The Lords’ amendments to a government financial statutory instrument are an attempted power grab that drives a coach and horses through a vital constitutional doctrine

The Lords’ refusal yesterday evening (26.10.2015) to approve the government’s statutory instrument incorporating cuts to tax credits was gloriously right as to the substance, but catastrophically wrong constitutionally. Part of the price paid for continued tolerance of a huge, bloated, unelected, expensive house of lords, its members mostly appointed by the party bosses over the years, is the hallowed convention, observed for more than 100 years, and indeed reflected in resolutions going back to the 1670s* and partially incorporated in statute law, that the Lords may not frustrate, amend or delay house of commons decisions on financial or budgetary matters, however unjust and reactionary they might be. Because the government’s proposal in the Lords was not technically a “money bill” but only a statutory instrument proposed to be made under an existing Act, a majority in the Lords argued that the convention and law restricting the Lords’ powers didn’t apply and that they were free to reject or delay it, an unconvincing play on words which precipitates a major constitutional crisis. It constitutes a rash grab for new powers by the unelected second chamber which progressive people in all parties ought to reject.

This presents Cameron and Osborne with two problems, neither of them insoluble.

First, they have to decide how to rescue the tax credit cuts, which they will unquestionably do, if necessary with some largely cosmetic new measures in next month’s Autumn Statement to reduce the impact on those who will be hardest hit by them. They can’t afford, and don’t need, to accept the conditions which the Lords have tried to impose on this key Osborne policy.

Secondly, the government has to decide how to bring the mutinous house of lords to heel — which I have no doubt they will also do. They can legislate to codify (and perhaps further reduce) the powers of the Lords in a new law which can if necessary be put on the statute book without the approval of the house of lords by using the Parliament Acts 2011 and 1949. In practice the Lords would probably acquiesce in such a law, making it unnecessary to use the Parliament Acts. Or, much less likely, they could reintroduce proposals for a mainly elected house of lords, in which they could expect to win an overall Tory majority in current political circumstances. They are most unlikely to carry out their threat to stuff the Lords, already more than 800 members strong, with the appointment of perhaps 150 new Tory peers to give themselves a majority, while at the same time legislating to reduce the size of the much smaller house of commons from 650 to 600, especially when the immediate purpose of such a drastic solution would patently be to get through Osborne’s increasingly unpopular and discredited tax credit cuts. An Act to spell out the limits of the Lords’ powers regarding the government’s financial measures, whether in primary or secondary legislation, under the existing

Lord Mackay of Clashfern

Lord Mackay of Clashfern

doctrine would obviously be in the interests of any future progressive UK government and would deserve unqualified Labour support.

*The constitutional position and the established primacy and privileges of the lower house in financial matters going back more than 340 years are described with exemplary clarity by Lord Mackay, the distinguished former Lord Chancellor (1987–1997), in yesterday’s debate — see the House of Lords Hansard, 26 October 2015, column 997 ff.

Note: This post is an edited and expanded version of a comment posted on an article on LabourList last night.


17 Responses

  1. ObiterJ says:

    Tax Credits Act 2002 section 66 is clear.  Regulations require approval of BOTH Houses of Parliament.  Legally, the Lords have done nothing wrong.  In fact, a so-called FATAL motion was actually defeated decisively BUT Lords went on to approve two motions calling for certain improvements.  This is precisely  function of the Lords in the constitution as it stands.  Whether the government will want to hog tie itself trying to get primary legislation through to further restrict the Lords is debatable.  They might try but then their Lorships might get even more rebellious.  A political fact is that the government does not truly need to act in such a haste to get reductions in welfare benefits.  They could be steadily reduced over time but that is, of course, a political question.

  2. Brian says:

    ObiterJ, your learned contributions on thorny legal or, as here, constitutional matters are always most welcome.  But for once I have respectfully to disagree with you.  Yes, seconday legislation requires to be laid before both Houses of parliament for affirmative resolutions, but primary money bills also require the approval of both houses of parliament, yet no-one disputes the fact that the House of Lords has no power to amend, delay or reject them: even if it simply fails to go through the motions of approving them, they become law notwithstanding the lack of approval of the Lords after a minimum period laid down by statute, on the passing of a motion by the House of Commons. So nothing can be derived from that analogy.   It would be a strange constitutional doctrine that prevented the Lords from amending or rejecting (primary) money bills but permitted them to undermine the financial privilege of the House of Commons by rejecting, delaying or amending (secondary) financial statutory instruments made under those same money bills (or other legislation).  My understanding is that only five SIs have been rejected by the Lords in the last (???) 100 years and that not one of the five was concerned with public expenditure or taxation.

