APPENDIX 2: COMMONS FINANCIAL PRIVILEGE
Paper deposited by the Clerk of the Parliaments in
the Library of the House, February 2009
Background
1. Modern practice in respect of Commons financial
privilege is based upon resolutions of the Commons passed in the
late 17th Century. In 1671, the Commons resolved "that in
all aids given to the King by the Commons, the rate or tax ought
not to be altered by the Lords". A more broadly drawn resolution
of 1678 effectively asserts the Commons' sole right in respect
of all legislation with financial implications.
Bills of aids and supplies
2. The most significant consequence of the Commons'
assertion of financial privilege is that bills of aids and supplies
("supply bills"), including the Finance Bill and the
Consolidated Fund Bills, which deal with taxation and Government
spending respectively, originate in the Commons, and are not amended
by the Lords. These bills are identified by a special enactment
formula.
Money bills
3. Under the Parliament Act 1911, if the Speaker
of the Commons has certified a bill as a "money bill"—that
is a bill whose only purpose is to authorise expenditure
or taxation or the granting or raising of loans and matters incidental
to those subjects—it may be presented for Royal Assent a
month after being sent to the Lords, whether the Lords has passed
it or not. In practice, the Lords does not amend money bills,
and no money bill has ever been presented for Royal Assent under
the Parliament Act.
4. Although there is a large degree of overlap
between supply and money bills, a supply bill need not be a money
bill, and vice versa.
"Tacking"
5. The practice of "tacking" onto supply
bills provisions unconnected with the grant of supply, in order
that the Lords should not be able to amend those provisions, was
condemned by this House in a resolution of 1702, which is now
enshrined in Standing Order 53:
The annexing of any clause or clauses to a Bill
of Aid or Supply, the matter of which is foreign to and different
from the matter of the said Bill of Aid or Supply, is unparliamentary
and tends to the destruction of constitutional Government.
6. It has recently been suggested that if privilege
is cited where none really exists, the House may need to renew
the 1702 resolution. The complaints about the Commons use of privilege
reasons at the end of the last session was not related to "tacking",
which could arise only on a supply bill. The last occasion on
which "tacking" was invoked by the Lords to reject a
Commons bill was in 1807. No complaint of "tacking"
in more recent times has been upheld.
7. The conventions surrounding Commons financial
privilege in respect of supply bills and money bills, including
the avoidance of "tacking", are well understood and
unchallenged.
Other bills
8. This note is mainly concerned with financial
privilege as it applies to public bills in general. In practice,
privilege issues normally arise only on Government bills.
9. Such bills often make significant changes
to public expenditure, and may affect national or local taxation
or national insurance. They can start in either House, and Commons
financial privilege can be invoked in respect of Lords starters
or Commons starters. A Lords private member's bill raising privilege
issues would normally be blocked before it reached the point at
which the Commons would formally invoke financial privilege.
The scope of Commons financial privilege
10. Privilege applies both to public expenditure
and to the raising of revenue to meet that expenditure. The word
"charge" is used in this note to refer to both taxation
and expenditure.
11. The Commons take a wide view of matters which
they consider infringe their privilege. These may include the
imposition or increase of a charge, any alteration of the amount
or duration of a charge, and any change in the administration
of the charge. "Administration" may include modes of
assessment, levy, collection or management of the charge, and
any alteration in procedural matters connected with the charge.
The recent discussions on the Planning Bill suggested that a change
in the parliamentary procedure for making Statutory Instruments
with financial implications constituted a change in the administration
of a charge, and was therefore a matter over which the Commons
could claim privilege.
"Unwaivable" and "waivable" privilege
12. If a Lords amendment is not "covered"
by the money or ways and means resolutions passed at the beginning
of a bill's passage through the Commons, it will be summarily
rejected by the Commons, on the instruction of the Speaker, and
will not be considered. This is sometimes referred to as an assertion
of "unwaivable financial privilege". The Companion
states that it is "unprofitable" for the Lords to
make amendments of this kind, unless the Lords has reason to believe
that the Commons will pass any necessary resolutions.
