Wednesday, 29 July 2015

Freud rejects change to calculation of cap

Welfare reform minister Lord Freud has indicated the government is not willing to change the way the proposed £500 a week cap on benefits for workless households is calculated- but has promised measures to ‘ease the transition’ for families.

The Welfare Reform Bill, currently going through the House of Lords, will replace a host of income-related benefits with a universal credit and cap total benefits at around £26,000 a year for lone parents and couples.

The cap will be based on median household earnings, but a cross party group of peers believe the cap as it stands, unfairly punishes households with families as the average income for households with families is higher.

John Packer, the Bishop of Ripon and Leeds, tabled an amendment last night (Monday) calling for a cap to be set in line with the income of working families with children. Lord Bishop Packer said this would lift 25,000 children from the cap. He said: ‘The amendment promotes fairness because it compares like with like. If we are to set a cap for families with children, that should be compared with working families with children.’

Liberal Democrat peer Lord German  said the cap would ‘punish children for the decisions of their parents.’ He said: ‘Children have little or not control over the upbringing they receive. I wonder whether the current cap , as defined here, could encourage family breakdown as families split in order to get their benefit entitlement.’

Lord Freud re-iterated the government’s belief that the cap should be set at around £500 a week.

He said: ‘Even with the limits of the cap, households will still be able to receive significant amounts of financial assistance from state welfare payments – an amount equal to the median national wage without going to work.’

Lord Freud said the bill will be flexible enough to allow governments to adapt the way the cap is calculated in the future. He also said the government will look at how the government will ease the transition of families to the new system, but would not explain further about what is being considered.

Lord Bishop Packer withdrew his amendment, and said: ‘I retain considerable disappointment in terms of moving forward in this area. There is clearly considerable disquiet among your lordships over how this is developing.’

Crossbench peer Lord Richard Best tabled amendments calling for a 26-week grace period before the cap is imposed, for housing benefit to be removed, and for homeless households in temporary accommodation to be excluded. Lord Bishop Packer moved a further amendment calling for child benefit to be excluded from the calculation of the cap.

The debate will continue tomorrow night (Wednesday).

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