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PARLIAMENTARY CONTROL OF THE PUBLIC ACCOUNTS
By Basil Chubb, University of Dublin
Lecturer in Political Science 1969
I wish to thank the Comptroller and Auditor General Sir Frank Tribe, K.C.B, K.B.E, for his willingness to answer many questions of fact.
To view the House of Commons only as “the grand forum of debate”, or as a legislative production line, is to miss important aspects of its work.
The examination of the Public Accounts is a case in point. Vital though it is if Government is to be really responsible, the floor of the House is no place to perform this task. Other procedures and techniques are necessary and exist. Since they work well and do not take up the time of the House, we hear little about them, the less so since the job is many, In Gladstone’s words, “work of a dry and repulsive kind.” It is intended to describe in two articles, the system, machinery and techniques by which the vast public accounts are examined and revived for Parliament and the Nation.
From medieval times Parliament insisted with varying success, on the principle that things and government must account for the funds granted to them. It is customary to point out to the insistence with pride, yet such admiration of the principle has tended to obscure the important facts that the practice of accounting and control was, at first, negligible and, at best inefficient, fragmentary and spasmodic until the 19th Century. It was not until the decade 1857-67 that a complete system and adequate machinery were evolved. This system and machinery have lasted, with no major alteration until the present, though the day to day techniques of audit.
There is a clear tilt variation between connotations of Public and Private Law. Gladstone emulgated after the Lords Select Committee on Migration bent on dealing with the issue of immigrants from the West Indies into the British Isles. The Committee vowed to stablish a Pullout Fund or what is known as a Trust Fund for the facility of dealing with the issue. This was abhorred by Lord Carrington, Sir Bradfield and Dicey who noted that, “A Parliamentary Select Committee cannot allow its resources to be administered through a trust fund as it would cross the bounds of Public into Private Law which deems uncompetitive of such a body. Such act should be administered through means spelt out by statutory enactments.
While ministers and their immediate Civil Service subordinates should be permitted to expend public funds on day to day running of the country, introducing such as this is more than routine expenditure and should be submitted to Parliament for approval BEFORE expenditure.
To the Civil Service, expenditure means jobs for civil servants regardless of the state of the country's economy and ability to fund such follies, especially when the opposition who will almost certainly rule in the not too distant future plan to scrap ID cards.
It is time for Parliament to regain it's eroded power and impose it's will on the Government, both political and civil service.
Lecturer in Political Science 1969
I wish to thank the Comptroller and Auditor General Sir Frank Tribe, K.C.B, K.B.E, for his willingness to answer many questions of fact.
To view the House of Commons only as “the grand forum of debate”, or as a legislative production line, is to miss important aspects of its work.
The examination of the Public Accounts is a case in point. Vital though it is if Government is to be really responsible, the floor of the House is no place to perform this task. Other procedures and techniques are necessary and exist. Since they work well and do not take up the time of the House, we hear little about them, the less so since the job is many, In Gladstone’s words, “work of a dry and repulsive kind.” It is intended to describe in two articles, the system, machinery and techniques by which the vast public accounts are examined and revived for Parliament and the Nation.
From medieval times Parliament insisted with varying success, on the principle that things and government must account for the funds granted to them. It is customary to point out to the insistence with pride, yet such admiration of the principle has tended to obscure the important facts that the practice of accounting and control was, at first, negligible and, at best inefficient, fragmentary and spasmodic until the 19th Century. It was not until the decade 1857-67 that a complete system and adequate machinery were evolved. This system and machinery have lasted, with no major alteration until the present, though the day to day techniques of audit.
There is a clear tilt variation between connotations of Public and Private Law. Gladstone emulgated after the Lords Select Committee on Migration bent on dealing with the issue of immigrants from the West Indies into the British Isles. The Committee vowed to stablish a Pullout Fund or what is known as a Trust Fund for the facility of dealing with the issue. This was abhorred by Lord Carrington, Sir Bradfield and Dicey who noted that, “A Parliamentary Select Committee cannot allow its resources to be administered through a trust fund as it would cross the bounds of Public into Private Law which deems uncompetitive of such a body. Such act should be administered through means spelt out by statutory enactments.
While ministers and their immediate Civil Service subordinates should be permitted to expend public funds on day to day running of the country, introducing such as this is more than routine expenditure and should be submitted to Parliament for approval BEFORE expenditure.
To the Civil Service, expenditure means jobs for civil servants regardless of the state of the country's economy and ability to fund such follies, especially when the opposition who will almost certainly rule in the not too distant future plan to scrap ID cards.
It is time for Parliament to regain it's eroded power and impose it's will on the Government, both political and civil service.
The evolution of parliament’s power of the purse
Introduction
The finance of the country is ultimately associated with the liberties of the
country… If the House of Commons by any possibility lose the power of the
control of the grants of public money, depend upon it, your very liberty will be
worth very little in comparison. That powerful leverage has been what is
commonly known as the power of the purse – the control of the House of
Commons over public expenditure.
William Ewart Gladstone, 1891
How did parliaments come to exercise the budgetary roles they have today? Why do
they participate in the budget process in the first place? To answer these questions, and
as a background to the subsequent units, this unit provides a brief overview of some key
stages in the evolution of the role of parliament in budgeting. The following sections
look at the struggle to ensure parliamentary consent to taxation, how the rise of modern
budgeting helped parliament to control expenditures, and more recent developments
relating to the role of legislatures in budgeting.
The struggle for parliamentary control of taxation
The struggle to ensure consent to taxation was a central battlefield in the evolution of
parliament in medieval England. To guard against despotic royal rule, parliament sought
to limit the kings’ powers to impose taxes so as to curtail their ability to maintain a
standing army beyond times of war and immediate external threat (Harriss 1975). The
principle of parliamentary consent to taxation gained constitutional recognition when it
was enshrined in the Magna Carta – a list of concessions to the barons that King John
signed at Runnymede in 1215. But this agreement did not resolve the conflict over the
power to impose taxes, which continued to simmer throughout the following centuries.
Bitter contests between kings and parliaments in the seventeenth century precipitated
procedural innovations that advanced parliamentary control of state finance. In
particular parliament’s increasing use of a committee of the whole House brought
several advantages, due to the fact that the procedures of committees applied for such
deliberations, rather than the standard rules. This allowed the Commons to appoint their
own chairperson, which reduced the influence of the Speaker, who at the time was
generally regarded as aligned with the monarch. The committee procedure also allowed
each member to speak more than once and thus facilitated much freer debate. It
became easier for the Commons to delay passing the bill to grant subsidies to the crown
until the end of a session, a tactic that afforded time to extract concessions from the
monarch. But clever procedural devices were not enough to establish parliamentary
supremacy over taxation.
A crucial shortcoming of parliamentary control was that it did not extend to royal
borrowing on the monarch’s personal credit. After Charles II claimed the throne in 1660
parliament started to demand estimations of cost before voting money to be granted to
the king, who claimed to get short shrift. To evade expenditure control, a popular royal
tactic was to resort to borrowing and hope that parliament would later consent to the
raising of funds to repay such loans. But this practice was not sustainable when
parliament refused to oblige. In 1672 the government in effect declared the only state
bankruptcy in British history when payments on loans from City bankers were
suspended initially for twelve months, which was later renewed repeatedly. Only after
1688 was executive borrowing tied to parliamentary consent, which restored trust with
lenders and ensured large-scale access to finance over the following centuries.
The Glorious Revolution of 1688 brought a decisive victory for parliament, and it is a
landmark in the evolution of its financial role. The 1689 Bill of Rights captures the
outcome of the struggle. Most importantly, it firmly established the principle that only
parliament could authorize taxation by proclaiming ‘That levying money for or to the use
of the Crown by pretence of prerogative, without grant of Parliament, for longer time, or
in other manner than the same is or shall be granted, is illegal.’ Still, at this stage there
was still no such thing as an annual budget, and there was no comprehensive control of
expenditures.
Before the revolution the royals freely mingled public and private income. Following the
revolution parliament made a life-long grant to the king to cover expenditures on the
civil list and the monarch in turn relinquished control over most of his hereditary
revenues. Originally, the list was intended to cover the financial requirements of the king
and his household as well as the expenditure of the central civil government excluding
debt charges. Expenditure items for civil administration were gradually transferred from
the list to the supply services and, later, the consolidated fund, in a process that lasted
until 1830. The creation of this list was the first step towards the separation of public
and royal expenditures.
Paradoxically, in these early days of growing financial control by the Commons one can
also find the origin of limitations on parliament’s budgetary powers. Given the political
dynamics of the time, it made little sense for parliament to volunteer money to the
crown. The Commons proceeded to resolve in 1706 ‘That this House will receive no
Petition for any sum of Money relating to public Service, but what is recommended from
the Crown.’ The financial initiative of the crown has been enshrined in the standing
orders since 1713 and this limitation on parliament’s power of the purse is considered an
essential constitutional principle to this day. Therefore, while the British Parliament was
at the forefront of claiming budgetary rights, it was also the first parliament to
voluntarily restrict its powers to introduce and amend financial legislation (Inter-
Parliamentary Union 1986, p. 1093):
Parliament still respects this long-standing custom and practice and, as a result,
it may not vote sums in excess of the Government’s estimates. Consequently, the
only amendments that are in order are those which aim to reduce the sums
requested and have as their purpose the chance for Members to raise
explanations before the sums in question are approved.
After the Glorious Revolution, it was not long before parliamentary control over taxation
spread beyond Britain. Parliament proved to have a short memory for the passions that
could be incited by unilateral imposition of fiscal measures. As imperial finances were
exceedingly stretched by the task of protecting vast colonial territories, parliament
sought to force the inhabitants of the empire’s North American possessions to contribute
towards the defense of the territory. In 1765 it ordered the imposition of a tax on a
stamp affixed to a range of documents including newspapers and playing cards. This
gave rise to great discontent in the colonies, and led to a boycott of British goods by the
colonialists. Despite a partial retreat by parliament, which abolished the ‘stamp tax’ and
several other duties, the continued imposition of a duty on tea was sufficient to provoke
unrest and ultimately led to the war of independence. At the First Continental Congress
in 1774 delegates from the colonies rejected ‘every idea of taxation, internal or external,
for raising a revenue on the subjects in America, without their consent.’
The rise of modern budgeting
Parliamentary control remained incomplete as long as governments continued to enjoy
wide discretion in expending public revenues. Without detailed knowledge of
expenditure needs, requests for funds could not be properly evaluated. Following the
Glorious Revolution, it took the Commons two further centuries to put in place a
comprehensive system of expenditure control. There were some interim achievements,
notably the creation of the consolidated fund in 1787. But the development of modern
budgeting practices in the United Kingdom had to wait until the Gladstonian reforms in
the second half of the nineteenth century.
