Friday, 25 January 2013

"I am not persuaded that the government has made out a good enough case for the 1% cap on benefits up until 2016


A number of issues worry me. For example there are some people in Southport who this will impact on in a particular way. We are a town that has a lot of seasonal employment chiefly allied to tourism but also in the retail sector. In addition many people who work for nursing homes and in care have flexible contracts –in some cases with no hours are guaranteed (sero hours contracts). These people will be impacted upon by the 1% cap. Moving in and out of benefits –with all the requirements for re-applying for benefit –is difficult enough. It is not my experience that these people are trying to avoid work. Most of them would happily opt into full time employment if the economy was more buoyant. By fixing the cap up until 2016 the government has locked itself into an inflexible policy. What happens if there is a spike in energy prices, or because of the volatile weather food prices peak, or if private sector rent continues to rise at greater than 1%?  If the policy objective is to make work always pay, then it is missing the target in the case of these people.

I do not doubt for a moment that we are in a difficult economic place and that the government’s debts need to be paid down. Nor do I think that the welfare budget-which is 30% of the governments spending -should be exclueded from savings.  For every £3 the last government raised in tax it spent £4. That was irresponsible and unsustainable. If the government did not have a credible deficit reduction plans than interest rates would rise rapidly and all those families with a mortgage would face a significant increase in their monthly payments. But I am not persuaded that those on the margins of the economy –moving in and out of work- should hit in this way. We know that they spend almost all they earn –unlike higher earners-and what is more they spend it locally adding demand into our Southport economy."

These concerns, amongst others, have been raise in Parliament by Lib Dems



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