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Legal Services Bill [Lords]

Volume 461: debated on Monday 4 June 2007

[Relevant document: The Third Report from the Joint Committee on Human Rights, Session 2006-07, Legislative Scrutiny: Second Progress Report, HC 287]

Order for Second Reading read.

I beg to move, That the Bill be now read a Second time.

I am absolutely delighted that, at last, after much debate in the other place, the Bill has finally reached this House. It is an especially important Bill because above all it puts consumer interests at the heart of legal services provision. The consumer focus, as the volume and nature of amendments in the other place show, was clearly forgotten during the Bill’s long and drawn-out six-month passage there, so I now look forward to this House reacquainting the Bill with its real purpose. This is our opportunity to give voice to the needs and aspirations of consumers as opposed to providers of legal services.

Before I deal with the Bill, let me pay tribute to Citizens Advice, the Federation of Small Businesses, the National Consumer Council, the Office of Fair Trading and Which? and particularly to the members of those organisations who have worked tirelessly on the Government’s consumer advisory panel to inform and shape the Bill and to ensure that it properly reflects the consumer interest. I am, of course, also grateful to leaders and members of the legal profession who have welcomed our agenda for reform and who have engaged with the Government, sometimes very constructively, in the development of the Bill. I also want to acknowledge the hard work and foresight of Sir David Clementi, whose independent review and report in December 2004 set very solid foundation stones for our proposals.

For too long, regulation of legal services has focused on the suppliers of those services at the expense of the consumer. It has been the consistent message from consumers, who have told us loud and clear—as, indeed, did Sir David Clementi—that their needs are simply not being met. In particular, they told us that they were not satisfied with the way that legal services were delivered, as the focus was on what suited the provider as opposed to the consumer; that they had lost confidence in self-regulation alone; and that their experiences of poor complaints handling had undermined their confidence in the system as a whole.

Let us look at some of the underlying problems. Bad experiences with poorly handled complaints, dealt with by the providers’ own bodies, have not only given consumers a raw deal, but undermined the confidence that we all should have in our legal profession. Problems with the quality and speed of the handling of complaints about solicitors are well documented: it is a headline story, but it is not just a problem with the Law Society. In fact, based on figures from the office of the legal services ombudsman, we can see that a higher proportion of the total number of consumer complaints against barristers over the last three years were found to have been handled unsatisfactorily than when compared with complaints about solicitors.

I will just acknowledge that I am a barrister, though not a practising one. Would not the Minister accept, however, that if we look at the legal services ombudsman’s annual reports of the Bar and how it deals with complaints, we find that it has been praised the whole way through, whereas when it comes to solicitors, the ombudsman actually fined the Law Society £250,000?

The hon. Gentleman is right about the ombudsman’s report, but my point is that while there are many more complaints against solicitors in comparison with the Bar, the percentage of complaints going from the Bar to the ombudsman is marginally higher than the number of complaints about solicitors going to the ombudsman. In other words, I do not believe that either house—the Law Society or the Bar Council—can afford to be complacent about their responses to consumers.

Does the Minister agree that the key thing that comes through from the deliberations of the other place about the Bar Council is clearly the self-interest of wanting to keep its independence? Does she further agree that, if we are to build confidence in the complaints procedure and also make it independent, the Bar Council must come within the remit of the legal complaints service?

My hon. Friend makes the vital point that the only body to argue for the Bar Council to retain the right to deal with complaints is the Bar Council itself. I suppose that that tells us something about its response to the consumer.

Does not the hon. Lady recognise, however, that when the Bar Council disciplines someone, the people who do that work are barristers, who are effective in finding out exactly what happened in court or the circumstances of complex cases? The way in which they do that has been praised to me by, for example, Which? It would not be good if we lost those skills to wheedle out exactly what had happened in particular cases and punish those who had not met the standards.

Of course we should not lose those skills. I am sure that the office for legal complaints, to which I shall refer later, will be able to call in some of those skills should it feel it necessary to do so. Some 33 per cent. of complaints dealt with by the Bar Council go to the legal services ombudsman, compared with about 10 per cent. of those dealt with by the Law Society. The point of the Bill is to reduce the number of complaints made in either sector of the legal profession, so that the consumer gets a better deal.

Does my hon. Friend also agree that the relationship between solicitors and barristers needs to be examined? Recently, I referred to the Legal Complaints Service the case of a poor constituent of mine who had been given very bad advice in relation to her divorce. There was a big question mark over whether barristers needed to be employed in the first place. Dealing with them separately would mean that one body would deal with the complaint against the solicitor, while the other, the Bar Council, would deal with the barrister. In that case, for example, would not it be common sense for one body to deal with the single complaint?

My hon. Friend makes a valid point. He is right: the purpose of the office for legal complaints is to have a one-stop shop to make a judgment as to who, if anyone, is at fault. Time and again, consumers have raised with me the issue that it is difficult for them to tell whether the fault is the solicitor’s or the barrister’s.

To get beneath the skin of some of the less obvious issues, we have undertaken long, thorough research and wide-ranging consultation. Concerns about the competitiveness of the sector began with the OFT’s 2001 report, “Competition in Professions”. That identified a number of potentially unduly restrictive rules of the legal profession, which had the potential to drive up costs and prices, limit access and choice, reduce value for money, and inhibit innovation in the supply of services. To a Government committed to delivering a better deal for the consumer, that is simply unacceptable.

Following the OFT's report, the Government consulted publicly throughout 2002, and in July 2003 concluded that the current regulatory framework was

“outdated, inflexible, over-complex and insufficiently accountable or transparent”.

It was clear that the existing regulatory framework was more like a “regulatory maze”, with a wide range of oversight regulators who had overlapping responsibilities and few clear objectives. The problems were not restricted to oversight regulators. The legal professional bodies contributed to the “maze” by failing to separate the exercise of their regulatory and representative functions. All of that drove the Government to the inescapable conclusion that reform was not only necessary but long overdue.

We therefore immediately appointed Sir David Clementi and charged him with the task of identifying a new framework that would be independent in representing the public and consumer interest, comprehensive, accountable, consistent, flexible, transparent and no more restrictive or burdensome than is clearly justified. He published his report in December 2004. I want to put on record that he lived up to that challenge and produced an excellent report.

The model that Sir David proposed was one of strong oversight regulation under which legal professional bodies would carry out day-to-day regulation provided they separated their regulatory and representative functions. He also proposed that there should be a clear set of statutory objectives and, importantly, that complaints handling should be taken away from the legal professions. The Government broadly accepted Sir David’s recommendations and in October 2005 published the White Paper “The Future of Legal Services: Putting Consumers First”. I leave it to hon. Members to work out from the title exactly where the Government stand on the issue.

In May last year, a draft Legal Services Bill was subjected to pre-legislative scrutiny by a Joint Committee of both Houses, and a very useful process that turned out to be. I am very grateful to the Committee for the hard work that it put into that.

I think that everyone in both Houses is grateful to the Committee that carried out the pre-legislative scrutiny—[Interruption.] No, they were not all lawyers. Having done that work, does the Minister accept that we should listen carefully to what it said, and that where its members supported Opposition amendments in the Lords, the Government should also accept that those amendments are the right ones to keep in the Bill?

I cannot say in all honesty that I would accept the amendments on that basis. We have accepted 34 or 35 of the Joint Committee’s recommendations wholly and absolutely, plus another eight at least in part, and have not accepted 14. Given the amount of consideration that we have given to the recommendations, I think that we have been fairly balanced in our approach to the subject.

That was the background. No one could accuse us of rushing ahead without a well thought-out or well thought-through policy.

As a lawyer and a member of the Joint Committee, I take issue with the point about not rushing the legislation through. Does the Minister accept the concern raised by the Joint Committee about the limited time given for it to consider what at that time were 159 clauses in the draft Bill, which has grown exponentially as the matter has been considered? Perhaps less time could have been given to the amendments if further time had been given to the Committee. Is there not a concern for Parliament that such a time limit has been extended to the Joint Committee on human embryo research? There is profound concern that we should give proper time for pre-legislative scrutiny.

I have always been a great advocate of pre-legislative scrutiny. The timing was challenging, but the Committee clearly rose to that challenge and invited me to respond in an equally short period of time, which I managed to do.

On the Bill itself, regulators must have clear objectives to guide them in exercising their functions and to provide a basis on which consumers can hold them to account. Part 1 sets out those objectives and principles. They will apply to the board, the approved regulators and the office for legal complaints. It is important to be clear that the objectives are not ranked.

Part 2 makes provision for the new oversight regulator, the legal services board. The board will provide independent oversight of legal regulatory bodies. While the day-to-day regulation should, quite rightly, remain with the professions, the board will have a range of powers over them. The Lord Chancellor will appoint the chair and members of the board, and will do so subject to the oversight of the Commissioner for Public Appointments. The Lord Chancellor can also remove members of the LSB subject to strict criteria set out in schedule 1.

An amendment in the other place now means that the Lord Chancellor must seek the concurrence of the Lord Chief Justice in appointing and removing members of the board. I understand that that might give comfort to the legal professions, but it gives no comfort at all to consumers, and I intend to table amendments to reverse that change.

It is clearly important to reflect both the consumer interest and the public interest, but there is a feeling that the legal profession should be independent of Government and that claimants should be able to rely on that independence. How can independence be assured if the Minister removes the provision inserted by the House of Lords that the Lord Chief Justice should be happy with appointments to the board?

Clause 1 sets out the regulatory objectives, one of which is

“encouraging an independent, strong, diverse and effective legal profession”.

Moreover, the Lord Chancellor’s appointments procedure will be subject to supervision by the Commissioner for Public Appointments. A joint appointment would not be dealt with in that way, and could therefore undermine the independence that the commissioner would ensure.

As the Minister will have realised, this is controversial territory, to which the House of Lords devoted a great deal of time. I understood her to say that she did not want the professions to decide membership of the legal services board. The Lord Chief Justice, however, is not regarded as a defender of the professions, and the Lord Chief Justice—any Lord Chief Justice—is held in high regard by the public. Does the Minister not think it would be better to bolster the confidence that the public may or may not have in a Government Minister with their confidence in someone who is clearly independent and above the fray?

That is not the view of the consumers with whom we have discussed the issue. They strongly believe that if a lawyer—even one as important and well-respected as this Lord Chief Justice, or any in the past—is seen to be party to the appointments, their confidence in the board will be undermined.

Does the Minister agree that what is paramount is for the legal services board to be seen to be independent, not only from Government but from the profession? Having read the reports of debates in the House of Lords and having heard what was said a moment ago by the hon. Member for North Southwark and Bermondsey (Simon Hughes), I have the impression that the legal profession is confusing the public interest with its own self-interest.

I think my hon. Friend and I are at one on this issue, but I fear that one of my lawyer friends may take a different view.

After giving evidence to the Select Committee, Sir David Clementi wrote to the Chairman, Lord Hunt of Wirral, to confirm the recommendation in his report that the judiciary should have a say in the appointment. He wrote:

“In practice this is likely to mean that the senior judiciary would have representation on the Nolan type committee selection process.”

That is much less than is provided by the amendment passed in the House of Lords. Can my hon. Friend assure us that that practice will be followed as Sir David Clementi would wish?

One of the benefits of allowing the Lord Chancellor to make the appointments is that, as well as their being made independently of Government, there will be clear lines of accountability to Parliament. That is one of the reasons why we enshrined the functions in the Lord Chancellor rather than the Secretary of State. The fact that public appointments made by Ministers are subject to supervision by the Commissioner for Public Appointments, and to the commissioner’s code of conduct, will help to ensure the board’s independence. Another point that may give succour to my hon. Friend is that no Lord Chancellor would make such an appointment without paying attention to the views of others, including the Lord Chief Justice, consumer councils and others. Therefore, I am not minded to leave the clause in as it presently stands, but I will be happy to hear further representations about whether there is a more appropriate way for the Lord Chancellor to go about making appointments.

I want to move on but I promised my hon. Friend the Member for Wolverhampton, South-West (Rob Marris) that I would give way to him.

My hon. Friend is being as generous as ever. I am a non-practising solicitor. She has given helpful reassurances. In response to the intervention by the hon. Member for North Southwark and Bermondsey (Simon Hughes), she mentioned consulting consumer groups for their views. Has she heard the views of what might be called consumer groups abroad? London is a major earner of foreign currency through legal services, particularly in the shipping sector, but also in the commercial sector. What do foreign users think about the independence of our judiciary and what would be their view were the Lords amendment to be reversed?

I am interested in consumer views abroad. I know that there are those who suggest that the legal professions in other countries think that that system might not be the way forward, but they have their own internal reasons for thinking that, so I am not over-impressed by that particular argument. The work that the legal professions bring to the country and the boost that they give the economy through their work abroad is exceedingly important. We would not want to undermine that, but I do not believe that that system to appoint the legal services board, with the oversight of the Office of the Commissioner for Public Appointments, would in any way undermine that part of the economy.

I will give way for the final time to the hon. Member for North-East Hertfordshire (Mr. Heald). I apologise to the hon. Member for North-West Cambridgeshire (Mr. Vara).

The hon. Lady is being very generous in giving way. I was pleased that she said that she would look at alternatives, but she will be aware that in Germany there is considerable concern and the thought is that solicitors firms from Britain that currently are allowed to practise there might not be in future if the issue is not resolved satisfactorily. Has she looked into that and what is her latest thinking on it?

I have looked into that because the one example that is constantly cited to me is the German example, but the BRAK in Germany is the representative body there, so it is looking at its own vested interests, rather than those of the consumer. As I have said, however, I am happy to look at ensuring that people feel confident that the system of public appointments made through Ministers is robust and will be seen to be independent.

May I move on to part 2 and to the legal services board? The board will provide independent oversight of the regulatory bodies. Again, day-to-day regulation will, clearly, remain with the professions.

I move on to reserved legal activities. Part 3 sets out those legal activities that will come under the regulatory control of the board, such as the provision of advocacy and litigation services. It also provides for the offences of offering or providing those services when not entitled to do so. The Bill also provides for alterations to be made to the list of those activities by affirmative order. That is an important change because, at present, additional activities cannot be brought under regulatory control without primary legislation.

I will be tabling amendments to ensure that trade unions can continue to provide legal services to their members, although they will need to be licensed under part 5 if they want to provide services more widely or on a commercial basis.

Part 4 sets out the arrangements under which the board will regulate “approved regulators” such as the Law Society and the Bar Council, and defines their regulatory and representative functions. That part also provides the board with its powers. Those include to set targets and to monitor the performance of approved regulators; to exercise a power of direction over approved regulators; to censure publicly an approved regulator; to fine approved regulators; to take over a function or functions of an approved regulator; and, ultimately, to remove the designation of an approved regulator. There are grades within those powers, and the board will determine which of them is appropriate at the relevant time.

The powers ensure that the board can effectively and fully protect the consumer interest. There must be the widest possible mix of powers, and the greatest possible flexibility in deciding when to exercise them. That is why I intend to introduce amendments to reverse changes made in another place that limit the legal services board’s flexibility by adding the term “significant” to the adverse impact test that triggers the use of the powers and by adding a requirement that the impact must be on the regulatory objectives “taken as a whole”, rather than on any single objective. As the National Consumer Council has said:

“The Board should not have to wait until a significant or serious event before taking action to protect consumer interests.”

Amendments made in another place also sought to make explicit in the Bill the “oversight” nature of the board. Although I have some sympathy with that, in its current form the relevant amendment does not properly reflect Government policy. I therefore intend to bring forward amendments to refine the change. Finally, this part of the Bill also provides the important power—to be exercised by affirmative order, and only following a recommendation from the board—for the Lord Chancellor to modify the functions of approved regulators in order that they might effectively discharge their regulatory responsibilities.

