Yesterday’s “fatal” motion by Liberal Democrat peer Zahida Manzoor to reject the governments tax credits was lost by 310 votes to 99 with the Labour bloc abstaining – another #Labstain on welfare.
Tax credits cuts "will have such a damaging and devastating impact on millions of peoples' lives."That was the verdict of one Liberal Democrats peer – who has provoked fury among Conservatives by introducing an unusual "fatal motion" in the Lords to try to prevent the cuts' introduction.
Posted by Channel 4 News on Monday, 26 October 2015
In moving the fatal motion Baroness Manzoor said
My Lords, there has been a lot of discussion in the run-up to this debate about the role of this House in debating statutory instruments. I know that many noble Lords will wish to pick up on the constitutional role of the House. We have already started to see some of those points being made.
I do not discount the strength of feeling on the issue of whether this House should seek to reject the views of the elected Commons, but I want to be clear about what we are talking about today. We are talking about a measure that, according to the expert analysis of the Institute of Fiscal Studies, will hit 3 million low-income working families. These are people doing the right thing: going out to work and trying to make ends meet. They are exactly the kind of people whom the Government have said they want to help. Yet this change will have a seriously damaging impact on their ability to keep their heads above water. These families will, according to the IFS, lose an average of around £1,000 a year. For many people on low incomes, that will mean the difference between being able to continue to pay to heat their homes, pay their rent and feed their families and not being able to do so. In total, 4.9 million children will be directly affected by the change. Almost a quarter of single parents living in the UK will see their incomes cut.
Yet the Government continue to ignore the overwhelming consensus among charities such as the Children’s Society and Gingerbread—I could name many others, including taxation experts and even their own Children’s Commissioner—that these changes need to be reconsidered. It is no surprise that the Low Incomes Tax Reform Group—by no means a leftie organisation—has said that the impact of these changes, “on the majority of tax credit claimants will be devastating”.
The problems with the Government’s proposals go far wider than those directly affected. They will also have a huge impact on the important principle—that this Government claim to support—that work should always pay more than a life on benefits. Evidence from the Social Market Foundation suggests that someone earning the average wage for those living in social housing of £8.08 an hour will see the benefits of earning wiped out almost entirely. Because of the way the so-called taper rate interacts with taper rates applied to other benefits including local Council Tax benefit, the marginal deduction rate—the rate at which benefits are withdrawn—will be 93%. That means that for every pound a person earns by going out to work—by taking on extra hours in order to improve their lives—they will keep only 7p.
Liberal Democrats in the coalition Government fought for universal credit. We fought alongside the Conservatives for the “make work pay” agenda. The Government’s proposals run utterly counter to this….(more)
The Lords approved an amendment to delay the changes by 307 votes to 277 and one to ask for more work on transitional protection by 289 votes to 272.
Government supporters have been happy all along to make this a debate about the proper powers of the House of Lords rather than the merits of the tax credit question, and Labour and crossbench peers have shown more fear of this than Liberal Democrats.
The government is quite entitled to stuff the Lords with peers – as was threatened in 1909 in support of the “people’s budget” introducing state pensions – or to use primary legislation and the Parliament Act to get its way: or it can appeal to convention that the House of Lords should give it an easy time. The nuclear options may undermine the sense that the House of Lords is a legitimate part of our constitution, and so it is quite appropriate for Liberal Democrats – as supporters of Lords reform – to be uninhibited by such threats.
* Joe Otten was the candidate for Sheffield Heeley in June 2017 and Doncaster North in December 2019 and is a councillor in Sheffield.
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39 Comments
MRDW,
I really hope you weren’t serious in your comments! It’s in NOBODY’s interests that these cuts happen, let alone the Lib Dems. I’ve heard about being cruel to be kind; but if that’s the kind of political game you want the Lib Dems to play, then there’s no wonder that they are languishing in the polls!
A bill on this matter would certainly be a Money Bill certified by the Speaker and the Parliament Act would allow its passage without consent from the Lords and without the one year delay.
However, because it wouldn’t require Lords consent, it would be scrutinised much more carefully in the Commons. It’s trying to avoid proper scrutiny in the Commons that has got the Government into trouble in the Lords.
Our system is designed to ensure that major changes are scrutinised in detail in at least one House of Parliament. Trying to duck one just gets you the other, and the Tories are now complaining that they can’t avoid both Houses.
Can anybody tell me why Labour sat on there hands to allow the tax credits to continue? Whats in it for them?
I think there is a danger here for Lib Dems. If you say ” Lib Dems are now the only national party to abolish the tax credits cuts” you run the same problems as you did in 2010 when you proclaimed that you were the only party that would abolish tuition fees. you seem to be falling into the same hole of raising expectations and making promises which simply can’t be kept.
