House of Lords
Monday, 26 October 2015.
Prayers—read by the Lord Bishop of Portsmouth.
Introduction: Lord Lansley
The right honourable Andrew David Lansley, CBE, having been created Baron Lansley, of Orwell in the County of Cambridgeshire, was introduced and took the oath, supported by Lord Dobbs and Lord Ribeiro, and signed an undertaking to abide by the Code of Conduct.
Introduction: Baroness Sheehan
Shaista Ahmad Sheehan, having been created Baroness Sheehan, of Wimbledon in the London Borough of Merton and of Tooting in the London Borough of Wandsworth, was introduced and took the oath, supported by Baroness Barker and Baroness Kramer, and signed an undertaking to abide by the Code of Conduct.
Introduction: The Lord Bishop of Gloucester
Rachel, Lord Bishop of Gloucester, was introduced and took the oath, supported by the Archbishop of Canterbury and the Bishop of London, and signed an undertaking to abide by the Code of Conduct.
Health: Global Health
My Lords, I congratulate the all-party parliamentary group on producing its report. The Government are determined to maintain Britain’s strong global role and welcome the report’s suggestions as to where we can continue to play a leading role in health globally. The United Nation’s sustainable development goals provide added incentive to look critically at where we can add maximum value in improving health systems overseas.
I thank the Minister for that very encouraging reply. The UK is a world leader in health. This report, produced by researchers from the London School of Hygiene & Tropical Medicine, shows that we have extraordinary strength in research, education, commerce, development, the NHS and the NGO sector. Given that, does the Minister agree that it is time for the UK to develop a new global health strategy to use that all-round strength to help to improve health globally—but, at the same time, to strengthen the UK’s health, science and technology base? More specifically, does the Minister agree that the UK’s medical, nursing and healthcare schools could be supported to play an even larger role in training health workers in low and middle-income countries?
My Lords, I agree with all the sentiments that the noble Lord mentioned—and, perhaps, one other, which is that in a number of other pioneering areas, such as genomics, dementia and antimicrobial resistance, the UK is very much at the forefront. The Government are following up the “Health is global” strategy that was initiated back in 2008 and will be reporting back in detail in 2016. I assure the noble Lord that we will take fully into account the findings of the all-party parliamentary group.
My Lords, does the Minister think it would be wise for us still to be learning from other countries, instead of learning only globally? For example, we have an appalling record on pancreatic cancer compared with many other countries. Is it not time for us to improve those things, and then we will be better able again to help others?
I agree with the noble Baroness that there is always plenty that we can learn from other countries. She cited one example, and I am sure there are many others. There is never any room for complacency. Other parts of the world are also making huge advances. One of the findings of the all-party parliamentary group’s report is that we face increasing competition not just from countries such as America, but from South Korea and Singapore, for example. The noble Baroness is right: we must always learn from others.
My Lords, the report is abundantly clear that the UK gains enormously from its work in other countries but it is also clear that, taking the point of the noble Lord, Lord Crisp, many of our universities are very inhibited in recruiting the overseas talent that reinforces the UK as a global leader because of Home Office policies restricting entry to work in our universities and other institutions. One of the report’s recommendations is that the Home Office review immigration policy in this area. Can the Minister confirm that his department is urging the Home Office to get on with it?
I understand that the Home Office is in the middle of this review and is due to report back later this year or early in 2016. It is also worth noting that this important report said we are No. 2 in attracting overseas students to come to England to train as doctors. I think America is No. 1.
My Lords, the life sciences are indeed an area in which the United Kingdom leads, as we have just heard. Will this Government be continuing the previous Government’s work in underpinning that lead through long-term investment? In particular, can the Minister assure me that the Newton Fund, which links research scientists in the United Kingdom with those in developing countries, will not be scaled back?
Following on from the Question from the noble Lord, Lord Crisp, does the Minister agree that, given the predicted growth of about 15% in the healthcare needs of countries such as India and China, we have a great opportunity not only to promote education but to develop health expertise? Does he agree that we need to have a stronger relationship with these countries in health?
I completely agree with the noble Lord. According to the report, health spending is likely to increase by 8% per annum in Asia for the foreseeable future and by some 5% in the rest of the world. This is a huge opportunity. The NHS is arguably the best-value healthcare system in the world, and the many lessons we have learnt since 1948 will be valuable when we go overseas.
Does the noble Lord agree that as part of carrying forward the excellent report to which the noble Lord, Lord Crisp, has referred, it is essential to take into account the lessons learnt from the Ebola episode in Sierra Leone, and to ensure that the World Health Organization has adequate resources to give muscle to its work, and to co-ordinate the work of other departments and aspects of government that are essential in preparing for such epidemics?
The Ebola crisis was indeed a wake-up call. There is no doubt that the leading role we play in the WHO is hugely important, so I agree fully with the noble Lord. The work we are doing on antimicrobial resistance is another example of the very important role the WHO can play, as does our Chief Medical Officer, Sally Davies.
My Lords, I declare my interest as chair of University College London Partners and an officer of the all-party group. This report identifies that our country is No. 1 among the G7 nations in terms of the impact of its medical research, as judged by citation impact. How do Her Majesty’s Government propose to ensure that the NHS continues to develop the foundation for that medical research impact?
The noble Lord raises an interesting point. Not only are there more citations of research conducted in Britain, but we co-operate with other countries far more than any other country. We also have in the BMJ, the Lancet and Nature the three leading medical and science magazines. The Government are determined to maintain Britain’s position as one of the leading medical research and life sciences nations in the world, and will carry on supporting that industry.
Schools: Free Schools
To ask Her Majesty’s Government how many free schools at primary and secondary levels were open at the beginning of this school year, how many are expected to open during the 2015-16 school year, and how free schools will be monitored and evaluated.
My Lords, there are 304 open free schools, including 118 primaries, 123 secondaries, 19 special schools and 32 alternative-provision free schools. This figure includes 52 free schools that have opened so far this academic year, incorporating 23 primaries, 15 secondaries, seven special schools and four alternative provision schools. In addition, we expect one further all-through alternative provision school to open this academic year. Free schools are inspected by Ofsted and monitored by departmental educational advisers, the Education Funding Agency and regional schools commissioners.
I thank the Minister for that comprehensive response. I return to the issue of monitoring. Will the Minister comment on the recent tables which show that this year the number of year 11 pupils in free schools achieving five A to C grades in GCSE, including English and maths, lagged behind the number in local authority schools by 5%? Would the Minister class those schools as “coasting”?
I would not class them as coasting. It is a very small sample. They are a long way short of coasting. Twenty-six per cent of free schools have been judged outstanding, which makes them by far our highest performing group of non-selective state schools. Free schools are monitored by Ofsted, like all other schools, and the EFA. They have much tighter financial oversight than local authority-maintained schools because they have annually to publish audited independent accounts, and regional schools commissioners also monitor them.
My Lords, of free schools that provide alternative provision, five have funding of £100,000 per pupil and 18 have £59,000 per pupil. That contrasts with local authority schools, which have only £22,000 per pupil. Has any analysis or evaluation been done about the different provision? Does the Minister think we are getting value for money in the funding of special education and alternative education?
I assure the noble Lord that we are very focused on value for money. Those figures are very deceptive because quite a few pupils in alternative provision are on the register of the school, so it appears as though there are fewer pupils in the alternative provision school. Pupils in alternative provision get much higher funding, as they do in pupil referral units run by local authorities, so the figures are quite confusing.
My Lords, it has been decided that new free schools will now be inspected in their third year of operation rather than in their second, although it is not clear whether that is due to funding cuts to Ofsted or perhaps, given that around 25% of them are deemed to be underperforming, it is to save the DfE from further embarrassment. Will the Minister explain how this new decision will help to ensure that underperforming free schools are identified and their failings addressed as soon as possible?
This is to bring free schools in line with all other new schools, which are inspected in their third year in the same way. Of course, free schools are monitored closely by education advisers in their early years and, as I already said, by the regional schools commissioners.
There is no question that that is the case. About half of free schools are in the most deprived areas in the country. In the last five rounds, 93% of them have been in areas where there was a forecast shortage of places and a large number of our top academy sponsors, who are particularly focused on underprivileged children, have entered the free school movement.
My Lords, the term “free school” obviously implies freedoms that do not apply to other kinds of school. Can the Minister assure the House that free schools do not have the liberty to withhold from their pupils in any circumstances a range of options in the curriculum that would be expected to be offered to children in other types of school? I think, for example, of subjects such as arts and music.
I assure the noble Baroness that all schools are expected to have a broad and balanced curriculum. Certainly on my visits around free schools I see a very wide curriculum. If the noble Baroness would care to accompany me on a number, I am sure I could satisfy her on this point.
My Lords, responsibility for housing in London has been devolved to the Mayor and the GLA, in line with this Government’s commitment to give local areas control over their development and growth. We work closely with London Councils and the GLA on increasing housing supply in London. Total funding to the GLA for affordable housing in London across 2015 to 2018 is nearly £1.5 billion, delivering 43,000 affordable homes under the programme.
My Lords, in the last five years the Government have failed to tackle the housing crisis in London: the number of people owning their own home in the capital is now below 50%; the number of private renters has gone up by 800,000; and there are the lowest levels of peacetime housebuilding since the 1920s and a 79% increase in rough sleepers. When are the Government going to take some real action to deal with the crisis? They have had five years to deal with it so far. Their record is poor. Urgent action is needed.
My Lords, I cannot agree with that statement. More council housing has been built since 2010 than in the 13 years of the last Labour Government. There have been more council housing starts in London than in the 13 years of a Labour Government, and there have been 800,000 more homes built in England since 2009—260,000 affordable homes delivered since 2010.
My Lords, given that average earnings in the capital now are just under £28,000 a year and given that research shows that in order just to get a foot in the property market in London needs an annual income of somewhere around £77,000 a year, what is the Government’s estimate of the number of people who will access starter homes in the capital?
My Lords, how do the Government view the fact that one impact of the housing shortage in London is that London boroughs are relocating families away from London and away from the communities and services they know, which puts pressure on receiving authorities in respect of their housing provision and services? I refer to places such as Stevenage, Milton Keynes and, of course, Luton.
My Lords, the noble Lord brings up a very important point, but of course London authorities have always done that. The important thing is to make sure that fewer families have to reside in temporary accommodation, and we have made sure that that is the case.
My Lords, will the Minister accept that one of the biggest problems relating to the welfare bill is the huge cost of housing benefit? This country will never get that cost down until we tackle the terrible shortage of land for housebuilding. We have vast areas of green belt. Will the Minister consider allocating 10% of the green belt to housebuilding in order to rack down rents and reduce the housing benefit bill?
My Lords, the Government are very clear that the green belt should be protected. However, as the noble Baroness will know, this Government are very committed to right to buy and to unlocking brownfield sites, with the brownfield register being available from councils, and we will put £1 billion into the brownfield fund. I have talked about starter homes and other affordable homes.
My Lords, I understand that developers have a very large amount of buildable-on land held, as it were, in a land bank and awaiting changes in the economic climate. What consideration is given by the Government to bringing pressure to bear and getting this land released so that the price of housing goes down?
My Lords, further to the question from my noble friend Lord McKenzie, what steps are the Government taking to monitor the numbers who have to leave London because they can no longer meet the cost of housing there, as well as monitoring the impact on families who are uprooted into new communities?
My Lords, does the Minister agree that it is high time that we paid as much attention to demand for housing in London and Britain as to supply? Can she say when the Government will publish an estimate of the increase in households without immigration—something that has not been done for five years?
I cannot answer the former part of that question but, in terms of the latter part, the Government are certainly keen to ensure that landlords know that their tenants have a right to be in the houses that they are renting. Therefore, we are cracking down on this and obliging landlords to ensure that the person tenanted in their house has a right to be in this country.
My Lords, does the noble Baroness accept that the Government’s policy of selling off social housing held by housing associations will further diminish the level of affordable and social housing? Does she not think that selling off housing association properties is, in effect, nationalising charitable assets?
My Lords, would the noble Baroness care to reconsider the answer that she gave my noble friend Lord Campbell-Savours? Viewed from some perspectives, there is no housing shortage in London: flats are being thrown up all over the city. However, they are being sold off at enormous prices and then left empty. Does she really think that in these circumstances it is appropriate to give—if I may say so without offence—what is more of a shrug-of-the-shoulders response on the subject of planning permission?
My Lords, I hope that I did not give the impression of a shrug of the shoulder. If one were to walk around certain parts of London, one may well be forgiven for thinking that many of the houses—certainly in certain parts of central London—were bought but not lived in. In fact, I understand that that rate has gone down; about 2% of all housing in London is not lived in. However, affordable starter homes, particularly for those in the age group that has found it difficult to get on the housing ladder, are a very good way forward.
My Lords, could my noble friend take account of the question that was asked by the noble Lord, Lord Green, on the need for statistics to be published that give us an indication of the increased demand arising from immigration? Is this not something that the Government should tackle?
Modern Slavery Act 2015
My Lords, we will be bringing Section 54 of the Modern Slavery Act into force later this week. Many businesses called for this provision, and we consulted on a turnover threshold and involved business in drafting associated guidance. The Government are confident that businesses will be ready. We have included a transition provision so that organisations will have time to digest the guidance before the first statements are due on 31 March 2016.
I thank the Minister for that reply. It was disappointing to read in last week’s debate that the Government now have no intention of launching an online central repository for the annual slavery and human trafficking statements but are hoping that an external provider will fulfil this role. Can the Minister confirm that this is the case and, if so, outline what the Government are doing to encourage an external provider to come forward, what guidelines and assistance will be provided to the external provider and whether, in the future, the Government plan to analyse on an annual basis information submitted via these statements?
When we had the debate on the regulations, the noble Lord, Lord Alton, raised this issue. I am confident that we will have an online repository in place. I totally agree with the noble Baroness that it is very important. Following the consultation, one of the consequences of setting the threshold at the lower end of the spectrum—at £36 million turnover—was to capture more companies in that. Therefore, it is a bit more of a challenge. However, we are considering a number of proposals that have been brought forward. I very much believe that, by the time this comes into force, we will have such a repository.
