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Friday 6th January 2012 | 07:30
By Isabel Hardman
The Government is planning to make last-minute changes to its controversial cap on benefits for workless families in an attempt to quell a rebellion among Liberal Democrat peers, PoliticsHome has learned.
Peers negotiating with the Government over a cap of £26,000 on the amount of benefits an out-of-work family can receive are hopeful that ministers may reveal changes during the debate on the cap at the report stage of the Welfare Reform Bill on 17 January.
The changes are essential to prevent Lib Dems mounting their second rebellion against the Government on the legislation. Peers are threatening to defy their party whip and vote for an amendment to the Bill which would alter the cap dramatically.
The changes, which are still the subject of intense discussion between ministers, officials and peers, could include changes to the way the cap is calculated so that it is based on the income of working families. Currently the £26,000 figure is based on average income for all families, including those on benefits, which means it is lower than the income of a family in work.
PoliticsHome also understands that the Government will make two vital concessions on a "period of grace" for a household to adjust to life under the cap after becoming unemployed, and exempting homeless families placed in expensive bed and breakfast accommodation by their local councils from the cap.
Crossbench peer Lord Best, who has been pressing for these changes, said he was hopeful that ministers would present sensible solutions so that he did not need to press two amendments he has tabled on the matter to a vote.
He said: "I am not expecting them to go to a vote because I am waiting for ministers to come to me with changes. I am expecting to hear that they have come up with something before it comes to a vote at report stage."
But the peer leading the Lib Dem negotiations told PoliticsHome he was not sure the changes would be enough to satisfy his colleagues, while a former frontbencher within the party said he and other colleagues would definitely vote against the Government on the cap unless ministers accepted a significant amendment.
Lord German, chair of the party's backbench committee on work and pensions, said: "This is going to go to the wire. I think there will be changes, but whether they will be sufficient to satisfy my colleagues is unclear. I suspect that there will be changes that will emerge during the course of the debate."
The Bishop of Ripon and Leeds has proposed removing child benefit from the cap entirely, which would mean larger families are not disproportionately hit by the cut.
Lord Avebury, formerly Lib Dem Home Office spokesman in the Lords, said the Government would need to accept the bishop's amendment, otherwise he would defy the whip and vote for it. He told PoliticsHome: "They would have to accept the amendment. I'm a great believer in greater equality: all our policies should be targeted towards seeking more equality."
He added that a number of other peers who were "very unhappy about the general direction of the Government's policies" would also vote against the Government. Two other peers, who did not wish to be named, also said they were very unhappy about the cap, but that they would wait until ministers revealed their position on the cap at report stage.
Last month 14 Liberal Democrat peers broke ranks to support another amendment to the legislation by Lord Best, which altered a cut to housing benefit for social tenants underoccupying their homes. They were joined by every single crossbench peer and one Conservative - Lord Newton of Braintree - in the Chamber to defeat the Government.
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