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Government forced to make tax credits delay

Tax Credits for people in work
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Last night, the Lords showed unprecedented defiance as they rejected a finance measure approved by the Commons which would have cut tax credits, for the first time in over a century.

Tax credits U-turn

The House of Lords have approved a Labour motion that forces George Osborne to delay his tax credit cuts until he creates a plan that compensates low-paid workers for three years. The vote has left Mr. Osborne backtracking as he said he would announce measures in the Autumn Statement next month.

The Lords also supported a crossbench motion that further delayed the cuts until the Government responds to an analysis of their impact, which will be conducted by the Institute for Fiscal Studies.

Unchartered waters

Downing Street has stated that the UK is now in ‘unchartered waters’, as the House of Commons is usually primary in financial matters. However, both Labour and the Liberal Democrats joined forces to pass the motions in the House of Lords, meaning the Tories were a minority. There will have to be a ‘rapid review’ Downing Street continued, so that the House of Lords cannot overpower the Commons on financial matters again. It’s thought that this review will limit the power of the Lords.

‘The Prime Minister is determined we will address this constitutional issue,’ a Downing Street spokesman said. ‘A convention exists and it has been broken. He has asked for a rapid review to see how it can be put back in place.’

Tory MPs furious

Many Tory MPs are furious over the events of last night. Michael Ellis, an aide to Theresa May, called the vote a ‘constitutional outrage’.

The Commons has conventionally been chief regarding financial matters since the late 17th Century, and the Parliament Act 1911 made it illegal for the Lords to overturn a finance vote by MPs. Labour has argued that this is a different situation as the tax credit cuts were introduced by a ‘statutory instrument’ not a bill, so there’s no problem with peers rejecting it.

Four hour debate

The debate last night lasted almost four hours as bishops attacked the cuts, ending when peers voted by 307 to 277 to approve an amendment presented by independent crossbench peer Baroness Meacher that demanded the cuts are delayed. Minutes later, the Government was defeated again by 289 votes to 272, as peers supported a Labour motion to delay the cuts until ministers create ‘full transitional protection’ for everyone affected.

Shadow Chancellor John McDonnell asked that the Chancellor obey the will unelected peers. ‘George Osborne’s got to think again,’ he said. ‘He’s been defeated twice in the Lords tonight.‘But there are a large number of Conservative MPs as well who have been telling him very very clearly he’s got to think again on this one.’

George Osborne’s response

Mr. Osborne said: ‘Unelected Labour and Liberal lords have voted down a matter passed by the elected House of Commons. That raises constitutional issues, and David Cameron and I are clear they will need to be dealt with.George Osborne Budget 2015

‘On tax credits I said I would listen to the concerns that have been raised and that’s precisely what I will do. We were elected to deliver this lower-welfare higher-wage economy and that is exactly what we will do.’

The changes proposed by Mr. Osborne aimed to slash £4.4billion from working tax credits and child tax credits, meaning three million families would lose £1,300 a year.

Rise in minimum wage and increased free childcare

The Institute of Fiscal Studies has denied the Government’s claims that other measures, such as higher minimum wage and more free childcare, will compensate.

Labour’s former work and pensions minister Baroness Hollis of Heigham encouraged peers to ‘keep faith with struggling families’ and dismissed claims that voting for a delay would create a constitutional crisis.

The Archbishop of York, John Sentamu, warned against forcing working families into the hands of ‘loan sharks’. Meanwhile, the Bishop of Gloucester Rachel Treweek asked peers to create a ‘louder message’ to Mr. Osborne about protecting working families.

Additionally, Lord Campbell-Savours accused David Cameron of lying about the cuts throughout the general election.

 

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About Siobhan Harmer

About Siobhan Harmer

Siobhan Harmer is an English Freelance writer who drinks far too much coffee!!

Website: Siobhan Harmer

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