Chris Grayling says 'nothing ruled out' after peers block tax credits plan

Nothing has been ruled out in the "rapid review" of rules governing the relationship between the Commons and Lords ordered by David Cameron after peers blocked Government plans to cut tax credits, a Cabinet minister has said.

Leader of the Commons Chris Grayling accused unelected Labour and Liberal Democrat peers of breaking parliamentary convention in order to "wreck" the Government's financial programme, and said it was clear that change was needed.

He confirmed that changes will be announced in November's Autumn Statement to ease the transition to lower tax credit payments for millions of households, but insisted the Government would not be distracted from its plan to balance the nation's books by the next election in 2020.

Peers backed two motions delaying the cuts following a series of impassioned speeches warning of the impact the changes would have on the poorest families.

Chancellor George Osborne, who will appear at the despatch box for Treasury questions and is also facing calls to make a full statement on the debacle, was forced to announce he would set out plans in the Autumn Statement to soften the blow for claimants hit by the reforms.

Details of the review ordered by David Cameron after peers defied a century-old convention not to block financial measures approved by the Commons would be worked out "in the next few hours", said Mr Grayling.

But he insisted that the rethink of parliamentary conventions itself would not be rushed but would be carried out "in a measured way".

Asked whether the PM had ruled out the option of creating 100 or more Tory peers in order to secure a majority in the Upper House, Mr Grayling told BBC Radio 4's Today programme: "I don't think we are ruling anything in or out at this stage.

"My view is I would be reluctant to see us do really dramatic changes, but it is really a matter of trying to sort out the relationship between the Commons and the Lords, if the Lords is intent on wrecking the manifesto of the elected Government.

"We have already last week seen them reject something that was in our manifesto, we have seen them reject part of the welfare changes that were very much part of our election platform in May.

"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."

In response to suggestions that Monday's defeat indicated the scale of public concern about the proposed £4.4 billion cuts to tax credits - which were not explicitly set out in the Conservative manifesto - Mr Grayling added: "I think this is all about Labour and Liberal Democrat peers in the Lords who are unhappy that they lost the election - the Lib Dems have eight MPs and 100 peers - deciding they want to wreck the Government's programme.

"There will have to be change. Of course there will have to be change."