By the beginning of the nineteenth century, the United States Congress already
constrained executive discretion through detailed line item appropriations that
prescribed the exact use of authorized expenditures, for instance by setting strict limits
on specific expenses such as firewood and candles in particular offices. This tradition
has its origins in colonial times, when legislatures were distrustful of British rule and
invested much effort in scrutinizing administrative expenditures. The colonialists were
suspicious of governors they did not appoint and who were regarded as agents of the
king in distant Britain. They thus devised stringent and humiliating control mechanisms
including the annual voting of salaries, detailed specification of the object of spending
and the amount to be spent, and the reversion of unspent funds to the treasury at the
end of the fiscal period. This advanced level of congressional scrutiny of expenditures
was exceptional compared with other countries at the time.
In Europe, France was first in developing modern expenditure control mechanisms
based on reforms of state audit during the first half of the nineteenth century. Napoleon
put in place the institutional fundamentals of modern public audit when he created the
cour des comptes in 1807. In the initial years following the creation of the court the
benefits of the new audit system for the French National Assembly were marginal. To
ensure effective reporting to the assembly, the publication and distribution of audit
reports was made a legal requirement in 1832. The assembly also gradually broadened
its control over the approval of expenditures until the specification of detailed items of
expenditure for each ministry became a legal requirement in 1831. By the middle of the
nineteenth century, France had put in place many of the elements that are associated
with modern budgeting, notably a comprehensive budget encompassing all of the
activities of government, a standard fiscal year, the principle of annual authorization,
and a developed system of accounting and audit control.
Control of expenditures evolved differently in the United Kingdom. Parliament
appropriated money many centuries before the use of budgets became common. A first
known instance of parliamentary appropriation dates back to the fourteenth century,
when a grant to the Edward III was explicitly earmarked for ‘the Maintenance and
Safeguard of our said Realm of England, and on Wars in Scotland, France and Gascoign,
and in no places elsewhere during the said Wars’ (Einzig 1959, p. 79). Particular sources
of revenue were also frequently tied to specific expenses in order to exercise some
control over royal spending. However, parliamentary oversight of expenditures remained
patchy and incomplete. An important improvement was the creation of the consolidated
fund in 1787 for the purposes of collecting revenues and disbursing all monies for the
supply of public services, which ‘broke the disorder caused by assigning particular taxes
to special purposes and it provided the means of infinite expenditure control through
comprehensive appropriation schedules’ (Reid 1966, p. 57). But full expenditure control
had to wait until the rise of modern budgeting.
The decisive steps towards modernization of public finances in the United Kingdom are
inextricably linked to William Ewart Gladstone, who first became Chancellor of the
Exchequer in 1852. Gladstone was determined to force greater economy in public
finance and introduced reforms in the 1860s that made annual and comprehensive
estimates central to legislative oversight. In 1861 the Commons, based on the initiative
of Gladstone, resolved to establish a public accounts committee to examine the accounts
showing the appropriation of the sums granted by parliament for public expenditure.
The Exchequer and Audit Departments Act of 1866 required all government departments
to produce appropriation accounts for audit purposes. The act also created the
comptroller and auditor general by merging the ex ante function of authorizing the issue
of money to departments with a new ex post function of examining every appropriation
account and reporting the results to parliament. The committee developed a high
standard of scrutiny and contributed significantly to rapid improvements in the
disclosure of financial information in the following decades (Chubb 1952).
In the United Kingdom a final step towards the democratization of the budget was taken
when the hereditary chamber, the House of Lords, was stripped of its veto power over
financial legislation. The elected House of Commons considered the Lords unable to
amend tax and spending bills by the end of the seventeenth century. The formal
removal of remaining veto power was triggered by the dramatic struggle over the 1909
budget of Chancellor Lloyd George, who sought increased tax revenues in order to pay
for pensions and defense expenditures (Porritt 1910). When the Lords rejected the
entire Finance Bill, this prompted the passing of the Parliament Act of 1911, the purpose
of which was to debar the Lords from rejecting money bills – legislation strictly related
to taxation, borrowing or appropriations. Since then, the supremacy of the elected
chamber has been firmly established. Budgetary bicameralism of various forms
continues in countries where second chambers of parliament have democratic
credentials.
More recent developments in legislative budgeting
Parliamentary fiscal power in the United Kingdom was at its peak in the second half of
the nineteenth century, when the Commons frequently amended spending and revenue
proposals (Einzig 1959). The spread of parliamentary democracy since the nineteenth
century ensured that the principle of parliamentary authorization of taxation and public
expenditure became a constitutional fundamental across democratic countries. However,
from a long term perspective the influence of national legislatures on budget policy
making has declined in most industrialized countries (Coombes 1976). The budgetary
decline of parliament is perhaps most evident in the United Kingdom, where the House
of Commons ceased to amend estimates almost a century ago.
Several developments contributed to reducing the budgetary activism of parliaments
(Schick 2002). The emergence of disciplined political parties has reigned in legislative
independence. Devolution of spending, and to a lesser extent of revenues, has chipped
away at the comprehensive control of public funds by national legislatures. In addition,
the massive expansion of entitlement spend in the twentieth century has substantially
rigidified budgets and commensurately decreased the remaining margin for active
legislative engagement in annual budgets. With the growth of public spending and the
increasing complexity of public finances, the executive budget proposal became the
standard against which legislative action was measured.
But the decline of parliamentary power over budgets is not universal. There are signs
that some parliaments are attempting a budgetary comeback. In France, for instance,
the National Assembly recently initiated a wide-ranging set of budget reforms. The
resulting changes include a reclassification of the budget in order to support
parliamentary oversight and an expansion of powers to amend expenditures (Chabert
2001). In developing and transition countries, a substantial number of legislatures are
moving towards budgetary activism. Perhaps the primary reason for this development is
that democratization and constitutional change have opened up possibilities for
legislature participation in many previously closed systems. A good example is the
Brazilian Congress, which historically played no significant role in the budget process.
Democratization in the 1980s led to constitutional changes that gave Congress powers
to modify the budget and have resulted in substantial levels of activism (Blöndal et al
2003).
In addition, there has been a recent shift in international financial institutions and donor
agencies towards participation in setting development goals and strategies. Developing
countries are now asked to access international finance on the basis of comprehensive
poverty reduction strategies that are meant to be compiled through an in-country
participative process. This shift is linked to renewed interest by the international donor
community in the quality of the budget process and the governance of the budget for a
variety of reasons, in particular the realization of the failure of conditionality in
development lending and evidence on the effectiveness of aid. This provides an
opportunity for legislatures in poor countries to reengage with development policy and
budgets (Stapenhurst and Pelizzo 2001).
Conclusion
The budgetary role of democratic legislatures is the outcome of a centuries-long
struggle for supremacy in public finance. Historically, parliaments first gained the right
to consent to taxation, and gradually they devised mechanisms to control the
expenditure of public funds. Modern budgets came to aid comprehensive legislative
oversight. Legislatures today exercise varying levels of budgetary influence. While some
parliaments have become less active in budgetary matters, others have maintained a
strong role in the budgeting process. Democratization and constitutional reform provide
opportunities for new parliaments to actively define an appropriate budgetary role.
Relevant internet resources
Bill of Rights (1689)
http://www.yale.edu/lawweb/avalon/england.htm
British Broadcasting Corporation:
A to Z of Parliament
http://news.bbc.co.uk/1/hi/uk_politics/a-z_of_parliament/default.stm
California Department of Finance:
Development of Modern Budgeting
http://www.dof.ca.gov/fisa/bag/history.htm
Magna Carta (1215)
http://www.bl.uk/collections/treasures/magna.html
Unit 1 Questions
Please answer each of the following questions. If you are taking this course in a
group you may then meet to discuss your answers.
Why did Gladstone say that ‘the finance of the country is ultimately associated
with the liberties of the country’?
Taking your country as an example, how would you describe the development of
legislative financial scrutiny over time? What factors have influenced this
evolution?
Select bibliography
Blöndal, J. R. et al (2003). Budgeting in Brazil. 24th Annual Meeting of OECD
Senior Budget Officials, Rome, Organisation for Economic Co-operation and
Development.
Chabert, G. (2001). ‘La Réforme de l'Ordonnance de 1959 sur la Procédure
Budgétaire: Simple Aménagement Technique ou Prélude à des Véritables
Bouleversements?’ Regards sur l'Actualité (275): 13-25.
Chubb, B. (1952). The Control of Public Expenditure: Financial Committees of the
House of Commons. Oxford, Clarendon Press.
Coombes, D. L., Ed. (1976). The Power of the Purse: The Role of European
Parliaments in Budgetary Decisions. London, George Allen and Unwin.
Einzig, P. (1959). The Control of the Purse: Progress and Decline of Parliament's
Financial Control. London, Secker and Warburg.
Ferguson, E. J. (1961). The Power of the Purse: A History of American Public
Finance, 1776-1790. Chapel Hill, University of North Carolina Press.
Harriss, G. L. (1975). King, Parliament, and Public Finance in Medieval England to
1369. Oxford, Clarendon Press.
Inter-Parliamentary Union (1986). Parliaments of the World: A Comparative
Reference Compendium. Aldershot, Gower.
May, E. (1997). Treatise on the Law, Privileges, Proceedings and Usage of
Parliament. London, Butterworths.
Mezey, M. L. (1983). ‘The Functions of Legislatures in the Third World.’
Legislative Studies Quarterly 8(4): 511-550.
Porritt, E. (1910). ‘The Struggle over the Lloyd-George Budget.’ The Quarterly
Journal of Economics 24(2): 243-278.
Premchand, A. (1963). Control of Public Expenditure in India: A Historical and
Analytical Account of the Administrative, Audit and Parliamentary Processes. New
Delhi, Allied Publishers.
Probyn, J. W., Ed. (1877). Correspondence Relative to the Budgets of Various
Countries. London, Cassell Petter and Galpin.
Reid, G. (1966). The Politics of Financial Control: The Role of the House of
Commons. London, Hutchinson University Library.
Robinson, H. J. (1928). The Power of the Purse: A Brief Study of Constitutional
History. London, J. Murray.
Schick, A. (2002). ‘Can National Legislatures Regain an Effective Voice in Budget
Policy?’ OECD Journal on Budgeting 1(3): 15-42.
Seidler, G. (1885). Budget und Budgetrecht im Staatshaushalte der
constitutionellen Monarchie. Wien, Alfred Hölder.
Stapenhurst, F. C. and R. Pelizzo (2002). ‘A Bigger Role for Legislatures.’ Finance
and Development 39(4): 46-48.
http://www.imf.org/external/pubs/ft/fandd/2002/12/stapenhu.htm
Webber, C. and A. B. Wildavsky (1986). A History of Taxation and Expenditure in
the Western World. New York, Simon and Schuster.
