Monday, 23 January 2012

BBC News - Government wins first benefit cap vote

Government wins first benefit cap vote

Live coverage from the House of Lords

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The government has won the first of several votes on its controversial plans for a £26,000 annual cap on benefits paid to families.

Peers voted by 250 to 222 to reject a Labour call to exempt people considered at risk of homelessness from the cap.

They are now debating a call by bishops to exempt child benefit from the overall cap.

But ministers said that would make the cap "pointless" - by effectively raising it to £50,000 a year.

The annual cap would come into force in England, Scotland and Wales from 2013.


If implemented in its current form, the government's benefit cap will save £290m next year, with 67,000 families losing on average £83 a week.

It's not a vast amount of money in the context of a welfare budget that runs to tens of billions of pounds, but its significance goes wider for the government.

First, ministers believe that they are in the same place as a significant portion of public opinion.

Second it reinforces the government's central policy aim of getting more people off benefits and into work by, they would say, encouraging a change in behaviour.

Thirdly it puts pressure on Labour, who know they can't oppose the cap outright, but have ended up having to criticise the implementation, a much less clear-cut position.

For the Lib Dems, this is difficult.

They believe their role is to soften Tory zeal when it comes to the benefits system.

Picking a fight, along with the bishops, also helps to create the fabled "definition" the party needs to secure its identity.

But if no real concessions are wrung, then they could end up looking impotent.

The government was defeated three times on votes on other parts of its flagship Welfare Reform Bill two weeks ago.

But Mr Duncan Smith has said any defeats will be overturned when the legislation returns to the Commons.

In the Commons, he accused Labour of saying they were in favour of a cap on benefits - while tabling a "wrecking amendment".

"They can't weasle their way out of it and say they are in favour on the one hand and against on the other."

The Labour amendment would have exempted people who would be considered "threatened with homelessness" under the cap - and obliged to be rehoused by their local council. The opposition says it supports the policy but as it stands it could end up costing the taxpayer more if 20,000 families have to be rehoused.

Shadow work and pensions secretary Liam Byrne said, if the government did not accept Labour's amendment, the party would support the amendment to exclude child benefit to avoid "another bill for council tax payers to clean up the cost of homelessness".

On Monday the government revised up its estimate of how many households would be affected - from 50,000 to 67,000, although the amount of money they would lose was revised down from £93-a-week to £83-a-week. More than half of those affected live in London.

'Relatively generous'

The cap would be £500 a week - equivalent to the average wage earned by working households after tax - for families and £350 a week for single adults without children.


  • Has completed its Commons stages and is now in the Report (penultimate) stage in the Lords
  • Ministers have already said they they will overturn Lords defeats in Commons
  • Unless and until agreement on differences is reached the bill is likely to "ping-pong" between the Lords and Commons

There have been suggestions that some "transitional arrangements" could be introduced for families affected by the cap - which applies to working age benefits.

Prime Minister David Cameron said the cap was "relatively generous": "I think this is a basic issue of fairness. It's time to call time on these excessive welfare payouts and that's what the benefit cap will do."

Mr Duncan Smith said most of those affected were people who had never worked - and had no incentive to do so because they were living in expensive properties which they would have to move out of if they lost their housing benefit entitlement.

He has rejected suggestions children could be pushed into poverty by the cap or that some families would be left homeless.

Benefit cap proposals

  • From April 2013, the total amount of benefit that working-age people can receive will be capped so that 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.

The Bishop of Ripon and Leeds, the Rt Rev John Packer, has put down an amendment that would exclude child benefit from the overall cap.

He said: "Child benefit is a universal benefit. I believe that it's wrong to see it as being a welfare benefit. It's a benefit which is there for all children, for the bringing up of all children and to say that the only people who cannot have child benefit are those whose welfare benefits have been capped seems to me to be a quite extraordinary argument."

And the former Bishop of Hulme, the Right Reverend Stephen Lowe, told the BBC if child benefit was included it would "damage those children's welfare and put potentially another 100,000 children into poverty".

But Mr Duncan Smith said excluding child benefit would make the cap "pointless" - as it would raise the amount families could receive to an average of about £50,000 a year. He said he wanted to be "fair" to taxpayers on low wages, who were supporting families in homes they themselves could not afford.

Former Lib Dem leader Lord Ashdown has said he will vote against the plans, unless there are measures to cushion the impact on those affected.

The Bishop of Leicester, Tim Stevens, said Child Benefit should be taken out of the calculation

The housing charity Shelter disputed Mr Duncan Smith's claims about the way "homelessness" is defined by it and the government. The minister told the BBC earlier: "The definition inside government and places like Shelter is that children have to share rooms. For most people who are working, their children share rooms, they would find that a strange definition."

But Shelter chief executive Campbell Robb said that was "simply not true" and the comments were creating "unnecessary confusion".

"Shelter uses the same definition of homelessness as the government, as set out in the Housing Act 1996, passed by the last Conservative government."

The changes would affect England, Wales and Scotland. Northern Ireland has its own social security legislation, but it is expected that what is approved at Westminster would be introduced there too.

How two families' weekly welfare benefits compare

Source: Benefits totals provided by DWP; BBC calculations based on figures from Direct Gov, HMRC

Family size

Family of five Family of 12

No. families affected by policy



Housing benefit (based on rent in Barnet, N London)



Child benefit



Child tax credit



Other benefits (ESA/JSA)



Weekly total



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