MPs Approve Annual Welfare Spending Cap

MPs have approved changes to the Charter for Budget Responsibility which includes an annual cap on total government welfare expenditure, following a vote in the House of Commons today (26th March 2014).

MPs voted 520 to 22 in favour of the cap which will see welfare spending limited to £119.5bn in 2015-16, rising with inflation to a forecasted £126.7bn by 2018-19.

The cap will include the vast majority of state benefits including pension credits, sickness and disability benefits, child benefit, maternity and paternity pay, universal credit and housing benefit. However, Jobseeker’s Allowance and State Pension will be excluded from the cap.


If a future government wishes to spend more on one area of welfare, they will now need to show good reason and cut spending elsewhere in order to remain within the overall cap.

Labour has come under heavy criticism for supporting the government’s welfare spending cap and a small (yet significant) number of backbenchers rebelled against the Party and voted against the cap.

One of those Labour MPs was Dianne Abbott (pictured), who accused Chancellor George Osborne and the coalition government of “playing games” with people’s lives and urged all MPs to remember this when their constituents turn to them for help as a result of the cap.

Dianne Abbott said that whilst all MPs supported the idea of cutting welfare spending, the best way of going about it would be through the introduction of a ‘living wage’, Labour’s Jobs Guarantee Scheme and building more ‘affordable homes’. She went on to say that the government’s welfare cap was “unnecessary”.

Chancellor George Osborne revealed the coalition government would introduce a welfare spending cap during his budget speech, but it was Labour leader Ed Miliband who first proposed the idea in June 2013.

A leading children’s charity has warned that the introduction of a welfare spending cap will push millions more children into poverty, and has also highlighted the importance of social security in tackling poverty in countries across the European Union, including the UK.

Responses

Gillian Guy, Citizens Advice Chief Executive, said:

“Capping only the few benefits selected by ministers means it will be the poor, sick and disabled who face having their support cut. The priority should be tackling the drivers of high welfare spending, like the dire lack of affordable homes, which increases house and rent prices and ramps up the cost of Housing Benefit.

“A guide on a limit to the cost of welfare is sensible, but leaving out large areas of spending is a mistake. A cap which deliberately targets support for the working poor and has little room for manoeuvre could put even greater pressure on low income families and has the potential to be very damaging.

“A cap has worked well in other countries when it has included welfare spending across the board and left ministers space to respond sensibly to unforeseen events. It is short-sighted to lock the cap into law and restrict Government’s ability to help people cope with economic shocks.”

Alison Garnham, Chief Executive of Child Poverty Action Group, said:

“Our economy and our society get a huge return from social security spending but the Chancellor’s cap would degrade its poverty-fighting ability by introducing rationing of basic support for children, working families and disabled people. It would tie the government’s hands on some of the most effective actions ministers can take to reduce child poverty, locking-in cuts for the poorest families who really need the same protection we’ve given pensioners.”

Bianca Todd from Left Unity said:

“This is a nasty attack by the government – and for Labour to back it is nothing short of a betrayal.

“Labour has forgotten what it’s for, and who it’s for. It is playing parliamentary games instead of standing up for the poorest people.

“The welfare cap is just a number the Tories have plucked out of the air. It does nothing to tackle the real causes of the growth in benefits spending: the austerity policies that are causing spiralling poverty.

“According to Oxfam the five richest families in Britain have more wealth than 12.6 million of us put together. We don’t need a welfare cap – we need a wealth cap.”

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