Act of Union Bill (HL Bill 132)

(b) a member of the UK Parliament returned for a constituency in Scotland
is referred to as a “Scottish MP”;

(c) a member of the UK Parliament returned for a constituency in Wales is
referred to as a “Welsh MP”; and

(d) 5a member of the UK Parliament returned for a constituency in Northern
Ireland is referred to as a “Northern Ireland MP”.

28 Abolition of House of Lords

(1) On commencement of this section, the House of Lords shall cease to form part
of Parliament.

(2) 10The following are repealed—

(a) the House of Lords (Expulsion and Suspension) Act 2015;

(b) the House of Lords Reform Act 2014;

(c) the House of Lords Act 1999;

(d) the House of Lords Costs Taxation Act 1849;

(e) 15the House of Lords Precedence Act 1539; and

(f) the European Parliament (House of Lords Disqualification)
Regulations 2009.

(3) The Life Peerages Act 1958 shall continue to have effect, with the omission of
references to the right to sit in the House of Lords.

(4) 20Her Majesty may by Order in Council—

(a) make other repeals and consequential amendments to reflect the
provisions of this section;

(b) make provision about the deployment of the premises and property of
the House of Lords;

(c) 25make transitional provision in connection with the implementation of
this section (which may include provision allowing former members of
the House of Lords access to facilities of Parliament other than the right
to participate in proceedings).

(5) An Order in Council under subsection (4)—

(a) 30may amend Acts and instruments, and

(b) may not be made unless a draft has been laid before and approved by
resolution of Parliament.

(6) On the commencement of this section, a reference in this Act to each House of
Parliament becomes a reference to the UK Parliament.

29 35UK Parliament Scrutiny Committee

(1) Each of the subnational Parliaments shall elect members to serve as the
Scrutiny Committee of the UK Parliament.

(2) The Scrutiny Committee shall perform whatever revising or other functions
are conferred on it by or under—

(a) 40Act of Parliament; or

(b) Standing Orders of the UK Parliament.

(3) An Act of Parliament may confer on the Scrutiny Committee powers to—

(a) delay the progress of Bills;

(b) exercise functions in relation to the scrutiny of subordinate legislation;
and

(c) exercise such other functions as it may specify.

30 Scrutiny Committees

(1) 5The English MPs shall constitute the Scrutiny Committee of the English
Parliament.

(2) The Scottish MPs shall constitute the Scrutiny Committee of the Scottish
Parliament.

(3) The Welsh MPs shall constitute the Scrutiny Committee of the Welsh
10Parliament / Senedd Cymru.

(4) The Northern Ireland MPs shall constitute the Scrutiny Committee of the
Northern Ireland Assembly.

(5) Each of the Scrutiny Committees shall perform whatever revising or other
functions are conferred on them by or under—

(a) 15legislation of the relevant Parliament or Assembly; or

(b) Standing Orders of the relevant Parliament or Assembly.

(6) An Act of the English Parliament, Scottish Parliament, Welsh Parliament /
Senedd Cymru or Northern Ireland Assembly may confer on the relevant
Scrutiny Committee powers to—

(a) 20delay the progress of Bills in that Parliament or Assembly;

(b) exercise functions in relation to the scrutiny of subordinate legislation;
and

(c) exercise such other functions (including functions relating to the
scrutiny of the relevant Government or Executive) as it may specify.

25House of Lords Restructuring Option

31 Introduction

(1) This group of sections—

(a) makes provision for the restructuring of the House of Lords; and

(b) comes into force if in the commencement referendum provided for by
30Part 11 a majority of the votes cast in the United Kingdom as a whole,
and in each of England, Wales, Scotland and Northern Ireland, are in
favour of the restructuring of the House of Lords.

32 Restructuring overview

(1) The House of Lords shall be reformed in accordance with section 33.

(2) 35A Scrutiny Committee for each of the subnational Parliaments shall be
constituted as set out in section 34 as follows—

(a) the Scottish MPs shall constitute the Scrutiny Committee of the Scottish
Parliament;

(b) the Welsh MPs shall constitute the Scrutiny Committee of the Welsh
40Parliament / Senedd Cymru; and

(c) the Northern Ireland MPs shall constitute the Scrutiny Committee of
the Northern Ireland Assembly.

33 House of Lords

(1) After the commencement of this section the House of Lords shall consist of—

(a) 5292 elected members, and

(b) 100 appointed members.

(2) A Representation of the People Act shall make arrangements for the
constituencies for the election of members; and—

(a) each member shall be elected for a single term of 15 years;

(b) 10elections shall be held at intervals of 5 years;

(c) the arrangements for which members are to be elected at each of the 5-
yearly elections shall be determined in accordance with the
Representation of the People Acts; and

(d) transitional arrangements shall be as set out in the Representation of
15the People Acts.

