THE government’s plan for a real-terms cut in working-age benefits cleared its first Commons hurdle last night after heated exchanges between coalition and Labour MPs.
MPs voted by 324 to 268, a majority of 56, to give the legislation a second reading, but former Liberal Democrat minister Sarah Teather rebelled and warned attacks on the poor could lead to the “fragmentation” of society.
Labour branded the plan a “strivers’ tax” as 68 per cent of households caught by the below-inflation rise in benefits were in work.
But Work and Pensions Secretary Iain Duncan Smith accused Labour of tying working families into the benefits system and “buying votes” by increasing handouts.
He said: “They think that helping people is about trapping more and more people in benefits. What is really interesting is that under the tax credit system, nine out of ten families with children were eligible for tax credits.
“This went in some cases up to over £70,000 in earnings. What a ridiculous nonsense they have created.”
The Welfare Benefits Up-rating Bill limits rises in most working-age benefits to 1 per cent in 2014-15 and 2015-16 instead of linking them to inflation. Similar measures for 2013-14 will be introduced separately.
The plan, announced by George Osborne in his Autumn Statement last year, is aimed at slashing £5 billion from the welfare bill over the next five years.
A Labour bid to block the bill and insist on a “compulsory jobs guarantee” was defeated by 328 votes to 262, a majority of 66.
Earlier, Mr Duncan Smith said that Labour has opposed £83bn worth of cuts, which would add debt to the public purse worth £5,000 for every individual in the country.
He said: “They will have to say what they are in favour of to bring down the deficit or they will be a laughing stock.”
As well as making savings, the vote was the latest stage in Mr Duncan Smith’s radical overhaul of the welfare system, aimed at “making work pay” and getting people off benefits and back into a job.
In his speech, the Tory Work and Pensions Secretary attacked Labour’s legacy on welfare and highlighted its tax credits, which he said failed to break the cycle of poverty.
Mr Duncan Smith said: “The important point that they [Labour] need to realise is that out of the total bill for tax credits, 70 per cent had no involvement with work at all.
“Child tax credits had no work agreement whatsoever and so the reality is that they spent 340 per cent more on tax credits, 58 per cent before the 2005 election, 29 per cent before the last election, in the hope of buying votes to get them out of the difficulty. The result of all of this is that the debt we all had to pay off was costing us £30,000 every single minute. That was what we had to pay as a result of this expenditure.”
Ms Teather, who was replaced as an education minister in last autumn’s government reshuffle, said she opposed the bill “with a heavy heart” because it was “disingenuous” to try to “find someone to blame for our own woes”.
“A fissure already exists between the working and non-working poor,” she told MPs. “Hammering on that fault line with the language of ‘shirkers and strivers’ will have long-term impacts on public attitudes, on attitudes of one neighbour against another. It will make society less generous, less sympathetic, less able to co-operate.”
Explaining his support, Lib Dem deputy leader Simon Hughes told MPs the “government have got the balance right in these difficult times” and said policies such as the rise in personal tax allowances and the change to the top rate of tax should be seen as a package.
Shadow work and pensions secretary Liam Byrne claimed the bill was being rushed through in a “hit-and-run on working families”.
He said the official impact assessment for the bill had been published just hours before the debate started and made “radically different assumptions to the policy costings set out by the Chancellor”.
The legislation showed “who is being asked to pick up the bill” for George Osborne’s “catastrophic economic failure”. Britain’s richest citizens were being spared, he said, as they were “so hard under the cosh that they have been given a tax cut”.
“Millionaires will have £107,000 more from next year to help them heat the swimming pool,” he said. “It’s not Britain’s millionaires who are picking up the tab, it is Britain’s working families. This bill is a strivers’ tax, pure and simple.”
The issue saw rare agreement between Labour and the SNP, with Nationalist MPs supporting a Labour amendment on benefits.
SNP work and pensions spokeswoman Eilidh Whiteford said: “The coalition cap will particularly hit parents in low-paid work or in part-time work, who are already struggling to make ends meet because of the wider economic climate.”