My Lords, are the Government aware that the majority of those who are working under slave conditions are working for private, family companies? It is essential that there is a way of finding out how young women in particular are driven into slavery without any human rights being respected.
I think that is right. There are two measures involved here. First, the new Immigration Bill will have a big focus on labour market enforcement, which will help in that regard. Also, if a private, family business has a turnover above £36 million, they will have to produce a statement saying what steps they are taking to eradicate modern-day slavery from their supply chain. These are all steps down the line. However, essentially, we need to also encourage more people who are victims to come forward and identify those employers so that they can be prosecuted.
My Lords, do the Government share my concern that, despite the Modern Slavery Act, Eurostar has still not put in place a system which ensures that unaccompanied children are escorted to and from their trains and are supervised during the journey? Is not the absence of such basic safeguards putting children at unnecessary risk from child trafficking?
I am certainly very happy to look into that further, if that is the case. Additional guidance has now been provided to Border Force enforcement officers to spot children coming into the country unaccompanied, or, for that matter, leaving the country. This is something that we need to look at very carefully. I will look into it and get back to her.
My Lords, last Monday, the Minister said that he believed that “imminently, if not already” a question relating to the compliance of supply chains under the Act in respect of its modern slavery conditions was being inserted into the cross-government procurement policy. Could the Minister now say definitely what the position is in this regard? Could he say whether the Government will produce regular statements, in line with the requirements for the private sector, on the steps they have taken to ensure that their own business and supply chains are slavery-free, and, if so, will it be a cross-government statement or will there be separate departmental statements?
There is an interdepartmental ministerial group on modern slavery, which meets and publishes quarterly reports—it published one just last week on its work on supply chains. The Home Office as it should, is ensuring that we lead by example across government in respect of supply chains. Of course, that question is going to be there in the checklist. It is there in a lot of cases already in departments, where they have obligations under human rights legislation to ensure that they check the status of people who are in their supply chain. We will continue to monitor that, and we will certainly continue to report on it.
My Lords, there is some research saying that nearly 50% of children who are going on to detention centres go missing within their first 48 hours within Europe. What are the Government doing to ensure that these children are not being trafficked?
I had not seen a report of that, but if the noble Baroness would draw it to my attention, I will certainly make sure that we follow up on it, because that is a crucial gap in the system if that is happening. I am sure that that is not happening in UK detention centres, but if she shares the information, I will ensure that it is thoroughly investigated.
The noble Lord’s own department has produced figures estimating that there are up to 13,000 victims of modern slavery in the country. Given the enormous workload in terms of enforcement, in terms of the work with private businesses and in terms of the work internationally in trying to reduce the flow of trafficked people into this country, is the Minister satisfied that, with a team of staff that is only going to reach seven, the Anti-slavery Commissioner has the resources necessary to carry out this important work?
The noble Lord will be aware that, last week, the Anti-slavery Commissioner produced his report—his strategy document—as he was required to do under the Act. He has set a very clear measure as to where he is focusing: the identification of victims, and the need to encourage prosecutions. As a former police officer, he is well placed to do that. In a lot of cases, it is not a resource question; it is an issue of will and intelligence to identify those people who are at risk to ensure that the perpetrators are tackled and those who are victims are helped.
European Union Referendum Bill
Order of Consideration Motion
That it be an instruction to the Committee of the Whole House to which the European Union Referendum Bill has been committed that they consider the bill in the following order:
Clauses 1 and 2, Clause 5, Clause 3, Schedules 1 to 3, Clause 4, Clauses 6 to 12, Title.
Childcare Bill [HL]
A privilege amendment was made.
My Lords, I would like to take this opportunity to express my thanks to noble Lords for their support, challenge and dedication throughout the passage of this Bill. I very much appreciate the expertise that Peers have brought to the House on the complex subject of childcare, and I hope noble Lords feel that I have listened to concerns raised and addressed them appropriately. I particularly would like to thank the noble Baroness, Lady Jones, who has provided strong and heartfelt opposition on this Bill, and I greatly appreciated working with her on the education brief over the last Parliament. I will miss her on the education brief, and I wish her well with her new one. I will, of course, be keeping noble Lords up to date with the progress of the Bill, and am committed to holding a meeting on the funding review following the spending review. I look forward to working with noble Lords on the Education and Adoption Bill.
My Lords, I thank the Minister for making time available during the passage of the Bill and outside of the official process to meet with noble Lords on a number of occasions. It was very much appreciated and helped to clarify a great many issues. I also thank the Bill team for their sterling efforts in producing a Bill at short notice and in difficult circumstances. The Bill is leaving this place in a better shape than when it arrived, suitably amended but with many questions still unanswered, so I look forward to hearing about further positive progress when the Bill is considered in the Commons and in other meetings that the Minister may be organising, so that we can achieve our shared and important goal of increasing free childcare for working parents.
Bill passed and sent to the Commons.
Tax Credits (Income Thresholds and Determination of Rates) (Amendment) Regulations 2015
Motion to Approve
My Lords, I will come shortly to the Motion before the House today, but before I do, I should briefly address why the Motion is standing my name. In the past few days, we have seen unprecedented focus on the passage of secondary legislation through this House. The further the debate has evolved, the more it has taken on a new dimension—a debate concerning our responsibilities as a House and how we want to discharge them. While I will now turn to the substance of the instrument before us, I will later come on to the context for the decisions before us today.
The regulations before the House cannot be viewed in isolation. They were part of the Chancellor’s Budget in July and form part of our wider economic strategy and vision for the future of our country. In the last Parliament, we made significant progress: through a combination of savings and growth, the deficit halved as a share of GDP, investment in our schools and the NHS increased and more than 2 million jobs were created. But our deficit is still too high and our debt, as a share of GDP, is at the highest level since the late 1960s.
In the months leading up to the general election and in our manifesto, my party made it clear that reducing the deficit would involve difficult decisions, including finding savings of £12 billion from the welfare budget. The regulations that we debate today deliver no less than £4.4 billion of those savings next year alone. But these reforms are about more than just savings; they are about delivering a new settlement for working Britain—more people in work, with better wages, keeping more of the money that they earn. The quickest and surest way for people to feel secure and able to succeed is a good job that pays well.
This Government have created 1,000 jobs every single day since 2010—1,000 more people each day with the security of a job and a wage. We have raised the personal allowance so that people keep more of what they earn. By next April, more than 27 million basic rate taxpayers will be paying less tax, with a typical taxpayer benefiting by £825 per year. We will go on raising the personal allowance until it reaches £12,500, so that those on the national minimum wage will pay no income tax at all. We will introduce a national living wage, raising the minimum pay for a full-time worker by £900 from next April and by nearly £5,000 by 2020, benefiting 6 million people with the upward pressure that it will apply on wages. I am glad to say that more than 200 firms, including some of our biggest employers, have announced that they intend to pay staff at or above the national living wage before it comes into effect.
We are supporting working families with their childcare needs, too, as we have just heard. We have already brought in 15 hours of care for the most disadvantaged two year-olds and we are doubling free childcare for working families for three and four year-olds— worth around £5,000 per child per year. But if we are to deliver that settlement in a way that is sustainable, reform to our system of tax credits must play its part. We have a situation where too many families are on low pay, and so, to make ends meet, the state has had to top up those wages with tax credits.
Noble Lords should be aware that spending on tax credits has increased from £4 billion to £30 billion this year, trebling in real terms, while in-work poverty has risen by 20%. That cannot be the right long-term solution for the country. Change was necessary, and we began to do just that in the last Parliament. As a coalition Government, we started to bring the system back under control, reducing the number of families with children eligible for tax credits from nine out of 10 to six out of 10. If we are to meet our commitment to a new deal for working people, we must continue that process of reform.
Tax credits will remain an important part of our support for those on the lowest incomes. Five out of 10 families with children will still be eligible to receive them and we will still be spending the same amount on tax credits in real terms as the last Labour Government did in 2007-08. But the SI before us today will change their operation in several respects. First, it will reduce the threshold at which working tax credits begin to be withdrawn from £6,420 to £3,850. As we do so, we will protect those on the very lowest incomes, while continuing to bring the overall Bill down.
My Lords, I ask the noble Baroness to answer my question directly, and not give me a tangential answer. When the Prime Minister said at the last general election that an incoming Conservative Government would not cut tax credits—child tax credits—was he telling the truth or was he deliberately misleading the British people? Let me have a direct answer to my question.
My Lords, we were very clear in the general election and in our manifesto that we would be introducing welfare savings of £12 billion and that these would be directed at working-age benefits. What we also did at the same time was promise a package of measures to support working families—a new settlement for the people of this country, so that they would continue to be better off in work and would continue to prosper. That is what we were very clear about in the general election campaign. That is what we were elected to deliver for the people of this country.
Secondly, the SI before us will increase the taper rate from 41% to 48%. This will mean that the rate at which tax credits are withdrawn will increase, but we will do so in a measured way with a gradual taper, which will still ensure that those on tax credits who work more will always take more pay home. Finally, it will reduce the income rise disregard, the in-year increase to an individual’s pay that can take place before their tax credit reward is recalculated, from £5,000 to £2,500—bringing it to a 10th of the rate it stood at when we came to power in 2010.
A sustainable economy which reduces inequality and provides opportunity for all means making choices. There are no easy options, but what we try to do is carefully balance spending and taxation decisions so that the richest pay the most towards services that are so vital to everyone, and the climate is right for everyone to seize opportunities to get on and to be successful. The Government’s job is to manage that in the fairest way while delivering the most important thing of all for working people: economic security and sound public finances.
The Government believe that as part of the overall package of measures that support working people, these changes to tax credits are right. If we want people to earn more and to keep more of their own money, we simply cannot keep recycling their money through a system that subsidises low pay. That is the Government’s case for these changes. But with the amendments we are due to consider, there are broader questions at stake, too, about our role in scrutinising secondary legislation and about the financial primacy of the other place.
I know that Members of this House on all Benches take their responsibilities very seriously and are committed to ensuring that the House fulfils its proper role, so let me be very clear. We as a Government do not support any of the amendments tabled to the Motion in my name, but I am also clear that the approach the right reverend Prelate takes in his amendment, by inviting the House to put on the record its concerns about our policy and calling on the Government to address them without challenging the clear and unequivocal decision made in the other place, is entirely in line with the long-standing traditions of your Lordships’ House.
The other three amendments take us into quite different and uncharted territory. All three, in the names of the noble Baronesses, Lady Manzoor, Lady Meacher and Lady Hollis, if agreed to, would mean that this House has withheld its approval of the statutory instrument. That would stand in direct contrast to the elected House of Commons, which has not only approved the instrument but reaffirmed its view on Division only last week. It would have the practical effect of preventing the implementation of a policy that will deliver £4.4 billion of savings to the Exchequer next year—a central plank of the Government’s fiscal policy as well as its welfare policy. It is a step that would challenge the primacy of the other place on financial matters.
I have been to see the Chancellor this morning at No. 11, and I can confirm that he will listen very carefully were the House to express its concern in the way that it is precedented for us to do so, and that is on the right reverend Prelate’s amendment. But this House will be able to express a view on that amendment only if the other three amendments on the Order Paper are rejected or withdrawn.
My Lords, the Leader of the House has given us the impression that there is some convention that prevents your Lordships’ House from voting on these amendments. I would ask her to look again at the report of the Joint Committee on Conventions entitled Conventions of the UK Parliament, which states clearly in paragraphs 227 and 228 that it is perfectly in order for your Lordships’ House to take a view on a statutory instrument of this nature and so,
“we conclude that the House of Lords should not regularly reject Statutory Instruments, but that in exceptional circumstances it may be appropriate for it to do so … The Government appear to consider that any defeat of an SI by the Lords is a breach of convention. We disagree”.
Your Lordships’ House and the other place approved the recommendations of the Joint Committee. If the Chancellor had wished to introduce a tax credit amendment Bill, he could of course have used the usual procedure and avoided the embarrassing situation that the Leader of the House is now outlining. He took a short cut to avoid debate, and he has now got the consequences.
My Lords, let me be absolutely clear. Any of the amendments that have been put down today, with the exception of that in the name of the right reverend Prelate, would mean that this House has not approved a statutory instrument which the House of Commons has approved and voted on three times. As I have already said, we would be challenging the primacy of the House of Commons on financial matters.
The right reverend Prelate’s amendment gives this House the opportunity to express its view in a way that accords with our conventions. The noble Lord, Lord Tyler, made various specific references. I say to him and to the House as a whole that the parent Act from which this statutory instrument is derived, which was brought forward by the Labour Government, made clear that amendments to tax credits should be introduced via secondary legislation. We are following that procedure. Indeed, after the Tax Credits Act was passed, other amendments to it were brought forward in the last Parliament, while we were in coalition government, exactly in the way that was expected.
The key fact is that there are conventions that apply to secondary legislation. The noble Lord, Lord Tyler, is right to refer to the Joint Committee’s report. But in addition to what he quotes, that report also made it clear that,
“opposition parties should not use their numbers in the House of Lords to defeat an SI simply because they disagree with it”.
The key point I make to the noble Lord is that we are in an unprecedented situation, because the kind of primary legislation conventions that he refers to that allow the other House to enter into a dialogue with us just do not occur in secondary legislation.
We have a choice. We must choose whether to accept or reject this statutory instrument. Right now, it is absolutely clear that if we withhold our approval for this statutory instrument, we will be in direct conflict with the House of Commons.
No, I do not accept what the noble Lord says. As I have already said, those amendments withhold this House’s agreement—its approval—from a statutory instrument that has already been approved by the House of Commons. They withhold this House’s approval from something that has already been approved by the other place. The noble Lord makes the perfectly fair point that this House has the power to defeat secondary legislation, but it does so very rarely. It has done so only five times since the Second World War, and it has never done so on financial secondary legislation. Although noble Lords have been able to table today’s amendments, it is up to us as a House to consider whether we regard the financial primacy of the House of Commons as vital to the continuing constitution of this country and the way in which Parliament operates. That is the important point here.
The leader of the Liberal party described this House as,
“a system which is rotten to the core and allows unelected, unaccountable people to think they are above the law”.
Does my noble friend think that the Liberals wish us to vote for their Motion in order to prove their leader right?
