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Monday, October 26, 2015 

Hubris, but not yet nemesis.

It wasn't meant to be this way.  Despite the slightness of their majority, the Conservatives were euphoric at their victory in May.  They had triumphed in spite of themselves, in spite of 5 years of austerity, in spite of the opinion polls.  To add to their delight, the opposition went into full on meltdown: the main leadership contenders and many others in the party seemed to be accepting almost completely they had lost because they weren't the Conservatives.  Interim leader Harriet Harman whipped her party to abstain on the welfare changes the new government pushed through at the first opportunity, as to oppose them would to be disagree with the electorate's verdict at the ballot box.  George Osborne was feted as a strategic genius, taking any opportunity given to lead his opponents into political traps from which there was no escape.  With the utmost chutzpah, the Tories declared themselves the true workers' party, the only party able to deliver true equality.

Hubris almost always leads to nemesis.  The government's defeat in the Lords tonight on tax credits is without doubt a result of the Tories' hubris, but nemesis has not arrived yet.  One defeat does not a crisis make.  It does however show that beneath the façade, the Tories' ability to get their legislation through parliament is slight.  The claims from the Tories that the Lords voting to block the cuts until the government sets out how it intends to alleviate the losses working families will suffer is a constitutional outrage is nothing more than a distraction technique.  This is mess of their own making, and they know it.  Osborne, the master manipulator, has stumbled right into one of his own traps.

Opinions vary on whether or not the intention always was to cut tax credits.  Certainly, as Rick has pointed out, cutting tax credits by £3bn (others are saying the cuts amount to £4.4bn) is the only way Osborne can eliminate the deficit by 2019-20 without cutting public services further or raising taxes.  The refusal to set out exactly how welfare would be cut by £12bn during the election campaign may have been just another part of the grand negotiation strategy they believed they would have to enter into with the Liberal Democrats for a second coalition.  Given a surprise majority mandate, rather than back off from the extremes promised in their manifesto, they've for the most part steamed ahead.

Except of course tax credits weren't in the manifesto.  While David Cameron didn't specifically say tax credits would not be cut, he did say that child tax credits would not be.  This nonetheless created the impression that tax credits themselves would be spared.  Come the budget, while still announcing the now expected cuts, Osborne pulled from his hat the new "national living wage".  It soon became obvious this higher minimum but not true living wage wouldn't come close to making up for the cuts to tax credits, but praise was lavished on Osborne for this stealing of Labour's clothes regardless.

Rather than put the cuts through the main finance bill following the budget, the government instead opted to implement the changes through what's known as a statutory instrument, in this case using the initial legislation that brought in tax credits, through which it can delegate changes to the rates and thresholds.  It's rare for the Lords to vote down a statutory instrument, but not unprecedented by any stretch of the imagination, despite what the Tories are now claiming.  In any case, the "fatal" motion in the Lords failed, with the two "regret" motions, which essentially ask the Commons to think again passed.  In any case, it's always amusing to hear ministers complain about "constitutional outrages".  Once we have a written constitution which definitively has been breached, then we'll get angry.

If the Tories had a whopping great majority then it might have more of a case.  It doesn't.  If they had set out the cuts in their manifesto the Lords would have only been able to block the plans for a year, before the parliament act could then be used to force it through.  If Osborne and Cameron hadn't been so hubristic as to claim they were now the party of working people, when one of their first major acts would be to screw those very people over to the tune of thousands of pounds, they wouldn't now be forced into such a humiliating u-turn.

How Osborne can then protect the lowest paid while still making the savings required to fill the gap in his overall economic plan isn't clear.  Unless he relents on reaching his surplus, as any sane chancellor would do, then he has to either cut further or raise taxes elsewhere.  If the Lords decides that his changes don't go far enough, they are perfectly entitled to reject them again, meaning they will have to go some way to meeting the Institute for Fiscal Studies test.  Whichever way he goes about correcting his mistake, it isn't going to be cheap.

In less than a month the Tories have gone from looking impregnable, the media for the most part lapping up Osborne and Cameron's speeches at the Conservative party conference despite the air of unreality to both, to being breached by a load of doddery old unelected peers.  It's an especial blow to Osborne, who refused to see the portents of defeat, from Michelle Dorrell on Question Time to Tory MP Heidi Allen using her maiden speech in the Commons to voice her and many other Conservative MPs fears over the cuts and the effect they would have.  Cabinet ministers claimed he was in listening mode, as though Osborne listens to anyone other than those who tell him what he wants to hear.  Just as he went ahead with all the various stupidities in the "omnishambles" budget, thinking he was the smartest guy in the room, so too he has been shown up now.

Damaging as this is the short term, it's by no means fatal.  The parliamentary Labour party had little to no role in the defeat, as it's still far too self-obsessed at the moment to offer a real challenge to the Conservatives, let alone encourage Tory MPs other than David Davis to vote with them.  Indeed, in the longer term, the cuts being defeated can only be to the Tories' advantage.  Had they passed the Lords unscathed, Labour would have had an issue they could have coalesced in opposition against, the obvious unfairness of the measure and the way it penalised those doing the "right thing" an open goal.  So long as Osborne's compensatory measure does what it's meant to, the attempt to penalise workers will soon be forgotten.

It ought also to knock some sense into the Tories: regardless of the opposition or lack of as it is currently, the idea they can stroll to 2020 and another victory is ludicrous.  The media's lovebombing lulled them into a false sense of security, when the truth is their majority could easily disappear over the course of a couple of years.  Should another worldwide economic crisis occur, as more and more commentators fear could be on the horizon, there's hardly any room for manoeuvre on policy, as Osborne must know.  Hubris can all too quickly turn to nemesis.  Or, even worse, Boris.

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