Cap on benefit increases will do more harm to Wales than recession

A leading Welsh think tank has warned that the decision to cap benefit increases at 1% could end up doing far more harm to the Welsh economy than the recession itself.

In concluding that the policy will “hit Wales hard” research published by the Bevan Foundation goes on to warn in stark terms:

“the limit on benefit rises will strip hundreds of millions of pounds out of the Welsh economy. If the Consumer Price Index increases by 2.5% a year over the next 3 years while benefits go up by 1%, £106 million less will be paid to claimants of Jobseekers Allowance, Incapacity Benefit, Income Support, Housing Benefit and Statutory Maternity Pay and Allowance. Even more will be lost because of lower than inflation payments on Child Benefits and Tax Credits whose value to the Welsh economy is not clear.”

It continues:

“This could prove to be a far more dramatic undermining of the economy and prosperity in Wales than the recession itself.”

It is a viewed shared also with Plaid Cymru who’s Treasury spokesperson at Westminster, Jonathan Edwards has warned:

“Wales will be hit particularly hard as a far greater percentage of our population are recipients of Tax Credits and/or benefits.

“Therefore, the real-term cut in these entitlements will inevitably have a dramatic effect on the amount of money spent in local economic across Wales, clearly highlighting the entirely self-defeating nature of the Coalition’s economic experiment.”

It comes as a Welsh Lib Dem MP has attacked the language that many Conservatives have used to frame the debate on last night’s vote.

Speaking to the Western Mail shortly before he took the decision to abstain from voting, Ceredigion MP, Mark Williams explained:

I am unable to support the Government this evening and will be abstaining in the second reading vote, and will review my position at third reading. I take great exception to some of the emotive language being used to describe welfare benefit recipients by some Conservatives and in the media, and in particular the simplistic notion that this is about scroungers and strivers.

“Yes there are some who abuse the system, but the characterisation of all welfare recipients that I meet in my surgeries as scroungers is not something I recognise.”

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