October 26, 2015 by Paul Goldsmith
I’ve been brought up to look everyone in the eye. Everyone, from Chief Executives to cleaners. But last week I struggled to look the dinner ladies and cleaners at my school in the eye. Why? Because I know that they work just as hard as I do, and sometimes for longer hours, but get paid very little compared to what I do. Yet their take home pay is being cut by the government’s tax credit reforms. At the same time, I stand to inherit more from my Parents because of the government’s inheritance tax reforms. Every time I think about that, say that and write that I can barely look at myself in the eye in the mirror let alone those people working at my school on low pay.
The oddest thing about these cuts in working tax credits when compared to the rise in the inheritance tax thresholds (that will effectively cut inheritance tax) is that they are being called ‘ideological’. Well, yes, I guess if the most important ideological priority for the Conservatives today is to shrink the size of the state and prioritise the keeping of private property within a family unit. But I thought the Conservative Party of today was ideological about being the party of ‘work’. If you get out of bed, go out and work hard you get rewarded. Yet, people on low pay who are doing this are having their income cut, whilst the income and wealth I get to accrue without any work (apart from being born to the ‘right’ people) is being raised. In short, these tax credit reforms rob those who work to provide more money to those who don’t have to.
The Tories may complain that I haven’t understood. The tax credit reforms are ‘part of a package’. This package will allegedly raise incomes over the long term. Yes, but they might push the working poor to need to use food banks or have to turn off their heating in the short term.
The Tories, or George Osborne to be precise, argue that the Conservatives have a mandate to implement the tax credit reforms as they claimed in their 2015 General Election manifesto that they would implement £12bn in welfare cuts. Poppycock. They were asked time and time and time again to spell out how they would cut £12bn from the welfare bill and refused to answer. Now we know why, because if they had dared to mention they would be trying to lower the deficit literally on the backs of the working poor then Ed Miliband might be Prime Minister right now.
This week the House of Lords are going to be debating the reforms. Unlike the House of Commons the Conservatives don’t have a majority in the second chamber. Unlike the House of Commons the Lords aren’t elected. This legislation is a statutory instrument called a ‘delegated legislation’ as it is part of the Tax Credit Act 2002 that the Government needn’t present a new Bill to change rate bands, which is what they are trying to do here. There have been a variety of motions put down, some wanting to delay the changes, and some trying to kill the changes.
The Lords do have a formal veto over delegated legislation. However, it is more likely that what the Lords will actually do is the equivalent of asking the Government “are you sure about this.” They have a right to do this. Whatever Osborne says it wasn’t in the Government’s manifesto so it isn’t covered by the Salisbury Convention (which generally means the Lords do not challenge anything that the Government has an electoral mandate for).
It could be argued that a more important constitutional convention is at risk here; that the Lords shouldn’t intervene in financial matters, particularly as the savings from the tax credit cuts are very large (around £4 billion). But Labour and the Lib Dems argue that this isn’t a financial matter but a welfare matter. Furthermore, the Lords are emboldened by the current disquiet on the Government’s own benches, with Conservative MPs Heidi Allen and Johnny Mercer both making speeches setting out their concerns during last week’s Labour opposition day debate.
The Conservative leadership are trying everything to warn the Lords against overplaying their hand (Excellent explanation by Professor Meg Russell here). There have been stories in the press of the Lords being suspended, of cutting the Lords’ powers and of David Cameron flooding the Lords with appointed Tory peers.
The first option is simply not in the Government’s powers. The second option is not possible without primary legislation that would have to pass through both chambers and thus could take two years. The final option would be highly controversial, eventually drawing the Monarch into a constitutional crisis like the ones over the 1832 Great Reform Act and the 1909 ‘People’s budget’.
Those two pieces of legislation were over vitally important issues. Both of them were perhaps worth fighting over. Will the Conservatives really create a constitutional crisis over their right to penalize those that work for very little pay instead of settling for a life on benefits. Really?