Welfare cap ‘locks in austerity’

24 Mar 14
The £119bn welfare cap, announced in the Budget, ‘locks in’ austerity for millions of low-income families, anti-poverty campaigners have warned.

Chancellor George Osborne said in his March 19 statement that the cap, which comes into force in 2015/16, would cover all benefits with the exception of the state pension and cyclical unemployment benefits. It will rise, but only in line with forecast inflation, and is expected to reach £127bn in 2018/19.

‘Never again should we allow its costs to spiral out of control and its incentives to become so distorted that it pays not to work,’ said Osborne.

‘In future, any government that wants to spend more on benefits will have to be honest with the public about the costs, need the approval of parliament and will be held to account by this permanent cap on welfare.’

But Alison Garnham, chief executive of the Child Poverty Action Group, said that without corresponding action on low pay and rising living costs, ‘the Budget tries to lock-in austerity for millions of low-paid families, poor children and disabled people’.

She added: ‘Announcing a cap for social security spending without a plan to address the root causes of low pay, high rents and high childcare costs, simply forces the most vulnerable in society to pay the price for inaction.’

Others warned that the cap could shift costs to other parts of the public sector.

Mike Turley, head of public sector at consultants Deloitte, said: ‘Targeting certain benefits could add pressure to spending on education, social services, housing and policing, so the danger is that costs are simply displaced.’

But he added that the cap was an important means of tackling pressure on the public finances and the need to make a statement to Parliament if the spending limit was breached provided some ‘welcome governance’.

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