    Anyway, we are dealing here with mostly unwritten convention, not the lawyers’ arcane interpretations of the legal language of statutes, instruments and regulations, encrusted with precedents and past rulings and perverse interpretations that acquire the force of law and are totally inaccessible to lay people like me.  This is different: it revolves round a convention or doctrine that can be expressed in several ways, all coming back to the central point, established by parliamentary resolutions and authoritative texts such as Erskine May, some of them going back to the seventeenth century:  namely that only the elected House of Commons enjoys the privilege of questioning, amending or rejecting the elected government’s financial measures, the measures concerned with taxes and expenditures required for the management of the nation’s finances — the House of Lords may comment on such measures, deplore them, demand that they be changed or withdrawn, but it may not amend, delay or reject them, whether the measures are primary or secondary, bills or statutory instruments.  If the unelected House of Lords were licensed to do any of those things to the government’s financial measures, in whatever form, the whole doctrine of non-interference by the unelected Lords would be shot to pieces — as the unconstitutional action by the unelected peers last night demonstrated.

    As I always have to acknowledge, I’m not a lawyer.  But I’m content to rely on the splendid statement of the position yesterday in the House of Lords by a much respected former Lord Chancellor, Lord Mackay.  A link to his contribution to the debate as recorded in Hansard is included in the last paragraph of my blog post above.  It includes a quotation from Erskine May which seems to me, with Lord Mackay’s other arguments, decisive.  By all means disagree with me, but please then also explain where Lord Mackay has got it wrong.

  3. Owen Barder says:

    I don’t agree that the Lords have overreached their constitutional role.

    The financial privilege of the Commons prevents the Lords from interfering in tax and budgetary matters. But it has never been intended to stop the Lords from scrutinizing all government policy that has financial implications. Almost every policy has some financial implications – so such an injunction would meant that the Lords had no role as a revising chamber.

    George Osborne could easily have avoided a showdown with the Lords by putting these amendments in primary legislation, which would have been subject to amendment in the Commons. He chose to use an instrument that avoided the risk of amendment in the Commons, as he is entitled to do under the Tax Credits legislation, but that legislation (passed by the Commons, of course) is explicit that changes require the assent of both Houses.  I don’t see any constitutional problem about the Lords fulfilling their role as a revising chamber.

  4. Brian says:

    Brian writes in reply to Owen:  Thank you for this.  I don’t think we’re far apart, in fact. You say that “The financial privilege of the Commons prevents the Lords from interfering in tax and budgetary matters.”  I agree.  I also agree that this “has never been intended to stop the Lords from scrutinizing all government policy that has financial implications. Almost every policy has some financial implications – so such an injunction would meant that the Lords had no role as a revising chamber.”  But in the present case, the Statutory Instrument which the Lords so controversially opted to defer by twice amending it to attach conditions to it was, and is, very much a “tax and budgetary” measure, setting out the ways in which the government wishes to reduce tax credits in order to achieve a long-term aim of eliminating a budget deficit and going into surplus.  If such an instrument were to be converted into a Bill (primary legislation), there would surely be no question about its status as a ‘money bill’ which the Lords would be unable to amend, delay or reject.  The Lords’ action in amending and thus delaying an SI which has these  characteristics seems to me both unprecedented (none of the learned lawyers who contributed to the debate in the Lords on Monday was able to quote a precedent for the Lords rejecting a financial SI) and plainly contrary to the accepted doctrine that the unelected peers should not have the power to paralyse the management of the nation’s finances by the elected government, which is answerable for its financial management solely to the elected House of Commons. The Senates of both the US and Australia are good examples of how an upper house in which the government does not have a majority can bring effective government to a halt by refusing to approve its financial measures, e.g. by attaching conditions to its approval — perfectly proper in both countries as in both of them the Senate is democratically elected.  In the UK (or England) it has been accepted since C.XVII that an unelected second chamber can’t be allowed to exercise such crucial power over the elected lower house, or over the elected government that springs from it and answers to it.

