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Labour 'would support any U-turn' over tax credits Labour 'would support any U-turn' over tax credits
(35 minutes later)
Labour has said it would support the government if it delayed plans to reduce tax credits, amid efforts to kill off the proposals entirely.Labour has said it would support the government if it delayed plans to reduce tax credits, amid efforts to kill off the proposals entirely.
Shadow Chancellor John McDonnell said the cuts should be put on hold for three years while the impact on those affected is considered. Shadow Chancellor John McDonnell said cuts should be put on hold to study the impact on those affected and at least three years of transitional help given.
Labour would "not make political capital" out of any U-turn, he said.Labour would "not make political capital" out of any U-turn, he said.
Education Secretary Nicky Morgan said Labour had no "credible alternative" and the "policy wasn't changing".Education Secretary Nicky Morgan said Labour had no "credible alternative" and the "policy wasn't changing".
She told the BBC's Andrew Marr show that Chancellor George Osborne was in "listening mode", ahead of a series of key votes on the issue on the House of Lords on Monday. She told the BBC's Andrew Marr show that Chancellor George Osborne was in "listening mode", ahead of a series of key votes on the issue on the House of Lords on Monday, where the government does not have a majority and faces possible defeat.
But she said was not aware of any discussions about watering down the changes and it was important that the "overall package" offered by the government, including a new living wage and more free childcare, was taken into account. But she said she was not aware of any discussions about watering down the changes and it was important that the "overall package" offered by the government, including a new living wage, more free childcare and a higher personal income tax allowance, was taken into account.
The government is coming under sustained pressure to rethink the plans, which opponents say could take £1,000 a year from working families. Peers will vote on a rarely-used "fatal motion" tabled by the Lib Dems which would scrap the proposed changes entirely. The government is coming under sustained pressure to rethink the plans, which opponents say could take hundreds of pounds per year away from working families from April.
Labour is backing a rival motion which calls for the welfare changes to be delayed pending an independent analysis of their impact and until transitional arrangements to help those affected are put in place. On Monday, Peers will vote on a rarely-used "fatal motion" tabled by the Lib Dems which would scrap the proposed changes entirely.
Shadow Chancellor John McDonnell denied this delay would effectively also kill off any changes to welfare. Labour is backing a rival motion which calls for the welfare changes to be delayed pending an independent analysis of their impact and until transitional arrangements to help those affected, lasting at least three years, are put in place.
Mr McDonnell denied this delay would effectively also kill off any changes to the £30bn tax credit bill.
'Above politics''Above politics'
"No, I think it is a real offer to George Osborne to see if we can make sure people are properly protected," he said. "This is becoming above politics. I know what a U-turn looks like and how it can do damage to you but we need a U-turn on this. "No, I think it is a real offer to George Osborne to see if we can make sure people are properly protected," he told Andrew Marr. "This is becoming above politics. I know what a U-turn looks like and how it can do damage to you but we need a U-turn on this," he said.
"If you change your mind on this, we will not make any political capital on this. If the Lords do throw this out tomorrow and put it back to the government, I've said to him 'If you change your mind, bring back a policy in which people are protected, not a political stunt but a real protection, we will not in any way attack you for that. In fact we'll support you.'" "These are people who go to work, look after their kids, do everything asked of them and they are going to lose on average £1,300 a year. 200,000 children could be forced into poverty as a result of this. Out there right across society, people are saying this is unacceptable."
He suggested Labour would be prepared at a future date to co-operate with the government in examining the tax credits bill. Mr McDonnell said he had written Mr Osborne to make clear that if the government changed tack now, Labour would "co-operate" in future efforts to review the tax credit bill, as long as it was done "at the right time and in the right way".
Ms Morgan said the Conservatives had been clear in their manifesto that they would make substantial changes to welfare, and tax credits cuts had been specifically approved by MPs. "If the Lords do throw this out tomorrow and put it back to the government, I've said to him 'If you change your mind, bring back a policy in which people are protected, not a political stunt but a real protection, we will not in any way attack you for that. In fact we'll support you.'"
She said it would be "constitutionally unprecedented" for the House of Lords to block a measure introduced via secondary legislation. 'Unprecedented'
"They should be very mindful about what they are doing," she said. "That is not the Lords' job." But Ms Morgan said the Conservatives had been clear in their general election manifesto that they would make substantial changes to welfare, and tax credits cuts had been specifically approved by MPs on two occasions
She said it would be "constitutionally unprecedented" for the House of Lords to block a finance measure introduced via secondary legislation.
"They should be very mindful about what they are doing," she said. "That is not what the Lords is about."
Defending the "broader package" of tax and welfare changes, she added: "The prime minister has made it clear the policy isn't changing. You have to accept that people keep more of the money they earn rather than being recycled through the system.
"Labour wanted a mandatory living wage and that is coming in and the income tax threshold is rising too."
Explaining his party's actions, Lib Dem chief whip Lord Newby said the Lords had the "formal power" to block the measures and were justified in doing so, telling Sky News the changes would have a "devastating" effect.
What are tax credits and what are the changes?What are tax credits and what are the changes?
Tax credits are a series of benefits introduced by the last Labour government to help low-paid families. There are two types: Working Tax Credit (WTC) for those in work, and Child Tax Credit (CTC) for those with children.Tax credits are a series of benefits introduced by the last Labour government to help low-paid families. There are two types: Working Tax Credit (WTC) for those in work, and Child Tax Credit (CTC) for those with children.
Under government proposals, the income threshold for Working Tax Credits - £6,420 - will be cut to £3,850 a year from April.Under government proposals, the income threshold for Working Tax Credits - £6,420 - will be cut to £3,850 a year from April.
In other words, as soon as someone earns £3,850, they will see their payments reduced. The income threshold for those only claiming CTCs will be cut from £16,105 to £12,125.In other words, as soon as someone earns £3,850, they will see their payments reduced. The income threshold for those only claiming CTCs will be cut from £16,105 to £12,125.
The rate at which those payments are cut is also going to get faster. Currently, for every £1 claimants earn above the threshold, they lose 41p. This is known as the taper rate. But from April, the taper rate will accelerate to 48p.The rate at which those payments are cut is also going to get faster. Currently, for every £1 claimants earn above the threshold, they lose 41p. This is known as the taper rate. But from April, the taper rate will accelerate to 48p.
There will be similar reductions for those who claim work allowances under the new Universal Credit.There will be similar reductions for those who claim work allowances under the new Universal Credit.
Read more about the changesRead more about the changes