Welfare Reform Bill

My Lords, I beg to move the Motion on behalf of my noble friend Lord Freud. I also felt that it might be a useful opportunity for me as Leader of the House to say a few words about the relationship between the two Houses and, in particular, the financial privilege of the House of Commons. After all, this being Valentine’s Day, it is not a bad time to talk about relationships. Perhaps I may begin by commending to the House the statement made by the noble Baroness, Lady Royall of Blaisdon, on 10 February 2009. Everything I say today is based on that material and I am grateful that there is not an inch between us. I also commend the paper on the subject by the Clerk of the Parliaments of 10 February 2009, yesterday’s update by the current Clerk of the Parliaments, and the note published by the Clerk of the House of Commons last Thursday. All three documents are available in the Library and online. They all accord with each other and clearly set out the position, which I shall now try to do with something approaching the same clarity and accuracy. Even for a Conservative, the financial privilege of the House of Commons cannot be considered new. Its origins lie in the constitutional settlement that followed our civil war. The Commons agreed its first resolution on the subject in 1671, and in 1678 resolved that: "““All aids and supplies, and aids to his Majesty in Parliament, are the sole gift of the Commons; and all bills for the granting of any such aids and supplies ought to begin with the Commons; and that it is the undoubted and sole right of the Commons to direct, limit and appoint in such bills the ends, purposes, considerations, limitations, and qualifications of such grants, which ought not to be changed or altered by the House of Lords””." That resolution settled the relationship between the two Houses for a long time, until the trauma of the Finance Bill of 1909 when this House rejected Lloyd George’s Budget. That led to the Parliament Act of 1911, which put the legislative relationship between the two Houses on a statutory footing and formally circumscribed our role in Bills which deal exclusively with expenditure or taxation or the granting or raising of loans—Bills referred to as money Bills. For the avoidance of doubt, the Welfare Reform Bill is not a money Bill. It is a normal public Bill, some provisions of which relate to expenditure. At this point I should make clear that the Commons’ financial privilege has, from its origins, extended to both taxation and expenditure. As successive editions of Erskine May have put it: "““The Commons’ claim to sole rights in respect of financial legislation applies indivisibly to public expenditure and to the raising of revenue to meet that expenditure””." The idea that it is novel for the Commons to assert its financial privilege for public expenditure as opposed to taxation is simply wrong. That is the history, but what are the implications for today and thereafter? The position is as it was throughout the 20th century. As the Clerk of the Parliaments put it in his 2009 paper, "““until the Commons asserts its privilege, the Lords is fully entitled to debate and agree to amendments with privilege implications””." That is what we did in this case; and were perfectly entitled to do. I vigorously defend the right of the House to ask the Commons to reflect, and indeed I did so myself in opposition. What happens next is entirely a matter for the House of Commons, and I intend to respect the convention that the two Houses do not debate the other’s procedures. I can though direct Members of this House to the helpful memorandum by the Clerk of the House of Commons which makes clear that it is the Commons officials under the authority of their Speaker who determine whether each Lords amendment engages financial privilege before the House of Commons is invited to accept or reject each amendment. The Government have no role in this decision; and the Clerk of the Commons has made that clear. It should not come as a surprise to anyone that in this case the Commons authorities decided that the 11 Lords amendments which we have before us today engaged financial privilege: their cumulative cost is more than £2 billion. So the idea that this was a knife-edge decision reached only after lobbying by the Government is simply implausible. It is only after the question of privilege has been determined that the Commons considers whether to agree or disagree with each Lords amendment. If the Commons agrees, it can choose to waive its privilege. But if it disagrees, it must offer a reason, and the only reason it can give is privilege. As the Clerk of the Commons explains: "““If an amendment infringes privilege, that is the only reason that will be given. This is because giving another reason suggests either that the Commons haven’t noticed the financial implications, or that they are somehow not attaching importance to their financial primacy””." I hope that three things are clear from that summary: first, that the scope and presence of privilege are solely for the Commons; secondly that the Government have no role in designating whether or not a Lords