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Government gets backing on 1% benefits rise

Wednesday, January 9 2013

Accounts

MPs have voted to back the government’s plans to limit the rise in working-age benefits to 1% annually – a rise which is more in line with the kind of increases in wages that workers have seen in recent years.

The majority of MP’s voted in favour of the Welfare Benefits Up-rating Bill, meaning the legislation will get a second reading.

The plan, which limits rises in most working-age benefits to 1%, is aimed at reducing the deficit by slashing £5bn from the welfare bill over the next five years, as well as restoring fairness to the benefits system by ensuring that works always pays.

Ministers say the cap is needed because it is unfair that benefits have been rising twice as fast as wages during recent years of austerity. Labour voted against the legislation indicating that they would rather borrow to fund benefits going up faster than wages.

Speaking about the proposed reforms, Work and Pensions Secretary Iain Duncan Smith emphasised that since the beginning of the recession incomes for those in work have risen by about 10%, whilst benefits had risen by about 20%, and that the Government’s aim was to " get that back to a fair settlement"