Tax Credits and How to Fix the House of Lords

by Benjamin Studebaker

In Britain, the House of Lords recently impeded an attempt by Prime Minister David Cameron’s Conservative government to cut tax credits for working families as part of its austerity program. The average beneficiary family stood to lose £1,300 (about $2,000) a year, often on incomes of £20,000 or less. It effectively would have amounted to a 5% to 10% income cut for 3.3 million of Britain’s poorest families. This would have inflicted terrible and unnecessary suffering on these families and it would have damaged consumer spending and harmed Britain’s economy. It is a wonderful thing that the House of Lords blocked these cuts. It illustrates just how important it is to have another legislative house with the power to curb the excesses of the House of Commons. Yet because the members of the House of Lords are chosen on an anachronistic and often arbitrary basis, it cannot be trusted with the power it would need to mount a broader, more serious opposition to austerity. So how do we fix that?

At present, the House of Lords consists of 26 Church of England bishops (the “Lords Spiritual”) and 92 hereditary peers. The majority are life peers appointed by the queen, though by convention in accordance with the Prime Minister’s recommendations, which are by convention intended to create a balance in the lords that roughly mirrors the balance in the commons, with opposition party’s recommendations considered for some seats. This is a horrific mess. It doesn’t accomplish any set of reasonable political goals. To have any purpose, a second legislative house must be meaningfully different from the first house in a way that adds something discrete and valuable to the political system. The life peers are routinely appointed in a corrupt and arbitrary way to serve the interests of the parties in the commons. Many of them are not policy experts by any stretch of the imagination. The hereditary peers receive seats merely because their fathers held seats–we have no reason at all to think that they know anything. The Lords Spiritual are an unwelcome intrusion of religion into the political sphere, tolerable only because they are small in number and politically weak.

Because the peers have gained office through such obviously illegitimate means, its powers are very limited. It can delay the passage of legislation by forcing the commons to pass legislation in two consecutive years before it becomes law, but that’s about it. Consequently, when the lords do use their power to block legislation (especially budgetary legislation, which by convention the lords do not block), it is always controversial.

Most people who propose lords reform want to shamelessly copy the US senate, albeit with somewhat longer terms. In the US, senators have 6 year terms (as opposed to 2 in the house), and the senate also balances the power of high population US states with low population US states, because every state gets 2 senators but the number of representatives in the house is determined by population. Most commonly, lords reformers suggest that the lords be entirely elected to 10 or 15 year terms, retaining its current nominal role in policymaking.

In the US, the senate’s power is arguably equal to or greater than the house’s, but because both the house and the senate are fully elected, the differences in their composition is not all that great. The smaller number of members in the senate allows for lengthier debates, the longer terms makes the senators less vulnerable to outside pressure, and the difference in how the seats are distributed among the states gives low population states like Wyoming or Kansas more influence. In Britain, the number of peers would not be significantly smaller and there would not be a significant different in the distribution among regions, so the only difference between a democratic lords and parliament would be that the lords are less accountable and much weaker. What’s the point of that?

Either there should be no second house or the second house should be designed to achieve a robust political purpose. Off the top of my head, there are two purposes I can imagine the lords might fulfill:

  1. A Real US Senate–give England, Scotland, Wales, and Northern Ireland equal numbers of seats.
  2. A Real Check on Democracy–allocate seats to different academic disciplines and allow those disciplines to elect their own peers, empowering real experts.

Britain could do both of these in the same house, but either one could fundamentally change the way Britain’s political system operates if the new house gained the legitimacy and power necessary to mount genuine challenges to the House of Commons. Let’s say a bit more about each one.

Real US Senate

The House of Commons allocates members based on population, and that means that England can always potentially dominate the commons at the expense of Scotland, Wales, and Northern Ireland. In the past, this has been dealt with through devolution–creating regional parliaments and handing them some of Westminster’s powers. This has not succeeded in pacifying discontent, particularly in Scotland where the independence-favoring Scottish National Party continues to dominate elections and demand further independence referendums. A real US senate solves this problem by giving the Scots, Welsh, and Irish power disproportionate to their populations so that they cannot be dominated by England at the national level. It creates a union in which England is equal in power to the other countries. Additionally, because Scotland and Wales tend to be more left wing than England, it also pushes British politics leftward and would make austerity much more difficult to pass.

The Conservative Party is not going to do this. It would require a Labour government. Such a Labour government would create this senate knowing that it would alienate English voters . Labour would certainly fail to be re-elected to a majority in the commons but it could expect to dominate in the new senate, as Scottish, Welsh, and Irish voters would be deeply indebted to it and would probably remain loyal to Labour for a generation or more. For those reasons, a Labour government that opted to create this senate would also need to endow it with enough power to put it on equal footing with the commons. This introduces the possibility of divided government, where the Prime Minister can be stalemated by the senate and rendered impotent on an array of issues, much in the same way that the US president is often stalemated by one or both of the houses of congress. The British people would have to  be prepared to accept the possibility of gridlock. If they are unwilling to accept gridlock, there’s not much point in having a second legislative house anyway–for it to have enough power to matter, it must have enough power to produce gridlock with the commons.

