83.Schedule 4 confers a power on UK Ministers or (within their areas of competence) Ministers in the devolved administrations to make regulations providing for a public authority to impose “fees or other charges” in respect of functions it is given by regulations under clauses 7 to 9. For example, regulations under clause 7 may establish a new public body to assume the functions of the European Medicines Agency as regards the UK. Schedule 4 would then allow Ministers to make further regulations allowing the body to levy charges on UK pharmaceutical companies, or even on the general public, in connection with the cost of the new UK regulatory regime for medicines.
84.The delegated powers memorandum indicates that Schedule 4 is designed to allow “flexibility” in how new Government functions are funded and that “it enables the creation and modification of fees or other charges so the costs of Government services do not always fall on the taxpayer”.
85.Schedule 4 also contains a power for Ministers to confer on public authorities the same powers to make fee regulations as Ministers have, save that where the public authorities make the subordinate legislation it does not have to be subject to parliamentary scrutiny or be made by statutory instrument.
86.The powers in Schedule 4 are very wide. The delegated powers memorandum notes that they would enable:
“the creation of tax-like charges [our emphasis], which go beyond recovering the direct cost of the provision of a service to a specific firm or individual, including to allow for potential cross-subsidisation or to cover the wider functions and running costs of a public body”.
87.Ensuring that the general taxpayer does not pay the cost of specialist services is a legitimate aim, although permitting organisations full cost recovery of their services without parliamentary scrutiny allows them to gold plate the services they offer. Parliamentary scrutiny is accordingly important, even where the fees do not overtly involve a tax or a tax-like charge.
88.A “tax-like charge” means a tax. Taxes and tax-like charges should not be allowed in subordinate legislation. They are matters for Parliament, a principle central to the Bill of Rights 1688. Regulations under clauses 7 and 9 cannot impose or increase taxation. But regulations under Schedule 4 may. Not only can Ministers tax, Ministers can confer powers on public authorities to tax and they can do so in tertiary legislation that has no parliamentary scrutiny whatsoever.
89.The affirmative procedure applies to secondary legislation under Schedule 4, made by UK Ministers or Ministers in devolved administrations, which imposes a new fee or charge. But only the negative procedure applies to subsequent regulations modifying those fees. This is open to abuse, allowing an initially very small fee to be set by affirmative regulations, with a subsequent increase accomplished by negative regulations.
90.The delegated powers memorandum recognises that the decision to charge is a policy issue warranting affirmative scrutiny, but suggests that the negative procedure suffices where a department amends the amount. In our view such an amendment equally involves a policy issue. Indeed the initial decision to charge (say) a £10 fee arguably involves less policy than trebling or quadrupling the fee, or increasing a fee by 13,000% — which the Government recently proposed for probate fees.
91.Schedule 4 is unacceptably wide.
(a)Taxation, including “tax-like charges”, should not be permissible at all in regulations made under Schedule 4. Fees and charges for services or functions should operate on a cost-recovery basis, leaving taxation for a Finance Bill — a principle enshrined in Article 4 of the Bill of Rights 1688.
(b)Schedule 4 should in no circumstances permit fees or charges to be levied by tertiary legislation.
(c)All regulations imposing a fee or charge under Schedule 4 should be made by statutory instrument either by UK Government Ministers or by Ministers in a devolved administration.
(d)The affirmative procedure should apply to all regulations made under Schedule 4, either in both Houses of Parliament or which introduce or increase fees in the relevant devolved legislature.
29 The consent of the Treasury is needed where the power is to be exercised by a UK Government Minister. Treasury consent is not needed for exercise of the power by a devolved administration although, in certain limited circumstances, the administration will need to seek the consent of a UK Minister.
30 Para. 91.
31 Para. 1(3)(c) of Schedule 4 and para. 7 of Schedule 7.
32 Para. 89.
33 Clauses 7(6)(a) & 9(3)(a).
34 Para. 7 of Schedule 7 to the Bill.
35 Para. 96.
36 The draft Non-Contentious Probate Fees Order 2017 and the of the Joint Committee on Statutory Instruments, Session 2016–17.