The present system of tax credits is simply indefensible because it lets employers off the hook by making taxpayers, including the low paid, top up for employers not paying a decent wage to their staff. The system itself is brutal and humiliates claimants. It should be replaced by a proper national living wage. That is what Tim Farron should campaign for. Even if Labour peers had voted with the Lib Dems it would still have failed because the Crossbenchers were not convinced either.
It sounds to me that Osborne got to cocky with his success and did not acknowledge parliamentary procedure and now that they did not get their way blaminf the house of lords with the only defence to drag out a constitutional law from 300 years ago. bad losers.;
nigel hunter 27th Oct ’15 – 10:49am………………Can anybody tell me why Labour sat on there hands to allow the tax credits to continue? Whats in it for them?…….
Perhaps a more relevant question (and one which is being ignored on these threads) is why almost one third of LibDem peers didn’t vote for their own amendment?
Labour are, as always, playing politics with this. As we know all too well in Scotland, electoral strategy long ago replaced principle for them. By delaying, rather than preventing the impact of the cuts, people will still feel the impact of the cuts but will feel that impact more acutely in a few years time. This will make it fresher in the memory of the electorate when the 2020 election rolls round.
What a set of miserable comments. Why can’t people here discuss the issues? Or even give us some credit for leading the charge against this disgraceful statutory instrument?
Tony Greaves
“Can anybody tell me why Labour sat on there hands to allow the tax credits to continue? Whats in it for them?”
Delay the changes to 2018/19 and you can then hammer the government when it introduces them, just 18 months before the election. The Tories want to do it now in the hope that by 2020 people will have forgotten about it and will gleefully accept whatever pre-election baubles they sling their way.
Tony Greaves is right this time, but he was the king of miserable comments throughout the 5 years of coalition.
The Tories are trying the ‘dead cat on the table’, tactic yet again by trying to get people to focus on the alleged constitutional issue rather than the real issue of tax credits. We really must learn to rebut these tactics now and in the future. Perhaps a lesson or two from the Canadian Liberals would help. They managed to turn the dead cat issue of the nicqab away and get people to focus on their message.
Well done to our peers for trying to do the right thing and a resounding raspberry to Labour for yet again failing to support people at the bottom of the income scale.
It would really help pedants like me have a better day if people learned the difference between there (over there) their (belonging to them) and they’re (they are)!
I thought the LibDems were the masters of the politics of coalition. By any casual inspection of today’s Media, it is plain that the Govt. has received more than a bloody nose over Tax Credits and to quote Tim Farron “Osborne has to go back to the drawing board”. Congratulations on all those that contributed to this defeat, irrespective of their party colours. Yet rather than appreciate what was achieved collectively through co-operation, several here seek to make political capital by picking at Labour’s tactics. What matters is not how we got there but what we achieved, surely. Is the LibDem position ‘our way is the only way’? What sort of coalition position is that to adopt in Government or in opposition. Last night’s result could not have happened with both parties pulling together. For goodness sake let’s recognise and celebrate success when it is achieved or are those people decrying Labour’s role suggesting that the LibDem’s should be no more than just a pressure group?
Typo “could not have happened without both parties pulling together”
“Is the LibDem position ‘our way is the only way’?”
The voting figures from last night’s amendment votes rather suggests that not to be the case at all.
@Dave Orbison: Actually the Lib Dems’ handling of being in coalition in the last parliament left a lot to be desired, so based on that it is difficult to describe us as “the masters of the politics of coalition”. Congratulations to the party on growing a spine under Tim Farron.
As far as “making political capital” is concerned, it is Labour who played politics by failing to vote for the Lib Dem motion that would have killed the tax credit cuts. Various reasons have been suggested for why they did this (not wanting to rock the boat, tribalism, wanting to gain politically from the effect of tax credit cuts by the next election); whatever the reason, the Lib Dems were right to call Labour out on this.
Why can’t it be the right thing to do and good politics at the same time? We’ve managed to delay cutting the income of working families and if the Conservatives try to flood the House of Lords with Tory peers it will only strengthen the argument for reform. To me, this is really a win-win move.
Dave Orbison, “our way is the only way” was Labour’s position not the Lib Dem one. We voted for their amendment and they abstained on ours.
Alex Macfie – I quite agree that the LibDems’ performance in coalition left a lot to be desired but probably best I not go there. My point is that Labour and LibDems are, whether they like it or not, going to be in opposition for five years and will need to work together on many issues if they are to be part of an effective opposition to the Tories. They will inevitably have differences of opinion of how best to achieve this. So what is the point of spending time arguing over a given – otherwise they would be the same party. If they spend their time arguing with each other, putting each other down etc then it will simply give the Tories a free run. Last night was a success in terms of cooperation. Just because it didn’t meet the full expectations of one party is no reason to pick it apart and start slugging it out. That will only make future cooperation more tricky and the net result again will be a free run for the Tories. Isn’t the test of a coalition (even an informal one) the ability of parties to set aside differences of style, emphasis or presentation or whatever they may be (where such differences are what defines them as separate parties) and to work together for a common good? Isn’t it rather negative and destructive then to turn ‘success into failure’ by resorting to some tribal analysis as to who had the moral high ground. Or are these outbursts simply a tell tale sign that some LibDems would only prefer coalition with Tories?