Part 5 of the Bill provides a means of increasing competition and consumer choice. By becoming licensed bodies, firms will be permitted to have different types of lawyer and non-lawyer working together on an equal footing. They will also have access to external investment. The Bill provides a number of important safeguards, including requirements for there to be named heads of legal practice and of finance and administration, and a “fit and proper” test for external investors. I know that there are concerns about the impact these proposals might have on access to justice and I accept that that is a vital issue, but I believe that the Bill already protects—indeed, that it enhances—access to justice, particularly given changes that the Government introduced in the other place to require the board to carry out monitoring of the impact of alternative business structures and to report on that monitoring.

However, it is also important to listen to consumers. Earlier this year, the National Consumer Federation said:

“The increased competition promised in the Bill should be a public benefit encouraging providers to be more responsive to consumer need, stimulating innovation and lowering prices.”

I therefore intend to introduce amendments to reverse the amendment made in the other place that could have the effect of ranking the regulatory objectives by requiring special consideration to be given to access to justice when granting ABS—alternative business structures—licences. I also intend to bring forward amendments to reverse those made in another place which require further study and a “sunrise clause” before part 5 can come into effect. That would only serve to delay innovation and consumer choice.

Far be it for me to be seen as a defender of the legal profession, but will the Minister take into consideration the Government’s self-inflicted scandal in relation to miners’ claims, particularly hearing loss claims? A claims handler called Vendside Ltd—non-solicitors—was allowed to bring forward claims on behalf of consumers, but the consumers then found that there were no regulatory powers in relation to any redress, other than using the civil courts.

My hon. Friend has been robust in his pursuit of Vendside and others over the appalling way in which they have handled matters with regard to his constituents. He, and others among our hon. Friends, welcomed the Compensation Act 2006. That Act means that there is now regulation of the claims handling market, and when the Bill is enacted, it will make that even more robust. My Department and the Department of Trade and Industry have, of course, been working very hard recently to ensure that claims made on behalf of miners are being properly dealt with.

Given the appalling record that the Minister has just alluded to with two trade unions, does she really think that there is any justification for excluding unions from the proper regulation that the Bill provides? Is that not asking for the sort of problems with legal advice that we have already experienced with claims handling?

The answer to that question is quite straightforward. If a trade union wishes to give other advice or to spread its wings more widely, it will have to be licensed. If the shop steward on the shop floor is giving advice to that union’s members, I do not think it appropriate for it to have to be licensed. If it wants to go beyond that, it certainly would have to be licensed.

I should perhaps declare an interest, in that I am a non-practising solicitor, although as a Scottish solicitor I would not be directly affected by this provision. On the sunset clause—or sunrise clause, as the Minister called it—for the ABS, concern has been expressed by the Law Society of Scotland, and, I think, others, about the extraterritoriality of some of the larger firms. The hon. Member for Wolverhampton, South-West (Rob Marris) mentioned large English firms working abroad. As part of our investigations, the Trade and Industry Select Committee came across such a firm in India and in Brazil. Has the Minister considered how the legal services board will deal with businesses that chose to go into an ABS structure but operate in more than one jurisdiction, given that the rules may well be different in other jurisdictions?

The Bill does touch on Scotland, in the sense that we will give effect to the Legal Profession and Legal Aid (Scotland) Act 2007 through it; that to some extent answers the hon. Gentleman’s question. However, it will be for the legal services board to look at how different firms operate, and to decide through the various structures that will be set up whether a particular firm is an appropriate one to act in that way. It will then license or not license that firm, accordingly.

Let me clear up the question of whether the clause relating to part 5 of the Bill should be called a sunrise or a sunset clause. It is called a sunrise clause because the idea is that nothing will happen until the relevant research is done, as opposed to allowing something to happen and reflecting on it afterwards. However, I am sure that Hansard will make the appropriate amendments for me regarding the use of the word “sunset” or “sunrise”.

Through part 6 of the Bill, we intend to establish a new and independent office for legal complaints, which will provide quick and fair redress of up to £20,000 for the consumer, although the Bill does provide for that figure to be increased.

I shall give way first to the hon. Member for Buckingham (John Bercow) as he has yet to intervene.

I am grateful to the hon. Lady for giving way. She rightly says that part 6, through clause 114, provides for the establishment of the office for legal complaints. I am a little concerned about this. In terms of the Bill’s chronological sequence, we are referred for further and better particulars to schedule 15. That is not entirely unhelpful, but I am a little disconcerted to discover only in the explanatory notes the observation that the office will be responsible for determining the details of the ombudsman scheme. Although I understand why the Government are proceeding as they are, if the devil is in the detail, it is a matter of some concern that Members will see that detail only after we have decided whether to approve the Bill. The public are very concerned about the detail of a scheme that will determine whether or not they benefit, and if so to what tune. Does the Minister have some sense of the legitimate concern that people will feel about the fact that they will see the detail only at a much later stage?

The hon. Gentleman makes a reasonable point, and as always, he is accurate about the detail and the parts of the Bill to which he refers. There will be a long run-in time before the structure is set up. I mentioned that we started in 2001 with the report by the Office of Fair Trading, and we are now in 2007. Alternative business structures, the office for legal complaints and so on will not be up and running until 2010-11. In the period before the legal services board and the OLC are set up, the details will be considered, and there will be an opportunity for everyone to see them. As I have said from the beginning, the Bill is about consumers, and about putting them at the heart of the legal system. I expect that the OLC would take account of consumer interest when developing an appropriate scheme.

I do not think that £20,000 is a high enough limit. May I give the Minister an example? Mrs. X, from Stanley in my constituency, recently complained to me about a firm of solicitors called Mark Gilbert Morse, which handled a miners’ compensation case on her behalf and rejected an offer of £42,000 from the DTI without even consulting her. Subsequently the offer was reduced, and it was only through the legal services complaints service that we shamed the company into paying her the original figure of £42,000. If it had been pinned down at £20,000, my constituent would have lost in excess of £22,000.

I understand my hon. Friend’s point, which is why the Bill allows for the amount to be increased. We set it at £20,000, which is still above the Law Society’s present level of £15,000, which was increased only recently. It will be not for me but for the OLC to determine whether to recommend that the amount be increased.

No doubt the matter will be gone into in more detail in Committee. However, is the Minister aware of the significant number of services awards for miners’ compensation claims which solicitors appear not to have put in for, and which, on the balance of probabilities, are all liable to be higher than £20,000? They include the case of one of my constituents, in which the solicitors concerned had to pay back £23,000. Many such detailed potential claims will go forward as complaints against solicitors, and all are liable to be in excess of £20,000. Should not that figure be reconsidered at this stage, to avoid the absurdity of having to change it within days of the Bill becoming an Act?

My hon. Friend makes a very good case for tabling an amendment in Committee—should he be on the Committee. We can have a full and detailed debate about it then.

I state my interest as a solicitor and as a member of the Law Society. The Minister says that she will exempt trade unions from part 3 of the Bill. Does she intend to exempt them from all the reserved legal activities set out in clause 12(1)?

Yes. As I said, under part 3 we will exempt the trade unions when they provide services to their members. However, when lawyers—perhaps in-house lawyers—employed by trade unions provide reserved activities, they will be regulated in exactly the same fashion as any other lawyer. I was talking about lay members of trade unions who give advice in their workplace. Lawyers who are employed by trade unions will be regulated in the same manner as any lawyer working in any other firm.

The Minister will understand the concern caused by the idea that if a shop steward represented a union member at an employment tribunal and made a hash of it there would be no redress, whereas if that person were represented by someone from a citizens advice bureau, there would be redress. Is that what she is saying?

No, that is not what I am saying. Perhaps the hon. Gentleman’s lack of knowledge of the trade union movement is rising to the surface. The work that lay officials of trade unions do on behalf of their members, whether in employment tribunals or elsewhere, is generally of a very high quality. I do not want trade union members to be any less well-off than anyone else, and I want to ensure that they are not. We have been working with the TUC and the Law Society to deal with that matter, and I think that we have agreed an appropriate way forward.

Under part 6 of the Bill, every authorised person must have internal complaints-handling arrangements, and approved regulators must set standards for that. The Bill recognises the importance of the legal professions disciplining their members, and provides for potential professional misconduct matters to be referred to approved regulators for consideration of disciplinary action.

There are two areas in which amendments were made in another place. First, there were amendments to restrict the circumstances in which the OLC may impose a charge on a respondent when a complaint is received, as under the case fee arrangements operated by the Financial Ombudsman Service. Again, I have sympathy for the arguments expressed in the other place, but the Bill already provides for that fee to be reduced or waived, and I am not yet fully convinced of the merits of restricting the OLC’s flexibility in that way. I therefore intend to table amendments to reverse those changes.

Secondly, following calls primarily—or, I suspect, exclusively—from the Bar, amendments were made providing for the delegation of complaints handling from the OLC back to the legal professional bodies. That point was raised earlier. That change defeats the whole purpose of this part of the Bill, and flies in the face of the deepest felt consumer concerns about complaints handling. Indeed, even the Law Society’s complaints-handling body accepts that

“delegation of complaints handling would dilute the Bill and the Office for Legal Complaints and be more complicated for consumers. The Bar Council seeking to ‘opt-out’ weakens the structure of the Bill and the Office for Legal Complaints.”

I agree. As far as consumers are concerned, that is a clear red line. I shall, therefore, table amendments to reverse those changes, and I shall be interested to hear the views of the House on that important issue.

I must declare an interest, in that I am in a minority in the Chamber because I am not a lawyer. Before the Minister goes on to discuss the OLC’s objectives, will she pay at least some tribute to the midlands-based Legal Complaints Service? It has been noticeably independent of the Law Society, has been recognised by the consumer association Which?, and has been engaged on an agenda of improvement for some years.

As we still have three years until the OLC emerges, will the Minister encourage the Legal Complaints Service to continue to invest in the improvement and independence that has impressed great numbers of people throughout the country? It has dealt with 18,299 complaints against solicitors in the most recent year for which we have figures. That is more than one complaint for every six solicitors. It still has a role in the next three years, has it not, so will my hon. Friend say something positive about what it has done in the past year or two?

My hon. Friend makes the very important point that the improvement made in recent years by the Legal Complaints Service has been remarkable, and much of that is due to the leadership shown by Shamit Saggar and others in ensuring that they deal with things robustly. My hon. Friend rightly points out that they must continue to deal with complaints about solicitors for the next three years. So it is very important that we manage properly the transition from the complaints services provided by the Law Society and the Bar, so that complaints continue to be dealt with and so that the improvement in dealing with them continues, too. I am very happy to put all that on the record.

The Minister helpfully indicated earlier how many of the pre-legislative scrutiny Committee’s recommendations had been accepted and how many had been rejected. I think that I have now calculated that she has addressed each amendment made by the House of Lords, and unless I am mistaken, she has indicated that the Government will accept none of the Lords amendments. Is that the position, or is the reality that although the Government are saying today that they will accept nothing, they recognise that the House of Lords has an important role, and that the best legislation is made when they listen to both Houses of Parliament and do not steamroller things through on the basis of the views of one side alone?

No, the hon. Gentleman is wrong. We have accepted a number of amendments in the House of Lords. For example, we have agreed that the public interest is different from the consumer interest. We have substituted the term “Lord Chancellor” for “Secretary of State”. We have amended the threshold for action on financial penalties. We have accepted the requirement for the ABS licensing authorities to issue policy statements. We have given the board a specific duty to cover ABS in its annual report. We have accepted a number of consumer-focused amendments, a power for ombudsmen to enforce the determination on a complainant’s behalf, and a narrowing of the circumstances in which complainants can be ordered to pay costs, and so on. We have accepted a number of amendments that were proposed in the Lords, and I pay tribute to my noble Friend Baroness Ashton, who worked very closely with others in the Lords in getting the Bill to its current position.

Part 7, which sets out further provisions relating to the board and the OLC, will require that those who are subject to regulation must pay for the cost of that regulation. The alternative—that the changes should be funded through general taxation—does not seem appropriate. Parts 8 and 9 will provide for amendments to existing legislation to align it with the Bill.

In relation to the board, I have not yet heard whether the Minister will honour the undertaking given in the other place. Hon. Members who are lawyers are used to honouring undertakings, and it would be useful if the Minister would do likewise, particularly in relation to the Lord Chancellor’s power to increase the size of the LSB. I understand that an undertaking was given that that relevant power could be dealt with by affirmative, rather than negative, resolution.

I will have to look in more detail at whether we have given such an undertaking. It is not one that jumps to the forefront of my mind at the moment, but I will look at it, and if we have given an undertaking, I will seek to find out whether there is a way in which we can carry it out. But I make it clear that I am not making any guarantee to the hon. Gentleman.

I apologise to the House for taking quite so long over the Bill, but as hon. Members will know, it is a pretty hefty piece of legislation. Parts 8 and 9, as I said, will provide for amendments to existing legislation, and I will introduce a number of minor amendments, including those promised in another place, to ensure that the Bill is consistent with existing legislation.

The rules of the Solicitors Disciplinary Tribunal will be subject to oversight by the LSB. The courts will be able to make a costs order in civil cases in favour of a party whose legal representation has been provided on a pro bono basis. Awards will be made at the discretion of the court and will be payable to a designated charitable body. As I have said, the Bill will give effect to the Legal Profession and Legal Aid (Scotland) Act 2007, which introduces new arrangements for handling complaints about lawyers in Scotland.

The Bill will restore consumer confidence. We will see a modern, flexible, transparent and independent system of regulation. We will have a new oversight regulator that can act, and will act, to protect consumer interests. There will be enhanced competition, with lawyers able to provide services in new and innovative ways. Most importantly, we will see the sweeping away of decades of piecemeal reform and a new robust regulatory system in its place that will put the consumer at the heart of the legal system. I commend the Bill to the House.

I welcome the Bill, which addresses serious issues regarding the regulation of solicitors, barristers and other legal professionals. It builds on the work of Sir David Clementi, whose report has been its cornerstone. I echo the tributes that have been paid to his work.

The Bill has important allies. The president of the Law Society, Fiona Woolf, has said that the society

“has consistently supported the principles of the Bill”.

Jill Johnstone, the director of policy at the National Consumer Council, also welcomed the Bill asking that

“MPs…give these consumer-friendly reforms a smooth passage through Parliament”.

Which? has been a strong supporter of the measure and, especially, moves to tackle complaints involving solicitors more effectively.

I join the Minister in paying tribute to the work of my right hon. Friend Lord Hunt of Wirral, who chaired the Joint Committee expertly. The Committee gave the Bill effective pre-legislative scrutiny over a short time scale. My hon. Friend the Member for Enfield, Southgate (Mr. Burrowes), a practising solicitor, also brought his insight to the Committee’s work. It was a sign of the Joint Committee’s effectiveness that the Minister in the other place was able to concede many of the points that it made. Improvements were made to the Bill in the other place and it was to be hoped that the Under-Secretary of State for Justice, the hon. Member for Lewisham, East (Bridget Prentice), would accept that the Bill was now much better than when it started its passage. I pay tribute to my right hon. Friend Lord Kingsland, who played a big part in improving the Bill.

I agree with the Minister that it is right that consumers should be able to challenge their lawyers effectively when things go wrong and that complaints should be efficiently handled. However, it is also vital that lawyers should be free to act for their clients without Government interference. The Government should not be able to use consumer rights as a cloak to attack people’s basic civil liberty of having a genuinely independent lawyer acting on their behalf.

Legal services make up a major economic sector that is valued at about £20 billion and they generate almost 2 per cent. of the UK’s gross domestic product. It is estimated that UK legal services exports amount to £2 billion a year. London is a major centre for international commercial litigation and arbitration, and English law is widely used as the basis for many international business transactions.

The legal profession is large. There are 14,000 practising barristers, 97,000 practising solicitors, thousands of legal executives and hundreds of licensed conveyers, registered trade mark attorneys and public notaries. Not-for-profit organisations such as citizens advice bureaux and law centres also provide much-needed legal advice. An independent legal profession provides legal services to some of the most vulnerable in our society. Indeed, many lawyers enter the profession with a vocation to help to right wrongs. It is an important check on government that lawyers in Britain will take on public authorities and the Government in court without fear or favour, often in cases that are not popular with the public. Indeed, it was reported only today that prisoners were taking the Lord Chancellor to court to ask not to sit around in prison idly all day, but to be able to work purposefully towards their rehabilitation.

