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Commons Financial Privilege

Volume 601: debated on Wednesday 28 October 2015

(Urgent Question): To ask the Leader of the House if he will make a statement on the Government’s review of the financial privilege of the Commons under Lord Strathclyde.

On Monday, the House of Lords rejected a financial measure that had been approved three times by the elected House of Commons. We are clear that that raises constitutional issues that need to be examined carefully. We need to ensure—[Interruption.]

Order. I apologise for interrupting the Leader of the House. This is a very serious matter and it would be seemly if colleagues who are leaving the Chamber did so quickly and quietly and if others inclined to conduct private conversations decided to do so outside the Chamber. There is a very important matter being treated of by the Leader of the House in response to the urgent question.

We need to ensure that we have arrangements in place that protect the ability of elected Governments to secure business that has the support of the elected House.

Yesterday the Government announced that we are in the process of setting up a review to examine how to protect the ability of elected Governments to secure their business in Parliament. The review will consider in particular how to secure the decisive role of the elected House of Commons in relation to its primacy on financial matters and on secondary legislation. The review will be led by Lord Strathclyde, supported by a small panel of experts.

The relationship between the Commons and the Lords is extremely important. When conventions that govern that relationship are put in doubt, it is right that we review that. Clearly, the House will be fully updated when more details of the review have been agreed.

It is clear that the Government intend to give the House of Lords a kicking, but they should remember, as they fashion this pretend constitutional crisis, that the vast majority of people in this country applauded the Lords on Monday, because the measure was not in the Government’s manifesto. Does the Leader of the House see no irony at all in getting a Member of the House of Lords—and, for that matter, a hereditary peer—to review the financial privilege of the House of Commons? Is this the right person for the task? After all, in 1999, Lord Strathclyde said of the convention that the House of Lords did not strike down statutory instruments:

“I declare this convention dead.”

That same day, he and the Lords voted down two Labour Government statutory instruments. Now he thinks that it is an utter disgrace to do so. Is there one rule for Tory regulations and another for Labour ones? Is he now a convert or frankly just a hypocrite?

Order. [Interruption.] I am perfectly capable of dealing with these matters. I certainly do not require any sedentary chuntering, however well-intentioned, from hon. Members. Their interventions are superfluous. The shadow Leader of the House should withdraw that term.

I withdraw that term unreservedly, Mr Speaker; I presume that he is a convert.

Why are there no representatives of other parties or of the House of Commons on the review panel? Would it not be better for this House to conduct its own inquiry into the operation of secondary legislation? Could not the Public Administration and Constitutional Affairs Committee, whose admirable Chairman is in the Chamber now, do the job far better?

Is there not a far simpler means of guaranteeing the financial privilege of the Commons? The Government should stop relying on secondary legislation and introduce properly scrutinised primary legislation as money Bills that are covered by the Parliament Act instead. In all honesty, is it not a disgrace that measures affecting 3.2 million people should be decided in a 90-minute debate with no opportunity for amendment? There is a very simple principle here: money Bills do not receive scrutiny in the Lords, so they get extra time in the House of Commons; secondary legislation does not get much time in the Commons, so it does receive consideration in the Lords.

Does the Leader of the House not realise that the Lords had the power they did on Monday only because the Government tried to sidestep scrutiny by using secondary legislation dependent on the Tax Credits Act 2002, section 66 of which specifies that changes to tax credit rates must be approved by both Houses of Parliament? As things stand, the Government rely on hundreds of Acts that have the same provision. Does the Leader of the House intend to make retrospective amendments to each and every one of those Acts, and will he use the Parliament Act to drive that through?

We have very few checks to Executive power in this country. If we do not protect our constitution, it is not worth the paper it is not written on. There is a real danger that if Parliament as a whole lets the Government of the day dismantle every check and balance, they will no longer be governing by consent—and that really would be a constitutional crisis.

I have great respect for the hon. Gentleman’s experience as a parliamentarian, but he will not be surprised to learn that I tend not to anticipate the outcomes of reviews before they have even started. I said a moment ago that we would publish full details of the terms of reference and the full review panel in due course, so he will have to wait to see the full detail when we bring it to this House. There is no restraint on any Committee of this House from carrying out any inquiry that it wishes to conduct, within its remit. Lastly, on primary legislation, it is a simple fact that tax credits are classified as a benefit. They cannot be included in a money Bill. You, Mr Speaker, would not certify a Bill containing a reference to tax credits as a money Bill, so I do not know what the hon. Gentleman is talking about.

