David Cameron and his chancellor have enjoyed a honeymoon period since May. But this week’s Commons debate on ending tax breaks for working families will be stormy. The stakes are high for a party that pledged to make work pay

One powerful human image or poignant personal story can force change on a government in a way that angry words spoken by opposition politicians will never do. Last month, photos of the three-year-old Syrian boy, Aylan Kurdi, whose body was washed up on a Turkish beach, caused such an outcry that David Cameron, within days, changed tack and announced he would admit 20,000 refugees into the UK over the next five years.

On Thursday, mother-of-four Michelle Dorrell, welling up with tears, ripped into the government for removing her tax credits on the BBC’s Question Time. She did so with such raw fury that her few seconds of fame will have done more to raise doubts in ministerial minds about the austerity agenda than anything that their Labour opposite numbers could hope to achieve.

Here was a hard-working mother, one of those the Conservatives say they back every inch of the way, visibly terrified about the unexpected financial punishment she faces. Shaking with emotion, Dorrell said she had voted Tory in May because Cameron had promised he would not slash her payments. She was right. He had made just such at promise. Then he and George Osborne went back on their word. “Shame on you!” she declared.

Tory MPs in 71 marginal seats at risk from cuts to tax credits Read more

The Treasury and No 10 are insisting that they will not budge and will press ahead with their plan to slash tax credits from next April. Some 3.3m families, including 2.7m with children, face a loss on average of £1,300 in the first year alone. Mothers in working families are expected to lose £2.5bn. New analysis from the Resolution Foundation (RF) has found that this group accounts for almost two-thirds of those who will receive letters just before Christmas, warning them about the pain to expect next spring. Overall, almost 70% of the total net savings from tax-credit cuts will fall on mothers in working families. RF analysis has shown that the pay boost from the new “national living wage” and the increase in the tax-free personal allowance will fail to offset the losses faced by millions of working families. Under the government’s plans, the earnings level above which tax credits are gradually withdrawn will be lowered from £6,420 to £3,850, and the rate at which the benefit is lost as pay rises will be accelerated.

Politically, Cameron and Osborne could probably tough this one out, and ride the protests – at least in the short term. There are plenty of Tory MPs who would like to see the government back off and soften the blow for their constituents – Boris Johnson among them – but few, if any, are likely to rebel in a vote on a Labour motion in the Commons on Tuesday. That said, the tax credits issue is slowly but surely developing into the biggest domestic political problem for the government in the early part of Cameron’s second term.

Facebook Twitter Pinterest Labour’s Rachel Reeves has suggested the Tories might at least delay making the cuts to lessen their impact. Photograph: Christopher Thomond/The Guardian

As we report, there are more than 70 Tory MPs with majorities smaller than the number of families who will be hit by the tax credit axe. Every one of those MPs will be feeling uneasy, wondering whether this might be a poll tax moment and a threat to their chances in 2020.

Apart from privately acknowledging the real pain the cuts will cause to millions, plenty of Tory MPs fail to see how this way of slashing the deficit fits with Cameron and Osborne’s second-term claim to be leading the “workers’ party”, one that represents, supports, and cheers on strivers like Michelle Dorrell.

As she said, she works “bloody” hard to pay the bills and struggles as it is. She thought the Conservatives would be on her side. Now she may back Jeremy Corbyn. The Tory problem is that there are millions of human stories like hers. For all his bravado, and Thatcherite resolve, Osborne will remember from his 2012 “omnishambles” budget how fortunes can dip dramatically when a government gets out of step with the public’s sense of fairness. Behind the scenes, Conservative calls for Osborne to back off a little will grow in the runup to his autumn statement on 25 November.

The Tories’ problems over tax cuts are an opportunity and a great relief for Labour. The party has, since Corbyn took charge, looked shambolic and divided over economic policy, Trident and Syria. Even Conservatives can be heard complaining that it is failing to perform as an effective check on government.

But on tax credits, Corbyn’s Labour is together in all senses. The right of the party is at one with the Corbynistas. Frank Field, Labour chair of the work and pensions select committee, is using his powerful position to launch a cross-party inquiry, which will ensure the issue remains centre stage in coming weeks and months.

Rachel Reeves, the former shadow chief secretary to the Treasury, has turned up the pressure too. Fully onside with Corbyn in opposing the cuts, she argues that the least the Tories might consider – if Osborne refuses to bend – is a two-year delay to help people reap the rewards of a higher minimum wage, and to give time for a proper assessment of the cost to affected families. Labour sees the tax credit cuts as a way to expose Tory claims to be the party of the workers as a sham.

Osborne knows he has more than four years until the next election. He seems to believe he can afford to be unpopular now. But sticking to his guns carries risks. He is probably the favourite to succeed Cameron as Tory leader after 2020 but to get the great prize he will need his own MPs. Which way he goes from here on tax credits – into a carefully executed U-turn or straight ahead – will be determined as much by his own self-interest as the interests of millions of increasingly hard-pressed families.

Case studies: people in the front line



Facebook Twitter Pinterest Vicky Charles and her daughter.