    Those who continue to argue that the House of Lords’ actions on Monday were constitutionally proper and consistent with the doctrine and convention of the financial privilege of the Commons surely have a duty to identify the flaw which they think they have found in the contrary case stated with great precision, as one would expect from an experienced and respected judge who occupied the highest judicial position in the land for a decade, by Lord Mackay of Clashfern in Monday’s debate — as I have said in my original post, see the House of Lords Hansard, 26 October 2015, column 997 ff.  I’m happy to rely both on Lord Mackay and on a common-sense interpretation of the doctrine and convention.

    As a postscript, it seems to me emblematic of the weird condition of British politics just now that it is primarily the left which is applauding an action by the unelected house of lords which, if accepted as a precedent, would enable a future progressive government to have its reforming policies frustrated and its management of the country’s finances paralysed by an unreformed, unelected house of lords comprising party hacks and political donors from the past, nominated by the party machines; a few self-selected lifers or ‘People’s Peers’; a sprinkling of high priests from a single religious sect and scions of titled families owing their places in our legislature solely to heredity; and an assortment of the once great and good, permitted to enjoy the amenities of the Palace of Westminster as a kind of retirement home.  How anyone with any claim to progressive opinions can be content with such a situation is to me quite incomprehensible.  The prime minister’s jibe in PMQs this afternoon about this curious alliance between the unelected and the unelectable made me flinch as well as lol.

  5. Luke says:

    “My understanding is that only five SIs have been rejected by the Lords in the last (???) 100 years ..”

    Sounds about right. But SIs aren’t meant to be major policy provisions, just updating, enabling etc. IOW, not something the HoL should bother about.

    If HoL can’t rule on SIs, there’s nothing to stop majority party using the Parliament Act to ram through a bill giving wide delegated powers – let’s say The Ministerial Discretion (to do whatever they feel like by way of Statutory Instrument) Act 2025.

    Then you have a real elective dictatorship, with the minister/majority just shoving any old stuff through by way of SI.

    I’m not being entirely facetious. The number of full bills per year is going down, the number of SIs is going up.



  6. Oliver Miles says:

    I strongly agree with your general argument. In particular I agree that what is at issue is a convention or doctrine that is well understood, not the lawyers’ arcane interpretations thereof.

    The only point on which I am inclined to disagree is that we are witnessing a major constitutional crisis. Most likely something will be patched up and the constitutional issue will be put on one side. The crisis will come later, and it may be major, when some future government is prevented from doing its job by their Lordships who will quote October 2015 as a glorious precedent.

    Or just as likely it may be when some future government decides to ignore what everyone knows to be a provision of the British constitution. I thought the coalition government came pretty close to it when they sprang five-year parliaments on us in 2011.

    Incidentally although I have not researched it myself, I am told that when Parliament decided not to hold an election when its mandate ran out five years after 1935 the matter was settled with scarcely any formality, and the same happened when the decision was taken to hold an election in 1945. Common sense ruled! But next time…?

  7. Just on  a point of information: There can’t be a constitutional crisis because the UK doesn’t have, per se, a constitution. What we do have collection of conventions which are usually claimed to be unwritten but as Wiki has made a pretty god job of actually doing that there is no reason to say that any longer.

    Overriding all these conventions is written law. If the Parliament wants to pass a law prohibiting the House of Lords vetoing any financial issues then that is exactly what it should do.

    Until such time as it does,  the Lords, whether or not we agree with the make up of the House, are doing exactly what they are meant to do which is review all legislation and pass it back to the Commons if they see the need.

    So its a case of “Crisis? What Crisis?”

  8. PS I’ve just noticed the “Salisbury Convention” in the link I posted above which states, sensibly IMO, that the Lords should not oppose any legislation which was part of the government’s manifesto.

    We might also consider that it should mean that the Lords should pay extra special attention to legislation which wasn’t in the Conservative Party’s election manifesto. For some reason it seems the Tories ‘forgot’ to include their plans for tax credit changes!

    If only they had ‘remembered’ to include those, they really would have had cause for complaint!

  9. “They can’t afford, and don’t need, to accept the conditions which the Lords have tried to impose on this key Osborne policy.”

