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Meg Russell: The Lords, Politics and Finance

Cross-posted from the Constitution Unit blog.

Meg RussellIn the aftermath of last Monday’s Lords defeats on tax credit cuts there has been much talk of a ‘constitutional crisis’. In this post Meg Russell argues that whilst that vote was certainly unusual, the most significant change is the wider political context: that it is a Conservative government on the receiving end of repeated defeats in the Lords. Much like Labour ministers under Blair and Brown, Conservative ministers will need to learn how to handle a relatively assertive House of Lords in which they lack a partisan majority.

A Conservative government seems to be at war with the House of Lords. The Daily Telegraph claims that the Lords is ‘undermining democracy’. What on earth is going on? Has the Lords suddenly lost hold of its senses and begun acting entirely without precedent? To listen to some government supporters, in particular, one would assume so. Ministers have suffered a string of defeats since May 2015 – a total of 19 up to and including this Monday. The most controversial, of course, was the chamber’s decision to delay approval of the tax credits regulations, which has caused some to proclaim a ‘constitutional crisis’– and has subsequently sparked the government to announce a review into the chamber’s policy powers.

There are aspects of Monday’s tax credits vote which were undoubtedly unusual. As explored in an earlier post on the Constitution Unit blog, defeats in the Lords on ‘delegated legislation’ (the proposed vehicle for the tax credit changes) are relatively rare. There have been only four previous occasions when such measures were blocked outright by the Lords. None of these (on sanctions against Rhodesia in 1968, the London mayoral elections in 2000, the Manchester ‘supercasino’ in 2007 and access to legal aid in 2012) had such major financial implications as Monday’s vote. This fuelled claims that the Lords was breaking centuries-old convention by not respecting the Commons’ financial primacy. Yet the parent act, the Tax Credits Act 2002, had explicitly given the House of Lords a veto over such orders – even though it is quite possible for explicitly financial legislation (as detailed in this excellent Hansard Society blog) to create orders that require the approval only of the Commons. The well-respected Lords Statutory Instruments Scrutiny Committee had drawn the measure to the attention of the House on the basis of inadequate information about its impacts (a circumstance which the 2006 Joint Committee on Conventions explicitly suggested could merit use of the veto power (para 229)). In fact, the most clearly innovative thing about Monday’s vote was that the Lords did not reject the government’s proposals outright via a ‘fatal’ motion, but only imposed a delay – in the case of  Baroness Meacher’s motion until further information became available.

The biggest change amidst all of the accusations and counter accusations is the wider political backdrop: that it is a Conservative government crying foul following repeated defeats by the Lords. That such a situation should occur was fairly predictable – as I detailed in a blog post a few days after the 2015 election, and alluded to previously in my 2013 book on the Lords. But it is very new, as the Conservatives dominated the chamber throughout the 19th and 20th centuries. Indeed, I have long argued that the fact that we no longer have the ‘same old’ House of Lords following the Blair government’s 1999 reform would only become apparent to most people once we had a majority Conservative government. This week that moment arrived with gusto.

The House of Lords was undoubtedly emboldened by the 1999 reform, which removed the majority of hereditary peers from membership. This resulted in a ‘no overall control’ chamber, in which the Conservatives lost their previous inbuilt advantage. Instead no party had an overall majority, leaving the balance of power with the Liberal Democrats and independent Crossbenchers. My research showed that peers felt more confident to challenge the government as a result. This greater sense of legitimacy, in turn, made the pre-existing conventions (including that on secondary legislation) increasingly fragile. In a 2007 survey, 44% of peers – including 52% of Conservatives – said that they felt the chamber’s powers over secondary legislation were ‘too weak’. Such a mood contributed to the context in which the Joint Committee on Conventions was set up.

After 1999 the number of government defeats in the House of Lords increased. But the Lords was defeating a Labour government, which to many looked like nothing new. As shown in the graph below, the clearest distinction was not between the number of Lords defeats per session pre- and post-1999, but between that under Labour governments (shown in red) and Conservative governments (in dark blue).

As is also shown in the graph the number of defeats under the Conservative/Liberal Democrat coalition (pale blue) was relatively modest – particularly once it is noted that the 2010-12 session, unlike all the others over the period, ran for a full two years. On an annual basis, the number of defeats under the coalition was more similar to that under previous Conservative governments than under Labour. On top of this, there were far fewer sustained arguments between the coalition and the Lords than occurred during 1997-2010. Partly thanks to the government’s greater numeric strength in the chamber, given the support of the Liberal Democrats, peers tended to back down rather than keep arguments going if MPs rejected their amendments.

Meg chart Lords defeats

Another contributing factor during this period, which reared its head very clearly again this week, was the question of Commons’ financial primacy. One of the biggest rows between the coalition and the Lords concerned the Welfare Reform Bill 2010-12, where peers inflicted defeats over matters such as introduction of the overall benefit cap, and the so-called ‘bedroom tax’. These were immediately rejected by the House of Commons by invoking ‘financial privilege’, with ministers suggesting that peers would be acting improperly if they pressed their case further. The Commons response proved highly controversial, including with some on the government’s own backbenches, and led to confusion about how and when financial privilege applied.

