"Labour to limit spending in welfare crackdown"

[dutchman]

Ed Miliband would impose budget cap and use cuts to child benefit to push parents back into work



A cap would be imposed on parts of the welfare budget by a future Labour Government to keep a lid on public spending, Ed Miliband will announce today. Housing benefit and payments to the sick and disabled would be covered by the ceiling, and so rates could be cut if total spending on them increased. But the state pension would not be included in Labour's cap.

Labour would also bring in a two-tier system of jobless payouts, with a higher rate for people who had paid national insurance contributions for five years. At present, unemployed people receive £72 a week in non means-tested jobseeker's allowance after two years of contributions. Experts say it could rise by £25 a week if it did not kick in for five years.

People in workless households, including single parents, could see their state handouts cut under Labour when their children were three and four if they refused to prepare to enter the labour market when their children reach the age of five. Labour's "tough but fair" measures are designed to tackle the impression that the party is "soft" on welfare at a time when public attitudes to such spending have hardened. A similar cap on such structural welfare payments was announced by George Osborne in his March Budget and will be confirmed in his spending review on 26 June.

Yesterday party sources confirmed that a future Labour government was unlikely to reverse the Coalition's cuts to child benefit for families with at least one earner on £50,000 a year. Aides said the £2.3bn cost would not be a priority for Labour, but the move will fuel concerns in the party that is ditching its long-held support for universal benefits.

Mr Miliband will promise a shift away from open-ended benefit payments to tackle the causes of rising welfare bills. Labour would spend money on housebuilding rather than £24bn a year on housing benefit. Councils would be allowed to negotiate lower rents, build more homes and reduce housing benefit.

The Labour leader will say: "We can't afford to pay billions on ever-rising rents when we should be building homes to bring down the bill. Thirty years ago, for every £100 we spent on housing, £80 was invested in bricks and mortar and £20 was spent on housing benefit. Today, for every £100 we spend on housing, just £5 is invested in bricks and mortar and £95 goes on housing benefit."

Mr Miliband will admit: "The next Labour government will have less money to spend. If we are going to turn our economy round, protect our NHS, and build a stronger country, we will have to be laser-focused on how we spend every single pound. Social security spending, vital as it is, cannot be exempt from that discipline."

Labour's cap on welfare spending would apply over a three-year period. No figures will be announced until nearer the 2015 election. The aim would be to impose budget discipline and provide an "early warning system" to stop benefits ballooning, as both housing and incapacity benefit have done since the 1980s.

To reduce the tax-credit bill so it can top up low wages, Labour would offer employers temporary grants for machinery, equipment and training to encourage them to pay the living wage, which is higher than the national minimum wage. "We can't afford a low wage economy that just leaves the taxpayer facing greater and greater costs. It is only by changing our economy that we can both keep costs under control and make progress towards a fairer society," Mr Miliband will say.

The Labour leader will pledge to restore the "contributory principle" to the welfare state. "People's faith … has been shaken by a system that appears to give a minority of people something for something and other people nothing for something," he will say.

[rebbonk]

Welfare is for the needy, not the idle, lazy, feckless or greedy!

[dutchman]

It's all rhetoric.

The state pension already accounts for more than half the total welfare bill and there are no plans by any party to reduce that.

Milliband's proposal to subsidise house building instead of rents is probably unworkable and could leave thousands of tenants in the private sector homeless.

[dutchman]

[dutchman]

[dutchman]