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Nicky Morgan: George Osborne is listening to tax credit concerns Nicky Morgan: George Osborne is listening to tax credit concerns
(about 7 hours later)
Nicky Morgan, the education secretary, has become the most senior cabinet member to suggest that George Osborne will soften the impact of tax credit cuts when she said the chancellor was “in listening mode”.Nicky Morgan, the education secretary, has become the most senior cabinet member to suggest that George Osborne will soften the impact of tax credit cuts when she said the chancellor was “in listening mode”.
Morgan indicated that senior ministers were aware of the furore over the cuts when she told BBC1’s Andrew Marr Show that people would be very concerned when they receive formal notification of the changes to their tax credits. As Downing Street and the Treasury applied intense political pressure on the House of Lords not to throw out controversial cuts to tax credits in a series of votes on Monday, Morgan indicated that ministers are aware of the furore over the cuts.
The education secretary said that there would be no change to the main policy, but she indicated the chancellor may take action to mitigate the effects of the cuts.
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“The prime minister has made it clear that the policy is not going to change,” said Morgan. “But the chancellor’s track record has been very much about supporting budgets in working families. MPs have voted three times to support these measures – in the budget, we had a vote in September, we had a vote last week as well.” “I was a Treasury minister in the last parliament, George was my boss at that point, he very much is always in listening mode,” Morgan told The Andrew Marr Show on BBC1.
As the shadow chancellor, John McDonnell, pledged to work constructively with Osborne if he changed tack, Morgan said the chancellor had a record of helping working families. The education secretary said that there would be no change to the main policy, but she indicated the chancellor may take action to mitigate the effects of the cuts. “The prime minister has made it clear that the policy is not going to change,” said Morgan. “But the chancellor’s track record has been very much about supporting budgets in working families. MPs have voted three times to support these measures – in the budget, we had a vote in September, we had a vote last week as well.”
Morgan spoke out after the Guardian reported that there is a growing expectation among senior figures in Whitehall that the chancellor will give ground by ensuring that the impact of the cuts is softened. Morgan indicated the chancellor may take action to mitigate the effects of the cuts as the government adopted hardball tactics with peers ahead of a series of votes in the 814-strong House of Lords on Monday which could throw out the cuts.
Ministers have been alarmed by the Treasury’s failure to counter claims by the Institute for Fiscal Studies (IFS) that 3 million families would lose £1,000 a year. Downing Street could flood the lords with new Tory peers or limit its powers if the cuts are blocked. If peers vote for a non-binding “regret motion” then the chancellor is expected to indicate that he would act in his autumn statement on 25 November.
Morgan, who knows Osborne from her time as a Treasury minister, suggested he was likely to act. “I was a Treasury minister in the last parliament, George was my boss at that point, he very much is always in listening mode,” she said. In a series of memos to the non-party crossbench group of peers, who hold the balance of power in the upper house, the government has warned that rejecting such a large financial measure would provoke a constitutional crisis. Sources said that over the past century peers have only rejected “statutory instruments”, the measures that are delivering the changes to tax credits, on five occasions. None of these applied to financial matters.
“The prime minister has been very clear that the policy is not going to [change]. It has to be right for people to keep more of the money they earn. It is an overall package. You can’t lift income tax thresholds and introduce the national living wage without also taking difficult decisions like the one we are taking on tax credits.” Lord Heseltine, the former deputy prime minister, and Michael Howard, the former Tory leader, warned in separate broadcast interviews that it would be unprecedented for the lords to block such an important part of the chancellor’s deficit reduction plan. “I think they are playing with fire,” Heseltine told the Murnaghan programme on Sky News of plans by Labour, Liberal Democrat and some crossbench peers to reject the cuts which make up £4.4bn of the chancellor’s £12bn welfare savings.
Morgan, who is gaining a reputation for speaking her mind, also praised the Tory MP for Cambridgeshire South, Heidi Allen, who criticised the cuts in her maiden speech last week. “It was a very heartfelt speech,” Morgan said. “That is why having female MPs is so brilliant in the House of Commons.” Labour and the Lib Dems said they would press ahead with their challenged to the cuts on the grounds that the tax credit cuts are included in a statutory instrument rather than in a finance bill which peers cannot delay or block. Peers will hold up to four votes which will determine the fate of the tax credit cuts in the following order:
The education secretary also spoke of how people will be worried about the cuts: “Of course people will feel very concerned. But also the broader package – that is what we, as politicians, have to indicate – … is going to make a positive difference to people’s income when you take all those other things into account.” The government is nervous because David Cameron leads the first Tory government to enjoy a majority in the commons without a majority in the upper house. There are 201 Tory peers, 212 Labour peers, 111 Lib Dem peers, 145 crossbenchers and currently 25 bishops.
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The chancellor is waiting for the result of a series of votes in the House of Lords on Monday afternoon before confirming his next move. If peers vote for a so-called fatal motion that would kill his plans, Osborne could adopt hardball tactics by, for example, flooding the lords with new Tory peers or limiting its powers. That motion, to be tabled by the Liberal Democrats, is likely to fail. In her interview the education secretary Morgan indicated that senior ministers are conscious that they are facing a potentially dangerous political moment when she acknowledged that people would be very concerned when they receive formal notification of the changes to their tax credits.
Osborne may also turn the screws if peers vote for a more moderate motion, to be tabled by the former Labour minister Patricia Hollis, that would delay the cuts unless the government reports back on how it will mitigate their effect. But if peers vote for a “regret motion” – a non-binding measure allowing them to express opposition to the cuts to be tabled by Christopher Foster, the bishop of Portsmouth – then the chancellor is expected to indicate that he would act in his autumn statement on 25 November. Morgan spoke out after the Guardian reported that there is a growing expectation among senior figures in Whitehall that the chancellor will give ground by ensuring that the impact of the cuts is softened. Ministers have been alarmed by the Treasury’s failure to counter claims by the Institute for Fiscal Studies (IFS) that 3 million families would lose £1,000 a year.
McDonnell meanwhile said on the Andrew Marr Show that he had written to Osborne to say he would work with him if he changed course. John McDonnell, the shadow chancellor, said on the Andrew Marr Show that he had written to Osborne to say he would work with him if he changed course. McDonnell, who came under fire for changing his position on the fiscal charter, said: “This is becoming above politics. I have written to George Osborne to say look, I know what a U-turn looks like and how it can damage you. But we need a U-turn on this one and so I have said to him, if you change your mind on this, we will not make any political capital out of this.”
The shadow chancellor, who came under fire for changing his position on the fiscal charter, said: “This is becoming above politics. I have written to George Osborne to say look, I know what a U-turn looks like and how it can damage you. But we need a U-turn on this one and so I have said to him, if you change your mind on this, we will not make any political capital out of this.”