    “Can’t afford?”  Why not? Has any serious economist suggested this? If you put money into the hands of those who need it they will spend it. Spending money creates tax revenue and will always create that revenue as it is spent and respent. That only stops when someone who doesn’t need the money decides to save it. The only risk might be increased inflation. But isn’t that what we need right now to hit our 2% target?

    A”key Osoborne policy” ?   The electorate can’t expect that every policy will be included in the manifesto. Circumstances change and what may well be needed in 3 or 4 years time can’t be foreseen now. But, we’ve just had an election! 5 months ago. Is the economy so much different now from what it was then? Sorry, but if this policy wasn’t included in the manifesto, it can’t be regarded as “key”.

  10. ObiterJ says:

    Yes, I see the convention referred to by Lord MacKay and others but should it apply no matter what the circumstances if the executive can label draft regulations with the word “money”?

    These days, we are seeing enormous swathes of policy being pushed through Parliament by means of regulations (statutory instruments) rather than by way of Bills (to which the Parliament Acts apply).  The cuts to tax credits were not included in any manifesto or financial statement from the Chancellor.  The decision to cut them is a policy development which some Conservative Ministers said (before election) would not happen.  In other words, there was a major policy change and the merits of it were not tested in detail by Parliament.  A Bill would have ensured that Parliament had a proper opportunity to consider the merits and detail of the policy.

    Conventions ought not to be misused and they must not be elevated so that they become almost rules of law.  In circumstances where a major policy change is being forced through by way of secondary legislation then I believe that the Lords were right to act as they did.  A government that operates properly and presents its policies to Parliament for full and thorough debate is fully entitled to rely on this convention but in the circumstances applying here the convention needed to give way so that Parliament as a body could consider more fully the impact of the tax credit cutting policy.



  11. Tom Berney says:

    As others have said, Brian, we are talking here about conventions not laws.  The more decent minded of the Lords did what they did because they could.  The result is that the Tories have been embarrassed, a nasty broken pre-election promise has been given maximum exposure, millions of low paid people are probably going to have some relief, either by delay or permanently of a cut in their standard of living and the sight of millionaires Andrew Lloyd Weber, Karen Brady, Michelle Mone, Seb Coe et al  trooping into the Lords to trample on the poor will have  registered a picture of Toryism that might well lose the Conservatives the next election.

    I’m not worried about the future behaviour of the HOL.  It’s a pantomime which should have been abolished yeas ages ago.  The SNP and  hopefully many on the Corbyn side of the Labour Party will be committed to that.   Any steps Cameron takes to either swamp it with new Tory peers, or drastically cut its powers, will simply strengthen the arguments for its abolition. What’s the down side of all this?

    You disparage the left for being pleased that the Lords have blocked a pernicious attack on the poor.  That seems to me to be an odd sense of priorities. I’m pleased for the three million low paid families.  Aren’t you?

  12. Brian says:

    Brian writes in reply to preceding comments by Oliver Miles:  I welcome your support for the general proposition that in claiming the power to ‘amend’ — in practice to delay and stymie — the government’s measure on tax credits cuts, the Lords were exceeding their powers under the constitution and setting a precedent which, if allowed to stand, would be likely to prove seriously harmful to any future progressive UK government.  Whether this constitutes a major constitutional crisis now, or only potentially in the future, is really a matter of definition — or else it resembles the question ‘how long is a piece of string?’.  But I’m happy to amend my description to an assertion that the episode raises serious constitutional issues with potentially grave consequences in the future.  Much will depend on Lord Strathclyde’s review’s recommendations and the government’s decisions on them.

