Citywire for Financial Professionals
Share this page:
Stay connected:

Citywire printed articles sponsored by:


View the article online at http://citywire.co.uk/money/article/a649291

MPs to vote on 1% cap for working-age benefits

The government is targeting working-age benefits but will leave pensioners alone.

 

by Michelle McGagh on Jan 08, 2013 at 09:42

MPs to vote on 1% cap for working-age benefits

MPs will today vote on capping benefit rises for those able to work at 1% to ensure they do not grow faster than wages.

Typically benefits have risen in line with inflation, which currently stands at 2.7%, but those claiming working age benefits like jobseeker’s allowance, employment and support allowance, income support and elements of housing benefits will see rises capped at 1% for three years from April.

Other benefits to be included in the cap are maternity allowance, sick pay, maternity pay, adoption pay, and couple and lone parent elements of working tax credits and the child element of the child tax credit. These benefits typically rise in line with consumer prices as part of an annual assessment known as uprating.

All these benefits increased 5.2% this year and would have increased a further 2.2%, the rate of inflation as of September.

Work and pensions secretary Iain Duncan Smith said failing to clean up the ‘outrageously messy system’ would leave the UK ‘bankrupt’ and drew comparisons with Greece and Spain which have huge borrowing costs.

The coalition is keen for benefit increases to be kept at the same rate as rises in public sector pay, which has already been capped at 1%.

Duncan Smith said benefits had risen by a fifth over the past six years but incomes had only increased by a tenth over the same period.

However, pensioners will escape any cap on their benefits, such as the winter fuel allowance. The government will not cap old age benefits because the elderly have ‘less flexibility’ and fewer options to work, said Duncan Smith.

‘We are all going to be pensioners at some time. No-one is going to be demonised on my watch,’ said Duncan Smith.

Labour leader Ed Miliband has spoken out against the cap on benefits, saying it will effect a large number of working families, not just those out of work.

‘By cutting the support that working families get – and more than 60% of those affected by the changes we are voting on are working families – that is going to be handicapping and stopping working families who want to get into work and do the right thing,’ he said.

3 comments so far. Why not have your say?

Anonymous 1 needed this 'off the record'

Jan 08, 2013 at 13:38

Ed Milliband and the whole of the Labour Party and Unions should hang their heads in shame.

If Beveridge and the great reforming Labour politians after the war were alive today I am sure that they would be discussed to see their Welfare State now paying substantial benefits often thousands of tax free pounds to those in work and to fit and healthy adults rather than to the young, sick and elderly and those genuinely out of work.

Unlike New Labour and Gordon Brown Post War Labour did not have to bribe the voters with large cash hadouts to win elections.

report this

Michael Stevens

Jan 08, 2013 at 19:17

Labour motto is TAX the workers and pay all types of benefits.

Simple answer is to raise the Personal Allowance to £12,000 by 2017

So it pays to work

report this

mark jukes

Jan 10, 2013 at 16:09

Fot 20 years I was an employer in my area. Employing, mostly, part timers.

These were able bodied, all ages of people who would not work full time because they would have lost "tax credits"

Gordon's legacy (that Labour are so proud of) Encourages people to work part time and make up their wages from benefits - one of the many great Labour policies that are the stumbling blocks to reducing the deficit.

Lets see how good Duncan is at unravelling all this mess.

But dont hold your breath - even if the silent majority would totally support him - they dont have the back bone for the fight.

report this

leave a comment

Please sign in here or register here to comment. It is free to register and only takes a minute or two.

Sponsored By:

Weekly email from The Lolly

Get simple, easy ways to make more from your money. Just enter your email address below

An error occured while subscribing your email. Please try again later.

Thank you for registering for your weekly newsletter from The Lolly.

Keep an eye out for us in your inbox, and please add noreply@emails.citywire.co.uk to your safe senders list so we don't get junked.

Latest from The Lolly

Read more...

Hard acts: do fund managers suffer the Moyes effect?

by Daniel Grote on Apr 23, 2014 at 14:30

Sorry, this link is not
quite ready yet