Wehner, J. (2004). ‘Back from the Sidelines? Redefining the Contribution of
Legislatures to the Budget Cycle.’ World Bank Institute Working Papers.
http://siteresources.worldbank.org/WBI/Resources/WBI37230WenherWeb.pdf
Wehner, J. (2004). ‘The Evolution and Decay of Parliament’s Power of the Purse.’
Unpublished manuscript.
White, E. N. (1995). ‘The French Revolution and the Politics of Government
Finance, 1770-1815.’ Journal of Economic History 55(2): 227-255.
The finance of the country is ultimately associated with the liberties of the
country… If the House of Commons by any possibility lose the power of the
control of the grants of public money, depend upon it, your very liberty will be
worth very little in comparison. That powerful leverage has been what is
commonly known as the power of the purse – the control of the House of
Commons over public expenditure.
William Ewart Gladstone, 1891
How did parliaments come to exercise the budgetary roles they have today? Why do
they participate in the budget process in the first place? To answer these questions, and
as a background to the subsequent units, this unit provides a brief overview of some key
stages in the evolution of the role of parliament in budgeting. The following sections
look at the struggle to ensure parliamentary consent to taxation, how the rise of modern
budgeting helped parliament to control expenditures, and more recent developments
relating to the role of legislatures in budgeting.
The struggle for parliamentary control of taxation
The struggle to ensure consent to taxation was a central battlefield in the evolution of
parliament in medieval England. To guard against despotic royal rule, parliament sought
to limit the kings’ powers to impose taxes so as to curtail their ability to maintain a
standing army beyond times of war and immediate external threat (Harriss 1975). The
principle of parliamentary consent to taxation gained constitutional recognition when it
was enshrined in the Magna Carta – a list of concessions to the barons that King John
signed at Runnymede in 1215. But this agreement did not resolve the conflict over the
power to impose taxes, which continued to simmer throughout the following centuries.
Bitter contests between kings and parliaments in the seventeenth century precipitated
procedural innovations that advanced parliamentary control of state finance. In
particular parliament’s increasing use of a committee of the whole House brought
several advantages, due to the fact that the procedures of committees applied for such
deliberations, rather than the standard rules. This allowed the Commons to appoint their
own chairperson, which reduced the influence of the Speaker, who at the time was
generally regarded as aligned with the monarch. The committee procedure also allowed
each member to speak more than once and thus facilitated much freer debate. It
became easier for the Commons to delay passing the bill to grant subsidies to the crown
until the end of a session, a tactic that afforded time to extract concessions from the
monarch. But clever procedural devices were not enough to establish parliamentary
supremacy over taxation.
A crucial shortcoming of parliamentary control was that it did not extend to royal
borrowing on the monarch’s personal credit. After Charles II claimed the throne in 1660
parliament started to demand estimations of cost before voting money to be granted to
the king, who claimed to get short shrift. To evade expenditure control, a popular royal
tactic was to resort to borrowing and hope that parliament would later consent to the
raising of funds to repay such loans. But this practice was not sustainable when
parliament refused to oblige. In 1672 the government in effect declared the only state
bankruptcy in British history when payments on loans from City bankers were
suspended initially for twelve months, which was later renewed repeatedly. Only after
1688 was executive borrowing tied to parliamentary consent, which restored trust with
lenders and ensured large-scale access to finance over the following centuries.
The Glorious Revolution of 1688 brought a decisive victory for parliament, and it is a
landmark in the evolution of its financial role. The 1689 Bill of Rights captures the
outcome of the struggle. Most importantly, it firmly established the principle that only
parliament could authorize taxation by proclaiming ‘That levying money for or to the use
of the Crown by pretence of prerogative, without grant of Parliament, for longer time, or
in other manner than the same is or shall be granted, is illegal.’ Still, at this stage there
was still no such thing as an annual budget, and there was no comprehensive control of
expenditures.
Before the revolution the royals freely mingled public and private income. Following the
revolution parliament made a life-long grant to the king to cover expenditures on the
civil list and the monarch in turn relinquished control over most of his hereditary
revenues. Originally, the list was intended to cover the financial requirements of the king
and his household as well as the expenditure of the central civil government excluding
debt charges. Expenditure items for civil administration were gradually transferred from
the list to the supply services and, later, the consolidated fund, in a process that lasted
until 1830. The creation of this list was the first step towards the separation of public
and royal expenditures.
Paradoxically, in these early days of growing financial control by the Commons one can
also find the origin of limitations on parliament’s budgetary powers. Given the political
dynamics of the time, it made little sense for parliament to volunteer money to the
crown. The Commons proceeded to resolve in 1706 ‘That this House will receive no
Petition for any sum of Money relating to public Service, but what is recommended from
the Crown.’ The financial initiative of the crown has been enshrined in the standing
orders since 1713 and this limitation on parliament’s power of the purse is considered an
essential constitutional principle to this day. Therefore, while the British Parliament was
at the forefront of claiming budgetary rights, it was also the first parliament to
voluntarily restrict its powers to introduce and amend financial legislation (Inter-
Parliamentary Union 1986, p. 1093):
Parliament still respects this long-standing custom and practice and, as a result,
it may not vote sums in excess of the Government’s estimates. Consequently, the
only amendments that are in order are those which aim to reduce the sums
requested and have as their purpose the chance for Members to raise
explanations before the sums in question are approved.
After the Glorious Revolution, it was not long before parliamentary control over taxation
spread beyond Britain. Parliament proved to have a short memory for the passions that
could be incited by unilateral imposition of fiscal measures. As imperial finances were
exceedingly stretched by the task of protecting vast colonial territories, parliament
sought to force the inhabitants of the empire’s North American possessions to contribute
towards the defense of the territory. In 1765 it ordered the imposition of a tax on a
stamp affixed to a range of documents including newspapers and playing cards. This
gave rise to great discontent in the colonies, and led to a boycott of British goods by the
colonialists. Despite a partial retreat by parliament, which abolished the ‘stamp tax’ and
several other duties, the continued imposition of a duty on tea was sufficient to provoke
unrest and ultimately led to the war of independence. At the First Continental Congress
in 1774 delegates from the colonies rejected ‘every idea of taxation, internal or external,
for raising a revenue on the subjects in America, without their consent.’
The rise of modern budgeting
Parliamentary control remained incomplete as long as governments continued to enjoy
wide discretion in expending public revenues. Without detailed knowledge of
expenditure needs, requests for funds could not be properly evaluated. Following the
Glorious Revolution, it took the Commons two further centuries to put in place a
comprehensive system of expenditure control. There were some interim achievements,
notably the creation of the consolidated fund in 1787. But the development of modern
budgeting practices in the United Kingdom had to wait until the Gladstonian reforms in
the second half of the nineteenth century.
By the beginning of the nineteenth century, the United States Congress already
constrained executive discretion through detailed line item appropriations that
prescribed the exact use of authorized expenditures, for instance by setting strict limits
on specific expenses such as firewood and candles in particular offices. This tradition
has its origins in colonial times, when legislatures were distrustful of British rule and
invested much effort in scrutinizing administrative expenditures. The colonialists were
suspicious of governors they did not appoint and who were regarded as agents of the
king in distant Britain. They thus devised stringent and humiliating control mechanisms
including the annual voting of salaries, detailed specification of the object of spending
and the amount to be spent, and the reversion of unspent funds to the treasury at the
end of the fiscal period. This advanced level of congressional scrutiny of expenditures
was exceptional compared with other countries at the time.
In Europe, France was first in developing modern expenditure control mechanisms
based on reforms of state audit during the first half of the nineteenth century. Napoleon
put in place the institutional fundamentals of modern public audit when he created the
cour des comptes in 1807. In the initial years following the creation of the court the
benefits of the new audit system for the French National Assembly were marginal. To
ensure effective reporting to the assembly, the publication and distribution of audit
reports was made a legal requirement in 1832. The assembly also gradually broadened
its control over the approval of expenditures until the specification of detailed items of
expenditure for each ministry became a legal requirement in 1831. By the middle of the
nineteenth century, France had put in place many of the elements that are associated
with modern budgeting, notably a comprehensive budget encompassing all of the
activities of government, a standard fiscal year, the principle of annual authorization,
and a developed system of accounting and audit control.
Control of expenditures evolved differently in the United Kingdom. Parliament
appropriated money many centuries before the use of budgets became common. A first
known instance of parliamentary appropriation dates back to the fourteenth century,
when a grant to the Edward III was explicitly earmarked for ‘the Maintenance and
Safeguard of our said Realm of England, and on Wars in Scotland, France and Gascoign,
and in no places elsewhere during the said Wars’ (Einzig 1959, p. 79). Particular sources
of revenue were also frequently tied to specific expenses in order to exercise some
control over royal spending. However, parliamentary oversight of expenditures remained
patchy and incomplete. An important improvement was the creation of the consolidated
fund in 1787 for the purposes of collecting revenues and disbursing all monies for the
supply of public services, which ‘broke the disorder caused by assigning particular taxes
to special purposes and it provided the means of infinite expenditure control through
comprehensive appropriation schedules’ (Reid 1966, p. 57). But full expenditure control
had to wait until the rise of modern budgeting.
The decisive steps towards modernization of public finances in the United Kingdom are
inextricably linked to William Ewart Gladstone, who first became Chancellor of the
Exchequer in 1852. Gladstone was determined to force greater economy in public
finance and introduced reforms in the 1860s that made annual and comprehensive
estimates central to legislative oversight. In 1861 the Commons, based on the initiative
of Gladstone, resolved to establish a public accounts committee to examine the accounts
showing the appropriation of the sums granted by parliament for public expenditure.
The Exchequer and Audit Departments Act of 1866 required all government departments
to produce appropriation accounts for audit purposes. The act also created the
comptroller and auditor general by merging the ex ante function of authorizing the issue
of money to departments with a new ex post function of examining every appropriation
account and reporting the results to parliament. The committee developed a high
standard of scrutiny and contributed significantly to rapid improvements in the
disclosure of financial information in the following decades (Chubb 1952).
In the United Kingdom a final step towards the democratization of the budget was taken
when the hereditary chamber, the House of Lords, was stripped of its veto power over
financial legislation. The elected House of Commons considered the Lords unable to
amend tax and spending bills by the end of the seventeenth century. The formal
removal of remaining veto power was triggered by the dramatic struggle over the 1909
budget of Chancellor Lloyd George, who sought increased tax revenues in order to pay
for pensions and defense expenditures (Porritt 1910). When the Lords rejected the
entire Finance Bill, this prompted the passing of the Parliament Act of 1911, the purpose
of which was to debar the Lords from rejecting money bills – legislation strictly related
to taxation, borrowing or appropriations. Since then, the supremacy of the elected
chamber has been firmly established. Budgetary bicameralism of various forms
continues in countries where second chambers of parliament have democratic
credentials.