I agree with the hon. Gentleman that lawyers should act in the best interests of their clients. However, does he agree that there are many cases, especially those regarding miners’ compensation that my hon. Friend the Member for Bassetlaw (John Mann) and I have raised, in which a huge number of lawyers, some in “well-respected” legal firms, did not act in the best interests of their clients—they did not care about the interests of their clients—but worked for their own interests? Surely that scandal shows that self-regulation involving the Law Society has not worked and that people need the protection offered by the Bill to get legal redress from such lawyers.

Yes, I agree absolutely. The hon. Gentleman and I have made common cause on some of those cases and have been disappointed to some extent by the Government’s response, especially in relation to claims handling. However, he and the Government must recognise that having a strong legal profession, independent of Government, is an important constitutional issue and improvements to the regulation of the legal profession should respect that. It is not in the consumer interest to have Government control over lawyers, because many consumers of legal services are taking cases against public authorities and the Government.

British exports could be threatened if the international perception is that our legal profession is not truly independent of Government. Indeed, the chairman of the Bar Council has described the plans as “an absurd own goal” and he and the senior partners of five of the largest legal firms have written to the Economic Secretary to the Treasury pointing out how important the issue is and explaining that overseas legal professions are already protesting about the Government’s plans. We believe that the amendments made in the other place have helped to save British legal services exports, but can the Minister give an assurance that legal services exports are safe under her plans? If she cannot, is not £2 billion a year in lost exports a high price to pay?

The Government appointed Sir David Clementi as long ago as July 2003 and the focus of his report was correctly summarised by the Minister as the complexity of the regulatory framework, how complaints about solicitors were being handled and the restrictive nature of the current business structures for lawyers and skilled professionals. However, I would say that the area of most concern was how consumer complaints against solicitors were being dealt with. There were concerns about efficiency and the overlapping powers of the oversight bodies. Sir David described the current regime as

“outdated, inflexible, over-complex and insufficiently accountable or transparent”,

and the Government accepted that phrase. He suggested the three main reforms: the legal services board, with its statutory objectives; the new office of legal complaints; and liberalisation through alternative business structures. We agree with that approach.

The handling of complaints against solicitors started to become a major issue as long ago as the 1980s, when it first became clear that it was taking up to two years to deal with some complaints. More recently, we have seen the cases referred to by the hon. Members for Bassetlaw (John Mann) and for North Durham (Mr. Jones), in which solicitors firms have fallen into disrepute over the handling of compensation claims by former miners.

The activities of trade unions have been criticised in connection with those cases. It seems odd that today the Minister has said that it would be all right for a trade union official who is not a lawyer to appear in court, to give legal advice and to carry out other activities associated with the work of a lawyer and there would be no regulation of that person, but someone who works for a law centre or citizens advice bureau would be regulated. That may be something that trade union leaders want, but trade union members should not be treated in that second-class manner. Trade union members are consumers every bit as much as any other person and I believe that they should be treated equally. The Minister said that lawyers employed by trade unions would be regulated, but we all know of cases in which trade union officials attend tribunals and other forums on behalf of members, so surely they should be regulated.

I think that the hon. Gentleman is inadvertently misleading the House by suggesting that trade union officials would appear in court. They have no rights of audience in court, so they would not be able to do that. The Bill will protect trade union members because if a union offers reserved legal services, those services must be carried out by qualified lawyers, who will be subject to regulation by an approved regulator. The exemption applies only where the union provides legal services by virtue of membership, and not in any wider sense. I hope that the hon. Gentleman understands that the Bill does not go quite as far as he seems to be suggesting.

The Minister may misunderstand the position herself. I have on many occasions attended tribunals where there has been a trade union official—often, I must say, expert in the law—on the other side with a right of audience. If she looks at clause 12, she will see that the reserved legal activities are set out there. They include exercising rights of audience, conducting litigation and giving legal advice in connection with any of the activities listed. Those are things that trade union officials do, and I cannot see why she would want trade unionists to have second-class status under the legislation.

I used to attend industrial tribunals on a weekly basis, as an unqualified solicitor and as a trade union official, and given some of the pathetic barristers that I had to deal with, I never saw myself as a second-class citizen. Does the hon. Gentleman agree that what a trade union official or layperson can do is quite limited? There were only two sets of proceedings that I used to appear in: one was industrial tribunals, and the other was county court proceedings, in which anyone can represent themselves. In terms of the scope of the legal services, one has to be legally qualified to represent people at a higher level—for example, if a case goes to appeal.

The hon. Gentleman will see in the Bill the list of activities for which, if undertaken by a trade union official, there should be no regulation. Yet if a person from a citizens advice bureau did one of those activities, the situation would be different. There are tribunals where trade union officials appear, but of course he is right that not every tribunal would allow that to happen. I do not see why members of a trade union should not have the protection that the Bill would give someone from the citizens advice bureau or a law centre doing the same work. We can pursue the subject further in Committee, but that position seems to be all of a piece with the exemption that applied to trade unions as regards their activities as claims handlers. My view on that is that what is good for one group of people doing a particular job should be good for all groups that do that job.

At the moment, legal complaints are handled in-house by the Law Society. A claimant who is dissatisfied can go to the legal services ombudsman, who can ask that the complaint be looked at again. There has been some suggestion that criticisms of the way in which barristers deal with complaints are on a par with criticisms as regards solicitors, and that simply is not so. The ombudsman has regularly praised the Bar for the way in which it deals with such cases, and has said:

“I can report I have seen an increase in the percentage of Bar Council investigations I was satisfied with, up…to 88 per cent. this year. I welcome this improved performance.”

She praised the “excellent progress made” on the speed of handling cases, and said, on transparency,

“I have found the Bar Council to work in a very open and co-operative manner.”

As I am sure that the Under-Secretary of State for Justice, the hon. and learned Member for Redcar (Vera Baird), would acknowledge, if there are disciplinary proceedings against a barrister, there is nearly always a conduct case, and in those cases it helps if the people carrying out the examination are skilled at cross-examination and at finding out what really happened. As I have said, when I discussed the subject with Which? some time ago, it acknowledged that the way in which the Bar dealt with such cases was very good.

The hon. Gentleman prays in aid Which?, but has he seen the briefing that it gave hon. Members for today’s debate? It says:

“Which? has found that the BSB’s complaints handling is not at all transparent, is far too complicated and bureaucratic, relies too heavily on ‘volunteers’ and is not particularly accessible.”

That is hardly an endorsement of the present system.

Perhaps that is an interesting reflection on a change of personnel. All that I can say is that when I spoke to a representative of Which? when the White Paper came out, they were very complimentary about barristers’ approach to professional standards. Which? said that it wanted barristers’ skills to be brought to the new office for legal complaints. It is important that we do not lose those skills, because one thing is sure: no one will be better at finding out what really happened in a particular incident, and at understanding the full issues of conduct, than someone who is skilled at finding out such things professionally.

In the debate about complaints—MPs have great experience of complaints against solicitors rather than against members of the Bar, although there are complaints against both—does the hon. Gentleman accept that the system has sometimes not worked very well for the professions, either? Significant numbers of solicitors have been unhappy about the old system of dealing with complaints, which has been as bad at dealing quickly with their concerns as it has been at dealing with the concerns of lay users of their services.

Yes, I agree entirely. One of the first points that I made was that I support the setting up of an office for legal complaints. If we can find a way of harnessing for the future the skills that the Bar has brought to the process, that would be a better way forward than immediately reversing the amendment made in the other place.

How would the hon. Gentleman deal with a complaint from a consumer where—for example, in many of the hearing loss claims on behalf of textile workers—unbeknown to the consumer because of their limited understanding of the process, the legal executive handling the claim goes to a barrister for five minutes of quick advice, but between them they handle the claim very badly? To whom should the consumer complain?

I suspect that the hon. Gentleman is referring to a particular case, of which I do not know the full circumstances. Depending on the circumstances, we would want the actions of both individuals to be carefully and effectively analysed in a speedy and transparent way. That is what we are all hoping the office for legal complaints will produce.

That is precisely the point. There is a raft of complaints concerning the process whereby the solicitor gives the work to a legal executive, who unnecessarily calls in a barrister for opinion, in order to advocate the case on behalf of the individual. Who should the complaint in such cases go against—the solicitor or the barrister, or should it not be against both?

One would start in such a case with the solicitor’s firm, but it is important that the new office for legal complaints is a one-stop shop and that each aspect of the problem outlined by the hon. Gentleman can be properly, speedily and transparently investigated. That is the outcome that we all seek.

The legal service ombudsman’s reports on the Bar were positive and praised the way in which it dealt with matters. It is not chance that, as the hon. Member for North Southwark and Bermondsey (Simon Hughes) observed, most of the complaints that Members of Parliament have received have been about the way in which solicitors have performed. Zahida Manzoor, the legal services ombudsman, fined the Law Society £250,000, stating that she was imposing the penalty because of the inadequacy of the Law Society’s plan for securing improvements to its complaints handling procedure.

The White Paper that followed the original Clementi report committed itself to the three main provisions proposed by Sir David. The Joint Committee then made some valuable recommendations pointing to particular areas of concern. It is right to pay tribute to the Government for listening to a substantial number of those, but on regulatory objectives, the Committee recommended that

“protecting and promoting the public interest”

should be included in the Bill’s list of objectives, and that the objectives should be redrafted to make explicit reference to the independence of the legal profession. The Committee found that the Bill gave the Secretary of State too much power, and recommended that that should be re-examined. It also expressed concern about alternative business structures, highlighting the potential for conflicts of interest, and about access to justice. It felt that the office for legal complaints should be not just a “rebrand”, but a genuinely new start, particularly for complaints relating to solicitors. In that connection, how does the Minister justify simply moving the office to Coventry from Leamington Spa—a move that is deliberately designed to ensure that the very staff whose work has been criticised would continue to deal with complaints against solicitors—and how can she assure us that that constitutes something good for the future that will tackle the problems that have bedevilled that part of the law since the 1980s?

The Government have accepted that there should be explicit reference to independence and that there should be reconsideration of the Secretary of State’s role. In the other place, the Government tabled amendments that dealt with many of those issues, but given the issues on which they lost votes, whether the amendments were tabled by a Cross Bencher, a Liberal Democrat or a Conservative, they seem rather unbending if the Minister’s tone today is anything to judge by. That is a pity, because the process has been relatively co-operative and progress has been made. For example, an amendment was passed that meant that the Lord Chief Justice’s concurrence would be required before the appointment by the Lord Chancellor of the chairman of the board. That was a means of securing for the board some independence from Government. The Minister’s comments suggest that she has some sympathy with that idea, although she has made it clear that the Government will reverse that decision. We must find a way that ensures that it would not be possible for the Lord Chancellor to appoint friends of his to the board without any check. It would be intolerable and unprecedented if it was possible to put friends of the Labour party or friends of the Lord Chancellor on the board, and that would not give us the independent, free legal profession that we are entitled to expect in this country. Even if one accepted that the present Lord Chancellor could be trusted, any such appointment would still be a constitutional issue.

The concurrence of the Lord Chief Justice provides a necessary check. The Minister says that she will reverse that, but it is important to have some form of check in the system—some consultation and some way of ensuring that our legal profession can continue to be genuinely independent.

Before I give way to the hon. Gentleman again, he should reflect on the fact that the legal services board, appointed by the Lord Chancellor, has the power to change the way in which the front-line regulators operate and seriously to affect the regulation of the legal profession. It would be wrong to do that in anything other than a transparent way with proper checks and balances.

I agree with the hon. Gentleman about transparency. Is it not also a fact that the appointments will be made with the Nolan principles in place, which the present Government introduced and which will make the process quite transparent? I would not agree with the situation described earlier either—no future Government of any party should interfere in the process—but why does the Lord Chief Justice’s involvement make the board more independent?

The reason for suggesting the Lord Chief Justice is that he is the head of the judiciary and as such has a position that is widely respected in the country as that of an independent figure—

We are talking about pillars of the constitution. Let us think about the judicial pillar—our courts. Right at the top, we have the Lord Chief Justice. Under the former arrangements, the Lord Chancellor used to span both pillars: he was part of the Executive and the most senior judge. However, it seems appropriate that under the new arrangements there should be appointments by the Executive, but with the concurrence of, after consultation with, this very important figure in the other pillar. Let us not forget that the legal profession gives us our judges, so if it was not truly independent, that would have very worrying implications for our constitution. By having the most senior judge involved in the process, the constitutional position would be subject to a proper check. That is my view, although I am willing to accept that there may be other ways in which to achieve the objective and that we can discuss the matter further in Committee. However, doing nothing is not acceptable and simply reversing the amendment would be intolerable.

Earlier, I quoted from a letter from Sir David Clementi. Would the hon. Gentleman accept a position whereby the Lord Chancellor made the appointment, but after a Nolan procedure had been undergone and a senior member of the judiciary had served on the Nolan committee that recruited?

That is better than nothing—we would be prepared to debate it. However, there is little to criticise in consulting the most senior judge. The Under-Secretary said that she did not want to do that because it gives consumer groups the wrong impression. However, if it is the right thing to do, surely we should do it.

Is it not a concern that there is little on the face of the Bill to guarantee independence? There is no guarantee, beyond the Under-Secretary’s assurances, that the appointments process will follow Nolan principles. The independence, accountability and openness that Nolan guarantees is not enshrined in the Bill.

My hon. Friend makes the point clearly. I agree that he outlines a concern. We should not trifle with the legal profession’s independence, which is as important as the consumer interest. They are both important principles, which need to be respected. Indeed, the Government have accepted that because they included the public as well as the consumer interest in the Bill. That was the right decision, but further work remains to be done.

The other place made changes to the ground on which the board could take action against an approved front-line regulator and to clarify that the board is to act only as a supervisory regulator. The Under-Secretary said that she wanted to refine that. Does she mean a drafting change or a substantive change to what was agreed in the other place? Perhaps the Under-Secretary of State for Justice, the hon. and learned Member for Redcar, could comment on the matter in her winding-up speech. If the regulator is only supervisory and acts as a backstop, that is clearly what Clementi proposed and what we all expect. However, if the Under-Secretary intends to change the Lords proposal, it is important to know the exact reason for that because the protection is important.

The Lords tried to raise the threshold for intervention by the board and constrain the powers of direction and public censure so that the regulation was lighter touch, not heavy handed. The Under-Secretary says that she wishes to overturn those changes, but does she not agree that the Clementi model is that of a supervisory regulator and that the provisions will set the tone for whether regulation is light touch or heavy handed? I understand that she has examined various ways in which to suggest appropriate intervention and I welcome her proposal to reconsider ensuring that the oversight nature of the board is included in the Bill. May I invite her to continue in Committee the search for the right words to describe the threshold for intervention? Heavy-handed regulation is in no one’s interests—I know that she agrees.

In a similar spirit, the Government successfully tabled amendments to limit the circumstances in which the board could exercise its power to fine. They responded positively to protecting and promoting the public interest in the regulatory objectives. Limits were placed on the discretion of the office for legal complaints, and that is welcome. However, the other place made a change to provide that charges for the complaints process should not be levied when the complaint was unfounded and the matter was handled properly in-house. I understand that the Under-Secretary proposes to abandon the principle that the innocent do not pay for a complaint against them and that the polluter pays. I find that surprising given that she said that she agreed with the thinking behind the amendment in the other place. Surely there is a compromise to be found there: if she agrees with us, surely we can find words to express that agreement.

Lord King also persuaded their lordships of the need to delegate complaints handling to an improved regulator by direction of the board. That relates, of course, to the highly regarded Bar standards board. It is well known that the Bar is tough on those who transgress: it is part of the culture of the Bar, and it is good at uncovering wrong-doing, so it would be counter-productive to lose those skills under the new system.