Does my right hon. Friend recall that the 2002 Act was produced by Gordon Brown precisely to keep tax credits out of a Finance Bill so that he could alter them by statutory instrument and raise them before elections without proper scrutiny? Will he confirm that the Labour and Liberal peers, having discovered that they have a large party political majority in the upper House, are using it with increasing frequency and that they have cast a vote that is totally contrary to every sensible understanding of the constitutional position for the past 100 years? Indeed, the situation is an exact replica of the Conservative peers foolishly voting against Lloyd George’s Budget.

The Lords does not vote against Budget measures. So although I welcome the advice of my noble Friend Lord Strathclyde, for whom I have enormous respect, will my right hon. Friend not delay too long before bringing forward legislation that sets out clearly what convention has previously established? If the Lords keep repeating these party political votes, it will be almost impossible to have stable government taking firm and difficult decisions for the remainder of this Parliament, when presumably they will start misbehaving with ever more frequency.

I share my right hon. and learned Friend’s concerns. He makes his point with his usual wisdom, and I hope very much that Lord Strathclyde will address the issues to which he refers. It is essential that these matters are dealt with. It is worth remembering that in 13 years of Labour government, the Labour party did not have a majority in the House of Lords, yet Conservative peers and others respected the conventions. It is a great shame that Labour and the Liberal Democrats clearly have no intention of respecting the conventions and will cast them out of the window, which will fundamentally change the relationship between the two Houses.

I am sure the British public are amazed and bewildered by that ermine-handbags-at-dawn spat between the Tories and the unelected Lords in this great battle of the nobles. We on the Scottish National party Benches are hoping it is a double knock-out blow.

Is it the case that the way democracy now works in the UK is that if the Government do not like what one part of the legislature does, they simply emasculate it or re-appoint it? Is this the sort of democracy we are living in? The emergence of the cronies and donors as some sort of ermined tribunes of the people is a ridiculous concept. We have great concerns about Lord Strathclyde. An unelected Tory peer—[Interruption.] Indeed, a hereditary peer is to handle this inquiry. The only comfort we take from this case is the fact that he reviewed and reported on the Scottish Tories and set recommendations in place for their progress in future. They are now at 14% in the polls.

I know very straightforwardly what the hon. Gentleman’s submissions will be to any review of the relationship between the House of Lords and the House of Commons. He can surely take comfort also from the fact that Lord Strathclyde is a Scot and therefore brings to this job great wisdom.

I thank my right hon. Friend for the announcement made yesterday and assure him that the Public Administration and Constitutional Affairs Committee requires no instructions from the Government about what inquiries we will carry out, and nor does it require any prompting from the Opposition.

At our meeting yesterday, we started to cross-examine witnesses about events on Monday, and we will be looking at what Lord Strathclyde is likely to consider, but there is a simple point to make. Does my right hon. Friend agree that the Parliament Act 1911 established the principle of financial privilege at a time when there was very little secondary legislation? Now that so much is done by secondary legislation, it should not be too complicated to make sure that that principle in the 1911 Act is extended to secondary legislation, to avoid such misunderstandings in the future.

I have no doubt that my hon. Friend and his Committee will look closely at those issues. I am not in the least bit surprised to learn that they have made a start. Most Members of the House realise that this week has marked a significant change or potential change in the relationship between the two Houses. We need to establish a firm foundation for the future. My hon. Friend and his Committee will play an active role in that. When change is necessary, I want to bring it forward as quickly and sensibly as possible, but we need to take the time to get it right and ensure that we deal with the issues for the foreseeable future.

Will the Leader of the House ensure that the review includes whether the House of Lords has the right to vote down measures introduced by a Government who said that they would not take such measures? Secondly, will the members of the review panel be paid a daily rate? If so, will it be higher than the minimum wage?

As I have said, we will bring forward full details of the review panel and the terms of reference in due course. I remind the right hon. Gentleman that nobody can be in any doubt that the Government won a general election in May saying that we would have to take tough decisions and cut welfare. That is what we are doing.

Many of us in the House believe, as a point of principle, that those who make the law should be accountable to those who live under the law. Does my right hon. Friend accept that that is absolutely impossible as long as we have an appointed Chamber? How does he feel about the fact that, nowadays, only Britain and Iran have unelected clerics in our legislatures?

