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Wages set to rise at the same rate as benefits

The work and pensions secretary, Iain Duncan Smith believes benefits should no longer automatically increase at the same rate as inflation. He stated that it is unreasonable for wages to rise at a slower rate than benefits.

There will be a 3 year cap at 1% on most working-age benefits and tax credits beginning 2012/14. The cap is below the level that cost of living is expected to rise to. Child benefits, universal credit and housing benefits are to be capped for 2 years beginning 2014/15.

Those against the 1% cap argue that in the past decade wages have seen a larger increase, rising 36% as opposed to job seekers allowance which increased by just 32%. Jobless benefits have rose 20% in the past five years, compared to an average 12% rise in private sector pay.

Those in favour of the cuts are hoping to restore fairness and put emphasis on the fact that the population should turn to employment as their income source, rather than benefits. Increases to benefits have cost taxpayers £6.3 billion since the beginning of the economic downturn in 2008. While those employed have seen restraints on their finances, those on benefits have seen no real cutbacks and this is where the issue lies.

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