Peers unhappy with inappropriate use of delegated powers and guidance

12 Jul 2019

Peers debated the legislative process on June 12th, drawing in particular on two reports produced by the House of Lords Constitution Committee,

The two reports were:

(NB. A third report - The Legislative Process: The Passage of Bills Through Parliament has been published since the debate, on 8 July 2019.)

CIOT submitted written evidence that contributed to both reports.

In our submission to the Preparing Legislation for Parliament element of the inquiry CIOT:

  • Argued for a reversion to one principal fiscal event a year to reduce the volume of legislation (sinec adopted by government);
  • Supported the work of the Office of Tax Simplification and argued an appropriately resourced OTS could have its remit expanded to allow it to look at some draft legislation;
  • Called for greater consistency of definitions used in legislation;
  • Stated that we see no reason why the process of amending tax law incorporated from EU law should be different from the process for other changes;
  • Argued that technology can be used to make consultation more accessible and communication more effective, for example through the use of webinars;
  • Expressed concern that there are still too many occasions when changes are rushed through, or consultations start at too late a stage;
  • Expressed concern about the quality of information published alongside tax measures;
  • Observed that meaningful parliamentary scrutiny of tax legislation is made difficult by technical complexity and the constitutional importance of 'supply'.

In our submission to the Delegation of Powers element of the inquiry CIOT:

  • Opined that delegated powers should be used only to deal with technical matters or the finer detail of matters decided by Parliament;
  • Stressed the importance of a thorough consultation process with adequate time to receive, consider and act on responses;
  • Warned that secondary legislation may lead to legislative measures not receiving the proper level of external challenge and scrutiny before implementation;
  • Stressed the particular importance of effective scrutiny of Brexit-related secondary legislation;
  • Noted the importance of clarity around which version of EU legislation the Government intends to follow and what position is to be taken on the decisions of the CJEU as to the proper interpretation of that European legislation.

The debate

Lord Norton of Louth (Conservative), a former chair of the Lords Constitution Committee, opened the debate. He noted that an earlier report of the committee, from 2004, had recommended “that Bills should be subject to pre-legislative scrutiny as the norm and not the exception, and that there should be a structured process of post-legislative scrutiny, assessing Acts against the criteria set for achieving their purpose. We also advanced proposals for the more effective examination of Bills as they pass through Parliament, including that every Bill should at some stage during its passage be subject to scrutiny by an evidence-taking committee. Some of our recommendations were subsequently adopted, and now form an integral part of the legislative process, such as improvements to explanatory materials and the Government undertaking a review of most Acts within six years of their commencement.”

He noted that the recommendation “that the Committee stage of each Bill should provide the opportunity for the public to give evidence—has been adopted for Bills that start in the House of Commons but not for those that start in your Lordships’ House. This is a matter to which the committee may return in a subsequent report.”

Turning to the current investigation he said that perhaps the biggest area of concern was “the quality of legislation that the Government introduce to Parliament. This is not a reflection on the standards of the drafting of legislation and the work carried out by parliamentary counsel. Our concern is with the quality control function of the PBL Committee of the Cabinet. That control is not what it could and should be. In our report, we endorse the proposal for the creation of a legislative standards committee, to develop and monitor a set of standards that legislation must meet before it can be introduced. This work would ensure that Bills introduced to Parliament are ready for its scrutiny, and that the essential explanatory materials accompanying Bills are complete and satisfactory.”

On delegated powers, Lord Norton observed that “Regular readers of the Delegated Powers Committee’s reports, as well as our own, will know that the Government’s use of delegated powers is regularly found to be inappropriate. It is constitutionally unacceptable that the Government seek to create criminal offences as well as new public bodies by secondary legislation, to which only limited parliamentary scrutiny applies. The Government’s response to our report suggested that such uses of delegated powers are, “likely to be few and far between”. We do not find this persuasive.” He was also critical on ‘Henry VIII powers’.

