Carmichael fears watered down tax credit cuts will still leave poor worse off

Hard-working people will still be left worse off as a result of changes to tax credits sought by Chancellor George Osborne despite a defeat in the House of Lords, fears Alistair Carmichael.

The Orkney and Shetland MP predicts watered down cuts will fail to go far enough to protect households at risk of losing out.

The House of Lords voted down the Tory plans to save billions of pounds from the welfare bill, sparking fears that a “constitutional crisis” will emerge because the Tory cuts have already been passed by the House of Commons.

Peers want Mr Osborne to come up with a way of effectively compensating low-paid workers who stand to be affected.

It follows warnings from Mr Carmichael last week that almost 2,000 families across Orkney and Shetland stood to lose a total of £1.4 million.

Today, the isles MP gave a cautious welcome to the news.

“I would have preferred that the Lords had killed it outright. They had the option to do that, but they allowed themselves to be bullied by the government, for constitutional reasons, into delaying the implementation,” said Mr Carmichael.

“I suspect that George Osborne will come back now with changed proposals which will take some of the heat out of the issue, but will still leave a lot of people worse off who can not afford to be worse off. We’re not out of the woods yet.”

He cited experience from the previous coalition government, insisting the Liberal Democrats had blocked similar proposals from the Tories in the past.

“The proposals, I think, are wrong-headed and I am glad that for the moment at least they have been seen off.”

Last week the proposals were supported by Tory Scottish parliamentary candidate, Cameron Smith, who said a new living wage announced in the budget would “significantly increase” the pay of those on low incomes.

The head of his own party north of the border, Ruth Davidson, voiced concerns, however.

Mr Carmichael said the cart had been put before the horse.

“The objection to what has been done is the immediacy of it. Tax credits need a fundamental reform and, as a model, they are not working.

“But, if you are going to change them, you have to protect the people who currently rely on them in the meantime. That’s the test that the Tories have failed this time.

“He [Osborne] is right that increases to the minimum wage and increases to the level of tax allowance will all help, but they won’t help everybody uniformly.

“You need to see where the winners and losers are going to be in these changes.

“The other truth is that the overall budget for tax credits will come down as people’s incomes go up, so you don’t need to drive the programme of cuts that George Osborne is doing if what you want to do is help people who are in work and who are not in well paid jobs.”

Following the Lords defeat, Mr Osborne said he would act on concerns about the impact of the cuts.
But he vowed to press on with changes.

“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,” he said.

“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 in the autumn statement.”


Add Your Comment
  • John Jamieson

    • October 28th, 2015 8:45

    Seems like only yesterday that the Lib Dems were voting with the Tories in favour of their austerity measures.

  • John Tulloch

    • October 28th, 2015 10:01

    In fairness, John Jamieson, do you not wish the Lib Dems were still there, watering down the Tory medicine?

    • John Jamieson

      • October 28th, 2015 20:24

      Who knows what the Lib Dems watered down ?
      No, I wish that they had never gone into coalition with the Tories at Westminster or Labour at Holyrood and worked with the rest of the opposition parties on a case by case basis.
      I’ll lay you odds that most of the Lib Dems who are no longer in either parliament and some of those who are also wish they’d not gone into either coalition.

  • paul barlow

    • October 28th, 2015 10:40

    no. i wish they had stayed true to there founding principles. to jump in bed with a party that considers the poor a fair target is truly shameful.

  • David Spence

    • October 29th, 2015 18:39

    I think we are, in the UK, living in dangerous times when 1 political party dominates over all other parties. This is the green light for the Tories to do what they want, when they want and how they want. They are already carrying out their agenda of look after number 1 and to hell withthe rest of the population.

    People will say ‘ They were voted in ‘ but I question whether or not the game we play called an election has any value at all when it comes to making sure those in power remain in power to suppress and subjugate the rest of the population. Their ideology is a system where they are better off whilst everybody else worse off (banking crisis being an example of this power – where we were forced to save this industry at great cost to millions of people – austerity cuts whilst the industry we saved still pays out bonuses in the billions, and behaves no differently than they did before the so-called crisis).

    The Tories are the party which would support, condone what the banks are doing, even if 99% of the population suffers hardship because of it.


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