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Govt caps annual benefit rises at 1%

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09/01/2013
The government has won a key parliamentary vote on plans to cap benefit increases to 1% for the next three years.

MPs rejected a Labour attempt to block the plans by 328 votes to 262 after five hours of debate, the BBC reports. However, four Liberal democrat MPs joined Labour in voting against the plans.

Previously benefits have increased in line with inflation, and were set to go up by 2.2% in April. The government said this should be changed to reflect the 1% cap on public sector pay rises.

It will apply to working-age benefits such as jobseeker’s allowance, employment and support allowance and income support. Elements of working tax credits and child tax credit will also be affected.

Business secretary Vince Cable said the welfare budget could not be “insulated” from necessary spending cuts.

The BBC reports Cable said benefit recipients had done “relatively well” in recent years in comparison to working people on low incomes, many of whom who have seen their wages frozen and incomes fall in real terms.

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