Tax credits: George Osborne will use Autumn Statement to set out protection for hardest hit

Chancellor forced into climbdown after bruising Lords defeat
Defeat: George Osborne
Richard Stonehouse/PA Wire
Ramzy Alwakeel27 October 2015

George Osborne will use the Autumn Statement to announce help for those hit by tax credit cuts after Lords humiliatingly voted to put his proposals on ice.

The chancellor warned “unelected” Labour and Lib Dem peers had “raised constitutional issues” by blocking the £4.4 billion plan even after it had cleared a trio of votes in the Commons.

“But,” he added, “it has happened, and now we must address the consequences of that. I said I would listen and that’s precisely that I intend to do.”

A Lib Dem proposal for peers to send the chancellor back to the drawing board altogether failed to gain support.

The so-called “fatal motion” won just a handful of votes.

Mr Osborne 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.

“That is what I intend to do at the Autumn Statement. I am determined to deliver that lower welfare, higher wage economy that we were elected to deliver and the British people want to see.”

It is a century-old convention that the unelected upper chamber does not block financial measures approved by the Commons.

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.”

The changes are intended to slash billions from the welfare bill by lowering the threshold for people claiming working tax credits and child tax credits.

Shadow chancellor John McDonnell said the Lords vote showed it was time for a ”full and fair reversal” of the policy.

Peers backed a motion by a majority of 30 delaying the cuts until the government responds to the Institute of Fiscal Studies analysis of their impact.

And a second vote minutes later resolved to delay the cuts until ministers could bring in “full transitional protection” for those affected for at least three years.

Additional reporting by Press Association

Create a FREE account to continue reading

eros

Registration is a free and easy way to support our journalism.

Join our community where you can: comment on stories; sign up to newsletters; enter competitions and access content on our app.

Your email address

Must be at least 6 characters, include an upper and lower case character and a number

You must be at least 18 years old to create an account

* Required fields

Already have an account? SIGN IN

By clicking Create Account you confirm that your data has been entered correctly and you have read and agree to our Terms of use , Cookie policy and Privacy policy .

This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.

Thank you for registering

Please refresh the page or navigate to another page on the site to be automatically logged in