Tax Credits (Income Thresholds and Determination of Rates) (Amendment) Regulations 2015

Lord Butler of Brockwell Excerpts

Monday 26th October 2015 Lords Chamber

[Lord Butler of Brockwell (CB)]

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.

[Lord Thomas of Gresford (LD)]

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?

[Lord Butler of Brockwell]

What I am saying is that the combination of the convention about statutory instruments and the fiscal significance of this one is what makes it special.

[Lord Thomas of Gresford]

Any!

[Lord Butler of Brockwell]

Any—but not since 1911 have a Government been challenged on a matter of this sort, which establishes what the constitutional conventions of the House of Lords are. In that respect—

[Lord Richard]

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?

[Lord Butler of Brockwell]

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—

[Baroness Meacher]

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?

[Lord Butler of Brockwell]

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—

[Lord Hughes of Woodside (Lab)]

Would the noble Lord realise that he is turning his back and not addressing the House, and he should learn the procedures, given his experience?

[Lord Butler of Brockwell]

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—

[Baroness Farrington of Ribbleton (Lab)]

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.

[Lord Butler of Brockwell]

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.

[Baroness Manzoor]

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.

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[Lord Taylor of Holbeach]

The House was listening to the noble Lord, Lord Butler.

[Lord Butler of Brockwell]

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.

[Lord Richard]

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.

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[Lord Butler of Brockwell]

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.

[Baroness Hayman]

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.

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[Baroness Smith of Basildon]

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.

[Lord Butler of Brockwell]

But it is a blocking amendment. Nobody can compel the Government to do what the amendment says, and if the Government do not, the House of Lords would be refusing to consider this Motion indefinitely.