Tory ministers are to backtrack on their pledge to cap state welfare hand-outs at £26,000 a year.

The retreat, which is a sop to Lib Dems, will overturn a promise that no household on benefits should be given more than the average family earns.

The policy was a vote-winning response to damaging headlines about large, workless families claiming more than £100,000 a year from the taxpayer.

Lord Freud, the Tory welfare reform minister, yesterday told the BBC’s Politics Show he was anxious to prevent bigger families being unfairly penalised. ‘We’re looking at exceptional circumstances which some people may find themselves in and we are going to be putting out arrangements for that later in the year,’ he said. 

He confirmed exemptions would occur and that ministers we’re ‘looking very carefully at how to draw up those protections’.

The climbdown marks another concession to the Lib Dems after a similar retreat on NHS reforms that saw party leader Nick Clegg boasting ‘we won’.

Bin collection and criminal sentencing pledges have also been reversed.
George Osborne announced the £26,000 cap last year, setting it as ‘the average family gets for going out to work’.