All eyes have been on the Lords in recent weeks as peers have debated, and amended, the government’s welfare reforms. But now that the Welfare Bill is back in the Commons, the government is attempting to use ‘financial privilege’ – a procedural instrument that removes the amendments and the need for a bill to ‘ping pong’ between the Houses if it is deemed to have big enough spending implications. Once applied for, the use of the privilege is adjudicated by Speaker with advice from parliamentary clerks.

If approved, the use of this device means that the government will have reversed the effects of the Lords amendments. The government suffered seven defeats in the upper house over amendments to the Welfare Bill, and peers of all parties are beside themselves that the government intends to strike out their work in this fashion. Leader of the Lords Lord Strathclyde put it mildly in debate yesterday when he said “the second Chamber might always think that the Commons using financial privilege is a little unfair”.

Baroness Grey-Thompson, a crossbencher whom I have previously praised for her non-partisan opposition to the government on aspects of the Welfare Reform Bill, told me this afternoon that she was very disappointed by the government’s actions.

“I understand it’s not as unusual as I first thought but it would have been good to know beforehand,” she said. “I perhaps should have taken the hint when Lord Freud started talking about the costs of my amendment. I’ve learned a lot.”

Disappointment and frustration aside, I would argue that the use of the financial privilege instrument in this way has implications for the proposed reform of the upper chamber. If it is intended to be a revising chamber, what criteria will be used as to whether the revisions are allowed to stand? Why have an upper chamber at all if the lower overrules it so completely?

I spoke to Lord Bassam, opposition chief whip in the Lords, this afternoon, and he was forceful in his disagreement with the government’s actions.

“I think it’s a mistake. I think it smacks of ‘we don’t like being beaten, we’re going to prove you’re completely wrong’,” he said. “It’s rather arrogant and high-handed on the government’s part. What I think is interesting in the Lords is that it’s not just Labour members who are aggrieved by this. Today we had Lawson, Newton, Forsyth, all chipping in and saying you shouldn’t be doing this.

“They can say ‘we could exercise financial privilege here, but we won’t, we’ll seek a proper resolution of these issues’. Governments traditionally have done that, and they’ve used financial privilege very sparingly. If we look back at our [Labour’s] time in government, I think there are two or three examples but not many more.

“One of the Tory peers asked the question – what is the point of the House of Lords if you’re going to use financial privilege on every decision that you dislike that they’ve made? I think it’s a very good question to ask. We continue to ask that question. It does cast a bit of a shadow over their commitment to Lords reform and I’m very suspicious that with the reforms that are going to emerge from the joint committee [on House of Lords reform], they will be seeking to muzzle us.”

The spotlight will remain on the Lords over the coming weeks as the Health and Social Care Bill, legal aid reforms and the Scotland Bill all due for debate. If the government continues to seek ways of disqualifying any changes the Lords make, both the coalition’s commitment to reform and the nature of the contribution the Lords can make the government’s legislative programme will be called into question.

Tags: House of Lords, House of Lords reform, Lord Bassam, Tanni Grey-Thompson, Welfare Reform Bill