What I do know, and I really feel this sincerely, is that noble Lords take their responsibilities very seriously. We are in an unprecedented situation. We either believe in the financial primacy of the other place, as has been in place for well over 300 years, or we do not.
There is a way for this House to express its view on the policy. It would be absolutely within this House’s proper function and responsibility to do that by supporting the right reverend Prelate’s amendment should it choose to. However, if the House decides to accept any of the other amendments we will be withholding this House’s approval for something that the other place has already approved.
I think I understood the noble Baroness correctly when she said a few moments ago that she accepted that there were circumstances in which this House could withhold approval of a statutory instrument. However, she said that that should not be on the grounds simply because this House disagrees with it—I think I am quoting her directly. Can she therefore say in what circumstances she thinks it appropriate for this House to withhold such approval?
When I quoted that from the Joint Committee on Conventions’ report, the point I tried to emphasise was that it is rare for this House to disagree to any piece of secondary legislation. The Joint Committee made it clear that, because it is very rare and because the Government are rarely in a majority in this House, it would be inappropriate for this House to vote down a piece of secondary legislation just because the opposition parties have the numbers to do so and do not approve of that measure. My point is that this situation invokes something that we have not seen before: noble Lords have tabled amendments that would prevent this piece of secondary legislation leaving this House and being approved. If the House were to do that—if it were to completely reject it outright or to withhold it—we would be challenging the financial primacy of the other place.
I am not defining them in such a way because they have not been defined in such a way by this House. They are amendments that are quite unique. They mean that this House will start setting conditions and making demands on the Government, and acquiring for itself powers as far as how it considers a matter that has already been decided and approved by the other place—a statutory instrument to the value of £4.4 billion. That is what makes this situation so different: we are challenging the primacy of the other place on a matter of finance.
Amendment to the Motion
My Lords, there has been a lot of discussion in the run-up to this debate about the role of this House in debating statutory instruments. I know that many noble Lords will wish to pick up on the constitutional role of the House. We have already started to see some of those points being made.
I do not discount the strength of feeling on the issue of whether this House should seek to reject the views of the elected Commons, but I want to be clear about what we are talking about today. We are talking about a measure that, according to the expert analysis of the Institute of Fiscal Studies, will hit 3 million low-income working families. These are people doing the right thing: going out to work and trying to make ends meet. They are exactly the kind of people whom the Government have said they want to help. Yet this change will have a seriously damaging impact on their ability to keep their heads above water. These families will, according to the IFS, lose an average of around £1,000 a year. For many people on low incomes, that will mean the difference between being able to continue to pay to heat their homes, pay their rent and feed their families and not being able to do so. In total, 4.9 million children will be directly affected by the change. Almost a quarter of single parents living in the UK will see their incomes cut.
Yet the Government continue to ignore the overwhelming consensus among charities such as the Children’s Society and Gingerbread—I could name many others, including taxation experts and even their own Children’s Commissioner—that these changes need to be reconsidered. It is no surprise that the Low Incomes Tax Reform Group—by no means a leftie organisation—has said that the impact of these changes,
“on the majority of tax credit claimants will be devastating”.
The problems with the Government’s proposals go far wider than those directly affected. They will also have a huge impact on the important principle—that this Government claim to support—that work should always pay more than a life on benefits. Evidence from the Social Market Foundation suggests that someone earning the average wage for those living in social housing of £8.08 an hour will see the benefits of earning wiped out almost entirely. Because of the way the so-called taper rate interacts with taper rates applied to other benefits including local Council Tax benefit, the marginal deduction rate—the rate at which benefits are withdrawn—will be 93%. That means that for every pound a person earns by going out to work—by taking on extra hours in order to improve their lives—they will keep only 7p.
Liberal Democrats in the coalition Government fought for universal credit. We fought alongside the Conservatives for the “make work pay” agenda. The Government’s proposals run utterly counter to this philosophy. Such a fundamental change in the Government’s approach should be challenged every step of the way.
My Lords, 104 years ago, a Liberal Government decided that this House should not have jurisdiction in budgetary matters. The noble Baroness speaks for a party which has a disproportionate strength in this House. She and her party believe in proportion. They also believe in the supremacy of the House of Commons. How does she square the various points I have just made with the speech that she is making and the vote that she is seeking tonight?
I thank the noble Lord for that intervention. I will come to that point and address it in the best way that I can.
I will pick up briefly on the speech made in moving the Government’s Motion by the Leader of the House. I do not discount her views but the overwhelming evidence is that these measures will do real damage.
However, I want to express my disappointment that this debate is not being led by the noble Lord, Lord O’Neill. This set of regulations relates to measures brought forward by the Treasury. It is right that such regulations should be promoted and defended by the Minister from the department responsible, whenever possible. As I said at the start of my speech, while much has been made of the constitutional issues surrounding the Motion, it is ultimately about the impact of the measures on the families affected. The Leader of the House does an excellent job in representing this House outside the Chamber, and in defending the Government’s position on the role of the House inside it, but this Motion is not about those things. It is about tax credit changes and it is reasonable for the House to expect the Treasury Minister to answer its concerns.
Fatal Motions on regulations should be used incredibly sparingly. I wish that we were not in this position but I cannot think of a better reason for this House to use such an option than the lives of 4.9 million children and the parents who go out to work to support them. I have tabled this fatal Motion for a simple reason: when all is said and done, and when the constitutional debate about the role of this House is over, I want to be able to go home this evening knowing that I have done everything I could to stop this wrong-headed and ill-thought through legislation, which will have such a damaging and devastating impact on millions of people’s lives.
We have a duty in this House to consider our constitutional role but we also have a duty to consider those affected by the decisions we make and the votes we cast. Were there another way for this House to reject this proposal and send it back to the Commons to reconsider, I would be all for doing so. Some people have said to me that this is a budgetary measure—indeed, the Leader of the House said so, too—and therefore not within our competence. Were that true, the Government had an opportunity to put these changes into the Finance Bill rather than to use an affirmative statutory instrument, a measure that this House is explicitly asked to consider and approve by the primary legislation from which it stems.
I have been told by many that a fatal Motion is too blunt an instrument. If that were the case then the Government could have placed this measure in the Welfare Reform and Work Bill, which is coming to your Lordships’ House in due course, giving this House the opportunity to amend the proposal and suggest alternatives, but they have chosen not to pursue that course either. So we are left with a statutory instrument, a tool designed for minor changes to processes and administration, being used to implement a substantial change in policy that will affect millions of people’s livelihoods. That is not my decision but I hope that we will do everything we can to stop it.
I want to turn briefly to the other Motions in the names of the noble Baronesses, Lady Meacher and Lady Hollis, and the right reverend Prelate. I am sure that they will speak on their own Motions in detail, so I do not want to dwell on them. However, to be clear, I support all those proposals. It is right that the Government should delay these measures to properly respond to the serious challenges put by the IFS, as the noble Baroness, Lady Meacher, suggests. It is also right that the Government should not make these changes unless there is transitional protection, as the noble Baroness, Lady Hollis, proposes. Fundamentally, however, these are sticking plasters on the wound. Transitional protection will help many of those who will see an immediate cut to their tax credits next April but would do nothing for those who become eligible for tax credits this time next year. If the Government succeed in meeting their employment target then we will see more people in part-time work, which is a great thing, but these people will need tax credits. If they meet their noble and worthy aim of increasing the number of disabled people in employment, that is likely to mean more people in flexible working arrangements whose income may need to be supplemented by tax credits. These people would not be protected by transitional protection. That is why, although I support and will vote for the amendment in the name of the noble Baroness, Lady Hollis, I believe that we need to go further.
I have no doubt that this House could spend many hours debating our constitutional role. I and all those on these Benches—
Does the noble Baroness not acknowledge that there is at least a certain irony in that, for five of the last five and a half years, her party gave strong support to the Cameron-Osborne Government? Now that Messrs Cameron and Osborne come forward with a proposal that they do not like, they are suggesting that the right course of action is a somersault. Would it not have been a lot easier, and maybe a lot more principled, if she and her colleagues had decided to bring down this Government a lot earlier?
I thank the noble Lord for his intervention. He is right to raise that point and quite right to ask that question. As I understand it very clearly, we did veto these proposals.
I have no doubt that this House could spend many hours debating our constitutional role. I, and all those on these Benches, take our role very seriously and will continue to push for reform that means that this House has real accountability to the electorate. But this debate is not about that. This is about putting to rest an issue which is of immense—
Will the noble Baroness just reflect on the fact that, in terms of accountability to the electorate on this matter, people who have stood for public office and have been accepted and elected to another place have the mandate? They, and only they, have that mandate on this subject. Although we in this House work very hard in order to reflect our views, so that the other place can take advantage of them, the noble Baroness is going just a bit too far in assuming that she has a mandate.
I do assume that this House has a mandate. We are back to the constitutional role of this House.
I will continue, because some answers have been given to that, and more will be given as we talk more about the role of this House. We want to put to rest an issue that is of immense concern to millions of people up and down the country. If the Government wish to withdraw their regulations, we can avoid this impasse. Sadly, I do not think that the Minister—for whom I have the utmost respect—is empowered to make such a choice. It is therefore right that this House perform its duty and stand up against a poor decision made in the Commons. What the Government do after that is up to them. But I and my colleagues are clear: it is time for this Government to think again. I beg to move.
My Lords, I rise to speak to the amendment that stands in my name on the Order Paper, which would defer consideration of the tax credit regulations. I pay tribute to other noble Lords who have tabled amendments to these regulations today, but I should explain to the House that I told the noble Baroness, Lady Manzoor, that I had come to a settled view that tabling a fatal amendment in this House was a step too far. The purpose of this amendment is to support the democratic process and to avoid impeding it.
The House of Commons will have a cross-party debate and a vote on these issues on Thursday. I understand that at least eight Conservative MPs have put their names to Thursday’s Motion. It seems, therefore, that the Government no longer have a majority in the House of Commons for the planned cuts as they stand. If we approve the Regulations today, the Commons debate will have been pre-empted. This would undermine the democratic process. If, however, the elected House supports the Government—contrary to my expectations, I have to say—and the Government present a report to your Lordships’ House responding to the Institute for Fiscal Studies analysis, I am sure that I and others will support these Regulations. This will not necessarily be because we agree with them—I most certainly do not—but because we respect the democratic process and the limits of the duties of this wonderful House.
Before she does, may I just ask the noble Baroness a question arising from her amendment? Does she agree that if the Government had, as they should have done, tabled these proposals as part of the Finance Bill, they would have been amendable in the other place and we would not be having this discussion today? Does she agree that the reason the Government are indulging in this sharp practice is that they know full well that, for any reasonable person in either House, these proposals are unacceptable and they would have been defeated in the other place because quite a few Conservative Members of Parliament would have voted against them?
I was talking to Jacob Rees-Mogg MP the other day and he said to me that the trouble is that the House of Commons deals with Statutory Instruments extremely badly. Our difficulty is that, that being the case, they depend on this House to do this very detailed work, on which your Lordships do an extremely good job. In response to the noble Lord, Lord Forsyth, the point is that the cross-party debate on Thursday is not a legislative debate. It would have been right for these matters to have been incorporated in full in a piece of legislation, which would then have been open to proper debate and amendment in the normal way.
To go back to my point, if we approve the Regulations today we are actually undermining the democratic process. If, however, the elected House supports the Government, as I said before, I know that this House will abide by our conventions and vote these Regulations through whatever our personal views of them. I do not personally approve of them, but I would be in the Lobby with the Government. The duty of your Lordships’ House, as we know, is to enable Governments to think again if, in our professional judgment, they are making a grave mistake, and to allow the elected House to hold the Government to account. Noble Lords can imagine that I do not take this action lightly. I am acutely conscious of the threats made by the Government to destroy this House, one way or another, if we proceed. I do not enjoy that kind of pressure.
I will come back to the constitutional issue, but at this point I want to thank the IFS, the Children’s Society and others for their valuable help. Why are these Regulations so serious? The Leader of the House has already made the point that tax credits will be withdrawn from an income of £74 a week, £3 above the jobseeker’s allowance level, whereas in the past the withdrawal has occurred from a weekly income of £123 a week, which is very different. Also, of course, the taper rate—the percentage of every pound earned that will be withdrawn from tax credits— is going up from 41% to 48%. Very low-income working families—the lowest-income families, as I understand it—stand to lose more than £20 a week. For one of us, this can mean a meal in a restaurant. For a poor working family it can mean a pair of shoes for a child who comes home from school crying because their toes are hurting in shoes that are too small, or money to feed the meter to keep the family warm.
The Government plan a four-year freeze on the private rent level covered by housing benefit, so as rents soar—and we know that, day by day, they soar—working families will have to pay more of their rent from a shrinking income. Damian Hinds, Treasury Minister, told me in person that he hopes that families will work more hours to compensate for the cuts they are facing, but many people cannot work more hours. A lady who has cancer and who is working all the hours she can contacted me—the treatment and her exhaustion mean that she cannot do more. The parent of a disabled child, who probably actually needs to be at home all the time, is working as many hours as possible but can earn very little. Indeed, our angelic army of carers of elderly and disabled relatives across our land will be penalised. Some of them will lose more than £40 a week. People with long-term conditions or in constant pain will be devastated by the waves of cuts, of which these regulations are just one. Self-employed people who voted Conservative in May, hoping for protection, but who may earn little or nothing for weeks at a time, will be among the biggest losers. The StepChange Debt Charity says that its clients on average will lose £139 a week, a staggering sum.
All those people have been supported by what I regard as the one-nation Tories of the past. The Prime Minister said in his speech to the Conservative conference:
“The British people … want a government that supports the vulnerable”,
and, he said,
“we will deliver”.
This amendment provides an opportunity for the Prime Minister to honour that pledge. He went on to say that the Conservatives are the, “party of working people”. No wonder dozens of Conservative Back-Benchers—perhaps most of them, in fact—want the Government to think again. They do not want the Prime Minister to have misled the people of Britain. It is this House’s duty to provide that time for a rethink by this Government.