He was disappointed that the government responses to both reports “seek to defend existing practice and concede nothing”. But he noted that some of the committee’s proposals “are matters for the House, not the Government, such as the recommendation for a legislative standards committee. I very much hope that this recommendation will be taken up by the Liaison Committee as part of its current review of committees, and likewise with the proposal for a post-legislative scrutiny committee.”

Lord Beith (Lib Dem) commented that the two reports being debated were “linked by cause and effect. Excessive and inappropriate use of the delegation of powers undermines the quality of legislation, leading to legislation that is unclear, incoherent, inaccessible or badly scrutinised. Furthermore, the excessive use of regulations to fill in the gaps in legislation is often a consequence of a failure to prepare legislation properly. The policy has not been worked through and properly consulted on, so the Bill leaves gaps to be filled by regulations. This is particularly the case when new elements are added to a Bill in the course of its passage through Parliament. All new laws should have to pass the tests suggested to us by the Office of the Parliamentary Counsel: is it necessary, effective, clear, coherent and accessible? Many new laws do not, at least in part, pass those tests.”

He noted that the House of Lords “has a device to identify and object to failings in statutory instruments—regret Motions—but these have no direct effect; they are not fatal. They may be appropriate, but an expression of opinion is all that your Lordships intend. They are not adequate to prevent the fundamentally inappropriate use of a statutory instrument, which brings me to the case of the tax credits regulations of 2015, which had far-reaching effects. This House passed a delaying Motion. The Government had a blue fit and called in the noble Lord, Lord Strathclyde, to act as a sort of one-man fire brigade, but then abandoned the proposed regulations—an appropriate course of action in the end. In paragraph 109 of our report we set out why we think it is wrong to frame discussions on the question of what happened in that instance as if it were about the balance of power between the two Houses of Parliament, the Lords and the Commons. It is not; it is about the balance of power between Parliament and the Executive, about whether and how the Executive should be held to account.”

Lord Hunt of Wirral (Conservative) said the time had come “for us to go back to first principles and examine why we are all here in this place and how we might best fulfil our responsibilities to the British people.” He said he was particularly disappointed with paragraph 7 of the Government’s response to the report on delegated powers, in which the Leader of the House of Commons said: “It is not always possible to set a clear dividing line as to what amounts to a matter of policy and what constitutes ‘filling in the detail’”. Hunt’s answer to this was “of course it is possible—and vital, too. Why on earth cannot Governments see that, whatever their complexion? As the Secondary Legislation Scrutiny Committee of this House [has warned]… “significant policy developments should not be merged with a mass of minor adjustments to the extent that they risk being overlooked”. Quite right.”

Lord Mackay of Clashfern (Conservative), a former Lord Chancellor, observed that the Constitution Committee “has suggested a standards committee for legislation. I wonder whether that can be done in the abstract. I would prefer to make it a binding obligation, so far as that is possible, on the committee of the Government who authorise a Bill to be placed before Parliament to have regard to the standards required to make the Bill reasonably capable of being dealt with under the available parliamentary procedure.”

Lord Mackay also commented on “a terrific, absolutely extraordinary growth in what is called guidance. Whose ​guidance is it, I ask? My late good friend, a Permanent Secretary at the Scotland Office, used to say that guidance was usually couched in the mysterious passive, which you can see if you look at it. The “mysterious passive” is a favourite expression. It is not “my” opinion or “my” guidance; it is written as, “it is thought that”, “it is required that” or “it is considered that”. The amount of that has grown beyond all recognition and it is at least as fatal to good lawmaking as any kind of Henry VIII clause.”

Lord Trefgarne (Conservative), chairman of the Lords’ Secondary Legislation Scrutiny Committee since 2015, noted that secondary legislation holds a particular interest for him. He noted the Constitution Committee’s deprecation of the use of guidance to assist the interpretation of legislation or to fill “policy lacunae”. In his committee’s annual report at the end of the 2016-17 Session, “we echoed this concern when we called for a clear distinction between guidance and secondary legislation, and for legislation to be sufficiently clear, “to avoid the need for interpretative guidance”.”

