Britain's Cameron defeated over welfare cuts for poor

British Prime Minister David Cameron suffered a damaging blow on Monday over plans to cut help for low-income working families that drew flak from within his Conservative party, AFP reports.

Since Cameron won a general election in May, concern has grown among opposition parties and many in low-paid jobs about its plan to save £12 billion (17 billion euros, $18 billion) from the welfare budget.

His government wants to cut over £4 billion from tax credits -- a complex system of benefits in which the state tops up the incomes of people on low salaries and families -- next year.

But in the most public rebuke on the issue yet, the House of Lords voted twice against the measures after an often emotional four-hour debate that included criticism from the Conservative side.

The results will be seen as a blow to finance minister George Osborne, the architect of the government's austerity drive and a favourite to succeed Cameron when he steps down before the next election in 2020.

Despite the setback, Osborne vowed to push ahead with the cuts while softening their impact when he unveils an update on government spending, due next month.

"I believe we can achieve the same goal of reforming tax credits, saving the money we need to save to secure our economy, while at the same time helping in the transition," Osborne said after the vote. 

The move by the Lords broke with a century-old convention that the unelected upper house does not block financial bills approved by the elected lower house, the Commons.

Osborne said the move "raises constitutional issues that need to be dealt with".

"A convention exists and it has been broken," a spokesman for Cameron said, adding that the prime minister "has asked for a rapid review to see how it can be put back in place".

  'What are the alternatives?' 

Opponents had accused Cameron of misleading voters by promising not to cut tax credits before the May election.

They also claimed that the government attempted to slip the measure through Parliament by tabling it as a statutory instrument -- an order usually used for minor pieces of legislation -- rather than full, primary legislation.

"We can be supportive of the government... or we can be supportive instead of the three million families facing letters at Christmas telling them, on average, they will lose around £1,300 a year," said Patricia Hollis during the debate.

Hollis, a Labour member of the Lords, tabled one of the successful motions, which aimed to soften the impact of the cuts for three years.

The two amendments passed by 307 votes to 277, and 289 votes to 272, but a move to kill the cuts outright was defeated.

Speaking after the vote, the finance spokesman for the opposition Labour party, John McDonnell, called for a "full and fair reversal" of the policy.

"George Osborne has got to think again," he told Sky News.

The proposals had drawn criticism from Conservative lawmakers, with one MP Heidi Allen using her first speech in parliament to argue passionately against the cuts.

"I worry that our single-minded determination to reach a budget surplus is betraying who we are," Allen said last week. "To pull ourselves out of debt, we should not be forcing those working families into it."

Osborne has argued that the existing system of tax credits, brought in under the last Labour government, is unsustainably expensive, costing £30 billion a year.

He is pledging a new "national living wage" of £9 an hour by 2020 and is lifting income tax thresholds to try and boost incomes.

"What are the alternatives to trimming an unsustainable welfare bill? We would have to borrow more money we don't have and burden our children with still higher debt," he wrote in a Daily Telegraph article this month.