An attempt by peers to kill off proposed cuts to tax credits has been rebuffed by the government after it warned the House of Lords it would trigger a full-scale constitutional crisis by pressing ahead with the plans.

As the chancellor faced a growing rebellion against the cuts among Tory MPs, the government told the non-party group of crossbench peers that they risked a renewed push to weaken the powers of the upper house if they refused to back down.

The high-stakes warning by the government came after Lady Meacher, a crossbencher who is the former chair of the East London NHS Trust, threatened to table a “fatal motion” to kill off the cuts to tax credits.

Meacher withdrew her fatal motion on Tuesday night and instead announced she would table a motion calling on the government to deliver a report responding to the warning by the Institute for Fiscal Studies that 3 million families would lose £1,000 a year.

The motion which Meacher had planned to table is known as a “fatal” one because it would have killed the government measure, known as a statutory instrument. Government sources say that this has only been done on five occasions by the lords over the last century on matters unrelated to spending.

Government sources say that this has only been done on five occasions by the Lords over the last century on matters unrelated to spending. Disputes between the Lords and Commons on normal legislation usually result in a process known as parliamentary “ping pong” in which bills are passed between the two chambers. Peers can delay bills for a year but have no powers to block finance bills.

The move by Meacher came as the former Tory chair Lady Warsi became the most senior Conservative to raise concerns about the cuts, which have prompted warnings by campaigners that 3 million of the poorest working families would in fact be worse off by £1,350 a year.

Warsi offered her support to Heidi Allen, the newly elected Tory MP for South Cambridgeshire, who used her maiden speech to issue an impassioned plea for the chancellor to rethink his plans. Allen, who had said that she would not bother making full-scale speeches in the Commons, told MPs: “Conservatives pride themselves on living within their means, of cutting their cloth. But what if there is no cloth left to cut?”

Heidi Allen: tax credits not a spreadsheet exercise, these are real people. Guardian

Allen took a swipe at the chancellor, who is introducing the £4.4bn cuts to reach his target of cutting the welfare budget by £12bn as part of his goal of delivering an overall budget surplus by 2019/20. She said: “It is right that people are encouraged to strive for self reliance and to find work that pays for their independence from the state. But I worry that our singleminded determination to run a budget surplus is betraying who we are. I know true Conservatives have compassion running through their veins.”

Warsi tweeted: “Brave and principled maiden speech by @heidiallen75 today on #TaxCredit cuts. #Compassionate #Conservatives.” In another tweet, the former Tory chair added: “Family credits provided my parents the necessary buffer to allow us to study and work our way out of poverty #socialmobility #taxcredits.”

The intervention by Allen was echoed by her colleague Johnny Mercer, a former British army officer elected as MP for Plymouth Moor View in May, who warned that the cuts would have a devastating impact on poorer parts of the naval city. He said: “Our duty is to shout for our most vulnerable ... I today urge the chancellor to provide something – anything – that might mitigate the harshest effects of this policy on our most vulnerable.”

The chancellor is making clear that he is determined to press ahead with his plans that will slash the earnings level at which tax credits start to be withdrawn from £6,420 to £3,850 from next April. Downing Street says that eight out of 10 families will be better off if all the tax changes and the chancellor’s “national living wage” are taken into account. Osborne announced in his summer budget that he would rebrand the minimum wage as the national minimum wage, which would be set at £7.20 an hour from next April for over-25s. It is to rise to £9 an hour by 2020.

The Institute for Fiscal Studies says it is “arithmetically impossible” to compensate for the loss in tax credits through the increase in the minimum wage. In its post-budget briefing, the IFS said 13 million families would lose an average of £240 a year, while 3 million families would lose £1,000 a year.

But the chancellor is aware of the growing rebellion. He will not back down on the specific cuts but may be minded to make the first tentative moves towards offering relief to Britain’s lowest paid workers who stand to lose thousands of pounds.

The government succeeded in killing off the fatal motion after Lady Stowell, the leader of the Lords, warned the crossbench peers of damaging consequences if they pressed ahead. Meacher lost the support of the convenor of the crossbench group after Lady D’Souza, the speaker of the Lords, raised concerns. There were suggestions that the Lords could see new restrictions on its powers if the motion were passed. The Tories do not have a majority in the Lords and faced defeat after Labour and the Liberal Democrats said they would support Meacher.



A debate ended in the Commons on the cuts ended with a government victory by 317 to 295, a majority of 22, after none of the Tory critics rebelled.

Peers are usually cautious about challenging the government on financial matters because the House of Lords lost the right to overturn finance bills after a row over David Lloyd George’s redistributive “people’s budget” of 1909.



Labour said that there were three days left to table another motion. But a new “fatal” motion would struggle without the support of the crossbench peers whose leadership would not support such aggressive tactics. The crossbenchers can play a pivotal role in the 806-strong upper house because they have 145 members. Labour has 205 peers, there are 105 Lib Dems and 200 Tories.

Labour says it is not bound by the Parliament Act because the cuts to tax credits are being introduced through a statutory instrument. It says it is also not bound by the Salisbury convention, which says that the Lords will not overturn manifesto commitments, because the cuts to tax credits were not included in the Tory manifesto.

Meacher told the Guardian: “My plan at the moment is to put down a motion which will prevent this regulation being approved on Monday, which will require the government to produce a report responding to the IFS analysis and consider mitigating action before bringing it back. This gives time to the House of Commons to go on doing what they are doing. There are Tory MPs horrified by this.

“So we are giving the government time to think again, but the word fatal would not be appropriate. This is causing a great deal of consternation at government level and we are trying to find a way through which will ensure that the government revisits these regulations.”