Ministers lose Lords welfare vote

The government has lost another vote in the House of Lords over its plans to reform the welfare system.

Peers backed by 10 votes an amendment to the Welfare Reform Bill, overturning a move to cut payments to specific council tenants with one spare bedroom.

The bill is now to go back before MPs, who disagree with the Lords.

Ministers have already had to reverse several defeats over their proposals, which include capping benefits at £26,000 a year per household.

They want the bill, which is back in the Lords after being approved by the Commons, to enter into law soon.

Peers are currently discussing a series of amendments to the legislation.

The latest exemption would cost around £100m if it passed into law.

In a statement, the Department for Work and Pensions said: "The House of Commons has made its position clear on amendments which would result in additional spending, and the government will seek to overturn the size criteria amendment when the bill returns for further consideration by the Commons.

"The majority of the public agree with the government's welfare reforms and we look forward to delivering on these radical proposals that will make our welfare system better and fairer."

The Welfare Reform Bill would cap the total amount of benefit that unemployed working-age households can receive at £26,000 a year, or £500 a week - about the average post-tax salary for a working household.

This would include combined income from the main out-of-work benefits - Jobseeker's Allowance, Income Support, and Employment Support Allowance - and other benefits such as Housing Benefit, Child Benefit and Child Tax Credits.

The government argues that the cap will create incentives to work and save the state £290m in 2013-14 and £330m in 2014-15.

The latest amendment, tabled by crossbencher Lord Best, would limit the impact of a "bedroom tax", so that disabled people, war widows and foster carers with more than one spare bedroom would be exempt from a proposed £14 cut in housing benefit. It passed by 236 votes to 226.

The bill will go back before the Commons, which is likely to remove the amendment.

During the debate in the Lords, crossbencher Lady Meacher withdrew another amendment calling on ministers to limit cuts to top-up payments made to the parents of disabled children. This followed a government pledge to hold a review of the situation.

But Lady Meacher told peers: "I do not accept this part of the bill is fair. It is not. It is deeply, deeply unfair."

'Ping pong'

Although MPs have passed the Welfare Reform Bill, ministers have lost several votes on it when it has gone on to the House of Lords previously.

Among these, peers have chose to exclude child benefit from the cap and to exclude cancer patients for means testing for Employment and Support Allowance.

However, all the changes were reversed when the bill returned to the Commons earlier this month.

In an effort to avoid what is known as parliamentary "ping pong", where the bill bounces back and forth between the two Houses until a compromise is reached, the government has said it will use "financial privilege" to ensure Parliament approves the cap.

This is based on the principle that the Lords cannot reject a bill passed by the Commons if it relates to tax and spending decisions.

'Negotiation and compromise'

This would mean their old amendments to the bill cannot be discussed again, it would not prevent them from tabling new ones - meaning a prolonged dispute is still possible.

In the Lords, several peers criticised the threat of using financial privilege.

Labour's Lord Morgan accused the government of trying to set up "a single-chamber Parliament in this country" so that its desires might more easily be carried out.

Baroness Boothroyd, a former Speaker of the Commons, called for "negotiation and compromise" between the two Houses, "rather than the government behave in a heavy-handed manner".

But Lords leader Lord Strathclyde said there would be "assurances and reassurances" offered and denied that the coalition was changing parliamentary rules to suit its needs.