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Tax credits: Pay up, George, you know you're cornered Tax credits: Pay up, George, you know you're cornered
(34 minutes later)
Should the House of Lords vote to force George Osborne to rethink his flawed tax credit cuts? Yes. Are David Cameron and his allies talking nonsense when they invoke a constitutional crisis if that happens? Yes again. Will it happen? Yes, I expect it will and the Treasury will bow to political reality while pretending not to do so. Excellent!Should the House of Lords vote to force George Osborne to rethink his flawed tax credit cuts? Yes. Are David Cameron and his allies talking nonsense when they invoke a constitutional crisis if that happens? Yes again. Will it happen? Yes, I expect it will and the Treasury will bow to political reality while pretending not to do so. Excellent!
In a world where the Labour leadership may be slipping into the hands of tankies and Scotland is run by Blair-style spin doctors in kilts, the tax credit row is a positively old-fashioned one and is welcome for that. Any politician from the last four centuries brought back today would be up to speed within minutes and feel very much at home. It’s about money and power – as usual – with a modern dash of social fairness.In a world where the Labour leadership may be slipping into the hands of tankies and Scotland is run by Blair-style spin doctors in kilts, the tax credit row is a positively old-fashioned one and is welcome for that. Any politician from the last four centuries brought back today would be up to speed within minutes and feel very much at home. It’s about money and power – as usual – with a modern dash of social fairness.
Related: Vandalise tax credit reform at your peril, my Lords | Matthew d’AnconaRelated: Vandalise tax credit reform at your peril, my Lords | Matthew d’Ancona
Unfortunately most of the guff spoken and written on the tax credit row simply highlights the youth and inexperience of those supposedly in charge of our affairs and commenting on them. Even Matthew D’Ancona, as clever and level-headed a Tory pundit as you could hope to find (that must be why he is in exile at the Guardian), is uncharacteristically implausible in Monday’s column.Unfortunately most of the guff spoken and written on the tax credit row simply highlights the youth and inexperience of those supposedly in charge of our affairs and commenting on them. Even Matthew D’Ancona, as clever and level-headed a Tory pundit as you could hope to find (that must be why he is in exile at the Guardian), is uncharacteristically implausible in Monday’s column.
Across at the Mail, GCSE-encrusted Dominic Lawson does only slightly better, attacking Lords nonentities in ferocious terms. He doesn’t mean Dad.Across at the Mail, GCSE-encrusted Dominic Lawson does only slightly better, attacking Lords nonentities in ferocious terms. He doesn’t mean Dad.
The Guardian’s Nick Watt sets it all out very sensibly here, as he and Patrick Wintour have been doing for weeks. And what is that we see being waved from the Whitehall bunker? Gosh, it’s the government’s slightly grubby (it’s been used before) white flag. “Osborne signals softening of stance” says the FT while the Times sets up one of its favourite diversions: don’t let the poor Queen (89) be dragged into the dispute. “Tories could soften blow,” reports the nimbler Mail.The Guardian’s Nick Watt sets it all out very sensibly here, as he and Patrick Wintour have been doing for weeks. And what is that we see being waved from the Whitehall bunker? Gosh, it’s the government’s slightly grubby (it’s been used before) white flag. “Osborne signals softening of stance” says the FT while the Times sets up one of its favourite diversions: don’t let the poor Queen (89) be dragged into the dispute. “Tories could soften blow,” reports the nimbler Mail.
The government is in trouble, as all governments periodically are, because less than modest pointy heads at the Treasury have got their sums wrong and their political leader, Master George himself, is not always as astute as his fan club keeps telling him. Remember Gordon Brown awarding pensioners a 75p a week annual increase? Remember his abolition of the 10p tax rate, despite the warnings by the evergreen expert Frank Field MP that it would be an own goal?The government is in trouble, as all governments periodically are, because less than modest pointy heads at the Treasury have got their sums wrong and their political leader, Master George himself, is not always as astute as his fan club keeps telling him. Remember Gordon Brown awarding pensioners a 75p a week annual increase? Remember his abolition of the 10p tax rate, despite the warnings by the evergreen expert Frank Field MP that it would be an own goal?
In Osborne’s case he is trying to take £4.6bn in tax credits away from poorer families whom the reputable Institute for Fiscal Studies says will lose an average £1,300 – 15% of their income on some estimates. Fancy talk about compensating them by imposing a “living wage” regime on private firms – otherwise known as “rising unemployment” – and other porkie pies in the sky impresses no one. The self-styled workers’ party is looking out of touch, despite Cameron’s own promises in Monday’s Guardian.In Osborne’s case he is trying to take £4.6bn in tax credits away from poorer families whom the reputable Institute for Fiscal Studies says will lose an average £1,300 – 15% of their income on some estimates. Fancy talk about compensating them by imposing a “living wage” regime on private firms – otherwise known as “rising unemployment” – and other porkie pies in the sky impresses no one. The self-styled workers’ party is looking out of touch, despite Cameron’s own promises in Monday’s Guardian.
