The Labour leader said that the party would introduce a limit on the ‘structural’ elements of welfare spending, such as Housing Benefit and pensions payments, which tend not to fall when an economy grows.
Outlining a number of policy changes in a speech in London today, Miliband said that the cap would help the government better plan its future spending.
He said it was ‘right’ to separate some of the short-term fluctuations in benefits from the underlying costs to ensure that the system was ‘sustainable’.
The proposal follows Chancellor George Osborne’s announcement in the Budget that he would examine limiting Annually Managed Expenditure measure of benefit payments in the Spending Review later this month.
Miliband said Labour would ‘look at’ any proposals from the government.
He added: ‘In particular, they are right we need to be able to separate the short-term costs of social security – those that come from immediate downturns in the economy – from the big, long-term causes of rising spending that should be within a cap, like housing costs and structural unemployment.’
Measurements against the cap would alert the government to unexpected increases in social security spending, and ensure that government policy was set to keep the budget within the limits, he added. ‘What governments should be doing is looking three years ahead and setting a clear limit within which social security would have to operate.’
However, Miliband did not say which benefits might be cut if the spending cap was looming close. He added that the policy would ‘consider’ how to treat the impact of the reform on the ageing population.
Miliband also announced that Labour would introduce a ‘radical devolution’ of control over Housing Benefit to local government.
Currently, Housing Benefit is administered by councils with funds provided by central government, and individual recipients have to find homes from landlords.
Miliband said that six Labour-run councils – Lewisham, Liverpool, Leeds, Manchester, Sheffield and Birmingham – have asked for the power to negotiate with landlords on behalf of all Housing Benefit recipients in their area, to make savings on individual deals.
Labour would empower councils to negotiate large-scale housing deals with private landlords and reinvest and savings in housebuilding, he said.
