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Chancellor bows to tax credit calls after defeat

By Sam Lister

Published 27/10/2015

George Osborne
George Osborne

Help for claimants hit by proposed tax credits cuts will be set out in the Autumn Statement, George Osborne announced after peers inflicted a blow on the Government over the move.

The Chancellor bowed to pressure to put measures in place following a bruising double defeat in the House of Lords over the divisive welfare reforms.

Mr Osborne criticised "unelected" Labour and Liberal Democrat peers for blocking the Government on a financial measure, which is traditionally decided by the House of Commons.

Prime Minister David Cameron promised to launch a "rapid review" into the constitutional fallout of the result.

"David Cameron and I are clear that this raises constitutional issues that need to be dealt with," the Chancellor said.

"However, 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. I believe that we can achieve the same goal of reforming tax credits and 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 in the Autumn Statement. I am determined to deliver the lower-welfare, higher-wage economy that we were elected to deliver and that the British people want to see."

Peers defied calls to respect a century-old convention that the unelected upper chamber avoids blocking financial measures approved by the House of Commons, sparking claims of a "constitutional outrage".

A No 10 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."

Shadow Chancellor John McDonnell claimed Mr Osborne's political reputation had been left badly dented after he failed to see off the drubbing in the Lords, despite stark warnings from across his own party in recent weeks about the impact the measures would have.

Mr McDonnell added that people had been "shocked" over the way in which the Chancellor had pushed ahead with the changes, which will slash £4.4bn from working tax credits and child tax credits for some of the country's poorest households.

He also claimed the result showed it was time for a "full and fair reversal" of the policy.

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