(3) There shall be a House of Lords Appointments Commission.

(4) In making appointments the Appointments Commission shall aim to ensure
that the appointed members of the House of Lords—

(a) are independent of government (including local, regional and national
20government),

(b) have no association with any political party, and

(c) are able to contribute knowledge and experience of a wide range of
commercial, professional, cultural and social matters.

(5) The members of the Appointments Commission shall be appointed by Letters
25Patent, on the recommendation of the Prime Minister made with the consent of
the leader of each political party with more than 2 MPs.

(6) Further provision about the constitution and proceedings of the Appointments
Commission shall be made by a House of Lords Act.

(7) Appointments are for a term of 15 years; and a person who has served in the
30House of Lords (whether as an elected or appointed member) is no longer
eligible for appointment.

(8) Further provision for the following matters shall be made by a House of Lords
Act—

(a) resignation of members of the House of Lords;

(b) 35early retirement from the House of Lords on medical grounds; and

(c) exclusion from the House of Lords of members convicted of serious
criminal offences.

(9) A House of Lords Act may make transitional arrangements in respect of
persons who are members of the House of Lords when this Act comes into
40force.

(10) A House of Lords Act may amend the Parliament Act 1911 to ensure that the
role of the House of Lords is confined to revision of legislation and scrutiny of
the Executive.

34 Scrutiny Committees

(1) The Scottish MPs shall constitute the Scrutiny Committee of the Scottish
Parliament.

(2) The Welsh MPs shall constitute the Scrutiny Committee of the Welsh
5Parliament / Senedd Cymru.

(3) The Northern Ireland MPs shall constitute the Scrutiny Committee of the
Northern Ireland Assembly.

(4) Each of the Scrutiny Committees shall perform whatever revising or other
functions are conferred on them by or under—

(a) 10legislation of the relevant Parliament or Assembly; or

(b) Standing Orders of the relevant Parliament or Assembly.

(5) An Act of the Scottish Parliament, Welsh Parliament / Senedd Cymru or
Northern Ireland Assembly may confer on the relevant Scrutiny Committee
powers to—

(a) 15delay the progress of Bills in that Parliament or Assembly;

(b) exercise functions in relation to the scrutiny of subordinate legislation;
and

(c) exercise such other functions (including functions relating to the
scrutiny of the relevant Government or Executive) as it may specify.

20 Part 8 Public money

Introductory

35 Public finance principles

(1) The public finance principles of the Union are—

251. That central functions should be financed from central taxes.

2. That the subnational governments should be free to raise subnational taxes
and spend them on local functions, in accordance with the principles—

• (a)that it is in the interests of the stability of the United Kingdom as a
  whole to avoid tax competition between the subnational governments;

• (b)30that subnational taxation should result in increased resources for local
  spending (“the additionality principle”).

3. That tax revenue should be retained and applied by the subnational
governments so far as possible, in a manner that—

• (a)maintains clear links between decisions on taxation and decisions on
  35spending;

• (b)supports accountability of subnational governments to their electorate.

4. That central taxes should be shared within the Union in a manner that
reflects—

• (a)differential local need;

• (b)40differential taxable capacities;

• (c)a balance between equitable distribution to ensure fair and equal access
  to public services, and ensuring responsibility for the consequences of
  local decision-making.

5. That the subnational governments should be able to raise funds through
public borrowing, but not at the expense of the financial stability of the United
Kingdom.

(2) In exercising functions under this Act or any other enactment public
5authorities of the United Kingdom, or of any part of the United Kingdom, shall
aim to apply the public finance principles.

(3) In this Part—

(a) “central functions” means functions of the United Kingdom
Government relating to central policy areas within the meaning of Part
102;

(b) “central taxes” has the meaning given by section 36; and

(c) “subnational governments” means the English Government, the
Scottish Government, the Welsh Government and the Northern Ireland
Executive.

15Central taxation

36 Central taxes

(1) The following are “central taxes” for the purposes of this Act—

(a) income tax (subject to subsection (2));

(b) corporation tax;

(c) 20inheritance tax;

(d) VAT;

(e) any other tax for the collection and management of which Her
Majesty’s Commissioners of Revenue and Customs are made
responsible by section 5 of the Commissioners for Revenue and
25Customs Act 2005.

(2) Where a subnational legislature increases the rate of income tax, amounts
raised in excess of the amounts that would otherwise have been collectable
shall be treated for the purposes of this Act as subnational tax revenue.

(3) Any tax imposed by or under an Act of a subnational legislature is a
30“subnational tax” for the purposes of this Act.

