Peers Vote To Delay Tax Credit Cuts

Despite the Government’s dire talk of a constitutional crisis, the House of Lords voted to delay the implementation of the tax credit cuts until Ministers take steps to soften the blow for low-income individuals.

Today’s debate was an example of the House at its finest. It soon became clear, however, that the Government and its supporters were having difficulties. Opponents of the cuts had the letter of the law on their side, so the Government had to rely on convention. But the fact that the report of the Joint Committee on the Conventions on the Relationship Between the Two Houses of Parliament explicitly recognized peers’ right to reject statutory instruments undermined the Government’s claims. Furthermore, the Clerk of the Parliaments ruled that the Commons’ financial privilege does not apply to statutory instruments.

There were four amendments to the Government’s motion of approval. The first one would have rejected the cuts outright, but peers voted it down by a wide margin. The second one would have delayed the cuts until the Government had responded to the Institute for Fiscal Studies’ criticisms. Peers supported this amendment by a vote of 307 to 277. However, a few minutes later they voted in favor of a third amendment that went even further–the Government would have to come up with transitional arrangements to soften the blow for low-income individuals and respond to the IFS report. This amendment was agreed to by a vote of 289 to 272. The fourth amendment was a compromise that would have approved the regulations while expressing regret, but it was withdrawn by its sponsor without a vote.

The final outcome came as a bit of a surprise to me. Although the cuts’ opponents made compelling arguments, I thought that enough peers would have second thoughts about defying the Commons when it came time to vote that the Government could eke out a victory. I also wondered if the Bishop of Portsmouth’s motion of regret would siphon off support from the other hostile amendments since it offered a way for peers to register their displeasure without provoking a clash with the Commons.

So far, the Government’s reaction has been muted. George Osborne told the BBC that the defeat raised constitutional issues that needed to be dealt with, but he shied away from the overt threats that emerged in the last few days. (I suspect that saner heads in Whitehall pointed out that a lot of those threats simply aren’t practical.) Hopefully, Osborne’s less-aggressive approach means the Government is willing to take a deep breath and respond thoughtfully instead of rushing forward in a fit of pique.

UPDATE: a Downing Street spokesman had this to say to the BBC: “The prime minister is determined we will address this constitutional issue. A convention exists and it has been broken. He has asked for a rapid review to see how it can be put back in place.” Further details will be announced on Tuesday.

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