I turn to the idea that the amendment is unconstitutional—and I shall keep this brief. The Cunningham joint committee, as has already been mentioned, made very clear the responsibilities of this House and that we should have unfettered freedom to vote on any subordinate legislation submitted for its consideration. The Motion was carried without a vote and is recorded in the Companion. In 1999, the former Conservative Leader of your Lordships’ House referred to a convention that the Opposition should not vote against the Government’s secondary legislation. The noble Lord, Lord Strathclyde, added:
“I declare this convention dead”.
Finally, I quote our highly esteemed Clerk of the Parliaments, who wrote a clarifying guidance note for the Cross-Benchers at my request. He said: “Procedurally, the Meacher-put Motion is entirely in order under the rules of the House. It is not a fatal Motion because it does not require a new statutory instrument to be laid and taken through both Houses. However, it does delay the approval of the statutory instrument, unlike an amendment which simply expresses regret while allowing the statutory instrument to be approved”.
I hope that the noble Lord, the Chief Whip, will forgive me for quoting him here. He urged me to exchange my amendment for a regret Motion. I said, “Oh, come on—that will have no effect at all”. He said, “Well, yes”. My apologies to the Chief Whip.
I am sorry that my conversation with the noble Baroness, Lady Meacher, has been quoted. That is not what I said. I made it quite clear to all who came to see me—they included all three protagonists in these debates—that the risk to this House was a constitutional one and that they ought to be aware that in my view to delay this Motion, as well as to vote it down, which is what the amendment proposed by the noble Baroness, Lady Manzoor, seeks to do, amounts to the same thing, and that the proper way in which to deal with something with which this House disagrees is to move a regret Motion. It was that to which I referred when I spoke to the noble Baroness, Lady Meacher.
I think I owe my apologies to the noble Lord. According to the Library just over two fatal and three non-fatal Motions were voted on in each year between 1999 and 2012, resulting in 17 defeats. There is nothing odd or unconstitutional about this Motion. According to the Clerk’s office there is no reason why we should not table a delaying amendment.
None of those Motions was on the Budget. That is the constraint on this House as I understand it. Had these provisions been in the Budget they would have gone through the normal procedures and this House would have had a different role. That is the crucial point—here we are dealing with a statutory instrument.
There are four Motions on the Order Paper today. My Motion clearly leaves the matter in the hands of the elected House. The justification for a delay is that the House of Commons will have a full-day debate and a vote on these issues on Thursday. I understand that dozens of Conservative Back-Benchers are urging the Chancellor to adjust the tax credit reforms to protect the most vulnerable. Yes, there have been three votes on tax credits in the House of Commons, won by the Government. However, Conservative MPs—not me—say they did not have the information they needed when they voted for the cuts. I hear that many of them are now livid about this. The third vote was last Tuesday. Conservative MPs made it clear they wanted adjustments to the tax credit cuts but they kept their voting powder dry anticipating the vote next Thursday.
It is extraordinary that at least eight Conservative MPs—
I apologise to the noble Lord, whom I greatly respect, but I did not imply that the Conservative MPs had voted against the Government. I was saying quite clearly that they had not voted for an Opposition Motion; they kept their voting powder dry because they knew that a cross-party Motion was being considered on Thursday with a full day for debate and a vote. Even with a majority of 13 after the death of my former husband last week, this wipes out that majority.
I am a little puzzled about the powers the noble Baroness has to understand what Members of Parliament might do next week as opposed to what they did do last week. Are we to guess? I might say that I understand that the Labour Party in the other place is going to vote for the regulations next week. I do not know that, of course, and she does not know what she has just said.
My Lords, eight Conservative MPs—some of them senior MPs; former Cabinet Ministers, indeed—have put their names to a cross-party Motion disagreeing with the Government or seeking information that the Government will oppose. The Government majority is 13, following the death of my former husband last week. I am quoting only what I know. I am not quoting what I do not know. I agree that that is extremely important.
I emphasise again that the justification for this amendment is that there will be an opportunity for the elected House to hold the Government to account. It will not be a legislative vote, and that is why this vote is very important. By supporting the Motion this House will support the democratic process. It will leave the situation open. It will leave this set of regulations on the Order Paper—unlike a fatal Motion—and then the Government can listen to the elected House. I am not asking the Government to listen to this House.
If I understand her correctly, the noble Baroness is saying that a significant number of Conservative people might support this Motion. This Motion will have no legislative effect and the legislation will continue. What is happening here is of a different order.
That is exactly the point I just made. The important point is that if we pass these regulations the debate in the House of Commons—the elected House—will be an irrelevance. The Government can say, “We have got our regulations. We can press ahead with our cuts. The elected House can say what it likes, we will not have to listen to it”. I am not saying they will say that, but they certainly could say that. The important point is that we need to protect the democratic process. The only hope for the Government is that the bullying tactics may persuade Conservative MPs and our colleagues to avoid defeat. At the moment, the situation in the elected House is that eight Conservative MPs have put their names to a Motion which means that the Conservative Government do not have a majority in the other House.
My Lords, does my noble friend not find it interesting that the Government are currently taking a Bill through this House that will remove the democratic choice of local people about whether their local school should become an academy? Indeed, during the introduction of academies, academies were taken out of the responsibility of local authorities and placed with the Secretary of State. In this Bill, in future local people will not be able to vote on whether they wish to have their local school turned into an academy. This is a very substantial change because, as I understand it, they are so concerned that the education of our children is so important that no coasting school should be allowed to continue. Therefore, they will take all means possible to ensure that our children get the best education possible. In this case, my noble friend is not asking for that change. She is asking merely for a delay so that the other House can think again. That is a much more minor change to make. Does she agree?
I thank my noble friend Lord Listowel. I should mention that a petition signed by 270,000 members of the public over the weekend was handed to me this morning. There is huge fear and anger about these cuts. I am very grateful for the support of the public and the media—believe it or not—and their appreciation of the efforts in this House, although I personally never sought any of it. That is a rather important point to make: I am really not here to grandstand.
I support the Government’s raising of the tax threshold, the increase in the minimum wage and free childcare for three and four year-olds, but those measures will not protect the most vulnerable. The Institute for Fiscal Studies makes clear in its analysis that the biggest losers from the 2015-16 tax and benefit changes, even by 2020, will be the poorest working families. The very poor will hardly gain at all from the increase in the minimum wage or the national living wage. Very poor self-employed people will not gain at all from the increase in the minimum wage. I have had a pile of emails from self-employed very poor people. The biggest gainers from the increase in the income tax threshold and the higher rate threshold will be those earning £43,000 to £121,000 per year. We seem to have a massive redistribution of income here, but it seems to be going the wrong way.
The Government have for five years urged unemployed people to take a job. The sanctions regime has been extremely brutal, but having said that, it is, of course, much better for people to work, if they can, than to remain unemployed. The main justification for the Government’s policy has been that work pays. Yes, and working tax credits achieved that objective. Working tax credits prevented unemployment soaring in the recent recession.
Finally, I repeat that the aim of this amendment is to support the democratic process to enable the elected House to hold the Government to account. That is the duty of this House. If we cannot do that, we might as well not exist.
My Lords, on the amendment standing in my name, two issues concern this House. The first is whether this amendment improperly challenges Commons financial privilege—a constitutional issue. The second is whether this amendment improperly challenges Government cuts to welfare—the policy issue.
Let me address the first, on constitutional propriety. As the noble Baroness, Lady Stowell, said, when we have framework Bills on childcare and social security, all the serious detailed work is done, rightly, by regulations—that is, SIs. We can amend Bills; we cannot amend SIs, yet often we do not know the Government’s intent until we see the SI itself. We then face either a draconian fatal Motion or a lamenting regret Motion that changes nothing, so instead this is a delaying amendment. It is not fatal, as the Government know. It was drafted with the help of the clerks and it calls for a scheme of transitional protection before the House further considers the SI. Essentially, the cuts would apply to new claimants only. Frankly, that new SI could be drafted in a week and implemented next April exactly as planned.
However, does it none the less break convention by trespassing on Commons financial privilege? No. The advice from the Clerk of the Parliaments—and he has seen and confirmed my words on the specific issue—is that Commons financial privilege is exercised in two ways. We can amend an education Bill, say, but the Commons can reject our amendment if the Speaker certifies that the Commons has financial privilege on this issue. Secondly, says the Clerk, the Commons can pass a supply or money Bill, which we cannot amend. He goes on: financial privilege does not extend to statutory instruments—it simply does not. Nor are statutory instruments covered by the Salisbury/Addison convention. The more so, I would add, because the Prime Minister ruled them out himself, and he did because these layered elements to tax credits are all affected by the taper and the cuts.
As has been said, if the Government wanted financial privilege, these cuts should be in a money Bill; they are not. If they wanted the right to overturn them on the grounds of financial privilege, they could be introduced in the welfare reform Bill on its way here; they did not. So why now should we be expected to treat this SI as financially privileged when the Government, who could have made it so, chose not to do so? It is not a constitutional crisis. That is a fig-leaf possibly disguising tensions in the Commons between members of the Government. We can be supportive of the Government and give them what they did not ask for—financial privilege—or we can be supportive instead of those 3 million families facing letters at Christmas telling them that on average they will lose up to around £1,300 a year, a letter that will take away 10% of their income on average. That is our choice. Those families believed us when we all said that work was the best route out of poverty and that work would always pay. They believed the Prime Minister when he promised that tax credits—and they are one package—would not be touched.
But why do people need tax credits? There is a lot of misunderstanding about this. If the House will allow me, consider two women in a call centre: one is single, working 35 hours a week, who from April earns £13,000 a year for herself, and the other, a deserted mother with two young children, managing 25 hours a week, earns £9,000 a year for the three of them. The Government are completely right that we should certainly not subsidise employers’ low pay, but no employer could pay the deserted mother twice as much per hour as the single woman on the next phone in the call centre to make up for her family’s circumstances. The employer cannot do that and it is not reasonable to ask it to do so. That is the job of tax credits. They reflect family circumstances, which an employer cannot reasonably do.
In 1997, some 43% of single parents worked. That figure is now 65%—a 50% increase—partly because tax credits made work pay. That was our contract with the working mother, and she has done everything that we asked. Now, we will send her a letter at Christmas telling her that we are taking away some £1,300. Her life is hard. She needs financial stability in which to bring up her children. She needs transitional protection, so that the cuts affect only new claimants who have not built their lives around the protection that tax credits currently offer.
National newspapers from the Daily Telegraph to the Sun are asking the Government to think again before those letters arrive at Christmas, as are the think tanks. The IFS says that the Treasury’s claims are “arithmetically impossible”, yet those letters will still arrive at Christmas. Members of the Conservative Party, including Members of this House, have expressed their disquiet as the cuts are too hard and being made too fast, yet those letters will still arrive at Christmas. We may be told—perhaps, among others, by the noble Lord, Lord Butler, who has gone on record as saying this—that the Commons has made its position clear three times: when it passed the Budget, then with this statutory instrument, and again in last week’s general debate on tax credits. However, is that right? What happens when the Commons has, in my view, made its decision based on incomplete information, some of which is only now becoming available?
The Government insist that there is no alternative to these cuts, which on average will take £1,300 from 3 million poor families. However, there is an alternative. We can and should offer transitional protection to families who currently count on tax credits. They include single parents, the self-employed—whose median wage, incidentally, is £10,000 a year—families with disabled children and carers. We could protect them but not new claimants and those newly on universal credit.
You would not know this from the impact analysis—which, I have to say, contains elements of neither impact nor analysis—but I am confident that the Government do not need to make these specific cuts to make their welfare savings, which they have authority to do. Why is that and how would that be? I have two major points to make. The first is that they will make their savings from the additional revenues that return to government from the very welcome rise in the national living wage. The Library has calculated for me that an increase of three-quarters of a billion pounds—£763 million—for every 50p rise will go back to the Government, plus of course there will be the ratchet effect of differentials, which we cannot calculate. By year two, the Government will make savings on that alone of £2 billion; by year three, it will probably be £3 billion.
Secondly—I do not think that this was mentioned at any point in the Commons debates, although, to me, it is crucial—those cuts will also kick in as families move over to universal credit, as I am sure the noble Lord, Lord Freud, will confirm. The National Audit Office says that by the end of 2019 only 9%—fewer than one in 10—of existing tax credit recipients will still be on tax credits. Some will no longer need them, because, say, they may have a son who has left home; the rest of the claimants should be on universal credit and the Government will get their full savings from them. The impact analysis chirrups happily that its statutory instrument cuts will put tax credits on a “more sustainable footing”. Quite, as tax credits will have largely disappeared.
Some of these data that I would like to have used more robustly the Government do not collect, but over the next four years these savings to government from the rise in wages, the move to universal credit and the natural churn of claimants should, I estimate, more than match the savings that HMT claims it needs from these specific tax credit cuts to work thresholds and the taper. If so, the Government can get their welfare savings. I am not talking about tax rates, pension relief or inheritance tax—the Government can get their welfare savings without these specific cuts.
I ask the House this: should not the Commons even have discussed this? Might it have made a difference to its position? Its Members have not discussed it so far, and so we do not know. They did not have that information. The impact analysis did not give them that information; some of it is only now coming out. It is reasonable that, as information comes through that challenges the original assertions, the Commons should be given a chance to think again in the light of that.
My amendment to the Motion is not fatal. It does not challenge the financial privilege of the Commons and it does not deny the Government their welfare savings. Instead, it delays this SI to ask the Government to provide transitional protection for existing families who are doing everything that we asked of them, who trusted the Prime Minister’s word that tax credits would not be cut and who trusted Parliament—us—when we said that we would make work pay.
What happens next? If the House were to support my amendment, the Government could come back quite quickly—I estimate within a week—with a new SI, if they chose, in which these regulations and cuts would apply only to new claimants. That is all. It is very simple: if the House agreed to that new SI, it would then go to the Commons, where it would be accepted or rejected. Theirs would, quite properly, be the final word, as our conventions demand. The Commons would have kept its supremacy, and that is right, but we would have kept faith with struggling families and perhaps restored some faith in Parliament.