amendment impinges on privilege; and last, that when the Commons disagrees with a Lords amendment found to involve money, privilege is the only reason that it can possibly cite for rejecting the amendment—there is no discretion to give another reason. The whole House should be grateful to the noble Lord, Lord Martin of Springburn, who has twice in recent weeks made these very points to help our understanding. I think that this notion of discretion is where much of the confusion lies, so I propose now to say a word about the ability of the Commons to waive its privilege. If a Lords amendment which has financial implications is within the existing Commons’ money resolution, the Commons may agree to that amendment and, in so doing, waive its privilege. But if the Commons disagrees to the amendment, the question of waiver does not arise: the Commons must give this House a reason and that reason must be a privilege reason. In other words, the designation of a Lords amendment as privileged does not preclude the Commons from accepting it. In fact, the only question for the Commons is whether to accept or reject each Lords amendment on policy grounds. If it accepts the amendment, privilege is waived; if it rejects it, privilege cannot be waived. On the Welfare Reform Bill, the Commons authorities found that privilege was engaged in 46 of the 110 Lords amendments. The Government asked the Commons to agree to 35 of those 46 amendments and to reject the remaining 11. In agreeing to those 35 Lords amendments, each a concession to this House, the Commons waived its financial privilege for more than £300 million of public expenditure. Therefore, we are really talking only about the remaining 11 Lords amendments, which, on policy grounds, the Government could not accept and which they asked the House of Commons to reject. When the Commons voted to reject each of those amendments, the only reason it could cite was privilege. There is a further reason why privilege reasons should not surprise us: we receive them regularly and have long received them regularly. Earlier this Session, the Commons asserted its financial privilege when rejecting Lords amendments to the Identity Documents Bill. It did the same in the previous Parliament on Bills as varied as the Counter-Terrorism Bill and the Personal Care at Home Bill—a telling statistic, given the vast sums of public money that were then being spent. Of course, it also did so when Mr Blair was Prime Minister, and it did so in the 1980s and 1990s when the Conservatives were last in office. I hope that that deals with the facts and the precedent in this area. I shall now briefly try to explain the options for this House today. The Companion makes it clear that: "““In such cases the Lords do not insist on their amendment. But they may offer amendments in lieu of amendments which have been disagreed to by the Commons on the ground of privilege””." I respect, and would defend, the right of this House to propose an amendment in lieu when the Commons has rejected our original amendment on grounds of financial privilege. However, I should remind the House that the Joint Committee on Conventions reported in 2006 that: "““If the Commons have disagreed to Lords Amendments on grounds of financial privilege, it is contrary to convention for the Lords to send back Amendments in lieu which clearly invite the same response””," and this House ““took note with approval”” of that report in 2007. As the Clerk of the House of Commons recently put it, a privilege reason, "““does not exclude a second try by the Lords””," but if the Commons has asserted privilege, there is simply no point in this House persisting with amendments in lieu which invite the same response. That is not closing down debate or rendering our work pointless. There is full debate in both Houses. We have asked the House of Commons to think again. The only effect of the privilege reason is to send the signal that it is unprofitable for the Lords to persist with amendments in lieu on the same lines as the original. I think we need to look at today’s Marshalled List in that light. I urge the House not to test our longstanding relationship with the other place. It is perfectly in order to debate the amendments on the Marshalled List today but it is simply unprofitable to send back to the Commons any of those amendments which invite the same privileged response from the Commons. Despite those dangers on the Marshalled List, I think that today we find ourselves in a rather good position. I do not want to pre-empt my noble friend Lord Freud but I think that he will have some useful things to say from this Dispatch Box in a few moments. My intention this afternoon has been to clarify the longstanding position on financial privilege and the relationship that exists between both Houses. I urge your Lordships to listen to my noble friend Lord Freud to see whether, irrespective of privilege and legislation, he can offer the assurances and reassurances which many Members are seeking on the substance of the policy that this Bill seeks to introduce. On that basis, I beg to move that the Commons reasons and amendment be now considered.