Lib Dem MPs, including the party’s deputy leader Simon Hughes, look set to obtain concessions from Iain Duncan Smith to win their support for the Coalition’s controversial welfare bill, which will introduce a benefit cap of a maximum of £26,000. Here’s how The Guardian reports the news:

The government is expected to make a series of concessions in the coming days on it controversial £26,000 household benefits cap to win over wavering Liberal Democrat MPs. Iain Duncan Smith, the work and pensions secretary, is expected to agree that a discretionary fund should be established to ease the burden on families who could be made homeless at a sensitive time in their children’s education. …

There are growing expectations that Simon Hughes, the Lib Dem deputy leader who has voiced concerns about the cap, will be won over by a new “discretionary fund”. Hughes has expressed fears that the cap, which includes housing benefit, could force thousands of families out of their homes in London and the south-east.

The discretionary fund would allow councils to exempt some families from the cap for a limited period of time if, for example, a child was due to sit examinations. The fund, which would only apply to existing recipients, would be modelled on the system that was set up after Hughes voiced fears last year about the impact of the housing benefit cap.

The cap, which will mean that no working household will be allowed to receive benefits of more than £26,000, is due to come into force in April 2013. This means that councils will have around a year to introduce the changes … The Lib Dems have argued that showing discretion for a limited period of time could avoid families moving into expensive bed and breakfast accommodation if they are forced out of their rented home but need to remain in the same area for their child’s schooling. The government is also looking at the introduction of a grace period for people who suddenly lose their jobs and are immediately hit by the cap.

Meanwhile, Labour’s shadow work and pensions secretary Liam Byrne — who supports the cap in principle — has called for the Coalition to agree a local rate for the cap in recognition higher living costs, especially in London. It’s a curiously inconsistent position for Labour to adopt as Lib Dem blogger Mark Thompson highlights here in a post titled ‘Have Labour just made a big mistake on the benefits cap?’:

The coalition has been pushing the idea of regional pay bargaining for a while now which has thus far been responded to by protest from Labour MPs. How can they now credibly fight that when they have made pretty much the exact same argument the government make in favour of it in the context of a benefits cap?