Benefits Cap Vote On George Osborne's Plans

The Government has insisted capping benefits at 1% for the next three years is vital as MPs prepare to vote on the controversial plans.

The Work and Pensions Secretary told Sky News workers would struggle even more if welfare was not slashed because taxes would have to rise.

Iain Duncan Smith condemned Labour as "pathetic", "unrealistic" and "ridiculous" over the party's decision to oppose the three-year cap.

"We have to still continue to try and tackle the deficit left for us by Labour which is fuelling huge borrowing and will cost taxpayers enormously unless we get it under control," he said.

"It is also about trying to do it in a way that is fair to those who are in work and are paying the taxes for those who are on welfare.

"The reality is they have seen their welfare payments rise far faster over the last six or seven years than anybody in work."

The Welfare Uprating Bill to sever the link between benefits and inflation, proposed by Chancellor George Osborne last month, will be voted on in the Commons this afternoon.

The move will hit jobseeker's allowance, employment and support allowance, income support, elements of housing benefit, maternity pay, sick pay and some tax credits.

It is projected to save £3.7bn from the welfare bill but Labour oppose it, citing analysis that shows seven million working households will lose an average of £165-a-year.

George Osborne's 1% cap is opposed by Labour's Ed Balls (right)

Shadow chancellor Ed Balls said: "While millionaires get a tax cut, seven million striving working families are paying the price for David Cameron and George Osborne's economic failure.

"The best way to get the benefits bill down is to get the economy growing and people back to work, not hit striving families."

The Opposition has now tabled an amendment calling for the Bill not to get a second reading and pushing its own plan for a compulsory jobs guarantee for the long-term unemployed.

But Mr Duncan Smith called Labour's language about strivers a "nonsense".

"They have punished strivers over the years through higher levels of taxes and this deficit is punishing those who are working, trying to get by and provide for their families," he said.

"This is not an easy decision. We have to cut the deficit otherwise we will go on borrowing more and more money and taxpayers in work will find life more difficult as their taxes rise."

Labour was "a pathetic opportunistic group who spend their time trying to pretend to people there are soft options out there", he added.

The vote this afternoon will also expose some tensions within the coalition. Former Lib Dem minister Sarah Teather has already said she will vote against the Government.

In a reflection of the concerns of many Lib Dem activists, the ex-children's minister said the cap would make already serious levels of child poverty "significantly worse".

She also hit out at Tory ministers for seeking to make the issue one of "scroungers" versus "strivers" - accusing Mr Osborne of indulging in "playground politics".

Deputy Prime Minister Nick Clegg agreed on Monday that it was unhelpful to single out the "undeserving poor".

Analysis by the respected Institute for Fiscal Studies (IFS) suggests half of working-age households with someone in work will be hit in some way by the cap.

It predicted the average loss would be £165-a-year for seven million families, compared to around £215 for the 2.5 million workless households affected.

The think tank also pointed out that the poorest in society would then be at risk of being left even further behind if inflation started rising.

Mr Duncan Smith said the IFS figures only reflected the benefits cap and claimed working families were around £125 better off each year once the income tax threshold rise was factored in.

But the cap has also sparked criticism from groups representing children, the disabled and parents who warn about the effects of the squeeze.

Children's Society chief executive Matthew Reed said a nurse with two children would lose £424 a year by 2015 and an Army second lieutenant with three children £552 a year.

"Many more will struggle to pay for food, heat their homes, and provide other basics for their children as they find it increasingly difficult to keep up with rising prices," he said.

The Child Poverty Action Group said it was a "poverty-producing" measure that hurt the most vulnerable and "cuts them loose from the cost of living and the mainstream of society".

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