Time to cancel the tax credit cuts

The Prime Minister and the Chancellor claim that low income households will not lose out if the Conservatives go ahead with slashing tax credit payments. They continue to argue that the low-paid will be more than compensated through a package of other changes including increases in the minimum wage (renamed as the so-called "national living wage"), the increase in the tax-free allowance and increased childcare support.

But a host of “experts” and think-tanks strongly disagree. The independent Institute for Fiscal Studies (IFS) has written that it is “arithmetically impossible” for poorer families not to lose out, while even the “free market” Adam Smith Institute (ASI) slammed the proposed cuts.

The ASI commented that “working tax credits are the best form of welfare we have, and cutting them would be a huge mistake” adding that “cutting tax credits would disincentivise work and hurt those at the bottom of society.”

It was certainly claim and counter-claim in the House of Commons last week when MPs debated a motion to cancel the tax credit cuts, which was lost by 317 votes to 295.

The opposition parties were united in demanding a rethink, but most Conservative MPs dutifully and repeatedly trotted out those same soundbites uttered by George Osborne in recent weeks.

Independent Northern Ireland MP Sylvia Hermon expressed her embarrassment and anger that she had previously voted in favour of the cuts “on the clear understanding that there would be mitigation … of the worst effects of the cuts,” though this had since been ruled out by the Conservative Party.

But most telling of all, a small number of Tories went off-message, rejected the arguments of their leaders and attacked the tax credit cuts.

Cambridgeshire MP Heidi Allen warned that the cuts were "too hard and too fast." She said: “Everything we do must pass the family test, but cutting tax credits before wages rise does not achieve that.” The MP added: "Sending a message to the poorest and most vulnerable in our society that we do not care does not achieve that either."

Plymouth MP Johnny Mercer meanwhile urged caution and appealed to the Chancellor to do “something – anything – that might mitigate the harshest effects of this policy on our most vulnerable.”

It seems to me that if the Conservatives do refuse to rethink their tax credit cuts, they will themselves have made a mockery of their oft-repeated and often ridiculed claim to be a “compassionate” party.

[This will be my article in this week's Cornish Guardian].