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Tax credits: Ministers urge opponents to back down

The government has urged opponents of tax credit cuts to withdraw attempts to delay or scupper them, at the start of a crucial debate in the House of Lords.
Lords leader Baroness Stowell said MPs had given the cuts their "clear and unequivocal backing", and urged the Lords not "to challenge their primacy".
If opponents backed down, she said, Chancellor George Osborne would listen "very carefully" to their concerns.
Critics have accused the Conservatives of misleading the public on the issue.
  • Follow the debate and reaction live
As the House of Lords prepares to vote on motions that could delay the controversial cuts by three years or scrap them altogether, ministers say peers do not have the right to block financial measures approved by the House of Commons.
Baroness Stowell told peers the "financial primacy" of the House of Lords had been in place for 300 years and to ignore this would be an "unprecedented" challenge to the elected chamber and put the two Houses in "direct contrast".

'Economic vision'

Urging peers to reject three separate motions calling for the cuts to be either scrapped or delayed, she said the policy should not be treated "in isolation" but was part of the government "economic strategy and vision for the country".
She said Mr Osborne would "listen very carefully" if a separate motion of regret put forward by Church of England bishops, which would not block the cuts, was passed by the Lords.
However, the BBC's political correspondent Robin Brant said it was looking increasingly likely that the Lords would block or delay the measures.

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.
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.
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.

Read more:

  • Kuenssberg: The high-stakes battle over tax credits
  • What tax credits are and how they're changing
  • Peston: Can tax credit cuts be made less painful?

Opponents of the tax credit changes say they will leave millions of existing recipients - many of whom work but are on low incomes - some £1,300 a year worse off when they come into effect in April.
But ministers say that taking into account other changes, such as the introduction of the new national living wage, further increases in the personal tax allowance and an extension of free childcare, the majority of existing claimants will be better off.
The measures have been approved on three occasions by the Commons since June but there has been growing unease on the Conservative benches about their impact and the government is more vulnerable to defeats in the House of Lords, where it has no majority.
Peers could be asked to vote on as many as four motions urging a different approach.

The Liberal Democrat peer Baroness Manzoor has tabled a so-called "fatal motion" that would "decline to approve" the plans and effectively send them back to the drawing board.
She said the effect of the cuts would be "devastating" and attempts to put them on hold or seek to alleviate their impact would merely be a "sticking plaster".

Constitution wars

It should not really be much of a problem - the House of Lords is not traditionally supposed to block financial legislation that has the backing of MPs.
This principle was established in 1911 during the constitutional gridlock that followed a decision by peers to block the Liberal Party's "people's budget".
But nothing is ever cut and dried in Britain's fluid, unwritten constitution. And both sides are angrily trading precedents and claiming that their opponents are overstepping the mark. If they could only agree where the mark is.
Lords v Commons: Tax credit battle gets constitutional

The Lib Dems have told their 111 peers to vote for the motion but it is not clear how much support the Manzoor motion will attract from Labour and the 176 crossbench members of the Upper House.
Labour's motion, under the name of Baroness Hollis, calls for the changes to be delayed until a three-year package of transitional financial help has been agreed upon.
Two other motions, one under the name of crossbench peer Baroness Meacher calling for a pause, and one from the Bishop of Portsmouth urging further consultation have also been tabled. However, it is not clear if they will be voted on.
Baroness Meacher accused ministers of "bullying" over their attempts to prevent peers from challenging the reforms, saying she was "acutely conscious" of threats by the government to "destroy this House one way or another if we proceed".
The Upper House, whose main function is as a revising chamber, has no powers to amend or block government money bills but the tax credit changes are incorporated in a so-called statutory instrument rather than primary legislation.
According to parliamentary records, peers have killed off secondary or delegated legislation supported by the Commons on five occasions since 1945: in 1968, 2000 (twice), 2007 and 2012.

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