Osborne stirs up Labour split ahead of vote on cuts

Labour leadership candidates could rebel against amendment that backs some of the Budget measures

Finance Minister George Osborne smiles before the start of an ECOFIN meeting in Brussels on 14 July.
(Image credit: AFP/Getty Images)

George Osborne is seeking to exploit a split in the Labour Party over the latest reforms to welfare including substantial tax credit cuts. In a letter to The Guardian which backs the stance of interim leader Harriet Harman, the chancellor is calling on 'progressive MPs' to stand with the government.

He writes: "Three in four people – and a majority of Labour voters – think that Britain spends too much on welfare. For our social contract to work, we need to retain the consent of the taxpayer, not just the welfare recipient."

The letter comes ahead of a key vote in the House of Commons this evening on the Welfare Reform and Work Bill, which will bring into effect changes announced at the Budget earlier this month. This includes lowering the benefit cap, bringing down the threshold at which working tax credits are tapered and cutting child tax credits for families with more than two children. There are also plans to introduce a higher minimum wage that is set to reach above £9 an hour by 2020.

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Despite its slim majority, the Conservative government will not need Labour votes to get the bill passed as it is unlikely to face a rebellion on its own benches. Other smaller parties are also likely to vote in favour. The letter does, however, highlight a major split in the main opposition party.

Harman, who is not running in the Labour leadership election later this year, had initially said the party should abstain from the vote rather than oppose it outright. The acting Labour leader signalled support for some elements, including the welfare cap of £20,000 (£23,000 in London) and cuts to child tax credits. She was later forced into a partial retreat amid a chorus of dissent and proposed an amendment calling for child poverty targets to be reinstated and for further reforms to disability benefits to be scrapped.

According to the BBC, at least one of the leadership candidates, left-winger Jeremy Corbyn, is still intending to vote against the bill. Speaking on the Today programme this morning, Helen Goodman, Labour's former shadow minister for welfare reform, also called on her colleagues to reject the plans.

An analysis by the Social Market Foundation in the wake of the Budget found that the changes would leave a couple with two children and one earner on the minimum wage about £200 a year worse off. A similar family with both parents working would be £6,000 a year better off.

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