Benefit rises outstrip private sector pay, says government

Labour party accuses Tory-led coalition of being out of touch with reality over plans to stem rise in working-age benefits

Many working-age benefits have risen by nearly double the rate of private sector pay increases, the government has said in the latest salvo in its campaign to win support for cuts to the welfare bill.

Figures released by the Department for Work and Pensions show private sector wages rose by 12% on average over the past five years, while many working-age benefits climbed by 20%, in line with inflation. The DWP said its calculation referred to the “vast majority” of such benefits linked to inflation, including job seekers’ allowance and income support.

On Monday the work and pensions secretary, Iain Duncan Smith, released separate figures claiming fraud and error in the tax-credit system had cost taxpayers £10bn under Labour.

In an attack on the welfare system, the former Tory leader said on Wednesday: “Working people across the country have been tightening their belts after years of pay restraint while at the same time watching benefits increase. That is not fair. The welfare state under Labour effectively trapped thousands of families into dependency as it made no sense to give up the certainty of a benefit payment in order to go back to work.”

The coalition has pledged to reduce many benefits rises to 1% in 2014-15 and 2015-16, below the current 2.5% rate of inflation, saving £4bn a year. It has also claimed the universal credit scheme being introduced this year will ensure people are never better off out of work.

Labour has challenged the government’s latest benefits figures. It published a report showing that in the past decade, rather than five years, jobseeker’s allowance rose 32%, while average wages rose slightly more, at 36%. “This Tory-led government is comprehensively out of touch with the reality of Britain’s working families,” said the Labour spokesman for work and pensions, Liam Byrne.

Ministers, or their advisers, are also seen as the driving force behind successive stories about families with multiple children, where parents do not work but receive tens of thousands of pounds a year in benefits.

However, critics have challenged many of the DWP’s claims, saying they exaggerate problems such as fraud and the number of large families who depend on benefits.

On Monday, Duncan Smith’s claims were questioned by Channel 4’s FactCheck blog, which said figures from HM Revenue & Customs showed fraud accounted for just 0.7% of all tax credits paid out by Labour from its introduction in 2004 to 2010. © 2013 Guardian News and Media Limited or its affiliated companies. All rights reserved. | Use of this content is subject to our Terms & Conditions | More Feeds

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