It is morally and practically right to cap welfare payments

Jan 23, 2012

But what about recouping the billions paid to families earning ABOVE the national average?

THE LORDS will vote tonight on coalition proposals to impose an annual cap of £26,000 on state benefits received per household. This figure equates to Britain’s average weekly family wage. The cap will apply only to the jobseeker's allowance, income support, housing benefit, child benefit and child tax credit. Church of England bishops fear the consequences for innocent children. A poll shows 69 per cent of the public support the benefit cap – but are they aware of the alternative savings that could be made if other benefits to above-average earners were tackled instead?

The right choice

Iain Duncan Smith's "plans for welfare reform... are essential for putting Britain's public finances on an even footing in the long term," says an editorial in The Sunday Times, because he "is saying work has to be a better option than idleness".

The Daily Telegraph agrees, noting that "the fiscal argument here – that the welfare bill is climbing further beyond affordability – is not even the strongest part of the case. It is a simple moral point, grasped by the vast bulk of the population: paying people more than the average wage to remain on benefits is insidious."

Surprisingly perhaps, these two voices are joined by that of The Independent. The paper acknowledges that there may be some "hard cases", such as those living in "expensive areas" like London, "who may have to move", but "on the basic principle - that no one who is able to work should be better off out of work than in it - there should be no compromise."

A popular reform

Tim Montgomerie of Conservative Home says that a YouGov poll which found 69 per cent support for the benefits cap shows that "welfare reform is the most popular part of the coalition's programme". Indeed, benefit and immigration caps "are our political cavalry as we raid Ed Miliband's heartlands, one senior Tory tells me”.

And Mary Ann Sieghart in The Independent has a warning on this point for Ed Miliband who, as The Mole points out today, has been strangely silent on the issue. "In government, Labour's uncritical admiration of bankers and its generosity to benefit claimants made it look as if it were on the side of the very rich and the very poor," says Sieghart. If Ed Miliband is really on the side of the "squeezed middle, he should uncritically support the benefit cap and ask his peers to do the same."

The risk to children

While the Labour party tries to decide whether it supports the cap or not, the main opposition to the bill is coming from Church of England bishops and other religious leaders, who wrote to The Sunday Times yesterday to voice their unease that "although the cap is targeted at promoting fairness between working and non-working households, evidence shows that it will hit children ten times harder than adults”.

The Daily Mail describes this as an "inflammatory claim", noting that "their utterly misguided view" never extended to helping the poor when they were living way beyond their means during the last Labour government.

There is an alternative...

The argument that these changes are needed to help balance the books are fallacious, says Tim Leunig in The Guardian. "Britain is not poor. In only five years of our history have we ever been richer than we are today. The savings from the cap are very small – £270m."

Instead, Leunig argues, the Government should be looking at the £53bn paid in other benefits not covered by this plan to families who earn above the average income. Leunig quotes Neil O’Brien, director of the think-tank Policy Exchange, who wrote in 2010 that 25 per cent of incapacity benefit goes to those on above average incomes. Similarly, they receive 40 per cent of all disability living allowances and 13 per cent of tax credits.

Sign up for our daily newsletter