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Labour to vote AGAINST Osborne's 1% cap on benefits rises which would cut 3.7bn from the welfare bill
17:01 GMT, 11 December 2012
Shadow chancellor Ed Balls said Labour would not support the cap because it hit working families as well as the jobless
Labour is to vote against a cap on rises in benefits, imposed after handouts soared at twice the rate of wages.
Shadow chancellor Ed Balls today revealed his party would oppose the 1 per cent rise planned by the government for each of the next three years.
Chancellor George Osborne announced in last week’s Autumn Statement that the Government would change the law to stop benefits rising in line with inflation, saving 3.7billion by 2016-17.
He said it was fair for people who go out to work that those on benefits like Jobseeker's Allowance were also squeezed.
Average wages have risen by around 1.4 per cent, but inflation – which has traditionally set benefit rises – is at 2.2 per cent.
Tory strategists believe the 1 per cent cap will prove popular with voters. ‘The polling shows we cannot be too tough on benefits,’ said a senior government source.
But after almost a week of refusing to say what Labour’s position was, Mr Balls told the Commons his party would vote for benefits to rise by up to 2.2 per cent instead.
‘We will look at the legislation but, if they intend to go ahead with such an unfair hit on middle and lower income working families while giving a 3 billion top rate tax cut, we will oppose it,’ Mr Balls said.
He claimed the Chancellor was making ‘striving, working families pay the price for his economic failure’.
He pointed to a study by the Institute for Fiscal Studies which found that as a result of the Autumn Statement a working family – the average one-earner couple – will be 534 a year worse off by 2015.
Under the plans set out by the Chancellor Jobseekers Allowance, Employment and Support Allowance, Income Support and Housing Benefit would rise by only 1 per cent from next April.
He insisted the government was helping those in work by raising the threshold at which people start paying tax.
Chancellor George Osborne told the Commons the plans were fair, before hosting a children's party at Number 11 Downing Street for charity Starlight
Mr Osborne told the Commons: 'Of course tax credits go to some people in work, but we are also helping those people with a personal allowance increase, and working households will be 125 better off.'
Some Liberal Democrat MPs have suggested they will also vote against the plans, branding them a ‘horrible thing to do’.
But today Lib Dem Treasury Chief Secretary Danny Alexander insisted the 1 per cent rise was more generous than some of the ‘punitive’ proposals that had been promoted.
‘The welfare system makes up over 200 billion of public spending. It cannot be immune from any effort to deal with the deficit,’ he said.