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Following the (provisional) defeat of the Tax Credits (Income Thresholds and Determination of Rates) (Amendment) Regulations 2015 in the House of Lords last week, a narrative has very quickly been established that this is an incident revolving around the powers of the House of Lords. Amidst suggestions that we are in “constitutional crisis”, the government announced a “rapid review” into the second chamber’s powers. Consistently with this understanding of the situation, Meg Russell argues that the wider political backdrop against which these developments should be understood is that of a Conservative government encountering – for the first time – an occasionally hostile House of Lords. In this post, I suggest an alternative – and I think, better – way of understanding the wider political backdrop to the current situation. We should see this (and react to it) as a controversy not about the balance of powers between the House of Commons and House of Lords, but as a controversy about the extent of executive power in the contemporary constitution. A momentarily (but still very hesitant) activist House of Lords adds nothing to our understanding of the problem of reforming the second chamber. Indeed, that issue is so long standing and well explored that we should know by now to be extremely suspicious of claims that progress can be made through any kind of rapid review. On the other hand, the arguments which have been deployed and hinted at under the guise of that issue in recent days would involve a genuine and substantive increase in the powers of the executive. They should be analysed in that light.
In particular, more sustained attention needs to be focussed on the fact that the provisions reducing the tax credit thresholds were found in a piece of secondary or, more precisely, delegated legislation. This is legislation made by the executive, under the authority of an empowering piece of primary legislation, commonly referred to as a “Parent Act”. Here, the Parent Act is the Tax Credits Act 2002, which empowers (in sections 13(2) and 65(1)) the Treasury to make legislation setting (amongst other things) the thresholds for entitlement to tax credits. The House of Commons and House of Lords act in this process not as legislators but as supervisors, charged with scrutinising an exercise of law-making power by the Treasury.
In this context, many of the constitutional rules and conventions which have been invoked in recent days are straightforwardly inapplicable (although the principles behind them do still apply – I return to this below). For example, the rules on Commons Financial Privilege are a (heavily institutionally systematised) set of rules which seek to accord primacy to the elected chamber in legislative decision making which – necessarily – takes place in collaboration with the House of Lords. Similarly Money Bills are a category in the Parliament Acts; the House of Lords’ power even to delay their passage is dramatically curtailed. But both ideas require there to be a Bill for the Houses to disagree over.
In the tax credits dispute, there is no Bill. So these existing constitutional conventions and rules which allocate power between the Houses as they legislate simply do not apply in the context of the Tax Credits dispute. The Houses were not legislating when they considered the tax credit proposals. They were scrutinising legislation made by the executive. More specifically, the House of Commons did not decide to reduce tax credit thresholds only to find its decision frustrated in the Lords. Rather, it decided to approve a decision by the Treasury to reduce tax credit thresholds. But the Lords – whose approval was also required – did not take the same decision. The legitimacy issues here are related to but different from those which prevail in the primary legislative context, and we should take care to resist attempts to cast the story in those terms. Criticism of the Lords’ decision which is framed in the language of the rules which apply to the legislative process (“financial privilege”, “money bills”, “primacy of the House of commons”) either misunderstands or misstates the constitutional position of delegated legislation.
Delegated legislation is a very common practice in the contemporary constitution. Vastly more delegated than primary legislation is passed each year. And it covers fundamental areas of public life (for example, delegated powers were used to nationalise Northern Rock and to renew the provisions of sections 1-9 of the Prevention of Terrorism Act 2005, the Control Order Regime, each year from 2006-2011). In some senses, it is fair to say that delegated legislation has become the standard form of law-making. In any event, it is certainly the standard way to enact changes to the shape of the tax credits scheme. The Tax Credits Act 2002 empowers the Treasury, and the Treasury routinely exercises those powers (and, until this year, its exercise of those powers has routinely attracted the requisite approval of both Houses): the figures are (mainly) in the Tax Credits (Income Thresholds and Determination of Rates) Regulations 2002 (a piece of delegated legislation), which is itself amended on a regular basis by subsequent delegated legislation (e.g. for uprating, in connection with the transition to Universal Credit, to pursue policy goals). Resort to primary legislation in this context is the exception rather than the rule: (and there is, inevitably, an exception: section 76 of the Welfare Reform Act 2012 makes a small change, again to those 2002 Regulations). So it is wrong to say, as Colin Talbot says, that the government’s use of secondary legislation here was “a very unusual procedure” or to analyse it as a misfiring strategic decision to try and avoid the scrutiny which would have been involved in pursuing primary legislation. This is – for better or for worse – the way we are governed across the whole spectrum of policy areas. Tax credits are just the wholly unexceptional tip of a constitutional iceberg. And this means that if the tax credits defeat prompts proposals to reconfigure the constitution’s treatment of delegated legislation, then the ramifications of those proposals will be far-reaching.
There is no overarching constitutional framework for delegated legislative power. The operation of each instance of delegated power is set out in its Parent Act. Certain practices and patterns do tend be followed though. The most common forms of delegated legislation involve either (what are usually called) the affirmative or negative procedures. Under affirmative procedures, statutory instruments take effect only if they are approved by one or both Houses (as specified in the Parent Act). Under negative procedures, instruments take effect unless they are voted down by one or both Houses (as specified in the Parent Act). Different procedures are, on occasion, specified – the EC Act 1972, for example enacts a hybrid procedure where instruments are vulnerable to annulment unless the government seeks prior approval.
