Labour’s plans for a “local benefit cap” could mean families in the West Midlands face tougher limits than under the Government’s controversial plans.

Birmingham MP Liam Byrne (Lab Hodge Hill) criticised Government proposals to limit the maximum any family can claim in benefits to £26,000, saying it was designed for London and “isn’t going to work in the West Midlands”.

Under new plans set out by Mr Byrne, Labour’s Shadow Work and Pensions Secretary, a local cap would be set in towns and cities across the country, based on local property prices and salaries.

The new policy was developed as Labour’s response to Government proposals to ensure no family can claim more in benefits than the median national wage, which is £26,000.

In fact, an employee would need to earn £35,000 to take home a salary of £26,000 once tax and National Insurance is taken into account.

Mr Byrne has previously said he supports the Government’s plans, sparking anger among some Labour activists. But Labour’s apparent reluctance to back a cap wholeheartedly, including supporting amendments to the Government’s Welfare Reform Bill introduced in the House of Lords, has led to Tory claims that it is not on the side of working families.

Labour is now calling for the creation of an independent commission to decide the level of benefit cap to be introduced in different places, and claimed the Government’s proposals will only have an impact in London.

A study published by the Government estimated that 67,000 households would be affected by a benefits cap of £26,000, but 54 per cent of these would be in London.

The only other town or city where more than 1,000 households would be affected was Birmingham. Speaking to the Birmingham Post, Mr Byrne said: “People in Birmingham want a benefit cap that doesn’t backfire and is fair to working people

‘‘Everyone in our city knows that a £500 a week benefit cap designed for London isn’t going to work in the West Midlands.

‘‘Labour’s local benefit cap sends a clear signal that you’re better off in work no matter where you live, it is fairer for working people, and unlike the government’s scheme it wouldn’t end up costing more than it saves.”

Annual figures published by the Department for Communities and Local Government show that the average rent for a private property in the Midlands is £116 a week, while in London it is £254 a week.

Median gross annual pay for a full-time employee in London is £31,875 while in Birmingham it is £25,322.

There is also considerable variation within the region. For example, in Wolverhampton the figure is £22,735.

Under Mr Byrne’s proposals, the benefits cap commission would also regulate private landlords in London, to prevent them receiving massive rents subsidised by the taxpayer through housing benefit.

Meanwhile, another Labour MP is calling for parents too be barred from claiming child benefit for more than three children.

Steve McCabe (Lab Selly Oak) said the current practice of simply paying families more child benefit every time they had more children should end.

Instead, parents would only receive child benefit for three children and no more.

And the MP urged the Government to scrap its controversial plan to abolish child benefit for any family where a parent was earning enough to pay the higher rate of income tax, which means a salary of £42,475.

Instead of penalising parents on good salaries, the Government should make it clear that work pays, he said.

Parents currently receive £20.30 a week in child benefit for a first child and £13.40 a week for each additional child.

Jonathan Walker Page 28