Turning to alternative business structures, the principal concern has been the threat of cherry-picking, whereby perhaps a supermarket chain or some other multiple sets up booths to deal with some small aspects—the profitable aspects—of legal services, as a result of which the wider service provided by high-street solicitors and law centres will be lost, widening the legal advice deserts and making life much more difficult for individuals seeking legal advice, particularly the most vulnerable. An amendment was passed in the other place whereby the licensor has to make an investigation of the access to justice implications when determining an application to become an alternative business. If the Minister accepts that that is a vital issue—that is what she said—and if she is happy that her proposals will not damage access to justice, why does she object to the amendment? She seems determined to reverse something that simply provides for what she claims to want, so perhaps she can find some way of squaring that circle, too. One thing is for sure: it is not in the interest of consumers to lose access to justice. A supermarket providing some small legal service is all well and good, but if people want to talk about family law problems or other matters of legal concern, they will have to travel literally tens of miles.

Finally, the Bill will transform the way in which legal services are provided. We consider the Bill to be broadly satisfactory in its current form. We would be alarmed, however, if the Government chose to try to undo all the good work that was done in the other place. There is substantial consensus over this Bill and the changes made reflect the spirit of Clementi and do not conflict with it, so there is no issue of principle between us.

The Joint Committee noted that the public interest and the consumer interest do not always equate, particularly in matters of law, and it is good that the Bill now reflects both interests and that the Government have agreed that it should do so. Although it is vital for consumers to be able to remedy wrongs done to them by lawyers, it is also important that they have access to lawyers who are independent of the Government so that they can pursue the Government for the wrongs that they do. There is therefore no conflict between protecting the consumer and protecting the independence of lawyers. A fair and just system works to the benefit of all. Indeed, it is very much in the public interest. We believe that it is vital to consumers to protect access to justice. Legal services are sometimes commercial in nature, but they often amount to an important part of the welfare state.

We look forward to examining the Bill further in Committee. We see some room for compromise and further reflection, and we will want to raise a range of issues. One issue is whether there should be some regulation for will writers. As the Minister knows, that is a classic area for burying one’s mistakes because problems often come to light after the death of the person who made the will. Some standards should be set, but I am not suggesting that only solicitors should be able to write wills. In some ways, this area falls into the same category as claims handlers, so perhaps the Minister will consider whether similar provisions should apply.

At this stage, and taking account of the current state of the Bill, we see no reason to divide the House, but I want to make it clear to the Government that if they abandon a co-operative approach and attempt simply to reverse the Lords’ improvements, our attitude will change.

I declare my interest—a modest one—as a non-practising solicitor. It is important to acknowledge something that may not be apparent from the number of hon. Members rushing back from the Whitsun recess to take part in the debate—that this is a landmark Bill in our generation for the regulation of legal services. Yes, we are going to meet the concerns of consumer groups, but it is also important as we legislate to recognise that legal services are vital to the upholding of the rule of law, the functioning of our democracy, and the effectiveness and success of our country’s commercial interests.

Throughout our history, there are some fine examples of the outstanding values of talented lawyers—whether it be in respect of criminal law, human rights law or even immigration, to mention a recent example discussed in the national media last week. When an injustice is prevented or put right later, and the case attracts a lot of attention, it is noticeable that the person who was the victim of the injustice—or about to be threatened with it—turns to their legal team and expresses their heartfelt thanks for their skill and dedication in defending them. It is important to bear that in mind, and to preserve the talent and success of legal services in our country. The Bill’s provisions for new business structures are intended to preserve all that is best in our legal services and give them the ability to flourish in new and changing markets.

A minority of lawyers are incompetent and, sadly, some of them are dishonest. It has not always been apparent that existing systems for identifying and rooting out such dangerous characters have been as effective as they should have been. When people complain, we do not often hear that the complaints procedures have been transparent; most people criticise their opaqueness. Often, consumers think that the system lacks independence, and that it looks as though lawyers are judging their friends—other lawyers. In many cases, the processes of dealing with complaints are far too slow. All that adds to an air of dissatisfaction, which has led to the pressure for change from consumer groups. If we also take into account doubts about the openness to competition of legal services, investigated by the Office of Fair Trading in 2001, we start to see the powerful case for change.

The legal profession has been structured through a series of professional bodies, which, historically, have taken on both representation and regulation of the members of their profession. The various professional bodies have appeared to act in silos—barristers, solicitors, legal executives and the like. It has not even been possible for different legal disciplines to form businesses together. Clearly, if it is not possible even for different kinds of lawyers to form businesses together, it has not been possible for different kinds of professionals to form businesses together and provide services in one business unit. If neither of those are possible, it is certainly beyond the pale at present for a banking or retail business to offer legal services with common owners and managers.

That was the scene surveyed by Sir David Clementi in 2003. After his investigation and report, he recommended a legal services regulator, an independent office for legal complaints, and new alternative business structures for the formation of legal businesses. All those recommendations form the basis for the Bill.

On a slightly separate note, I was closely involved in the legislation that established the Financial Services Authority. For the financial services sector, the FSA was created to be a single, powerful regulator. In the case of legal services, however, Sir David came up with a design of greater subtlety. He recognised that there is value in continuing to utilise the expertise of professional bodies such as the Bar Council, the Law Society and so on. He made it clear, however, that they could not continue to act as representative and regulator at the same time. For the professional bodies to be regulators, he said that they must effect a complete separation of the two roles. The Government accept that proposition and, through the Bill, envisage that front-line regulators will be formed out of existing professional bodies. In fairness to those professional bodies, they have not waited for the Bill to become law to act. Most recently, both the Bar Council and the Law Society have separated out their regulatory arms and made them more independent.

To provide oversight and knit together a seamless, consistent regulatory regime, Sir David also recommended, as the Government accepted too, that an overarching legal services board should be established. The danger of that approach is the inherent duplication of two regulators where one might otherwise suffice: perhaps the legal services board second-guessing the front-line regulator; perhaps one regulator being played off against another; perhaps gaps opening up in regulation because each of the two regulators thought that the other was acting in a particular situation; and certainly, a danger of two sets of costs.

Achieving an effective value-for-money regulatory system through the structure of front-line regulators and the legal services board requires us to give careful attention to the architecture of regulation and the powers and duties of the different regulators. In the case of the legal services board, it needs to be small, light touch and strategic, with the power to act decisively when called on. In the case of the front-line regulators, they need to be allowed the freedom to operate effectively within their spheres of operation. Even with that balancing act successfully established, there is still the tricky business of identifying when and in what circumstances the legal services board must intervene if a front-line regulator is failing—what should be regarded as a sufficiently serious failure to warrant intervention by the board. My advice is that decisions about the timing and manner of an intervention—be it a public reprimand or fines, through to the most serious power of withdrawing authorisation from the front-line regulator—should be guided by the best interests of the relevant consumers.

Handling complaints relating to legal services is often separate from, but obviously relevant to, the regulation of legal services. As Sir David recommended, the Bill establishes an independent office for legal complaints. The intention is that there will be a single point of contact for all aggrieved consumers of legal services. Where complaints relate solely to poor service, the office for legal complaints will be able to investigate, conciliate and determine the complaints. It can order redress, the equivalent in the legal services area of what the financial services ombudsman scheme does in the financial services sector. Where the complaint points to potential professional misconduct, the front-line regulator—for example, the Solicitors Regulation Authority for solicitors—takes over. In reality, however, many complaints will not neatly fall one side or the other of such a divide. There will, therefore, be a need for co-operation between the regulators and a free flow of information.

I have received representations from the Solicitors Regulation Authority to the effect that the Bill should be further amended to give the authority powers that it does not currently possess. One of those is a power to fine and publish rebukes for lawyers whom it has fined and who have fallen short in their duties professionally. That would provide an alternative route to taking each case to the solicitors disciplinary tribunal, which the authority thinks should be retained for the more severe cases. Hearing about the delay in cases coming before that tribunal, I can well see that it would be desirable for some of the less serious cases to be dealt with by different routes. The other representation from the Solicitors Regulation Authority refers to sole practitioners, with the authority wanting to be able to regulate sole practitioners in the same way as a business entity, to prevent there being a possible gap in the regulation between the two.

The aim is for the office for legal complaints to be the one clear place to take complaints, offering a quick, fair and accessible way to put matters right, and ensuring transparency and independence both for consumers who make complaints and for the legal service providers who are being complained against. Alternative business structures have the capacity to transform the landscape for the delivery of legal services in England and Wales. Parliament’s role in defining the arrangements will be crucial: too little detail, and loopholes will open up to render regulation ineffective; too much detail, and regulation may be overbearing, complex and costly. Consider the difficulties that arise when one business organisation provides a range of services, each of which is currently separately regulated. Who will license the business to provide the legal services? Will there be one lead regulator? If so, how will the one be chosen above the others? Will different regulators have in place agreed common approaches to the exercise of their respective powers?

Such concerns led the Joint Committee, of which I was a member, to propose a step-by-step approach to introducing different forms of alternative business structure. However, evidence that I have seen since the Committee reported leads me to think that that is too strict a way of dealing with the problem. I have in mind, first, evidence from the Chartered Institute of Patent Attorneys and the Institute of Trade Mark Attorneys. Admittedly, they are small in terms of their membership and operate in niche markets, but nevertheless they have considerable expertise and some international significance. They already have experience of mixed-practice firms, and they say that such a structure can operate without adverse effects on consumer interests. I am also impressed by the briefing that Members received for the debate from the Institute of Chartered Accountants in England and Wales, which argues convincingly—in my view—that some multi-professional businesses which bring together lawyers and professionals such as accountants and surveyors offer considerable benefit to consumers, along with low risk for regulators.

I conclude that Parliament should concentrate on getting the regulatory framework right, and leave the Legal Services Board to get the sequence and the pace of introducing licensing for alternative business structures right for themselves.

There is genuine concern about the effects of alternative business structures on access to legal services. Will new businesses “hoover up” existing sources of work, making existing providers on high streets and in rural areas no longer viable? Will consumers retain their present ability to choose between providers, or will that choice be reduced? The Bill—rightly, in my opinion—requires the Legal Services Board to have regard to that issue. One of the regulatory objectives is “improving access to justice”.

I think I heard my hon. Friend the Minister say that she did not like amendments to that effect that were made in the House of Lords. She referred specifically to the requirement for research to be carried out before the first licences could be issued. I agree with her that that goes too far, but I think it right to require the Legal Services Board to monitor the operation of alternative business structures in the market, to evaluate the effect on the market of the first issues of licences, and to consider, following that monitoring and evaluation, whether and at what pace to grant further licences in the future.

Today’s professional bodies are greatly exercised about the costs of setting up and running the new regulatory regime. The Joint Committee expressed reservations about the cost estimates in the draft regulatory impact assessment. It can fairly be said that those reservations have proved to be justified, as the Department has since revised the estimates significantly upwards.

The Government say that the legal professions must bear all the costs of the new system. I can see the case for the independent regulator not to rely on public funds for running costs in order to be independent, but the setting-up costs could place a harsh and heavy burden on those who are members of the profession at the time when the Legal Services Board is set up. I ask the Minister to consider carefully, as the costs continue to rise, whether it is fair to expect only legal professionals to bear that burden, given that some elements of today’s supervision are paid for by public funds.

Would it not be useful if the Minister could give us an updated estimate of the start-up costs? Of course, it might depend to some extent on what amendments are finally incorporated in the Bill.

Yes, indeed. The latest estimate that I have seen is in the briefing sent to us by the Institute of Legal Executives, which states that the estimated cost of “light-touch regulation” has risen from £28.6 million to £37 million or £38 million,

“with…running costs now predicted to be £19.9 million”.

All those figures are higher than those given by PricewaterhouseCoopers at the time when the Joint Committee was sitting. I agree with the hon. Gentleman that up-to-date figures would help politicians to decide where the costs should lie.

I hope I can help. Our revised estimate of the transition cost is £32.1 million, which does not entirely accord with the figure from a different source that my hon. Friend cited. The revised estimate of the running costs is £4 million for the Legal Services Board and £19.9 million—as I think my hon. Friend said—for the office for legal complaints. Those costs represent 2007-08 prices, include VAT, and reflect other adjustments. As my hon. Friend says, the amendments that are eventually included in the Bill will influence the final figures.

It is very helpful to get a speedy response to the request that was made by the hon. Member for North-East Hertfordshire (Mr. Heald).

The Bill contains measures for a once-in-a-generation reform of our legal services. We must guard jealously those qualities that make our legal services renowned for their excellence and independence at home and abroad.

May I shed further light on the issue of costs and in a sense apologise to the hon. Member for North-East Hertfordshire (Mr. Heald), who speaks for the official Opposition, and to the hon. Member for North Southwark and Bermondsey (Simon Hughes)? I wrote to the Chair of the Select Committee on Constitutional Affairs with details of the costs and made copies available in the Library, but I will ensure that substantial copies are made available to them.

That is generous of the Minister.

We must guard jealously those qualities that make our legal services renowned for their excellence and independence at home and abroad, but we must press on with necessary reforms to meet the genuine concerns of consumers, to protect the public interest and to enable lawyers to compete and to innovate in changing times. Holding the ring between those interests, which will sometimes coincide and at other times conflict, is the statutory objective in the Bill. Those eight values set out, at the start of the Bill, what will be guaranteed for the continuation of high standards in the provision of legal services. They should be our route map and our ringing declaration of what we expect the Bill to produce in terms of the future quality of legal services. Like others before me, I support the Bill.

The hon. Member for Stafford (Mr. Kidney) was right: this is not a Bill for which colleagues have come in numbers from all parts of the UK to ensure that the first day back after the half-term break is the most exciting parliamentary event in the Commons before the new Prime Minister comes to his first Prime Minister’s Question Time. However, as colleagues have said, it is an important Bill.

All the time I have been in this place—like many others, I came from a legal background—I have been conscious that the legal system has not always served the public in the way it should have done. In all my time here, there has been a regular trickle of complaints to me as an MP and when I have had responsibility for the subject, and to other colleagues, that the system has not been working. That has been a slow but long fuse, so it was right that the Government addressed the issue.

As I have done before, I pay tribute to the Labour Government in 1997 for seeing the reform of the Courts Service, the justice services and therefore the legal services as an important matter of public policy. It is notable that the Bill is the first to come to the House of Commons from the new Ministry of Justice, under its new colours. That is important because this is a justice Bill.

I want to start where the hon. Member for Stafford finished. Clause 1 sets out what the legal services of this country should be about. In parenthesis, I am going to have a slight carp. I always have a complaint about the way in which Bills are set out. It is frustrating that even now Bills are not written in the ways in which the public read things. To start a Bill with definitions, without saying whom one is defining and who has that obligation, strikes me as the wrong way around. I hope that we will be able to tidy that up, so that the Bill starts by saying, “This Bill sets up the legal services board”—that comes in clause 2—“which has responsibility for making sure that the following are achieved”, and then sets out the objectives. If we are going to try to make the law of the land useable by consumers and non-lawyers, we need to write our legislation in such a way that non-lawyers would read it, as opposed to paying people to do that.

Everyone else has declared their interest. It will not give the public huge confidence to hear everyone, apart from the Minister and other honourable exceptions, saying, “I am a non-practising solicitor or barrister”. They will think that they cannot be up to speed as to what is going on. To exculpate colleagues, the answer is that people gave up their full-time jobs doing those things when they came here. People should do that. I am a non-practising member of the Bar, but still a member of chambers in King’s Bench Walk and I value my continuing links with that profession.