    In reply to three comments by Peter Martin:  It’s difficult to reply to most of your points without repeating what I have written in my original post and in reply to earlier comments.  The Salisbury Convention is not strictly relevant here: the Lords are constitutionally barred from rejecting or amending the government’s financial measures whether or not they were included in the Conservative manifesto. (Even if this were somehow relevant, the Tories can argue that their intention to cut the welfare budget by £12 billion was in their manifesto and the tax credit cuts are clearly a part of that: the manifesto can’t be expected to forecast every detail of how every policy is to be implemented.)  By definition constitutional conventions are unwritten, and private attempts to define and write them down, even by mighty Wikipedia, obviously have no authority.  Parliament could in theory legislate to define more precisely the limits to the Lords’ powers in respect of financial measures, but (a) such legislation would probably require the procedures laid down by the Parliament Acts to override the objections of the House of Lords and (b) the government would be unlikely to embark on such a lengthy and controversial exercise when it would have been triggered by a government defeat in the Lords on such an unpopular and dubiously justified issue as tax credit cuts.   When I said the government “can’t afford, and don’t need, to accept the conditions which the Lords have tried to impose on this key Osborne policy”, Iwas fairly obviously meaning that they ‘can’t afford’ politically, not financially, to submit to the Lords’ conditions, especially as the Lords had no constitutional right to impose those or any other conditions on a government financial measure.  As noted earlier, whether the policy was in the Tory manifesto is not relevant here.  It’s a key Osborne measure if only because he has invested so much of his reputation and authority in it.  And it’s simply incorrect to assert, as you do, that the UK doesn’t have a constitution.  Our constitution is partly written in many different documents, including statute laws, and partly embodied in unwritten but fairly widely understood conventions, such as that the House of Lords may not interfere with the government’s financial business.

    In reply to ObiterJ’s further comment:  Yes, I do maintain that in constitutional matters accepted convention, such as that limiting the powers of the House of Lords, has the force of law and is binding just as a statute is binding, or should be.  The executive didn’t need to “label the draft regulations [i.e. the proposed SI cutting tax credits] with the word ‘money'” because on any reckoning it was, and is, a government financial measure totally concerned with taxes over which the Lords have no jurisdiction apart from the right to comment on it.  In any case, as I understand it, in cases of doubt or in borderline cases (which this SI is not), the executive (i.e. the government) doesn’t decide whether to attach the money label: that’s the responsibility of the (politically impartial) Speaker of the House of Commons.  I don’t agree, either, with your utilitarian argument that an established convention may legitimately be overridden to prevent a government misusing parliamentary procedures to avoid debate on its controversial measures, disgraceful though such behaviour might be.  Who is to decide whether and when a government is behaving so disgracefully (or improperly or controversially — all purely subjective judgements) as to warrant overriding an accepted constitutional convention, especially when the convention in question is as important as that which limits the powers of the upper house of parliament?  Such a doctrine would make half our constitution meaningless.  I agree that the government should have handled the whole thing differently, in such a way as to permit full debate in the house of commons and in the country, but that essentially political judgement can’t be held to permit such a brazen breach in the financial affairs convention as that perpetrated by the House of Lords, however commendable its intentions.

    In reply to Tom Berney:  I hoped it was clear from my original post that I fully share the indignation that you and many others across the political spectrum feel about Mr Osborne’s wicked plan to impoverish further the poorest of the working poor and their dependents by reducing their tax credits, without any remotely adequate compensating measures to ensure that no-one is made worse off by his so-called reforms to the benefits system.  But indignation at government immorality can’t justify a bid to extend the powers of the unelected House of Lords beyond those granted by the constitution.  All progressive people ought to be able to grasp that if the action taken by the House of Lords in this case is accepted as a legitimate precedent for the future, a future progressive government lacking a majority in the House of Lords is likely to have its financial management constantly frustrated and held up by the unelected peers.  The record shows that even when the Lords abide by the convention limiting their powers in government financial matters, as they have done until last week, they still make far more trouble for Labour governments than they ever do for Conservative or Conservative-led ones.  Their power grab last month, if not challenged, will cause any future left-of-centre government incalculably more trouble even than in the past.  Socialists and other progressives should be ready to support strongly any measures proposed by Lord Strathclyde to restore the status quo ante, under which such meddling by the Lords in the government’s financial affairs (regardless of their merits or lack of them) is clearly out of bounds and universally accepted as such.
    I doubt very much whether the illegitimate ‘amendments’ passed by the House of Lords to the government’s tax credit cuts instrument will materially affect the outcome of this issue in any case.  The tax credit cuts will clearly have to be either reduced or offset by other measures, not because of any demands by the House of Lords but because of the uproar in the country over them, and because enough Tory MPs are afraid of losing their seats if Osborne succeeds in re-toxifying the Tory party as “the nasty party” in this way to put the government’s slim majority in the house of commons at risk.  The tax credit cuts and their appalling effect on millions of the working poor simply lack enough support even on the right in British politics to be viable, and it seems clear that Mr Osborne is now aware of this.  Widespread opposition to the measure, once its dire implications were exposed, has been more than enough to kill it (or to force Osborne drastically to amend it) without the need for the rash action by the house of lords involving punching a large and potentially dangerous hole in the British constitution.  The morally commendable end simply didn’t justify the grubby and ill-considered means, which ought to be obvious to everyone who values democracy.

