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John McDonnell vows to reverse planned cuts to tax credits

Published 18/10/2015

Seema Malhotra was quizzed on Labour's policy on tax credits
Seema Malhotra was quizzed on Labour's policy on tax credits

John McDonnell has confirmed Labour would reverse the Government's planned cuts to tax credits after two shadow ministers ducked the question.

The shadow chancellor moved to clarify the party's position after shadow chief secretary to the Treasury Seema Malhotra and shadow international development secretary Diane Abbott suggested a decision had yet to be taken.

Mr McDonnell tweeted: "We are calling on Osborne to reverse his decision to cut tax credits.

"If he doesn't reverse these cuts, we're making it clear that we will."

Ms Malhotra was asked repeatedly by Andrew Marr if her party would reverse the cuts, ahead of a crunch Commons vote on Tuesday.

But she would not commit, simply stating that Labour does not want the cuts to go ahead.

Speaking to the BBC's Andrew Marr Show, she said: "We have said that this cut should not go forward ... this is a cut to hard working families who are doing absolutely the right thing.

"It is a work penalty."

Ms Malhotra said George Osborne has "no transition plans" for bringing in the cuts and that they would be a "false economy" because they could lead to people being unable to pay their rent.

Mr Marr asked Ms Malhotra: "To be absolutely clear, Labour would restore the whole lot? Yes or no?"

She said: "We don't believe these cuts should go forward from next April."

When asked again if she would reverse the planned cuts, she said: "We are saying we don't want them to go forward now."

Tax credit cuts will be debated in Parliament on Tuesday during an opposition day debate.

Ms Malhotra said she believes her party could win that vote.

"I believe we can," she said. "I very much hope that we can.

"But that will rely on Conservative MPs coming and working with us on Tuesday.

"And I hope that they will because they, I am sure, will have representations from thousands of families in their constituencies."

Meanwhile, Labour has claimed the changes to tax credits could put 71 Tory MPs at risk of losing their seats because of the unpopularity of the policy.

Labour claim the 71 MPs - 21 in marginal seats - all represent constituencies where there are more families who will lose tax credits than was their majority in May.

Labour's tax credits debate on Tuesday will call on the Conservatives to halt the cuts plan.

Ms Abbott also refused to confirm that Labour would reverse the tax credit cuts.

"We will not be dealing with the deficit on the backs of the working poor," she told the BBC's Sunday Politics.

"We have voted against the tax credits and we are constructing a fiscal mandate which will not involve those cuts to tax credits.

"You are going to have to look at (shadow chancellor) John McDonnell's fiscal mandate in its totality."

Pressed again on whether Labour would reverse the tax credit cuts, she replied: "I am saying you are going to have to look at John McDonnell's fiscal mandate in its totality."

Labour's motion for its opposition day debate on Tuesday, signed by Jeremy Corbyn and Ms Malhotra among others, states: "That this House calls on the Government to reverse its decision to cut tax credits, which is due to come into effect in April 2016."

Defence Secretary Michael Fallon said the current tax credit system was "not very sensible", pointing out that even some MPs were eligible.

"We need to focus welfare on where it is needed most, and move our country to where you keep more of your earnings - lower tax and lower welfare," he told the BBC's Andrew Marr Show.

Former international development secretary Andrew Mitchell denied the Government was "penalising" the working poor, and said the tax credit system was "out of control".

But the Tory MP suggested that "tweaks" could be needed.

"This is a very tough measure, but I think it will be greatly compensated by other changes in the tax and welfare system," he told Sunday Politics.

"Of course we have got some time now before it comes in so we can tweak it if necessary.

"But I think it is the right reform to make and we must ensure that overall there are as few losers as possible."

Appearing on Murnaghan on Sky News, Welsh Secretary Stephen Crabb was repeatedly asked why the Government will not accept that the planned cuts will leave some people worse off.

Dermot Murnaghan said: "Why don't you admit that some people will be hurt by this and it's for the greater good? You could say that?"

To which Mr Crabb replied: "I don't accept that. In the same way that five years ago I didn't accept the predictions that we would create five million unemployed, that we would create new poverty.

"Poverty has fallen in the last five years. Unemployment has fallen."

Owen Smith MP, the shadow work and pensions secretary, told Murnaghan on Sky News many people have "deep misgivings" about the Government's planned tax credit cuts.

He also said he had spoken to Tory MPs who could back Labour on Tuesday.

When asked if he had reached out to Conservatives, he said: "Yes, I have spoken to lots of Conservatives last week and we will be doing it again next week and I think some of them will vote for us."

Chief Secretary to the Treasury Greg Hands said: "Eleven times today Labour refused to say they would reverse our necessary reforms to the complicated, means-tested payments called tax credits, which they ended up making to nine out of every 10 UK families, including MPs.

"Now, just hours later, John McDonnell says he would reverse the changes, with no explanation of where the £4.4 billion cost would come from.

"Labour's economic policy lurches further from chaos to incredibility.

"Labour need to answer whether they would cut people's pay by putting up taxes, by cutting the NHS, schools or benefits for the disabled? Or do they just propose to borrow forever, putting the economic security of working families at risk?

"They have learned nothing from the last Parliament, when they opposed every single saving we made from welfare and tax credits budgets, which they had allowed to spiral completely out of control."

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