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Were MPs right to cap the benefits rise at 1 per cent? (City AM)

    CPS Head of Economic Research Ryan Bourne debates NIESR's Jonathan Portes on the government's benefits cap. 

    To view the full debate, visit the City AM website

    "THE government is struggling to control borrowing and this is partly due to a 5.9 per cent increase in net social security payments this financial year compared with last. Many benefits were uprated by 5.2 per cent for 2012-13 because of high consumer price index inflation in the previous year, when average earnings were only increasing by 1.8 per cent. Since 2007, benefits have risen by 20 per cent; average earnings have gone up by only 10 per cent. The government is having to borrow large amounts to pay more in benefits (which no economic model suggests will boost growth), and the divergence in the growth of benefits and earnings risks weakening work incentives. The government’s broad approach to stop growth in unearned income, while increasing the personal allowance to make work pay, therefore makes both financial and economic sense."

    To view the full debate, visit the City AM website

    Date added: Wednesday 9th January 2013