So the detail is determined on a case by case basis. It is not necessarily true to say that the House of Lords has a veto power over delegated legislation. It has that power when, and only when, Parliament grants it in a Parent Act. But that power is often not granted. When primary legislation delegates law-making power over financial matters, for example, it is generally the case that only the House of Commons is accorded a role in scrutinising instruments made under that power. This is how the principles underlying the legislative rules about commons primacy, financial privilege, money bills (and so on) are already accommodated in our standard practices about delegated legislation. So the House of Lords has the veto it (almost) used over tax credits secondary legislation not because of some overarching constitutional structure but because the 2002 Parliament expressly chose to grant it one. Similarly, much has been made about the inflexibility of the House of Lords’ position; it can only reject or accept but not amend the government’s proposals. But it is not necessarily true to say that the House has no power to amend proposed delegated legislation. Parliament can include a power of amendment in the scrutiny processes laid down in a delegation of power, but it chooses to do so only very rarely. There is an example in section 27(3) of the Civil Contingencies Act 2004. The House of Lords could not negotiate over the content of the Tax Credits proposals not because of some overarching constitutional restriction on its powers, but because the 2002 Parliament chose not to grant it that power.
The tax credits proposals are just part of a much bigger picture. And, in practice, what emerges from all the potential variety is that delegated legislation is, if anything, under- rather than over-scrutinised. An effective level of scrutiny would require the government to publicly defend the merits of its proposals, and run a genuine, even if only small, risk of them being voted down. The current arrangements fall short of this aspiration.
The courts police the legality of secondary legislation, applying standard public law standards to ensure it is intra vires, rational and so on. But they do not, and should not, police its merits (and Chris Grayling recently told the House of Commons of his “severe doubts about whether secondary legislation should be subject to judicial review” at all!)
Parliamentary Committees tend to focus the bulk, and sometimes all, of their attention on primary legislation. The Joint Committee on Statutory Instruments reports only on matters “which do not impinge on the merits of the instrument”, as does the related House of Commons committee for instruments which do not require Lords scrutiny. The only committee which systematically tackles the merits of statutory instruments is the House of Lords Secondary Legislation Scrutiny Committee (previously the Merits of Statutory Instruments Committee). There is, then, very little pressure on government to defend the merits of its proposals. And regardless of the outcome of these restricted deliberations, instruments are almost never rejected. Here, the House of Commons essentially plays no role. For (obvious) political reasons, it acts purely as a rubber stamping chamber, if at all. It never (as far as I am aware) annuls instruments made under negative procedures, never (as far as I am aware) refuses to pass motions approving instruments made under positive procedures, and sometimes even approves them without debate. Indeed, the government did not intend to make time for the Tax Credit changes to be debated on the floor of the House until pressured to do so.
In the House of Lords, motions to annul instruments made under the negative procedure essentially never succeed (there is only one example – the Lords’ rejection of the Greater London Authority Election Rules 2000; the proposal was subsequently passed). In fact, time is rarely found to even debate them. A power to make legislation under a negative procedure (whether one or both Houses are empowered to annul) is therefore effectively a power for the executive to legislate free of any effective scrutiny. Thus, the only procedure which carries any real risk for the government is a positive procedure requiring the assent of the House of Lords (the procedure to which the tax credits proposals were subject). But, even here, the House of Lords is very restrained in its use of its power to decline to pass a motion authorising instruments made under the positive procedure. So restrained, in fact, that the government tends to claim that there is a convention restraining it from using that power at all. There is no such convention. The House of Lords passed a motion denying its existence in 1994, The Report of the Leader’s Group on Working Practices concluded that there was “never a House-wide convention” (in para. 148), The Joint Committee on Conventions rejected its existence (in para. 228) and the Companion to the Standing Orders and Guide to the Proceedings of the House of Lords does not even entertain the possibility. Only the government really advocates for its existence and this is best understood as a just-about plausible sounding claim which puts pressure on the Lords to approach their scrutinising functions with caution. There are good reasons (of political legitimacy, of deference to Parliament’s decision to delegate and so on) and regrettable reasons (the realities of time pressure, perhaps a failure to react to the ever growing importance of delegated legislation) for this caution. But it is important to notice that if caution were amplified into a convention requiring inaction, that would denature the only effective procedure that there is for delegated legislation, and thus free executive law-making from all effective scrutiny. The terms of reference of the government’s rapid review include a reference to securing “the decisive role of the elected House of Commons in relation to secondary legislation”. But the House of Commons does not have, and cannot be expected to exercise, any such role. This is not a statement of a constitutional principle which is endangered. Rather, it plays on (sound and widely known) worries about the legitimacy of the House of Lords as a legislative body in order to undermine the only (but even then reticent) body we have to scrutinise delegated legislation.
In the realities of modern government we cannot and should not seek to eliminate legislation by the executive. As Ian Loveland memorably (and rightly) said, “[t]o reject altogether the process of delegated legislation … is to reject the substance of social democratic government.” But it is a constitutional phenomenon that should be treated with great caution – a straightforward and potentially dangerous violation of the separation of powers. And, in constitutional terms, that caution should be expressed through effective scrutiny of the exercise of delegated legislative power. But we are right on the edge of no scrutiny at all. The House of Lords is not the ideal body to perform that scrutinising function, but it is (for now) fair to say that it is the only body which properly performs it at all. So, despite that House’s obvious democratic inadequacies, we should understand the tax credits argument and – more importantly – any proposals about delegated legislation which come out of the rapid review, as proposals about executive power rather than as proposals about the democratisation of the House of Lords.
Adam Tucker is 50th Anniversary Research Lecturer in Law at the University of York.
(Suggested citation: A. Tucker, ‘Tax Credits, Delegated Legislation, and Executive Power’ UK Const. L. Blog (5th Nov 2015) (available at https://ukconstitutionallaw.org/))