Benefits capped at 1% for three years

Handing over money

Plans to limit annual increases in working-age benefits to 1% for the next three years have been given the go ahead from MPs.

The Coalition argue the cap is fair because benefits, which historically rise in line with inflation, should not be going up at a faster rate than wages.

The government won a vote on the issue by 328 votes to 262, as parliament rejected Labour's attempt to block the cap on the basis that millions of low-income families would be worse off.

Had the cap not been agreed, benefits were due to rise by 2.2% in April - at a time when public sector pay rises were limited to 1%.

The cap will apply to working-age benefits such as Jobseeker's Allowance, employment and support allowance, income support and will also affect child tax credit and working tax credits.

After the vote, Prime Minister David Cameron tweeted: "The Commons vote to limit benefit rises to 1% while pay is only rising at 1% is fair. Labour have the wrong priorities."

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