In order to address these questions, we conducted a Constitution Unit project, which found that there was much in the current arrangements that was unclear. This work focused largely on application of financial privilege to House of Lords amendments, which is only one part of the Commons’ broader ‘financial primacy’ (which also includes, for example, the Lords’ reduced power over money bills under the 1911 Parliament Act). While some of the limitations on the Lords’ power (particularly with respect to money bills) are quite clear cut, we found that most of the boundaries in terms of what is or is not financial, and what is or is not consistent with precedent, are distinctly fuzzy. In addition, as our report emphasised, changed politics may change the interpretation, and the operation, of the conventions. In particular, the novel situation of a right-leaning government potentially facing a left-leaning House of Lords raised new challenges – further heightened in a political context of ‘austerity’. While the Blair governments faced opposition from the Lords on issues such as civil liberties, over which the Liberal Democrats and Conservatives could unite, for the coalition, and even more so the 2015 Conservative government, the primary battleground is spending cuts. The Lords did not challenge Blair and Brown over finance; economic times were mostly good, and peers raised few arguments about generous public spending. But the change of government, and of broader economic context, places such arguments at the heart and centre of political debate. An assertion of Commons’ financial primacy is hence useful to a government engaged in cuts. It may in contrast be less necessary to a government boosting spending, since a vote-seeking opposition may be disinclined to court unpopularity by reining the government in. Hence the application of financial primacy is not only technically tricky, and very open to interpretation, it also has a political edge.

So what is to be done? Lord Strathclyde’s review has been tasked with looking at ‘how to protect the ability of elected governments to secure their business in parliament’, and ‘in particular how to secure the decisive role of the elected House of Commons in relation to (i) its primacy on financial matters and (ii) secondary legislation’. Various options exist, such as removing the veto power over secondary legislation (as recommended by various groups, including the 2000 Royal Commission on Lords reform), and further codification of restrictions on the Lords’ financial powers. But to be fully enforceable any such change would require primary legislation, and would be likely to be disputed (not least by the Lords itself). With regard to the latter, even the drafting (given that most policy has some financial impact) could prove tricky. A gentler approach would be to return to seeking cross-party agreement on the interpretation of conventions, as pursued by the Joint Committee on Conventions in 2006. This would require both the opposition and the government to sign up to some principles of restraint.

In the end, the easiest route out of the current difficulties is almost certainly political, not legal. Viewed in the broader context, recent events can be seen as a return to the status quo ante, as applied under Blair and Brown. That is, a government having to handle a relatively assertive House of Lords in which it lacks a partisan majority. Conservative ministers who served in the coalition found themselves lulled into a false sense of security. As I pointed out in my post in May, gaining a slender Commons majority should not have been read as an indication that handling parliament was going to get easier – indeed, if anything the reverse.

The post-1997 Labour governments had some rocky times with the Lords; in the 2002-03 session alone the chamber inflicted 88 government defeats. Blair did try to ‘take on’ the Lords – most notably over his anti-terrorism legislation – but soon learnt how this could backfire, as such battles sometimes just boosted the public image of peers as plucky defenders of principle instead. Labour gradually learnt that inflammatory language was a less effective weapon than calm negotiation – and that when concerns by the Lords echo those of your own backbenchers it is often better just to back down, as occurred quite publicly over 42 day detention without trial. Otherwise, as Blair learnt on the Racial and Religious Hatred Bill, you may even face the embarrassment of your MPs backing the Lords’ position. The best strategy for ministers is almost always to avoid defeat altogether by thinking through in advance what parliament (and particularly government backbenchers) will ultimately be prepared to accept.

Returning to finance, the closing words from our 2014 report on financial privilege now seem rather prescient:

It must be recognised that arguments about financial privilege are ultimately part of a bigger political debate about the powers of the Commons and the Lords, and that for so long as arrangements rest on convention they remain extremely fragile. These tensions are unlikely to be resolved any time soon – with or without Lords reform. All parties, and particularly the government, thus need to apply caution in not inflaming tensions too far.

Professor Meg Russell is the Director of The Constitution Unit and author of The Contemporary House of Lords: Westminster Bicameralism Revived (Oxford University Press, 2013).

(Suggested citation: M. Russell, ‘The Lords, Politics and Finance’ U.K. Const. L. Blog (2nd Nov 2015) (available at https://ukconstitutionallaw.org/))

This post originally appeared on the Constitution Unit blog, and is reposted here with thanks.

5 comments on “Meg Russell: The Lords, Politics and Finance

  1. Jenny Meade
    November 2, 2015

    Thank you for all the useful information. To me the most important issue is that the members of parliament are making the wrong decisions based upon either no genuine knowledge of the subjects concerned, of indeed no actual passion to do the right thing for ALL the British people. Are you or other uses of this site for example trying to find a way to stop the massive Tax Evasion & corruption with which our Government is involved via their advisers. We need Global Laws to solve the problems of massive multi-national, multi-subsidiary companies who basically steal natural resources worldwide which creates poverty, unrest, and war, to the benefit of the Arms manufacturers and dealers. Do any of you work with the international “Tax Justice Network” & or co-founders John Christensen &/or Quaker Richard Murphy who has a daily blog on “Tax Research UK”.
    We need people like you to work on these huge issues. Bradford University Peace Centre which is supported by Rotary International, and the Quakers are all interested in getting to the route of all evil.

  2. Gordon J Sheppard
    November 2, 2015

    David Cameron complaining of the House of Lords actions in defeating the “Credit Tax” legislation asserted that the legislation had been passed in parliament ‘five times’. That may have been so; but, each of those votes taken in parliament were under the influence of the political party WHIPS; and the WHIPS activities in parliament ‘instructing Members of Parliament on how they should or must vote’; has no legality at all. See “GREAT BRITAIN’S WRITTEN CONSTITUTION” here: http://pamphletteer.blogspot.co.uk/2015/10/written-constitution.html

  3. Pingback: Adam Tucker: Tax Credits, Delegated Legislation, and Executive Power | UK Constitutional Law Association

  4. Pingback: Robert Brett Taylor: The House of Lords and Constitutional Conventions: The Case for Legislative Reform | UK Constitutional Law Association

  5. lyndon @ cls
    January 5, 2016

    Have you noticed that the “common people” of this country are demonstrating their dissatisfaction via petitions?

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