Lords discusses tax credits

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Members of the Lords will discuss draft regulations on tax credits on Monday 26 October.


Watch live from 3.15
http://www.parliament.uk/business/ne...ax-credits-si/

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Re: Lords discusses tax credits



The government has been dealt a major blow after the House of Lords voted to delay tax credit cuts and to compensate those affected in full.
Peers voted by 289 votes to 272 to provide full financial redress to the millions of recipients affected.
They earlier inflicted a second defeat by backing a pause until an independent study of the impact was carried out.
George Osborne said he would heed the outcome of the vote, but said it raised "constitutional issues".
The chancellor criticised "unelected Labour and Lib Dem lords" for defying the will of the elected House of Commons, but said he would set out how the proposed changes to tax credits would be modified in response in next month's Autumn Statement.
"I said I would listen and we will listen to the concerns that have been raised," he said.
"I believe we can achieve the same goal of reforming tax credits, saving the money we need to save to secure our economy, while at the same time helping in the transition.. I'm determined to deliver that lower welfare economy the British people want to see."
But the BBC's political editor Laura Kuenssberg said it was a "very bad result" for the government but it was not clear what it meant for recipients of tax credits.
Labour reacted by calling for a "full u-turn" over the tax credit changes.


'Powerful message'

On a dramatic evening in the House of Lords, peers threw out a "fatal motion" tabled by the Lib Dems, which would have blocked the changes entirely.
If it had passed, the Lib Dem motion would have stopped the £4.4bn cuts to tax credits in their tracks and sent the proposals back to the drawing board.


But peers backed calls, by 307 votes to 277, led by crossbench peer Baroness Meacher for the cuts to be put on hold pending an independent analysis.
They also supported a Labour plan to provide transitional financial support for at least three years for those likely to be affected.
Baroness Meacher told Sky News that the government was "pulling the rug" from under the feet of working people, saying the outcome sent a "powerful message" to MPs to think again.
Ministers argued peers did not have the right to block financial measures approved by the House of Commons, with Lords leader Baroness Stowell telling them the "financial primacy" of the Commons had been in place for 300 years and to ignore this would be an "unprecedented" challenge.

'Economic vision'

Urging peers to reject the critical motions, she said the squeeze on tax credits should not be treated "in isolation" but was part of the government's "economic strategy and vision for the country".
But speaking during a three-hour debate, former Conservative Chancellor Lord Lawson urged "tweaks" to the policy to reduce the "financial harm" to those on the lowest incomes, saying "it is not just listening which is required, but change"
What are tax credits and what are the changes?

Tax credits are a series of benefits introduced by the last Labour government to help low-paid families. There are two types: Working Tax Credit (WTC) for those in work, and Child Tax Credit (CTC) for those with children.
Under government proposals, the income threshold for Working Tax Credits - £6,420 - will be cut to £3,850 a year from April.
In other words, as soon as someone earns £3,850, they will see their payments reduced. The income threshold for those only claiming CTCs will be cut from £16,105 to £12,125.
The rate at which those payments are cut is also going to get faster. Currently, for every £1 claimants earn above the threshold, they lose 41p. This is known as the taper rate. But from April, the taper rate will accelerate to 48p.
There will be similar reductions for those who claim work allowances under the new Universal Credit.

Opponents of the tax credit changes say they will leave millions of existing recipients - many of whom work but are on low incomes - some £1,300 a year worse off when they come into effect in April.
But ministers say that taking into account other changes, such as the introduction of the new national living wage, further increases in the personal tax allowance and an extension of free childcare, the majority of existing claimants will be better off.
The measures have been approved on three occasions by the Commons since June, but there has been growing unease on the Conservative benches about their impact and the government is more vulnerable to defeats in the House of Lords, where it has no majority.

It should not really be much of a problem - the House of Lords is not traditionally supposed to block financial legislation that has the backing of MPs.
This principle was established in 1911 during the constitutional gridlock that followed a decision by peers to block the Liberal Party's "people's budget".
But nothing is ever cut and dried in Britain's fluid, unwritten constitution. And both sides are angrily trading precedents and claiming that their opponents are overstepping the mark. If they could only agree where the mark is


The Lib Dems told their 111 peers to vote for the motion but it did not attract support from Labour and the 176 crossbench members of the Upper House.
Labour's motion, under the name of Baroness Hollis, called for the changes to be delayed until a three-year package of transitional financial help has been agreed upon.