Let the final words rest with what families themselves say as they face those Christmas letters. Angela from Stevenage says: “I already work 40 hours a week on minimum wage doing two jobs around my children. I cannot believe that this is actually going to happen. I am terrified. We are not scroungers. We work unbelievably hard just to keep going and, once again, we are being punished for trying to earn a living wage”. She will lose £1,643 a year after she gets that Christmas letter. Sian from Basingstoke writes: “My husband works full time as a firefighter. We have four children. We won’t survive”. In her Christmas letter, she stands to lose £2,914. Rachel, from Milton Keynes, says: “It probably means that, as parents, we will skip a few extra meals to ensure our children eat”. In her Christmas letter, she stands to lose £2,005.
Finally, we have Tony and Jacinta Goode, from my city of Norwich. He is in full-time work, earning above the living wage, and she is the carer of two substantially disabled children. They are exhausted. Their Christmas letter will tell them that they will lose £60 a week, or £3,120 a year. That is £3,120 from a family where he is in full-time work and she is caring for two disabled children. We do not need to do this to them.
Last Wednesday, at PMQs, the Prime Minister said:
“Let us make work pay”.—[Official Report, Commons, 21/10/15; col. 948.]
He is absolutely right, and my amendment to the Motion is in that spirit. It will protect deserted mothers and lone parents who want their children to grow up in a household where their parent works; carers who live out their lives in service to others and struggle to maintain a foothold in the labour market; working families—such as the Goodes, whom I mentioned—who exhaust themselves caring for disabled children; or the self-employed, who will, I really hope, help us build a more productive and entrepreneurial economy.
If we do not pass my amendment today, or even if we pass the Bishop’s regret Motion, this SI will become law tonight. Whatever the Commons decides on Thursday, the Chancellor then need do nothing at all, because the SI will have been banked as law. Is that what we want, or do we want to give the Commons a pause to think about this additional information on where the savings could fall, about the additional information that is coming through from the think tanks and so on and about the additional thoughts that members of the Conservative Party might now have in the light of their correspondence with their constituents?
I hope that I do not sound pious, but I think that this is about honouring our word—the Prime Minister’s word—that work must always pay. It is surely about respect for those who strive to do everything we ask of them, and now find themselves punished for doing what is right. It is about trust between Parliament and the people we serve.
My Lords, I deeply regret that the Government’s regulations lead me, and others in this House for whom politics is not a vocation, to be part of a debate with constitutional and political implications. I am of course aware of Her Majesty’s Government’s manifesto commitment to eradicate the deficit, including through reduced welfare payments, and of the studied lack of detail about how this was to be achieved. It is impossible to claim now that we should somehow have anticipated these proposals when they were not detailed. Indeed, we were assured that a sharing of the burden was appropriate and that work should pay.
My primary concern with these regulations is with their short-term impact on some of our poorest families. We have been encouraged to consider these measures as part of a package that includes increases in the minimum wage towards the national living wage, childcare provision and raising the income tax threshold. We are told that this is a five-year programme on a journey towards a higher-pay, lower-tax and lower-welfare economy. This argument will be scant consolation to the 3 million and more low and moderate-income working families who will see a very large reduction, as we have heard, in their tax credits from next April. To be assured that you will be better off in five years’ time will not help these families to pay the rent, or gas and electricity bills. The Government are boldly confident that this will be so within five years. Their confidence for the future sounds like extraordinary optimism today for the working families, including 4 million children who will pay such a huge price and bear such a heavy burden immediately on the introduction of these changes.
Of course, I welcome the pledge incrementally to increase the minimum wage, which will benefit some next year and might give small amelioration to those on the minimum wage, but only for them unless and until, as time passes, there might just be some knock-on, rollover impact on wage levels for those on a very modest wage, just above the present minimum. The likeliest knock-on effect in the short term will be indebtedness, which will have a negative effect on parents’ mental health and children’s education and future life chances.
In addition then to a sudden drop in income of up to 10%, many will face a marginal 80% hit on income whether from increased hours or a rise in wages; it will be even higher in some instances when other benefits are factored in. If that were a marginal tax rate, there would be howls of protest. What reward is that for those willing to work hard? It is all so grossly insensitive to the many parents who already work full-time or struggle to balance their work with childcare and other responsibilities in order to provide for their families’ financial and other needs.
While the increase in the minimum wage and the rise in the income tax threshold are being phased in over the years, the changes to the income thresholds for tax credit and the increase in the taper rate take immediate effect. Of course, employers should pay decently and not rely on the rest of us to subsidise their low rates of pay, but while they may expect to be rewarded for better practice with changes in company taxation, those receiving tax credits will bear the impact immediately—a carrot for some, a stick for others.
I say to the Government that these proposals are morally indefensible. It is clear to me and, I believe, many others, that these proposals blatantly threaten damage to the lives of millions of our fellow citizens. This must not be the way to achieve the Government’s goals at a cost to those who, if we believe the rhetoric, the Government intend to encourage and support. To many in my diocese and beyond, this seems punishing rather than encouragement. I hope that we can hear this afternoon an assurance, a commitment to consult and to listen and a willingness to revisit these proposals in the coming weeks.
The right reverend Prelate is speaking very movingly and rightly about the injustice and suffering caused by the passage of this statutory instrument unamended, but does he not feel in those circumstances that it is our duty not just to talk about it or even record our objections to it, but actually to do something to stop it?
I am grateful for that intervention. I believe that our first duty is to speak and in a variety of ways to act. That will involve, as many noble Lords know, the very many who participate in charitable organisations and support on the ground. I commit that those in my diocese will do our very best. I myself shall be listening to the rest of this debate before I determine how I shall vote on the amendments before us.
I return to those commitments that I asked the Government to make over the coming weeks. I ask the noble Baroness if she can make those commitments on behalf of the Government. During the past few days, I have wrestled long and hard with the question of how to vote and speak today. Partly the dilemma has been because of the anger, the party-political point scoring and the raising of the issues around constitutional matters. That has obscured what ought to be a measured and careful consideration as to the best interests of the poorest workers in our society.
I am appalled by the Government’s proposals. I emphatically did not table this amendment because of party-political pressures. I am aware of the conflicting views on constitutional matters. This amendment offers an alternative and an opportunity—whatever happens with the other three amendments—for this House clearly to register its disapproval of these proposals and its expectation that our reservations will be addressed. Your Lordships’ House must, in my judgment, make that clear. I will listen carefully to further contributions this afternoon and intend to vote with, at my heart, the interests of those who have most to lose through these regulations. Should other amendments fail or fall, then I present mine as a respectful but firm message to the Government that the regulations are not acceptable in their current form, and that significant work is required for us to be satisfied that the needs of those working for the lowest incomes will be met.
My Lords, we have just heard some very moving speeches on this matter. I have no doubt that, as the Leader of the House has said, the Chancellor of the Exchequer will consider these matters very carefully. I know that it is extremely difficult to analyse the precise effect of income tax or tax credit changes in individual circumstances. Your Lordships will remember that when Mr Gordon Brown, as Chancellor, thought to take out of the tax system the 10% tax band that had previously existed, finding out precisely who was affected and how they were affected turned out to be extremely difficult. I believe that there are difficulties in this connection also. It may well be that the information that arises in the course of the attempt to deliver this will show what in detail is required if changes should be made.
I am intending to deal only with the constitutional question as I see it. These draft regulations are made under the Tax Credits Act, which sets up mechanisms for the payment of tax credits of two types: children’s tax credits and working tax credits. The arrangements were under the control of the Board of Inland Revenue which was entitled under Section 2 to deduct the sums paid for tax credits from the income of the board raised by taxation. So it is perfectly clear that these tax credits are a charge on the taxes raised by the Board of Inland Revenue, as it was then. The details of the credits and the machinery necessary for their administration were set out in the later sections of the Act. Section 66 of the Act provides:
“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.
(2) Subsection (1) applies to … (a) regulations prescribing monetary amounts that are required to be reviewed under section 41”.
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. The Motions other than that in the name of the right reverend Primate—
The right reverend Prelate.
I am sorry, the right reverend Prelate. That was a bit of a promotion because we are in the presence of the two Primates. The Motions mark a refusal to accept a decision of the elected House on a matter of financial privilege as the final authority for it. That is what they amount to. It has to be noted, as I have said, that this is the privilege of the elected Chamber, not of the Government.
The amendment proposed by the right reverend Prelate—I shall try to get it right this time—is entirely in accordance with the arrangements of this House and with the financial privileges of the House of Commons. Therefore from the point of view of the powers of this House, it is by far the safest of the Motions that have been put forward. In light of what the Leader of the House said in opening, I believe that the Chancellor of the Exchequer is very open to considering the detail—
My Lords, does the noble and learned Lord not agree that the conventions to which he has referred, going back to the 17th century, were so uncertain that in 1908 the Conservative Party defeated Lloyd George’s People’s Budget in which he sought to give money to the poor people of this country? Does he also not agree that the 1911 Act set out a mechanism whereby the Speaker would certify that a money Bill was a money Bill, and that would remove from us our powers of consideration? Is he not going back to an argument that failed more than 100 years ago?
Not at all. 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 Democrats—I suppose they were the Liberal Party then, but the succession is probably allowable—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 is the arrangement that was proposed in the Tax Credits Act, which was passed by the Labour Government in 2002. It was thought to be the right way to do this particular thing, and the Chancellor of the Exchequer and the Government have followed that. It is not a necessary consequence that the Commons or the Government should use a different procedure in order to secure the financial privilege of the House of Commons. The procedure was laid down in the Tax Credits Act, which is the main statute on this matter. For the Government to do anything other than use that course would be offensive to the way in which the system was set up.
The Leader of the House mentioned the Chancellor of the Exchequer’s attitude to considering more detailed material when it becomes available. That is a considerable consolation to me in light of what the right reverend Prelate said. I believe the right reverend Prelate’s approach to be the safest way to secure what a number of your Lordships have asked for.
My Lords, I have several points to make about the substance of these regulations. First, this represents a lamentable example of non-evidence-based policy-making, the victims of which are going to suffer greatly. Secondly, the arguments used to justify the policy—by reference to other policy changes and to how people could or even should work harder—betray a lack of understanding of policy and of people’s lives.
In its letter to the Financial Secretary to the Treasury, the Social Security Advisory Committee criticised the “scant” evidence to support the policy changes. It thus encouraged the Government to make available to Parliament,
“more detailed information that clearly explains the changes and potential impacts to ensure that they can be subject to effective scrutiny”.
With due respect to the noble and learned Lord, Lord Mackay, SSAC clearly believed it possible to provide such information. Its advice was ignored, leading the Secondary Legislation Scrutiny Committee to observe that the explanatory memorandum laid in September “contained minimal information”.
Getting an impact assessment out of the Government has been like pulling teeth. That which finally emerged is a travesty; much of it simply reiterates repetitively the rationale behind the policy. It certainly does not provide the information about potential impacts that SSAC sought. There is no information on the impact on different groups affected, including the self-employed, who, as we have heard, cannot benefit from an increase in the minimum wage. The information about the impact on protected groups is simply laughable. When I asked in a Written Question,
“how many people in receipt of Carer’s Allowance are also in receipt of Working Tax Credit”,
and are therefore vulnerable, I was told that the information,
“could only be provided at disproportionate cost”.
I know that Carers UK is very worried about the likely impact on all carers receiving working tax credit.
In the letter accompanying the impact assessment the Chancellor excused the delay on the grounds that the Government do not usually publish an IA for statutory instruments of this kind. I found this statement very revealing. It suggests that the Government made no attempt to assess the impact for themselves before going ahead with such significant cuts and that they see an IA simply as a tick-box exercise to pacify pesky parliamentary committees. Surely, given the Prime Minister’s pledge at his party conference of an “all-out assault on poverty”, the Government would want to know the impact on poverty. But no: it was left to the Resolution Foundation to point out that it could mean an additional 200,000 children falling into poverty next year, rising to 600,000 by 2020 when other summer Budget measures have taken effect.
Surely a Government who have promised to apply the family test to every measure would want to know the impact on low-income families—a point made by Heidi Allen MP in her passionate maiden speech demolishing her own Government’s policy. Surely a Government who go on constantly about making work pay would want to know the impact on low-paid workers. But we had to look to the IFS for that. In effect, the Government appear to be contracting out to the voluntary sector genuine assessment of impact. Of course, that is assessment after, rather than as part of, the policy-making process. That is one reason why it is so important that your Lordships’ House asks the Government to think again in the light of the evidence that has emerged of the damaging impact that the cuts will have.
I am grateful to all organisations that have exposed how the overall policy package that the Government constantly cite does not amount to an adequate defence of the policy, particularly in the case of lone parents, who will be disproportionately affected, according to Gingerbread. A key reason why the overall policy package does not provide adequate protection is that with the exception of childcare, which applies to only a very limited age range, the other policies—the increase in the minimum wage, welcome as it is, and in personal tax allowances, which is less welcome because it is wasteful and poorly targeted—cannot take account of the presence of children, a point made by my noble friend Lady Hollis. All the talk about tax credits subsidising low pay ignores the fact that child tax credits were introduced primarily as a child poverty measure. Wages cannot take account of the presence of children. That was one reason why family allowances were originally introduced and why an increase in child benefit, which also helps families below the tax threshold and is currently frozen, would provide more effective mitigation than further increases in tax allowances.
Finally, according to the Health Secretary, the cuts are intended to send a “very important cultural signal” about hard work. Leaving aside his denigrating suggestion that receipt of tax credits is somehow incompatible with “independence, self-respect and dignity”, he does not appear to understand that reducing the income threshold and the universal credit work allowances while increasing the taper rate penalises what he calls “hard work”. Likewise, the Work and Pensions Secretary suggested that the problem can be solved if those hardest hit are encouraged to work a few extra hours. Even if extra hours were feasible and available, the gain from doing so will be reduced by the very changes that they are supposed to mitigate. As the Children’s Society points out, every extra £1 in wages will provide a net income increase of only 3p for those also in receipt of housing benefit and only 20p for those not. What about those with family responsibilities, particularly lone parents and carers, for whom working extra hours could impact negatively on their and their families’ lives?
It is our job to scrutinise legislation. This legislation does not stand up to scrutiny. The policy-making process from which it has emerged does not stand up to scrutiny. It is not noble Lords, or Government Ministers, who will bear the cost of this. It will be people like the low-paid worker who emailed me to say that he was very scared about how he will manage next year. Hundreds of thousands of children will be pushed into poverty. We have a duty to defend them, our fellow citizens.
