Tax credits cut comes under fire

Lib Dem leader Tim Farron said his party’s peers were “well within their rights” to try to block the changes as the Conservatives did not have a mandate for them because they were not included in their manifesto.

Mr Smith said ministers were “just not being truthful” in claiming that cuts to tax credits were offset by measures such as the increase in the minimum wage.

Peers will on Monday evening vote on a “fatal” motion which would see the tax credit cuts scrapped. The government is hoping that crossbench peers, who are wary of being overly hostile to the government, will support this motion.

However at the moment David Cameron does not have enough Tory peers in the Lords to form a majority.

He could therefore decide to flood the Upper House with a raft of new Tory peers.

By tradition the House of Lords can only revise, and not overturn, legislation passed by the Commons.

Ministers are urging critics in the Lords to express their anxiety instead by backing a motion tabled by Church of England bishops expressing “regret” over the impact, but allowing the cuts to complete their parliamentary passage.

A motion, to be tabled by the former Labour minister Patricia Hollis, which would halt the cuts until the government produced a scheme to compensate low-paid workers for three years.

The Conservative majority government is more vulnerable to defeats in the House of Lords as it has no majority there. But reaching that figure means attacking those in work too.

The IFS calculates that millions of people will lose up to £1,300 a year from the Budget changes.

A few 19 per cent said the cuts should not go ahead altogether, and 16 per cent think cuts and changes should be made elsewhere.

The House of Lords have even been warned that rejecting such a large financial measure would provoke a “constitutional crisis” in a bid to persuade peers not to block the measures. If not for the tax credits we’ve received over the past few years we’d have gone into debt.

This is now levied at a rate of 12% on incomes above £8,000, unlike income tax which is not paid on earnings below £10,600.

“Chancellor George Osborne previously claimed that anyone working full-time on the National Living Wage will be better off by 2017, after changes to taxes, tax credits and benefits are taken into consideration”.

What are tax credits and what are the changes? The government will also limit Child Tax Credits to two children from April 2017.

But peers insist they are free to act because the measures were not specifically set out before May’s election and are being pushed through as a Statutory Instrument (SI), not a formal Bill.

Prime Minister David Cameron went as far as to threaten a suspension of the higher chamber, where the Tories are outnumbered by the opposition, if the Lords voted down the welfare squeeze.

“We want to listen to the views, which I respect, from the House of Lords”.

And it comes as a parade of senior Tories line up to warn of the danger in the tax credit cuts.

Labour and the Liberal Democrats are split on how to halt the Government’s tax credit cuts in the House of Lords as a vote looms today.