Tax credit cut: Lords did the decent thing

She said David Cameron had “denied” he’d cut tax credits, adding: “Members of the public especially those who voted Conservative are quite rightly very angry”.

The tax credits benefits system was introduced by the last Labour government.

Guto Bebb MP criticised a fellow Conservative MP who suggested that those losing £30 a week in tax credits should simply work three more hours.

The impoverishment of so many children highlights the absolute callousness of David Cameron saying that he’s “delighted” that his MPs voted through George Osborne’s economic assault on the working poor. And there is no doubt that the Lords have been emboldened on tax credits by the sense that public opinion is on their side. It will also increase the personal tax threshold to GBP12,500 over the next five years. After the government failed to publish its usual distributional analysis, the Institute for Fiscal Studies (IFS), a think-tank, helpfully obliged.

“People with older children who don’t necessarily have childcare provision, single parents who earn more than the living wage, and people in private accommodation who don’t benefit from the rent reductions”. The IFS said that the NLW would, on average, compensate for 26 percent of the losses this group would face; they would however remain GBP550 worse off per year on average.

Legislation to implement the reforms passed the House of Commons on October 20 and was sent up to the Lords.

It has always been seen as the lesser chamber, an anachronism from Britain’s past, but the country’s unelected upper house of parliament briefly reclaimed its long-lost pre-eminence this week when it rejected the government’s welfare reforms. This was defeated by 310 votes to 99.

So we have a balanced plan to move to a lower-welfare, lower-tax and higher-wage economy, based on a combination of the new National Living Wage, reformed tax credits and lower taxes that taken together with other benefit changes and tax cuts means a typical family with someone working full time on the minimum wage will be over £2,400 a year better off by 2020.

The Chancellor’s embarrassment comes just days after he accused the House of Lords of “breaking convention” for passing a similar motion.

The government has been long in convincing the House of Lords not to throw out the tax cuts altogether, and it seems now that Osborne will not act if his peers vote for any other option when they next meet.

The Chancellor has promised to draw up a set of revised proposals to ease the transition to the new system for those affected, which he will set out in next month’s Autumn Statement.

Field’s sentiment was echoed by Tory rebel, Stephen McPartland, who said: “I do want to urge the Treasury to talk to us, to listen to us, to work with us because I do warn the Treasury if they don’t come forward with mitigation proposals we find acceptable we are going to continue to raise the issue and we are going to continue trying to ensure we look after those poorest in society”.

Further reform of the upper chamber has been an objective of many British governments for more than a century, but progress has been slow, with a consensus on comprehensive change continually out of reach. When Jeremy Corbyn was elected Labour leader, the Tories hoped this would reduce their problem in the Lords.

The governing Conservative party has known that its bills could get a rough ride in the Lords, because it does not have a majority there, but the rejection of a financial matter amounted to a “constitutional issue” in the prime minister’s eyes.