This morning, I was at a meeting on behalf of a constituent at the headquarters of ACAS, the Advisory, Conciliation and Arbitration Service, which does a very good job. We all wish that more people would end up going to organisations such as mediation centres and ACAS, rather than to lawyers. One of the frustrations in our world is that we are producing a society in which people have increasingly to use lawyers. It is a reflection of the sort of society that we live in that the number of lawyers and accountants—those who make legal and financial interpretations—increases but the number of people who actually make things decreases. However, the fact is that there are more lawyers and there is more law—not least because we pass more law.

I join others in paying tribute to Sir David Clementi and all those who have done the work that has led to us reaching our current position. The Bill seeks to address the difficult questions of how to produce a good complaints system and how to regulate in respect of people who are not directly a public service, or who are not a public service at all.

As I was preparing over the weekend for today’s debate, I thought about the fact that we regulate and allow complaints in different ways. In terms of Government and local government, there are methods of complaining but they cannot be made to do anything. Because they are elected bodies, the ombudsman can recommend but they cannot tell them what to do—if Government or local government say no, there cannot be any further sanction. However, in recent years we have, for example, taken complaints against the police out of the hands of the police, and I strongly supported that; that is a public service and police officers are public servants and they should not investigate themselves. There is a halfway house in respect of doctors—how to deal with them was controversial for a long period. Doctors are generally independent but are contracted to the state. The body that regulates them is the General Medical Council—and there are similar bodies for nursing and dentistry. Therefore people working in the NHS—paid for with public money—are regulated by part-independent organisations.

The question in the current debate is how to deal with lawyers. The hon. Member for Stafford made the point that a few years ago we addressed the same question in relation to the financial services industry, which is a private sector industry. We asked whether it should just be left to regulate itself, or if there should be some form of legislative control.

We are asking ourselves the same question in this debate. There is a sound logical argument—especially for someone who is a liberal by conviction—that we should allow the market and those working in this field to regulate themselves. However, it is clear that that is unsatisfactory in relation to the public. The hon. Member for Bassetlaw (John Mann) and others have pointed out over the years how unsatisfactory that has been. People abused their private-market position. Therefore we as a nation—or the nations of England and Wales in this instance—have come to the conclusion that we need a regulatory system.

My next point has not been made explicitly, although the hon. Member for Bassetlaw made it indirectly in relation to miners’ compensation claims. It has often been the case—and it frequently remains the case, I think—that when people go to find a lawyer they do not know the professional qualification of the person with whom they end up dealing. People have often said to me, “I went to see a solicitor” when they did not see a solicitor; instead, they might have seen a legal executive or a clerk, or someone in training. I hope that we will address how to ensure that everyone who practices these professions or works in their organisations must identify their status and qualification.

That point is of relevance to the following conundrum, which has already been posed. If someone goes to a legal firm and they are dealt with by a person who is not a solicitor—by a clerk or legal executive, perhaps—and that person then instructs a member of the Bar, who is by definition independent, and the case then goes wrong, who takes responsibility? To be blunt, the solicitor’s firm—the senior partner or managing partner—should take responsibility for all their staff, and in the past the Bar Council would have taken responsibility for the discipline of its member.

The public do not know about the differences between all the various sorts of people who might be involved. In terms of the courts, distinctions have become much less obvious; solicitors can now appear, as it is no longer necessary to be a barrister. That is perfectly reasonable. However, we need to make sure that people know who they are dealing with. It is therefore right that when people want to complain, they in effect go through one door marked “Complaints”, because they should not have to do the run-around. The old system was really confusing, and I accept that the “maze”—the phrase used—of different regulatory authorities, ranging from the Master of the Rolls to individual organisations that people have barely heard of, has to be replaced. People need to go through one door, and there needs to be a proper system for dealing with complaints on the other side of that door.

I want to add my tribute and thanks to the tributes and thanks already paid and given to those who have done the work on this Bill. I am a great fan, as I think everyone now is, of important and difficult legislation such as this going before a pre-legislative scrutiny Committee. The Committee in question did an extremely good and robust job, and Lord Hunt of Wirral, who is very well respected, was clear. The Committee did not consist of all lawyers. For example, my hon. Friend the Member for Birmingham, Yardley (John Hemming), who certainly is not a lawyer, came to the issue from a business point of view and from a local government background. Others were also not lawyers. The Committee did an excellent job and I pay tribute to it.

There were not many. I accept that the majority were lawyers—I was not on the Committee—I was making the point that my hon. Friend the Member for Birmingham, Yardley, who comes from a non-legal background, was one of those who were not lawyers. That was important.

I also pay tribute to those of my colleagues who did the burden of the work in the other place. Lord Thomas of Gresford and Lord Maclennan of Rogart bore the brunt of the heat of the debate that started in the Lords almost six months ago to the day. That was not too long a period, and I am extremely grateful that the Bill did start in the Lords. The Lords did a fantastic amount of work on it, and as the Minister said in answer to one of my interventions, the work done with her noble Friend Baroness Ashton, who was very helpful, in the end produced an agreement to amend the Bill. Many of the Joint Committee’s recommendations were accepted, and I pay tribute to colleagues who worked to make sure than the Bill is much better than when it started.

After almost six months in the Lords, the general conclusion—everybody seems to have said this—was that it was considerably improved by the amendments made there. [Interruption.] There are remaining objections to certain significant changes. The Minister rather cleverly avoided a direct answer to my earlier intended direct question. Where there were votes in the Lords and the Government were defeated—according to my calculations, there were seven of those—we Liberal Democrats and, I think, the Conservatives, by and large, believe that the Lords made the right decision. Such amendments were sometimes proposed by independent, Cross-Bench Members of the Lords, sometimes by Conservatives and sometimes by Liberal Democrats, and they were all moves in the right direction.

That such proposals were indeed right is confirmed to me by the phrases used by Lord Hunt of Wirral, who supported and voted for either all or many of them. For example, he said the following on Second Reading about the alternative business structures proposal:

“There are widespread worries about conflicts of interest, which will—not may—be created if Ministers press ahead with the ABS reforms. Sir David drew attention to that concern in his report, as did the Joint Select Committee that I chaired, which was unanimous in its report. The provisions in the Bill are very weak and will have to be strengthened considerably, but that will be a matter for Committee stage.”—[Official Report, House of Lords, 6 December 2006; Vol. 687, c. 1181.]

On Third Reading, where the Lords supported an amendment providing a sunrise clause and other provisions for ABSs, Lord Hunt said:

“My Lords, I should explain how strongly I support Amendments Nos. 3 and 13. It was the unanimous view of the Select Committee that amendments should be tabled,

‘to ensure that the impact of ABSs on access to justice, particularly in rural areas, informs the decision-making process for licensing an ABS firm’.”—[Official Report, House of Lords, 15 May 2007; Vol. 692, c. 140.]

So there was clear support, on the basis of argument, for the amendments on which the Government were defeated. We should work on the basis that that is the right starting place, and that the burden is on the Government to make the case for any changes. I am troubled that the Minister appears in most cases to be rejecting such amendments completely, and in one or two cases to be saying that she will reject them at least in part. I hope that there will be a debate on that, and that we can win the argument. If we do, I hope that the Government will be flexible and will not stubbornly hold on to a position that clearly did not win the confidence of the other place.

Does the hon. Gentleman agree that none of the amendments conflict with what Sir David Clementi proposed in his report? In fact, as the hon. Gentleman said, they work with the grain of what Sir David suggested to a considerable extent.

I agree. The amendments all help to achieve a better list of principles in clause 1. The principles are of

“(a) protecting and promoting the public interest; (b) supporting the constitutional principle of the rule of law; (c) improving access to justice; (d) protecting and promoting the interests of consumers; (e) promoting competition in the provision of services…(f) encouraging an independent, strong, diverse and effective legal profession”—

“independent” was added in the Lords, as was the first principle, “protecting and promoting the public interest”. The list continues with

“(g) increasing public understanding of the citizen’s legal rights and duties; (h) promoting and maintaining adherence to the professional principles.”

The hon. Member for Stafford said also that five professional principles are then set out. The first three are independence and integrity for all in the professions; proper standards; and the support of clients’ best interests. The last two provide that

“people who exercise before any court a right of audience, or conduct litigation…should comply with their duty to the court to act with independence in the interests of justice, and (e) that the affairs of clients should be kept confidential.”

Lord Thomas of Gresford made the point clearly on Second Reading that the important thing about people practising in the legal profession is that they owe a duty not just to their clients, but to the courts and to the justice system. They therefore, for example, have an obligation to ensure that there is no conflict of interest, and an obligation not to state things that they know to be untrue. [Interruption.] That is the professional obligation. One may be given instructions that sound incredible, but one has to put the case, because that is the way in which the adversarial system works. One is certainly not allowed to put forward something that one knows to be untrue, or something that reveals a conflict of interest without it being public. Those matters are important, and making the regulatory standards clear and placing them in statute will represent progress.

We now think that the objectives are much better defined, and we do not think that they should be amended by ministerial decision alone. It is not the biggest debate in the world as to whether the Lord Chief Justice and the Lord Chancellor should be able to change the membership of the legal services board, and add to or take away from its numbers, but it is the right change to make, because one of the Bill’s troubles is that it increases the powers of the Government and of Ministers. A tally was made of the Secretary of State’s powers: it started off at 100 and ended up at 288. However eminent the Minister and however grand their title—such as Lord Chancellor, which goes with the title of Minister of Justice under the new system—we should ensure that decisions are made not only by the Government.

The reason why we support appointments and dismissals being under the joint lock of the Minister and the Lord Chief Justice is that the head of a Department—however full of integrity—is a politician and is perceived to be a politician. If an authority is to command respect, it must be seen not to be full of political appointees. The Lord Chief Justice, who has never been perceived to be political or party political, will provide that guarantee.

The hon. Gentleman used the word “we”. Are we to understand that in his extraordinary eulogy to the vested interests of the legal professions, he speaks on behalf of the Liberal Democrats? If so, is that in the true traditions of the Liberal party?

First, yes, I speak on behalf of the Liberal Democrats. Secondly, my speech is not a eulogy to the legal professions. I have made it clear that the legal profession has a good reputation in this country, but it has also had its significant failures, and I started by saying that that is why we are in the Chamber debating the Bill. We are trying to get a structure.

We have supported there being clear, regulatory objectives. That is a good thing. We have supported there being a legal services board—an overarching regulatory authority. That is a good thing. We have supported the separation of representation and regulation. That is a good thing. We have also supported there being one door to a legal complaints service. None of that is a eulogy to or defence of the current position or the past practices of the major professions—the Bar and solicitors—or any other relevant profession. This is not about taking a defensive position, it is about making sure that we respect what works and put it in the context of an accountable and better-to-use service that gives citizens the rights that they expect.

The hon. Gentleman will appreciate that because of changes made by the Labour Government, the Lord Chancellor could be situated in this place in future. In some ways, that makes his point about the politicisation of the role more important. I do not say that that is wrong or that accountability is wrong, but the balance that comes with the role of the Lord Chief Justice might become more important as a result.

I accept that. Indeed, my hon. Friends and I have always argued, in recent years, that there should be a Minister for Justice and that they should be in this place. We think that here is the right place for them to be and that they should be accountable to other elected Members of Parliament, but, yes, that would make such a Minister more overtly party political than they sometimes appear when acting as Lord Chancellor at the other end of the Corridor.

We believe that the way in which the costs of the legal services board are met should be reconsidered in Committee. That issue comes up most frequently in cases with vexatious litigants, whom we all know exist—the Under-Secretary of State for Justice and I and others all come across them in our constituencies on a regular basis. We need to ensure that firms are not penalised, and it seems to us that there could be some general public contribution.

The board must also be able to punish and fine people who misbehave.

I find the hon. Gentleman’s contribution absolutely fascinating. The Liberal party is supposed to stand up for the little men and women in society. Is he really arguing that someone should be penalised for making a complaint to the legal services board—or the Legal Services Commission, at the moment—and that costs should then be given? My experience and, I am sure, that of my hon. Friend the Member for Bassetlaw (John Mann)—I think that we topped last year’s poll for the most complaints to the complaints service—is that it does not deal with frivolous and vexatious cases. It throws them out before they even get to an adjudication. What the hon. Gentleman suggests will put another hurdle in front of the consumer. I find that very disturbing.

I absolutely was not arguing that the consumer should bear the cost. I was arguing that not all the costs should necessarily fall on the companies or individuals who have been complained about, and that there might be a public interest in some of that cost being met publicly and generally, so that the cost of the regulatory authority and what it does is not borne entirely by those whom it regulates. That does not put the burden on the little man or woman; it means that we—the people as a whole—share the responsibility.

I think that I understand the legal services complaints system quite well. Will the hon. Gentleman explain what costs are placed on a solicitors firm that is being complained about? In my experience, the initial action is to put the case in writing, and then if it comes back and the complaints service thinks that there is no case to answer, it goes no further so there are no costs at all. His point is, therefore, complete nonsense.

The Government’s proposal, which is generally supported, is that there should be a legal services board, which will be a new organisation. It will employ people and those costs will have to be paid for. I am suggesting that we need to consider, in Committee, from where the whole costs of that organisation will be met and whether they should be met only by the firms that it will regulate, or whether there should be a public contribution.

In the interests of consistency, will the hon. Gentleman and his party argue that the costs of trade union political functions should be entirely covered by the state as well?

That is an entirely separate debate, but certain costs are met—for example, those associated with certification officers—and other regulatory agencies are also part-funded by the taxpayer. So the answer is that we must have a reasonable outcome in the way in which the costs are met, and we need to have that debate.

I am anxious to follow the hon. Gentleman’s point because he speaks as though public input into the costs and the problem of firms bearing the cost of vexatious litigants with nuisance applications are almost the same thing. As configured before the Lords amendment, the LSB will have discretion—it will no doubt exercise it properly, subject to judicial review—over whether it awards costs against the firm. That point was satisfactory before the amendment. The hon. Gentleman raises a different issue about whether the public should pay for the ongoing running costs, and it is intended that such costs should be met from a levy and from costs per case from the firm.

The Minister is right; they are separate points. Of course, there is discretion, which remains right. The question is whether the set-up costs and the ongoing costs should be met at all from the public purse, or only from the two sources that she talked about. We need to have that debate, so that there can be confidence that the costs fall in the right place.

My last point about the LSB remains slightly unresolved after various specific debates in the Lords. What rights of appeal will exist against the LSB’s decisions?

On reserve legal activities, there is a question about will writing. I do not suggest that everyone needs to employ a lawyer to write a will. People increasingly go to the shop down the road and get a “write your own will” pack. However, if people employ someone to write their wills, they need to make sure nowadays that they employ someone who is competent, and we need to consider that profession as well.

I have dealt with the legal complaints issue. One door is the right place. There should be the ability to delegate the powers to investigate, but the legal complaints system should be able to look after that. Independence from the profession is needed. Such things might have been done well or badly. Solicitors have received many more complaints than the Bar, but they are a much bigger profession. We certainly need a system that works better and more quickly, in the interests of the professions, as well as consumers who have often received a bad service.

The really controversial issue is the business structures proposal. Logically—I will pick up the challenge—Liberals will say, “Fine. Free market. There should be absolutely open competition.” But we do not do that in many other areas of life. Why? Because we know what happens. This is like the postal service debate. If we had a free market for the postal service, the people who would undercut the costs in urban areas would not be willing to deliver to the islands and highlands of the country. So we must have a service that ensures that access to justice is as readily and easily available to people in the constituency of my hon. Friend the Member for Somerton and Frome (Mr. Heath) who live in villages and towns in rural Somerset or those who live in the villages and towns of north Wales referred to by my noble Friend Lord Thomas of Gresford as it is in the capital city of our country, part of which I have the privilege to represent.

There is a real concern that, if we just go down the road that the Government propose, we will produce the sort of cut-throat competition that not only has the advantage of bringing professions together, but that means, bluntly, that the big boys—the big commercial companies, whose interest is principally in something else—come in, undermine and kill off the people who have local competent experience.

