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Clegg: Benefits rise cap is vital to cutting deficit Clegg: Benefits rise cap is vital to cutting deficit
(about 1 hour later)
Nick Clegg has defended the government's plans to place a 1% cap on annual rises in working-age benefits and some tax credits until 2016.Nick Clegg has defended the government's plans to place a 1% cap on annual rises in working-age benefits and some tax credits until 2016.
Labour urged the deputy PM and his Liberal Democrat colleagues to oppose it when the Commons votes later, saying it would "leave millions worse off".Labour urged the deputy PM and his Liberal Democrat colleagues to oppose it when the Commons votes later, saying it would "leave millions worse off".
But Mr Clegg told MPs services such as schools and the NHS would suffer unless the cap was imposed.But Mr Clegg told MPs services such as schools and the NHS would suffer unless the cap was imposed.
Benefits have historically risen in line with the rate of inflation.Benefits have historically risen in line with the rate of inflation.
The House of Commons will vote at about 19:00 GMT on the Welfare Benefits Uprating Bill, which would keep the benefit rises to 1% for three years from next April. The House of Commons is debating - and will vote at about 19:00 GMT on - the Welfare Benefits Uprating Bill, which would keep the benefit rises to 1% for three years from next April.
'Compassion''Compassion'
The coalition argues this is necessary to reduce the deficit, and is fair at a time when public sector pay is being capped and salaries in the private sector are rising below the rate of inflation.The coalition argues this is necessary to reduce the deficit, and is fair at a time when public sector pay is being capped and salaries in the private sector are rising below the rate of inflation.
But Labour, which opposes the cap, says it will result in a real-terms cut in support for millions of working people.But Labour, which opposes the cap, says it will result in a real-terms cut in support for millions of working people.
Some Lib Dem MPs, including John Leech and former minister Sarah Teather, are expected to rebel against the government, although the coalition is thought likely to win the vote. Some Lib Dem MPs, including John Leech and former minister Sarah Teather, are expected to rebel against the government while others could abstain.
Mr Leech, MP for Manchester Withington, said he found it "objectionable that the Tories are using 'skivers versus strivers' rhetoric to justify a cut to seven million working families".
Despite the concerns of some Lib Dems, the coalition is thought likely to win the vote.
Legislation is needed to implement changes announced by Chancellor George Osborne in last month's Autumn Statement - to cap increases in jobseeker's allowance, employment and support allowance, income support and elements of housing benefit.Legislation is needed to implement changes announced by Chancellor George Osborne in last month's Autumn Statement - to cap increases in jobseeker's allowance, employment and support allowance, income support and elements of housing benefit.
The cap would also apply to maternity allowance, sick pay, maternity pay and paternity pay as well as the couple and lone parent elements of the working tax credit and the child element of the child tax credit.The cap would also apply to maternity allowance, sick pay, maternity pay and paternity pay as well as the couple and lone parent elements of the working tax credit and the child element of the child tax credit.
These benefits traditionally rise in line with consumer prices in an annual process known as "uprating".These benefits traditionally rise in line with consumer prices in an annual process known as "uprating".
They increased 5.2% this year and without the planned change would have been set to rise by 2.2% - the rate of CPI inflation last September, on which the figure is calculated. The rate of inflation has since risen to 2.7%.They increased 5.2% this year and without the planned change would have been set to rise by 2.2% - the rate of CPI inflation last September, on which the figure is calculated. The rate of inflation has since risen to 2.7%.
Ahead of the debate, during Deputy Prime Minister's Questions, Labour's Deputy Leader, Harriet Harman, said: "If he votes for the Welfare Benefits Uprating Bill tonight, the deputy prime minister will be voting to make millions of families worse off." 'Worse off'
The BBC's political correspondent Gary O'Donoghue said an "impact assessment" published by the government suggested single parents would be most affected by the cap - losing £5 a week or about £250 over the three year period.
Glance at the spreadsheets and the scale of the saving is apparent.Glance at the spreadsheets and the scale of the saving is apparent.
