Divisions exposed as MPs back 1% welfare cap

Wed, Jan 9, 2013, 00:00

Welfare payments in the United Kingdom will rise by just 1 per cent a year over the next three years, following a House of Commons vote last night that exposed sharp divisions between the Conservative/Lib Dem coalition and the opposition Labour Party.

Despite the defection of a small number of Liberal Democrat MPs, the Tories were gleeful that the legislation has successfully painted Labour as the “the party of the skivers”, in the words of one newspaper columnist.

The below-inflation rises could have been brought into law by statutory instrument and regulations, rather than needing a full Commons vote. But the Tory desire to marginalise Labour in the court of public opinion has been clear for weeks.

Childcare bills

The changes will affect not just those on unemployment benefit, but also the tax credits received by millions of working families who are able to claim relief if they earn above £30,000 (€37,000) – and up to £50,000 a year as long as they have high childcare bills.

However, a leading charity has already warned that half a million families living on annual salaries below £35,000 will be significantly worse off after the changes. These include 300,000 nurses, 150,000 teachers and 40,000 soldiers .

Up to now welfare cuts have been among the coalition’s most popular policies, even among strongly-supporting Labour voters.

Hardening public opinion towards benefits in the last few years is illustrated by the Labour leadership’s reluctance to defend those living on welfare. The party has instead preferred to concentrate its attention on the working poor who will lose out.


Work and pensions secretary Iain Duncan-Smith said the changes are part of “the renewal” of “a principled welfare state based on affordability, integrity and fairness”.

He said a decade of changes during Labour’s time in power had been “a poor deal for Britain’s taxpayers”.

But Labour MPs were prepared to make the arguments.

Rother Valley MP Kevin Barron, born in a mining village, strongly rejected the notion that his electorate are “the caricatures that they are being painted in here”.

The decision to hold welfare rises to 1 per cent follows decades of practice where they rose in line with inflation. But tax credits – which are now subject to the same rule – were frozen last year with little public outcry. Half of all British households with someone in work will lose out.

Seven million families with a wage earner will lose £165 in tax credits, while those on benefits will be £215 worse off in real terms, according to the Institute of Fiscal Studies.

Lib Dem secretary of state for business Vince Cable said he deprecated the “sort of language from some of our colleagues” that attacks the unemployed. But he added: “We do believe that there has to be financial discipline.”