Benefit cap defeat will be reversed, says Clegg

Nick Clegg has said ministers will seek to overturn a Lords defeat for plans to cap benefits for households at £26,000, when the bill returns to the Commons.

The Welfare Reform Bill looks set to "ping pong" between the two chambers, after peers voted to exclude child benefit from the overall cap.

Ministers say that would raise the cap to the take home pay of someone on a £50,000 salary, making it "pointless".

Former party leader Lord Ashdown was among 26 Lib Dem peers to rebel.

The peer said that as president of the United Nations children's agency Unicef, he could not back the government's plans in their current form.

'Fair'

But Lib Dem leader and Deputy Prime Minister Mr Clegg said on Tuesday he was a "strong supporter" of the cap, as were the "vast majority" of people, because it was "fair to say you can't receive more in benefits than if you were to earn £35,000 before tax".

He added: "That's the simple principle which we will stick to and we will make sure that any amendments in the Lords that make that impossible will be reversed."

However, he said those worried about "transitional arrangements" - Lord Ashdown's key concern - would be "comforted that we're sticking to the cap but we're going to implement it in a sensible way".

Labour peers also backed the amendment from the Bishop of Ripon and Leeds, the Rt Rev John Packer, after their own amendment to exclude people at risk of homelessness from the cap failed to get enough support.

Crossbenchers also backed the amendment which was carried by 252 votes to 237.

The cap - which applies to England, Wales and Scotland and would be introduced from April 2013, applies to out-of-work benefits like Jobseeker's Allowance, and Employment and Support Allowance (ESA). But it also includes Child Benefit - currently paid to all parents who want it, regardless of income.

Critics argued that imposing the same cap on all families - regardless of the number of children - effectively meant some children would no longer get child benefit, once the £26,000 cap was reached.

The bishop said: "It cannot be right for the cap to be the same for a childless couple as for a couple with children. Child benefit is the most appropriate way to right this unfairness."

But the government argues that the cap merely brings families on benefit into line with working households - it amounts to £500-a-week, equivalent to the average household wage after tax.

Work and Pensions Secretary Iain Duncan Smith says including child benefit would effectively raise the cap to £50,000 a year, and told MPs on Monday it was "rather pointless to have a cap set so high that nobody could ever earn it".

Monday's vote was the latest in a series of defeats for the government's flagship Welfare Reform Bill - peers also voted down changes to ESA and Disability Living Allowance. The government has made some concessions but says it intends to overturn the defeats in the Commons.

BBC News Channel chief political correspondent Norman Smith said ministers appeared relaxed about the Lords defeat, because they felt they had public opinion on their side and they felt it put Labour in a difficult position. The party said it supported the cap in principle but voted to support the amendment - arguing the current cap risked making people homeless, ultimately increasing the cost to the taxpayer.

'Fairness'

Mr Duncan Smith says the cap on out-of-work benefits would save "something in the order" of £600m.

The cap would be £500 a week for working-age families - equivalent to the average wage earned by working households after tax - and £350 a week for single adults without children.

The government says 67,000 households, more than half of which are in London, can expect to lose £83-a-week when it is brought in.

The legislation affects England, Wales and Scotland. Northern Ireland has its own social security legislation, but it is expected that what is approved at Westminster would be introduced there too.