This may sound far-fetched, but a future Labour government could have good reason to do this–it could successfully avert Scottish independence, reclaim Scotland from the SNP, and put itself in position to present a permanent obstacle to any Conservative majority in the commons. The concern is that Britain is too politically diverse for this to work. If England’s dominance of the commons would be so great that Labour could never win in the commons again, this would effectively set up a permanently Conservative house of commons against a permanently Labour senate. That kind of gridlock would be structurally impossible to overcome, and it would probably result in the break up of the United Kingdom. That said, if England and the other countries are politically so divergent that these two houses would never look anything like one another, a break up of the UK is probably inevitable anyway.

Real Check on Democracy

A more palatable option for England would be to organize the lords in such a way that its members really are experts on subject areas relevant to governance. This house would be sophiarchist–it would attempt to empower people with a certain kind of relevant wisdom, people who have spent many years reading, writing, and thinking about important matters that are closely related to politics. Under this system, PhDs and DPhils would vote to elect people to represent their disciplines in parliament. We would have peers from across the social sciences and humanities–philosophy, politics, history, economics, sociology, anthropology, literature, classics, the whole gamut. We could also have some science peers from physics, chemistry, biology, engineering, computer science, and other such fields. Unlike politicians in the commons, most of whom have BA degrees and little else, these folks would be deeply well-versed in the relevant academic research and literature, with all of them having themselves contributed to it. They would be able to bring the best thinking British society has to offer on what the real consequences of policy could potentially be.

There are two critiques that one could level at a sophiarchist house:

  1. Undemocratic–only a subgroup of people would be eligible to vote for it, which means that creating a house of this kind gives some voters more power than others.
  2. Unequal Opportunity–because of disparities in the quality of education received by different classes of British people, PhDs and DPhils tend to come from affluent backgrounds and private schools.

It is certainly true that a sophiarchist house makes the political system less democratic, but because the house of commons still exists with at least equal if not much greater power and the commons remains elected by the population as a whole, it would also be impossible for this subgroup to achieve political dominance. Furthermore, if we believe that a second house is desirable in the first place, it stands to reason that we must also think that there is something fundamentally inadequate about the commons on its own. The commons sometimes produces disastrous legislation like these cuts to tax credits. It failed to adequately regulate the banking sector, and it isn’t doing enough about climate change. The commons sometimes makes bad choices and it often unnecessarily exposes Britain to the long-term risks of economic instability and environmental catastrophe. If we want a house that really checks the power of the commons, we have to make that house significantly different from the commons. The current lords is different, but its members are chosen in a way that gives us no reason to think they know what they’re talking about. The people who are in the best epistemic position to judge whether someone is really representative of an expert viewpoint are the experts themselves, not the general public or the politicians in the commons elected by that public. If we think this expertise is truly needed, we have to acknowledge that we cannot access it through a wholly democratic mechanism. Ordinary voters cannot successfully judge whether or not prospective peers are well-versed in literature they themselves have not read.

That said, it is very important that this house not be permitted to become a tool of the affluent, and we ought to take the unequal opportunity critique very seriously. Once we link higher education to political power in this way, it becomes even more important that Britain ensure that there is no discrepancy in educational opportunities for different classes. A sophiarchist house requires that any person who qualifies for university and wants to attend face no financial obstacles to doing so, which means that universities must be tuition free, with costs paid for by the state with tax revenue. It also requires that the immense divide in Britain between the private and state schools be systematically addressed. The government should prevent large gaps in resources from forming among different schools, redistributing where necessary. If private schools are retained, the fees parents pay will need to be recirculated throughout the rest of the school system. This might not even be sufficient–the private schools may have to be nationalized and converted into state schools, with tax increases on the families that would have previously sent their kids to private schools to fund better schools for all British children. The government will also need to do more to equalize opportunities within the family, ensuring that all children receive sufficient constructive attention when they are away from school.

Even if we do our best, affluent families may retain some opportunity advantage in producing PhDs and DPhils. If so, it is very regrettable. But I would point out one thing–even though the British education system currently massively favors the affluent and most doctorates come from affluent families, it is still the case that British academia largely skews to the left of where the house of commons routinely finds itself. This suggests that academics do not always take positions that further some narrow conception of their class interests. I contend that even if Britain were unable to make the educational reforms described above, a sophiarchist house would routinely pull to the left of the democratically elected commons and take the interests of poor and working people more seriously than the commons often does. It’s also undeniably the case that despite its democratic status, the commons is full of Etonians and other privately educated people. The difference is that the privately educated people in the commons are experts only on manipulating public opinion and climbing the greasy poll–they have limited training in the subject areas relevant for wise and effective government. The time academics spend reading, writing, and thinking about important subjects often gives them insights into how policies will affect real people. The current political class is at best ignorant of these effects and at worst indifferent. If we are going to be governed by a group of affluent people, can some of them at least be affluent people who have had to spend a lot time thinking hard about what the consequences of government policies might be? Can some of them have spent some years thinking about the economy, about the environment, about justice? Is that too much to ask?