More recent developments in legislative budgeting
Parliamentary fiscal power in the United Kingdom was at its peak in the second half of
the nineteenth century, when the Commons frequently amended spending and revenue
proposals (Einzig 1959). The spread of parliamentary democracy since the nineteenth
century ensured that the principle of parliamentary authorization of taxation and public
expenditure became a constitutional fundamental across democratic countries. However,
from a long term perspective the influence of national legislatures on budget policy
making has declined in most industrialized countries (Coombes 1976). The budgetary
decline of parliament is perhaps most evident in the United Kingdom, where the House
of Commons ceased to amend estimates almost a century ago.
Several developments contributed to reducing the budgetary activism of parliaments
(Schick 2002). The emergence of disciplined political parties has reigned in legislative
independence. Devolution of spending, and to a lesser extent of revenues, has chipped
away at the comprehensive control of public funds by national legislatures. In addition,
the massive expansion of entitlement spend in the twentieth century has substantially
rigidified budgets and commensurately decreased the remaining margin for active
legislative engagement in annual budgets. With the growth of public spending and the
increasing complexity of public finances, the executive budget proposal became the
standard against which legislative action was measured.
But the decline of parliamentary power over budgets is not universal. There are signs
that some parliaments are attempting a budgetary comeback. In France, for instance,
the National Assembly recently initiated a wide-ranging set of budget reforms. The
resulting changes include a reclassification of the budget in order to support
parliamentary oversight and an expansion of powers to amend expenditures (Chabert
2001). In developing and transition countries, a substantial number of legislatures are
moving towards budgetary activism. Perhaps the primary reason for this development is
that democratization and constitutional change have opened up possibilities for
legislature participation in many previously closed systems. A good example is the
Brazilian Congress, which historically played no significant role in the budget process.
Democratization in the 1980s led to constitutional changes that gave Congress powers
to modify the budget and have resulted in substantial levels of activism (Blöndal et al
2003).
In addition, there has been a recent shift in international financial institutions and donor
agencies towards participation in setting development goals and strategies. Developing
countries are now asked to access international finance on the basis of comprehensive
poverty reduction strategies that are meant to be compiled through an in-country
participative process. This shift is linked to renewed interest by the international donor
community in the quality of the budget process and the governance of the budget for a
variety of reasons, in particular the realization of the failure of conditionality in
development lending and evidence on the effectiveness of aid. This provides an
opportunity for legislatures in poor countries to reengage with development policy and
budgets (Stapenhurst and Pelizzo 2001).
Conclusion
The budgetary role of democratic legislatures is the outcome of a centuries-long
struggle for supremacy in public finance. Historically, parliaments first gained the right
to consent to taxation, and gradually they devised mechanisms to control the
expenditure of public funds. Modern budgets came to aid comprehensive legislative
oversight. Legislatures today exercise varying levels of budgetary influence. While some
parliaments have become less active in budgetary matters, others have maintained a
strong role in the budgeting process. Democratization and constitutional reform provide
opportunities for new parliaments to actively define an appropriate budgetary role.
Relevant internet resources
Bill of Rights (1689)
http://www.yale.edu/lawweb/avalon/england.htm
British Broadcasting Corporation:
A to Z of Parliament
http://news.bbc.co.uk/1/hi/uk_politics/a-z_of_parliament/default.stm
California Department of Finance:
Development of Modern Budgeting
http://www.dof.ca.gov/fisa/bag/history.htm
Magna Carta (1215)
http://www.bl.uk/collections/treasures/magna.html
Unit 1 Questions
Please answer each of the following questions. If you are taking this course in a
group you may then meet to discuss your answers.
Why did Gladstone say that ‘the finance of the country is ultimately associated
with the liberties of the country’?
Taking your country as an example, how would you describe the development of
legislative financial scrutiny over time? What factors have influenced this
evolution?
Select bibliography
Blöndal, J. R. et al (2003). Budgeting in Brazil. 24th Annual Meeting of OECD
Senior Budget Officials, Rome, Organisation for Economic Co-operation and
Development.
Chabert, G. (2001). ‘La Réforme de l'Ordonnance de 1959 sur la Procédure
Budgétaire: Simple Aménagement Technique ou Prélude à des Véritables
Bouleversements?’ Regards sur l'Actualité (275): 13-25.
Chubb, B. (1952). The Control of Public Expenditure: Financial Committees of the
House of Commons. Oxford, Clarendon Press.
Coombes, D. L., Ed. (1976). The Power of the Purse: The Role of European
Parliaments in Budgetary Decisions. London, George Allen and Unwin.
Einzig, P. (1959). The Control of the Purse: Progress and Decline of Parliament's
Financial Control. London, Secker and Warburg.
Ferguson, E. J. (1961). The Power of the Purse: A History of American Public
Finance, 1776-1790. Chapel Hill, University of North Carolina Press.
Harriss, G. L. (1975). King, Parliament, and Public Finance in Medieval England to
1369. Oxford, Clarendon Press.
Inter-Parliamentary Union (1986). Parliaments of the World: A Comparative
Reference Compendium. Aldershot, Gower.
May, E. (1997). Treatise on the Law, Privileges, Proceedings and Usage of
Parliament. London, Butterworths.
Mezey, M. L. (1983). ‘The Functions of Legislatures in the Third World.’
Legislative Studies Quarterly 8(4): 511-550.
Porritt, E. (1910). ‘The Struggle over the Lloyd-George Budget.’ The Quarterly
Journal of Economics 24(2): 243-278.
Premchand, A. (1963). Control of Public Expenditure in India: A Historical and
Analytical Account of the Administrative, Audit and Parliamentary Processes. New
Delhi, Allied Publishers.
Probyn, J. W., Ed. (1877). Correspondence Relative to the Budgets of Various
Countries. London, Cassell Petter and Galpin.
Reid, G. (1966). The Politics of Financial Control: The Role of the House of
Commons. London, Hutchinson University Library.
Robinson, H. J. (1928). The Power of the Purse: A Brief Study of Constitutional
History. London, J. Murray.
Schick, A. (2002). ‘Can National Legislatures Regain an Effective Voice in Budget
Policy?’ OECD Journal on Budgeting 1(3): 15-42.
Seidler, G. (1885). Budget und Budgetrecht im Staatshaushalte der
constitutionellen Monarchie. Wien, Alfred Hölder.
Stapenhurst, F. C. and R. Pelizzo (2002). ‘A Bigger Role for Legislatures.’ Finance
and Development 39(4): 46-48.
http://www.imf.org/external/pubs/ft/fandd/2002/12/stapenhu.htm
Webber, C. and A. B. Wildavsky (1986). A History of Taxation and Expenditure in
the Western World. New York, Simon and Schuster.
Wehner, J. (2004). ‘Back from the Sidelines? Redefining the Contribution of
Legislatures to the Budget Cycle.’ World Bank Institute Working Papers.
http://siteresources.worldbank.org/WBI/Resources/WBI37230WenherWeb.pdf
Wehner, J. (2004). ‘The Evolution and Decay of Parliament’s Power of the Purse.’
Unpublished manuscript.
White, E. N. (1995). ‘The French Revolution and the Politics of Government
Finance, 1770-1815.’ Journal of Economic History 55(2): 227-255.
A theory of Justice
Many people acclaim A Theory of Justice to be a pinnacle 20th century book about political philosophy and theory. The book is nothing more than a cleverly disguised polemic embracing coercive wealth redistribution.
Ramble several dozens of pages into the book and a reader eventually realizes that Rawls never explicitly defined the word justice. Odd considering the title of the book, but not so odd considering the disguised thesis. How does one substantiate almost 600 pages of discourse without once defining the key word of the entire discussion? A common method for authors to hoodwink readers is to not define the terms of the discussion. Avoiding specifics open doors for deception. A more appropriate title for this book would be A Theory of Social Justice, or A Theory of Distributive Justice. Such a title then would provide a clue about the book’s thesis. The book has nothing to do with the concept of justice — the desire to remedy trespasses.
Red flags should rise any time the topic of “distributive justice” appears. Rawls wanted to address the question of how to distribute the “benefits” of cooperative and collective living. Such a question is laid to rest by properly identifying the system, elements, and relational rules of that system. In the real world of human action, only people interact with one another. The benefits of interaction are part of the cooperating and contracting process. Although often there are spillover effects from all interactions, in such an environment nobody receives less than they bargained. That is, some people might receive more than they bargained, some non-participants might receive benefits, but the direct participants receive at least what they negotiated or agreed. Discussing how the indirect benefits of such interaction should be distributed is meaningless.
The concept of distributive justice arises only when people participate in coercively derived exchanges and non-participants are provided standing to share directly in all benefits of the exchange. This concept is better known as statism, a process whereby people try to position themselves politically to obtain as much as possible with as little effort as possible. Discussing distributive justice is a senseless exercise because the coercive nature of exchange is ignored. The starting point of the discussion is always wrong.
Add the insult of coercively requiring people to accept dealing with artificial legal fictions through which this coercive redistribution occurs (the illusion of “the state”). Create additional confusion through the legal fiction illusion that many people possess title to certain resources when in fact no such title exists (“public property”), and the entire discussion of “distributive justice” is forever clouded.
Rawls thought that justice is the first virtue of society. Observant people will disagree. The first virtue is peaceful survival and self-preservation. The closest Rawls came to defining the word justice was through his concept that justice is fairness. Yet this too is vague. Fair according to whom? Those people who use political power to coercively redistribute wealth will define fairness in one way and those coerced to share their wealth involuntarily will define fairness in another. If history reveals anything, people should have learned by now that such a question never will be answered in unanimity.
Rawls tried an old parlor trick of introducing a hypothetical thought-experiment through which he later would introduce his ideas for a “nicer” method of coerced wealth redistribution. He called this concept the original position and the veil of ignorance.
His hypothetical original position is that everybody starts out not knowing their eventual position and status in society. Nobody knows how rich they will be, how smart, or what opportunities might prevail. From this original position, Rawls then introduced his veil of ignorance behind which everybody must decide on the principles and rules that will guide human action once the veil is lifted.
As an analogy, Rawls described the idea of cutting and sharing a cake. The individual cutting the cake is required to select a cut piece only after all others have selected their piece. The inferred solution is the cutter will cut all pieces equally to ensure an equitable piece. A problem with the analogy is that the system parameters are rigged thereby reducing the available options. In the field of logic this is known as a false dilemma. This same fallacy is why polls often are rigged to produce a specific outcome. Simply control the options available and one also controls the outcome.
Rawls’s cake-cutting analogy changes quickly by modifying the system parameters. Introduce more than one cake, or accept that not all participants enjoy cake, or that some do not want cake. Some participants might like cake, but perhaps they are on a diet and choose not to eat. Perhaps for other health reasons they simply are not allowed to eat cake. Rawls’s analogy dies quickly. There is no such thing as equal distribution and this analogy assumes that the desired result is equal distribution.
