Welfare: Osborne Defends Benefits Shake-up

George Osborne today defends the controversial benefits shake-up - insisting Britain can no longer afford to reward people who do the "wrong thing".

The Chancellor is to condemn the old system as "broken", warning Labour that they are out of step with public opinion on the issue.

The intervention comes after 660,000 social housing tenants with a spare room began to lose an average £14 a week in what critics have dubbed a "bedroom tax".

Wider welfare and tax changes coming into force this month will also see council tax benefit funding cut.

And working-age benefits and tax credit rises will be pegged at 1% - well below inflation - for three years.

George Osborne insists nine out of 10 families are better off

Meanwhile, disability living allowance (DLA) is being replaced by the personal independence payment (PIP).

And trials are due to begin in four London boroughs of a £500 a week cap on household benefits, and of the new Universal Credit system.

Work and Pensions Secretary Iain Duncan Smith said yesterday that the changes were about "fairness".

But he was also facing a backlash after suggesting that he could get by on £53 a week, rather than his current after-tax income of £1,600 a week.

"If I had to I would," Mr Duncan Smith told BBC Radio 4's Today programme.

Iain Duncan Smith says he could survive on £53 a week

In the wake of the comment, more than 30,000 people signed a petition on the change.org website, calling for the minister to try surviving on that money for a year.

Speaking at a supermarket in Kent today, Mr Osborne will insist that nine out of 10 working households will be better off as a result of the welfare and tax changes.

"For too long, we've had a system where people who did the right thing - who get up in the morning and work hard - felt penalised for it, while people who did the wrong thing got rewarded for it," he will say.

"That's wrong... This month we will make work pay."

Mr Osborne will dismiss "depressingly predictable outrage" about reforms, saying he wants to "take the argument" to critics.

"Because defending every line item of welfare spending isn't credible in the current economic environment," he is to say.

"Because defending benefits that trap people in poverty and penalise work is defending the indefensible.

"The benefit system is broken; it penalises those who try to do the right thing; and the British people badly want it fixed.

"We agree - and those who don't are on the wrong side of the British public."

But shadow Treasury minister Chris Leslie pointed out that the top rate of tax was being cut from 50p to 45p.

"While millionaires get an average £100,000 tax cut this week Institute for Fiscal Studies (IFS) figures show that the average family will be £891 worse off this year because of tax and benefit changes since 2010," he said.

"And just looking at the new changes this week the poorest 10% are losing £127 while the richest 10% gain 10 times that - £1265. Labour would not be making these deeply unfair choices this week.

"The benefits bill is rising under this Government because our economy is flatlining, prices are rising faster than wages and unemployment is high.

"And it is this Government's cuts to tax credits which have left thousands of working parents better off if they quit their job.

"The best way to get the benefits bill down is to get our economy growing strongly and get people back to work."

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