Britain’s Finance Minister Says He Will Act Over Tax Law Defeat

Peers defied calls to respect a century-old convention that the unelected upper chamber does not block financial measures approved by the Commons or manifesto commitments.

It is the first time in 100 years that the Lords has voted down a financial package backed by MPs in the Commons and will be seen as a major blow to Mr Osborne.

A No 10 spokesman said: “The Prime Minister is determined we will address this constitutional issue”.

However in addressing MPs during a scheduled session on Treasury questions, he conceded to last night’s Labour motion which passed in the Lords.

Under government proposals, the income threshold for Working Tax Credits – £6,420 – will be cut to £3,850 a year from April.

The House of Lords will hold a series of votes on the issue Monday in which the government could face defeat after peers tabled motions to try and stop the cuts.

In the House of Commons, Conservative lawmaker Edward Leigh said the rights of legislators were being trampled by the unelected Lords.

Meanwhile, UK Chancellor of the Exchequer George Osborne has been accused of bullying peers over the controversial tax credit cuts.

As part of this, his government wants to cut over £4 billion from tax credits – a complex system of benefits in which the state tops up the incomes of people on low salaries and families – next year.

Former Chancellor Lord Lawson urged changes to the policy to safeguard those on the lowest incomes.

“You need to see where the winners and losers are going to be in these changes. That is what concerns me”. “Are you saying absolutely as a guarantee, it will never happen?”

A number of senior Conservatives including Boris Johnson, the Mayor of London, and Ruth Davidson, the leader of the Scottish Tories, have expressed concerns about the tax credit cuts.

The Archbishop of York, the Most Rev John Sentamu, told peers they would be abrogating their responsibilities by approving regulations without having the full facts before them.

The Resolution Foundation think tank, which campaigns on behalf of low-paid workers, said Osborne had three main options.

One testimony was from Rachel in Milton Keynes, who is set to lose £2,005 a year and said: “It probably means we will skip a few extra meals to ensure that the children eat”. “But I accept that none of this was the fault of the families who are struggling to make ends meet”. Any attempt to do so would likely generate more bad headlines, and more Tory discontent, than the defeats it sought to head off. Plus, the House of Lords is bloated already.

Mr Davis told the BBC Radio 4 Today programme: “The simple truth is that this was an incredibly important, possibly harmful, thing to 3 million people – hard-working families, the people we are supposed to support – and somebody had to tell the Government to think again”.