Additionally, Rawls did not address another social system characteristic — ownership. Who owns the cake? If I own the resources to baking that cake, then I get to decide how the cake is cut and who gets to share the cake with me. I might decide to eat the entire cake all by myself.
Rawls’s original position and veil of ignorance fails for other reasons. All humans are self-interested. There is no escaping this in-born characteristic of all living creatures. The degree in which each human decides to exercise that attribute depends upon each individual, but everybody possesses the desire to serve self. No living creature survives for long by ignoring this instinct. Thus, even behind a veil of ignorance, people will try to create a system that they can manipulate, despite the facade of trying to create a system that might originally seem equitable to all. Rawls assumed that while behind this veil humans will ignore their thinking skills and ignore their will to preserve self. Rawls’s veil of ignorance requires that very human possess no information or experience about how the processes of exchange and cooperative living actually work. Rawls wanted people to be blissfully ignorant about human nature. Although not explicitly mentioned, Rawls’s veil idea unrealistically requires everyone to possess nothing, never having had experienced ownership, and never having had experienced anything in life.
Additionally, once the veil is lifted, many people immediately will begin the process of changing the rules and circumventing the original plan. History reveals this is exactly what happens. Take a look at the American, French, and Russian systems created from their respective revolutions. All began from an altruistic cornerstone but each system was corrupted easily.
Rawls also assumed that those people whom he thought were on the losing end of unequal redistribution never have the ability to reconcile the situation. History is full of Horatio Alger stories that discredit this assumption.
Rawls’s hypothetical starting point fails because the entire concept is unrealistic. At no time in history have humans done anything other than pursue their own self interests. From the moment a human is born each person thinks about self and survival. No human is capable of standing behind a veil of ignorance. The idea is impossible.
This is the same problem with the “state of nature” concept used by Hobbes, Locke, and Rousseau. There never has been any thing in human history that resembled a “state of nature.” Never happened. At birth humans are so utterly dependent upon other humans that they always have been social creatures. Humans are not self-sufficient and never have been. Thus, cooperation and not destructive competition tends to be the norm. Humans become anti-social only when confronted with various forms of trespass. To introduce a hypothetical concept such as the “state of nature” or original position behind a veil of ignorance is nothing but misdirected energy. Why not instead develop realistic social system models? Granted, Rawls admitted that a concept such as his original position never existed, but at that point in the book a reader should pause and wonder why one should bother with a hypothetical that has no basis in reality?
A primary problem with why so much conflict exists today is the concept of coercive wealth redistribution. Regardless of how that process is cloaked in theory, philosophy, or masked under the color of law, most people realize that any coercive redistribution is nothing but theft — a form of trespass. Thus, Rawls’s discussion is merely another extension of the problem and not a solution. Rawls tried only to modify the methods of coercive redistribution rather than attack the disease itself. For thousands of years humans have worked together cooperatively to improve life. An appropriate question is not how to force cooperation or equal distribution of resources, but how and why do a minority of people hoodwink the majority into believing that coercive redistribution is the only acceptable solution?
Uneven wealth distribution always will exist for a simple reason — everybody has a different concept of what defines their pursuit of happiness. Equal distribution is and always will be impossible. Reducing conflict will occur more quickly by removing the illusions and false doctrines through which coercive redistribution occurs. Only when people are no longer ignorant about these processes can they hope to avoid them.
This is not an easy book to read, especially if one is experienced in identifying various flaws of debate and discussion. Identify early the flaws of Rawls’s theory and the book then is no longer a classic or important book about social philosophy. Rawls ignored basic human nature, assumed that everyone would embrace his veil of ignorance approach, and “rationally” select a better system. Within the narrow boundaries of the deceptive doctrine of coerced wealth redistribution, that is, “distributive justice,” Rawls’s thesis might provide some people fodder for discussion. Destroy that assumption and the book is little more than another ivory tower polemic with no basis in reality. Rawls’s thesis is self-contained entirely within the boundaries of statism. If you accept statism then you might enjoy his discussion. If you reject statism then you already have mastered Rawls’s book. Rawls did at least raise some valid questions concerning the philosophy of utilitarianism, but don’t bother reading this book unless required in a school environment. And even then, rip the thesis to shreds.
Finis.
Ramble several dozens of pages into the book and a reader eventually realizes that Rawls never explicitly defined the word justice. Odd considering the title of the book, but not so odd considering the disguised thesis. How does one substantiate almost 600 pages of discourse without once defining the key word of the entire discussion? A common method for authors to hoodwink readers is to not define the terms of the discussion. Avoiding specifics open doors for deception. A more appropriate title for this book would be A Theory of Social Justice, or A Theory of Distributive Justice. Such a title then would provide a clue about the book’s thesis. The book has nothing to do with the concept of justice — the desire to remedy trespasses.
Red flags should rise any time the topic of “distributive justice” appears. Rawls wanted to address the question of how to distribute the “benefits” of cooperative and collective living. Such a question is laid to rest by properly identifying the system, elements, and relational rules of that system. In the real world of human action, only people interact with one another. The benefits of interaction are part of the cooperating and contracting process. Although often there are spillover effects from all interactions, in such an environment nobody receives less than they bargained. That is, some people might receive more than they bargained, some non-participants might receive benefits, but the direct participants receive at least what they negotiated or agreed. Discussing how the indirect benefits of such interaction should be distributed is meaningless.
The concept of distributive justice arises only when people participate in coercively derived exchanges and non-participants are provided standing to share directly in all benefits of the exchange. This concept is better known as statism, a process whereby people try to position themselves politically to obtain as much as possible with as little effort as possible. Discussing distributive justice is a senseless exercise because the coercive nature of exchange is ignored. The starting point of the discussion is always wrong.
Add the insult of coercively requiring people to accept dealing with artificial legal fictions through which this coercive redistribution occurs (the illusion of “the state”). Create additional confusion through the legal fiction illusion that many people possess title to certain resources when in fact no such title exists (“public property”), and the entire discussion of “distributive justice” is forever clouded.
Rawls thought that justice is the first virtue of society. Observant people will disagree. The first virtue is peaceful survival and self-preservation. The closest Rawls came to defining the word justice was through his concept that justice is fairness. Yet this too is vague. Fair according to whom? Those people who use political power to coercively redistribute wealth will define fairness in one way and those coerced to share their wealth involuntarily will define fairness in another. If history reveals anything, people should have learned by now that such a question never will be answered in unanimity.
Rawls tried an old parlor trick of introducing a hypothetical thought-experiment through which he later would introduce his ideas for a “nicer” method of coerced wealth redistribution. He called this concept the original position and the veil of ignorance.
His hypothetical original position is that everybody starts out not knowing their eventual position and status in society. Nobody knows how rich they will be, how smart, or what opportunities might prevail. From this original position, Rawls then introduced his veil of ignorance behind which everybody must decide on the principles and rules that will guide human action once the veil is lifted.
As an analogy, Rawls described the idea of cutting and sharing a cake. The individual cutting the cake is required to select a cut piece only after all others have selected their piece. The inferred solution is the cutter will cut all pieces equally to ensure an equitable piece. A problem with the analogy is that the system parameters are rigged thereby reducing the available options. In the field of logic this is known as a false dilemma. This same fallacy is why polls often are rigged to produce a specific outcome. Simply control the options available and one also controls the outcome.
Rawls’s cake-cutting analogy changes quickly by modifying the system parameters. Introduce more than one cake, or accept that not all participants enjoy cake, or that some do not want cake. Some participants might like cake, but perhaps they are on a diet and choose not to eat. Perhaps for other health reasons they simply are not allowed to eat cake. Rawls’s analogy dies quickly. There is no such thing as equal distribution and this analogy assumes that the desired result is equal distribution.
Additionally, Rawls did not address another social system characteristic — ownership. Who owns the cake? If I own the resources to baking that cake, then I get to decide how the cake is cut and who gets to share the cake with me. I might decide to eat the entire cake all by myself.
Rawls’s original position and veil of ignorance fails for other reasons. All humans are self-interested. There is no escaping this in-born characteristic of all living creatures. The degree in which each human decides to exercise that attribute depends upon each individual, but everybody possesses the desire to serve self. No living creature survives for long by ignoring this instinct. Thus, even behind a veil of ignorance, people will try to create a system that they can manipulate, despite the facade of trying to create a system that might originally seem equitable to all. Rawls assumed that while behind this veil humans will ignore their thinking skills and ignore their will to preserve self. Rawls’s veil of ignorance requires that very human possess no information or experience about how the processes of exchange and cooperative living actually work. Rawls wanted people to be blissfully ignorant about human nature. Although not explicitly mentioned, Rawls’s veil idea unrealistically requires everyone to possess nothing, never having had experienced ownership, and never having had experienced anything in life.
Additionally, once the veil is lifted, many people immediately will begin the process of changing the rules and circumventing the original plan. History reveals this is exactly what happens. Take a look at the American, French, and Russian systems created from their respective revolutions. All began from an altruistic cornerstone but each system was corrupted easily.
Rawls also assumed that those people whom he thought were on the losing end of unequal redistribution never have the ability to reconcile the situation. History is full of Horatio Alger stories that discredit this assumption.
Rawls’s hypothetical starting point fails because the entire concept is unrealistic. At no time in history have humans done anything other than pursue their own self interests. From the moment a human is born each person thinks about self and survival. No human is capable of standing behind a veil of ignorance. The idea is impossible.
This is the same problem with the “state of nature” concept used by Hobbes, Locke, and Rousseau. There never has been any thing in human history that resembled a “state of nature.” Never happened. At birth humans are so utterly dependent upon other humans that they always have been social creatures. Humans are not self-sufficient and never have been. Thus, cooperation and not destructive competition tends to be the norm. Humans become anti-social only when confronted with various forms of trespass. To introduce a hypothetical concept such as the “state of nature” or original position behind a veil of ignorance is nothing but misdirected energy. Why not instead develop realistic social system models? Granted, Rawls admitted that a concept such as his original position never existed, but at that point in the book a reader should pause and wonder why one should bother with a hypothetical that has no basis in reality?
A primary problem with why so much conflict exists today is the concept of coercive wealth redistribution. Regardless of how that process is cloaked in theory, philosophy, or masked under the color of law, most people realize that any coercive redistribution is nothing but theft — a form of trespass. Thus, Rawls’s discussion is merely another extension of the problem and not a solution. Rawls tried only to modify the methods of coercive redistribution rather than attack the disease itself. For thousands of years humans have worked together cooperatively to improve life. An appropriate question is not how to force cooperation or equal distribution of resources, but how and why do a minority of people hoodwink the majority into believing that coercive redistribution is the only acceptable solution?
