The Lords have passed the Tax Credits amendment, proposed by Baroness Hollis, by 289 votes to 272 - a majority of 17
The Hollis amendment proposed that:
“this House declines to consider the draft Regulations laid before the House on 7 September until the Government, (1) following consultation have reported to Parliament a scheme for full transitional protection for a minimum of three years for all low-income families and individuals currently receiving tax credits before 5 April 2016, such transitional protection to be renewable after three years with parliamentary approval, and (2) have laid a report before the House, detailing their response to the analysis of the draft Regulations by the Institute for Fiscal Studies, and considering possible mitigating action.”
View Hansard report of Lord’s debate
Read our concerns about the Government's proposed Tax Credits reforms
Chancellor George Osborne has promised both to address the question of tax credits transitional protection in the autumn statement and the constitutional issues surrounding the Lords vote
“Tonight unelected Labour and Liberal lords have defeated a financial matter passed by the elected House of Commons and David Cameron and I are clear that this raises constitutional issues that need to be dealt with.
However, it has happened and now we must address the consequences of that. I said I would listen and that is precisely what I intend to do. I believe we can achieve the same goal of reforming tax credits, saving the money we need to save to secure our economy, while at the same time helping in the transition. That is what I intend to do at the autumn statement. I’m determined to deliver that lower welfare, higher wage economy that we were elected to deliver and that the British people want to see.”
During the debate Baroness Jane Campbell emphasised the importance of tax credits for disabled people.
"My Lords, as a Cross-Bencher in this House, I see it as my job to offer my best expertise and knowledge to help the Government understand the consequences of some of their legislation and statutory instruments. That is what I will now offer.
Working tax credits have provided an unprecedented and effective pathway into employment for disabled people who faced the greatest barriers to employment. Proposals to lower the threshold for working tax credits and accelerate the taper rate to 48p will dramatically reduce the incomes of disabled people in low-paid employment who, for reasons directly linked to their impairment, do not have the option to increase their working hours or to offset their losses. Disabled people—especially those with learning disabilities—are more likely to be in low-paid employment than non-disabled people.
I am not aware of an impact assessment that has evaluated this specific disability element. I fear that this cut will also disincentivise disabled people from taking the very difficult step off benefits and into work. There is little doubt that it will negatively impact on the Government’s other policy, which is to halve the disability employment gap. It does not make sense. Do not forget, either, that that gap is currently running at over 30%. Higher costs in health and social care are the inevitable result of unemployment among disabled people.
Furthermore, we cannot look at working tax credits in isolation. We are promised joined-up government but I am not aware of any cross-government analysis of the cumulative impact of this regulation on working disabled people or families with a disabled member. Where is the Department of Health? Many working disabled people affected by cuts to working tax credits are also suffering because of cuts to their social care support, the closure of the Independent Living Fund and the changes to Access to Work. In effect, the Government are making employment less likely for people with these support needs. I know that this is not their intention.
I hope that this little detail—this bit of reality and evidence—will help us to reflect. Maybe the Government will change their mind; I do not know. But I am deeply worried about the number of people who will effectively be hit by this provision, which will not deliver the Government’s own policy."