(4) In this Part “subnational legislature” means—

(a) the English Parliament;

(b) the Scottish Parliament;

(c) the Welsh Parliament / Senedd Cymru; and

(d) 35the Northern Ireland Assembly.

(5) In this section a reference to a tax includes a reference to any levy of a fiscal
nature (irrespective of what it is called).

(6) The list of central taxes in this section may be amended by a Finance Act.

37 Application of central taxes

(1) 40Central taxes shall be—

(a) applied first to the funding of central functions, and

(b) then shared within the Union in accordance with the provisions of this
Part.

(2) Decisions on the raising of central taxes must be made—

(a) by the Treasury, but

(b) 5on the basis of consultation with the subnational governments.

38 Revenue sharing

(1) This section deals with the distribution of central funds, being—

(a) amounts collected by way of central taxes and not required for central
functions, and

(b) 10other taxes raised in accordance with Act of Parliament.

(2) Central funds shall be distributed in accordance with the principles laid down
from time to time by Act of Parliament to be known as a Public Spending Act.

(3) The principles laid down by Public Spending Act shall—

(a) include a starting presumption of distribution in accordance with an
15average per capita formula, and

(b) provide for such modifications or adjustments as appear necessary or
desirable in the light of differential need and incomes, and other
demographic and other considerations.

39 UK Funding Committee

(1) 20The Treasury must establish and maintain a UK Funding Committee,
composed of—

(a) the Chancellor of the Exchequer;

(b) a sufficient number of other Ministers of the Crown, appointed by the
Chancellor of the Exchequer, to ensure a majority on the Committee;

(c) 253 English MPs, elected by the body of English MPs;

(d) 3 Scottish MPs, elected by the body of Scottish MPs;

(e) 3 Welsh MPs, elected by the body of Welsh MPs; and

(f) 3 Northern Ireland MPs, elected by the body of Northern Ireland MPs.

(2) The UK Funding Committee shall meet at least once a year and make
30recommendations about—

(a) the operation of the Public Spending Act, and

(b) any amendments that in the opinion of the Committee ought to be
made to the Public Spending Act.

(3) The UK Funding Committee—

(a) 35shall appoint a UK Funding Commission consisting of independent
experts to advise on changes to the Public Spending Act from time to
time required to ensure that it continues to reflect the public finance
principles; and

(b) may refer issues to the UK Funding Commission as to the rules for the
40distribution of central taxes, and agree to be bound by the
Commission’s recommendations.

(4) The UK Funding Committee—

(a) shall appoint a Responsibility and Compensation Commission, to
advise on achieving a balance between a compensation mechanism

based on indicators of differential local need, and a responsibility
mechanism reflecting increased or diminished revenues based on the
achievement of policy objectives; and

(b) shall have regard to advice and recommendations of the Responsibility
5and Compensation Commission.

Public borrowing

40 Power to borrow

(1) Each of the subnational governments may borrow money to fund public
expenditure, but subject to the provisions of this Act.

(2) 10In this Act a reference to borrowing money to fund public expenditure is a
reference to the issue of bonds or other securities of any kind.

(3) The Treasury may by regulations provide that specified actions or classes of
action—

(a) are to be treated as borrowing money for the purposes of this section, or

(b) 15are not to be treated as borrowing money for the purposes of this
section.

(4) Before making regulations under subsection (3) the Treasury must consult—

(a) each of the subnational governments, and

(b) the independent members of the Public Borrowing Board.

(5) 20Regulations under subsection (3)—

(a) shall be made by statutory instrument; and

(b) may not be made unless a draft has been laid before and approved by
resolution of each House of Parliament.

41 Public Borrowing Board

(1) 25There shall be a body corporate, to be known as the Public Borrowing Board,
to exercise the functions conferred by this section or any other enactment.

(2) There shall be 15 members of the Public Borrowing Board, of whom—

(a) 2 shall be appointed by the Prime Minister;

(b) 2 shall be appointed as representatives of England;

(c) 302 shall be appointed by the First Minister of Scotland;

(d) 2 shall be appointed by the First Minister of Wales;

(e) 2 shall be appointed by the First Minister and deputy First Minister of
Northern Ireland acting jointly;

(f) 5 shall be appointed by the other members of the Board, as experts in
35national economics who are independent of any public authority (“the
independent members”).

(3) The Board—

(a) shall consider borrowing proposals made by non-central governments;

(b) may impose requirements as to the presentation of borrowing
40estimates and proposals by non-central governments;

(c) may by order limit or impose conditions on borrowing by a non-central
government.

(4) The Treasury shall by regulations make further provision about—

(a) the constitution, functions and proceedings of the Board;

(b) timing and procedure for the presentation to the Board of borrowing
estimates and proposals; and

(c) 5the process, content and enforcement of limits and conditions on
borrowing imposed by the Board.

