Backbench Tories pile pressure on Osborne over tax credit cuts

George Osborne may have to drastically reconsider his cuts to tax credits after a succession of Conservative MPs warned him in the Commons that his measures punished the wrong people and could permanently damage the party’s “reputation for compassion”.

In a day-long debate on the cuts, introduced on a cross-party motion, not a single Tory backbencher spoke fully in defence of the proposals, while at least 10 warned the Treasury front bench that a large scale rethink was required by the autumn statement.

On Monday, the House of Lords voted to block the changes, and Osborne responded by promising to mitigate the effect.

But freed by the format of the Commons debate to express their doubts and abandon the normal party political shackles, Tory MPs issued clear warnings that the £4.4bn cuts to tax credits went too far and targeted the wrong people.

Treasury minister Damian Hinds responded, saying: “I acknowledge, as does the chancellor, the concerns expressed ... by MPs”.

Tory MPs told him the cuts should not be imposed on current tax credit recipients, or that they should not bite this April but instead be delayed until the end of the parliament when large-scale balancing increases in the national minimum wage will take effect.

Some suggested if necessary Osborne should delay his plans to put the overall budget into a £10bn surplus by 2019-20. Many also expressed concerns that the impact of the changes was to reduce incentives for people to work.

Stevenage MP Stephen McPartland led Conservative opposition to the plans, warning that Tories with concerns would “continue to raise the issue” until their demands were met.

McPartland said: “People on £11,000 will still be hit by the £1,200 or £1,400 cut. That punishes people who are going out to work and doing the right thing. That does not sit right with me and I cannot support it. I do want to work with the Treasury. I can be a prodigal son and be returned to the fold, I am sure”.

But he added: “I warn the Treasury that if it does not come forward with mitigation proposals that we find acceptable, we will continue to raise the issue and try to look after the poorest in society” .

What are tax credits?

Guto Bebb, Conservative MP for Aberconwy, said the “decision to cut so quickly so deeply” was problematic. He criticised the discrepancy in the timing between the rise in the national minimum wage at the end of the parliament and cuts in the tax credits coming into force next April.

He said he was shocked by crass comments from fellow Tory MPs who claimed tax credit recipients could make up the loss by working extra hours.

Neil Parish, the MP for Tiverton, said: “We have just lost our way a little, but we can come back out of the wilderness and put this right. It is not a crime to be lowly paid. We have got to put this right, because the Conservative party and the government’s reputation is at stake.”

People would be driven back on to benefits if the government were not careful with its tax credit changes, he warned.

The environment select committee chairman added: “I think we are standing up for what we believe to be right because as far as I am concerned it’s absolutely fundamental people that work are better off than those that don’t.

Frank Field, Labour chairman of the work and pensions select committee, said the Commons had sent a clear message to Osborne to pause the proposed cuts to tax credits and publish a full analysis of their impact on low-paid workers.

Field said: “Both Houses of Parliament now have given George Osborne a chance to reflect on the likely impact of his tax credit cuts on Britain’s strivers and, more importantly, come up with ways of softening the blow to their budgets. Crucially, the chancellor must use this opportunity to boost his credentials as a welfare reformer by reviewing the whole operation of tax credits.”

He had told MPs at the start of the Commons debate: “Talking to constituents you cannot come away without being incredibly conscious of the fears people are suffering. People we should be saluting and cheering are sick with worry about how they will make ends meet, whether they are going to lose their homes, whether the interest on their mortgages can be repaid, let alone protecting their children.”

Heidi Allen said concern about the reforms was not just coming from the poor: “I have had countless letters from wealthy people telling me this is wrong.”

David Davis the leading rightwing Tory backbencher, said the policy had been a mistake and that the cuts should “be staged to match movements in the minimum wage and the living wage so that people would not lose”.

Powered by article was written by Patrick Wintour Political editor, for The Guardian on Thursday 29th October 2015 20.29 Europe/London © Guardian News and Media Limited 2010