The Upper House, whose main function is as a revising chamber, has no powers to amend or block government money bills, but the tax credit changes are incorporated in a so-called statutory instrument rather than primary legislation.
According to parliamentary records, peers have killed off secondary or delegated legislation supported by the Commons on five occasions since 1945: in 1968, 2000 (twice), 2007 and 2012.
Conservative MP Michael Ellis told Sky News that it was a "constitutional outrage" for the Lords to defy the Commons over the issue, saying it should have "consequences" for the unelected chamber.

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Re: Lords discusses tax credits

SUMMARY


George Osborne has been forced to water down his flagship tax credit reforms after peers voted to delay the cuts and sparked a constitutional crisis.

In an historic move, the Lords voted for the Chancellor to stop his tax credit reforms until he comes up with a way of “compensating” low-paid workers for three years.

The defeat immediately forced Mr Osborne into a U-turn. The Chancellor announced that he would next month reveal measures to soften the impact of the cuts on the lowest paid.



Mr Osborne said: "I said I would listen to the concerns being raised and that is precisely what I will do.
"We can achieve the same goal of reforming these tax credits, securing the money we need to ensure our economy is safe, and at the same time helping in the transition to these changes and I will set out how we achieve that at the Autumn Statement."
Peers voted down the measures despite being warned that they would provoke a “constitutional crisis” because the reforms have already been passed by the House of Commons.
It is the first time in 100 years that the Lords has voted down a financial package backed by MPs in the Commons and will be seen as a major blow to Mr Osborne.

In the minutes after the votes, David Cameron suggested the government would seek retribution for the defeat.
He announced a “rapid review” to ensure peers are unable to vote down future Government finance bills.
It raises the prospect of new rules preventing peers from voting on similar packages of reforms.
There have been suggestions that the Conservative could create scores of new peers to ensure that they have a majority in the Lords.
A Downing Street spokesman said: “The Prime Minister is determined we will address this constitutional issue. A convention exists and it has been broken. He has asked for a rapid review to see how it can be put back in place."

Earlier in the Lords, peers demanded that Mr Osborne “rethinks” the £4.4billion cuts to the tax credit system that he announced earlier this year.
A coalition of Labour and Liberal Democrat peers joined with senior figures in the Church of England to savage the tax credit cuts as “morally indefensible” and demand that they were rejected.
The Government lost two votes calling for a delay to the reforms. However, a Liberal Democrat motion to “fatally” kill the changes failed.
Mr Osborne will now be forced to consider ways of mitigating the cuts. He could still consider wrapping the tax credit reforms into the finance bill – which is passing through the Commons - but he will be accused of ignoring the will of the Lords and would face heavy criticism.
The delay could prove especially damaging as it may require the Government to implement major welfare reforms close to the general election in 2020.
Conservatives reacted furiously in the minutes after the Lords votes.
Michael Ellis, who is Theresa May’s Parliamentary Private Secretary, said: “It should and hopefully will have consequences for the House of Lords.”
And Edward Leigh, the senior Tory backbencher, said: “Not for 100 years has the House of Lords defied this elected House. This is a serious matter and I ask for [the Speaker] to give a statement to protect the rights of the elected representatives, not just for us but for the people of this country.”

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Re: Lords discusses tax credits

The thing is, if the elected representatives lie to gain power, they are not truly elected.

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Re: Lords discusses tax credits

The thing is, if the elected representatives lie to gain power, they are not truly elected.

This is he lying

[Amethyst]

Re: Lords discusses tax credits

To be fair, that woman at the end says that said she works bloody hard for her money, yes she may do, but not for tax credits.

It is a system I never have agreed with and it should be ditched - BUT - the government have to recognise how the last 12 years have made people, employers, the country generally, absolutely reliant on it (including myself ) and it needs to be taken away with care and other benefits, the living wage, basic tax rate etc fill in the gap to ease the transition. So I agree with the Lords that it needs delaying until they have figured it out properly to remove in stages cause the least detriment possible.

I am pissed with Dave for the blatant lying though.

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Re: Lords discusses tax credits

I also have never understood the system and think it's a crap system that causes as much grief as benefit for many.

The reliance on the 'living wage' that if enforced imo will only lead to job losses or even more insulting zero hour contracts.

The 12 billion cut in welfare is as it states 'a cut' and on paper will be covered by people working longer, for more money and taking more of their hard earned home by being able to earn more before paying tax.
That can only happen if the jobs are there and the companies can afford to pay higher rates and offer longer hours.
I have yet to be convinced the jobs created by the clone clowns actually exist and if they do, how many are full time employment and long term.

I think the woman is self employed running an unprofitable nail salon from her home and has 4 kids, leaving her totally dependant on child and working tax credits to cover her rent etc.