Lord Trefgarne said the most fundamental issue in relation to the delegation of legislative power was “the boundary between primary and secondary legislation. It is, as was amply demonstrated in the debates on the tax credits regulations and the subsequent Strathclyde review, at the very heart of the relationship between Parliament and the Government—between the legislature and the Executive.” His committee’s experience bore out the Constitution Committee’s concern “that the balance of power is tipping away from Parliament. It refers to how the boundary is “not always respected”, and that statutory instruments may be used, “to give effect to significant policy decisions”.”

Lord Blencathra (Conservative), the chairman of the Delegated Powers and Regulatory Reform Committee, agreed that the proper balance between primary and secondary legislation is “not always respected”. He said that Brexit-related Bills have been introduced “which have included the delegation of powers to Ministers that have been nothing short of breath-taking in some instances.” “[I]n addition to inappropriate secondary legislation, we get tertiary legislation, and raising taxes by tertiary legislation, and we had that wonderfully unique lawmaking power in Schedule 5 to the European Union (Withdrawal) Bill, a power last used in 1539, making law by proclamation—or, in the words of the schedule, by “direction”. Paragraph 2 of Schedule 5 permitted a Minister of the Crown to change the law by giving a direction with no parliamentary procedure applying to it whatever. We stated that a direction is what Henry VIII would have called a proclamation— there is a no real difference—and that the Statute of Proclamations 1539, which gave proclamations the force of statute law and later gave rise to the term “Henry VIII power”, was repealed in 1547 after the King’s death. We found it extraordinary that the Government should try to bring it back in this small area of a Bill 470 years later.”

Lord Cope of Berkeley (Conservative), a former Treasury minister and chartered accountant, was the one speaker in the debate to specifically explore the area of tax legislation (notwithstanding that he observed that “[o]ne of the advantages of being in the House of Lords is that I am no longer required to take part in Bills on taxation”!)  He said that while he has a high respect for the skills of parliamentary draftsmen, he often thought while a minister “that legislation I was being asked to take through Parliament could be worded in a plainer English.” He accepted that “legislation is sometimes more clearly worded now than it was.”

Lord Cope said that the Select Committee was “right to single out taxation legislation as one area that is not clear. Indeed, it is appallingly complex in places. Some might think that this benefits accountants and tax lawyers, and of course, people from both categories have been the reason for extra complexities being introduced in the cause of anti-avoidance. Both the Institute of Chartered Accountants in England and Wales, to which I still belong, and the Chartered Institute of Taxation complained in their evidence to the Select Committee about the lack of clarity and inconsistent definitions. The problem is recognised by government; the existence of the Office of Tax Simplification demonstrates that.”

He noted ‘in passing’ the call from one of the Conservative leadership candidates for VAT to be replaced with ‘a so-called simpler sales tax’. “As it happens, I was in at the birth of British VAT and it was then regarded as a huge simplification of and improvement on purchase tax, the sales tax collected at the wholesale stage. Purchase tax lost favour, to put it mildly, because of the inherent definitional problems inevitably involved in practice when you came to write it into law and vary it over the years. VAT remains an excellent, ingenious, clear concept and its replacement would not lead to simplification for long, if at all, and meanwhile there would be huge disruption. I mention this because it is a special example of the problems of proposed legislation being written into manifestos. This is discussed in the committee’s report in respect of changes in government after general elections, but it has some relevance this week too.”

Finally, Lord Cope offered support for the concept of “rolling consolidation”. “An example may explain the concept a little more clearly. A change in the law may be proposed by an amendment saying something such as, “except that subsection (5)(b) will not apply in the following circumstances”. Is it not better to have an amendment that proposes to leave out subsection (5)(b), or whatever it is, and insert a new subsection altogether, incorporating the changes required? That technique leaves the legislation in a cleaner position, and a consolidated one, to a degree. Footnotes on the website can direct readers to the old version in case that is required. There will not always be a choice between the two ways to frame a change but, where there is, the First Parliamentary Counsel is quite right to prefer it.”

