It is a blow to the chancellor, who has staked his reputation on making Britain “live within its means”, and could spur the leadership ambitions of other members of the ruling Conservative Party who are keen to replace Cameron.
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He said: “The basic principle is this: The House of Commons is elected, the House of Lords is not”.
The savings from his plans totalled £4.4bn, so he’s going to have to find a more palatable way to save the cash when announced revised and softened plans in his Autumn Statement due at the end of November.
The first female bishop to enter the House of Lords has called for peers to send a “loud message” to George Osborne about protecting working families in a crunch vote on the Chancellor’s cuts to tax credits.
Commons Speaker John Bercow said there had been no “procedural impropriety”, but Osborne reacted angrily, saying it had “raised constitutional issues”.
But the Labour peer said: “This review mustn’t be seen as punishment for the Lords, and the Speaker of the Commons himself said that nothing procedurally improper had been done”. “I am determined to deliver that lower welfare, higher wage economy that we were elected to deliver and the British people want to see”.
The Chancellor bowed to pressure to put in place transitional measures following a double defeat in the House of Lords over the deeply divisive welfare reforms.
The Chancellor said he would listen to any proposals Mr McDonnell had “to help in the transition” to lower tax credits.
“One constituent told me “Tax credits at the moment only just make it possible for families to feed and clothe their children as it is”.
According to prime minister David Cameron, the upper house contradicted conventions dating back to the aftermath of Lloyd George’s People’s Budget of 1909 which clarified peers do not interfere in financial matters.
Baroness Stowell, the Conservative leader of the Lords, had warned that Labour and Liberal Democrat motions to kill or delay the cuts would take Parliament into “uncharted territory”.
Tina Stowell, the Conservative leader in the Lords, had earlier urged the chamber not to reject the tax-credit cut, and instead to express their disagreement by backing an amendment expressing “regret” at the cuts.
“If it is their intention to tear up the rules that have applied for half a century and say “We are happy to throw out the programme of the elected Government”, then of course we have got to address that”.
The tax credit cuts are forecast to save around £9.7bn by 2020/21 as part of the government’s drive to save £12bn from welfare spending in order to reach a surplus in public spending. “They haven’t done that for 100 years and it does raise constitutional issues”. “People who have been in parliament with for the past 14 years know my view is clear – we should have an elected House of Lords”.
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SNP MP Stewart Hosie told Mr Osborne he had not only “lost his political touch but his chance of being Prime Minister have gone up in a very large puff of smoke”.