As we have learned from debates over the past few years, there are strong opinions in the House about the need for reform. Up to now, the House has chosen not to pursue the avenue of reform of the House of Lords, but it is difficult to see how, in the wake of these events, there can be no change at all to the relationship between the two Houses.

The Lords were right and entitled to table the fatal motion and it has not created a constitutional crisis. That is a smokescreen to distract attention from the pain that would have been inflicted by tax credit cuts on 3 million working families on low incomes. If the Leader of the House wants to reform the House of Lords, I recommend that he dusts down all the hard work done in the coalition on House of Lords reform. This time, he should get the Conservative party to support those reforms rather than scupper them.

I am not sure how the Liberal Democrats advance their case for reform by throwing out conventions and behaving in a way that is contrary to all the workings of Parliament over the past few decades. They can by all means make the case for reform, but they should not behave in a way that is simply designed to wreck the manifesto of an elected Government.

The House knows only too well that knee-jerk reactions leading to rapidly made legislation often result in poor law. What assurances can the Leader of the House give that such a hastily convened commission will be given reasonable time to carry out its work, and that no pressure will be brought to bear on it on the timetable? We do not want results produced in haste that we regret at our leisure.

One thing I said clearly yesterday was that I do not think we should do change on the hoof and rush headlong into change. Equally, we must accept that there appears to be a strategy in the House of Lords—an alliance between Labour and Liberal Democrat peers—to demolish the Government’s platform on which we were elected in May. This cannot therefore wait forever, but I accept my right hon. Friend’s point that we must do it carefully and properly.

Does the Leader of the House appreciate the irony of selecting a hereditary peer who has previously said that the convention is dead to undertake the review?

It is entirely sensible to pick a respected senior figure who knows the workings of government and of the House of Lords, and who will undoubtedly produce words of wisdom for all of us.

My friends on the Scottish National party Front Bench want me to mention that, from 1407—the beginning of the 15th century—the Commons was given primacy over financial matters. That was confirmed in our motion of 1678, when all matters of taxation and expenditure were to be the preserve of this House. In 1839, the Speaker of the House of Commons insisted that an amendment from the House of Lords on a financial matter must be rejected. At that date, the House of Commons would not even consider the change of a trustee of a turnpike trust if it was suggested by the House of Lords, so jealous were we of the privilege that the democratic House must have control of taxation and expenditure.

May I urge my right hon. Friend to send the clearest message to the House of Lords that, if their lordships do not obey the conventions that have governed this country for centuries, they will be forced to do so by legislation?

My hon. Friend speaks with enormous wisdom and knowledge on these matters. He will not be surprised to remember that history was downplayed in our curriculum under the Labour Government. Parliamentary history does not appear to be top of the knowledge of Members of the other place. My hon. Friend is absolutely right. We have traditions and ways of working in this country that date back decades and centuries. They have been cast away this week entirely inappropriately. It would be a huge mistake for us to allow them to slip away. It is a shame that the Opposition parties appear not to respect them.

Order. I gently ask the Leader of the House to face the House so that we all get the benefit of his words.

As we all carefully reflect on the 15th-century precedent, could we also carefully reflect on the modern world? A Government elected on 37% of the vote and 14% in Scotland might not be expected to win every single Division in the legislature. Should the Government not accept that their position seems to be based on a sense of entitlement as opposed to an attachment to the democratic ballot box?

The issue has nothing to do with entitlement and no Government should ever take either House for granted, but it is not unreasonable that, when precedents and conventions have existed for handling financial matters for decades and decades, they should be respected.

Does the Leader of the House agree that the time has come for proper reform of the House of Lords? By “proper reform”, I mean a reformed Chamber that is fully elected.

From talking to colleagues around the building, I know that House of Lords reform has returned very much to the centre stage, but we face big challenges in this country and have important legislation to get through. I want to deal first with challenges in health, education, environmental matters, enterprise and the economy, but there is no doubt that reform will now be discussed much more widely in the House.

The Leader of the House has explained why the measures were not in a Finance Bill. He seems to be confused: he seems to believe that the big bill attached to tax credits makes them a finance measure. If we follow his logic, no Bill that involves spending could go to the other place, be it on legal aid or HS2.

Let us be clear to the House—this is a very simple matter—that tax credits are officially categorised as a benefits matter and not a tax matter. If one puts a change to tax credits into a Finance Bill, that Bill will not necessarily be certified as a money Bill. That is the state of play and the reality of what we are dealing with. That is why the tax credits measures were not in a Finance Bill.

