David Cameron faces revolt over cuts to tax credits

The cuts to tax credits make up £4.4 billion (US$6.8 billion) of a total of £12 billion worth of cuts to welfare which Osborne seeks to make.

Osborne, seen as the frontrunner to succeed Prime Minister David Cameron before 2020, was forced to backtrack on cuts to so-called tax credits after the unelected chamber defeated a key component of his drive to wipe out the budget deficit.

But Mr Grayling vented the Government’s anger at peers, accusing them of breaching a century-old convention that the Lords do not block the government’s financial measures.

“The proposals, I think, are wrong-headed and I am glad that for the moment at least they have been seen off”.

In a second interview the former justice secretary told Sky News this morning: “The truth is this was a part of our election manifesto”.

Mr Osborne also said the matter would not be let to rest.

“That’s what we’re doing now – that’s what we’re seeking to do”.

He said “transitional” help would be afforded to those worst affected. The move by the upper house was met with fury by Cameron, who said the decision to defy the Commons raises “constitutional issues”, but was greeted with delight by the public, who took to Twitter to hail Lady Hollis as a heroine. “But if he continues down his path of tax cuts for the rich paid for by tax credit cuts for many hardworking families, then he will be putting the interests of his party before the interests of those working families who just want to pay their bills and get to the end of each month”.

Mr Hancock said: “It would be unprecedented for the unelected House of Lords to reject a financial measure of this scale that has been passed by the House of Commons”.

“These cuts to tax credits also comes at the same time that the Government is making harsh changes in welfare such as lowering the benefit cap”.

A spokesperson for the Child Poverty Action Group said, ‘We hope ministers take a deep breath and admit that these cuts will pull the rug from under the feet of working families.

“I will set out the plans in the Autumn statement”.

Downing Street said a review of the constitutional implications would begin straight away, arguing that a “convention exists and it has been broken”.

How will tax credit cuts affect you?

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.

“Instead of manufacturing a phoney constitutional crisis why won’t he put his toys back in the pram and appreciate he needs to go back to the drawing board with his failed policy that hits working people the hardest?” He said: “The simple truth is that this was an incredibly important, possibly harmful, thing to three million people – hard-working families, the people we are supposed to support – and somebody had to tell the Government to think again”.

Shadow Chancellor John McDonnell said the Chancellor could have made the savings by reversing his tax breaks for multinational firms and scrapping his inheritance tax cuts for a wealthy few.