  13. ObiterJ says:

    Dear Brian – thank you for your replies.  This is an interesting topic and, over the weekend, I did further research.  Please see my own blogpost but, more importantly, the links therein.  These look at some of the deeper concerns regarding the use of secondary legislation which, all too often, receives scant attention / scrutiny in Parliament.  Thanks again for a good discussion.

  14. robin fairlie says:

    What an extraordinary outpouring of learned nothings on a subject of as much interest and importance as how many Lords can dance simultaneously on the head of a pin. Constitutional crisis? Rubbish. Governments of every stripe will in future acknowledge that if they wish to pass into law highly controversial measures, it is a good idea to embody them in primary legislation, not to seek to sneak them through in secondary instruments (whose use for this purpose, not for the first time, is a disgrace, which should be outlawed by – ahem – constitutional convention). It may even come to be seen that to deal in this underhand way with a highly-significant measure which you have not only not included in your manifesto, but have actually denied your intention to pursue, is to seek out and deserve trouble in advance. The only real outcomes of this brouhaha are that the government has suffered an embarrassment – or a humiliation if you prefer; shares in George Omnishambles Osborne have taken a (temporary?) dive; and the unfortunate recipients of tax credits may be marginally advantaged. (And the ‘uproar in the country’, whether or not it would have occurred in any event, has certainly been stimulated by their Lordships’ action.) All of which outcomes should be a matter of limited pleasure to any left-thinking persons in these dark times.

  15. Phil says:

    Adam Tucker argues that the key issue here is the use of delegated legislation. A lot of legislation is secondary or delegated, and necessarily so. If in year 1 the government passes a Bill saying that a certain tax allowance will henceforth be uprated in line with inflation (having publicly promised to do so in year 0), a statutory instrument is the ideal means of getting it done in years 2, 3 and so on. It would be a waste of everyone’s time to have to go back to the House every time to debate an Inflation-Related Uprating Bill.

    This, mutatis mutandis, is the situation we’re in with the Tax Credits Act 2002. Here Tucker makes a very important point, which is that the primary legislation itself prescribes the level of oversight which delegated legislation made under it will receive. It’s possible to give the Lords a power of amendment as well as power to accept or reject; it’s also possible to give the Lords no power at all, so that the House of Commons alone determines whether delegated legislation will be accepted or rejected. It’s open to the Commons to accept delegated legislation without debate, which in most cases it will. But the cases where the Commons will nod through delegated legislation because it’s straightforward and unproblematic need to be distinguished from those where the Commons complies simply because it’s dominated by the governing party.

    So, firstly, if the Lords has power to reject statutory instruments under the Tax Credits Act 2002, it’s because the Tax Credits Act 2002 was drafted so as to make this possible. And, secondly, if the Lords didn’t have power to reject statutory instruments of this type, nobody else would: given a whipped government majority, the Lords is the only thing standing between an unscrupulous executive and law-making at will through (ostensibly) secondary legislation. Which, incidentally, is why the Left are making strange bedfellows with the Lords: it’s an abuse of executive power, and the Lords* has the power to block it.

    *I’m using ‘Commons’ and ‘Lords’ as contractions for ‘House of…’, hence singular verbs.

  16. Brian says:

    Brian writes in reply to Phil:  Adam Tucker’s argument, which at first sight I agree looks entirely convincing (and which echoes the point made earlier in this thread by ObiterJ) is in fact comprehensively rebutted by the former Lord Chancellor, Lord Mackay, whose intervention in the Lords debate on 26 October I referred to at the end of my original post with a hyperlink to the relevant passage in Hansard.  Perhaps the best way to explain this is to reproduce the relevant part of Lord Mackay’s speech, preceded by a couple of the relevant texts:

      Section 66  Tax Credits Act 2002 section 66:
    66  Parliamentary etc. control of instruments
    (1)No regulations to which this subsection applies may be made unless a draft of the instrument containing them (whether or not together with other provisions) has been laid before, and approved by a resolution of, each House of Parliament.