My Lords, perhaps I may suggest, given the very large number of noble Lords who want to speak, that for the benefit of the House they keep their contributions brief and to the point, so that we can get as many people in as possible. Furthermore, if we can go around the House, as we do at Question Time, it will help create a sense of balance in our debate, which I am sure noble Lords will appreciate. I hope the right reverend Prelate will excuse me—because normally he would take precedence—but I have indicated to the noble Baroness, Lady Campbell of Surbiton, that she might speak next. I hope that he will understand why I wish to do so.
My Lords, as a Cross-Bencher in this House, I see it as my job to offer my best expertise and knowledge to help the Government understand the consequences of some of their legislation and statutory instruments. That is what I will now offer.
Working tax credits have provided an unprecedented and effective pathway into employment for disabled people who faced the greatest barriers to employment. Proposals to lower the threshold for working tax credits and accelerate the taper rate to 48p will dramatically reduce the incomes of disabled people in low-paid employment who, for reasons directly linked to their impairment, do not have the option to increase their working hours or to offset their losses. Disabled people—especially those with learning disabilities—are more likely to be in low-paid employment than non-disabled people.
I am not aware of an impact assessment that has evaluated this specific disability element. I fear that this cut will also disincentivise disabled people from taking the very difficult step off benefits and into work. There is little doubt that it will negatively impact on the Government’s other policy, which is to halve the disability employment gap. It does not make sense. Do not forget, either, that that gap is currently running at over 30%. Higher costs in health and social care are the inevitable result of unemployment among disabled people.
Furthermore, we cannot look at working tax credits in isolation. We are promised joined-up government but I am not aware of any cross-government analysis of the cumulative impact of this regulation on working disabled people or families with a disabled member. Where is the Department of Health? Many working disabled people affected by cuts to working tax credits are also suffering because of cuts to their social care support, the closure of the Independent Living Fund and the changes to Access to Work. In effect, the Government are making employment less likely for people with these support needs. I know that this is not their intention.
I hope that this little detail—this bit of reality and evidence—will help us to reflect. Maybe the Government will change their mind; I do not know. But I am deeply worried about the number of people who will effectively be hit by this provision, which will not deliver the Government’s own policy.
My Lords, I support the amendment to the Motion as tabled by the right reverend Prelate the Lord Bishop of Portsmouth, in the hope that it will indeed give space for further reflection and reconsideration of the tax credit proposals. I believe that it has the potential to do that.
First, I want to record my appreciation for the welcome rhetoric in recent months from members of the Government saying that employment, not least hard work, merits fair pay and some recognition in the national minimum wage. It is this, rather than buttressing from the state, that should provide the income of working people. It follows from this that rising wages and salaries will, of their own accord, not least from the Government’s own national living wage proposals, reduce the use of tax credits in due course without the introduction of the draft regulations before us.
The diocese which it is my calling and privilege to serve covers most of south London and east Surrey—I have the honour of several of your Lordships living within it. It is a large and populous area, encompassing significant pockets of urban deprivation alongside considerable wealth. The unsustainable cost pressures in the property rental market, as well as rapidly rising house prices, already threaten the balance of many communities. I fear that the introduction of these regulations will push a significant number of hard-working although low-earning families to breaking point. A reduction in the threshold for families’ earnings before credits are withdrawn from £6,420 to £3,850 is a very dramatic change, which will adversely affect all but the poorest members of the communities we serve. Families that strive, struggle, aspire and hope to advance their well-being will be thrown back, since few have the sort of margin between income and expenditure to cushion them from the blow that is coming. In the London Borough of Southwark alone, whose 50th anniversary was commemorated in my cathedral this past weekend, it is estimated that some 20,000 families are in receipt of tax credits and, further, that even making allowance for the mitigating factors being introduced by the Government, some 4,000 will remain worse off by these changes. That is in just one London borough.
The sort of wage rises that would mitigate this and the extra hours worked to catch up will be taken away by the loss in other benefits, even if there were enough hours in the day. The rise in personal allowances which benefits a far wider group of people, including Members in this Chamber, will not compensate for this shortfall. By these regulations, we are in fact asking parents to make their children bear a significant adjustment in their economic circumstances—an adjustment that some children will not understand, which in itself will be an added stress to their families. We risk stripping our fellow citizens of their dignity by these provisions, even though the Government’s stated intention with a whole range of economic and fiscal measures is to do the opposite. We should take this opportunity to counsel Her Majesty’s Government not to seek to add to the burdens of those working hard for their families, and to reconsider in detail the impact of these regulations and the need for more fully worked-out transitional arrangements. I therefore support the regret Motion as tabled by the right reverend Prelate.
My Lords, there seem to be two strands to this emotive phrase “constitutional crisis”, which is what I would like to address. The first is that this House should not vote down a statutory instrument—certainly not one that has been through the House of Commons. But there is no Standing Order which lays this down, and the Parliament Acts are silent on the primacy of the Commons over statutory instruments. Yes, it is taking a very rare step, but the footpath is there, even if it is rather overgrown. In this House, we do not look to Erskine May so much as the Companion to the Standing Orders, which is where we find that this House has an unfettered right over statutory instruments. If an instrument is not approved by this House, there is nothing to stop the Government immediately bringing another instrument to both Houses with a minor change. It is time we stopped being bullied over how we consider statutory instruments.
The other strand of the so-called constitutional crisis involves the primacy of the House of Commons over financial matters. Here, I echo what the noble Baroness, Lady Hollis, said. The parent Act from which this instrument comes was not certified by the Speaker as a money Bill, and if this House is entitled to debate the statutory instrument at all—which it is—then it is entitled to approve or to decline to approve it. It is not a question of courtesy; this is what we do and what Parliament has decreed. We would be failing all those affected by this measure if we simply pulled a duvet over our faces and turned our backs to the wall while saying it was none of our business.
If the Government had wanted to avoid this situation, why on earth did they not introduce a very short tax credits amendment Bill? Then we could have debated it in the usual way, with none of this intolerable pressure. If this House had sent back an unacceptable amendment, the Commons could have invoked financial privilege and that would have been that, but we might have found a way to tweak such a Bill that would have found favour with all those Conservative Members who have been calling for just that.
If the Bill route had been taken, we might have had a much more informative impact assessment, which could have told us what was likely to happen to those low-paid workers affected when the tax credit changes happen next April, instead of being told that by 2020 there may not be quite so many losers. We surely know that not all the thousands of employers up and down the country will pay the new living wage immediately to all part-time workers for the same number of hours to make up the shortfall. As it is, for the Government to decide to make a very controversial change by way of an unamendable statutory instrument, and then to bully members of this House into passing it by telling us that we are provoking a constitutional crisis if we do not agree to it, is surely quite unacceptable. We should stand up for what we believe to be morally right. The spirit of 1911 is being invoked, but at least Lloyd George wanted to take from the rich to pay the poor. George Osborne seems to want to do the opposite.
I suspect that I am not the only one on this side of the House who feels torn on this issue. The constitutional position, which I will refer to first, has been set out admirably by the noble and learned Lord, Lord Mackay, and it is very clear: budgetary matters are the prerogative of the other place—of the elected Chamber—and this is undoubtedly a budgetary matter, however it is dressed up. What is the purpose of the measure? The purpose of it is to help reduce the budget deficit, and everybody is agreed that it should be—
The noble Lord seems to imply that because this is a tax credits issue, as was said by the noble and learned Lord, Lord Mackay, for whom the House holds enormous respect, it would be subject to financial privilege. Is he aware that the legislation in 2002 was not subject to financial privilege? It is hard to argue, then, that a statutory instrument from that legislation should be.
Does the noble Lord, Lord Lawson, think that the Clerk of the Parliaments was nitpicking when he told my noble friend that statutory instruments were not covered by financial privilege? That was said unequivocally by the Clerk of the Parliaments.
The point is that this is a budgetary matter and budgetary matters are the prerogative of the elected House. That is the most important constitutional principle. This was designed to reduce the budget deficit, which everybody on all sides agrees has to be eliminated, by something like £4.5 billion. It is quite clear that this is the Chancellor of the Exchequer’s measure, in effect, whosever name may be on the statutory instrument. That is the constitutional position. I said I would be brief, so I will not elaborate, but that is clear.
On the other hand, I also said I am torn, because I believe that there are aspects of this measure which need to be reconsidered and, indeed, changed. The right honourable George Osborne, the Chancellor of the Exchequer, made it clear that he was going to get a lot of his savings, probably the greater part, from the welfare budget, and tax credit, which has ballooned enormously in recent years, is a large part of the welfare budget. I think that is absolutely fair, but the question is the particular incidence of this package in the regulations. What concerns me is not that there are high implicit marginal rates of tax—which are transient, incidentally. That is the case with all means-tested benefits and it is absurd to say that means-tested benefits can never be reduced. Nevertheless the tax credits system—the in-work benefits—rise surprisingly high up the income scale, but here the great harm, or a great deal of the harm, is at the lowest end. That is what needs to be looked at again; that is what concerns me. It is perfectly possible to tweak it to take more from the upper end of the tax credit scale and less from the lower end.
I heard my noble friend the Leader of the House say that the Chancellor would listen to this debate. I would have been surprised if she had said that the Chancellor would not listen to this debate. Of course he will listen to this debate, but it is not just listening that is required. Change is required. I very much hope that my noble friend Lord Howe, when he winds up, will indicate that there will be change, though he cannot indicate what, but I must say that my present intention is to support the amendment in the name of the right reverend Prelate the Bishop of Portsmouth.
I hope that the Chancellor of the Exchequer listens very carefully to the contribution of the former Chancellor of the Exchequer the noble Lord, Lord Lawson of Blaby, because his support for what appears to be the Frank Field amendment should be taken seriously. The Leader can call on all the constitutional arguments she can muster in support of the Government, as indeed can the noble and learned Lord, Lord Mackay of Clashfern, on the issue of financial privilege, but all those arguments pale into insignificance when compared with the greater argument that the general public, millions of people outside this House, are considering today—that being statements given during the course of the general election, solemn undertakings given by Cabinet Ministers to the British people, on what their attitudes would be to tax credits.
Mr Gove gave the undertaking that there would be no cut in tax credits, which he was unable to substantiate by way of any agreement, but that is what he said on television, in an interview. Mr Cameron deliberately misled the British public, who would regard what he said now as a lie to win a general election. The British public are fed up with politicians who tell lies on that scale. It exceeded the misleading of the public in the case of the Liberal Democrats over tuition fees; at least they did not know what was going to come after the election when they misled the public. In this case, Mr Cameron did know, and the Government set out to avoid revealing the facts by hiding behind the statement that they would have to make substantial cuts without going into details. Those lies trump all the constitutional niceties, whether they be financial privilege or the fatality of amendments, and it is on that basis that I intend to support the amendment tabled by my noble friend Lady Hollis this evening. The public cannot take this scale of lying.
My Lords, I shall try to put my points briefly. I do not want anything that I say to be taken as implying a lack of sympathy with the concerns of those who have spoken about the effects of the Government’s policy. Like other Peers, I have had moving emails from many such people who expect to lose benefits through the statutory instrument. However, I want to confine myself to the constitutional issue. I usually agree with the noble Baroness, Lady Thomas, about statutory instruments. As has been pointed out, it is a very rare event that the Government are defeated on a statutory instrument; it has happened only five times since the war, but that does not mean that the House could not do it. But there is a combination here, because this is a statutory instrument about a budgetary matter central to the Government’s fiscal policy; it is that combination that is unprecedented, which is why it would be beyond the House’s constitutional powers to defeat the Government today.
Would the noble Lord wish to amend the Companion to the Standing Orders and guide to the Proceedings of the House of Lords? It states:
“The House has resolved ‘That this House affirms its unfettered freedom to vote on any subordinate legislation submitted for its consideration’”.
Is this not subordinate legislation submitted for our consideration?
The noble Lord says that no Government have been challenged on a matter of this sort since 1911. However, in July 2008 there was a debate in this House on a statutory instrument, in which, after a discussion, the House came to a conclusion and voted down the Government’s suggestion, insisting that any attempt by the Government to raise national insurance had to be done by way of primary and not statutory legislation. Was that not also an example of a Government trying to pursue their financial and fiscal policies and the Opposition voting them down, saying that it had to be done not by statutory instrument but by primary legislation?
I shall not contest the precedent given by the noble Lord, which I have not myself considered. The amendment proposed by the noble Baroness, Lady Manzoor, is, transparently, a fatal one; she agrees with that—and, in my view, it is outside your Lordships’ constitutional role. I note that my noble friend Lady Meacher agrees with that view. The amendments proposed by the noble Baroness, Lady Hollis, and my noble friend Lady Meacher, raise a more subtle issue. They are not fatal, but they seek to defer our consideration of the statutory instrument until the Government have done certain things specified in the amendment, including, in the case of the noble Baroness, Lady Hollis, surrendering some of the savings that would be achieved by this measure. But they are still blocking amendments. I can best demonstrate that by the following question. What happens if the Government refuse to do what the amendments demand? Will your Lordships then refuse to consider the statutory instruments for ever and a day? In that case, these amendments would block the statutory instrument indefinitely, which in my view is not within the—
I point out to my noble friend Lord Butler that the House of Commons has a very similar request for Thursday: that House also wants more information, because Conservative MPs even now do not feel they have enough information to understand the full implications of these regulations. If the House of Commons votes for more information—in other words, says not to go ahead until we know what on earth is going on—would my noble friend then agree that that should be provided not only to the House of Lords but to the House of Commons?
If the House of Commons asks for more information, it should be provided. But the constitutional position is that the House of Commons has passed this statutory instrument, and it cannot go back on that. Now what is at issue is whether the House of Lords should pass it, and however much sympathy the House may have for the objectives of those who have moved these amendments, it would be a constitutional infringement of great gravity to pass the first three of them. It would be wrong on three counts. First, this is a budgetary matter. It may be a welfare matter as well, but it is certainly a budgetary matter. Secondly, it is crucial to the fiscal policy that was explicit in the manifesto on which the Government were elected only a short time ago. Thirdly, the statutory instrument has been passed by the House of Commons, which has that responsibility in our constitutional arrangements. It has been passed not once but three times. I am afraid that I cannot find myself persuaded—
I am sorry, my Lords, and I apologise if I have committed a constitutional impropriety, but I still do not understand quite the point that the noble Lord makes.
