Tax credits: George Osborne vows to press ahead with reforms

George Osborne Reponds to House of Lords Tax Credit Vote
George Osborne Reponds to House of Lords Tax Credit Vote

Chancellor George Osborne has insisted he will press ahead with changes to reduce the welfare bill, despite a double defeat in the House of Lords over his plans to cut tax credits.

Mr Osborne received a noisy reception as he faced MPs for the first time after peers backed two motions on Monday which delay the £4.4 billion cuts in working tax credit and child tax credit.

Speaking at Treasury questions in the House of Commons, Mr Osborne confirmed that he will announce plans to ease the transition to lower tax credits in next month's Autumn Statement.

But he also said the Lords vote breached the century-old convention that the Upper House does not block financial decisions made by the Commons, raising "clear constitutional issues which we will deal with".

Prime Minister David Cameron is later expected to announce details of a "rapid review" of the rules governing the relationship between the two Houses of Parliament.

Mr Osborne told MPs: "Last night, unelected Labour and Liberal peers voted down the financial measures on tax credits approved by this elected House of Commons. That raises clear constitutional issues which we will deal with.

"We will continue to reform tax credits and save the money needed so that Britain lives within its means, while at the same time lessening the impact on families during the transition. I will set out the plans in the Autumn Statement.

"We remain as determined as ever to build the low-tax, low-welfare, high-wage economy that Britain needs and the British people want."