Chancellor George Osbourne must rethink plans to cut tax credits – to ensure workers on lower incomes are protected, a Conservative MP has warned.
Former cabinet minister Andrew Mitchell, Conservative MP for Sutton Coldfield, was speaking after the Government suffered a dramatic defeat in the House of Lords over tax credits.
Mr Mitchell urged the Chancellor to ensure the cuts hit “those with the broadest shoulders” who could afford to cope with a reduction in their income.
And he said Mr Osborne was right to “respond to the will of the Lords” and accept that he had to make changes to his plans.
Government figures show that 319,000 working households in the West Midlands region receive tax credits. Those with incomes above £3,850 will be affected by the cuts under Mr Osborne’s original plans, although some will also benefit from an increase in the minimum wage or an increase in the income tax threshold, which effectively cuts income tax for many people.
Critics say the move could deprive low-income workers of up to £1,300 a year.
The Lords blocked the changes by voting for a Labour motion stating cuts should not go ahead unless the Government ensures people on low incomes who currently receive tax credits are protected for at three years.
Government ministers criticised the unelected House of Lords for blocking their plans and Mr Osborne said it raised “clear constitutional issues which we will deal with”.
But the Lords vote, combined with open criticism of the cuts from some Conservative MPs, also meant Mr Osborne was forced to announce that he will find a way of reducing the impact the changes have on families, with details to be announced in his Autumn Statement on November 25.
Mr Mitchell, a former Chief Whip and International Development Secretary, said: “I think the Chancellor deserves some credit for having responded to the will of the Lords in the positive way that he has, and not dug in.
“And he now has some time to reflect on the necessary tweaks to this policy that many of us have urged him to bring forward.”
Mr Mitchell said he backed the Chancellor’s goal of cutting the welfare bill.
He said: “We have to bring down the cost of welfare, balance the budget over the medium term and and live within our means as a country.
“That is going to require difficult decisions, which it is the duty of a government to take, bearing in mind the importance of those with the broadest shoulders bearing the greatest burden.”