Joseph Perry’s News Crunch: Good Lords
Joseph Perry crunches the news of the Lords voting down George Osbourne's credit cuts...
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For the first time since the pre-World War Two days of David Lloyd George, a budgetary matter has been voted down in the House of Lords. George Osborne’s plans to cut Child Tax Credits have been put on hold whilst the Chancellor recovers from a major political blow.
The Conservatives had planned to cut the social security given to millions of people in the UK who cannot afford to raise their children on wages or other benefits alone. The Tax Credits, first introduced by Gordon Brown, are worth £30bn in total - £29bn more than originally intended by the former New Labour politician.
Lowering this bill is part of the Treasury’s plan to produce a budget surplus by the end of this Parliament, however it was only after the May General Election that the true extent of the impacts on working families were revealed.
If Child Tax Credits are cut, over 3 million working families - not unemployed - will lose on average £1,300 per year. This factors in the minimum wage rise to £9.20 by 2020.
Despite these damning figures, the proposals were still voted through in the House of Commons, without any protest from the government benches.
However, in the House of Lords - where the Conservatives do not have a majority of the 800+ members - the bill did not get such gentle treatment.
As the bill was not included in the Chancellor’s summer budget, but in a separate piece of legislation designed to pass through Parliament quicker, the House of Lords were entitled to vote on it.
Theoretically, members on the red benches can vote on anything brought to them, but a long standing agreement known as the Salisbury Convention means that they choose not to vote on the Budget. This is to respect the fact that the Commons has been elected by the people, and the government on the green benches should have the greater say on this particularly important issue.
As a result of the bills exclusion form the Budget, it faced fierce debate in the House of Lords.
In favour of the cuts were Conservative Lords such as former Chancellor and father of Nigella, Lord Lawson, ‘The Apprentice’ star Baroness Brady, and the musical mogul Lord Lloyd Webber.
The main argument for this is that, although the bill was not in the budget, it was still a financial matter so it should pass through unchallenged.
However, Labour, Liberal Democrats and Crossbenchers (independent Lords) had other ideas. Three amendments were put to a vote - scrapping the bill, delaying it until the effects could be fully explained, or delaying it until the average £1,300 gap per family was plugged.
Given that it is almost 100 years since the last budgetary matter was rejected, it is unsurprising that the first vote was lost by the opposition. However, the second two were both passed in an historic night in the upper chamber.
This means that Osborne’s initial Tax Credit changes cannot go into law.
Why does this matter?
First of all, it means that the changes to Tax Credits will not happen via the legal route. If George Osborne wants to impose his plans unchanged, he will be sidestepping Parliament and will face protests from within his party for doing so.
For the millions of families set to lose out by £1,300 per year on average, it will be welcome news before the Christmas season.
It is also significant as it raised questions about the role of the House of Lords, and the validity of its conventions. Immediately after the votes, Osborne said they marked a ‘constitutional issue’.
This ‘issue’ for the Conservatives is that they can no longer rely on the Lords to purely rubber stamp their financial proposals. This could have bigger ramifications when it comes to other bills over the next 5 years - they will have to include as much as possible in their budgets to guarantee it passing.
But not everything can be, leaving Cameron with three options.
He can flood the Lords with Conservative appointments, which would give him an overall majority in the upper chamber. This would work politically, but is likely to go down like a lead balloon with the public.
He can look to introduce some reforms and new conventions to firm up his government’s constitutional position. As well as this, we may need to water-down some policies on occasion. This is more likely than any other options.
Or, he can do away with the Lords entirely. This may be popular with the public, but would give Cameron a legacy few traditionalist Conservatives desire, and may create more problems for him politically going forward than there were in the first place.
His other choice is to do nothing, and home that it is 100 years until the next financial bill is rejected by the Lords.
Losing in the Lords is a disaster for George Osborn both politically, and personally.
As a chancellor he looks weaker and less credible, at a time when he is trying to present his Shadow member, John McDonnell as inept.
The defeat won’t have done his chances of becoming party leader much good either.
Having said this, it was refreshing to see the House of Lords wake up. After sleeping for years, often literally, the majority of members have seen the light and remembered what they are in the Houses of Parliament to do - scrutinise and vote.
If David Cameron does not like the fact that politicians are doing what they are paid £300 per day to do, perhaps he should consider doing away with the anarchic Lords all-together.
There were three lessons to be learned for the Conservatives here.
Firstly, financial bills should be in the budget. Trying to cut corners has cost Osborne in this case.
Secondly, be honest with the electorate. Many crossbench Lords said that if the Conservatives had advertised the fact they would be cutting working tax credits, they would have allowed it to pass in the House. They did not, and Lords felt they were sticking up for the deceived electorate.
Finally, listen to the public. It was clear that this policy had not been thought through. Making families £1,300 per year poorer was never a good idea. Osborne should have reacted before their embarrassment, and amended his proposals to guarantee that the Tories delivered on their promise to stick up for working Britain. The public saw through the policy, and so did the Lords.
The Tories have come down from cloud nine with one hell of a bang.
To hear Joseph breakdown more of the week’s biggest stories, listen to TeenScope this Sunday at 9pm UK time.