The House of Lords has voted to reject George Osborne's proposed ending of tax credits. Osborne has, in response, promised to look again at the policy but at the same time has fired a clear warning shot in insisting that the Lords have acted unconstitutionally. They will, he has just said, 'be dealt with'.
But who is behaving unconstitutionally in this situation? There have been conventional limits to the House of Lords' actions, but in this instance, I think, they have behaved quite properly. Because here's what the Government could have done:
1. Put the axing of Tax Credits in their election Manifesto
There is a constitutional principle called the Salisbury Convention which states that Bills voted through by the Commons which were mentioned in the governing party's manifesto cannot be struck down. But the Government did not do this. There is no hint that tax credits were to be abolished in the manifesto. Indeed there are two mentions of these tax credits ('the tax credits that top up low wages' it boasts, p. 30); both of these references in the context of denying them to migrants, which plainly implies that they are to be continued for everyone else.
2. Not actually promise to keep them during the election campaign
In fact, David Cameron went further. On the BBC Question Time leaders debate on 30 April 2015, David Cameron was asked by an audience member if he would cut child tax credits and he replied:
No, I don’t want to do that – this report that was out today is something I rejected at the time as prime minister and I reject it again today
David Dimbleby reiterates: 'clearly there are some people who are worried that you have a plan to cut child credit and tax credits. Are you saying absolutely as a guarantee it will never happen?' Cameron tries to parry this by insisting that the Coalition have increased child tax credit, but Dimbleby presses him: 'And it’s not going to fall?' Cameron's answer is unequivocal:
It's not going to fall.
The context for this exchange was that the Government did announce that they were going to make £12bn of welfare cuts, but they refused to be led on what they were. The Liberal Democrats, who had stopped them cutting these tax credits before, knew this was potentially on the table and tried to force the Government to admit what it was up to. Hence these questions. But it's clear: Cameron explicitly denied he would cut Child tax credits. This was exactly what they didn't want to pledge but it explains Osborne's policy which cuts working tax credits while limiting child tax credits for new claimants. It observes the letter, though not the spirit, of Cameron's pledge.
3. Cut tax credits as part of the Budget
Since the Parliament Act 1911 (following the battles over the 'People's Budget' in 1909-10), the principle has been established that the Lords will not vote down Finance Bills. If Osborne had included the cut to tax credits explicitly as part of the Budget, it would indeed have been constitutionally very difficult for the Lords to reject it. But he didn't. Now he's trying to claim that cutting tax credits was financial legislation and therefore should not have been opposed. But that's absurd: almost all parliamentary bills have some financial ramifications. To claim that bills with financial aspects cannot be opposed would be to say the Lords can't amend anything. But why did Osborne not put them into the budget? Because he knew how much scrutiny a Budget gets. There's a substantial debate, covered live on the broadcast media, pages and pages of analysis. It would - quickly and publicly - be seen for the highly controversial policy that it is.
4. Cut tax credits as part of a Bill
So, this is complicated. What the Lords were voting on was not a Bill. There was no Tax Credits Bill 2015 before them. What they were voting on was a 'statutory instrument', a kind of secondary piece of legislation. The Tax Credits Act 2012 establishes powers for a Government to amend bands and levels of the tax credits, without the need to create a separate Bill. When they want to amend tax credits, the earlier legislation allows them to create a simpler 'statutory instrument' which is then voted on in the Commons and Lords. It's significant because statutory instruments are intended to be minor, technical amendments; they get much less parliamentary time for debate, because, it is imagined, they would usually be waved through.
But the abolition of tax credits is no minor, technical thing. The Child Poverty Action Group has produced a study of what these cuts will means for a range of families and incomes. A farm worker on £20,906 will lose £2,247.62 in 2016/17; a childminder on £16,779 will lose £1,958.73. A library clerk on £18,524 will lose £2,080.88. And so it goes on. Overall, the Group calculate that 3.2 million low-paid workers will lose an average of £1,350 a year. These are not technicalities; this is the forcing of millions of people further into poverty. If the abolition of tax credits had been introduced as a Bill, there would have been more parliamentary time to air these concerns, to bring out fully to horror of what George Osborne is trying to unleash.
There's a pattern here. What we notice in each of these instances is a Government is trying to introduce a policy with the minimum public scrutiny, almost in secret. They didn't mention it in their manifesto; they brushed over it in the election campaign; it wasn't made explicit in the Budget; it was rushed through parliament. This is a Government with the thinnest mandate: less than a quarter of the electorate voted Tory. They need to win the argument; persuade people; take people with them. If they had presented the policy honestly and won the argument, the Lords would have been hard-pressed to defeat it. But instead the Tories tried to sneak their cruellest legislation through, using technicalities, threats and three-line whips. They hoped we would find tax credits so confusing that we would hesitate.
There are plenty of things wrong with the House of Lords, but, for now, they have performed a valuable service in putting this covert and deceitful policy right in the glare of public attention. They are quite right to have opposed it.