Vicky Charles, Salisbury

Charles, 34, is “extremely anxious” about the impact of tax credit cuts. As a low earner, she relies on them to make ends meet. “I’m on an income of around £8,000 a year, and there’s nothing I can cut back on as things stand,” says Vicky, a freelance writer, blogger and social media trainer who lives with her daughter Samaire, three. Currently, she claims £247 a week in working tax credit with the childcare element, and child tax credits. “I haven’t worked out the impact of the cuts yet because I’m too scared to do so, as I’ll panic and the worry will take over my life,” she says. “My daughter goes to nursery at the moment, which costs about £150 a week, and what’s left goes on food and nappies and anything else essential. At least when she goes to school childcare costs will fall, but belts are extremely tight.” She adds that with rent and bills to pay, and building a business, the change will only “make life more difficult”. “The majority of my earnings go on rent at the moment, so I desperately need this extra cash.” Harriet Meyer

Facebook Twitter Pinterest Single parent Karen.

Karen (surname withheld), Devon

Karen, a single parent with two boys, already works full-time as a health care assistant, but worries she might need to find additional work once tax credits are cut. At the moment she receives working tax credits and child tax credits, which add up to around £130 a week. “I don’t know how much of this I’ll lose, but I think it’ll end up being somewhere between £60-100 a month - I don’t have that to spare,” she says. “My wages cover my mortgage and fuel to work. My tax credits pay my bills and food. We managed a holiday last year because my wonderful sister paid for me and the boys to go away, but we don’t normally. I wouldn’t say I’m poor, but I live month-to-month and my mortgage is a huge chunk of my wage - and then there’s the cost of clothes and everything for my children as well. All I keep hearing is that nobody’s going to be affected because there’s more support for childcare and a rise in the minimum wage - but this won’t help me. I live next to parents so I don’t pay for any childcare, and I’m already paid more than the minimum wage.”

Self-employed businessman Simon Bradley

Simon Bradley, Manchester

Simon, who went self-employed two and a half years ago, says working tax credits were crucial to helping him set up his own business, which provides typist support to disabled students and university researchers. “Having a regular bit of money topping up my income has been invaluable. In my area of work, you can advertise as much as you want but the best way to get work is through recommendations, so it takes a bit of time to build up a reputation. Right now, it seems like the government - a supposedly pro-small enterprise government - is removing that lifeline.”

Simon currently receives £50 a week on working tax credit, and he expects to lose most of this, if not all. Changes to the national minimum wage are little consolation, he says: “For a start, the new national living wage is being slowly phased in before 2020, while my tax credits are being cut in one swoop. And changes to the minimum wage won’t help most self-employed people, he adds. “I employ myself, so obviously I pay myself as much as I earn.”

At the same time that tax credit changes come in, Simon is also due to lose his position working part-time at a local charity, which he uses at the moment to top up his income. He expects his disposable income will take a hit: “I was looking forward to time when I could have holiday every summer - there’s so much uncertainty now, I think that I’ll struggle with that.”

Rebecca Ratcliffe and Elena Cresci

OPPOSING VOICES

Jeremy Corbyn

The new Labour leader said at Wednesday’s prime minister’s questions that “the government is taking away the opportunities and limiting the life chances of hundreds of thousands of poor and middle-income children in this country”.

The Bishop of Manchester

The Rt Rev David Walker wrote in the Observer in July: “The changes … are not good news. Reducing tax credits will leave many households at least £1,000 worse off. Some face losses of more than twice that, even after accounting for any benefit they get from increases in the minimum wage.”

Zac Goldsmith

The Conservative mayoral candidate told the Sun he supported the reforms, but was “pressing the government to phase them so that the lowest paid are protected and to make sure that any losses are absorbed by higher wages”.

Boris Johnson

The London mayor warned in his speech to the Conservative party conference that “we must ensure that as we reform welfare and we cut taxes that we protect the hardest working and lowest paid”.

The Sun

In a leader earlier this month, the red-top tabloid declared: “It cannot be justified. PM, you are making a mistake.”

Peter Oborne

The Conservative commentator wrote in the Daily Mail that the tax-credits cuts “may prove to be the biggest political disaster of the Cameron government”.

David Davis

The former leadership candidate was one of two Tory MPs to vote against the measure in September. He has said: “I hope this doesn’t turn out to be our poll tax.”

Frank Field

The Labour MP and chairman of the work and pensions select committee has pushed for a Commons debate on the cuts this week. He said: “The game is up. They will have to change on this.”

Contact a Family

The charity supporting families with disabled children says that 150,000 of them will be affected by the cuts. “Enough is enough. The government must think again about making these cuts and how they impact on disabled children,” said the charity.

Neil Kinnock

The former Labour leader has launched a fierce attack on the policy. He told the Independent: “Failure to maintain working tax credits could bring an early departure for David William Donald Cameron. Let’s hope that provokes a rapid swerve away from this cruel policy, just like the poll tax. The wellbeing of families demands that.”