The House of Lords blocked a bill to cut tax credits on Tuesday, with Labour and Liberal Democrat peers calling for a delay until the government examines the expected impact, and asking for families to be compensated when they do come in.
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The cross party backbench motion was passed by 215 to 0 after supporters of the proposal – tabled by Labour’s Frank Field and Mr Davis – forced a division.
And in a reflection of mounting public anger, a host of Tories who voted for tax credit cuts only last month claimed they now want the blow softened.
His government wants to cut over œ4 billion from tax credits – a complex system of benefits in which the state tops up the incomes of people on low salaries and families – next year. By reducing tax credits and imposing a National Living Wage, which would gradually increase to more than £9 per hour by 2020, workers would be no worse off, employers would be forced to pay their way and the fiscal deficit would be reduced.
On Monday, the House of Lords voted to block the tax credit reforms, and Osborne responded by promising to mitigate the effect of the changes saying he was in listening mode.
“And I’ve had countless letters from wealthy people telling me this is wrong”.
Lord Lisvane, better known as Sir Robert Rogers, thinks the talk of a constitutional crisis over tax credits is overblown. However he added that the tax credit cuts were “punishing people who are going out to work, doing the right thing”.
“And in my opinion tax credits have been a means of reducing inequality and particularly excessive inequality in this country”. “I firmly believe work should always pay…”
He slated Labour and Jeremy Corbyn for their policies, but said: “We must support those who do work”. “Instead of tackling low pay, they are attacking the low-paid!”
However, all the economic analysis of the policy has shown that low-income workers will finish up worse off and, indeed, the policy will act as a disincentive to work.
Guto Bebb, Conservative MP for Aberconwy, said the “decision to cut so quickly so deeply” was problematic.
And while organisations like the Electoral Reform Society work away at the task of suggesting improvements that might actually strengthen our democracy, we scan the horizon in vain for a major political party prepared to take up the cause; or to learn serious progressive lessons from events like this week’s tax credit row, rather than simply rejoicing at the sight of George Osborne being briefly unseated from his austerity high horse, before he climbs back aboard, and resumes the hunt.
“The Chancellor has said he has listened to concerns and will come forward with proposals in the Autumn Statement to achieve the goal of reforming tax credits, saving the money needed to secure our economy while at the same time helping in the transition to the changes”. “People we should be saluting and cheering are sick with worry about how they will make ends meet, whether they are going to lose their homes, whether the interest on their mortgages can be repaid, let alone protecting their children”.
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Chesterfield MP Toby Perkins told the Derbyshire Times: “The government seem to be in denial about the scale of the issue they are creating for working families on low to modest incomes”.
