Tax credit changes would see millions of poorer people lose out
THE CONSERVATIVE majority government is facing its first crisis as the prospect increases of the House of Lords either delaying or scrapping legislation which will reduce tax credits.
The controversial legislation has survived three votes in the House of Commons, but faces four separate counter motions in the Lords.
One supported by Liberal Democrat peers calls for the tax credit cuts to be scrapped altogether, a so-called “fatal motion”. Another motion promoted by Labour calls for a three-year delay while a package of financial aid is assembled to help those worst hit by the cuts.
Two more moderate motions have been submitted by cross-bench peers calling for delay and reconsideration.
Osborne, the shadow chancellor who has ultimate responsibility for the changes which are a flagship policy, has warned that the House of Lords should not interfere with the legislation. A former Conservative party leader and peer Lord Howard, quoted on the BBC , warned that moves to reject a statutory instrument passed in the Commons would represent a violation of “centuries of observance” of the Lords position as a scrutiniser of bills with a strictly limited remit.
Many peers in the Lords, which does not have a Conservative majority like the Commons, disagree, saying they have a duty to intervene. They also cite several incidents of legislation being rejected by the Lords since the Second World War.
Meanwhile, shadow chancellor John McDonnell told Osborne that Labour would not seek to make political capital out of a U-turn if he chose to back down.
Speaking on the Andrew Marr show , McDonnell said: “I have written to George Osborne today to say, ‘I know what a U-turn looks like and how it can damage you but we need a U-turn on this one’.
“So I have said to him, ‘Look, if you can change your mind on this we will not make any political capital out of this’.
“If the Lords do throw this out tomorrow and put it back to the government, I have said to him, ‘If you change your mind and bring back a policy in which people are protected – not a political stunt but a real protection – we will not in any way attack you for that, in fact we will support you’.”
The current system of tax credits, including Working Tax Credit (WTC) and Child Tax Credit (CTC), were introduced by the last Labour government. Osborne’s legislation will significantly reduce the income threshold at which the tax credits become available, from PS6,420 to PS3,850 a year for WTC and PS16,105 to PS12,125 a year for CTC. The changes are expected to leave millions of low-paid people worse off.
The vote in the House of Lords is expected today (26 October) at around 4pm.
Picture courtesy of UK Parliament