29/02/2012 16:18 GMT | Updated 01/03/2012 03:35 GMT

Welfare Reform Bill Passed Into Law After Lords Back Down

The House of Lords has passed the Welfare Reform Bill, having withdrawn its only remaining objection to the government's flagship piece of legislation.

David Cameron hailed "an historic step in the biggest welfare revolution in over 60 years" after the government's controversial reforms cleared Parliament.

In an exclusive blog for HuffPost UK, the PM said it would take people out of dependency, saying it was an example of "compassionate government in action".

The legislation brings in a £26,000-a-year household benefits cap and sets up the universal credit.

The Bill had a stormy passage through the Lords, with peers inflicting seven defeats on the Government when the legislation was first considered and a further one after MPs had overturned all the setbacks.

The government is clearly delighted that the Bill has now completed its passage through Parliament - ministers had been keen to see all stages of it finished by the end of the financial year.

But many will be upset that the Lords caved in over the so-called Bedroom Tax, which will see penalties for people living in council homes claiming benefits if they have a spare room.

On Wednesday night independent crossbencher Lord Best withdrew without a vote an amendment on the Bedroom Tax. The Bill will now be sent for Royal Assent.

The Lords have secured several concessions from Iain Duncan Smith, particularly on payments to disabled people. Labour has opposed some aspects of the Bill, but there is cross-party support for reforming the welfare system.

The centrepiece of this Bill sees many benefits merged into a Universal Credit which ministers say will reduce paperwork and overlap. Disability rights campaigners maintain that they will be lumped in with other jobseekers in being forced to take unsuitable jobs, based on assessments carried out by private contractors out to make a profit.

Mr Cameron said: "While we've been putting in place a sensible, modern welfare system that protects the vulnerable, our opponents have shown they are on the side of Britain's something-for-nothing culture.

"We've stood up against the abuse that left taxpayers footing the bills for people on £30,000 or even £50,000 a year in benefits.

"It's a fair principle: a family out of work on benefits shouldn't be paid more than the average family in work."

The government deployed the tactic of "financial privilege" to override many of the the Lords' concerns last month, in a move which was described by constitutional experts as unprecedented. By convention the Lords may not vote on financial matters, but the government took the unusual step of declaring some of the Lords objections subject to the automatic will of the Commons.

This practice had been castigated by former Speaker of the Commons, Baroness Boothroyd, who had claimed that the usual channels of Parliament had been ignored.