So a mighty coalition, public and expert opinion, plus politicians, has rallied against it. Though the Lib Dem leader, Tim Farron, was bickering like a washer woman (do I mean washer man?) with Labour’s Owen Smith on Radio 4’s Today programme, the parties will combine in the Lords to help impose one of the four restrictive options which Watt explains. Together with crossbench peers and even a few Tory rebels they will force ministers to blink – perhaps before the vote on Monday night.So a mighty coalition, public and expert opinion, plus politicians, has rallied against it. Though the Lib Dem leader, Tim Farron, was bickering like a washer woman (do I mean washer man?) with Labour’s Owen Smith on Radio 4’s Today programme, the parties will combine in the Lords to help impose one of the four restrictive options which Watt explains. Together with crossbench peers and even a few Tory rebels they will force ministers to blink – perhaps before the vote on Monday night.
Here’s the maths in the upper house, where the Tories lost their built-in hereditary majority to Tony Blair’s reforms in 1999 (boy, do they hate it). And here’s a handy reminder from the Institute for Government of recent Lords defeats for successive governments, usually more for Labour ones than Tory in my long experience. Here’s a bit more context.Here’s the maths in the upper house, where the Tories lost their built-in hereditary majority to Tony Blair’s reforms in 1999 (boy, do they hate it). And here’s a handy reminder from the Institute for Government of recent Lords defeats for successive governments, usually more for Labour ones than Tory in my long experience. Here’s a bit more context.
The Tory counter-case against a Lords revolt is that Cameron won the 7 May election on an explicit manifesto commitment to cut a further £12bn from public spending and that the Commons has voted three times to endorse the tax credit changes Osborne unveiled in his July budget.The Tory counter-case against a Lords revolt is that Cameron won the 7 May election on an explicit manifesto commitment to cut a further £12bn from public spending and that the Commons has voted three times to endorse the tax credit changes Osborne unveiled in his July budget.
Manifesto commitments have been protected from defeat in the unelected Lords since 1945 and the emergence of the “Salisbury convention” to that effect, they say. Besides, the Lords lost the power to reject a money bill – notably the budget – since the titanic battle over Lloyd George’s “people’s budget” in 1909-11, with two general elections in 1910.Manifesto commitments have been protected from defeat in the unelected Lords since 1945 and the emergence of the “Salisbury convention” to that effect, they say. Besides, the Lords lost the power to reject a money bill – notably the budget – since the titanic battle over Lloyd George’s “people’s budget” in 1909-11, with two general elections in 1910.
Well, yes, but during the election both Cameron and Michael Gove ruled out a tax credit squeeze. So the manifesto line doesn’t quite work. Former Tory leader in the Lords, Lord Strathclyde, was the first to proclaim the Salisbury convention dead after the 1999 reforms. The half-reformed Lords is a very different place now, dominated by life peers, most of them political appointees.Well, yes, but during the election both Cameron and Michael Gove ruled out a tax credit squeeze. So the manifesto line doesn’t quite work. Former Tory leader in the Lords, Lord Strathclyde, was the first to proclaim the Salisbury convention dead after the 1999 reforms. The half-reformed Lords is a very different place now, dominated by life peers, most of them political appointees.
As for not rejecting money bills, well again ministers are right in theory, though their party is as inconsistent in practice as you might expect. Tories complaining about unelected peers, eh!As for not rejecting money bills, well again ministers are right in theory, though their party is as inconsistent in practice as you might expect. Tories complaining about unelected peers, eh!
Related: The Guardian view on the tax credits disaster: a way out for the chancellor | EditorialRelated: The Guardian view on the tax credits disaster: a way out for the chancellor | Editorial
But the tax credit change comes in the shape of secondary legislation – a statutory instrument – when (as Monday’s Guardian editorial suggests) it should be in primary legislation ie a proper money bill. Has a Lords vote actually overturned a major financial policy in recent years ? No, say the teenage scribblers. Yes, say the experts. Between 1999 and 2012 the Lords voted on 27 “fatal” and 42 “non fatal” motions (two of Monday’s four options) and defeated the government in 17, three of them “fatal”. Two or three, one on national insurance changes under Labour, could be called financial. It’s rare, but not unprecedented.But the tax credit change comes in the shape of secondary legislation – a statutory instrument – when (as Monday’s Guardian editorial suggests) it should be in primary legislation ie a proper money bill. Has a Lords vote actually overturned a major financial policy in recent years ? No, say the teenage scribblers. Yes, say the experts. Between 1999 and 2012 the Lords voted on 27 “fatal” and 42 “non fatal” motions (two of Monday’s four options) and defeated the government in 17, three of them “fatal”. Two or three, one on national insurance changes under Labour, could be called financial. It’s rare, but not unprecedented.
