GEORGE Osborne is facing a major constitutional tussle with the House of Lords over the UK Government’s £4.5 billion tax credit cuts after Conservative MPs used a Commons debate to make sustained attacks on the controversial policy.
While the Tory administration narrowly won the vote on Labour’s motion to reverse the reforms with a majority of 22, a number of the governing party’s MPs criticised the policy and the way it was being introduced.
Heidi Allen, who represents South Cambridgeshire, unusually used her maiden speech – by convention meant to be non-controversial - to protest that "the pace of these reforms is too hard and too fast...too many people will be adversely affected. Something must give".
Her Conservative colleague, Plymouth MP Johnny Mercer, urged the Chancellor to do "something, anything" to ease the "harshest" effects of the cuts on vulnerable people.
Tory veteran Sir Edward Leigh added criticism from the party's senior ranks while Andrew Percy, Peter Aldous, Jeremy Quin and Jeremy Lefroy also signalled opposition from the Government benches.
Critics say that as many as three million households across the UK, including 350,000 in Scotland, could lose as much as £1300 a year because of the cuts, which kick in next April.
The Government insists the cuts are necessary to get the burgeoning welfare bill down, arguing that when other issues are considered, such as the rise in the personal tax-free allowance and the introduction of the National Living Wage, people will be better off.
Ahead of the Commons debate, John McDonnell, the Shadow Chancellor, accused David Cameron of an “outright lie”, saying how before the General Election the Prime Minister said he would not cut tax credits but now intended to.
In the debate, his colleague Seema Malhotra claimed the Tories were in "disarray" over the tax credits plan and said the Government had not "told the truth" on the impact of the reforms, which cut from £6420 to £3850 the earnings level above which tax credits are withdrawn from April 2016, as well as speeding up the rate at which the benefit is lost as pay rises.
The SNP’s Ian Blackford said his constituents saw the Government move as "mean-spirited" and urged it to reverse the reforms as they contradicted its own claim to be on the side of working people.
But Damian Hinds, the Treasury Minister, said that when governments lost control of the national finances, "those who lose the most are generally those who have the least".
He said the Government was passionate about protecting working people's economic security, adding: “Our mission is to get wages up, tax down and welfare under control."
As the arguments for and against the tax credit cuts were made in the Commons, attention was turning to the Lords and a debate set for Monday.
Lord Kirkwood, the Scottish Liberal Democrat peer, had tabled a motion of regret, seeking Mr Osborne to reconsider his plans but now a crossbench “fatal motion” to block it will be tabled.
Tim Farron, the Liberal Democrat leader, who branded the Government’s changes “George’s Poll Tax,” made clear he had instructed his peers to vote for the blocking motion. Labour peers will do so too as well as, possibly, some Conservatives and crossbenchers.
While the Lords cannot interfere with a government’s Finance Bill, it has been pointed out how the tax credits cuts were not in the Tory manifesto and therefore do not fall under the Salisbury Convention, whereby the Government gets its policies through the Upper Chamber unimpeded.
Given the Conservative administration does not have a majority in the Upper House, then Mr Osborne is facing an embarrassing defeat and the prospect of restarting the whole process.
But Ken Clarke, the former Tory Chancellor, warned peers against "irresponsibly" blocking the tax credit cuts, stressing how he would become a "fervent advocate" of reforming the Lords if it succeeded in a last-ditch bid to kill them off .
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