I am afraid that I am not persuaded by the argument made by the noble Baroness that this House—
I have worked in many roles, and I have listened to the noble Lord giving advice. I know that after this debate many members of the public will ask what an earth was going on in the House of Lords. Could the noble Lord answer the question: if the House of Lords today amended or voted down this statutory instrument, could the Government in the Commons bring back a one-word-change statutory instrument within the next few days? Secondly, would he care to comment on the following? I listened very respectfully to the noble and learned Lord, Lord Mackay, who used an expression that I could not understand. Could the noble Lord explain why the noble and learned Lord thought that it would be offensive for the Government just to choose to bring this item forward in primary legislation? I did not understand the reasoning, but I am sure the noble Lord does.
My Lords, I think it is a little unfair of the noble Baroness to ask me to interpret the statements of the noble and learned Lord, Lord Mackay. They were perfectly clear. Can I just give the answers I was going to give about the point made by my noble friend Lady Meacher? I cannot be persuaded that this House would be failing in its democratic duty if we did not block this statutory instrument so that the House of Commons could have yet one more debate on it. It has had three already.
I am so sorry to intervene on the noble Lord. I have an observation. The director of the Institute for Government, Peter Riddell, who is greatly respected in Whitehall and Westminster makes the following point. Forgive me, it is rather long but I want to read it.
My Lords, I am afraid I have been rather frustrated in trying to put my points as briefly as I could, so let me put one final point. There have been many times in the past when there has been an opposition majority in your Lordships’ House, particularly when there has been a Labour Government. There have been many occasions when the Opposition have wanted to overturn the Government on a fiscal matter. It has not happened and in these cases the Opposition, recognising the conventions, have exercised self-restraint, bitten their lip and stayed within the constitutional conventions. I believe that the House should do that today.
My Lords, in response immediately to what the noble Lord, Lord Butler, has just said, there was no doubt that the occasion in July 2008—I will go into it in a little more detail further on—was a fiscal matter. There was no doubt it was government policy and this House demanded that the Government should give it up and insisted that what the Government wanted to do could be done only by primary legislation and not by a statutory instrument. This has been before the House before and the House has done it before.
There are three major issues this House has to consider today. The first is whether financial privilege attaches to this proposition. The second is the effect of the way in which it proceeded through Parliament, and the third is whether any of the amendments is a fatal one.
Let us deal with the constitutional one because we have heard quite a lot about it this afternoon. I totally reject the suggestion made by the Chancellor that somehow or other a vote to postpone the operation of this resolution would be contrary to the financial understandings and conventions that exist between the two Houses. I do not think that is justified. The Government could have avoided these constitutional problems if they had wanted to, had they chosen to legislate for this matter by primary rather than secondary legislation. It would have been open to them to have included these proposals in the Finance Bill. Alternatively, they could have legislated by way of a short and separate Bill. Instead, they chose—it is a government choice, not an opposition choice or anyone else’s—to do it by secondary legislation. That inevitably curtailed debate both here and in the House of Commons and particularly in the country. Of course I accept that it has been dealt with in another place, but inevitably the national discussion has been truncated—to the point almost of extinction. There has been no consultation on transitional measures, nor on measures to alleviate the burden on the poorest—quite the contrary. None of these issues has been even discussed, let alone agreed. We do not know what, if any, transitional measures the Government might have in mind. The Government do not even have the excuse that it was all put before the country at the general election. It most certainly was not—quite the contrary. Considerable efforts were made to conceal the fact that this was the Government’s intention if they were re-elected. From the Prime Minister down we had Minister after Minister appearing in front of the television cameras and in the press saying it was nothing to do with tax credits and they would tell us what it was eventually. There was not a word in the Conservative manifesto about it. We are now told that in that situation this House willy-nilly has to accept what the Government say. What the Government are asking us to do is not acceptable.
The noble Lord has set out an alternative policy which the Government might have followed, but they did not. We are not dealing with the alternative policy but with what actually happened. He is saying that the Government have seen a way of doing things that he does not like. It does not alter the fact that this is a money matter and he wants this House to overturn a majority decision in the Commons on a money matter.
My Lords, can I ask the noble Lord how your Lordships’ House should interpret the point of order made by Sir Edward Leigh on 21 October in the other place? He said:
“On a point of order, Mr Speaker. Generations of your predecessors defended the privileges of this House, and the greatest privilege of all is the principle of no taxation without representation …We had a lively debate yesterday on tax credits, and many of us would like to see some movement from the Government, but surely it is the elected representatives of the people who decide on tax and spending”.
The Speaker responded:
“I understand entirely what the hon. Gentleman is saying. My own feeling from the Chair is that the other place can look after itself; but we also can and will look after ourselves. I think it would be much more dignified for the Chair not to become drawn into what might be a public spat between the two Houses. In the final analysis, each House knows what the factual constitutional position is, and that position is what it is of long standing”.—[Official Report, Commons, 21/10/15; col. 959.]
My Lords, I am bound to say to the noble Lord that I am not sufficiently qualified medically, politically or personally to know what is in the mind of Mr Leigh when he gets up in the House of Commons. To expect me to be able to do that is, frankly, unrealistic.
The answer to the noble Lord, Lord Tebbit, again is very simple. Of course the Government chose to do it. Why? Because it cut off discussion. It meant that they were not accountable on the Floor of the House of Commons. They knew when they did it that there was a convention here that we did not vote against statutory instruments; we did not turn them down. By doing it that way the Government thought they were impregnable in their approach. I do not think they are.
The Act gave the Government the power to do it. It did not compel them to do it. If they wanted to do it by way of an Act of Parliament it could have been done that way. They could have added it to the Finance Bill and it would have come up here and in the normal way financial privilege would have applied and none of this nonsense would have been created. Perhaps the reason the Government chose to legislate in this way was because it was bound to create political controversy. Perhaps that was the object of the exercise.
I want to say a word about the debate in 2008. It was when this House limited the power of a Labour Government to raise the national insurance upper threshold so that it could be done only through primary legislation. The two cases are almost identical. In each case, the Government were trying to alter tax provisions by a statutory regulation. In each case, this House was standing in their way. The only real difference is that in 2008—
I am so sorry to interrupt the noble Lord, but he is referring to a previous case in a way which I do not believe is accurate. The example he is citing relates to primary legislation, not to a statutory instrument. An amendment was properly tabled in this House to that primary legislation, and this House voted on it. This House sent the Bill back to the other place in the normal way. The House of Commons decided that it would invoke financial privilege, and that was the end of the matter, so it is wrong for the noble Lord to draw direct comparisons in the way that he is doing.
The reason why the 1911 Act is relevant is that is quite clear that secondary legislation is not covered by some of the conventions that have been raised in debate in this House. What is at risk here is the financial primacy of the Commons.
I hear what the noble Baroness says but, as far as the financial privilege of the House of Commons is concerned, if this House decides to vote for my noble friend Lady Hollis’s amendment—as I hope it will—it would not kill the statutory instrument. It would not mean that it was dead. It would mean that its implementation was delayed. According to the clerks—and I understand it is broadly accepted by most people—that is not a fatal attack upon these regulations. If the House were to do that, we would get the best of both worlds. I am not in favour of voting for the Liberal Democrat amendment because I do not, on the whole, think that voting for fatal amendments on statutory instruments is a good thing for this House to do, and I do not think I have ever done it. However, an amendment to postpone the statutory instrument until the other House has a chance to look at the evidence that has now arisen makes a great deal of sense. I hope that, when it comes to a vote, that is what will happen.
My Lords, I want to a repeat a few words of the noble Lord, Lord Richard. I, too, have been listening to this debate, and I listened to the argument made by the noble and learned Lord, Lord Mackay. He persuaded me that the amendment moved by the noble Baroness, Lady Manzoor, to decline to approve the regulations is fatal and perilously would raise all kinds of constitutional matters.
The amendments moved by the noble Baronesses, Lady Meacher and Lady Hollis, simply decline to consider the draft regulations. They do not say that the regulations will not be approved. In fact, they tie our hands because when the regulations are produced, we will have no choice but then to approve them. If the Chancellor is being very mindful, as we have been hearing from the Lord Privy Seal, and is willing to negotiate and to listen to our advice, well, we are giving him our advice, so why does he not take it? I think that the amendments moved by the noble Baronesses, Lady Meacher and Lady Hollis, are not fatal. They are simply delaying, and we can do something about it.
My right reverend friend called on the Government to further consult on the draft regulations and revisit their impact. It is a question of trust. If you are legislators and do not have the facts before you before you finally approve these draft regulations, you are abrogating your legislative responsibilities. If you are a revising and scrutinising Chamber, surely you must do it. If you do not, who else is going to do it? They may even be glad that some people are planning; it will become very clear that some were probably not all that important. The noble Baroness, Lady Hollis of Heigham, in her moving speech, outlined clearly the unintended consequences of this hasty way of reducing and cutting tax credits because the people who are going to suffer most are those who up to now have been relying on them. They are in work, and they are managing to get their things in order, and then suddenly the Government say they are going to take it away. That is not good. The Chancellor of the Exchequer is more likely to meet his target reduction of the budget deficit of up to £4.2 billion a year by introducing the real living wage first, which I trust will be calibrated soon by the Living Wage Foundation.
What is my basis for saying this? Two years ago, I chaired the Living Wage Commission which brought together people from business, the trade unions, industry and civil society to look at how we could inspire and create a brilliant way of dealing with this difficulty. How can we tackle the blight of low pay? We looked closely and objectively at the case for the living wage, and we were sure about what should be done. Let me give the House the evidence. It is in the report. The evidence pointed to the living wage being good for employees, good for business, good for the economy, good for society and good for low-paid people. Employers who have already adopted a living wage policy have lifted thousands of people out of working poverty. They are not claiming tax credits because they have been lifted out. The Exchequer could gain up to £4.2 billion a year in increased tax revenues and reduced expenditure on tax credits. That is a much neater way of doing it. Businesses are reporting increases in productivity and improved morale. The truth is that you and I lose out on poverty wages. Billions of pounds are being spent every year on topping up the incomes of low-paid workers at a time when private finances are very tight. Demand is sucked out of the economy by the lack of spending power of a fifth of our workforce—about 5 million people—and where inequality grows, all of us end up diminished.
Economics was not always divorced from moral and ethical considerations. Adam Smith, the father of modern economics, had been professor of moral philosophy at the University of Glasgow before he wrote The Wealth of Nations. To him and later classical economists such as Ricardo, Mill and Henry George, ethical considerations were of prime importance. Economic justice on a global scale is the only way we are going to deal with this. The issue we are facing here is not just economics divorced from morals and ethics. The decisions we take will affect a lot of men and women throughout the country who want to get out of poverty and out of depending on tax credits, and we should consider them properly and fairly.
Britain has struggled through very challenging times. I hope that the work being done by government, business and the people of the United Kingdom will enable us to take a huge step forward. The minimum wage, when introduced, went some way, but it did not go far enough. Let me give some recent research which seems to suggest that the legislature has considered the possibility of delaying in order that further facts may be brought out. What are they? There has been a rise in demand for unsecured credit, with many people reporting an increase in their need to borrow. This is likely only to get worse in the winter months. Do you want people who have hitherto been dependent on work and tax credits to be driven to the loan sharks of this country? That would be quite unhelpful. What about UNICEF saying that a quarter of children in Britain are living in poverty? Britain is at risk of becoming a place where the haves and the have nots live in parallel worlds, where the common good, or the big society, has been a pious platitude rather than genuine. I want to listen more, and I hope the decision to delay the draft regulations until further facts ties our hands and allows the Chancellor, who is willing to listen to our advice, to come back with all that information. We are almost saying that we will pass it, we will agree with it.
Finally, a wonderful report by the Joseph Rowntree Foundation, Will the 2015 Summer Budget Improve Living Standards in 2020?, states that over seven years there has been a decline in living standards. It is pausing for the moment, but many low-income households are still much worse off than in 2008, leaving them struggling to make ends meet and reliant on benefits to top up their finances. Today, we want to say to hard-pressed families on poverty wages that the Government are serious about deficit reduction, but they want to do it in an orderly fashion that will not leave men and women in the hands of loan sharks.
My Lords, I have two claims to briefly intervene in the debate. First, it was my proposals in the social security legislation of 1986 that led to the introduction of family credit, which was a successor to Keith Joseph’s family income supplement and, of course, the forerunner of tax credits. It then became a Treasury matter when it went to tax credits. Obviously, I have considerable sympathy with the general case being put in this debate. Secondly, I was for six years the Secretary of State for Health and Social Security and, as such, no one’s idea of a natural supporter of the Treasury and all its schemes.
Various Chancellors and Chief Secretaries might put it more strongly, and a former one just has. Perhaps I can add in parenthesis in this heated debate that throughout my time doing social security my shadow Minister was Michael Meacher, who died last week. We did not agree on very much but he was a very honourable and totally sincere man and he will be much missed.
My Lords, I spent three months every year debating with the Treasury the proposals that it put forward to cut my budget. One counterargument I never used was that the specific cost-cutting measure was not in the party’s manifesto. Frankly, I had quite enough trouble getting the Treasury to recognise the measures that were in the manifesto. Every Government introduce measures not contained in the manifesto. The last thing I did was to introduce the dock labour scheme—there was not a word about that in the manifesto. Back in my old social security days, Barbara Castle, under pressure from the Treasury, altered the whole basis of measuring inflation at a cost and a saving of well over £1 billion.
The truth about reduction in benefit spending is that it is always going to be unpopular. I found that in Cabinet everyone was in favour of doing it in general but when it came to the specifics they always said, “Please, not that way”. Frankly, I think that the Conservative manifesto in 2015 spelled out what was intended with more clarity in this area than any manifesto I can remember on either side. The Government said in words that they would have to find £12 billion from welfare savings. That is a good deal more specific than any manifesto I had anything to do with myself and, indeed, any manifesto which ever came up on the other side.