In many places in the country—let us take a small city such as Hereford, where the issues are often to do with flooding and land drainage—there is a lot of tradition and understanding of exactly the issues. That would not be known by someone in the headquarters of a multinational company, which has a principal interest not in legal issues in rural counties in England, but in something else. Therefore, the Liberal Democrats are absolutely clear that the sunrise protection—having a proper check and an investigation—is the least that should happen before we open up the profession to full competition.

Does not the hon. Gentleman agree that that is already happening with regard to the legal profession? There is gravitation towards not only larger firms, but firms that specialise in certain areas. From my experience of miners’ compensation, that is a good thing, because some of the scandalous cases with which I have dealt involved the sort of small practices of family firms to which he referred that had no experience in dealing with complex litigation. Such firms do not say to clients, “We are not competent to deal with this,” but take on the case and give a bad service.

I absolutely understand that point. We have debated how we do not want a health service in which people go to their general practitioner to get referred for an X-ray, for example, and are then shuttled between 19 different providers, even though they are getting one service. Of course, some local solicitors might not have the competence to deal with matters that are beyond their expertise, yet do not say so. The situation has improved because solicitors can now say what their expertise is and it is easier for people to work out the solicitors who are specialists in such areas as family law. However, I agree that things are not perfect. Solicitors can hold themselves up as experts in certain areas, although they are not.

I will not give way because otherwise colleagues will not have the opportunity to make their points—[Interruption.] I will not be tempted. There might even be a chance of an early finish if the hon. Member for North Durham (Mr. Jones) lets me finish shortly.

There is an argument that there will not be an understanding of many of the more expensive, difficult and complex local issues in many places in big organisations without any local interest. Such organisations will be under no obligation to provide the personal service that has been offered in such places in the past. People often have a personal obligation to their community, but that is not the case for an international organisation that is based in Nevada, or one city in this country.

A further difficulty is very much evident in areas such as mine, which my hon. Friend identified. Small firms often provide the cross-subsidy that allows any sort of criminal law to take place in our magistrates courts and smaller courts. Such work is not profitable and is carried out only due to the good will of small firms. If we lose them, we will lose any hope of legal aid for criminal cases in rural areas—[Interruption.]

The Ministers are saying that that is absolute rubbish, but it is not. In practice, many firms make their money through the easier route of conveyancing, which effectively allows them to do other things. We are having a separate debate about legal aid—not all such work is legal aided—but it is certainly the case that such easier work allows those firms to carry out more difficult work. There is a danger that big companies will cherry-pick the easier work for bigger profits, while the less fashionable and straightforward cases will go to the wall. That is why we strongly support the amendment that says that access to justice should be a special consideration when granting business structure licences and the amendment that states that there will need to be a review.

I agree with the hon. Gentleman’s point about access to justice, but why should people in rural communities get a second-class service because their firm of solicitors is a cosy family firm with no expertise in some matters? I am sorry, but the hon. Gentleman is wrong that solicitors say, “I’m sorry, but I’m not expert in this, so can you go somewhere else?” Instead, they take cases on, and people who do not understand the way in which solicitors operate think that they are getting a good service when they clearly are not. The hon. Gentleman is deluding himself if he thinks that small family firms in rural communities are turning people away when they do not have relevant expertise. They take the cases on and the clients become disappointed in the long term when they find that they are getting a poor service.

I am not generalising at all. There are some extremely good local firms of solicitors that deal competently with the work with which they can deal and take on work that others might not because of their loyalty to a community and its residents. Such solicitors will often and perfectly reasonably send off work that they are not competent to carry out to a colleague or another firm. There may be firms—I am sure there are—that seek to do work that they are not competent to do. What I know is this: if small firms are faced with competition from a catch-all company that does everything—insuring clients from the cradle to the grave and providing legal services for everything, allegedly—that underprices and takes the business, the result will be that some of those firms are no longer viable. When those smaller firms have gone, if the big international provider decides not to have an outlet in that village, town or city, there is nothing to take its place.

That is the danger of the predatory market and it is the reason why, in a capitalist society, checks and balances are always necessary. That is why, in this debate, the big issue is what the correct balances are. Yes, we need a more customer-oriented, consumer-oriented service; but, no, we do not need an untrammelled free market that suddenly says that everybody can come, irrespective of tradition, practice, competence and so on. Let us proceed carefully—the amendments made in the Lords allow us to do that. They do not prevent alternative business structures; instead, they say that we should proceed carefully and in a way that protects the best and protects access to justice. That is the test. This is a justice Bill and the outcome should be judged by whether it gives best access to justice and legal services in the smallest villages and the biggest cities in our land.

I start by declaring an interest: I am not a lawyer, but I am a Labour and Co-operative Member of Parliament. Given that some parts of the Bill have been described as “Co-op law” or “Tesco law”, I think it only right to bring my association with and support for the co-operative movement to the notice of the House.

I welcome the Bill, but I would like to comment on the process hitherto. Hon. Members on both sides of the House agree that the consultation process has been very thorough, and I think that part of the reason for that agreement across the House is that the majority of participants in the debate have a legal connection. The ad hoc Committee comprised—not entirely, but largely—people with legal backgrounds. Not all but most of those who contributed to the debate in the other place have legal backgrounds, and so far a high proportion of those who have contributed to today’s debate have legal backgrounds, or have operated with non-legal qualifications.

Does my hon. Friend agree that if a piece of trade union legislation was going through Parliament and the debate was packed with people who were trade union members or Co-operative Members, the press would be full of condemnation about vested interests?

My hon. Friend makes an important and valuable point, which underlines my next observation, which is that had the consultation process been so dominated by representatives of consumer organisations, we might have a rather different Bill and heard different comments today. Notwithstanding the praise that has been given, we have to recognise that overall, the debate has been legally driven and legally dominated. It is interesting that those who have been so complimentary toward the ad hoc Committee are largely solicitors and lawyers who agree with those who participated in the Committee. The amendments that have been accepted are those that were proposed by them, and they have been complimented by them.

My perspective is that of a non-lawyer consumer. Listening to the debate, I have at times felt like an atheist at a Council of Churches debate, because the nature of this debate has been arcane and sometimes almost theological. I do not pretend to understand all the arcane structures and processes of the legal services industry, but I have a general understanding, from a consumer’s perspective, of how that industry appears not to be meeting the needs and concerns of the general public. I hesitated to speak at first, but then I thought that, as a representative of constituents who are mainly on low incomes and do not readily run to the courts, I am perhaps better placed, and in some respects better qualified, to participate than are some others.

My constituents have little confidence in the law. There is a pervading suspicion of lawyers, and given the cases that have been brought to me, I can understand that. That feeling was reinforced in me three or four years ago, during the Carter review of legal aid, when I was asked to attend a meeting of solicitors in Birmingham. When I got there, I was stuck on a chair in front of a great group of solicitors and told that the big issue in my constituency was the absence of legal aid. I was puzzled, and my response to that statement was fairly robust. I said that I had been an MP for four or five years and had held hundreds of surgeries, but not one person had come to me to complain about the inability to get legal aid. However, many people had come to me to complain about the services that they had received from solicitors. Needless to say, that did not go down too well. What struck me was the ability of the profession to redefine self-interest as public interest. That experience clearly demonstrated to me how exclusive the profession was, and how it perceived the outside world.

As I see it, there are two big issues: first, lack of accountability, and secondly, cost. Reference has been made to the number of complaints that have been dealt with unsatisfactorily by the Bar Council and the Law Society. One third of Bar Council complaints ended up with the ombudsman, as did more than 17,000 complaints made to the Law Society. There is a general feeling that complaints are being judged and determined by members of the legal profession, and that they run a closed shop. Looking at the number of complaints and given the prevailing perception that there is little point in complaining, I cannot help but wonder how many complaints there would be if we had a process that commanded public trust.

Does my hon. Friend agree that one of the biggest problems is that many people do not know how to complain about the poor service that they get from some solicitors?

I agree absolutely. Many people in areas such as the one that I represent want as little as possible to do with solicitors. They do not know how to complain and they do not believe that they will get value for money, so they avoid solicitors.

The one time when the great majority have some association with the legal profession is, of course, when they buy a house. I shall not bore the House by repeating the litany of complaints that I have heard about the service that people have had from solicitors carrying out conveyancing on their houses. I am sure that other hon. Members have had similar experiences. I would summarise the complaints by saying that they relate to slowness, lack of response to telephone calls, and indifference to the stress of purchasing a house and to the implications of slowness on the part of the legal profession. I am the first to accept that there are many dedicated solicitors who take a professional approach, but overall the perception is that there is a culture within the profession that is not responsive or accountable.

There has been a lot of debate about the independence of the legal services board. Other key regulatory organisations—the Financial Services Authority and the Office of Fair Trading, among others—have independent chairmen appointed by the Lord Chancellor or by other members of the Government. The funny thing is that when the appointment is made, the debate is always about whether the chairman will be independent, but once the person is appointed, the nature of the debate usually changes. We start hearing people complain, “Why don’t the Government interfere in the decisions being taken by that independent organisation?” That is a reflection of the fact that the process is legitimate, robust and can be trusted.

I shall talk briefly about whether regulation should be light-touch or heavy-handed. In an ideal world, we would want light-touch regulation, and that is appropriate when there are regulatory organisations that function appropriately. However, if they are not functioning appropriately, light-touch regulation is no good. There has to be the capacity to be more intrusive if the regulatory bodies do not deliver according to their purpose. Although I certainly subscribe to the principle that regulation should be light-touch, it must also be appropriate. I hope that when the Under-Secretary of State for Justice, the hon. Member for Lewisham, East (Bridget Prentice), devises the regulations, there will be a process to make sure that the level of regulation is appropriate to the effectiveness of the organisation being regulated.

Another issue to consider is cost, which in turn is affected by competition. That brings me on to the so-called alternative business structures. I have never understood why only lawyers can employ other lawyers; that strikes me as the ultimate in restrictive practices. To take up and extend a point made by my hon. Friend the Member for North Durham (Mr. Jones), if that practice was applied in other contexts—for example, in relation to trade unions—there would be a reaction against it. It is quite possible for single practices, or groups of practices, comprising excellent lawyers to have a deficient business organisation. A practice that delivers a very good legal service might carry out that service in a far more cost-effective manner if it were organised differently and were subject to more business discipline—and that way, it would get far more public support.

I have listened to the objections to the alternative business structures, and they fall into a number of categories. One objection is that companies will cherry-pick cases. Looking back to the Carter review, and issues to do with the cost of legal aid, the argument for extending funding for legal aid, and against some of the Carter proposals, was that companies were cherry-picking and were no longer providing legal aid, and legal aid deserts were being created. These issues are by no means new. I would argue that opening up the profession to competition from other organisations will force companies to look again at their business practices and to deliver a service more effectively and cheaply, thereby possibly making legal aid more profitable. Of course, that would enable other organisations with tried and tested business practices to use them to deliver the same service more cheaply. The point needs to be made that there are organisations, such as those in the co-operative movement, that have found a market niche through ethical trading and targeting communities that have hitherto been marginalised or excluded. If those organisations took part in providing legal services, it is hardly likely that they would adopt the practices that some hon. Members have criticised.

I agree that the change will have to be monitored. Obviously, whenever a market is opened up competitive advantages arise, but there is scope for abuse too, and there must be a monitoring process that ensures that we benefit from competition and do not lose out. However, on balance, I think that the change will be a force for good. It will act as a business discipline on a range of solicitors and lawyers who have hitherto never had to consider the issues that we are discussing.

Another objection concerns the conflict of interest between shareholder return and quality legal services. I do not understand how anybody working for a big corporation could have a more direct interest in enhancing shareholder value than a lawyer working on his or her own, or in a partnership, in terms of the profitability of the company. There is a far greater relationship between profitability and the individual for lawyers working on their own, or in a partnership, than there is for lawyers who work for a large organisation, which may be a public limited company. Under the current framework, there is far more incentive for individuals to maximise their profit at the expense of quality legal services.

I conclude by acknowledging the contribution that many good lawyers make, and I accept that many members of the profession are dedicated to the public good and work for a relatively low income on behalf of the public. However, there is a culture that prevails in the profession that is at odds with that dedication, and it fails to project the real value that some solicitors bring. The Bill, by enhancing the complaints procedure and reinforcing trust in the profession, will go an enormous way towards dealing with that. It should not only create more confidence, but enable more people to access legal services. As is the case with alternative business structures, legal services could well be provided by organisations that are skilled in developing markets, and which have access to constituencies that solicitors currently do not provide for. There is a real prospect that more people, with greater confidence in the profession, will use those services. If they do, they will enhance the industry, not just for themselves, but for the whole profession. When a complaints procedure that reinforces public confidence is combined with a business structure that gives people more options when selecting who provides their legal services, there will ultimately be a positive impact on the profession, and on the public.

I proudly declare an interest as a practising solicitor. I do not apologise for being a solicitor, even though some Labour Members seem to suggest that one should. Lawyers are an integral part of society. It is easy to criticise them until we need their services. For 12 years I have been a legal aid lawyer, defending those on benefits or on income levels below that—people on the margins of society. After those 12 years, I believe I have a useful contribution to make about the impact of the Bill on those consumers and others, and I shall impart that to the House.

Given the hon. Gentleman’s commendable introduction, does he agree that robust regulation of those who do not meet the standards to which he aspires and which, I am sure, he meets is required to protect the good name of solicitors like him?

I am grateful to the hon. Gentleman. The essence of the Bill, and the concern of the Opposition, is that any regulation which the hon. Gentleman might call robust is not so overbearing that it gets in the way and undermines the confidence of clients such as those whom I have represented in their battles with the state. I am sure the hon. Gentleman would be on their side, and they would not want a regulatory body under the influence of an overbearing state.

During the debate, references to the legal profession have conveyed the assumption, implied or explicit, that there is some overarching conflict of interest between lawyers and consumers. The Minister seemed to be pitting consumers against the legal profession. One should rise above that kind of debate. The Joint Committee was well served by lawyers, but in the limited time available had extensive consultation with consumer groups and the like. I hope not to make the same easy mistake.

The essence of the Bill, for consumers and lawyers alike, is independence and trust in public authorities, Ministers and politicians. When Ministers give assurances about independence, they should take heed of the latest opinion survey. On trustworthiness, Ministers were rated just above car salesmen, and lawyers were more highly rated than Ministers. It is worth noting that when one listens to what some lawyers say.

The theme of my remarks and of many representations is independence, which takes many forms. Provisions to safeguard independence were inserted in the Bill after strong representations from the Joint Committee. That raises suspicions in my mind and in the mind of others that the Government have begrudgingly recognised independence as the mark of the legal profession in our society. It is important that the legal services board should be demonstrably independent of Government. That matters less for lawyers than for the public. It also matters for professional confidence in the regulation of legal services.

I agree entirely that the legal services board should be independent of Government. Does the hon. Gentleman agree that it should also be independent of the legal profession?

The hon. Gentleman is correct that the issue is independence, but it depends how one defines “legal profession”. I shall come on to the process of appointment.

We have heard references to the miners and to other individuals. Those citizens, those consumers, are dependent on lawyers when they are in conflict with the state, and they need the assurance and the confidence that they have a lawyer whom they can trust and who is ethically sound and competent. We have all heard of those who are not, but we must support and promote those who are ethical and competent, and they must be regulated by a body that is independent of the state. Such confidence is crucial for the litigation that takes place every day of the week.

This morning I was at Stevenage magistrates court, where a client was benefiting from confidence in the independence of his lawyer. It was of great significance to that person, who had been arrested for an offence and charged and was appearing in court. At a late stage of his trial it became apparent that the identification parade that formed the basis of the case against him was undermined by the fact that the photograph of him had been shown to a witness prior to the identification parade. In that case a diligent lawyer had been working hard up to the final hour of the trial to expose that point, which led to the case being discontinued. No doubt the defendant appreciated the independence of that lawyer in his contest with the state in the form of the Crown Prosecution Service.

