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 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.
More about this:
More from us
- Child benefit changes: how will you be affected?
- Impose a death tax to pay for Dilnot care reform, says MP
- Pensioners are getting wealthier, but rising costs remain a threat
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 firstname.lastname@example.org to your safe senders list so we don't get junked.
Latest from Investment Basics