Current Affairs

Cuts to Tax Credits: What Next?

cuts to tax credits

Last night the House of Lords voted on the government’s statutory instrument (SI) to make changes to Tax Credits. I wrote here what those planned changes were. The SI had already been through the House of Commons and been passed; this was just a formality… or so they thought.

Three motions were voted on in regard to the SI: 

Baroness Manzoor (Lib Dem) put forward a fatal motion, to basically throw out the SI. This motion was defeated by 310 to 99 votes. 

Baroness Meacher put forward a motion to delay the cuts. This one was supported by 307 to 277 votes.  This means the government will have to delay cuts to Tax Credits, until they have taken into account the findings of an Institute for Fiscal Studies report into the impact of any cuts. 

Baroness Hollis put forward a motion that said:

this House declines to consider the draft Regulations laid before the House on 7 September until the Government, (1) following consultation have reported to Parliament a scheme for full transitional protection for a minimum of three years for all low-income families and individuals currently receiving tax credits before 5 April 2016, such transitional protection to be renewable after three years with parliamentary approval, and (2) have laid a report before the House, detailing their response to the analysis of the draft Regulations by the Institute for Fiscal Studies, and considering possible mitigating action.

This motion was passed by 289 to 272 votes. 

What does all this mean?

Essentially this means that Osborne will have to try and push the whole thing through Parliament all over again – or to backtrack on his policy, neither of which would be on his own terms. Many of his colleagues have suggested he might make amendments to the policy, but Osborne himself has said he is “comfortable” with the cuts. Before the vote they did try to appease the Lords by saying they would “listen” to concerns if they passed the SI without amendment.

Does that mean no cuts?

Probably not. It means Osborne has gone back to his evil lair drawing board. With the media storm that has been raging around his planned cuts (did you see me on TV last week?), it’s likely he will make some changes to his plan before attempting to get it back through Parliament. Then again, he has egg on his face and is not a happy chap. He may well just take it straight back to Parliament as is.

What if he did that?

Before the vote, there was talk of the Tories stuffing the House of Lords with people sympathetic to their cause. Last night when their SI was defeated the government were calling it a constitutional issue that needed to be “dealt with” – by that they mean the idea that an amendment that has been passed in the Commons – a house of elected representatives – should be thrown out by a house of unelected peers is not right. That would be a valid point, if they weren’t trying to force through a change that would leave millions worse off.
What they really mean is that usually the house of unelected peers do as they’re told, and now they’ve thought for themselves and put Osborne in his place, he’s not happy.
Cameron is apparently planning to limit the powers of the Lords to avoid any more of his government’s policies being defeated in this way.

Osborne lords defeat
Source: BBC News

Either way, those of us who rely on Tax Credits are not out of the woods yet. The government are still planning to make cuts, and they still don’t much seem to care if that leaves a lot of us on or below the breadline. All this means is that their plans will be delayed slightly.

It is worth remembering that in the Tory manifesto they put out before the General Election this year, they said they would cut £12 billion in spending, but they didn’t quite get around to mentioning where they would make cuts – and they hinted that they wouldn’t cut Tax Credits. Last night in the Lords it was noted that the Tories have in effect misled the public, many of whom will have voted for them in the belief they would find their £12 billion elsewhere.

Any attempt to force these cuts through the Lords – either by attempting to amend the constitution or by stuffing the house with sympathetic peers – could turn out to be a PR disaster for them. To me, it reeks of a semi dictatorship where the leaders push through whatever laws they want, regardless of any opposition. It will be interesting – but also worrying – to see what happens next.

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Vicky is a single mother, a blogger, a podcaster and a social media trainer. You can find her blogging, business and social media tips at VickyCharles.com.

1 Comment
  • Carol Hedges

      REPLY

    Cameron was asked DIRECTLY, twice, pre election whether he would cut Tax Credits. He replied NO on both occasions. Therefore he and his government have lied to the electorate. When the Libdems reneged on their promise to get rid of tuition fees, they received excoriating headlines in the press and it marked tghe end of them as a viable party. Watch how mush this DOESN'T happen to the tories and note how a Murdoch press has created a biased and pro rightwing media. (You now I was going to pilke in). BTW WE are about to be hit by the'Universal Pension' which is going to leave many many thousands of older people far worse off., But that's MY story...x Carol Hedges recently posted...Autumn Ambling (Adventures of L-Plate Gran)My Profile

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