George Osborne's tax credit cuts face Lords showdown


Charter of Budget Responsibility

Peers will decide whether to reject controversial tax credit cuts in a highly-charged showdown over the impact of the squeeze on low-income families.

Ministers claim any move by the House of Lords today to kill off or delay the £4.4 billion-a-year welfare squeeze would be an unconstitutional power grab.

But critics remain hopeful that Chancellor 's proposals will be defeated, despite days of what one opponent called "unspeakable" bullying to back down.

The prospect of the cuts being killed off altogether appears slim after a rare "fatal" motion tabled by the Liberal Democrats failed to win the support of Labour.

Labour believes sufficient crossbench peers can be persuaded,though, to back its bid to block them until the Treasury consults further and promises "full transitional protection" for at least three years.

Ministers are urging critics instead to back a motion tabled by Church of England bishops expressing "regret" over the impact, but allowing the cuts to complete their parliamentary passage.

More than three million families will lose an average of £1,300 a year from April - a drop ministers say is balanced by a higher minimum wage, bigger income tax allowance and more free childcare.

But the respected Institute for Fiscal Studies (IFS) says higher wages will make up for only a fraction of the loss of income - and the Chancellor has refused to publish Treasury analysis.

Mr Osborne - who, it was strongly hinted at the weekend, would announce measures to soften the blow in the Autumn Statement - insists he is "comfortable" with the policy.

He challenged the House of Lords to respect century-old conventions that the unelected upper chamber does not block financial measures approved by the Commons or manifesto commitments.

Senior figures have warned of a serious repercussions, with Prime Minister David Cameron even failing to rule out handing out a hundred of more new Tory peerages to give his party a majority.

Lords leader Baroness Stowell will lead the debate instead of a Treasury minister as the Government seeks to press home warnings against what it says would amount to "constitutional vandalism".

But peers insist they are free to act because the measures were not specifically set out before May's election and are being pushed through as a Statutory Instrument (SI) not a formal Bill.

Labour's leader in the Lords, Baroness Smith of Basildon, said that had been done deliberately "to sidestep the more usual detailed parliamentary scrutiny".

Conservative peers had acted similarly in 2008 over the then Labour government's attempt to increase the National Insurance upper earnings limit without further primary legislation, she added.

"The threats we are now hearing have nothing to do with reform, and all to do with a government that hates challenge and will try any trick in the political playbook to get its way," she said.

"We will debate and scrutinise the tax credits SI in the usual way.

"We will not exceed our authority but neither will we be cowed into abdicating our responsibilities to hold government - any government - to account."

MP David Davis - the senior backbencher leading growing Tory demands for mitigating measures - said ministers were paying the price for having sought to stifle Commons debate.

Education Secretary Nicky Morgan said Mr Osborne was "in listening mode" in an apparent signal that changes - possibly through the tax system - would be found to mitigate the cuts.

She insisted there was no question of the cuts being dropped however - after shadow chancellor John McDonnell said Labour would refrain from exploiting any U-turn for party political advantage.

MPs will have a fourth chance to vote on the cuts on Thursday - after Mr Davis and London mayoral candidate Zac Goldsmith joined forces with Labour's Frank Field to secure a cross-party debate.

The result is not binding but defeat would be a severe embarrassment for the Chancellor.

"Had the Commons been given a proper chance to think in the first place, this circumstance would never have arisen," Mr Davis said of the decision to push it through via statutory instrument.

"Let us recognise that it was a mistake, remember that the strongest stance is often the one of most flexibility, and thoughtfully and carefully put it right."

A poll found 57% of people said George Osborne's plans to cut tax credits should not go ahead as planned.

The YouGov survey on 1,625 adults commissioned by campaign group 38 Degrees and conducted last week found 28% thought more negatively about the Government as a result of the controversy.

New Tory MP Voices Concerns Over Tax Credit Cuts