In the House of Commons on Tuesday, Chancellor George Osborne announced he would reveal new plans to tax credit cuts in the Autumn Statement, with a particular focus on the effects the cuts would have on poor families.
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Peers voted to require the government to conduct an independent report on the impact of the cuts before the issue is brought back to the Lords, and voting to require the government to put in place a scheme of transitional protection for at least three years for those affected by the cuts.
Lord Campbell Savours, who now sits in the House of Lords, said Mr Cameron had deliberately “misled the public” by saying in May that tax credits would not be cut.
“David Cameron and I are clear that this raises constitutional issues that need to be dealt with”, the Chancellor said.
Changes to his tax credits plan, which will derail his £4bn savings target, will be announced at the Autumn Statement at the end of November.
Speaking after the defeats by the Lords, Mr Osborne said: “Unelected Labour and Lib Dem lords have voted down a financial matter passed by the elected House of Commons”.
The Chancellor has said he will continue to reform tax credits but told Sky News the Government will soften the blow of the cuts and help families.
Former Lords Speaker Baroness Hayman backed the review ordered by the Prime Minister into the relationship between the two Houses of Parliament after peers defeated the Government’s tax credit reforms.
It comes after peers defied a long-standing parliamentary convention not to obstruct financial decisions approved by the elected Commons.
A review into how MPs can be given the “decisive role” over key financial decisions has been set up following the United Kingdom government’s Lords defeat over plans to cut tax credits. Osborne stated, “We remain as determined as ever to build the low-tax, low-welfare, high-wage economy that Britain needs and that Britain wants”.
The UK Government had comfortably seen off a Liberal Democrat bid to kill off the controversial cuts to tax credits in the Lords by a majority of 211.
Or he can reverse those tax breaks for the few and instead go for a less excessive surplus target in 2019-20 and be in a position to avoid penalising the 3million working families with these tax credit cuts, and stick to his self-imposed charter.
“Those families believed us when we all said work was the best route out of poverty, that work would always pay”, she said.
Asked if that could mean changes to the Parliament Acts, the legislation which imposed restrictions on the Lords, the peer said: “At its most extreme that is one possible solution, to try and amend the Parliament Acts”. “I don’t think we are ruling anything in or out at this stage”.
Labour imposed a three-line whip on the House of Lords votes and reported the presence of Tories not seen in the chamber for years.
Treasury chief George Osborne, who championed the cuts, conceded defeat and said he would introduce measures to lessen their impact on working people.
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Critics of the government say that it has mishandled the presentation of its tax credits policy and sought to enact the changes through a statutory instrument rather than a money bill, which the Lords can not challenge, to restrict debate.
