Review of Lords confirmed in wake of tax credit defeat

Mr Osborne is facing dissent from a number of his own backbench and Cabinet colleagues over the austerity move.

George Osborne has signalled transitional relief will be offered to a few of the poorest households to soften the impact of cuts totalling £4.5 billion.

“Tax credits are part of parliament’s control of public expenditure and fall under the constitutional convention of House of Commons primacy in financial matters”.

Unlike in the Commons, the government does not have a majority in the Lords and has suffered 19 defeats in the Lords since May.

During the debate it became clear that the government would even struggle to keep Tory peers on side. It has been widely suggested that the Prime Minister could pack the Lords with ranks of newly-appointed Tory peers, to secure a majority and avoid the prospect of future embarrassment in the upper chamber.

“A convention exists and it has been broken”.

George Osborne has promised to “lessen” the impact of his tax credit cuts after being dealt an embarrassing double blow by the House of Lords. However, a Liberal Democrat motion to “fatally” kill the changes failed.

But peers said they had the right to vote against the cuts as they were not in the Conservative manifesto. “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”.

UUP members of the Lords did not vote.

While speaking to reporters, Osborne said “I have said I would listen and that’s exactly what I intend to do”. He voted to delay the reforms.

“I say to the Government that these proposals are morally indefensible”, he said. Child benefit, to me, is one of the most important benefits there is.

Sarah Champion, Labour MP for Rotherham, asked the Chancellor what he would do to protect the 5100 families in Rotherham, who will be “punished” by tax credit reductions.

A second motion from Baroness Meacher – calling for the cuts to be delayed until independent analysis of their effects was carried out – was also supported.

The BBC’s political correspondent Ross Hawkins said the government felt “hard done by” and believed it could “rewrite or clarify the rules” to stop the House of Lords “over-reaching itself”.

“We can’t allow this constitutional outrage”. “It puts us on to a perpetual treadmill”.

‘Nobody who supports hard-working families can think it’s right to suck £1,788 from the tax credits of a nursery nurse’s annual income.

Closing the debate for the Labour Party, Baroness Smith of Basildon condemned the prime minister for talking-up a “phoney” constitutional crisis in order to deflect attention away from the impact of the cuts.

Former Conservative chancellor of the exchequer Lord Lawson criticised the way cuts to tax credits are being pushed through and has demanded changes. There are concerns that the decision taken in the House of Lords will now embolden Tory rebels to vote against the Government.