Iain Duncan Smith hits back at claims of 'two-tier' benefits system

The Government has been accused of creating a "deeply unfair" two tier benefit system.

The shadow work and pensions secretary Owen Smith told MPs that the Government had raided its Universal Credit budget to fund its tax credits U-turn.

Mr Smith said the result is a "postcode lottery" which is "arbitrary" and "unfair".%VIRTUAL-ArticleSidebar-pensions%

But Work and Pensions Secretary Iain Duncan Smith rejected the accusations during what was at times a fiery Commons clash.

Owen Smith said: "The truth is the Chancellor bailed himself out of the hole he had dug on tax credits by raiding the Universal Credit system creating a deeply unfair two tier system where a working mother on Universal Credit will next year be £3,000 worse off than her equivalent on tax credits.

"In all, 2.6 million families will be £1,600 on average worse off.

"It's the new IDS postcode lottery.

"It is arbitrary, it is unfair and if you are a low wage working mother it could be you."

But Mr Duncan Smith hit back, saying the numbers quoted did not take into account certain elements of Universal Credit.

"The reality is all of those calculations for lone parents do not take into consideration the childcare package that comes with Universal Credit is dramatic," he said.

Mr Smith challenged Mr Duncan Smith as he spoke and the Work and Pensions Secretary told his opposite number to be quiet and "listen for once to somebody who knows what they are talking about".

"I say to him very simply that the childcare package from Universal Credit gives parents with children childcare support up every single hour while they are in work," he said.

"Under tax credits they got next to nothing."

Mr Smith had earlier pushed Mr Duncan Smith on whether anyone will lose out because of planned changes to Universal Credit.

Mr Duncan Smith said that "no family will take an immediate hit from being moved onto Universal Credit".

He also said the Government is "transitionally protecting those who are moving onto Universal Credit".