Government wins key vote on planned 1% cap on annual benefits rises 8 January 2013 Last updated at 19:33 The government has won a crucial vote in Parliament on plans to limit annual increases in working-age benefits to 1% for the next three years. MPs rejected a Labour bid to block the proposals by 328 votes to 262 after five hours of heated debate. Several Lib Dem MPs had said they would defy the coalition by joining Labour. Labour argues that millions of low-income families will be worse off but ministers say benefits should not be going up at a faster rate than wages. Benefits have historically risen in line with inflation and, without any change, would have been due to go up by 2.2% in April. But the government says that with public sector pay rises capped at 1%, a similar limit should apply to working-age benefits such as jobseeker's allowance, employment and support allowance and income support as well as elements of working tax credits and child tax credit. The Lib Dem Business Secretary Vince Cable said the welfare budget could not be "insulated" from spending cuts that were needed to rebalance the public finances. Benefit recipients, he suggested, had done "relatively well" in recent years in comparison to working people on low incomes, many of whom who have seen their wages frozen and incomes fall in real terms. "It seemed fair to us to distribute some of this pain in a more equitable way," he told the BBC News Channel. Several Lib Dem MPs - including ex-minister Sarah Teather - said they would either vote against the government or abstain on the second reading of the legislation needed to implement the three-year cap. While backing the changes, Mr Cable criticised the language used by some Conservatives in the debate over welfare, describing it as "appalling stuff." Labour has accused the government of trying to pit unemployed people against the low-paid while former foreign secretary David Miliband, speaking in the Commons, called the proposals "rancid."