We have been round this particular point because the noble Lord has made it several times. More to the point, it has been considered now three times in the House of Commons and has been rejected. In fact, I think he was talking about considering child tax credits and not the whole ball game.
The manifesto also made it clear in words that pension upratings would be protected. In other words, that area of retirement would be ring-fenced. I do not think there was any great controversy about that. By ring-fencing pensioner benefits the Government narrowed the field very substantially from where the £12 billion cuts could come. It follows as night follows day. Not everyone will agree with that diagnosis. Indeed, my major reason for introducing family credit was my concern for low-income working families with children. Even then it was clear that pensioner earnings were improving and increasing and that was not being followed by the low-income families.
I do not think that anyone can have imagined how spending on tax credits was to escalate in the way that it did. Tax credit spending trebled in the 10 years up to 2010 and by the Budget of this year was estimated to be about £30 billion a year. That was a long way from the original aim. However, I accept that none of this was the fault of the families who are struggling to make ends meet, often in very difficult circumstances. I totally accept and agree with that. I therefore welcomed the assurance of the Leader of the House when she said that these matters would now be considered again. I hope that when they are we can find room to look particularly at families with children. That is a priority, and Frank Field has a Motion down on this. That argument is particularly strong. Whether the Government do this or not—and this is the point—is frankly a matter for the Chancellor of the Exchequer, who is answerable on this and other financial matters to the House of Commons and not to us. It is a common-sense position—
My Lords, I hate to interrupt the noble Lord, for whom I have the greatest respect, but he said that the Leader had told the House that these measures would be reconsidered. I listened quite carefully to what the Leader said and I am not sure I heard that, but if I am wrong I am very happy to be corrected.
I leave it to the Leader of the House and the noble Earl who will be winding up to put it in specific words, but I think that not an unfair representation of what she said. We are the unelected House. The other place is the elected one. The measure has already been voted on twice, if not three times in the Commons. We cannot have the unelected House trying to impose its will on £5 billion of savings. I say one thing to the ex-Members of the House of Commons who are here: I do not remember their saying when we were in the House of Commons together, “We must give more financial power over what happens to the House of Lords”. I do not remember at any stage that point being made by anyone in any party on this particular position. I think a certain degree of humility might therefore be in order.
I agree entirely with the point made by the noble Lord. Does this not show, though, that our powers on statutory instruments are far too drastic, as was pointed out in the report on conventions? It would be better if we gave up the power to accept or reject a statutory instrument in exchange for maybe two amendments, which would deal with the point made by the noble Lord, Lord Lawson—we could have tweaked it but we could not have opposed it anyway. There may be a lifeboat in this, if we could get something out of it in the way we deal with secondary legislation and avoid all this in future.
That is obviously something we can consider for the future, and on first hearing sounds an attractive proposition. However, we are considering what we are doing now and not in the future.
I make a last point. In spite of some of the criticism—no, the attack—now being directed at this House, it is my view that it carries out a very valuable series of functions. The Members I meet here day by day are hard-working, not just on the Floor of the House but in Select Committees. However, we need to recognise one common-sense thing: that as long as this is an appointed House, we must accept the limitations on our powers, particularly in financial matters. To ignore those limitations is not in the interests of Parliament, it is certainly not in the interests of the House of Lords and it is not in the interests of the public. It cannot be justified and that is why I will be voting against these amendments.
My Lords, we have been going at this now for well over two and a half hours. Strong points have been made on each side of the argument and many points have been made in speeches that have been not only lengthy but weighty. I find it difficult to conceive that any more arguments can be deployed on either side. I submit that we need to make up our minds on the basis of what we have heard and that it is time to come to a conclusion.
My Lords, I accept what the noble Lord, Lord Low, says but I want to make one or two points that have perhaps not been made before and, if the House will indulge me, I would be grateful for the opportunity so to do.
I shall not go over the case against the regulations in their current form. That has been argued powerfully tonight from all Benches, and I think that we could pass almost nem con that we feel there is a need for reconsideration. The issue before us is whether it is constitutionally appropriate for the House of Lords to use its most potent and well-known weapon—the weapon of delay—in respect of these regulations.
Very powerful speeches were made from the Bishops’ Benches. I am delighted that the right reverend Prelate the Bishop of Gloucester is here for today’s debate. I should warn her—or console her—that it is not always like this. However, I hope that those Benches and others will consider that it might be appropriate for the House to use its powers of delay tonight. I favour the amendment in the name of the noble Baroness, Lady Meacher, because it gives us an alternative to a fatal amendment on a matter which is, I agree, of high political import. It gives us the opportunity to delay the regulations and to ask the Commons—and, through it, the Government—to think again.
In introducing the debate, the noble Baroness the Leader of the House said that she had seen the Chancellor of the Exchequer today. I think that the words used were that he would “listen very carefully” to what was said in the House today. I accept that. However, having had the privilege of being a Member of both Houses, I think he will listen even more carefully to what is said in the House of Commons on Thursday, and I would like him to have the opportunity to do that.
Delaying an SI rather than killing it is innovative, and I have asked myself over time whether it is something we should therefore abjure. My answer is no. If we have the power to kill a statutory instrument and send it back to base, surely we have the power to delay it and wait for reconsideration.
I absolutely accept that this matter has been discussed in another place three times. Does it need further consideration? I think the evidence is that it does. Every time we discuss an amendment to a Bill that has gone through the House of Commons, it has probably been voted on three times: at Second Reading, in Committee and on Report. That does not inhibit us from saying first time round, “Please will you look again?”.
Therefore, for me, the only question that remains is that of financial privilege. I hesitate to cross swords with either the noble and learned Lord, Lord Mackay, or my noble friend Lord Butler, but the situation is not as clear-cut as they have set out. If this were a Finance Bill we would have no part in it, and if it were a taxation SI we would have no part in it. In fact, it would never come here: it would go through only the House of Commons. But it is not. This is an SI under “ordinary legislation”—under a welfare Bill. Under that legislation, this House considers amendments and sends them to the House of Commons. The House of Commons can then do what it likes with them: it can accept them; it can offer a compromise; it can reject them; or it can invoke financial privilege. However, that is after this House has asked it to think again. That is a better analogy than the analogy of a Finance Bill. This statutory instrument comes under welfare legislation, not a Finance Bill.
Surely there is an analogy with Finance Bills. They come to your Lordships’ House but we pass them without amendment because that is the constitutional convention, and that is similar to what we are being asked to do on this statutory instrument.
I say to the noble Lord, Lord Butler, that the financial convention has not stayed absolutely the same for 300 years. The convention was that this House did nothing about the Finance Bill or, indeed, other economic measures. In 2000, we set up an Economic Affairs Committee. The House of Commons went into free-fall about encroachment on financial privilege. In fact, we were told that Gordon Brown, the Prime Minister at the time—I see the noble Lord, Lord Lisvane, nodding—was incandescent at the idea that there should be a sub-committee looking at the Finance Bill. However, those things happened and the world did not collapse. Financial privilege and the right of the Commons to have the final say was not impeded.
To my mind, this is a matter of very high and clear-cut politics, and of highly nuanced constitutional significance. Overall, I believe that the most important power of this House, while leaving the last word to the other place, is to ask it to think again, and I urge the House to use that power this evening.
My Lords, this has been a quite extraordinary debate. It is unusual for your Lordships’ House to find itself at the centre of such a ferocious policy and constitutional debate as it does today. It is also extraordinary and unusual that, on a matter that affects the Department for Work and Pensions and the Treasury, we have no Treasury or DWP Minister addressing your Lordships’ House today. I can understand why: the Government feel more comfortable talking about constitutional issues in this regard than they do about the impact of this policy. We all understand that. Again, it was extraordinary that the noble Baroness the Leader of the House supported an amendment to her policy by supporting the right reverend Prelate’s amendment. So there have been some quite extraordinary scenes and what we are seeing today is unprecedented. It is good to see the noble Earl, Lord Howe—
I thank the noble Baroness for giving way. It is important that she does so because she has incorrectly interpreted what I said. I was very clear that the Government do not support any amendment to their Motion. I said that the right reverend Prelate had brought forward his concerns in a way that was consistent with the conventions and the proper role of this House.
I think that that is a bit of an angels-on-pinheads defence, but I take the point that she makes.
I suspect that when the noble Earl, Lord Howe, took on the role of defence Minister, he did not think that his job would be defending all government policies across the House, as he is being asked to do today.
We have been asked to approve the Government’s tax credit order, and we are unable to do so. The reasons for that have been very carefully laid out. Our view is that these are pernicious regulations that do enormous damage. Overnight, at a sweep, they would dramatically cut the income of some of the poorest in society: those who are working hard and doing what the Government say is the “right thing”. About 3 million people will be affected by these cuts. Like many other noble Lords, I have had emails and letters from those who are likely to be affected: from nurses, teachers, cleaners and firefighters—people working hard, trying to raise a family. They are terrified by what lies before them; they do not know how they are going to cope. The noble Baroness, Lady Campbell, echoed some of the emails that I have received when she talked about those who have disabilities being moved into work and finding it so much better for them.
When my noble friend Lady Hollis spoke to her amendment, the House was silent. We could have heard a pin drop as we listened to what these cuts will really mean and the impact that they will have on people across this country. I think that the House was shocked and upset by the information that she provided today. However, she also provided a way through.
The noble Lord, Lord Lawson, said that tax credits have increased to £30 billion. They have; that is part of their success. In almost equal measure, we have seen income support reduce as people went into work. Therefore, they were no longer on income support but were receiving tax credits—that was the success of the measure. Income support went down as people moved into work and received tax credits to reflect their circumstances and help them to work. We have always been told that the way out of poverty is work, and that is what those people on tax credits have done; they have moved into work.
It may be that some people cannot imagine what it is like to lose £25 or £30 a week from their income. For a lot of people out there, the loss of that £25 or £30 a week—in some cases much more—would be devastating. It would mean not putting in the money for heating this winter when it gets colder; it would mean not getting the kids new school shoes; it would mean making the kinds of choices that we should never place on families.
This is a highly contentious area, but it is the policy that is important. Having said that, there are conventional and constitutional issues, which noble Lords have raised, that have given some concern. It would, as we have heard, normally be expected for a measure of this nature and magnitude to be introduced by primary legislation. Thus, a government Bill would go through all the stages that such a Bill goes through and there would be the opportunity to debate it, put amendments to it and vote on those amendments. There would be opportunity to make revisions and to listen to the concerns that were raised. One has to wonder why the Government did not take that route. They could have applied financial privilege, which would have stopped all this, but they have chosen to deal with this measure through a statutory instrument.
I am sorry to interrupt the noble Baroness, but we did hear from the noble and learned Lord, Lord Mackay, that this came about as a result of the secondary legislation from the tax credits legislation introduced by her Government. As a result of which, this is a natural progression from that legislation. Therefore, perhaps the noble Baroness could explain why that was wrong.
I can certainly help. In 2002, the legislation that went through that allowed for amendments to tax credits legislation to be made by statutory instruments or delegated legislation was so that normal uprating, for example, could be applied. It was for minor changes and normal uprating. However, major policy changes would not normally be made by these kinds of regulations. Furthermore, as I said earlier in my intervention on the noble Lord, Lord Lawson, the legislation in 2002 was not itself subject to financial privilege. But now we have a Government saying that the secondary legislation that follows on from that should be subject to financial privilege. I hope that that addresses the concerns that the noble and learned Baroness has raised. I give way to the noble Baroness yet again.
An important point for the House to understand is that the original Bill—the Tax Credits Act 2002—was not certified as a money Bill because it included changes to the administration of the welfare system. Had it just been about the financial measures that we are debating, it would probably have been certified as a money Bill. It was the addition of administration that caused it not to be certified as a money Bill.
In some ways, the Minister makes my point for me. Major issues and changes such as this are undertaken in primary legislation—a case she made for what happened in 2002. It is unusual to make such major changes in secondary legislation. But let us leave that to one side, if we may.
Anybody in the real world listening to us talk today would wonder what on earth we are on about—primary legislation, secondary legislation, delegated legislation, affirmatives and negatives. What really matters is the impact it has and applying a common-sense approach to what is before us today. We know, as parliamentarians, that SIs are more normally used for that specific detail of legislation that we have passed already or for issues following primary legislation where the principle has already been approved into law. As I have said, they can be very properly used for normal uprating in tax credits, and I made the point about 2002 to the noble and learned Lord, Lord Mackay.
The proposal before us today goes way beyond that normal kind of uprating. It is a major policy change that, in the first place, the Government promised not to do. The route that the Government have chosen is not illegal or the wrong route, but there are consequences of taking it. If the Government try to truncate the process, so as not to have that full consideration in the House of Lords, yet at the same time allow this House, through the normal constitutional procedures of your Lordships’ House, to debate and discuss the proposal and the kinds of amendments that we have before us today, it is quite clear that the amendment from my noble friend Lady Hollis is not a fatal amendment, whatever the Minister and her colleagues may think. She has had advice from the clerks and has made numerous references. It is no good the Leader shaking her head at me; the evidence is there and it is very clear cut.
If the Government had gone down the normal route, they would have claimed financial privilege and we would not be here today, and there would have been further debates in the House of Commons. MPs from across the House privately, and now publicly, admit that this goes too far, too quickly and causes too much harm.
The amendment in the name of my noble friend Lady Hollis is what I refer to as the common-sense, practical approach. It can really make a difference and is in line with what most people in this country are asking for: 60% of the population today are reported to want to see a U-turn or change in this policy. That is what my noble friend is seeking to do. Her amendment calls on the House to reject these proposals as they stand and for Ministers to come back with a proposed scheme to protect those already getting tax credits for at least three years—that is all of them.
If the amendment is passed, what happens next? The onus is then on the Government to take the proposals away and reconsider. The Government can bring forward new proposals for consideration. The policy would not, as the noble Lord, Lord Butler, intimated, disappear into the ether—that is a matter for the Government. If they are committed to doing something, the Government can bring new proposals to your Lordships’ House or choose to bring forward new primary legislation. However, if they failed to bring anything back at all, it would mean that they could not proceed with these cuts, would have to look for another route and would have to reconsider their policy. No Government ever have the wisdom such that they are right all the time. This House is right to ask the other place and the Government to reconsider, to pause and to try to get it right.