Labour looks set to oppose the welfare cuts announced in the autumn statement.

Chancellor George Osborne announced last week that increases in local housing allowance rates, used to calculate housing benefit for private renters, will rise at 1 per cent instead of in line with inflation for two years from April. Rises in other working age benefits, including jobseeker’s allowance and tax credits, will also be capped at 1 per cent.

The changes, which the government says will save £3.7 billion by 2016, will be introduced through primary legislation. This has led to speculation about whether Labour will vote for or against the proposals when they come to parliament in the new year. Mr Osborne said: ‘I hope it [the bill] commands support from both sides of the House of Commons.’

Chuka Umunna, shadow business secretary, yesterday gave a strong indication that Labour will oppose the move.

In a BBC interview, he said: ‘We haven’t seen the bill but I think unless fundamental changes are made to the proposals that we’ve seen so far, I think we will struggle to support it.’

Last year, Labour said it supported a total household benefits cap in principle but voted against it in parliament, leading to accusations of opportunism. Shadow ministers said a system of regional caps would be fairer.

Social landlords and charities have warned the latest welfare cuts will force people out of the private sector and lead to more homelessness as income falls further behind the cost of living. The government has argued that as public sector pay rises will be capped at one per cent, benefits should be as well.