Uneven wealth distribution always will exist for a simple reason — everybody has a different concept of what defines their pursuit of happiness. Equal distribution is and always will be impossible. Reducing conflict will occur more quickly by removing the illusions and false doctrines through which coercive redistribution occurs. Only when people are no longer ignorant about these processes can they hope to avoid them.
This is not an easy book to read, especially if one is experienced in identifying various flaws of debate and discussion. Identify early the flaws of Rawls’s theory and the book then is no longer a classic or important book about social philosophy. Rawls ignored basic human nature, assumed that everyone would embrace his veil of ignorance approach, and “rationally” select a better system. Within the narrow boundaries of the deceptive doctrine of coerced wealth redistribution, that is, “distributive justice,” Rawls’s thesis might provide some people fodder for discussion. Destroy that assumption and the book is little more than another ivory tower polemic with no basis in reality. Rawls’s thesis is self-contained entirely within the boundaries of statism. If you accept statism then you might enjoy his discussion. If you reject statism then you already have mastered Rawls’s book. Rawls did at least raise some valid questions concerning the philosophy of utilitarianism, but don’t bother reading this book unless required in a school environment. And even then, rip the thesis to shreds.
Finis.
Common Citizenship for the English Race
In several earlier posts of e-book material, we’ve seen a transect or cross-section of ideas about unity of the English-speaking peoples at the turn of the 20th century. In 1892, relations between Great Britain and the US were cordial but still distant … and George Parkin is offering Imperial Federation as a means by which Great Britain, alone, and its largest colonies could resolve economic, political, and military vulnerability.
Ten years later, by 1903, the United States and Great Britain had undergone a vast change in their relationship as a result of the Venezuela boundary controversy, the Spanish-American War, the Boer War, the impending American construction of the Panama Canal, and America’s staggeringly large increase in its naval power. John Dos Passos is arguing at book length for harmonization and rationalization of relations between the two great powers out of the roots of sentiment, self-interest, and Christian duty.
Finally, by 1914, Sinclair Kennedy’s book on the “Pan-Angles” is sounding a far more urgent call for unity in the face of serious Great Power challenges in Europe and Asia. Kennedy quotes chapter and verse to establish the common set of values on both sides of the Atlantic, and that alliances should naturally follow such shared values. Within months of that book’s publication, the world was cast into a global realignment and the 20th century’s social and political upheavals were underway.
Turning back for a moment to the period before US-GB rapprochement, however, we can spot the first serious but very delicate propositions about unity amongst the English-speaking peoples. A.V. Dicey (British journalist and legal historian of the first rank) may well have claim to being the “James Bennett of the late 19th century” with his publication of an essay on “isopolity” or common citizenship for the former colonies and then-current dominions of Great Britain.
To quote him: “The idea of a common citizenship for the whole English people is novel. My proposal, therefore, must of necessity sound startling. My purpose is to establish, first, that my plan is practicable; secondly, that the immediate effects of common citizenship would be extremely small, but, as far as they went, wholly good; thirdly, that the indirect and moral, and, ultimately, the political results of common citizenship might be great and extremely beneficial; and, lastly, that the time is opportune for aiming at, or at any rate contemplating, the extension of common civil and political rights throughout the whole of the English-speaking people.”
Dicey, writing at a time when WW0 was still in its early phases quite explicitly stated that his proposal was suited to equal parties … to the proper respect of the dignity of both peoples. America was asserting itself petulantly and rather boorishly in the Caribbean but its trajectory of dominance was yet unexpressed (though internal papers of the Royal Navy suggest that they already had calculated the “prevailing breezes.”). So Dicey's writing reflects neither the disdain of Parkin, nor the American strategic enthusiasm of Dos Passos and Kennedy. Could any value be more important, for example, in current proposals for unity in the English-speaking world, than finding the right balance of engagement and restraint? Unifying enough but not too much. Dicey offers one model.
Dicey’s short essay outlines, in retrospect, a modest proposal that might nonetheless have had real positive, lasting effects as the two nations were swept later into World War I. Without such a common citizenship, the English-speaking peoples at the individual and national levels were to go on informally to establish “special relationships” that changed the nature of the 20th century. The practical nature of the ties between these nations is still to be fully acknowledged or formally established. Hidden "isopolity" -- diplomatic, commercial, military, and cultural, has had to suffice.
Running less that twenty pages, Dicey’s essay from the 19th century is thought-provoking in substance and interesting to observe from a rhetorical standpoint. He sought to soothe but also to motivate. Well worth a read for Anglosphere enthusiasts after 108 years.
Ten years later, by 1903, the United States and Great Britain had undergone a vast change in their relationship as a result of the Venezuela boundary controversy, the Spanish-American War, the Boer War, the impending American construction of the Panama Canal, and America’s staggeringly large increase in its naval power. John Dos Passos is arguing at book length for harmonization and rationalization of relations between the two great powers out of the roots of sentiment, self-interest, and Christian duty.
Finally, by 1914, Sinclair Kennedy’s book on the “Pan-Angles” is sounding a far more urgent call for unity in the face of serious Great Power challenges in Europe and Asia. Kennedy quotes chapter and verse to establish the common set of values on both sides of the Atlantic, and that alliances should naturally follow such shared values. Within months of that book’s publication, the world was cast into a global realignment and the 20th century’s social and political upheavals were underway.
Turning back for a moment to the period before US-GB rapprochement, however, we can spot the first serious but very delicate propositions about unity amongst the English-speaking peoples. A.V. Dicey (British journalist and legal historian of the first rank) may well have claim to being the “James Bennett of the late 19th century” with his publication of an essay on “isopolity” or common citizenship for the former colonies and then-current dominions of Great Britain.
To quote him: “The idea of a common citizenship for the whole English people is novel. My proposal, therefore, must of necessity sound startling. My purpose is to establish, first, that my plan is practicable; secondly, that the immediate effects of common citizenship would be extremely small, but, as far as they went, wholly good; thirdly, that the indirect and moral, and, ultimately, the political results of common citizenship might be great and extremely beneficial; and, lastly, that the time is opportune for aiming at, or at any rate contemplating, the extension of common civil and political rights throughout the whole of the English-speaking people.”
Dicey, writing at a time when WW0 was still in its early phases quite explicitly stated that his proposal was suited to equal parties … to the proper respect of the dignity of both peoples. America was asserting itself petulantly and rather boorishly in the Caribbean but its trajectory of dominance was yet unexpressed (though internal papers of the Royal Navy suggest that they already had calculated the “prevailing breezes.”). So Dicey's writing reflects neither the disdain of Parkin, nor the American strategic enthusiasm of Dos Passos and Kennedy. Could any value be more important, for example, in current proposals for unity in the English-speaking world, than finding the right balance of engagement and restraint? Unifying enough but not too much. Dicey offers one model.
Dicey’s short essay outlines, in retrospect, a modest proposal that might nonetheless have had real positive, lasting effects as the two nations were swept later into World War I. Without such a common citizenship, the English-speaking peoples at the individual and national levels were to go on informally to establish “special relationships” that changed the nature of the 20th century. The practical nature of the ties between these nations is still to be fully acknowledged or formally established. Hidden "isopolity" -- diplomatic, commercial, military, and cultural, has had to suffice.
Running less that twenty pages, Dicey’s essay from the 19th century is thought-provoking in substance and interesting to observe from a rhetorical standpoint. He sought to soothe but also to motivate. Well worth a read for Anglosphere enthusiasts after 108 years.
House of Lords Parliamentary Standards Bill
1. The Parliamentary Standards Bill is a legislative response to the public anger in recent weeks about the conduct of some Members of both Houses of Parliament in relation to financial matters. In this report we express concerns about the bill. We are particularly concerned by the hasty manner in which policy-making has taken place, with negligible public consultation, and the subsequent 'fast-tracking' through Parliament of a bill which will have major constitutional implications. We focus on these issues of process in this report. We intend to make a further report on the bill, dealing in more detail with constitutional points relating to the policy of the bill.
2. At the outset, we need to recognise that the bill as introduced in the House of Lords is in two vital respects different from the one originally introduced in the House of Commons. First, the Government agreed to remove a clause seeking to place a statutory duty on the House of Commons to have a code of conduct. Second, the Government was defeated on a controversial clause ("the proceedings in Parliament clause") that sought to carve out an exception from Article IX of the Bill of Rights 1689, which protects freedom of speech and proceedings in Parliament from being questioned in court. The Government indicated that they will respect the view of the House of Commons and not seek to reintroduce the proceedings in Parliament clause. Both of these clauses threatened to undermine freedoms which are essential for Parliament to operate properly and risked opening the door to conflict between Parliament and the courts.
3. We welcome these changes. They do, however, reinforce our view that the bill is the product of a desire to respond to a demand to see something done, as the Government put it, rather than the outcome of a law-making process suitable for a bill with serious constitutional repercussions. Even with the two clauses removed, the bill raises other as yet unresolved questions about the relationship between Parliament and the courts. Moreover, it will fall to the House of Lords to consider how the bill hangs together in the light of the decisions made in the House of Commons. Baroness Royall of Blaisdon, the Leader of the House of Lords, told us 24 hours before the removal of the proceedings in Parliament clause, that "The package in the bill is a coherent whole, and no part of it would work without the rest". The bill will accordingly have to be substantially recast. To do so under an accelerated passage is in our view wholly unacceptable given the questions of constitutional principle and detail that it raises.
The contribution of the House of Lords to the scrutiny of this bill
4. In different circumstances, a bill that seeks to regulate the working practices of the House of Commons might be thought to require the House of Lords to adopt a degree of deference in the scrutiny of it. It has been a characteristic of the British constitution that each House should be free to regulate its own internal affairs independently of the other. Our Committee is, however, called upon to examine all public bills. The bill raises questions of broad constitutional significance, including that of the relationship between Parliament and the courts and matters relating to parliamentary privilege. More specifically, the Government have indicated in relation to the present bill that they intend "to extend it to the Lords, using the same principles, as soon as the Parliamentary timetable allows".[1] This was confirmed by the Justice Secretary during the second reading of the bill in the House of Commons on 29 June.[2] A document deposited in the House of Commons Library by the Government on 20 May 2009, referring to the proposed Independent Parliamentary Standards Authority, states that "it is clearly appropriate that this new body also takes responsibility for these issues in the Lords".[3] The document adds:
"We recognise that the principle of self-regulation operates differently in the House of Lords. It is clear that extensive work and consultation will be necessary in order to ensure the agreement of the House to the effective transfer of responsibilities to the new body".
5. For these reasons, it is in our view necessary for the House of Lords to subject the provisions contained in the bill to close scrutiny, even though the proposals contained in the bill apply (at present) only to the House of Commons. In any event, it is clear from remarks made in the proceedings on report in the House of Commons that that House expects the bill to be thoroughly revised in the House of Lords, if only to make it workable.
