UK Constitutional Law Association

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Andrew Denny: Would a Bill Seeking an Article 50 Extension Require a Money Resolution Proposed by the Government?

Introduction

The on-going constitutional laboratory experiment that is Brexit has now turned to the question of whether a bill proposed by a backbench MP can be passed into law against the express opposition of the Government.  This scenario gives rise to a number of issues, including whether Parliamentary rules in the form of its standing orders, will need to be amended to enable this.  A number of commentators, including on this blog, have even considered the question of whether in those circumstances, ministers could advise the Queen to refuse Royal Assent to such a bill.  One of the most eminent of these, Sir Stephen Laws, has argued here such a situation might arise if the Speaker endorsed “… an attempt to bypass the financial Standing Orders and allowed a Bill to pass that contravened them”, a situation he describes as “potentially horrific”.

In particular he considers that legislation to produce a postponement or cancelation of the repeal of section 2(3) the European Communities Act 1972 – which makes provision for the UK’s financial obligations to the EU – would result in significant financial impact on the public purse.  Under existing standing orders, such a change in law, he argues, would require a resolution of the House recommended by the Crown.  A similar argument has been made by Joe Armitage and most recently by Vernon Bogdanor.

This post does not attempt to grapple with the wider issues around Royal Assent or whether it is in fact constitutionally proper for Parliament to seek to overrule the Executive in this manner.  Instead it focuses on the narrow (but nonetheless important) issue of whether a bill which has as its objective an extension or cancellation of the Article 50 Notice would in fact require a money resolution sponsored by the Government under existing standing orders.  The conclusion set out below is that no such resolution would be required.

Section 2(3) of the 1972 Act

The relevant wording of section 2(3) of the 1972 Act is as follows:

(3) There shall be charged on and issued out of the Consolidated Fund or, if so determined by the Treasury, the National Loans Fund the amounts required to meet any EU obligation to make payments to the EU or a member State … .

The payments made pursuant to this provision are categorised as Standing Services, as they are exempt from the usual requirement for expenditure to be voted on annually, as Parliament has, by this provision, permanently authorised such payments.  Under section 1 of the European Union (Withdrawal) Act 2018, section 2(3), and the rest of the 1972 Act, is repealed on exit day, currently 29 March 2019.  It is worth noting that section 1 is not yet in force, and will only come into force on such date as a Minister of the Crown specifies by regulations.

The Financial Standing Orders

The Standing Orders in question are SO 48 and 49:

Recommendation from Crown required on application relating to public money.

 

48. This House will receive no petition for any sum relating to public service or proceed upon any motion for a grant or charge upon the public revenue, whether payable out of the Consolidated Fund or the National Loans Fund or out of money to be provided by Parliament, or for releasing or compounding any sum of money owing to the Crown, unless recommended from the Crown.
Certain proceedings relating to public money. 49. Any charge upon the public revenue whether payable out of the Consolidated Fund or the National Loans Fund or out of money to be provided by Parliament including any provision for releasing or compounding any sum of money owing to the Crown shall be authorised by resolution of the House.

These provisions are somewhat dense, but in brief SO 49 requires for these purposes that an enactment creating new and continuing expenditure must be authorised by a resolution of the House (a so-called “money resolution”), and SO 48 stipulates that any such resolution must first be recommended by the Crown.

Erskine May describes the requirement set out in SO 48 as a “…long-established and strictly observed rule of procedure, which expresses a principle of the highest constitutional importance, that no charge on public funds or on the people can be incurred except on then initiative of the Crown” (Page 716).  Sir Stephen Laws in the above-mentioned paper justifies this principle as follows (page 7):

The electoral system itself, so far as it is a means of holding the Government accountable to the public, depends crucially on the ability of the public to hold the Government responsible for how it has used the principal lever of government – the use of public money. Removing that responsibility would undermine the whole UK constitutional system.

Is there a need for a money resolution for a bill seeking to extend or cancel the Article 50 Notice?

Sir Stephen Laws’ argument is as follows:

It follows that any legislation to produce a postponement of the repeal [of section 2(3)], or its cancellation, will revive that provision (if only temporarily) and so be changing the law in a way that potentially carries a very substantial financial burden on the exchequer. It may be that the expenditure would continue under the proposals for a transition period, but there is no legislation for that yet in place and it cannot be taken into account.

The problem with this argument is that it overlooks the actual words of SOs 48 and 49.  They refer to the authorisation of, or a motion for, “a charge on the public revenue”.  Here, the charge on the revenue permanently authorising the payments to the EU was created by section 2(3) of the 1972 Act, which would have been authorised at the time by the appropriate monetary resolution put forward by the Crown.  Until such time as the repeal of section 2(3) (and the rest of the 1972 Act) comes into effect, that charge remains in place.  That charge does not need to be “revived” as it has not yet been removed.  So a bill seeking the extension or cancellation of the Article 50 Notice would not need to create a “charge upon the public revenue” under SO 48 or 49 as the repeal of section 2(3) has not yet come into effect and so payments to the EU can continue pursuant to the pre-existing charge.  Similarly, the authorisation for such charge given by the money resolution proposed by the Crown at the time also remains in place and so no further authorisation is required.