Don’t take my word for it. Peerless Meg Russell (pun not intended), the Lords expert at UCL’s constitution unit, has a blog here which covers most of the ground, including a light doffing over of all the government’s threats about revenge if defeated in the Lords on Monday night.Don’t take my word for it. Peerless Meg Russell (pun not intended), the Lords expert at UCL’s constitution unit, has a blog here which covers most of the ground, including a light doffing over of all the government’s threats about revenge if defeated in the Lords on Monday night.
As Russell says, airy talk about “suspending” the Lords is rubbish, as one might expect from the Huffington Post ( the clue is in the name). Curbing its powers ? Oh do give it a rest, Dave. You have enough constitutional trouble on your hands with Scotland and the entire European Union without taking a fresh crack at Lords reform.As Russell says, airy talk about “suspending” the Lords is rubbish, as one might expect from the Huffington Post ( the clue is in the name). Curbing its powers ? Oh do give it a rest, Dave. You have enough constitutional trouble on your hands with Scotland and the entire European Union without taking a fresh crack at Lords reform.
What was the third floated option? Ah yes, the old chestnut of threatening to flood the Lords with new peers, 100 or so rough fellows from the tax-dodging corners of Mayfair and the City, I expect, donors to Tory funds who don’t know how to use a fork and eat with their hands. The notional cost of such a move, Andrew Rawnsley rightly pointed out in Sunday’s Observer, is £200m per batch of 50. So much for saving money! Thanks to Cameron’s patronage the Lords is already flooded with 150 new peers.What was the third floated option? Ah yes, the old chestnut of threatening to flood the Lords with new peers, 100 or so rough fellows from the tax-dodging corners of Mayfair and the City, I expect, donors to Tory funds who don’t know how to use a fork and eat with their hands. The notional cost of such a move, Andrew Rawnsley rightly pointed out in Sunday’s Observer, is £200m per batch of 50. So much for saving money! Thanks to Cameron’s patronage the Lords is already flooded with 150 new peers.
The real challenge thrown up by the row is what Democratic Audit highlights here, a proper reform of the Lords, but that impulse has been overwhelmed by events many times in the past 120 years, as it was in 2011. Blair (1999) and Harold Macmillan (life peerages in 1958) did most by taking the incremental road. It ain’t going to happen until Jeremy Corbyn wins a majority and has spare time on his hands. Don’t hold your breath.The real challenge thrown up by the row is what Democratic Audit highlights here, a proper reform of the Lords, but that impulse has been overwhelmed by events many times in the past 120 years, as it was in 2011. Blair (1999) and Harold Macmillan (life peerages in 1958) did most by taking the incremental road. It ain’t going to happen until Jeremy Corbyn wins a majority and has spare time on his hands. Don’t hold your breath.
Underpinning all this is the raw politics. As so often in the past decade the Lords speaks for wider public opinion against the Commons majority. Voters who want the deficit cut are uneasy about making poor working families pay such a large price. Tory MPs are uneasy. So are some cabinet ministers, we are told.Underpinning all this is the raw politics. As so often in the past decade the Lords speaks for wider public opinion against the Commons majority. Voters who want the deficit cut are uneasy about making poor working families pay such a large price. Tory MPs are uneasy. So are some cabinet ministers, we are told.
It’s an open goal, especially since the government has more to lose in a bust-up than the peers, at least in the short term most of them inhabit. It’s an open goal, especially since the government has more to lose in a bust-up than the peers, at least in the short term that most of them inhabit.
Osborne’s not daft and he wants to be prime minister. He’ll bend and compromise, especially if the Lords make it easier for him to do so, as they probably will.Osborne’s not daft and he wants to be prime minister. He’ll bend and compromise, especially if the Lords make it easier for him to do so, as they probably will.
How about raising some of the money via a sugar tax, chancellor? I realise it might disproportionately hurt the household budgets of the poor too. At least it might improve their health in the process.How about raising some of the money via a sugar tax, chancellor? I realise it might disproportionately hurt the household budgets of the poor too. At least it might improve their health in the process.