The Public Bodies Bill [HL] 2010-11 offers the coalition new powers to reduce the number of public bodies and bring greater accountability, transparency and efficiency to the public sector. However, this draft framework legislation has also inflamed a constitutional debate.

Key points

  • The draft bill offers Ministers ‘Henry VIII’ powers to amend primary legislation by order.
  • The Constitutional Committee and Delegated Powers and Regulatory Reform Committee's recent reports and Lords' Second Reading debate indicate high levels of opposition, which may result in substantial amendment and/or consequential effects on the balance of the constitution.

Ending the Quango State

Following the election of the coalition government, Her Majesty declared in the Queen's Speech of 25 May 2010: "The cost of bureaucracy and the number of public bodies will be reduced". The Public Bodies Bill (the "Bill") offers Ministers the tools to deliver on this announcement. As drafted, it empowers them to abolish or merge specified public bodies, transfer their functions to government departments or modify their constitutional arrangements. The government has said that the Bill would initially reduce annual costs by £1 billion, with surviving public bodies then subject to triennial reviews of their independence, expertise and accountability.

The Bill was introduced in the House of Lords on 28 October 2010 and received its Second Reading on 9 November 2010 following publication of a Report of the Select Committee on the Constitution on 4 November 2010 (the "Report"). Line by line examination will begin on 23 November 2010.

Henry VIII Powers

The Constitution Committee's Report warned that the Bill "vastly extends Ministers' powers to amend primary legislation by order". Although most of the public bodies subject to the Bill were created by statute or Royal Charter, the Bill permits the executive to use secondary legislation to abolish them or redefine their functions. The Bill may even allow Ministers to amend its own provisions by order, for example by adding to the list of bodies subject to it.

The Committee considered these so-called 'Henry VIII' powers a threat to the constitutional principle that primary legislation is amended or repealed only by Parliament and to the democratic necessity that the executive remain subject to effective parliamentary scrutiny. Its members would not countenance any departure from these requirements without a full and clear justification, which was absent in this case. The Committee levelled particular criticism at the absence of any duty for Ministers to consult with interested or affected parties before orders were made, and the proposal that Ministers could make changes to multiple public bodies in a single order. It concluded that the Bill "strikes at the very heart of our constitutional system" and unacceptably "drains the lifeblood of legislative amendment and debate".

The Second Reading Debate

Lord Taylor of Holbeach (the Whip and government spokesperson) adopted a conciliatory tone when introducing the Bill in the Lords. He explained that the government intended to harness peers' expertise to "scrutinise this Bill with thoroughness" and would engage constructively with the Constitution Committee’s criticisms in due course. He nevertheless failed to mollify the Bill's many opponents. Baroness Royall of Blaisdon branded the draft legislation: "badly thought out, badly structured, badly executed, bad for the constitution, bad for public bodies and bad for government".

The chief criticisms were that: (i) the Bill permitted the executive to make unilateral changes with minimal debate to bodies that carry out vital functions, and (ii) the Bill effectively re-assigned control over these bodies from Parliament to Ministers, entrenching the dominance of the executive over the legislature. The Lords accepted that rationalising, reorganising or abolishing public bodies that had outlived their usefulness was necessary. However, many considered that the amendments to the legislation governing such bodies deserved the scrutiny and substantial debate afforded to primary legislation, not the "truncated treatment" ministerial orders receive. They emphasised that while the government’s aims were legitimate, the proposed means to realise them were not. The need for "increased efficiency, effectiveness and economy in the exercise of public functions" could not justify the unconstitutional and disproportionate strengthening of Ministers' delegated powers with inadequate procedural safeguards against their misuse.

While the Bill survived a rare motion to refer it to a special Select Committee for further consideration, Lord Taylor of Holbeach made several concessions to secure this result. He offered to meet the Constitutional Committee's concerns and "ensure proper public consultation and enhanced parliamentary scrutiny before any proposals to act under the legislation are approved", and agreed to amend the Bill to protect the independence of public bodies against unnecessary ministerial interference. He also promised to reconsider which public bodies should be subject to the new powers.

Delegated Powers and Regulatory Reform Committee Report

The DPRRC published its report on the Bill on 12 November 2010. It reiterated the view that key clauses were "not appropriate delegations of legislative power. They would grant to Ministers unacceptable discretion to rewrite the statute book, with inadequate parliamentary scrutiny of, and control over, the process". The DPRRC took comfort from the "general agreement" that the Bill required amendment at the Second Reading debate, and proposed several strategies for making revisions. These included the: (i) removal of certain powers; (ii) detailing of how powers were to be exercised on the face of the bill; (iii) placing of further limitations on Ministerial powers; (iv) removal of certain bodies from the new regime; and (v) insertion of a sunset clause.

Commentary

The government appears to have accepted that the powers conferred by the Bill require reconsideration. However, it remains adamant that the Bill is part of a "reform programme that is a coalition commitment, that reflects manifesto commitments and that the public rightly expect to be delivered without delay", which suggests that a wholesale rewrite of the Bill is unlikely. The significant opposition evident from the Committee reports and the Second Reading debate indicates that the Bill’s progress through the committee stage is unlikely to be smooth. The Joint Committee on Human Rights will submit its report, which may also be negative, and the Constitution Committee and DPRRC are both likely to report again on any concrete amendments that are proposed.

These stages of parliamentary procedure were vital in diluting a similar proposal to empower Ministers to reform primary legislation under the Legislative and Regulatory Reform Bill in 2006. On that occasion the government ultimately accepted various constraints, including: (i) exchanging an unrestricted power to amend or replace primary legislation by order for narrower powers to do so in specified circumstances of no "constitutional significance", and (ii) introducing a parliamentary veto of overmighty Ministerial orders. The current Bill's opponents are likely to campaign for similar dilutions. The Constitution Committee and DPRRC have already complained that the Bill lacks a 'super-affirmative resolution procedure', like that contained in the Legislative and Regulatory Reform Act 2006, whereby Ministers must lay draft orders before Parliament and amend them having regard to representations before they are placed before both Houses for final approval.

This is the second time in five years that the Constitution Committee has criticised the "lack of consideration given by the Government to the constitutional implications of proposed legislation". The Bill illustrates the growing willingness of successive governments to propose wide powers limited by mere assurances rather than statutory restraints. If the concessions the Bill’s opponents demand cannot be secured, and the Bill’s passage does upset the balance between legislature and executive, there may be knock-on effects. One constitutional consequence may be the dilution of the parliamentary convention that the legislature does not reject Ministers’ statutory instruments except in the most exceptional circumstances. Another may be the "virtually unprecedented" introduction of a procedure allowing Parliament to amend orders made under the new powers by Ministers. Finally, and more controversially, there may be a growing role for the courts in policing the rationality of such instruments through judicial review.

Find out more

http://www.direct.gov.uk/en/Nl1/Newsroom/DG_191548

http://www.publications.parliament.uk/pa/ld201011/ldbills/025/11025.i-ii.html