On 26 October 2015, the House of Lords debated the Tax Credits (Income Thresholds and Determination of Rates) (Amendment) Regulations 2015. The Regulations were approved, but subject to two riders. Critics claimed that these riders constituted “fatal” amendments, and that they were therefore tantamount to a rejection of the legislation. It was argued that it is constitutionally improper for the House of Lords to reject financial legislation in this way.

In the wake of this controversy, the Conservative peer Lord Strathclyde is conducting a “review into how to secure the decisive role of the elected House of Commons in the passage of legislation”. Pending the outcome of the review, this post seeks to shed light on the question of when the House of Lords can properly reject a statutory instrument (SI).

1. Financial privilege

The case against the Lords’ actions in relation to the tax credits SI is based on the doctrine of financial privilege. This holds that it is constitutionally improper for the House of Lords to resist the House of Commons on a financial measure.

The doctrine is generally traced back to two resolutions passed by the Commons in the 17th century (the first on 13 April 1671 and the second on 3 July 1678). For many commentators, the long historical pedigree of the doctrine both demonstrates its importance and militates against interfering with it. On the other hand, it is not immediately apparent why parliamentary practice in 2015 should be constrained by the outcome of controversies among the property-owning élite over the royal debts and foreign policies of King Charles II.

The 17th century resolutions sought to deter the Lords from initiating and amending financial legislation. They did not seek to deny the Lords the power to reject such legislation – and indeed the Lords continued to do just that. As late as 1860, they succeeded in throwing out a bill to repeal newspaper taxes (for an account of this, see C. Stebbings, The Victorian Taxpayer and the Law (CUP, 2009), 62-64). But they never attempted to do such a thing again. By the time of the People’s Budget of 1909, financial privilege had become an established convention. The peers who voted the budget down were able to claim that they were not breaching the convention, as Lloyd George’s measures amounted to social rather than financial legislation.

The convention was placed on a partially statutory footing by the Parliament Act 1911. When the Speaker of the Commons certifies that a bill is a money bill, it can only be held up by one month by the Lords. However, only a small number of bills end up being formally certified as money bills (see here). Financial privilege has a broader application than the limited statutory restriction in the Parliament Act.

Yet the doctrine of financial privilege grew up in the context of primary legislation, and it is far from clear that it covers SIs. As recently as 20 October 1994, the Lords voted to reaffirm its “unfettered freedom to vote on any subordinate legislation”. During the debate on the tax credits SI, Baroness Hollis reported that the Clerk of the Parliaments took the view that financial privilege does not extend to SIs. Prior to the recent controversy, the House of Lords had rejected five items of secondary legislation (see here and here). Some of these measures could be categorised as financial in nature: for example, the Legal Aid, Sentencing and Punishment of Offenders Act 2012 (Amendment of Schedule 1) Order 2012 had direct public spending implications.

Another problem with financial privilege is that it is not always easy to determine when it applies. There was some disagreement on whether the tax credits SI amounted to a financial measure or a social security measure. Some would view such distinctions as artificial and question why they have retained such significance in modern times.

The public finances are an important matter. There are good reasons of principle, as well as historical precedent, for concluding that the Lords should not interfere with financial legislation. From what has been said, however, it will also be clear that the proposition that the Lords should not reject SIs containing financial measures should not be allowed to pass as an uncontroversial constitutional truth.

2. Constitutional measures

Financial privilege may not be the only constitutional restraint on the Lords’ powers over SIs. It may be argued that the true principle is that the unelected chamber should not block any legislation approved by the Commons, save only for legislation with constitutional implications, where the Lords may have a legitimate function as a long-stop.

In the realm of primary legislation, the Commons has used the Parliament Acts to enact bills on seven occasions since 1911. Rodney Brazier has argued that, in broad terms, all of these bills “can be said to be constitutional in character, or at least to have constitutional aspects to them”. In similar vein, Halsbury’s Laws takes the view that “the Lords are constitutionally entitled to amend or refuse consent to measures which appear to them to be contrary to constitutional principles”. This doctrine has some statutory basis: Section 2 of the Parliament Act 1911 gives the Lords a veto over bills to extend the lifetime of a Parliament beyond five years. International comparisons also show that second chambers often have enhanced powers over constitutional legislation.

This doctrine deserves to be taken seriously. But if it was accepted in relation to SIs, it would effectively remove the Lords’ ability to veto secondary legislation. It is difficult to think of any constitutional change that would be adopted by way of an SI. The closest precedent was perhaps the Lords’ rejection in 2000 of two SIs relating to the Greater London Authority Act 1999. The SIs concerned the conduct of elections, and there were concerns that they failed to provide for free mailshots for candidates.

3. Measures that should have been put in primary legislation

It could be argued that the Lords should be free to reject SIs whose contents have the character of primary legislation. This was one reason advanced by Viscount Dilhorne, the former Lord Chancellor, for voting to reject an SI on sanctions against “Rhodesia” in 1968. It also seems to have been implicit in Lord Bach’s justification for tabling the motion to reject the Legal Aid SI in 2012. When in 2006 the Joint Committee on Conventions set out examples of circumstances in which the Lords could legitimately reject an SI, several of those circumstances fell into this general category (see para. 229(b)-(e) of the Committee’s report; also here for the Government’s ambivalent response).

The key argument for this position is that the executive should not be able to abuse the SI process. There needs to be some check on using SIs to enact measures which otherwise would or should have been put in a bill. The difficulty, of course, lies in those tricky little words “would or should”.

4. Measures which do not have a mandate

It is generally accepted that the Lords do not reject primary legislation which implements a Government’s manifesto commitments. It could easily be argued that this doctrine – the Salisbury-Addison convention – should apply equally to secondary legislation. The reverse side of this coin would be that the Lords are entitled to reject SIs for which the Government cannot claim an electoral mandate (subject, perhaps, to financial privilege).

This argument was put by Viscount Dilhorne in the debate on sanctions on “Rhodesia”. It was echoed in the same debate from the Conservative side by the Marquess of Salisbury, the progenitor of the Salisbury-Addison convention. The main strength of the argument is that it speaks directly to the weakness of the Lords in this area: that it has no electoral mandate. This need not be such a weakness if it confines itself to rejecting measures for which the Commons has no specific mandate either.

5. Abolish the Lords’ veto

Some have argued that the Lords should lose its veto over SIs entirely. This was one of the recommendations of the Wakeham Report produced in 2000 by the Royal Commission on Lords reform.

This change could be justified on the grounds both of practicality (the Lords hardly ever use the veto) and of democratic principle. Yet democratic principle also requires a meaningful mechanism for scrutinising SIs issued by the executive, as Adam Tucker has recently argued. It is noteworthy that the Parliament Act 1911 did nothing to curtail the Lords’ powers over secondary legislation, even though secondary legislation was already a real thing at the time (the Rules Publication Act was enacted in 1893, and there were already 995 pieces of secondary legislation being adopted annually by 1900). It would arguably be a regressive move for Parliament in 2015 to remove a restriction on executive legislation which was left in place both by the reform of 1911 and by the Parliament Act 1949.

Graham John Wheeler is a solicitor (England and Wales, Republic of Ireland) and an independent researcher.

(Suggested citation: G. J. Wheeler, ‘When Should the Lords Reject Secondary Legislation?’ U.K. Const. L. Blog (7th Dec 2015) (available at https://ukconstitutionallaw.org/))