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Mark Hoban: benefits cap may be too high outside London
The Coalition’s £500-a-week cap on household benefits may be too generous for claimants in poorer parts of the country, a minister has suggested.
The Department for Work and Pensions estimated this year that up to 12,000 of the highest-claiming households on welfare were receiving more than £34,000 a year in benefits, equal to the take-home pay of an employee with a £47,000 salary Photo: GETTY
By Tim Ross, Political Correspondent
9:30PM BST 16 Jul 2013
Comment
Under new rules, an estimated 40,000 households will have their annual benefits payments limited to £26,000 in a move that the Government has said will stop families earning more on welfare than the average income from work.
Iain Duncan Smith, the Work and Pensions Secretary, has insisted his reform, which came into force this week, is pushing unemployed people to return to work.
With opinion polls suggesting a tough welfare policy is popular with voters, the Conservatives are said to be drawing up plans to cut the benefit cap after the next election by £6,000 to £20,000. Government sources said there were “no plans” to change the policy before 2015.
However, Mark Hoban, the Tory minister for work, indicated the cap may be too high in parts of the country outside the capital where wages are lower. During discussions with MPs, Mr Hoban said: “Particularly given regional wage rates, what is set at a fair level in London appears to be higher in other parts of the country.” He said the policy was about “fairness” and giving the unemployed incentives to seek work.
“It is absurd to have people on benefits taking home more than the average wage,” Mr Hoban said. The question of whether the cap should be lower outside London was “a debate for another day”, he added.
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A Tory source said ministers were not actively considering cutting the level of the cap. However, such a change has not been ruled out and it is expected to form part of the Conservative Party’s deliberations in the run-up to the next election.
Some Tory MPs want the level reduced significantly to take account of the impact of taxes on average take-home pay rates.
Julian Smith, the Conservative MP for Skipton and Ripon, said the cap could be “much lower” in parts of the country where wages were less generous, to make the policy “fairer to working people”.
Brooks Newmark, the Conservative MP for Braintree, Essex, said the public believed the cap was too generous.
“You would have to earn more than £35,000 to have that sort of income after tax,” he said. “Many people would be in favour of bringing it down to the real average post-tax pay.”
The Liberal Democrats have warned they will oppose further cuts to welfare unless pensioners’ benefits, such as the free TV licence and winter fuel payments, are targeted first. Labour has suggested a regionalised system of caps on benefits but has criticised the Government’s scheme, claiming 4,000 households will escape the new limit due to a loophole.
The opposition has also been attacked for defending benefits spending, as research suggests that even Labour supporters have hardened their attitudes to welfare in recent years.
Mark Hoban: benefits cap may be too high outside London
The Coalition’s £500-a-week cap on household benefits may be too generous for claimants in poorer parts of the country, a minister has suggested.
The Department for Work and Pensions estimated this year that up to 12,000 of the highest-claiming households on welfare were receiving more than £34,000 a year in benefits, equal to the take-home pay of an employee with a £47,000 salary Photo: GETTYBy Tim Ross, Political Correspondent
9:30PM BST 16 Jul 2013
Comment Under new rules, an estimated 40,000 households will have their annual benefits payments limited to £26,000 in a move that the Government has said will stop families earning more on welfare than the average income from work.
Iain Duncan Smith, the Work and Pensions Secretary, has insisted his reform, which came into force this week, is pushing unemployed people to return to work.
With opinion polls suggesting a tough welfare policy is popular with voters, the Conservatives are said to be drawing up plans to cut the benefit cap after the next election by £6,000 to £20,000. Government sources said there were “no plans” to change the policy before 2015.
However, Mark Hoban, the Tory minister for work, indicated the cap may be too high in parts of the country outside the capital where wages are lower. During discussions with MPs, Mr Hoban said: “Particularly given regional wage rates, what is set at a fair level in London appears to be higher in other parts of the country.” He said the policy was about “fairness” and giving the unemployed incentives to seek work.
“It is absurd to have people on benefits taking home more than the average wage,” Mr Hoban said. The question of whether the cap should be lower outside London was “a debate for another day”, he added.
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A Tory source said ministers were not actively considering cutting the level of the cap. However, such a change has not been ruled out and it is expected to form part of the Conservative Party’s deliberations in the run-up to the next election.
Some Tory MPs want the level reduced significantly to take account of the impact of taxes on average take-home pay rates.
Julian Smith, the Conservative MP for Skipton and Ripon, said the cap could be “much lower” in parts of the country where wages were less generous, to make the policy “fairer to working people”.
Brooks Newmark, the Conservative MP for Braintree, Essex, said the public believed the cap was too generous.
“You would have to earn more than £35,000 to have that sort of income after tax,” he said. “Many people would be in favour of bringing it down to the real average post-tax pay.”
The Liberal Democrats have warned they will oppose further cuts to welfare unless pensioners’ benefits, such as the free TV licence and winter fuel payments, are targeted first. Labour has suggested a regionalised system of caps on benefits but has criticised the Government’s scheme, claiming 4,000 households will escape the new limit due to a loophole.
The opposition has also been attacked for defending benefits spending, as research suggests that even Labour supporters have hardened their attitudes to welfare in recent years.
Comment