If that individual had not got the good service that the hon. Gentleman describes and was dissatisfied with the service that he had received from his lawyer in that case, does the hon. Gentleman think that he would have a great deal of confidence if he knew that the body to which he could complain included solicitors or other legal professionals?

I support the Bill and the intention to establish a one-stop shop for legal complaints. That would provide integrity and ensure that complaints that had not been followed through correctly in the past—we have heard many stories about those—will be better dealt with. That is why I support many of the principles underlying the Bill. The independence of the legal profession is the cornerstone of the rule of law. That is worth repeating, even though the Minister was not keen to extol it.

When one considers the structures proposed in the Bill, one needs to see where that independence is guaranteed. First, the chair of the legal services board will be a lay person. If the defendant at Stevenage were aware of that, he would no doubt be pleased that the chairman was not a lawyer. It is a clear indication that lawyers will not dominate the regulatory structure.

I am rather confused about the direction in which the hon. Gentleman is going by suggesting that the Bill is against the independence of solicitors acting in court. Could he assist me by giving an example of a legal appointment made by the Lord Chancellor that he regards as not independent?

If the hon. Gentleman will be patient, I shall come to the process and give some examples of the Government not handling lawyers in a different way from accountants and other professionals when they should do so.

Is the legal services board independent? I hope the hon. Gentleman and others would agree that the Government are not universally trusted in respect of the appointment process. A survey on whether the Government are trusted with appointments would reveal some reservations. It is not universally accepted that they are the appropriate authority. The Government should be primarily involved in legal appointments, but such appointments should be made with the concurrence of the Lord Chief Justice. Why should the Lord Chief Justice not be involved, to ensure a degree of independence? The criticism that is made is that he is just another lawyer.

That is a fair point, but will the hon. Gentleman comment on the fact that the legal services ombudsman, who is a lay person, is appointed by the Lord Chancellor? Is he saying that the profession has no confidence in that appointment?

Not at all. Far be it from me to speak on behalf of the legal profession—I am as much a consumer and as much a lawyer as others. However, an appointment as crucial as this, which involves a supervisory role—a real break from the past—must be dealt with uniquely, because it raises clear questions about independence that need to be dealt with satisfactorily.

I want to make some more progress.

In the other place, arguments were made about areas that I do not think can be advanced as equivalents. The question was asked, “Why should we do this? Is it not the same as the head of Ofcom being appointed by Rupert Murdoch or the chairman of the Competition Commission being the chairman of Tesco?” Those arguments are not well made. The independence of the legal profession is significant: it is a cornerstone of the rule of law and needs to be handled cautiously.

The Government seek to give assurance by saying that the appointment process will be conducted according to the Nolan principles and that it will be conducted diligently and transparently. The concern, though, is whether that is enough and whether the Government should have gone further in another place. There are legitimate questions and concerns. Is it significant that the Government resisted the amendment saying that the appointment should be made in accordance with the rules applicable at the relevant time? Why did they resist that amendment so vigorously? Surely a justified concern is properly dealt with by the Lord Chief Justice having the concurrent responsibility for an appointment.

The appointment process also raises other questions. The Government have not yet made clear how it should properly be carried out and where formal responsibility for appointment lies. It will be essential to ensure that the appointment panel is demonstrably independent of Government. Under the ordinary procedures for public appointments, the panel would no doubt have been chaired by a senior official in the Department for Constitutional Affairs, but that would not be satisfactory in a context in which independence from Government is paramount for consumers up and down this land.

The concern about independence goes further than the appointment process and relates, among other things, to the powers exercised by the legal services board. I urge the Minister to think again as the Bill proceeds to Committee and to take seriously the amendment and the supporting argument that those powers should be exercised only when there is a significant rather than a marginal adverse impact on the regulatory objectives. That amendment referred to the important point that, as all hon. Members have said, the legal services board should have a light-touch role—a supervisory role that could be properly enshrined in the amendment.

The regulatory structure proposed in the Bill cannot work unless the presumption is that the approved regulators carry out their responsibilities diligently and competently in the public interest. They are entitled to expect a degree of discretion to act on their analysis of what is needed. The front-line regulators need to be distinct from the supervisory role of the legal services board. The board should not be able to exercise its powers simply because it would have reached a different decision on the matter concerned and has thus concluded that the regulatory objectives would be better served by a different decision. It is important that the board does not just second-guess the front-line regulators. It must see its role as an important supervisory one that should involve intervention only when it judges that there has been a significant adverse impact.

Further to the issue of independence, I look forward to the Minister’s opinion on whether the undertaking given to the other place about the power of the Lord Chancellor to increase the size of the board, which could affect the decisions that are made, could give an impression of manipulation. Will there be an undertaking that the powers to increase the size of the board will be achieved by affirmative resolution rather than negative resolution?

The hon. Gentleman raised that issue with the Under-Secretary, my hon. Friend the Member for Lewisham, East (Bridget Prentice), when she opened the debate. The Delegated Powers and Regulatory Reform Committee considered that a negative resolution was sufficient, and we are content to accept its advice.

I am not sure of the order of events relating to the Committee’s advice, but certainly in the other place a clear undertaking was given that the issue would be decided by affirmative resolution if necessary, and that matter will need to be progressed.

I agree with the concern expressed by the Government in their response to the Joint Committee. They said:

“The Legal Services Board should exercise its powers only where approved regulators are clearly failing”.

Unfortunately, that undertaking is not to be carried through, according to the Government’s latest indication. The impact provision needs a qualifying adjective: “clearly failing” were the Government’s words and that is what needs to go into the Bill. I urge the Government to review that aspect of it.

Independence covers other areas, including costs in relation to the legal services board. In making these comments, I am not just squeaking on behalf of members of the profession, who will have to pay more. I want to look beyond that to the important issue of independence. Is it reasonable to have no contribution from the Government in terms of the supervisory role of the legal services board? Its functions, which I hope we would all agree with, relate to public assurance. When hon. Members have expressed concerns about some activities of the legal profession, is it right that the legal profession should be depended on to be able to fund the supervisory role of the legal services board? Surely it is important to have the independence that is marked by not depending on the purse strings of the legal profession. Inevitably, the high initial costs—we heard the latest figures today and they may well rise—will fall on practitioners, but not only on them. They will not simply take a cut in their salaries. The costs will also fall inevitably on consumers. Consumers have an interest in whether the initial costs should be borne, at least in part, by the Government.

The Government say in response that those being regulated should bear the cost of regulation. Why, then, do they have a different approach to claims management and to the accountancy profession? It is important that while the legal profession recognises the full cost of the first tier of regulation, the supervisory tier has a distinct purpose. The supervisory tier of the legal services board guarantees for consumers as much as anyone else that there are ethically sound and competent lawyers who are independent of the state.

Let me use not my own words, but those of Sir David Clementi, whose work has been widely approved:

“The issue arises as to how the LSB should be paid for. At present a substantial part of the oversight function is paid for by the State: judicial oversight falls to the taxpayer, as does the cost of the oversight function carried out by Government departments. The arguments in favour of the Government contributing to the cost of oversight functions, beyond the fact that it does already, are…that the LSB, in pursuit of its objectives…such as ‘access to justice’, has a wider role in the public interest than the oversight of practitioners in the legal sector; and”—

this is a crucial argument by Sir David—

“that an element of payment by other than the bodies being regulated confirms that the regulator is independent of the regulatee.”

Sir David went on to raise the interesting precedent in the proposed funding of the Financial Reporting Council. Its funding is to be split, with two thirds falling to the private sector and one third to the Government. How the split should be made between the private sector and the Government for the LSB would need to be covered in statute and no doubt subject to parliamentary scrutiny. Sir David points to that example of the Government meeting one third of the cost of the Financial Reporting Council. The Government also meet the full cost of the supervisory tier of health care regulation—the Council for Healthcare Regulatory Excellence. However, they have not provided an adequate explanation of why they consider it appropriate to meet part of the cost of the supervisory tier of regulation in the accountancy field, but not in respect of legal services. In the case of the CHRE, the Government say that it is appropriate for them to pay because it is important to demonstrate that the organisation is independent of the medical profession. Why can that argument apply to the CHRE but not to the legal profession? The legal services board should be demonstrably independent of the Government and the legal profession. Why is the argument good for the medical profession but not for the legal profession? Are the Government proposing a new constitutional settlement in which they value the independence of the medical profession but not that of the legal profession?

It is important to ensure that the legal profession is not expected to finance the element of regulation that focuses primarily on the public interest. The legal services board will not only deal with the regulation of legal services but consider the interests of legal service providers and others entering the field. That has significant public policy implications. Is it right to expect the legal profession to finance public policy considerations, which the Government currently fund?

The Government propose to transfer costs, which they currently fund, to the legal profession for the legal services ombudsman. They propose that the legal profession should pay the costs of the office for legal complaints, part of those of the Office of the Legal Services Complaints Commissioner, which the Bill abolishes, and those of the legal services consultative panel. The Government could continue with their current spending commitments, thus ensuring the preservation of the important principle of independence.

A continuing contribution from the Government may act as an important brake on the legal services board expanding its activities unjustifiably. One would hope that there was no greater brake or check on that than the public purse. The board should not be able to increase its activities and simply pass on the costs to the legal profession unchecked. Many want the board to operate as a light-touch supervisory body, and costs need to be taken on board in that context and in that of the debate on independence.

I cannot finish without mentioning access to justice, in which I have been involved as a solicitor for 12 years. The Government wish to reverse an amendment, and that means removing the guarantee that access to justice will be taken into account in decisions on licensing prospective alternative business structures. Concern was expressed in the Joint Committee and evidence was taken from the Legal Aid Practitioners Group, which stated:

“Such changes are seen as a potentially catastrophic threat to the networks of high street solicitors, with the damage to access to justice for ordinary people that that would cause.”

That may be overstating the case, and it is important that access to justice works both ways.

I agree with the hon. Gentleman about access to justice. However, does he agree that any method that keeps inefficient and poor solicitors in business does nothing to provide access to quality justice, which many of his constituents and mine should expect?

I am grateful for that intervention. I am the first to admit that I have seen and been frustrated and appalled by the bad practices that occur. However, there are many good local high street practitioners who provide an invaluable service. The baby should not be thrown out with the bathwater that has been stained by solicitors who cause problems. In some circumstances, access to justice can be promoted by lower costs and providing services away from high street premises. One should not simply wed the argument about access to justice to the number of offices on a high street.

Nevertheless, the Carter reforms pose a threat. As we speak, good quality solicitors’ firms—not the bad ones—are going out of business. I can give the Under-Secretary a list of such colleagues and firms.

The hon. Gentleman knows very well that approximately 95 per cent. of all solicitors signed the unified contract again, thus showing their willingness and, indeed, anxiety to continue working on legal aid. I do not believe that he can be right.

The Under-Secretary knows about the great concern about signing that contract. The fact that 95 per cent. of solicitors signed it does not constitute a ringing endorsement of the Government’s approach to legal aid. One has to look beyond that at what is happening on the ground and the number of solicitors’ firms that are worried about the future, even before the Carter reforms have been effected.

Although we should not be wedded to the principle that access to justice depends on having high street firms everywhere, we should at least take account of it. The amendment proposed that due weight should be given to that and that, when appropriate, investigations should be conducted.

I welcome the Bill for many reasons but especially because it simplifies matters. The Joint Committee helpfully provided a diagram in colour of the current regulatory maze. It could well be a design that my children did during half term. Over the page, the maze is transformed by the proposed reforms. That is welcome to the profession and consumers. Above all, the Government must ensure that they do not challenge and undermine the profession’s independence.

I declare an interest, which is different from most of the others that have been declared. I have initiated regulatory action against 45 firms of solicitors. To date, none of them has won. My constituents have won in every resolved case without exception. The numbers that the Law Society records are a tremendous underestimate because, being a moderate man, I have been prepared, when my constituents agreed, to conciliate. Many cases did not therefore go through the regulatory process for complaints. The 45 firms have been described as a small number of solicitors, but those against which I have taken action had approximately 80 per cent. of the business—the claims and the amount of money that they were paid for handling them—in relation to the coal miners’ compensation scheme. Some battles have been small, marginal and easily won and others have been long and hard. Some are ongoing. However, 80 per cent. of the total is not a small matter.

Would my hon. Friend like to comment on a letter that I received this morning from Fiona Woolf, the president of the Law Society, following my Adjournment debate in Westminster Hall the week before last? The final paragraph states:

“However I am determined not to allow all solicitors involved in the miners’ compensation cases to be tarred with the same brush as a result of the mis-deeds of a minority.”

When I consider the solicitors in my area, one has to travel a significant distance to find a firm that I have been prepared to recommend to my constituents—or even to ask my constituents to contemplate—on the basis that it will not charge. The vast majority of complaints have come from my hon. Friend the Member for North Durham (Mr. Jones), my right hon. Friend the Member for Rother Valley (Mr. Barron) and me. What that says to me is not that our areas are particularly problem areas, but that the publicity in them has been such as to encourage people to come forward. What is really interesting is that not a single one of the 1,500 of my constituents who complained to me had any idea that they could take forward a complaint process.

Another interesting piece of research is in the Law Society’s records and is waiting to be published. I had to fight some battles to get these questions asked, but the Law Society puts five questions to new complainants and one of them is, “What experience have you had of the legal profession before?” I have seen the answers of my constituents and I can say that the majority, and particularly the elderly, have the perception that people only go to a solicitor if they have been in some problems with the police and require defending. That is their perception—not their experience—of the legal profession. The younger generation have a slightly different perspective because more of them have had experience—not necessarily a pleasant one—of family law courts, for example. As to challenging the high and mighty—whether it be the Government, firms of solicitors or whatever—my constituents do not have much experience of it.

It may not be a term that is fashionable in this House these days, but class is major issue when it comes to access to justice. I find that the upper classes always have a family solicitor and always have had one. The middle classes have a mixed experience, but they know what questions to ask. They sometimes get into difficulties, but they come forward and demand justice, and they have some idea that there may be a complaints procedure to go through. The working classes, from my experience, work on the basis that a solicitor is a man or a woman who can be trusted. It is a bit like with a police officer or perhaps an accountant in some vague notion, but a solicitor is someone who can be trusted.

It seems to me to be rather good for a profession to imbue in people the idea that that profession can be trusted precisely because it is a profession, which is exactly why I break from the general consensus that only my hon. Friend the Member for West Bromwich, West (Mr. Bailey) has really broken with so far. That is why I say that the cosiness with which both Houses seem to want to go forward does not satisfy me or, I believe, the interests of my constituents. Regulation needs to be highly robust precisely because of the important traditional reputation of the legal profession, as people see it and wish to see it. That must be the case.

I commend the recent changes in how the Law Society has handled complaints with its new set-up and new name—though that confuses me, never mind my constituents. What we see is a far more rigorous and robust system in place, which is exactly the direction of travel that is needed. My fear in respect of some of the amendments from the other place is that they appear to rein in that direction of travel.

I volunteered to sit on the Joint Committee on pre-legislative scrutiny, but I was not successful in my application through the usual channels! The places were filled by those with far more knowledge of the workings of the law than myself. That is a fundamental weakness in terms of our debate and the debate in the other place, but not because it invalidates the points that others make. It is not a little point, however, to suggest that if this were a debate on building the resource base and legal parameters of co-operatives, and if the pre-legislative scrutiny committee were made up of 18 out of 20 members who were active co-operators earning a living previously, currently or— perhaps if the electorate no longer wants them—in the future in that profession, one might perceive that a vested interest was involved.

There have been two fascinating historic developments tonight—the first I welcome, the second I merely observe. The one I welcome is the rolling back of some of the misconceptions about Nolan. Under Nolan, the perception held among the trade unions was that if someone was a trade unionist, it was not possible to speak on issues that were directly related to trade unions. One could not advocate or move amendments and all the rest of it. Yet what we have seen here is the ability of members of the various legal trade unions or legal executives, solicitors and barristers to do precisely that, as they did in the House of Lords. Doubtless they wanted to move and support amendments either in Committee or on the Floor of the House. I welcome that, because under the Nolan principles the issue always was transparency, not putting restrictions on what people can do. I have not sought to challenge anyone’s right to advocate on that basis and I will not do so as the Bill progresses.

