number 404.

    Average pay rise of 12% in the private sector? I work in the public sector, excuse me for asking but what's a pay rise. How is it right for people on benefits (and I'm not criticising WHY people are on benefits) to be guaranteed an increase year after year whilst I have effectively had a pay cut for the last 4 years? We're all in this together? Absolute nonsense.

  • rate this

    Comment number 403.

    Oh the irony. IDS used to claim benefits. See here for the facts :

  • rate this

    Comment number 402.

    I've been unemployed and it was the worst period of my life; feeling pretty useless, downright misrable and worried sick you're going to lose everything.Then you have idiots next to you or on TV spouting ignorance with no conception of what unemployment is like, try it at Xmas when you have children.


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