Has not the Leader of the House just said why the Lords were entitled to amend the statutory instrument? They did not reject it but delayed it because it clearly was not a tax measure. If it had been a tax measure, we would have put it in the Finance Bill. We are seeing a knee-jerk reaction to the House of Lords doing what it is supposed to do. I am all for a review, but let us have a proper review and take our time over it. Will my right hon. Friend reflect on that and announce more than just Lord Strathclyde heading a review?

It is absolutely essential that we do not rush this. We have said that there will be a panel of people working with Lord Strathclyde. Their names will be announced in due course, but I remind my hon. Friend that a statutory instrument has been rejected by the House of Lords in that way only five times in the past century. This is the first time that it has happened to a specifically budgetary measure. That is the important change.

Before we all join the Lords resistance army in a synthetic constitutional crisis, will the Leader of the House not acknowledge that the real issue is not the procedural powers of respective Houses in this Parliament, but the spending powers of hard-pressed and hard-working households in this country? In any review, will he ensure that our first priority is to get this House in order, not another?

I think that this House is in perfect order. It has voted for these measures five times and passed them five times.

I frequently take schoolchildren and visitors from other democratic countries on tours of this building, and I always feel slightly awkward when explaining that the House of Lords is appointed. As my right hon. Friend the Member for North Somerset (Dr Fox) and my hon. Friend the Member for Carlisle (John Stevenson) suggested, is it not time we had a fully elected second Chamber?

I know that my hon. Friend thinks that, along with a number of other Members. Certainly, as a result of Monday’s activities, that debate is likely to restart in this Parliament, having not continued in the previous one.

Does the Leader of the House not accept that the other place has a constitutional role to provide pause to this House when it feels that we have taken a decision that is wrong and out of sync with the feelings of the country? Why should we take seriously his views on the powers of the other place, and indeed the views of Government Members, given that he is continuing to pack that House with 50-odd new peers at the same time as slashing the number of elected Members of this House by 50?

The simple reality is that this House has now voted for these changes five times—prior to Monday it was three times. Ultimately, it must be the elected House of Commons that has the final say on these matters, which is why the actions of the House of Lords were, in my view, unacceptable.

I welcome the Strathclyde review and the Leader of the House’s reiteration of the primacy of the elected House of Commons. The shadow Leader of the House alluded to our unwritten constitution, which is a constitution of convention. Is it not the case that the House of Lords has breached that convention and therefore, by definition, is acting in a very unconstitutional manner?

I very much agree with my hon. Friend. In recent years I have heard many Members of the House of Lords stress the importance of convention, but on this occasion they appear to have completely ignored it, which is why we now face this issue.

As I said earlier, we will give more details about the panel’s composition and terms of reference shortly.

Is it not true that although changes to the House of Lords might be necessary, the last thing we want is another House of Commons?

My hon. Friend sets out one of the great subjects of debate: if we replace the House of Lords with something else, should it be elected? As he knows, that has been debated several times since he and I were first elected in 2001, and I suspect that it will now be debated again. The important thing, from my point of view, is to deal in the coming months with the apparent wrecking strategy that Labour and the Liberal Democrats in the House of Lords appear to be taking to the platform of the elected Government, so we have to resolve these matters quickly.

The Conservative Government keep trying to play politics with this but keep finding themselves in a hole. For a start, they did not put the tax credits policy in their manifesto, which has allowed the Lords to vote against it. Then they introduced it in a statutory instrument, which also allowed the Lords to vote against it. Now they have appointed a hereditary peer to conduct a review into the unelected House of Lords. Mr Speaker, when will the Government stop digging?

We have appointed a respected former Leader of the House of Lords, and a compatriot of the hon. Lady, to conduct a review, and I think that he will do an excellent job.

Yesterday the Chancellor said that the House of Lords has no mandate for tinkering with his tax credit changes, but, with 14% of the vote, it is his Government who have no mandate to introduce their vicious welfare reforms up in Scotland. After all the constitutional tinkering we have already had to introduce English votes for English laws, would not the solution to both constitutional conundrums be to abolish the House of Lords and replace it with an English Parliament?

The Scottish nationalists keep making that argument. Over the past few weeks, I have listened to them express fury about the introduction of EVEL because it gives them less say over matters that they say affect Scotland. But an English Parliament would give them no say, so their argument simply does not stack up.