Tax credits: Tories promise ‘rapid review’ after Lords reject cuts

Britain's Chancellor of the Exchequer George Osborne © Suzanne Plunkett
Prime Minister David Cameron has promised a “rapid review” of the relationship between the House of Lords and the House of Commons after the unelected peers blocked government plans to cut tax credits on Monday evening.

Leader of the Commons Chris Grayling accused Labour and Liberal Democrat peers of trying to “wreck” the Conservatives’ planned cuts by breaking with usual parliamentary convention.

He added that changes to the relationship between the two houses was long overdue.

Grayling also announced that Chancellor George Osborne would reveal adjusted reforms of the tax credit system in November’s Autumn Statement designed to ease in the lower tax credits.

On Monday, the Lords backed two motions in favor of delaying the changes after a number of peers made speeches about the effects of the cuts on Britain’s poorest families.

The latest analysis of the proposals suggested that 67 percent of families receiving tax credits would be worse off after the changes. The cuts to tax credits make up £4.4 billion (US$6.8 billion) of a total of £12 billion worth of cuts to welfare which Osborne seeks to make.

During Treasurer's Questions in the House of Commons on Tuesday, Osborne stated that the interference from the Lords indicated the need for a reformed relationship. 

The Chancellor said he would lay out revised plans for the introduction of tax credit changes in the Autumn Statement.

"We are going to go on taking those difficult decisions to deliver that lower welfare, lower tax and higher wage economy. And this elected House of Commons is going to go on promoting the economic plan that delivers that," he said. 

Labour MP Caroline Flint also asked that the Chancellor ensures that he will publish an impact assessment of how the changes will affect claimants.

Grayling told the BBC that Cameron would work out details of the Lords/Commons review “in the next few hours,” adding that any renegotiation of parliamentary convention would be carried out “in a measured way.

"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,” he told BBC Radio 4’s Today program.

"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 program of the elected government,' then of course we have got to address that."

Asked whether the tax credit defeat displayed public concern over the planned £4.4 billion cuts, Grayling suggested that the Labour and Lib Dem peers were simply bitter at May’s general election defeat.

"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 program.

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