MRDW,
It’s just as well that you are hiding behind some letters. What you are apparently advocating is playing politics with people’s lives. Am I the only contributor that feels this way, or have I just misread what you have said? If your anonymous views are typical of the majority in our party, then I wonder whether it is time that people like me started thinking about abandoning ship.
Maybe if tax credits were administered by the DWP, there would be a greater appreciation of the fact that they are benefits.
People moan about benefit claimants when themselves in receipt of tax credits.
I believe that as part of the rethink, the lower threshold ought to stay at £6,420 but the basic awards could be reduced a little each year, with the one for the second and subsequent children ( for existing claimants ) taking the biggest hit.
In addition, the awards should become capital means tested straightway ( with a £16,000 savings limit ) instead of upon the first change of circumstance following the migration to universal credit. Finally, I would propose that income for tax credits awards should be income before pension contributions, not after them. These two changes would mean that the better off claimants would lose, thus enabling funding to be directed at the poorest claimants ( with little capital and not making pension contributions ).
Joe Otten “our way was their way….etc” Perhaps it’s fitting that we are closing in on the Pantomime season as I could easily add a chorus of “Oh yes it is, on no it’s not”. Who cares which way got us their – it’s not the journey it’s the destination that counts. For that matter Labour could say it was rather crude of Farron to go round saying the LibDems would take the lead in killing the bill when they couldn’t do so of course without the help of others. In doing so Farron sought blatantly make political capital by presenting this as a concern that was unique to the LibDems. I think in doing this Farron showed poor judgement, a weakness that Ashdown has pointed to in the past. However, to Farron’s credit and unlike some of the contributions on LDV on this matter today, he chose to focus on the bigger picture – i.e. the end result.
It is almost comical that when positions between LibDems and Labour coincide, there are some (on both sides) who would rather waste their effort point scoring as to who got there first, etc., etc., etc. In doing so, at best they detract from the result, at worst they make future co-operation when it makes sense to do so that much more difficult. The net losers from such pointless naval gazing are the public. But as I say, I think there are some in the LibDems who would not entertain co-operation with Labour at any cost and prefer a cosier relationship with Tories. They are of course entitled to that view – it might just be helpful if they were just straightforward about this.
@Philip Rolle – “Maybe if tax credits were administered by the DWP…”
But they are administered by the DWP hence why there are all the jumps and hoops people have to go through t get them and get off them without getting into debt… They should more correctly be administered by HMRC and become a fully fledged part of our tax system…
This would allow for much more reasonable schemes of payment and reduction than currently allowed under the DWP administered scheme… The key that is missing from the current debate is how to positively incentivise people to take actions that will increase their earnings.
As for idea’s contained in your final paragraph, well I suspect that you haven’t really thought through your idea’s or had any direct experience of tax credits.
Topping up low pay by tax credits simply allows employers off the hook. It needs to go; but do you do it in one fell swoop on the basis of jam tomorrow or do you do it in stages as David Davis MP proposed in the Daily Politics this morning? 36.9% of those who bothered to vote last May cast their votes for a Conservative Party whose manifesto, as far as I know, never specified HOW it intended to reduce the welfare bill. The ‘unelected’ House of Lords is now being pilloried by some for having the audacity to oppose the current plans coming from the lower house. Well, as Lord Paul Tyler said on the same programme today, the ‘unelected’ could have been a thing of the past had the Coalition’s 2012 reform bill been passed. Secondly, had a proper PR proposal been accepted and passed in a referendum, the so called Tory mandate to penalise large numbers of the low paid would never have seen the light of day,
@Roland
If you have had direct experience of tax credits, you ought to have seen that the letters have HMRC at the top of them, not DWP.
I see the old “tax credits just subsidise bad employers” meme is cropping up again. I suspect those repeating it have never troubled to find out how tax credits are calculated (to be fair, it’s a laborious business finding out, as the system is ridiculously complex).
However, a family with two children paying childcare of £150 a week (hardly a lot), would need to have income of over £45000 a year to be better off without tax credits. A two-child family with one earner and no childcare costs would qualify for tax credits on an income of up to £33,000 per year – even at full-time (40 hrs pw) that’s nearly £16 an hour – and given that you can get tax credits if you’re working as little as 16 hpw … do you really think that anybody paying less than £40 an hour is an exploitative, low-pay employer?
