Tax credit victory should be welcomed, not derided
Ian Murray MP, Shadow Secretary of State for Scotland, says the Lords did the right thing last night, and it’s sad that Cameron and Osborne are so blinded by ideology, and Nicola Sturgeon by party politics, that they cannot see it.
Last night, the Labour Peer and former DWP Minister, Baroness Patricia Hollis, delivered one of the best speeches that either House, the Lords or Commons, has heard in many years. It was balanced and well-researched. It was passionate without being partisan.
What’s more, it was practical and it was positive – and that, I think, is the key reason her motion was carried by cross party and cross bench support. It was designed to support he poorest in our society who work hard and do the right thing. It called upon the Government, on George Osborne and David Cameron, to listen to the concerns being raised about their cuts to tax credits, and the impact this will have, and to take action to provide full transitional protection for those hardworking families who stand to suffer, through no fault of their own.
Baroness Hollis furnished the House with a number of illustrative examples of such families.
- The mother working 40 hours a week doing two jobs on the Minimum Wage to support her two children who will lose £1,643 a year.
- The couple, one working full time earning over the Living Wage, the other a carer for their two disabled children, who will lose £3,120 a year.
For the very interested here is the Statutory Instrument. You will see it is about thresholds, rates and tapers only.
In what warped world could this be deemed fair? These individuals, and thousands of others like them, could not be working harder. They have done everything that Government and society has asked of them, using tax credits to bolster their wages and working flat out to support themselves and their families.
The plain truth is that the Government have got this around the wrong way. In order to bring down the tax credit bill, you have to increase wages. If you increase wages first then tax credits fall and people are not worse off. Despite what the Prime Minister claims about people being better off, the Institute for Fiscal Studies said this claim was “arithmetically impossible”.
Yet thousands of families will be getting those letters, at Christmas no less, telling them how much money they will lose. 3 million families, according to the IFS, will lose on average £1300 a year. An additional 200,000 children, according to the Resolution Foundation, will be plunged into poverty next year, rising to 600,000 in 2020 when other budget measures take effect.
And it isn’t just Think Tanks and the Third Sector who are urging restraint. Right wing papers like the Sun and the Daily Telegraph have been critical. Tory MPs like Heidi Allen are telling George Osborne he has got this wrong. A former Tory Chancellor, Lord Lawson, expressed disquiet at the Government’s refusal to mitigate the impact of these cuts.
Whatever your feelings on the legitimacy of the House of Lords – and we in the Labour Party have made ours quite clear in our calls for it to be abolished and replaced with an elected Senate of the Regions and Nations – no fair-minded, compassionate individual could deny that, in passing Baroness Hollis’s motion, and forcing George Osborne to “think again” by setting out transitional measures to protect those families who will lose out from the tax credits over the next three years, the Lords did a good deed. This was a major victory for decency and common sense.
Sadly, individuals from two parties did not see it that way. David Cameron and George Osborne complained that the Commons’ “financial privilege” had been breached. Threats were issued about “Rapid Reviews” to limit the power of the Lords. This is a specious argument. If the Government had wished for financial privilege, they would not have made these changes through Statutory Instrument, but would have included them in the Finance Bill, which was considered in the Commons yesterday evening, or the Welfare Reform and Work Bill, which will complete its remaining stages today. It is George Osborne who has breached a convention – the convention that if you work hard and play by the rules you will be taken care of.
The other person who expressed disapproval was First Minister Nicola Sturgeon. No sooner had Labour Peers declined to support the Liberal Democrats’ “fatal motion”, then she took to twitter to criticize, quickly followed by others who support her every utterance blindly and without question. The hypocrisy of this is beyond belief and lack of understanding deplorable. The SNP do not recognise the Lords, and frequently deride them as an unelected second Chamber with no democratic legitimacy. And yet here was the leader of the SNP, the First Minister of the Scottish Government, openly attacking Labour Peers for not going far enough in using powers that, in her eyes, they are not entitled to exercise in the first place. Indeed, judging by the way she rapidly backtracked, I think Nicola herself realised she had gone too far.
There is a simple reason why neither Labour, cross benchers, the Bishops and even some Lib Dem peers didn’t support the Lib Dem fatal motion and that is because it would have killed the Statutory Instrument and it was advised that the Government would just have brought it back immediately in a money bill that the Lords can’t look at.
Labour’s amendment was drafted with the advice and guidance of the clerks – constitutional experts. It did not contravene constitutional convention or financial privilege. It did not infringe upon the rights of the Commons, as an elected Chamber, to make financial and budgetry decisions. What it did do is force the Government to listen, to think again, and to protect the thousands of people who would otherwise have been left out of pocket, if not thoroughly impoverished.
The Lords did the right thing. It is sad that Cameron and Osborne are so blinded by ideology, and Nicola Sturgeon by party politics, that they cannot see it. I’m proud of what the Lords did last night. The actions of our First Minister show she is more concerned with creating grievance against Labour and does not care if she does it through misunderstanding or misinformation.
As she and the SNP take up all their time doing this, we will continue to find ways to protect Scots from a majority Conservative Government. Last night we won, today, we fight on.
Here is the text of Baroness Hollis’ motion which passed in the Lords:
As an amendment to the motion in the name of the Lord Privy Seal, to leave out all the words after “that” and insert “this House declines to consider the draft Regulations laid before the House on 7 September until the Government, (1) following consultation have reported to Parliament a scheme for full transitional protection for a minimum of three years for all low-income families and individuals currently receiving tax credits before 5 April 2016, such transitional protection to be renewable after three years with parliamentary approval, and (2) have laid a report before the House, detailing their response to the analysis of the draft Regulations by the Institute for Fiscal Studies, and considering possible mitigating action.”
As we know, Nicola Sturgeon and the SNP criticised this heavily, failing to acknowledge that the fatal motion they preferred would likely have resulted in the measure returning as primary legislation and being forced through the Lords. So how extraordinary it is that yesterday in the Commons the SNP moved this clause, which they had submitted about a week before:
“Tax Credit reforms
The measures in this Bill and (Income Thresholds and Determination of Rates) (Amendment) Regulations 2015 relating to the award of tax credits and the relevant entitlement within Universal Credit shall not take effect until the Secretary of State has implemented a scheme for full transitional protection for a minimum of three years for all families and individuals currently receiving tax credits before April 2016, such transitional protection to be renewable after three years with parliamentary approval.”
Yes, it’s a non-fatal amendment pretty much identical to the one they so heavily criticised Labour for supporting!
Now Labour’s Commons amendment yesterday was a fatal amendment, because the bill can be safely blocked in the Commons without the measure being brought back. So we have the extraordinary situation of the SNP proposing what they claimed was a disgrace the day before, in a situation where a fatal motion was in fact the right course of action.
So, in essence, the SNP called us a disgrace yesterday for voting on a motion they already had down to the Welfare Bill and for not voting on a motion that we had down today ourselves that they could have put down but didn’t.
Labour will continue to use Parliament to make a difference in people’s lives. It’s becoming clear that the SNP’s only use for it is grandstanding.