Family benefits should not be touched in spending plans, Labour tells Chancellor

Benefits and support for families should not be touched when Chancellor George Osborne reveals his future spending plans, Labour has said.

Shadow chancellor John McDonnell called on Treasury ministers to end the insecurity for families by announcing they will withdraw £4.4 million of tax credit cuts "in full" ahead of next week's Autumn Statement.

He added the Government should also offer assurances that Mr Osborne will not pay for the reversal of his tax credit policy by cutting the "benefits and support to families elsewhere".

Mr McDonnell said the guarantees are needed as the Chancellor has a reputation of "giving with one hand and taking with another".

The Opposition has warned three million working families will lose an average of £1,300 a year from April 2016 as a result of the tax credit cuts.

Several Conservative MPs have raised concerns about the policy and the Government has suffered a double defeat on the issue in the House of Lords.

Mr Osborne has said he will bring forward revised proposals when he delivers his Autumn Statement later this month.

Moving a debate on the Government's economic record, Mr McDonnell told MPs that housing support and other areas appeared to be under threat as Mr Osborne seeks to rectify the issue.

He said: "I don't expect ministers to reveal us the detail of the Chancellor's proposals today to resolve this matter, but can I say for the three million families who face a cut of £1,300 a year could ministers at least assure us - and those families - that they'll be withdrawing the tax credit cuts in full and no existing or new claimant will be losing out."

The Labour frontbencher also said: "All I urge today is not the detail of how he is resolving it, I will wait for that next week, but at least the assurance that nobody will lose out because I think families out there want that assurance now because of the insecurity that they face."

He reiterated the Opposition will support the Chancellor if he withdraws the tax credit cuts "in full and fairly".

"On fairness, can ministers also assure us if the Chancellor does scrap this tax credit cut this will not be paid for by cutting the benefits and support to families elsewhere.

"I seek that assurance because unfortunately the Chancellor does have a bit of reputation of giving with one hand and taking with another."

Treasury Minister Harriet Baldwin reiterated the Chancellor's commitment to "responding" to concerns over tax credit cuts in next week's Autumn Statement, without setting out details.

She claimed the Tories won the election because people want a low-welfare, low-tax, high-wage economy, which is what the Government is working towards.

Ms Baldwin suggested a higher national minimum wage, income tax cuts and increases in free childcare would go some way towards mitigating the effects of the tax credit cuts.

She said: "The British people want to see a lower-welfare, lower-tax, higher-wage economy, that's what they voted for in May.

"In the summer Budget we set out a package of reforms for working people which included the introduction of the new national living wage, continued increases in the personal allowance and the doubling of free childcare worth up to £5,000 a year for working parents.

"Of course we will listen to the concerns raised about the transition period and the Chancellor will set out our response to these concerns next week.

"But make no mistake, creating a low-welfare, low-tax, high-wage economy is one of the most progressive goals a government can achieve and one that we will continue working towards."

Ms Baldwin slammed Labour's position on the economy, claiming the party was rejected at the election because it did not recognise the deficit.

She said: "First of all, and we've heard it here today that the deficit doesn't really matter, that it shouldn't be a priority to reign in unsustainable public spending, that it's fine to kick difficult decisions down the line.

"Well, these are the views that were put to the British electorate in May and the electorate rejected them overwhelmingly.

"They looked at the 1,000 jobs that the UK economy had created every day since 2010, they looked at the highest growth figure in the G7 for the last two years in a row, they looked at rising wages, at rising living standards and falling inequality and they said - your long-term economic plan is working so we want you to continue the job."

SNP economics spokesman Stuart Hosie berated "smirking Tories" for leaving poor families thousands of pounds worse off with tax credit cuts, claiming "stubborn" Mr Osborne would do little to change his original plans.

He said some of the worst affected households, losing around £4,000 a year, would be facing a marginal tax rate of 90% - something that would normally have Tories "up in arms".

The SNP MP said: "While of course there may be changes announced next week, I think few believe the stubborn Chancellor and his Government will actually stray too far from the plans he originally announced.

"And those plans have a quite horrendous impact on households in Scotland and throughout the UK.

"For many real people, real families and real communities, the erosion of their household income is quite extraordinary.

"The average figure of £1,200 a year, £100 a month is routinely used, that's an accurate figure.

"But for some households the annual loss is around £4,000 a year.

"Now the Tories may find this funny, but that would imply a marginal tax rate of 90% on some of the poorest working households in the country.

"If that was what they were proposing, the backbenchers would be up in arms, but because this is taking what they see to be benefits from poor people, it's suddenly OK because that's the way smirking Tories always think."

Mr Hosie raised concerns about the HMRC closures announcement, stating that if the UK Government was serious about clamping down on avoidance, evasion, fraud and even error, then closing 137 HMRC offices, including almost every one in Scotland, was a "catastrophic mistake".

Most individuals and businesses he said wanted to be honest and wanted to pay their tax, adding: "If less than half the calls are being answered now, it will get worse."

Conservative Alex Chalk (Cheltenham) branded Labour's motion "misconceived".

He said: "It is by getting that stability, by getting that growth, by getting that prosperity, that we in fact assist the most vulnerable in our society."

He added: "There's an issue of generational justice, we owe it to the next generation to bequeath to them an economy that can pay its way."