This interpretation is supported by Erskine May’s view of the requirements of SOs 48 and 49 (page 746):

Standing Orders Nos 48 and 49 apply in cases where a proposal involves a ‘charge upon the public revenue’ (see p 712). In practice, this is interpreted to mean a proposal for new or increased expenditure, which is not already covered by legislative authorisation.

In this case, the expenditure is not new – it is on-going currently – and it is already covered by legislative authorisation in the form of section 2(3) and its accompanying money resolution.  The fact that that section is currently scheduled for repeal does not alter the fact that it remains in force at this point in time.  Any payments to the EU would still cease (subject to any separate transitional provisions) if and when section 2(3) was repealed on a delayed exit day, as the authorisation for such payments flows from section 2(3), not from any legislation extending that deadline.

The position would have been different had the original charge and its accompanying authorisation been time limited: Erskine May is clear that any extension to such a time period would require authorisation by a money resolution (page 750).  But that is not the case here, as the original charge and its authorisation were indefinite.  If and when the repeal of that charge and authorisation pursuant to section 1 of EUWA comes into effect, any further payments (including pursuant to any transitional arrangements) would of course require a fresh money resolution as this would be “new expenditure”.  But for the moment, it should be possible to rely on the existing indefinite authorisation to continue the status quo.

Conclusion

In the current febrile environment, any route which could avoid an issue blowing up into yet another constitutional crisis should be welcome.  In this situation, the way through should be to regard a bill seeking to delay or extend the Article 50 deadline not as an usurpation of the Government’s control over legislation having a financial impact, but instead as simply operating under an existing authorisation pursuant to the 1972 Act.

The author would like to thank Jack Simson Caird for his comments on the original idea for this article.

Andrew Denny is a partner in Allen & Overy LLP’s London office and head of the firm’s UK Public Law Group. All opinions are his own.

(Suggested citation: A. Denny, ‘Would a Bill Seeking an Article 50 Extension Require a Money Resolution Proposed by the Government?’, U.K. Const. L. Blog (28th Jan. 2019) (available at https://ukconstitutionallaw.org/))

5 comments on “Andrew Denny: Would a Bill Seeking an Article 50 Extension Require a Money Resolution Proposed by the Government?

  1. Aaron Nelson
    January 28, 2019

    “It is worth noting that section 1 [EUWA] is not yet in force, and will only come into force on such date as a Minister of the Crown specifies by regulations”

    The fact s.1 EUWA is not yet in force is consistently ignored by both media commentators and politicians. Both consistently assert that the default position in UK law is that the UK is leaving the EU on 29 March. It seems to me that isn’t the case until s.1 is brought into force, and that requires a ministerial order, i.e. a positive act by the Government. If the UK were to seek, and were granted, an Article 50 extension by the EU, the government could decline to bring s.1 into force (for now), and change EUWA’s “exit day” to another date using the ministerial order making powers in EUWA s.20(3) and (4).

  2. Anthony
    January 28, 2019

    This argument is interesting but it seems to rest on this notion:

    “The position would have been different had the original charge and its accompanying authorisation been time limited: Erskine May is clear that any extension to such a time period would require authorisation by a money resolution (page 750). But that is not the case here, as the original charge and its authorisation were indefinite.”

    However, that final sentence is no longer the only relevant one. The ECA72 may have allowed for spending over an indefinite period, but the EUWA18 explicitly made the period for which the spending was allowed a definite period, superseding the indefinite period set out in 1972. The period extends until exit day which is set, currently, as 29 March 2019. The act is in force now in the sense that the original, indefinite period of spending has now become definite. That has definitely happened in law, surely?

    One intention of the EUWA18 must surely be, then, to prevent further spending after that date. That being the case, surely, spending beyond 29 March 2019 is new and must be requested by the government.

    Indeed, the expected payments to the EU under the transition period, which would have been made under membership of the EU anyway, will surely require a money resolution in the perhaps forthcoming EU Withdrawal Agreement Act 19. By the argument in the text, couldn’t we simply use the ECA72 money resolution to pay this? But that is surely not acceptable.

    I’m not sure that ultimately the money resolution will turn out the way it is expected. Even if changing exit day requires a money resolution, suppose that resolution is not forthcoming and the commons and lords pass the bill anyway, with exit day unmoved. The government will be obliged to request an extension, and suppose the EU grants it. Then the government will be in the strange position of having achieved the Commons’ goal of extending the article 50 period but without the domestic law to support it. Under the Rule of Law principle that guides the government’s approach to foreign affairs, would the government then be politically obliged to change exit day and provide the money?

    What strange times.

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