MPs to vote on setting welfare cap

26 March 2014 Last updated at 09:33

MPs set to vote on setting annual welfare cap

 

The welfare cap would include spending on housing benefit

MPs are set to vote on plans to introduce an overall cap on the amount the UK spends on welfare each year.

Welfare spending, excluding the state pension and some unemployment benefits, would be capped next year at £119.5bn.

The idea, put forward by Chancellor George Osborne in last week's Budget, would in future see limits set at the beginning of each Parliament.

Labour leader Ed Miliband has backed a welfare cap but some party backbenchers are expected to vote against the plan.

The cap will include spending on the vast majority of benefits, including pension credits, severe disablement allowance, incapacity benefits, child benefit, both maternity and paternity pay, universal credit and housing benefit.

However, Jobseeker's Allowance and the state pension will be excluded.

Parliamentary vote

Under the proposed system, if a government wanted to spend more on one area of the welfare state it would have to compensate by making cuts elsewhere, to stay within the overall cap.

If the limit is breached - or going to be breached - ministers would have to explain why to Parliament and get the approval of MPs in a vote.

Mr Duncan Smith told the BBC that the cap would stop politicians in the future from saying welfare spending "was under control when it was rising".

George Osborne says governments in future must be honest about the cost of welfare spending

He insisted it was not punishing benefit claimants but was a recognition that money was "finite", adding that it would give ministers greater flexibility to adjust spending in different areas while being more "accountable" to the taxpayer for overall expenditure.

Labour has said it would introduce a three-year cap on structural spending, including housing benefits

But Mr Duncan Smith said Labour needed to explain how it would pay for its £460m pledge to reverse changes to cuts to housing benefit for additional rooms in council and social housing.

"They have to say immediately now what they would reduce in that spending to be able to afford that - otherwise they are voting to break the cap," he told BBC Radio 4's Today.

"I think there is a bit of scam going on," he added. "What they (Labour) are trying to persuade their own backbenchers is 'don't worry, we won't implement this as it stands'."

'Arbitrary cuts'

The shadow work and pensions secretary, Rachel Reeves, said Labour had plans in place to pay for its pledge to reverse what it calls the "bedroom tax" - the housing benefit changes that ministers say ended the "spare room subsidy".

She told Today that Labour was already committed to taking "tough decisions" on welfare - such as cutting winter fuel allowance for better-off pensioners.

Asked whether Labour was prepared to cut aspects of the welfare bill to stay within the cap, she said she was "confident" it would not need to because it would tackle the "root causes" of rising costs - such as low wages, youth unemployment and the number of people unable to find full time work.

"The government have failed in their approach. We would do it in different ways to the way the government is proposing to do it but we are confident that our way will control the cost of social security."

A number of Labour backbenchers are expected to rebel in today's vote.

Some Labour MPs, including Diane Abbott, are expected to defy the party whip

"We think this cap will just encourage arbitrary cuts rather than long-term policies because that will bring down welfare spending," the Hackney North and Stoke Newington MP, Diane Abbott, said.

"It's also part of the narrative to demonise benefit claimants. I don't think we should allow George Osborne to play politics with this issue, because it is people's lives."

BBC political correspondent Chris Mason said the proposed government cap for next year was, in broad terms, what the UK was already spending on those benefits.

Last summer, the government imposed a benefits cap of £500 a week for couples or single parents, and £350 a week for single adults.