Welfare reform: benefits cap would reduce payments by £83 a week

House of Lords to vote on bill that would see 20% of households that fall in criteria lose over £150 weekly.

•    Patrick Wintour, political editor
•    guardian.co.uk, Monday 23 January 2012
http://www.guardian.co.uk/politics/2012/jan/23/welfare-reform-benefits-cap-payments


A total of 67,000 households – 310,000 individuals – will have their benefits reduced by an average of around £83 per week as a result of the government's benefit cap due to be voted upon by the House of Lordson Monday, according to updated research published by the Department of Work and Pensions.
Nearly 20% of those households losing benefit will lose more than £150 a week.

There will be a transfer from these households of £290m in 2013/14 and £305m in 2014/15. The figures come in an impact assessment published by ministers.

The Labour party has said it supports the principle of a cap, but not the way it is being implemented.
It is the first time the government has published such detailed survey data on the impact of the cap, especially the impact in terms of different regions.

As expected, families in London are worst affected by the cap due to high rents – 54% of affected households are in Greater London. The shares of other English regions are all less than 10%, with the south-east having 9% (6,000) and the north-west 6% (4,000).

Ministers are still looking at transitional arrangements and government sources were stressing it would not be expected that families with children in important stages of their school term, such as exams, would be required to be uprooted.

Such concessions are unlikely to satisfy Liberal Democrat rebel peers, such as Lord Ashdown.

Justifying the cap, the impact assessment states: "Spending on welfare increased by 45% in real terms in the decade to 2009-2010. In that year, the government spent £192bn on welfare payments, compared with £35bn on defence, £50bn on education, and £98bn on health.

"The state can no longer afford to pay people disproportionate amounts in benefit each week in welfare payments, sometimes in excess of what someone in work may take home in wages".

Iain Duncan Smith has defended the government's plans to cap the benefits paid, insisting families would not be "plunged into poverty" as a result of the proposed £26,000 annual limit.

Speaking before Monday's Lords vote on the measures, the work and pensions secretary also denied the £500-a-week cap would lead to an increase in child poverty, adding: "We just don't believe that that's going to happen."

It has emerged that Ashdown will join Church of England bishops and other rebel Lib Dems by voting against the proposals unless greater measures are put in place to ensure children living in poverty are protected.

However, ministers appear determined to ride out the opposition, believing there is strong public support for their plans to curb a "benefits dependency culture" and "make work pay".

Duncan Smith told BBC Radio 4's Today programme that the plans would not provoke a rise in either child or adult poverty. "Our department does not believe that you can directly apportion poverty to this particular measure," he said.
"At £26,000 a year, it's very difficult to believe that families will be plunged into poverty."