Lord Cormack (Conservative) observed that “Parliament does not exist for the convenience of government. It is not an arm of government; it is not a servant of government. Parliament is not doing its job adequately unless it is constantly challenging the Government and holding them to account. That may be uncomfortable, but you are not attacking the man or the woman, you are attacking the measure or the proposal—and we ought to be much more rigorous in doing both those things. Delegated powers are not there to enable the Government to circumvent Parliament.”

Lord Dunlop (Conservative) said legislation should not be brought before Parliament unless and until it has met a threshold of legislative standards. “At present, prime responsibility for policing the quality of legislation before introduction lies with the Parliamentary Business and Legislation Committee of the Cabinet… My own experience as a Minister attending PBL is that it often did challenge robustly whether legislation was necessary. It did worry about the extent of and justification for delegated powers, not least because of the certain knowledge that your Lordships’ House… would be forensic in its scrutiny of such powers. However, other aspects of parliamentary counsel’s good law test were perhaps the subject of less discussion. Unsurprisingly, political imperatives will always loom large, given the five-year electoral cycle and the 18-month average life—apparently—of a Minister in a particular post.”

Lord Dunlop, a member of the Constitution Committee, added that the committee’s first report “highlights the importance of evidence-based policy-making while pragmatically recognising that sometimes, evidence will not exist. Of course, it is perfectly valid for Ministers to exercise their political and professional judgment in policy-making, for which they will be answerable to the voters. However, when an evidence base does exist, the committee believes that it should be routinely published.”

Lord Judge (Cross-Bencher), a former Lord Chief Justice, and another member of the Constitution Committee, emphasised the cross-party nature of the reports’ recommendations. On the tax credit regulations, he noted that “[w]hen this House exercised its undoubted constitutional authority to reject that legislation, it was the sixth time in the last 50 years—not exactly a declaration of independence, was it? But, lo and behold, we had an entire review put into place and we were told that the Lords had interfered with a decision of the Commons. You might have expected the Government to go back to the Commons and say, “Please, just tell the Lords they are wrong”. But the Government did not… Maybe the point of the review was just to discourage us from rejecting secondary legislation; but the incident graphically highlights the dangers of giving Ministers power to use secondary legislation. The power exercised by the Conservative Government in relation to tax credits was based not on their own legislation but on legislation enacted when Labour was in power—the Tax Credits Act 2002. Some 13 years or so after a Labour Parliament had given a Labour Minister these powers, those same powers were being exercised by a Conservative Government. The Opposition in this House certainly involved a great number of Labour Peers who spoke against it, which eventually led to its defeat. I cannot remember the specific words they used at the time, but the meaning of their words conveyed that this was a misuse of power—what a lesson to us about the long-term consequences of enacting powers in a Government to use secondary legislation to do almost anything they like, and it was not petty cash that was involved in the issue.”

Lord Tyler (Lib Dem) said his approach to both sets of recommendations owes much to his previous membership of the Joint Committee on Conventions of 2006. “In updating the so-called Salisbury/Addison convention, the committee was unable to make a definitive recommendation on the status of legislation brought forward by a minority Government. Having identified Bills introduced by an incoming majority Government as “manifesto Bills”, which deserve respectful treatment by the Lords, obviously the status of a Government whose manifesto had not been supported by a majority was less easily defined, so we were not able to make a recommendation on that point.”

