Freezing working age benefits is a short term solution

If the rumours are correct, the Treasury is considering a two-year freeze in working-age benefits. Those who have been following the debate surrounding the need for a further £10 billion from the welfare bill will not find this surprising. The most recent Government statement on the issue came in the Prime Minister’s welfare speech in June when he clearly laid out his unhappiness that benefits had been increased by 5.2 per cent last year, despite earnings only increasing by 2.5 per cent.

With this in mind, the rationale behind the freeze is twofold. Firstly, if benefits are rising faster than wages, the gap between what someone gets on benefits and what they might get in work is reducing and incentives to make the move into work are being reduced. This undermines the work that Iain Duncan Smith is undertaking to try to make work pay. Secondly, the savings are substantial. If benefits had been increased by 2.5