(5) Regulations under subsection (4)—

(a) shall be made by statutory instrument, and

(b) may not be made unless a draft has been laid before and approved by
10resolution of each House of Parliament.

42 Borrowing controls

(1) Where the Board approves a non-central government’s borrowing proposal,
the Board shall publish a certificate of authorisation, identifying—

(a) the nature and extent of the borrowing authorised by the Board, and

(b) 15any conditions (including time limits) attached to the authorisation.

(2) The Public Spending Act may include provisions designed to impose a charge
on a non-central government in respect of unauthorised borrowing.

Central Bank

43 Bank UK

(1) 20The Bank of England is by this subsection renamed the Bank of the United
Kingdom (“Bank UK”).

(2) The Treasury shall by regulations make consequential amendments of the
Bank of England Acts and other enactments to reflect subsection (1).

(3) Regulations under subsection (2)—

(a) 25shall be made by statutory instrument; and

(b) shall be subject to annulment in pursuance of a resolution of either
House of Parliament.

44 Central bank functions

(1) Bank UK shall continue to exercise—

(a) 30central banking functions for the United Kingdom, and

(b) other functions conferred on it by this or any other enactment.

(2) For the purposes of the European Union and any other international
obligations or arrangements to which the United Kingdom is a party—

(a) Bank UK is the central bank of the United Kingdom, and

(b) 35no other financial institution, or arrangements made by the
government of any part of the United Kingdom, is entitled to exercise
central banking functions.

45 Representation

(1) The members of the Board of Bank UK shall include persons appointed to
represent the interests of—

(a) England;

(b) 5Scotland;

(c) Wales; and

(d) Northern Ireland.

(2) The Treasury shall make regulations about representatives for the purposes of
subsection (1); and the regulations—

(a) 10shall determine the number of representatives;

(b) shall determine the periods of appointment;

(c) may specify terms and conditions of appointment (including
remuneration and allowances); and

(d) may specify qualifications or disqualifications for appointment.

(3) 15The English representatives shall be appointed in such manner as may be
provided for by or under Act of Parliament.

(4) The Scottish representatives shall be appointed in such manner as may be
provided for by or under Act of the Scottish Parliament.

(5) The Welsh representatives shall be appointed in such manner as may be
20provided for by or under Act of the Welsh Parliament / Senedd Cymru.

(6) The Northern Ireland representatives shall be appointed in such manner as
may be provided for by or under Act of the Northern Ireland Assembly.

Transitional

46 Transitional protection

(1) 25The UK Funding Committee must establish a Transitional Protection Sub-
Committee.

(2) The Sub-Committee—

(a) must be established within the period of one month beginning with the
commencement of this section;

(b) 30must be dissolved by the Committee as soon as reasonably possible
after the end of the period of 10 years beginning with the
commencement of this section.

(3) The function of the Sub-Committee is to recommend transitional modifications
of the rules for revenue-sharing set out in the Public Spending Act, so as to
35ensure that the transition to the new system under this Act—

(a) is orderly;

(b) is affordable;

(c) allows subnational governments and other public authorities to make
appropriate preparation for the implementation of the new system; and

(d) 40so far as possible, avoids defeating legitimate expectations or creating
undesirable anomalies.

Part 9 Defence and security

47 Public sector general duty

(1) A public authority of the United Kingdom or any of the UK countries must in
5exercising its powers aim to ensure that the union of the UK countries protects
and enhances the security of the citizens of—

(a) each of the UK countries, and

(b) the United Kingdom as a whole.

(2) In this section—

(a) 10“public authority” means any person if and in so far as it exercises
public functions, and

(b) the “UK countries” are England, Scotland, Wales and Northern Ireland.

48 Duty to co-operate

(1) The public authorities of each part of the United Kingdom must co-operate
15with each other, and with any other public authority of the United Kingdom,
for any purpose connected with defence and security.

(2) In this Part “defence and security” includes—

(a) defence of the realm,

(b) security (including cyber-security) and intelligence,

(c) 20protection against terrorism, and

(d) resilience to natural and other emergencies.

49 Liaison

(1) The Secretary of State must establish and preside over a Defence and Security
Liaison Committee.

(2) 25The purpose of the Committee is to ensure that the public authorities of each
part of the United Kingdom—

(a) are appropriately briefed and consulted on matters of defence and
security;

(b) liaise appropriately on matters of defence and security;

(c) 30co-operate appropriately on matters of defence and security.

Part 10 Home affairs

Law and order

50 Courts

(1) 35The Supreme Court shall remain the most senior court of the United Kingdom,
with the jurisdiction conferred on it by Act of Parliament.