[News] Government tax credit cuts bill defeated in the House of Lords

[JC Footy Genius]

Tax credits benefit employers also. They are able to offer more roles at minimum wage, because the government will pick up the shortfall.

To be able to get rid of in-work benefits, you must have a minimum wage and taxation policy which provides at least enough income to cover the cost of living.
The government need to spell out precisely what this level is and put policies in place to ensure employers meet their side of the deal, before they take away the safety net.

Yes Tax credits also benefit employers by subsidising their meagre wages and encourages some to only pay minimum wage as they know the state will pick up the bill.

The government is introducing a higher living wage and has continuously raised the tax threshold removing large numbers on the lowest pay from paying income tax. I agree this should continue to happen as other cuts are made to the welfare budget.

 

[Yoda]

The government is introducing a higher living wage

And I can already see what could happen with that long term.

Companies have to raise the cost they charge for services/goods to compensate loss of profits. Inflation will balloon through the roof, effectively hitting us in the pocket, making us feel worse off. With the general public spending less because of this, we'll enter another recession.

 

[Pavilionaire]

Why do you keep comparing us to the Greeks?

The UK government wants these cuts because they cannot afford the public spending budget. Real austerity is when tax rates rise, public services are slashed and welfare payments are significantly. Greece is the yardstick on real austerity, I'm arguing the welfare cuts are the first concrete sign of austerity to the individual. If the Lords throw this out then they're basically saying no austerity in this country which, given the size of the deficit, is a massive thing to do.

I have to say that while the intentions of the Lords are noble a government cannot reduce a deficit without raising taxes or cutting government spending. Their hands are tied on the former because of election pledges and the "triple lock", they were elected partly on the basis that they would reduce the deficit and rebalance the economy.

I think the Lords have overstepped the mark here, big time.

 

[Pavilionaire]

Tax credits benefit employers also. They are able to offer more roles at minimum wage, because the government will pick up the shortfall.

To be able to get rid of in-work benefits, you must have a minimum wage and taxation policy which provides at least enough income to cover the cost of living.
The government need to spell out precisely what this level is and put policies in place to ensure employers meet their side of the deal, before they take away the safety net.

Nobody is talking about auto-enrolment here - the obligation for employers to make pension contributions on behalf of employees and for those employees to start paying some of their net pay into that scheme too. That is kicking in for many smaller businesses now and throughout 2016, so just when they're being asked to pay more in wages the government is also telling them to start making pension payments too.

With dividend taxation coming in April 2016 the Chancellor is in for a tough ride from now on.

The government's reasoning is sound enough but their implementation of the changes they deem necessary is ham-fisted which, for this Prime Minister, is no surprise. The only way they're going to get out of this tight squeeze is to sink to their knees and blow the Chinese.

 

[JC Footy Genius]

And I can already see what could happen with that long term.

Companies have to raise the cost they charge for services/goods to compensate loss of profits. Inflation will balloon through the roof, effectively hitting us in the pocket, making us feel worse off. With the general public spending less because of this, we'll enter another recession.

That seems a tad pessimistic but you could have added encouraging another few hundred thousand economic migrants to our shores ...

 

[beorhthelm]

Was it a convenient method for Labour to get nearly 40% of working families addicted/reliant on state aid so their votes could be swayed by tax credit increases pre election ? (costing £30 Bn)

yes. didn't increase the tax allowance or other tax cuts, he made millions of workers dependent on the state instead.

 

[JC Footy Genius]

yes. didn't increase the tax allowance or other tax cuts, he made millions of workers dependent on the state instead.

I certainly think nearly every major decision New Labour made went through the 'will it benefit us electorally test' much like the Tories, which is probably why they kept winning elections.

 

[El Presidente]

And I can already see what could happen with that long term.

Companies have to raise the cost they charge for services/goods to compensate loss of profits. Inflation will balloon through the roof, effectively hitting us in the pocket, making us feel worse off. With the general public spending less because of this, we'll enter another recession.

Do they have to compensate for the lack of profits though?

Profit margins have been significantly rising, and the profits go mainly to the top 1-2%, who need the money the least.

Employees are stakeholders in a company too, there's nothing wrong with giving them a slightly bigger share of the corporate cake, directors have been doing exactly that for years now.

 

[Ernest]

Part of the problem is the difference in wages between CEO and the people at the bottom, the gap has widened too far now and it is one of the things that needs sorting

 

[severnside gull]

The UK government wants these cuts because they cannot afford the public spending budget. Real austerity is when tax rates rise, public services are slashed and welfare payments are significantly. Greece is the yardstick on real austerity, I'm arguing the welfare cuts are the first concrete sign of austerity to the individual. If the Lords throw this out then they're basically saying no austerity in this country which, given the size of the deficit, is a massive thing to do.

