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Poorest households will be hit hardest by benefit changes, Whitehall admits Poorest households will be hit hardest by benefit changes, Whitehall admits
(about 3 hours later)
Britain's poorest households will be hit hardest by government plans to limit rises in working-age benefits to 1% in a bid to save £3.1bn by 2016, according to a Whitehall assessment rushed out shortly before MPs debated a controversial welfare bill. Britain's poorest households will be hit hardest by government plans to limit rises in working-age benefits to 1% in a bid to save £3.1bn by 2016, according to a Whitehall assessment rushed out shortly before Tuesday's controversial welfare bill debate.
As David Miliband signalled a possible return to the political frontline by attacking the government plans as "rancid" – while accepting the overall level of cuts – the Department for Work and Pensions admitted that households "further down the income distribution" would suffer the greatest loss of income. As Labour's David Miliband signalled a possible return to the political frontline by attacking the government plans as "rancid" – while accepting the overall "envelope" on benefits and tax credits – the Department for Work and Pensions (DWP) admitted that households "further down the income distribution" would suffer the greatest loss of income.
The government's impact assessment was published at midday, shortly before MPs debated the welfare benefits up-rating bill, which is designed to ensure that in-work and out-of-work benefits will be increased at the same rate as public-sector pay. Pensioners and disabled people will be excluded from the change. Until now benefits have increased in line with inflation. Iain Duncan Smith, the work and pensions secretary, launched a strong defence of the plans which were designed to cut the deficit which be blamed on Labour which had frittered away money "like drunks on a Friday night".
At the end of a five-hour debate, Nick Clegg suffered one of the biggest rebellions he has faced when the former Liberal Democrat leader Charles Kennedy led six Lib Dem MPs in voting against the second reading of the bill. The bill was passed by 324 to 268 – a government majority of 56. But Duncan Smith showed he remains at odds with David Cameron when he gave a strong hint that he would like to see universal benefits for pensioners, such as the winter fuel allowance, abolished at the next election. He told BBC Radio 4's Today programme: "The prime minister said they wouldn't be changing anything at all in this parliament. If there are going to be any changes made as a proposal, those are the sort of changes that have to go into a manifesto but you'd have to be talking about those in advance."
Sarah Teather, the former children's minister who was one of the rebels, attacked her Tory coalition partners, who have spoken of unemployed people idling on benefits. "A fissure already exists between the working and the non-working poor. Hammering on that faultline, with the language of 'shirkers and strivers', will have long-term impacts on public attitudes. It is an open secret at Westminster that Duncan Smith believes the government's priorities have been skewed after Cameron gave a commitment during the election to maintain the allowances. No 10 and DWP sources made clear that Duncan Smith accepted Cameron's pledge and that it was to early to speculate on the manifesto for the 2015 general election.
"That fragmentation of society is, for me, the spectre of broken Britain. It is one we should worry about hastening at our peril." Means testing universal benefits for the elderly would go some way to covering the savings made by limiting rises in working-age benefits to 1% – below the rate of inflation. The winter fuel allowance alone cost £2.1bn last year. Means testing it could save £1.5bn a year, according to a CentreForum thinktank.
But similar Labour attacks on the government were blunted when the Tories unearthed a speech by Liam Byrne, the shadow work and pensions secretary, in which he spoke of "shirkers". Byrne told the Labour conference in 2011: "Let's face the tough truth – that many people on the doorstep at the last election felt that too often we were for shirkers, not workers." Pensioners and disabled people will be excluded from the latest changes which are designed to ensure that in-work and out-of-work benefits will be increased at the same rate as public sector pay. Until now, benefits have risen in line with inflation.
