The Government’s victory in passing the Welfare Reform Bill, ensuring that no family can receive more in benefits than the average working family earns, has been welcomed by Karl McCartney, Member of Parliament for the City of Lincoln.
Under the reforms, the benefit payments that a household on ‘out of work benefits’ receives will be capped at £26,000 per year so that work always pays. Under Labour, households were able to receive up to £104,000 per year in Housing Benefit alone.
Labour have opposed this fair cap on benefits, voting to maintain a ‘something for nothing’ culture whereby some families who don’t work receive thousands of pounds more in welfare handouts than the average working family earns.
Commenting, Prime Minister David Cameron said, “Today marks an historic step in the biggest welfare revolution in over 60 years. This Government has taken bold action to make work pay, while protecting the vulnerable. Past governments have talked about reform, while watching the benefits bill sky rocket and generations languish on the dole and dependency. This Government is delivering it. Our new law will mark the end of the culture that said a life on benefits was an acceptable alternative to work.”
Mr McCartney commented, “In the City of Lincoln the average person would have to pay tax for 34 years to pay for one household to receive £104,000 in benefits a year, which could happen if Labour had their way. Why should hard working people in my Constituency have to pay taxes that allows those on benefits who are not willing to work to receive more than them? That is not fair and I am pleased that my Government have taken positive steps to ensure we live in a fairer and responsible society.
“This benefit cap shows that Conservatives are the party of fairness, standing up for hard working taxpayers. By voting against it, Labour have once again shown they are the party of something for nothing, willing to try and defend the indefensible.”
For further information, please contact Karl McCartney MP at karl.mccartney.mp@parliament.uk
Notes
· We are implementing an overall benefit cap to incentivise work. The cap, linked to weekly average earnings, will limit the amount a household can receive in benefits to £26,000 a year. On introduction, we estimate that the cap will be set at £500 per week for couple and single parent households – this is the same as £35,000 a year before tax; £26,000 after. We estimate that the cap for single adult households will be £350 per week.
· The cap is set at a fair amount. The Benefit Cap is set at £26,000 per year, this is the equivalent of a household earning £35,000 before tax. This is more than enough in benefits for households affected to find alternative accommodation if they find that they are over the cap.
· The most vulnerable are already exempt from the cap. All households where someone is receiving DLA, Attendance Allowance, PIP, or Constant Attendance Allowance will be exempt from the cap. War widows and widowers are also exempt.
· The cap provides an incentive to work by exempting households where someone gets Working Tax Credit. If anyone in a household is entitled to Working Tax Credit the household will be exempt from the benefit cap.
· Measures are in place to protect families during transition. Throughout the year, the Government will work intensively with families who may be affected by the cap before its introduction to help them move into work or to change their circumstances so that they are not affected. The Government is looking at ways of easing the transition for families and providing assistance in hard cases.
· Under Labour, households could receive up to £104,000 per year in Housing Benefit alone. In June 2010 the maximum local housing allowance rate rose to £2,000 a week which would be equivalent to receiving £104,000 a year in housing benefit assuming the individual remains in receipt of the same level of benefit for 52 continuous weeks: ‘In June 2010 the maximum local housing allowance rate rose to £2,000 a week which would be equivalent to receiving £104,000 a year in housing benefit assuming the individual remains in receipt of the same level of benefit for 52 continuous weeks. Information on housing benefit awards in June will be available in September 2010’ (Hansard, 6 September 2010, Col. 80WA).
· Someone on average earnings in the UK would have to work for 28 years to pay enough tax to cover the overall benefits of that family.
o Average UK earnings are £26,036. According to the ONS, median earnings for someone in full-time employment are £26,036 (ONS, ASHE, 23 November 2011, link).
o Someone on average earnings pays £3,712 in income tax. Based on a personal allowance of £7,475 and a tax rate of 20 per cent, someone earning £26,036 would pay £3,712 in income tax (HMRC, link).
o So it would take 28 years for someone on average earnings to pay enough tax to cover a the benefit bill of what some families got under Labour. £104,000/£3,712 = 28 years.
· Ed Miliband talked tough on welfare and fiscal responsibility…
o ‘I do think there need to be big changes in welfare and I think the most important thing is that we restore greater sense of responsibility to the, to the system… it means anybody who can work should work’ (BBC Radio 4, Today, 10 January 2012).
o ‘Spending more on one thing means finding the money from somewhere else’ (London Citizens’ speech, 10 January 2012)
· …But Labour MPs voted to oppose the £26,000 benefit cap. Labour MPs voted against the Government’s plans to cap benefits at £26,000. They voted against overturning a Lords’ amendment which would have effectively wrecked the cap (Hansard, 1 February 2012, Col. 902, link).
The figures viewed by Constituency can be seen here Constituency Figures
