Coalition may modify benefits cap

10am update: Paul Waugh tweets: "No.10 in full rebuttal mode re 'benefits U-turn'. Downing St spksman: "The policy is unchanged.The £26k benefits cap remains.""

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By Tim Montgomerie
Follow Tim on Twitter.

On yesterday's Politics Show the welfare minister Lord Freud appeared to signal flexibility on the benefits cap that George Osborne announced at last year's party conference. The Mail splashes with the news, describing it as another government "retreat" and as a "sop" to the Liberal Democrats. The Telegraph lists what it says are four Cameron u-turns in recent days.

The cap was intended to end the scandal that about 50,000 families received more in state benefits than the average family that goes out to work. When he announced the cap last year the Chancellor said that the only households that might get more than £26,000 would be households where someone had a disability. This is what Mr Osborne said at the time:

“The limit will be set according to this very simple principle: Unless they have disabilities to cope with, no family should get more from living on benefits than the average family gets from going out to work. No more open-ended chequebook. A maximum limit on benefits for those out of work, set at the level that the average working family earns. Money to families who need it - but not more money than families who go out to work. That is what the British people mean by fair - and we will be the first Government in history to bring it about.”

The policy is hugely popular but many Liberal Democrats are worried that it might leave too many 'hard case' families worse off.

Lord Freud, acting with the full authority of Iain Duncan Smith who has always had reservations about the cap, has now said that other households may receive special help in "exceptional circumstances". He told the BBC:

"We have got quite a lot of protections in this cap. Firstly of course, if you are in work, you are not affected. Secondly if you're a disabled person or there's a disabled person in the household, you're not affected. If you're a war widow or a widower, you're not affected."

Labour is very aware that the Tory welfare reforms are, overall, very popular and Ed Miliband will today promise to crack down on both the welfare claimants and the very wealthy who 'rip off' Britain. According to The Times (£) working households may get priority in council house allocation and workless youths will have their benefits reduced if they don't attend special preparation-for-work courses.

WATCH THE POLITICS SHOW'S REPORT ON THE BENEFIT CAP, INCLUDING LORD FREUD'S BRIEF INTERVIEW