Constitutional consequences of a further move away from self-regulation
6. On one view, the policy of the bill to create an independent body responsible for allowances and registration of interests, working at arm's length from Members, may be seen as an incremental development. The House of Commons first established a system for registering financial interests in 1974, in which the registrar was a clerk and alleged abuses were investigated by a parliamentary committee. In 1995, the first report of the Committee on Standards in Public Life, under the chairmanship of Lord Nolan, recommended that the House of Commons should appoint a Parliamentary Commissioner for Standards, who would be "a person of independent standing" responsible for maintaining the register of interests, offering advice to MPs, and investigating allegations of misconduct relating to the register. Decisions about imposing penalties would remain with a committee of MPs. The House of Commons accepted this recommendation. Parliament has also agreed to subject itself to external regulation of a constitutional character in other contexts, notably in the Freedom of Information Act 2000.
7. On the other hand, the policy expressed in the bill of establishing a statutory external regulator of important parliamentary matters, acting within a statutory regime and potentially subject to the jurisdiction of the courts, in our view represents a step-change in the trend towards greater external regulation. Self-regulation has been a central characteristic of both Houses of the United Kingdom Parliament. The "exclusive cognisance" of each House to regulate its own affairs, free from intervention by the courts, has been a key feature of our constitutional framework. The bill breaks with that convention. This is a profound change which has the potential to give rise to conflict between Parliament and the courts, the implications of which require very careful examination.
8. There are questions about the extent to which decisions taken under the new institutional framework created by the bill—by the Independent Parliamentary Standards Authority (IPSA) and the Commissioner for Parliamentary Standards—will open up the possibility of judicial review challenges. We note that suggestions have also been made that the bill may even lead to the prospect of judicial review proceedings against the Speaker of the House of Commons. The proposition raised by the Joint Committee on Human Rights that disciplinary proceedings within Parliament against Members ought to be subject to an appeal to the courts was not debated in detail in the House of Commons and deserves to be examined during the bill's passage through the House of Lords. There are also questions about the constitutional acceptability of the policy of the bill to create special criminal offences that apply only to a small class of person (in this case, Members of the House of Commons). It appears to us that the excessively speedy policy-making and consideration of the bill has prevented proper examination of these and other legally and constitutionally complex questions. We will address these further in our second report on the bill.
Fast-tracking of policy-making and of the passage of the bill
9. The way policy-making has been rushed, the lack of public consultation and the limited opportunities given to Parliament to scrutinise the bill all, in our view, fail to meet the minimum requirements of constitutional acceptability.
10. The Government decided that the bill should have an accelerated passage through both Houses. The bill was introduced in the House of Commons on Tuesday 23 June 2009. Second Reading was held on Monday 29 June; the Committee stage took place on Tuesday 30 June and was completed on Wednesday 1 July, along with all remaining stages. The timetable for consideration of the bill did not even provide the House of Commons with an opportunity to debate the proceedings in Parliament clause, which was of vital constitutional importance.
RUSHED POLICY-MAKING?
11. The House will want to consider whether the bill is the product of a thorough policy-making process. To do so, it will be helpful to set the bill's proposals in the context of the recent initiatives designed to restore public confidence.
12. On 23 March 2009, the Prime Minister invited the Committee on Standards in Public Life, chaired by Sir Christopher Kelly, to inquire into MPs' allowances.[4] In his letter to Sir Christopher, the Prime Minister stated "I understand that you will be undertaking a short, focused review of whether current arrangements in the House of Lords are still appropriate, given the reforms already completed for MPs, once the Sub-Committee on Lords' Interests, chaired by Usha Prashar has concluded its review. It would be helpful to consider the evidence from that exercise".[5] The Committee invited written submissions (the closing date for which was 5 June 2009) and is holding a number of oral evidence sessions. The Committee's report is expected to be published in autumn 2009.
13. On 21 April 2009, the Prime Minister used the constitutionally unorthodox medium of a video clip on YouTube to announce "urgent proposals to make our system of MPs' allowances and expenses simpler and less generous".[6] These interim changes were debated in the House of Commons on 30 April 2009. The House of Commons voted in favour of Resolutions that: welcomed the Committee on Standards in Public Life's inquiry; amended rules relating to allowances for MPs in outer London constituencies; ensured that all claims are backed with receipts; amended the rules relating to MPs' declarations of outside earnings; and made changes to the arrangements for MPs' staff employed on parliamentary business.[7]
14. On 19 May 2009, the then Speaker of the House of Commons made a statement to that House saying that a meeting of party leaders:
"... received a paper from the Prime Minister, which was endorsed by the other party leaders, calling for a fundamental reform of allowances—moving from self-regulation to regulation by an independent body. The Government will consult widely on this proposal. Further to this, the Leader of the House will be making a statement tomorrow, which will allow the House a full opportunity to ask questions, and Members to air their views on the decisions we have made and the proposals for the future".[8]
15. On 20 May 2009, Harriet Harman MP (Leader of the House of Commons) made a statement in the House of Commons on a proposed Independent Parliamentary Standards Authority.[9] Subsequently, a three page outline of the proposals was deposited in the House of Commons Library[10] and later uploaded to the Ministry of Justice website.[11]
16. On 23 June 2009, when the bill was introduced to the House of Commons, the Leader of the House of Commons said in a Written Statement:
"This Bill is the first stage of legislation and covers the specific but important and urgent task of setting up an independent authority. There is likely to be subsequent legislation where this is judged necessary, not least in the light of further cross-party discussions".[12]
17. We have recently been engaged in an inquiry into fast-track legislation. Our report Fast-track Legislation: Constitutional Implications and Safeguards will be published in the next few days. In Appendix 1, we have set out the recommendations we will make for improvements to the pre-legislative, legislative and post-legislative scrutiny process relating to fast-tracked legislation. We wrote to Baroness Royall on 25 June seeking a full explanation of the justification for fast-tracking this bill, in accordance with our recommendation at paragraph 186 of our forthcoming report.[13]
18. Baroness Royall told us "Fast tracking is necessary because there is an urgent public demand to see something done about the system for regulating MPs' expenses". She said "If the legislation were not passed until the autumn, that would lose three months during which the public would continue to wonder what MPs were doing to answer their concerns". It appears that the key driver for the bill is public perception, rather than any specific policy outcome. Nevertheless, in answer to our question as to what public consultation there had been about the policy contained in the bill, Baroness Royall responded that "The policy proposal directly affects only MPs and the staff of the House". She did not allude to any external public consultation, nor admit the case for it. This strikes us as an worryingly narrow view of a bill designed to rebuild public confidence in the way Parliament operates.
19. There is no sign that the policy proposals contained in the bill were subject to rigorous internal scrutiny as to their constitutional acceptability. Once again, there appears to have been a failure at the centre of Government to prevent a policy with clear constitutional flaws being pursued. The abandoned clauses in the present bill now lay on the cutting room floor alongside clauses from the Legislative and Regulatory Reform Bill in 2006 and the 2003 announcement that the office of Lord Chancellor would be abolished.
20. We recognise that there have been discussions, conducted under the "Chatham House Rule", involving the leaders of the political parties about the policy in the bill. We understand that the bill changed substantially as a result. We welcome consultation between the parties about matters of significant constitutional importance. But such discussions are no substitute for rigorous evaluation of policy options and public consultation. It is ironic that provisions designed to restore public confidence in aspects of the operation of Parliament have emerged from behind closed doors without providing an opportunity for adequate public engagement before the policy is crystallised into a bill introduced to Parliament. This is no way in which to legislate on matters which raise complex constitutional and legal issues.
21. The proposals contained in the bill have not been preceded by public consultation in accordance with the Government's Code of Practice on Consultation.[14] We see no justification for departing from the presumption in favour of formal, written public consultation, the duration of which should be no less than 12 weeks. The failure to consult has deprived Government and Parliament of the opportunity to hear expert views on the policy of the bill. Other parliaments have adopted various models for the regulation of ethics and financial interests of their members. There is little sign that policy-making in advance of the bill has been informed by careful evaluation of what has worked well, and less well, in other systems
22. Moreover, this is a bill that should subsequently have been published in draft to enable pre-legislative scrutiny. Without such prior scrutiny, or the evidence-based scrutiny of a Public Bill Committee in the House of Commons (because the Committee stage was taken on the floor of the House), it is difficult to see how the policy can have been appropriately informed by expert and public opinion.
23. We are wholly unpersuaded by the Government's case for this bill to be fast-tracked. There is an undoubted need to restore public confidence in the parliamentary system. It is not, however, clear to us that a cobbled together bill rushed through Parliament will help rebuild public trust; on the contrary, if Parliament cannot be seen to be scrutinising proposals with the thoroughness they deserve, public confidence in parliamentarians is likely to be further undermined. Governments should find the strength to resist falling into a temptation simply to see something done, which is no substitute for properly prepared policy and legislation.
24. It will ultimately be for the House as a whole to decide whether the bill should follow a normal timetable, respecting the minimum recommended intervals between stages of the bill and following the requirements of Standing Order 47 that no two stages of a Bill be taken on one day. For our own part we regret the haste with which the bill is being pursued. In our forthcoming report on Fast-track legislation we identify a number of principles which we consider need to be met in order to justify expediting legislation. We doubt that any of these principles has been met in respect of this bill. Accordingly we do not think that the case for proceeding with this bill on a fast-track timetable has been established and we do not support any curtailment of the usual legislative timetable.
2. At the outset, we need to recognise that the bill as introduced in the House of Lords is in two vital respects different from the one originally introduced in the House of Commons. First, the Government agreed to remove a clause seeking to place a statutory duty on the House of Commons to have a code of conduct. Second, the Government was defeated on a controversial clause ("the proceedings in Parliament clause") that sought to carve out an exception from Article IX of the Bill of Rights 1689, which protects freedom of speech and proceedings in Parliament from being questioned in court. The Government indicated that they will respect the view of the House of Commons and not seek to reintroduce the proceedings in Parliament clause. Both of these clauses threatened to undermine freedoms which are essential for Parliament to operate properly and risked opening the door to conflict between Parliament and the courts.
3. We welcome these changes. They do, however, reinforce our view that the bill is the product of a desire to respond to a demand to see something done, as the Government put it, rather than the outcome of a law-making process suitable for a bill with serious constitutional repercussions. Even with the two clauses removed, the bill raises other as yet unresolved questions about the relationship between Parliament and the courts. Moreover, it will fall to the House of Lords to consider how the bill hangs together in the light of the decisions made in the House of Commons. Baroness Royall of Blaisdon, the Leader of the House of Lords, told us 24 hours before the removal of the proceedings in Parliament clause, that "The package in the bill is a coherent whole, and no part of it would work without the rest". The bill will accordingly have to be substantially recast. To do so under an accelerated passage is in our view wholly unacceptable given the questions of constitutional principle and detail that it raises.
