Budget 2015: Tax credits cuts will leave workers worse off, says Harriet Harman

Labour’s acting leader said the Budget’s overall impact would be to widen social divisions and to make millions of working people worse off

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Britain’s lowest-paid workers would bear the brunt of George Osborne’s squeeze on spending, Labour protested, as it condemned cuts to tax credits and student grants.

Harriet Harman said the Budget’s overall impact – even taking into account the unexpected announcement on the living wage – would be to widen social divisions and to make millions of working people worse off.

Labour’s acting leader faced repeated barracking from jubilant Tory backbenchers, leading to demands from the deputy Speaker, Lindsay Hoyle, for calm in the Commons.

Ms Harman, who appeared to have been taken by surprise by the living wage move, retorted: “What [Tory] MPs clearly haven’t worked out is even with the higher national living wage it will not be enough for a family to live on because of the cuts in tax credits.”

She said: “The Chancellor is said to be liberated without the ties of coalition holding him back, but what we have heard today suggests his rhetoric is liberated from reality.

“A Budget for working people? How can you make that claim when you are making working people worse off. You are making working people worse off by cutting tax credits and scrapping grants for the poorest students.”

Ms Harman also launched a pointed personal attack on Mr Osborne, accusing him of putting his ambition to succeed David Cameron ahead of Britain’s economic interests in the Budget. “This Chancellor is renowned for his political traps, games and tactics, but that’s not what he should be doing,” she said. “Normally it is government which governs while the opposition plays politics, but this Government is playing politics with this Budget.”

She lambasted the Chancellor for his lack of action to tackle the housing crisis, contrasting the absence of measures to tackle the problem with his pledge to raise the inheritance tax threshold to £1m.

“While it is right to help people pass on their family home to their children, more important than giving inheritance tax relief for homes worth millions is helping millions more people own their own home,” she said.

Ms Harman argued that the economic recovery remained fragile and decried Mr Osborne’s record on improving productivity.

She mocked his commitment to a “long-term economic plan” by citing the Government’s dithering over whether to expand Heathrow airport and the delay to the planned electrification of the TransPennine Express.

The Liberal Democrat MP Tom Brake argued that the Budget betrayed the Conservatives’ true instincts after they had been constrained by his party in the Coalition.

Charging Mr Osborne with “attacking opportunity and entrenching the divide between the young and old”, he said: “This is the first real test of what happens to the Budget when the Liberal Democrat stabilisers are off. It lurches very heavily to the right.”

Caroline Lucas, the Green MP for Brighton Pavilion, attacked the Budget as “cruel and counterproductive”.

She said: “The welfare cuts announced today will plunge thousands of people in poverty, and cause families to be evicted from their homes. I’m deeply concerned that my own constituents are set to face needless hardship as this Government continues its economically illiterate and utterly unjust mission to hack away at our welfare state and public services.”

Order, order: Speaker berates Labour MPs

Three Labour MPs were given a public warning by the Deputy Speaker, Lindsay Hoyle, because they were barracking so loudly that George Osborne’s announcement of a new benefits cap could not be heard above the noise.

“We seem to have a little problem with the gang of three,” Mr Hoyle said, adding that others wanted to hear an announcement that “will affect my constituents and yours”.

He did not say name the three, but a minute earlier had warned the former shadow minister Andrew Gwynne to quieten down. It is thought he was also referring to two of the newer MPs, the Blairite Mike Kane and the leftist Richard Burgon.