Obviously, I’m not even citing the most extreme cases here – bigger families, disabled children, etc.
Conclusion: there’s a lot wrong with the tax credit system, but it really can’t be simply characterised as a “Low wage subsidy”. Of course, it’s precisely that characterisation that allows Osborn to (almost) get away with his smoke-and-mirrors of “living wage” and tax thresholds versus tax credit cuts.
Joe Otten
“We voted for their amendment and they abstained on ours.”
Simple arithmetic will reveal some basic facts:
Baroness Manzoor motion was voted against by 217 Cons plus 74 Crossbenchers = 291
Even if every Lab Peer (164) had voted with the LibDems that bothered to vote for their own motion (83) that would still have been defeated by the Govt because 291 is greater than 247.
LibDems could do themselves a favour by looking objectively at some facts or they can choose to make lots of sound & fury but ultimately, look foolish when the facts are revealed.
I joined the party recently. When it comes to tax credits, the tragedy isn’t taking them away, it was giving them in the first place. The state doesn’t exist to subsidise low pay, to let off employers who squeeze their margins, to compensate for the consumer seeking the lowest price available. These are societal problems which need a different answer than tax credits, a temporary and politically motivated stop gap.
There is a strong moral argument for tax credits, redistributing wealth and reducing income inequality across a wealthy society. However, unless the public is prepared to contribute more in taxation and a government is prepared to collect more in taxation, I believe the state’s resources should be used to best effect. Out creeking health and social care system, not to mention policing and defence, need a greater share of the finite resources available to the government. These resources have to come from somewhere else unless we as a society are prepared to pay more.
Malcolm Todd
I hadn’t realised that! I genuinely thought they were subsisting low-paying employers. I wish someone had made that point – for instance Tim Farron who has been on the media a lot recently – and made it forcefully. I’m sure many people, like me, are unaware of this.
I’m just confused now!
@Philip Rolle
Re: letterhead
Yes the DWP effectively outsourced the day-to-day administration of tax credits to HMRC in 2013. However, the scheme is still operated to DWP defined rules…
MRDW,
That lady you mention apparently had four children, no husband/partner and owned a Nail Bar. My question here would be “Where is the father of her children and, if he’s still around, why isn’t he doing his bit?” That question has far more relevance than whether or not she should have known what she was voting for when she put her cross on the ballot paper.
@ Roland.
I think you are probably referring to s126 of the Welfare Reform Act under which the functions of HMRC are transferred to DWP in relation to tax credits. But I cannot see that this has actually happened apart from the small number of cases that have already migrated to universal credit. Can you explain what adverse impact the DWP are having in regard to the implementation of the tax credits legislation?
Apparently, when tax credits first came in ( 2003 ), many of those dealing with the awards directly or indirectly ( at HMRC or the local council ) thought they must be all wrong because they seemed so high!
The objection to tax credits that I have is that they have subsided the middle class and acted as a redistributor of wealth, rather than a protector from poverty, as regards poorer people. The taxpayer has been paying for overseas holidays and the latest IT gadget.
The Conservatives proposals were shocking and iniquitous and it was right that they be knocked down. However, their broad theme that tax credits must be pared back is certainly correct – they were misconceived from the start.
Stephen Howse 27th Oct ’15 – 11:21am What acting Labour Leader Harriet Harman said.
Davis for Prime Minister?
‘The wrong man was made Prime Minister and where if this man from the ‘Slums’ had achieve the leadership of the nation, the UK would be a far better place for everyone’ – http://worldinnovationfoundation.blogspot.co.uk/2013/12/the-wrong-man-was-made-prime-minister.html
If the Tories really want to get these cuts through then they can. They would put them in a Bill, which would be certified as a Money Bill and then push them through the Commons without any hope of an objection from the Lords.
@Philip – To me the big issue with “tax credits” is that they are part of the benefits system and not the tax system.
If they were truly part of the tax system then they effectively become an annual allowance that is aligned to the tax year and gets included in your tax return; vastly simplifying their calculation, reporting and administration. Unfortunately, Government prefers ‘welfare’ monies it hands out to be part of the benefits system because it discourages people from claiming since you have to go through all the benefits systems hoops, plus you can change the rules as and when it suits…
It appears that MRDW has taken his/her bat and ball home. Is the kitchen too hot for you?
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Joe Otten | Tue 27th October 2015 – 9:59 am In the present and recent past Parlaiment Act should be plural, because the 2-year delay built in in 1911 was reduced to 1 year in the 1940s.
Although many Tories are horrified by any mention of the Parliament Act/s they have used it. Willie Whitelaw visited the National Liberal Club during Lady Robson’s presidency and had to concede this fact.
http://www.parliament.uk/about/how/laws/parliamentacts/