In his speech to MPs on Tuesday, Byrne seized on the government's impact assessment, which highlighted how the poor would suffer the greatest hardship. It says: "It is estimated that around 30% of all households will be affected. The majority of working-age households in receipt of state support will be affected by this policy, with an average change of around £3 a week compared to CPI up-rating. The former Liberal Democrat leader Charles Kennedy led a group of Lib Dem MPs who registered their unease with the bill. Kennedy formally abstained by voting for and against the bill's second reading. Four Lib Dem MPs, including the former children's minister Sarah Teather, voted against the bill which was passed by 324 to 268, a government majority of 56.
"Households towards the bottom of the income distribution are more likely to be affected and have a slightly higher average change because they are more likely to receive the affected benefits." Teather attacked her Tory coalition partners, who have spoken of unemployed people idling on benefits. But similar Labour attacks on the government were blunted when the Tories unearthed a speech in 2011 by Liam Byrne, the shadow work and pensions secretary, in which he spoke of "shirkers".
Byrne told MPs the government had shown "contempt" for parliament by publishing the impact assessment at midday. "It makes radically different assumptions to the policy costings that were set out by the chancellor last year," he said as he contrasted the £1.9bn annual savings from the cuts with the £3bn-a-year tax cut for higher-rate taxpayers. In his speech to MPs, Byrne seized on the government's impact assessment, which highlighted how the poor would suffer the greatest hardship. It says: "Households towards the bottom of the income distribution are more likely to be affected and have a slightly higher average change because they are more likely to receive the affected benefits."
David Miliband highlighted the claim by George Osborne in the autumn statement last month that the bill was designed to tackle the high level of benefits paid to people "still asleep, living a life on benefits" as hard-working neighbours leave for the office. The former foreign secretary described the bill, which he said would take five times as much from poor and low-income families as from the richest in Britain, as "rancid". Byrne told MPs: "It makes radically different assumptions to the policy costings that were set out by the chancellor last year," and he contrasted the £1.9bn annual savings from the cuts with the £3bn-a-year tax cut for higher-rate taxpayers.
Miliband said: "The truth is that this rancid bill is not about affordability. It reeks of the politics of dividing lines that the current government spent so much time denouncing when they were in opposition in the dog days of the Brown administration. David Miliband highlighted the claim by chancellor George Osborne in the autumn statement last month that the bill was designed to tackle the high level of benefits paid to people "still asleep, living a life on benefits" as hard-working neighbours leave for the office. He described the bill, which he said would take five times as much from poor and low-income families as from the richest in Britain, as "rancid".
"It says a lot that within two years they have had to resort to that dividing-line politics. We know the style: you invent your own enemy, you spin your campaign to a friendly newspaper editor, you 'frame' the debate. But the enemy within in is not the unemployed; the enemy within is unemployment." The former foreign secretary sparked speculation that he may be eyeing a return to a frontline role when he said Labour should accept it made mistakes in government and he accepted the government's overall "envelope" in a key area of the public finances.
The former foreign secretary sparked speculation that he may be eyeing a return to a frontline role when he said that Labour should accept it made mistakes in government and said he accepted the government's overall spending totals. "The government themselves have projected the total cost of all benefits, all tax credits and all tax relief for the next few years, and I am happy to debate priorities within that envelope. I will take the envelope that they have set, but let us have a proper debate about choices, not the total sum – a priorities debate, not an affordability debate." "The government themselves have projected the total cost of all benefits, all tax credits and all tax relief for the next few years, and I am happy to debate priorities within that envelope. I will take the envelope that they have set, but let us have a proper debate about choices, not the total sum – a priorities debate, not an affordability debate."
Iain Duncan Smith, the work and pensions secretary, accused the last government of "buying votes" by extending tax credits. "Labour spent taxpayers' money like drunks on a Friday night, with no care or concern for how effective it was," he said. Ed Miliband told the Mirror the door remained open for his brother, who he defeated to become Labour leader, to return to the frontbench. He said: "It was a bruising leadership contest and as time goes on that sort of recedes and that's good for our relationship. But I wouldn't take it as indication about a change in his view he's not coming back to the shadow cabinet, but the door is open."