Tax credits vote: The civil service "must be more careful about parliamentary handling"

Analysis: What does the tax credits defeat in the House of Lords mean for the government's legislative programme – and are civil servants ready for the fallout?

By Jessica Wilkins

28 Oct 2015

In the wake of the government’s bruising defeat in the Lords over tax credits, Downing Street has announced a review to try and “protect the ability of elected governments to secure their business”. The row over tax credits points to a much larger problem for ministers – their slender majority in the Commons looks even slimmer when the majority of Lords are from opposition parties.

CSW spoke to three constitutional experts – Dr Hannah White of the Institute for Government, Dr Stephen Barber of London’s South Bank university, and Professor Colin Talbot of Manchester University – to try and make sense of the debate, and ask whether government departments are ready for more tough times in the Lords…

Is the tax credits vote a challenge – as former cabinet secretary Lord Butler described it last week – to the "supremacy of the House of Commons"?

Dr White: “Monday night’s vote does not challenge the ‘supremacy of the Commons’, nor is it a constitutional crisis! It simply shows that the government has yet to adapt to working in a parliament where they have a narrow majority in the Commons and no majority in the Lords. No matter what the prime minister announces as part of the Lords review, the government and civil service must be more careful about parliamentary handling if it wants to achieve its aims.”

Dr Barber: “In a sense, this is a challenge to the authority of the Commons. Not only has the elected chamber voted in favour of this measure three times, it is arguably a money bill and the upper house supposedly lost authority to block financial legislation in 1911.

“And yet here it is frustrating the will of a recently elected government. That said, we have a bicameral system and it is the job of a revising chamber to do just that. Peers are asking ministers to think again on tax credits. The government does not have a majority in the House of Lords meaning it cannot force through legislation using the Whip as it can in the Commons. Given that Cameron’s is a majority government elected on just 37% of the vote, one could view this as a useful check on the power of the executive.”

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Professor Talbot: “This is primarily a conflict between the government and the Lords, not the Commons and Lords. The “supremacy of the Commons” on finance matters is severely limited by the way in which only the government can propose to raise taxes or spend money. Normally measures like these would go into a finance bill over which the Lords has no say. The government chose the unusual step of dealing with a major and controversial change to tax credits through a Statutory Instrument (SI) which meant it had to go to the Lords.”

Are civil servants sufficiently clued up on the ins and outs of the Lords, given that the upper chamber looks set to play a bigger role in this parliament than the last one?

Dr White: “Cabinet secretary Jeremy Heywood admitted at our event that the civil service is a 'bit rusty' on the Lords, and the government has already suffered 19 defeats since the election. Clearly the civil service needs to think carefully about how to take its business through parliament if it wants to make sure it achieves the government’s aims.”

Dr Barber: “It remains to be seen if it will have a bigger role. The Lords has been the place where government is most likely to lose a parliamentary vote since the reforms in 1999 which removed all but 92 of the hereditary peers.

“What needs to be recognised is successive governments have resisted democratising the upper house, peers have grown in confidence in terms of frustrating government, particularly where there public opinion is also identifiably uneasy with policy. Remember, the composition of the Lords is already more reflective of votes cast in general elections than the Commons and if it were to be elected by some form of proportional voting system, this government would likely have almost two-thirds of members ranged in opposition.”

Professor Talbot: “Probably not, although I think this was entirely a political decision to avoid even the modest scrutiny finance bills get in the Commons by pushing it through as a statutory instrument which gets very limited debate, no amendments allowed, and a simple yes/no vote.

“It spectacularly backfired, derailing both the policy on tax credits and the narrative about scroungers and welfare that the government has crafted. It is a major self-inflicted wound brought about by trying to be too clever by half.”

What are the prospects for reform of the House of Lords now?

Dr White: “In this instance, people seem to be talking more about adding peers or changing the powers of the Lords – which isn’t actual reform.”

Dr Barber: “While David Cameron and George Osborne are furious at the Lords, those of us hoping to be able to elect the people who scrutinise legislation are likely to remain disappointed. Government frustration with the upper house is not founded on any kind of zeal for constitutional renewal.

“In coalition, Cameron rather easily acquiesced to Conservative MPs bent on wrecking Nick Clegg’s cherished House of Lords Reform Bill. And in this parliament, opportunities presented by the debates over devolved power and the reality that the Lords is creaking at the seams – heading in the direction of 900 members – have not given rise to serious proposals in government about constitutional reform. It is a shame because these circumstances offer a serious opportunity to engage people in the political process.”

Professor Talbot: “I suspect all this ‘constitutional crisis’ talk will die off in a day or two. The talk of packing the Lords [with new Conservative members], or even suspending it, are politically unfeasible."

Ministers have announced a review to "sort out the relationship between the Commons and the Lords". What do you think that will that mean in practice?

Dr Barber: "There is something rather menacing about the promise isn’t there? I think it is clear from the reaction of government ministers to the challenge from the Lords over tax credits that they want to emasculate the upper house, not legitimise it.

“The threat to suspend the Lords or even flood it with (more) Conservative peers points to a desire on the part of the executive to ensure it can drive through its legislative programme. Government has little control over the actions of peers. Even most of those taking the government whip do not owe their elevation to the incumbent prime minister, who in turn has little by way of patronage power in the Lords.

“Meanwhile, with a small majority in the Commons, this government certainly isn’t interested in legitimising democratic opposition to its legislation. For the time being, I suspect government will be content with veiled threats. But even once the dust has settled, don’t expect more than procedural tampering to favour executive power.”

Professor Talbot: “In practice it will almost certainly mean going back to what usually happens anyway - major changes to tax and spend are dealt with in bills in the Commons, and the Lords has no say. If they had done that to start with none of this would have happened.”

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