Latest Public Sector News

04.07.11

Row continues over impact of welfare payments cap

Labour has accused the Government of misleading MPs over the impact of the £26,000 cap on welfare payments.

Shadow work and pensions secretary Liam Byrne said that a letter from communities secretary Eric Pickles’ private secretary to No 10, leaked to the Observer newspaper, showed that ministers “haven't been straight with the House of Commons”.

The letter, sent in January, suggested the plan would have a net cost, because of the extra costs that would be imposed on councils having to deal with people affected by the cap. It also suggested homelessness would rise by 20,000.

The letter also suggests that although the cap plan was initially supposed to save £270, that amount “does not take account of the additional costs to local authorities (through homelessness and temporary accommodation). In fact, we think it is likely that the policy as it stands will generate a net cost.”

Labour says there have been many times since January when DWP and CLG ministers have publicly contradicted the private warnings and analysis in the letter.

Shadow communities secretary Caroline Flint said: “It has become clear that while Eric Pickles defends his government housing policies in public, in truth he doesn't believe in them. The public and parliament have a right to know why time and again his department dismissed the very same housing concerns he secretly raised with the prime minister.”

The welfare bill has yet to go through the Lords.

One DWP source told the Guardian newspaper that the department did not recognise the figures in the letter, and did not accept the cap would increase homelessness, saying: “You know what councils are like – when they have concerns, they are very vocal about it.”

Officially, a DWP spokesperson said: “We cannot carry on with a situation where people on benefits can receive more in welfare payments than hard-working families and where a life on benefits robs people of achieving their potential. No one needs to be homeless because of these reforms. Many working families live on this amount of money.”

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