Plea to Tory MPs to join opposition to cuts in tax credits

Tory MPs concerned about George Osborne's plans to cut tax credits have been urged to join Labour in voting against the measures in the Commons.

The Chancellor was challenged by Tory MPs about the £4.4 billion cuts as he came under mounting pressure to make changes to the controversial policy.

But in a sign of defiance the Treasury released figures showing that without the reforms to tax credits since Mr Osborne entered Number 11, taxpayers would face a bill in 2016-17 of almost £15 billion more than is currently forecast.

In a late plea for support, shadow work and pensions secretary Owen Smith, and the shadow Treasury chief secretary Seema Malhotra have written to Tory MPs calling on them to back a Labour motion calling for the cuts planned for April to be reversed.

They claimed that around three million working families will lose an average of £1,300 per year as a result of the cuts.

"This issue transcends narrow party lines, as surely none of us came in to politics to take money away from low and middle paid workers," they wrote.

"If left to go ahead, the changes will make people significantly worse off the length and breadth of the country, hitting thousands of people in every constituency. This is why representatives of all parties have raised concerns about this issue."

Tory unease about the plans was on display at a meeting of the 1922 Committee of Conservative backbenchers, where Mr Osborne was questioned about the measures.

In an effort to underline the importance of the plans as part of Mr Osborne's efforts to balance the books, the Treasury commissioned analysis on the level of public spending on tax credits that would have occurred without the Government's changes.

The figures show that before Mr Osborne's reforms since 2010, including the controversial cuts in July's Budget, spending on tax credits would have risen from £28.9 billion in 2010-11 to £40 billion a year in 2016-17.

It is now forecast by the Office for Budget Responsibility to be just over £25 billion in 2016-17 - around £15 billion lower.

Treasury Chief Secretary Greg Hands said: "Labour has opposed every single saving we've made in a welfare budget they let spiral completely out of control.

"When they left office, they had allowed means-tested payments to go so far up the income scale that nine out of ten families - including MPs - were eligible.

"Treasury analysis now shows that without the reforms we have embarked on, spending on tax credits would be rising to £40 billion next year. Instead it's forecast to be £25 billion.

"That £15 billion that we've saved - while at the same time offering working people lower taxes and higher wages, thanks to our new personal allowance of £11,000 from April and the new National Living Wage - is the equivalent to £500 extra in income tax for every taxpayer.

"Labour must now explain where the money is coming from. Their economic policy lurches further from chaos to incredibility."

Although Tory MPs were elected on a manifesto commitment to cut the welfare bill, some have concerns about the way tax credits will hit those in work.

Following the meeting of the 1922 Committee in the Palace of Westminster, Tory MP Steve Baker confirmed Mr Osborne had been asked about the issue. The High Wycombe MP said: "Lots of us don't like the tax credit changes."

He said MPs were aware they were part of a package, which also included the new National Living Wage and the increase in the tax-free personal allowance.

"But colleagues are well aware that some families will miss out," he said.

"Lots of us are very concerned about it but the vast majority of colleagues accept that these changes are a consequence of all the other pledges we made in the manifesto."

A number of Tories expect Mr Osborne to come up with plans to reduce the impact on low-paid workers.

London mayor Boris Johnson said he believed the changes were under "intensive review" while former Cabinet minister Andrew Mitchell also suggested Mr Osborne may have to "tweak" the plans.

Stevenage MP Stephen McPartland - one of only two Tories to vote against the tax credit cuts - said he believed Mr Osborne was preparing to take action to soften the blow.

Mr McPartland told BBC Radio 4's PM: "I genuinely believe that we will be able to persuade him to tweak the policy.

"I believe he will because I believe he wants to look after those people and it will just have been a matter of maybe nobody understood the full impact."

Mr McPartland said that the prospect of a worker on £12,000 losing a 10th of his income "doesn't sit right with me", adding: "There were and still are a number of Conservative MPs who are very unhappy about the changes."