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March 29, 2014 / politicsbitesize

The Benefits Cap

Poverty07A study conducted by Ken Coates and Richard Silburn in the 1960s in the St Ann’s area of Nottingham revealed the plight of the in-work poor. Fifty years on government research reiterates their findings, yet a vote in the Commons on Wednesday saw an overwhelming majority of MPs vote to cap in-work benefit payments.

The vote followed on from an announcement by the Chancellor, George Osborne, in his Budget Speech last week that the amount the government was spending on welfare needed to be restricted. A cap of £119.5bn was approved by 520 votes to 22 and will come into force in 2015. Eleven Labour backbenchers, including Diane Abbott and Tom Watson, voted against the plan, but the rest of their party supported the new measure.

The cap includes benefits such as pension credits, severe disability allowance, incapacity benefits, child benefit, both maternity and paternity pay, universal credit and housing benefit. Jobseeker’s Allowance and the state pension are excluded.

The Work and Pensions Secretary, Iain Duncan Smith, told the BBC that the cap would increase the government’s accountability when it comes to doling out benefits payments.  Under the proposed system the government would have to set a limit at the beginning of each Parliament that was in line with inflation, and would have to make cuts in one area if it wanted to spend more in another area. Furthermore, if the limit was likely to be breached, ministers would be required to explain why and get approval to raise the limit from MPs in a vote.

However, opponents of the cap fear that the measure will push more working people and families into poverty. Save the Children warned that the welfare cap would push 345,000 children into poverty in only four years. Research by Landman Economics for the charity, ‘found that £3 billion of savings would be needed for the Government to stay within the cap’. And that the pressure would fall on the in-work benefits that parents rely on to make ends meet.

Will Higham, Save the Children’s director of UK poverty, said: ‘Parties need to explain how they will work to improve wages and welfare to ensure that work pays. Otherwise, the vote will become a straitjacket, binding future governments from taking action to stem a rising tide of child poverty.

One of the Labour backbench rebels, Diane Abbott, stated that, ‘this is not a game, this is about people’s lives… [They] are not to be a matter of short-term political positioning.’ She went on to say that there is a need to tackle the ‘root causes’ of poverty, such as low wages, youth unemployment and the increase in part-time workers. A living wage for all and the scrapping of zero hours contracts would be a good place to start!

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