House of Lords Tax Credits Victory

The House of Lords dealt a blow to the Chancellors flagship tax credit cuts policy a couple of weeks ago.

Much has been written about this but it is important to lay out exactly what happened and the significance of it.

The changes to the tax credit system were brought to parliament by a Statutory Instrument (SI).  These are secondary pieces of legislation that sit alongside the primary Acts of Parliament.  For example, a piece of legislation will set out that the Government has the general authority to do something and they will set the X and Y via an SI.  In this case the SI changed the thresholds, tapers and levels of tax credits under the Act.

The House of Lords are not allowed to look at any House of Commons laws that have financial implications.  This financial privilege is well established.  E.g. the House of Lords cannot look at a budget measure.  Had these changes been brought by a financial instrument then the House of Lords would not have been able to do anything about them.

There is no constitutional issue here as the Government brought the changes via an SI and it is perfectly legitimate for the House of Lords, as the revising second chamber, to assess the Si and make judgement on them.

In the House of Lords several motions were brought forward but the two main ones were what is known as a "fatal motion" that kills a proposal and a motion by Labour Baroness Hollis to say tot he House of Commons that the Lords will not give its approval unless the Government brings forward full mitigation measures and delays the changes by three years for that to happen.

The fatal motion fell as it was felt that killing the proposal would merely allow the Government to bring it back again quickly in a money resolution to cut out the Lords.  It was felt that the most damage to the Governments proposals was that of the Baroness Hollis amendment.  That carried the day with a huge majority.

Now the Government must think again.

In the House of Commons the following day the Labour Opposition tabled the fatal motion (as having a fatal motion carried in the Commons would kill the policy stone dead).  It was defeated by the Conservative majority.  The Baroness Hollis motion was brought by the SNP Opposition but that was also defeated.

In the meantime, the Scottish Labour Party Leader has said that a future Scottish Labour Government in Scotland would use the powers that are currently in the Scotland Bill to compensate for any loses of tax credits for people living in Scotland.  It is  fully costed plan and the right thing to do.

These are hugely complicated processes but the bottom line is that the House of Lords, as a revising chamber with no Government majority, has defeated the Governments dreadful cuts to tax credits.  We now await to see how the Chancellor will respond in the Autumn Statement on 25 November.

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Ian Murray for Edinburgh South