European Union (Withdrawal) Bill

Lord Tyler Excerpts

Committee: 10th sitting (Hansard - continued): House of Lords
Monday 26th March 2018 Lords Chamber

[Lord Judge (CB)]

My Lords, I was not able, for unavoidable reasons, to be here when the issue of tertiary legislation was addressed in the course of the debate on this Bill, so I want to add something. I do not think that even those who do not see eye to eye with me would accuse me of being an ardent advocate of secondary legislation: I am not. I spoke about this at Second Reading and have been extremely reticent on the issue in Committee, but I shall return to it in much greater detail on Report.

I support my noble friend Lord Lisvane. The provision we are considering—I will take it quite slowly, because this is how I see it—would vest powers in a Minister to use secondary legislation, with negligible proper scrutiny, if any, to bestow lawmaking powers on a public authority, with even less scrutiny. It amounts, in effect, to scrutiny being diminished to extinction. In that process, we as lawmakers are not doing right. We are simply handing power over to people who should not have it. This tertiary form of legislation is, therefore, even more questionable than secondary legislation, for the same reasons and—I add, at this time of night—with knobs on.

[Lord Tyler (LD)]

My Lords, I endorse the contributions of the noble Lord, Lord Lisvane, and the noble and learned Lord, Lord Judge, and draw attention to the work of the Delegated Powers and Regulatory Reform Committee, on which the noble Lord, Lord Lisvane, and I sit. One of the things the committee found most uncomfortable was the extent to which Ministers have played games with words in their explanatory memoranda. We were particularly critical of the reference in Schedule 4 to tax-like charges. The committee stated:

“A ‘tax-like charge’ means a tax. Taxes and tax-like charges should not be allowed in subordinate legislation. They are matters for Parliament, a principle central to the Bill of Rights 1688”.


It is not so late and therefore I shall indulge in some further remarks. My only really respectable connection with your Lordships’ House is that of my ancestor, the great Bishop Jonathan Trelawny, the Cornish folk hero who was one of the seven bishops to defy James II’s attempts to impose rules upon this country without Parliament’s acceptance. His portrait is in the Peers’ Guest Room—he is the one at the end with the Beatles haircut.

I make that point because I am amazed and ashamed that Members of the House of Commons have not seen the dangers in this part of the Bill. I speak as a former Member of the House of Commons. This issue goes back to not just the Bill of Rights and the Glorious Revolution of 1688, but far earlier. Reference was made to the Bill of Rights in previous exchanges in Committee. The short-circuiting of the most basic responsibility and role of the House of Commons of approving taxes seems to me an extremely important issue. We should not allow this precedent to be pursued in this Bill. It is the historic role of the House of Commons. I recall that when we had exchanges about tax credits, the former Chancellor of the Exchequer, Mr George Osborne, sought to short-circuit and get round the normal process by which the House of Commons decides financial matters. I remember at the time that the noble Lord, Lord Forsyth, referred, I think, to ship money and Charles I, saying that the last time a member of the Executive sought to short-circuit Parliament, he lost his head.

[Baroness Kramer (LD)]

My Lords, I shall add a very quick word because so much has already been said. There is an irony in Schedule 4 which may interest the Committee: namely that the power to provide for fees and charges has been handed to Ministers by means of either secondary or tertiary regulation, depending on which part of this measure you are looking at. Paragraph 3 of Schedule 4 states:

“A Minister of the Crown may only make regulations under paragraph 1 with the consent of the Treasury”.


The irony of that is, frankly, extraordinary because it shows where the Government intend the power of the land to lie. We have always suspected that the Treasury is handed some of the greatest powers that are denied to Parliament. If it is considered fit for the Treasury to be able to intervene in fees and charges, then surely it is Parliament’s right to be able to intervene, scrutinise and monitor those fees and charges.

--- Later in debate ---

[Lord Callanan]

The noble Lord is right—I am sorry.

I will try to give a relatively detailed explanation. For any policy to be complete, it must have a practical answer to the question of how it will be funded. Clause 12 and Schedule 4 are that answer here. I hasten to add that they are not the answer to all money matters in relation to Brexit. The withdrawal agreement and implementation Bill will provide the statutory underpinning for paying our negotiated financial settlement with the EU and any other financial matters related to the withdrawal agreement. Before I proceed, I make it completely clear that I have heard the principled and eloquently expressed concerns about the powers in Schedule 4 and their scrutiny, and we will look closely at this ahead of Report. I regret to say that I am unable to provide too much detail on that at the moment, but we will carefully consider this issue.

