With a gossamer Tory majority in the Commons and no majority at all in the Lords, confrontation between the two chambers was always inevitable. Tonight’s defeat over tax credits will be the first of many. But it would be a great error for the Conservative government to choose this as the issue over which to go to war with the Lords.
For a start, their Lordships are right: taking tax credits away from low-paid workers, rather than phasing them out, is cruel and and unnecessary. Next, this was not in the Tory manifesto: the party said they would cut £12 billion but didn’t say how — and had hinted that they would not do it by tax credits.
But also, crucially, this battle threatens to retoxify the Conservatives. What does it say about Tory values? That the party will make a constitutional crisis out of its desire to tear away financial support from low-paid families who had thought that the Tories were on their side? The people who have done everything that Cameron’s government asks of them?
Jeremy Corbyn may well tempt the Tories into hubris, make George Osborne think that he can do anything, pass any law, ride through any media storm. But the Chancellor should be careful about seeing this as a Westminster power struggle — it’s about more. Not just the livelihoods of the millions affected but about the priorities and purpose of the Conservative Party.
So while Osborne will be furious about tonight’s defeat, he should pause. His plan is addled with unintended consequences — which is why he should only ever have considered phasing out tax credits, denying them to new claimants. His plan, as it stands, involves a lot of political pain for not very much economic gain — £3.5 billion. A snip, in the context of £650 billion state spending. Osborne could could find this sum in any number of other ways.
So tax credits is a battle of choice, not of necessity. And it’s the wrong battle; this shows the Tory party as a mean-spirited bunch of deficit obsessives – or, worse, being so out-of-touch that they would rather protect rises in their fashionable overseas aid budget than help the strivers, the people whose efforts actually pays the ministerial wages.
The late Dennis Healey had a rule of jokes: ‘when you’re in a hole, stop digging’. Osborne is in a hole. The next five years will bring plenty of good, noble causes over which to take on the Lords. This is not one of them.
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