13. When, however, the Lords make an amendment
which has financial implications but which is within the money
or ways and means resolution, the Commons may agree to it. In
such cases, the Commons' Votes and Proceedings make it clear that
the Commons' claim to financial privilege was waived. This is
referred to as "waivable" privilege. The Speaker advises
the House, before it considers the Lords amendments, which amendments
involve financial privilege.
Privilege reasons
14. When the Commons rejects a Lords amendment
without offering an alternative, it gives a reason for doing so.
Where privilege is involved, the reason always concludes with
the words "and the Commons do not offer any further reason,
trusting that this will be deemed sufficient". In the Commons'
view, therefore, the matter should not be further debated between
the two Houses, but should be regarded as settled. The first part
of the reason varies from case to case but examples include:
"because it alters the rate or incidence of
taxation",
"because it would impose a charge on the public
funds",
"because it would alter the financial arrangements
made by the Commons".
The reasons are proposed by the "reasons committee"
and are agreed to by the Commons.
Options open to the Lords following receipt of a
privilege reason
15. If the Commons have rejected a Lords amendment
with a privilege reason, the options open to the Lords are limited.
They cannot insist on their original amendment. It is possible
to send back an amendment in lieu, although the recent Joint Committee
on Conventions has stated that it is "contrary to convention
to send back an amendment which clearly invites the same response[14]".
Recent criticism of claims of financial privilege
16. Recent debates, in particular on the Planning
Bill, have included negative comment on the Commons practice of
using privilege reasons, and there have been suggestions that
privilege is being claimed as a way of avoiding debate on substantive
issues. This claim is not new, and it is difficult to say whether
the use of privilege reasons is increasing or whether they are
being applied to amendments which would not previously have attracted
a claim of privilege. It may also be the case that there has been
an increase in the number of provisions relating to charges. The
scope of financial privilege is a matter for the Commons, and
it is clear from Erskine May that matters which are potentially
regarded as privileged range very widely indeed[15].
Points which have emerged from discussions on the Planning Bill
are that—
(i) where several Clauses, taken together, provide
for some new financial arrangement, the Commons may regard an
amendment to any part of that structure as something which can
lead to an assertion of privilege; and
(ii) any change of parliamentary procedure for
secondary legislation making financial arrangements (changing
negative to affirmative, or making Commons-only instruments bicameral)
will probably be regarded as a privilege issue.
Packaging
17. The issue of packaging of Lords amendments
in the House of Commons was also raised at the end of last session.
For the avoidance of doubt, this is an entirely separate issue
of "ping-pong" procedure. The amendments rejected by
the Commons with privilege reasons were single amendments dealing
with well-defined issues, so "packaging" was irrelevant
to the fate of these amendments. There was certainly no suggestion
that the Commons was conflating amendments raising privilege with
other amendments, in order to "shelter" non-privilege
amendments under a privilege reason.
18. In conclusion, it may be worth making two
points:
- First, until the Commons asserts its privilege,
the Lords is fully entitled to debate and agree to amendments
with privilege implications.
- Second, the critics of the Commons' claim of
privilege may have misunderstood the extremely broad scope of
the matters which the Commons has over a long period regarded
as privileged.
19. In the last analysis, the scope and application
of financial privilege is for the Commons alone to determine.
Michael Pownall, Clerk of the Parliaments, February
2009
14 Report of the Joint Committee on Conventions
of the UK Parliament, Session 2005-06, HL Paper 265-I, para
252. Back
15
Extract from Erskine May, 23rd edition, p.920:
"With regard to the charges in
respect of which they claim privilege, the Commons treat as a
breach of privilege by the Lords not merely the imposition or
increase of such a charge but also any alteration, whether by
increase or reduction, of its amount or of its duration, mode
of assessment, levy, collection, appropriation or management;
and in addition, any alteration in respect of the persons who
pay, receive, manage, or control it, or in respect of the limits
within which it is leviable." Back
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