Benefits cap rise limited to 1%

MPs have voted in favour of plans to limit annual increases in working-age benefits to 1% until 2015.

The benefits subject to the cap from April 2013 include sick pay, maternity pay, paternity pay and adoption pay.

The cap was proposed by Chancellor George Osborne in the Autumn Statement on 5 December 2012. The bill was then introduced into the House of Commons on 20 December 2012.

Social security legislation requires a review of benefit levels each year to determine whether they have retained their value relative to prices. For most benefits, an annual rise is not mandatory, but governments have historically exercised their discretion by increasing the principal means-tested working-age benefits each April in line with prices.

Since 2011, the measure used has been the consumer prices index (CPI).