The contribution of the House of Lords to the scrutiny of this bill
4. In different circumstances, a bill that seeks to regulate the working practices of the House of Commons might be thought to require the House of Lords to adopt a degree of deference in the scrutiny of it. It has been a characteristic of the British constitution that each House should be free to regulate its own internal affairs independently of the other. Our Committee is, however, called upon to examine all public bills. The bill raises questions of broad constitutional significance, including that of the relationship between Parliament and the courts and matters relating to parliamentary privilege. More specifically, the Government have indicated in relation to the present bill that they intend "to extend it to the Lords, using the same principles, as soon as the Parliamentary timetable allows".[1] This was confirmed by the Justice Secretary during the second reading of the bill in the House of Commons on 29 June.[2] A document deposited in the House of Commons Library by the Government on 20 May 2009, referring to the proposed Independent Parliamentary Standards Authority, states that "it is clearly appropriate that this new body also takes responsibility for these issues in the Lords".[3] The document adds:
"We recognise that the principle of self-regulation operates differently in the House of Lords. It is clear that extensive work and consultation will be necessary in order to ensure the agreement of the House to the effective transfer of responsibilities to the new body".
5. For these reasons, it is in our view necessary for the House of Lords to subject the provisions contained in the bill to close scrutiny, even though the proposals contained in the bill apply (at present) only to the House of Commons. In any event, it is clear from remarks made in the proceedings on report in the House of Commons that that House expects the bill to be thoroughly revised in the House of Lords, if only to make it workable.
Constitutional consequences of a further move away from self-regulation
6. On one view, the policy of the bill to create an independent body responsible for allowances and registration of interests, working at arm's length from Members, may be seen as an incremental development. The House of Commons first established a system for registering financial interests in 1974, in which the registrar was a clerk and alleged abuses were investigated by a parliamentary committee. In 1995, the first report of the Committee on Standards in Public Life, under the chairmanship of Lord Nolan, recommended that the House of Commons should appoint a Parliamentary Commissioner for Standards, who would be "a person of independent standing" responsible for maintaining the register of interests, offering advice to MPs, and investigating allegations of misconduct relating to the register. Decisions about imposing penalties would remain with a committee of MPs. The House of Commons accepted this recommendation. Parliament has also agreed to subject itself to external regulation of a constitutional character in other contexts, notably in the Freedom of Information Act 2000.
7. On the other hand, the policy expressed in the bill of establishing a statutory external regulator of important parliamentary matters, acting within a statutory regime and potentially subject to the jurisdiction of the courts, in our view represents a step-change in the trend towards greater external regulation. Self-regulation has been a central characteristic of both Houses of the United Kingdom Parliament. The "exclusive cognisance" of each House to regulate its own affairs, free from intervention by the courts, has been a key feature of our constitutional framework. The bill breaks with that convention. This is a profound change which has the potential to give rise to conflict between Parliament and the courts, the implications of which require very careful examination.
8. There are questions about the extent to which decisions taken under the new institutional framework created by the bill—by the Independent Parliamentary Standards Authority (IPSA) and the Commissioner for Parliamentary Standards—will open up the possibility of judicial review challenges. We note that suggestions have also been made that the bill may even lead to the prospect of judicial review proceedings against the Speaker of the House of Commons. The proposition raised by the Joint Committee on Human Rights that disciplinary proceedings within Parliament against Members ought to be subject to an appeal to the courts was not debated in detail in the House of Commons and deserves to be examined during the bill's passage through the House of Lords. There are also questions about the constitutional acceptability of the policy of the bill to create special criminal offences that apply only to a small class of person (in this case, Members of the House of Commons). It appears to us that the excessively speedy policy-making and consideration of the bill has prevented proper examination of these and other legally and constitutionally complex questions. We will address these further in our second report on the bill.
Fast-tracking of policy-making and of the passage of the bill
9. The way policy-making has been rushed, the lack of public consultation and the limited opportunities given to Parliament to scrutinise the bill all, in our view, fail to meet the minimum requirements of constitutional acceptability.
10. The Government decided that the bill should have an accelerated passage through both Houses. The bill was introduced in the House of Commons on Tuesday 23 June 2009. Second Reading was held on Monday 29 June; the Committee stage took place on Tuesday 30 June and was completed on Wednesday 1 July, along with all remaining stages. The timetable for consideration of the bill did not even provide the House of Commons with an opportunity to debate the proceedings in Parliament clause, which was of vital constitutional importance.
RUSHED POLICY-MAKING?
11. The House will want to consider whether the bill is the product of a thorough policy-making process. To do so, it will be helpful to set the bill's proposals in the context of the recent initiatives designed to restore public confidence.
12. On 23 March 2009, the Prime Minister invited the Committee on Standards in Public Life, chaired by Sir Christopher Kelly, to inquire into MPs' allowances.[4] In his letter to Sir Christopher, the Prime Minister stated "I understand that you will be undertaking a short, focused review of whether current arrangements in the House of Lords are still appropriate, given the reforms already completed for MPs, once the Sub-Committee on Lords' Interests, chaired by Usha Prashar has concluded its review. It would be helpful to consider the evidence from that exercise".[5] The Committee invited written submissions (the closing date for which was 5 June 2009) and is holding a number of oral evidence sessions. The Committee's report is expected to be published in autumn 2009.
13. On 21 April 2009, the Prime Minister used the constitutionally unorthodox medium of a video clip on YouTube to announce "urgent proposals to make our system of MPs' allowances and expenses simpler and less generous".[6] These interim changes were debated in the House of Commons on 30 April 2009. The House of Commons voted in favour of Resolutions that: welcomed the Committee on Standards in Public Life's inquiry; amended rules relating to allowances for MPs in outer London constituencies; ensured that all claims are backed with receipts; amended the rules relating to MPs' declarations of outside earnings; and made changes to the arrangements for MPs' staff employed on parliamentary business.[7]
14. On 19 May 2009, the then Speaker of the House of Commons made a statement to that House saying that a meeting of party leaders:
"... received a paper from the Prime Minister, which was endorsed by the other party leaders, calling for a fundamental reform of allowances—moving from self-regulation to regulation by an independent body. The Government will consult widely on this proposal. Further to this, the Leader of the House will be making a statement tomorrow, which will allow the House a full opportunity to ask questions, and Members to air their views on the decisions we have made and the proposals for the future".[8]
15. On 20 May 2009, Harriet Harman MP (Leader of the House of Commons) made a statement in the House of Commons on a proposed Independent Parliamentary Standards Authority.[9] Subsequently, a three page outline of the proposals was deposited in the House of Commons Library[10] and later uploaded to the Ministry of Justice website.[11]
16. On 23 June 2009, when the bill was introduced to the House of Commons, the Leader of the House of Commons said in a Written Statement:
"This Bill is the first stage of legislation and covers the specific but important and urgent task of setting up an independent authority. There is likely to be subsequent legislation where this is judged necessary, not least in the light of further cross-party discussions".[12]
17. We have recently been engaged in an inquiry into fast-track legislation. Our report Fast-track Legislation: Constitutional Implications and Safeguards will be published in the next few days. In Appendix 1, we have set out the recommendations we will make for improvements to the pre-legislative, legislative and post-legislative scrutiny process relating to fast-tracked legislation. We wrote to Baroness Royall on 25 June seeking a full explanation of the justification for fast-tracking this bill, in accordance with our recommendation at paragraph 186 of our forthcoming report.[13]
18. Baroness Royall told us "Fast tracking is necessary because there is an urgent public demand to see something done about the system for regulating MPs' expenses". She said "If the legislation were not passed until the autumn, that would lose three months during which the public would continue to wonder what MPs were doing to answer their concerns". It appears that the key driver for the bill is public perception, rather than any specific policy outcome. Nevertheless, in answer to our question as to what public consultation there had been about the policy contained in the bill, Baroness Royall responded that "The policy proposal directly affects only MPs and the staff of the House". She did not allude to any external public consultation, nor admit the case for it. This strikes us as an worryingly narrow view of a bill designed to rebuild public confidence in the way Parliament operates.
19. There is no sign that the policy proposals contained in the bill were subject to rigorous internal scrutiny as to their constitutional acceptability. Once again, there appears to have been a failure at the centre of Government to prevent a policy with clear constitutional flaws being pursued. The abandoned clauses in the present bill now lay on the cutting room floor alongside clauses from the Legislative and Regulatory Reform Bill in 2006 and the 2003 announcement that the office of Lord Chancellor would be abolished.
20. We recognise that there have been discussions, conducted under the "Chatham House Rule", involving the leaders of the political parties about the policy in the bill. We understand that the bill changed substantially as a result. We welcome consultation between the parties about matters of significant constitutional importance. But such discussions are no substitute for rigorous evaluation of policy options and public consultation. It is ironic that provisions designed to restore public confidence in aspects of the operation of Parliament have emerged from behind closed doors without providing an opportunity for adequate public engagement before the policy is crystallised into a bill introduced to Parliament. This is no way in which to legislate on matters which raise complex constitutional and legal issues.
21. The proposals contained in the bill have not been preceded by public consultation in accordance with the Government's Code of Practice on Consultation.[14] We see no justification for departing from the presumption in favour of formal, written public consultation, the duration of which should be no less than 12 weeks. The failure to consult has deprived Government and Parliament of the opportunity to hear expert views on the policy of the bill. Other parliaments have adopted various models for the regulation of ethics and financial interests of their members. There is little sign that policy-making in advance of the bill has been informed by careful evaluation of what has worked well, and less well, in other systems
22. Moreover, this is a bill that should subsequently have been published in draft to enable pre-legislative scrutiny. Without such prior scrutiny, or the evidence-based scrutiny of a Public Bill Committee in the House of Commons (because the Committee stage was taken on the floor of the House), it is difficult to see how the policy can have been appropriately informed by expert and public opinion.
23. We are wholly unpersuaded by the Government's case for this bill to be fast-tracked. There is an undoubted need to restore public confidence in the parliamentary system. It is not, however, clear to us that a cobbled together bill rushed through Parliament will help rebuild public trust; on the contrary, if Parliament cannot be seen to be scrutinising proposals with the thoroughness they deserve, public confidence in parliamentarians is likely to be further undermined. Governments should find the strength to resist falling into a temptation simply to see something done, which is no substitute for properly prepared policy and legislation.
24. It will ultimately be for the House as a whole to decide whether the bill should follow a normal timetable, respecting the minimum recommended intervals between stages of the bill and following the requirements of Standing Order 47 that no two stages of a Bill be taken on one day. For our own part we regret the haste with which the bill is being pursued. In our forthcoming report on Fast-track legislation we identify a number of principles which we consider need to be met in order to justify expediting legislation. We doubt that any of these principles has been met in respect of this bill. Accordingly we do not think that the case for proceeding with this bill on a fast-track timetable has been established and we do not support any curtailment of the usual legislative timetable.
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