The committee had, however, made a very robust recommendation about secondary legislation: “The Government appear to consider that any defeat of an SI by the Lords is a breach of convention. We disagree. It is not incompatible with the role of a revising chamber to reject an SI, since (a) the Lords (rightly or wrongly) cannot exercise its revising role by amending the SI or in any other way, (b) the Government can bring the SI forward again immediately, with or without substantive amendment, as described by the Clerk of the Parliaments, and (c) the power to reject SIs gives purpose and leverage to scrutiny by the Joint Committee on SIs, and by the new Lords Committee on the Merits of SIs. The Government’s argument that ‘it is for the Commons, as the source of Ministers’ authority, to withhold or grant their endorsement of Ministers’ actions’ is an argument against having a second chamber at all, and we reject it”.

Baroness Smith of Basildon, speaking for Labour, reflected on her time in Parliament since she was elected to the House of Commons in 1997. “Back then, Explanatory Notes were perhaps a sentence or two about what the clause did—they were not really Explanatory Notes at all. That has changed. We have seen progress in pre-legislative and post-legislative scrutiny… We are making steady progress, but when reading through the reports what struck me was that… there seemed to be a complacency in how close the Government think they get to good practice.”

She said she would like Parliament “to look more at impact assessments; that is one way in which we could get better evidence. I regret that the Government do not often follow their own guidance on the availability or content of impact assessments. At times, the content has been of little value. When one looks at the alternatives, it just says, “It doesn’t achieve the objective”. It does not say why or what other options have been looked at. A good impact assessment could be a great tool for examining legislation and a real help to the Government and Parliament.”

On the appropriate use of delegated powers, Baroness Smith said she could recall, just four years ago, “when even the most experienced of political journalists had no knowledge of and showed no interest in secondary legislation. Then came tax credits and the Government’s wildly exaggerated response to the actions of your Lordships’ House… I take a slightly different view from Lord Judge on this. This House did not reject the tax credits—it tried to find another way without rejecting them completely. The fatal Motion was rejected by your Lordships’ House. The Motion passed asked the Government to have another look.”

For the government, Lord Young of Cookham, a former Leader of the House of Commons, said that some of the recommendations—such as for a legislative standards committee – were for the House to reflect on. He would try to address the recommendations directed to the Government. He thanked all Lords who have been involved in the process of pre-legislative consultation. “The hours of detailed scrutiny have led to the introduction of better legislation and an easier passage through both Houses.”

He said the government was “placing renewed importance on ensuring that our policies have a sound evidence base. For example, the What Works Network, set up in 2015, provides government departments, Ministers and front-line professionals with independent assessment of the available evidence in specific policy areas. There is now a central team in the Cabinet Office that helps bring these findings to the attention of policymakers. In its first five years, the What Works centre has produced 288 evidence reviews, including 48 systematic reviews on a wide range of topics.”

Lord Young said the government attach great importance to clear, well-drafted and accessible legislation. “We have come a long way in the clarity and accessibility of our legislation… The skilled lawyers within the OPC are constantly working to improve on this. For example, they have revised and updated their drafting guidance, strengthened their internal quality assurance processes and invested heavily in training new counsel, operating an apprenticeship model so that experience is shared. I place on record my thanks for their ongoing efforts to achieve this goal. Progress is still needed, particularly in the area of taxation, as mentioned by my noble friend Lord Cope.”

“The noble and learned Lord, Lord Judge, expressed surprise that no statutory instruments had been rejected,” Lord Young added. “I think he will find that quite a lot have been withdrawn and then resubmitted. This is probably a better process to go through than actually having them defeated. I know that some have been introduced, subsequently been found to be incorrect and a separate SI introduced to put them right.” He said it was “impossible to prescribe a hard and fast set of rules to be applied uniformly to all delegations of power, as each delegation must be considered on its merits.” He agreed with the committee “that delegated powers should generally be reserved for prescribing matters of detail.”

Finally, Lord Young noted that “A number of noble Lords suggested that it should be possible to amend statutory instruments. That is not proposed by the committee, but the noble Baroness, Lady Smith, made a suggestion that the committee might like to reflect on—that it look again at the “take it or leave it” position of SIs. I would be interested in its reflections on that.”

The full debate can be read: 

By George Crozier