Clause 12 and Schedule 4 provide that all the money which might flow into and out of the Exchequer as a consequence of the Bill is made “proper”, in line with the rules governing public expenditure and as laid down between the Commons and the Treasury in the PAC concordat of 1932—which I assume even the noble Lord, Lord Lisvane, was not around to take part in. Maybe his maiden aunts were around at the time to take part—who knows? These are obviously provisions relating to spending and charges on the public and were closely examined by the other place, which has privilege in financial matters, before the Bill reached us.

It is evident that the process of taking on new functions from the EU, and in the future running them, will cost money. Some of this will be public measures funded from general taxation—and, I hope, more efficiently than they were funded at the EU level. Some will be paid for by users of services to ensure that taxpayers, both corporate and individual, do not end up unfairly subsidising specialist provision. Where the line will fall is clearly a matter for debate in some cases, and I expect that as SIs come before Parliament for scrutiny, that question will, in a handful of cases, be relevant to the discussion. These provisions of the Bill, however, are key to ensuring that the rest of the Bill can be given real-world effect. I hope noble Lords will agree that without funding, the essential EU exit preparations enabled by the Bill could not be put into practice.

I thank the noble and learned Lord, Lord Judge, and the noble Lords, Lord Lisvane and Lord Tyler, for Amendment 348. The Government, as has been said at other times and in other places, are aware of the risks and concerns posed by any legislative sub-delegation to public authorities, but we remain convinced that conferring powers on public authorities other than Ministers to allow them to make provisions of a legislative character can be an appropriate course of action. I stress that, like any other form of sub-delegation under this Bill, any transfer of legislative power must be approved by both this House and the other place following a debate. It will not be possible for an SI to pass through this place, under the eyes of noble Lords, without a thorough and reasonable explanation of how any sub-delegation will be exercised in practice.

In this exceptional Bill, it is right that, although we must address all the issues that we discussed at Second Reading and which will arise under the Bill, Parliament also keeps a close and strict eye on all matters where any financial burden can be imposed on individuals and businesses. However, I remind noble Lords that this power is only available if the public authority is taking on a new function under the Bill and that the fees and charges must be in connection to that function. This is not a general power for the Government or any other public authority to raise moneys as they please.

The Government envisage sub-delegating this power in limited circumstances—for example, where Parliament has already granted to a public authority the power to set up its own rules for fees and charges of the type envisaged by this power, and, for good reasons, made it independent of the Government.

[Lord Tyler]

Will the Minister clarify one point? As I understand it, the affirmative procedure would apply to secondary legislation under Schedule 4 where there is a new fee or charge, but only the negative procedure would apply in subsequent regulations modifying those fees. That is an important qualification of the assurances he was giving to the Committee just now.

[Lord Callanan]

The noble Lord makes a good point. I will answer his question later. In line with the Bill’s aim to provide continuity, Parliament should have the option of approving the ability of authorities such as the Financial Conduct Authority and the Bank of England to independently make fees and charges for firms that will, after exit and under this Bill, fall under their regulatory remit.

Amendment 349 comes to the heart of the purpose of these powers and I thank the same noble and learned Lords for tabling it. This power is designed to ensure that those using specialist services transferred from the EU to the UK pay for them. This involves providing for fees and charges which, though not taxes in the common sense of the term, are at least tax-like. For the benefit of the noble Lord, Lord Tyler, let me clarify what we mean by tax and tax-like charges in this context. Under the guidance laid down by the Treasury, although fees and charges for services that are set on a strict cost-recovery basis are not taxes, any fee or charge that goes further than direct cost recovery is likely to count as taxation or to be tax-like. This would be the case if it cross-subsidises to construct a progressive regime between large multinationals and small enterprises, if it is a compulsory levy in a regulated and surveilled sector, such as banking, or if it funds the broader functions of an organisation not directly part of the cost of providing a service, such as enforcement.

I hope we can all agree that, as part of providing continuity, this Bill should enable the Government to continue to fund public services in an appropriate manner. Because the Government have directly prohibited the increase or imposition of taxation, including tax-like charges of the type I have just described under other relevant powers in the Bill—particularly Clause 7(1)—we require the ability to do so under this power. To give an example, without this the Bank of England would not be able to bring trade repositories—a vital piece of financial market infrastructure currently supervised at the European level—within the scope of its levy-based funding regimes. This House approved the creation of those delegated regimes through the relevant legislation and I hope that, with the proper information before it, it will approve the relevant power in this Bill, subject to the use of the affirmative scrutiny procedure.

Having said all that, let me repeat what I said at the start. We are looking closely at this matter ahead of Report. We will try to see how we might provide appropriate reassurance to a number of the fairly reasonable concerns that have been raised by noble Lords. Even with that caveat, I recognise that noble Lords may still have concerns but I hope that I have given some insight into the Government’s position and satisfied the House of the honourability of the Government’s intentions. I hope that noble Lords will agree, therefore, to not press their amendments or object to Clause 12 standing part.