I have to say that while the intentions of the Lords are noble a government cannot reduce a deficit without raising taxes or cutting government spending. Their hands are tied on the former because of election pledges and the "triple lock", they were elected partly on the basis that they would reduce the deficit and rebalance the economy.

I think the Lords have overstepped the mark here, big time.

I totally understand where you are coming from. Last night was a potentially historic decision by the Lords and it will be interesting to see how this Tory government reacts. But given their predeliction for petulance their attempts to destroy any power the upper house has could backfire. Most people view this decision as a social rather than fiscal one and perception (where the influence of social media cannot be curbed in the same way,for example, as the press which can be bought or - as with the BBC - bullied and cash starved) is everything. Over-reaction could cost the Tories at the polls.
Amusing that it takes the Lords to stand up for the working man and woman while the Commons vilifies them.

There are of course endless other options for a government, even one bound to brainwashing the electorate that austerity is the only way, and breaking electoral promises is never an issue. After all Cameron repeatedly said that having raised tax credit levels his government would not cut them.

 

[Ernest]

It would also be nice if the Tory trolls who trumpeted the budget as such a good thing kept their mouths shut now as no doubt many posters on NSC would have faced the prospect of worrying times if the cuts had gone ahead.

Cameron lied to the electorate and if you feel that is the sort of way to win an election then god help us.

 

[spring hall convert]

Isn't the real constitutional crisis that we have a majority government elected by 24% of the electorate? I'd be far more willing to consider a debate about the future of the second chamber if our electoral system was more proportional than FPTP.

Not being upfront about this tax credit change was probably the difference between their slim majority and a hung parliament. Therefore, the Lords are well within their rights in my opinion.

 

[Czechmate]

The country moans about people not voting , yet when we do vote we elect a government on the policies it has put forward and get´s rejected by a bunch of has-beens that were NOT elected and looking at the amount of votes at least 600 off the old cronies at 300 pounds a piece has cost the tax payer at least 180 grand for a days work plus expenses i guess . Worse day in political history , some deserve my tax but after 35 years of paying a large proportion and seeing wasters and kids spring up galore it does **** me off !

What's the point in voting !

Oh i am back in the UK now living after 2 years in Czech .

 

[beorhthelm]

Isn't the real constitutional crisis that we have a majority government elected by 24% of the electorate? I'd be far more willing to consider a debate about the future of the second chamber if our electoral system was more proportional than FPTP.

i'm curious why this keeps being brought up when no one seemed to notice the same in 2001 and 2005 where the government was elected on 24% and 21.5%. yes, we probably need to address the whole electoral system as its odd that 21.5% and only 9.5 million voters can return a 60+ seat majority, when the two elections since has given us a hung parliament and 12 seat majority on a million and two million more votes for the largest party. think about this when boundary changes, and equalising size of constituencies comes up (it will im sure).

i think its more than likely that the Tories hadnt actually worked through exactly where the cuts were going to fall, as they hadn't expected a majority, and made broad policies to be traded/merged in with Liberal policies. what we see here is a somewhat odd attempt from the Chancellor to get bad news and big cuts out of the way early in the parliament, for a strategist he doesn't seem to judge the impact and outcome of his policies very well, then digs his heals in, before an inevitable climb down. hopefully this will be a wake up that you cant keep running policy like this, an we have more sensible economic policy for the next 4 years.

 

[Surf's Up]

It would also be nice if the Tory trolls who trumpeted the budget as such a good thing kept their mouths shut now as no doubt many posters on NSC would have faced the prospect of worrying times if the cuts had gone ahead.

Cameron lied to the electorate and if you feel that is the sort of way to win an election then god help us.

Hmmmm ... as opposed to Tony Blair who never lied to the electorate

 

[severnside gull]

The country moans about people not voting , yet when we do vote we elect a government on the policies it has put forward and get´s rejected by a bunch of has-beens that were NOT elected

.......except the reversal of tax credits was not only NOT an election promise but rather their retention WAS specifically promised by Cameron before a vote was cast. Assuming people believed him and voted accordingly the Tories' election majority has questionable validity.

 

[beorhthelm]

their retention WAS specifically promised by Cameron before a vote was cast.

only child tax credits where promised and remain for those receiving it.

 

[Uh_huh_him]

Gideon is going to have to do some backtracking on this one way or another. It will be interesting to see how he handles it.

 

[Herr Tubthumper]

i'm curious why this keeps being brought up

Spring Hall Convert brought it up very clearly in the context of, and in comparison to, the current alleged constitutional crisis. Nothing to be curious about.

 

[Ernest]

Hmmmm ... as opposed to Tony Blair who never lied to the electorate

About Tax Credits ? Or taking money out of 'hard working families' wage packets ?

Please supply evidence of this, if you wish to debate the wrongs of the Iraqi war I'm sure there is a thread about that on here