Figures in the Autumn Statement show raising many benefits and tax credits by 1% a year will save £2.8bn in 2015/16, compared with the government's previous plans.Figures in the Autumn Statement show raising many benefits and tax credits by 1% a year will save £2.8bn in 2015/16, compared with the government's previous plans.
The overall welfare budget in 2011/12, as calculated by the Institute for Fiscal Studies, is £201bn.The overall welfare budget in 2011/12, as calculated by the Institute for Fiscal Studies, is £201bn.
The political debate will centre on who should feel the pain.The political debate will centre on who should feel the pain.
Jobseekers Allowance totals 2.4% of the total bill, according to the IFS. Benefits for those on low incomes make up just under 21%.Jobseekers Allowance totals 2.4% of the total bill, according to the IFS. Benefits for those on low incomes make up just under 21%.
Those for elderly people, including the state pension, make up over 42%.Those for elderly people, including the state pension, make up over 42%.
The estimated value of fraud and error overpayments in benefit expenditure in 2011-12 is £3.2 billion.The estimated value of fraud and error overpayments in benefit expenditure in 2011-12 is £3.2 billion.
The majority of working age households in receipt of state support are likely be an average of £3 a week worse off.
Ahead of the debate, during Deputy Prime Minister's Questions, Labour's Deputy Leader, Harriet Harman, said: "If he votes for the Welfare Benefits Uprating Bill tonight, the deputy prime minister will be voting to make millions of families worse off."
She added that the reduction of top-rate income tax from 50% to 45% would leave people earning a million pounds a year a good deal "better off", saying: "The government has failed on fairness, as well as compassion."She added that the reduction of top-rate income tax from 50% to 45% would leave people earning a million pounds a year a good deal "better off", saying: "The government has failed on fairness, as well as compassion."
Mr Clegg agreed the cap would affect "people both in and out of work", but added that it was needed to make savings.Mr Clegg agreed the cap would affect "people both in and out of work", but added that it was needed to make savings.
He said: "The challenge for her [Ms Harman] and her party is firstly to explain to this house and the British people why she can support a 1% pay [increase] limit to doctors, nurses and teachers in the public sector and not back this approach.He said: "The challenge for her [Ms Harman] and her party is firstly to explain to this house and the British people why she can support a 1% pay [increase] limit to doctors, nurses and teachers in the public sector and not back this approach.
"And where is she going to find the £5bn that the measures are going to save in the next three years?""And where is she going to find the £5bn that the measures are going to save in the next three years?"
Mr Clegg also praised the government's decision to raise the threshold at which people start paying basic income tax, saying this was helping poorer households in particular.Mr Clegg also praised the government's decision to raise the threshold at which people start paying basic income tax, saying this was helping poorer households in particular.
Earlier, Work and Pensions Secretary Iain Duncan Smith said inaction on benefits would leave the UK "bankrupt", and that "like Greece and like Spain... we'll have huge borrowing costs". Earlier, Work and Pensions Secretary Iain Duncan Smith told BBC Radio 4's Today programme that inaction on benefits would leave the UK "bankrupt" and the last Labour government had created an "outrageously messy system", which had to be reformed.
He told BBC Radio 4's Today programme the last Labour government had created an "outrageously messy system", which had to be reformed. No cap could be placed on pensioners' benefits during this parliament, he added, as the Conservatives had made a "clear commitment" to this in their 2010 general election manifesto.
Mr Duncan Smith added that benefits payable to pensioners, including the Winter Fuel Allowance, were not being capped because older people had "less flexibility" and did not have the option of finding work.
No cap could be placed on pensioners' benefits during this parliament, Mr Duncan Smith argued, as the Conservatives had made a "clear commitment" to this in their 2010 general election manifesto.
Labour says it wants to introduce a compulsory job guarantee - where a person unemployed for a couple of years will no longer receive jobseekers allowance, and they will have to take a job, or be helped towards getting one.
Former Lib Dem Education Minister Sarah Teather has said she will oppose the government's proposed cap, as she is "deeply anxious" about the impact it will have on the poorest in society.
Fellow Lib Dem MP John Leech said: "I strongly support raising the tax threshold for low paid workers, but this cut will wipe out much of that good work."
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