Universal Credit: The One Percent Debate

MPs will debate and vote this week on the controversial welfare benefits uprating bill. The bill proposes that benefit rises over the next 3 years are capped at 1% rather than staying in line with inflation. The CPAG has published a report on the uprating bill; “Double Lockout Bill” which outlines “How low income families will be locked out of fair living standards”. The executive summary of the report states “the bill creates a double lockout: it locks out the workers, jobseekers, carers and disabled people receiving the affected tax credits and benefits from a link with either prices or earnings. It cuts them loose from the cost of living and the mainstream of society. CPAG contends that the policy of real terms welfare downrating will also increase absolute and relative child poverty, with serious consequences for large numbers of children, their families and indeed for broader society.”

Labour will vote against the cap and shadow Chancellor Ed Balls stated in a recent interview  “There are people looking for work, who currently can’t find work because the economy is in a bad state. “These aren’t the feckless, the work shy, people behind curtains whilst others go to work, and these are striving people. And why should they see their incomes cut while our Prime Minister at the same time is cutting taxes for the richest people. Where is the fairness in that?

“In the last few years benefits have gone up by inflation, and it has been a principle of our welfare system to stick with that. And it is a tough time, but people who are seeing their wages under pressure are the same people who now see their tax credit cut in real terms.”

The Chancellor, George Osborne sees things differently, and illustrated this with  “the shiftworker, leaving home in the dark hours of the early morning, who looks up at the closed blinds of their next-door neighbour sleeping off a life on benefits”.  Iain Duncan Smith tries to back the argument in favour of the cap by highlighting “Working people across the country have been tightening their belts after years of pay restraint while at the same watching benefits increase. That is not fair.

“The welfare state under Labour effectively trapped thousands of families into dependency as it made no sense to give up the certainty of a benefit payment in order to go back to work.
“This Government is restoring fairness to the system and Universal Credit will ensure it always pays to be in work.”

The arguments for and against a 1% cap on benefits rather than using Consumer Price Index inflation (currently 2.6%) are certainly strong from both sides of the political fence. What do our readers think? Should benefits rises be capped or should benefits rise with inflation?

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