    [[In 2015] The House of Lords, that no longer had an in-built Conservative majority reported that they would consider rejecting the bill of repeal. Government ministers reminded their Lordships that there were precious few precedents for the revokation of a Statutory Instrument of this kind. The Lords has no constitutional authority over financial bills in Parliament.

    Lord Mackay, House of Lords debate, 26 Oct 2015, Col 998:
    That is the system under which this statutory instrument has been made. Accordingly the statutory instrument before the House requires to be approved by each House of Parliament before it can be made. The instrument, as we know, was approved by the other place and a Motion to reverse it was defeated in the other place. So it has come to us as a matter which has been fully considered so far as the other place is concerned until now.

    In considering this, regard must be had to the financial privileges of the other place. It is not a question of the conventions of this House, it has nothing to do with them; it is to do with the financial privileges that belong to the House of Commons. So far as I understand it, there is nothing to prevent a Motion along the lines proposed here being considered by this House, but the question is whether that consideration can properly interfere with the financial primacy of the elected Chamber. Erskine May says that the practice is ruled today by resolutions which were made in the 1670s. The last one of these, the clearest and fullest, states that,

    “…all aids and supplies and aids to his majesty in Parliament, are the sole gift of the commons; and all bills for the granting of any such aids and supplies ought to begin with the commons: and that it is the undoubted and sole right of the commons to direct, limit, and appoint in such bills the ends, purposes, considerations, conditions, limitations, and qualifications of such grants; which ought not to be changed or altered by the House of Lords”.

    It is clear that these tax credit payments are made out of the supply raised by taxation and that the other place has decided that the Tax Credits Act 2002 should be amended in terms of the approved draft. I am clearly of the opinion that a failure on the part of this House to approve the draft of this instrument would be a breach of the fundamental privileges of the elected Chamber.

    It may be asked why the approval of this House is required. I believe that it is as a courtesy to the House, just as it is asked to agree to the passing of money Bills on their way to becoming Acts of Parliament. The House never seeks to delay them as it is obliged to respect the financial privileges of the elected Chamber and how it deals with those matters; it should deal with this matter in the same way. To decline to approve these draft regulations or to decline to deal with them until certain conditions are met is a refusal to accept that the decision of the elected House on a matter of financial privilege is the final authority for it. It has to be noted that this is a matter of the privilege of the elected Chamber, not of the Government. …

    I am stating the present practice, according to Erskine May, in relation to matters of financial privilege. As I said, it is not a matter of the conventions of this House, but of the rights of the other place in this matter. My clear submission to your Lordships is that these amendments challenge the final authority of the elected House on a matter of financial privilege. It is true that the … Liberal Party … found it necessary to take further action to ensure that the practice that had been built up in the 17th century applied in the 20th century and beyond. They put mechanisms in place to prevent financial privileges being in any way transgressed again.

    That seems to me to settle the matter.  It’s clear that the action taken by the Lords was in blatant breach of the financial privilege of the House of Commons which goes back several hundred years, and which is reflected in the statutory and conventional limit on the powers of the Lords in regard to money bills.  It should also be noted that Lord Mackay leaves no doubt that both the original primary law of 2002 and regulations made by secondary legislation under it are protected against any change or rejection by the Lords since they both deal exclusively with supply to the executive approved by the House of Commons.  IOW, the House of Lords should have “approved” the statutory instrument automatically, whether or not it thought it sound.  The merits or defects of the statutory instrument have nothing to do with it.  And the principle of the financial privilege of the House of Commons is one that all progressive people clearly ought to defend, even if in some specific circumstances it has unpalatable consequences.  The consequences of ignoring or undermining it, even if the House of Commons were to acquiesce in such damage to it, would be infinitely worse.  The government is right, therefore, to examine the matter and to devise a way to put the matter right.  The Labour party, similarly, should support the government in action to ensure that the action mistakenly taken by the Lords will not be accepted as setting a precedent for the future.  Whether Labour will do so, however, must be an open question, unfortunately.

  1. 29 October, 2015

    […] (UPDATE 27 October: My father disagrees, here.) […]