I apologise for not hearing the beginning of the hon. Gentleman’s remarks, but I have just returned from a funeral in my constituency. I also declare my interest as a member of the Bar, though not a practising one. Perhaps the hon. Gentleman, who referred to the Law Society, would accept that exactly the same point about transparency has been met by the Bar Council in separating its regulatory role, by setting up a Bar standards board, from the work of the rest of the Bar Council in its representational, lobbying or, to use the hon. Gentleman’s phrase, trade union role. The Bar Council and the Law Society have taken account of his point about transparency. Does it not also follow that, if we are talking about independence, things would be so much more robust if the Lord Chief Justice had to approve appointments to the legal services board? Is that not a double lock on independence?

I thank the hon. Gentleman, who will be delighted to know that I am coming on to deal with barristers and the Bar Council later in my speech. To save him the trouble of having to read Hansard tomorrow, let me point out that his party’s Front Benchers were rather more circumspect about self-regulation by trade unions than he was.

I am disappointed that the hon. Gentleman did not make it to the Joint Committee, as I would have enjoyed being part of the same Committee and exchanging views with him. He talks a good game about being robust, but can he be more specific in explaining why the amendments from the other place are not robust? Does his direction of travel mean a greater role for the Government?

I intend to go through the amendments, not least because there is a whisper that the Opposition are not particularly perturbed about how many days are allocated to the Public Bill Committee. There seems to be a consensus on getting the Bill through quickly and smoothly. I offer to the usual channels my services on the Public Bill Committee. I understand that, even if I am not selected as a member of that Committee, I have the right to attend in order to ensure that my constituents’ perspective is heard. My services are available in the next few weeks, should they be required.

My other observation is of an even more historic nature: the final decline of “Liberal” within the Liberal Democrats. I always disagreed with the Liberals’ overemphasis on the individual as opposed to society. That was always my perspective on the history of the trade union movement’s shift from the Liberals to the Labour party. Finally, the last vestiges of “Liberal” in the merged party have been put to rest. Given the extraordinary position of the hon. Member for North Southwark and Bermondsey (Simon Hughes) on the question of the rights of the individual consumer, the only appropriate name change I can suggest for the party is to “Whigs”.

“Independent” cuts in different directions. As far as I am aware, there is currently an independent legal services ombudsman. I have here a report that appears to be written by the legal services ombudsman, “The special report by the legal services ombudsman for England and Wales on the miners’ cases”. I do not know whether the current post holder is a barrister or a solicitor, but that does not seem to me to be a relevant requirement for the supervisory role being fulfilled, despite the implicit suggestion that a legal professional is needed.

I shall have to study the Bill in greater detail, but a provision that the post should always be filled by a lay person who is not a legal professional might be a suitable way of ensuring the independence of the chair of the legal services board. Clearly, it is invidious for a legal professional to oversee his own profession without independent input. Many skills can be brought to bear, but having the view of a person from outside, who neither has, has had or intends in future to have a pecuniary interest in the profession being overseen, seems to be the essence of independence.

We can argue about the detail, and it is legitimate for hon. Members to put forward proposals, test the Government and go further in that regard. My requirement, however, is for an independence that is separate from the vested interests of the legal profession. I do not use the term “vested interests” in a derogatory way; I use it factually. It is perhaps no surprise that some of the improvements in the Law Society’s robustness in dealing with problems have been due to bringing in expertise from outside to take a fresh view. In saying that, I cast no aspersions on anyone in the legal profession, now or previously. It would be similarly absurd were we to appoint a Member of the House—or an ex-Member—to oversee our behaviour. Were that suggested, it would, I hope, be ridiculed in the House, and I would vote against it were it ever proposed. It would also rightly be ridiculed outside the House.

Does not the Bill provide that the first chairman of the legal services board will be a lay person? Does not that provide the robustness that the hon. Gentleman wants? The concern is that there should be a joint appointment process involving the Lord Chancellor and the Lord Chief Justice.

If it is good to have an independent person at the beginning, it is also good in the continuum. Let me answer the question that I posed to the hon. Gentleman, which he forgot to answer, about current appointments by the Lord Chancellor. I have not heard criticism of those appointments. In relation to the other side of Nolan, the robustness is therefore all to be seen. I am totally against the vested interests of the legal profession influencing such decisions. That would be an absurdity, and would let down the legal profession overall.

I have some other concerns about the Bill. On the maintenance and development of standards for the legal profession, does the Bill assist—and what does “assist” mean—or does it lead the way? The report took a lead—it could have gone further, and other reports might be needed, not just relating to miners, on the way in which the profession has handled itself. I would like to see a leadership role in maintaining and developing standards, not merely an assisting role.

The question of the legal services board’s powers is fundamental—what it can and cannot do should perhaps be itemised. The auditing of regulatory services is also fundamental. Progress must be made on what lies underneath the problems.

Does my hon. Friend also agree that one of the problems with the current system is the closed shop operated by the Law Society, for example, in relation to Watson Burton solicitors in Newcastle? They were subject to disciplinary procedures, but the judgment was kept secret from the public. Does he agree that maximum transparency on disciplinary actions and criticism of law firms should be at the heart of the Bill?

I agree totally with my hon. Friend. I would like the legal services board’s powers over the approved regulators laid down in statute, so that the general public are protected. On the question that he asks about confidentiality, and allowing misconduct cases to go forward and then hiding them away, the Watson Burton case came to light only by accident—a copy of the ruling came into my hands, and I felt it appropriate to give him a copy too, as he had far more such cases in his area. Through that, the issue got into the wider arena, so people could see what was happening.

How many more slaps on the wrist, or worse, have there been against solicitors? The public have a right to know, in order to make an informed choice about whom to go to, whom not to go to, and whether a potential claim exists in relation to mismanagement. The Accident Group case, for example, involved enormous mismanagement. The public and legislators have a right to know, and that needs to be built in to ensure full openness. If solicitors have behaved badly, and decisions are made against them through regulation by their profession, those decisions should be made available to the general public, not kept quiet.

In a similar vein, there should be the power to enforce decisions. There should be an instruction to pay back—perhaps to pay back a dying miner, and perhaps the three dying miners in my constituency who died during the course of their claim. There was also the case of the miner’s widow who wanted the money for her husband’s headstone and who died in the process of winning justice, after the ruling against the solicitor who had refused to give her the money to pay for her headstone and that of her husband.

What disrepute does that bring the profession into? Could a profession get any lower than that? When people say that there should not be robust regulation of the profession, I can provide case after case to show that there should be. I could spend the rest of the evening—although I will not, Mr. Deputy Speaker, you will be glad to know—tomorrow and the day after illustrating the need for robust regulation with individual cases just of my constituents. I have astonishing cases of people fighting for basic justice, in which the wrong done to them is obvious to anyone looking in from outside. They have never dealt with the legal profession before and need the money, although not as a good-will gesture of winning a case and thereby winning justice.

I have in mind the miner who is dying from emphysema and who needs the money for breathing equipment; those miners who go to solicitors who give them all the pat about how they should not have it back and, when they challenge the senior partner directly, face to face, still do not get the money paid back; and those who have been waiting three years—three years!—for justice after adjudication because the cases have not gone in front of the solicitors disciplinary tribunal. I have scores of those cases to deal with and many more in the pipeline. They are what the Bill needs to be about.

The other place has watered the Bill down, but the other place has vested interests—declared vested interests, according to Hansard—and it should not have watered it down, but beefed it up. Cases from my area are not reaching the Bar Council because I have a day job to do as well, but I can assure the House that plenty are in the pipeline. Perhaps I will push some of them slightly higher up the order following this debate. I have tonnes and tonnes more cases.

Let me illustrate those cases with an example that shows some of the weaknesses, and I hope that the Government will be wary of expanding the market too quickly—making it too open—without giving thought to the consequences. The example is the conditional fee agreements and the hearing loss cases, involving miners, textile workers, steel workers and engineering workers, and if it is happening in my area, it is happening across the country. There are two forms of funding for that, which is why we have a case against them. Often, a claims handler grabs hold of the case and sells it on to a solicitor, who sells it on to another solicitor, who gives it to a legal executive, who commissions a private health company to get in a GP, from which the solicitors’ firm gets a bit of commission. They take a loan out and get commission from the loan for insurance. The claim goes to a barrister, who writes up the facts, which I could have written up in five minutes—I do not exaggerate—and then charges for writing an opinion, which becomes the case taken forward.

There is something very badly wrong if my constituent wins a case for industrial deafness but finds that the amount of money going to that plethora of vested interests is four, five, six, seven or eight—sometimes even 10—times what he is getting. That may well be something for the Bar Council to consider, but I want one body where I can take the whole job lot and say, “You sort it out,” because I’ve had to fight each case individually. I spend more money on filing cabinets—that is true—than any other piece of office equipment to stick all the files in. There are hundreds of pages in each one, because legal defences arrive, written by counsel on behalf of a solicitor, trying to stop my constituents gaining access to justice—in other words, prolonging the misery when the solicitors know that they are wrong.

Those are the simple cases, not the complex ones that will take even longer. Where is the justice in that? I allege that tens of thousands of industrial deafness cases and tens of thousands of cases that have already been compensated for industrial deafness—in other words, people who are partially or largely deaf—have solely been handled over the telephone. Where is the justice in accessing justice for those people? There has been no face-to-face meeting, and key decisions have been made. That is a scandal that all the regulatory bodies, from the Bar Council through to the Law Society, should be dealing with. The whole profession has operated on the basis that that is perfectly acceptable because the people live in rural mining areas and are not always nearby. Therefore they can grab the case and deal with them over the telephone.

Strangely, a 91-year-old with a claim for industrial deafness might not always be able to hear. If I can manage to see my constituents face to face, why cannot the solicitor, who is being paid to represent them, do so? If they do not—this is endemic in the profession—who is going to do something about it? That needs to be part of the regulatory role. The LSB should be about ensuring that we have best practice. It comes as a shock to solicitors in other parts of the country who are used to dealing with more matter-of-course matters—although not more mundane matters—to learn about such scams and scandals, and it is a shock when they see the profit involved. Who are the highest paid solicitors? The legal profession, through its own journals, now advertises the fact that phenomenal amounts of money are being made out of those practices. Their powers are not a small side issue.

I have come across solicitors’ firms that refuse to release the files of dying miners who want me to go through the files to see whether the full claim was put in. The legal service makes the claim, including additional things such as not being able to wash up or having to have someone come in to clean or cook. I find that the claims are often not done in full. Why? Incompetence. The solicitor has ticked a few boxes and sent the claim in but has not done the full job. The only way we know that is by looking at the file, and yet despite the fact that we have won more than £20,000 for several people by challenging those claims—although perhaps that is why—firms still refuse to hand over the files. That is another role for the legal services board: to get the profession’s house in order.

Has my hon. Friend also come across another problem whereby constituents legally transfer their cases from unscrupulous firms to others so that they can be dealt with properly or reviewed, only to find that the original solicitors either refuse or delay the transfer for many months, or possibly years? The Law Society has little control over forcing those solicitors to hand them over.

Those solicitors think that some of the claims will not be worth a great deal and can be pushed to the back of the queue. I have cases, as I am sure my hon. Friend has, in which people have been waiting six or seven years for progress to be made. They ask to be transferred to a solicitor who might do something about it and are refused. Again, it is extraordinary, but we cannot think that it is a unique Bassetlaw, north Nottinghamshire experience, because the firms are dotted around the country, from Brighton up to the north-east. My hon. Friend the Member for North Durham, who represents an entirely different part of the country, has found exactly the same. What a surprise; what a coincidence. This is a national issue.

I am talking about people who are not used to dealing with the legal profession—about vulnerable clients. Access to justice, and the expansion of justice, should be aimed at such people, whether it involves large firms of solicitors or small local firms. I have no strong view in either direction, but if we are to expand the market, I want access to justice to mean access for those people and many more. I want access to justice for people who have been done over in a range of ways, not just through industrial injuries: people who feel that they cannot proceed further because solicitors and the legal profession are not for them—that they cannot afford such advocacy, and that it is for the middle class rather than the working class.

Those people should not have to come to me to challenge insurance companies that refuse to pay out, or house builders when houses fall down, or conveyancers when enormous subsidence holes suddenly appear in the middle of the garden and under the foundations. They should feel confident about going to solicitors to obtain legal remedy, but they do not feel comfortable about it. This debate is about expanding the market, and there is a market full of people with grievances who ought to be making a sensible, coherent, rational decision to use a solicitor, be it a large multinational, a one-man band or a small family company in a town.

As for the location of the Office for Legal Complaints, there has been argument about whether it should be so near to Leamington Spa. I have no strong objection, but I do think it would be unwise to limit a body to one base by statute. If the miners’ scam were repeated, a base in Sheffield or Newcastle would make sense, pragmatically and in terms of cost. Hands should not be tied for the sake of ensuring that the organisation is up and running as soon as possible.

I hope that the Office of the Legal Services Ombudsman will not suddenly disappear in the next few weeks or months, because its supervisory role has proved extremely valuable in the miners’ cases. Both its remit and its role need to be maintained: it should be both an overseeing body and what some might term a court of appeal. It should be a further resort if regulation and the complaints procedure have not worked, but it should also ensure that there is forward looking as well as retrospectivity when it comes to the regulatory regime.

Enhanced powers are essential. Of the top three powers that are needed, the most important is a power to deal with the inability to keep confidential misconduct action taken against solicitors. Next on the list are explicit powers to enforce decisions, including those relating to the payment of compensation awards. Finally, the £20,000 compensation level is much too low. We also need to ensure that the Solicitors Disciplinary Tribunal is made to work, so that solicitors cannot play games of cat and mouse with people who are literally dying while they wait for justice.

I begin by declaring an interest. I am a non-practising solicitor.

The principles behind the Bill should be applauded. There is widespread recognition, both in the legal profession and among consumer groups, that the provision of legal services is in need of reform and modernisation. Sir David Clementi’s report highlighted several areas that are in urgent need of reform, and it is right for the Bill to take its suggestions on board.

Few would argue that increasing choice and trying to ensure more value for money for consumers of legal services are not desirable aims, or that when bad service is received the complaints process should not be more accountable, transparent and independent than it is now. The move away from allowing the same bodies to carry out both representation and regulation in the industry is also long overdue. The changes in the Bill will help to strengthen the reputation of an already excellent legal system. However, although there is room for improvement, let us not forget that the British legal system is believed by many to be the finest in the world. As we introduce these changes, it is vital that we do not, by accident or design, put that world-renowned reputation at risk.

The Bill is, on the whole, in a good state, having been improved considerably in the other place. The amendments made in the House of Lords are not wrecking amendments. They do not seek to change the Bill beyond recognition, and they do not seek to undermine its underlying principles. On the contrary, they seek to improve and clarify specific points, to elucidate where there is uncertainty, and in particular to ensure that the regulation of legal services not only remains but is seen to be independent from political interference. It is clear that the Government seek to overturn at least some of those amendments. That is a short-sighted approach, and I urge the Minister and other Labour Members to think again.

The Government are wrong to insist that the Lord Chancellor alone should appoint all members of the legal services board—that is, all members except the chief executive, who will be appointed by the board in any event. I am afraid I did not find the Minister very convincing when she argued that it was right for the Lord Chancellor to consult other bodies. If that is right, what is wrong with including it in the Bill?

I was referring to the Minister’s opening comments. I shall deal with concurrence later, but I recall the Minister saying at the beginning of her speech that the Opposition should not be too worried about the fact that the Lord Chief Justice’s concurrence would not be necessary, because before making any appointments the Lord Chancellor would take consultations from other sources. If that is the case, what is wrong with stating in the Bill that there will be such consultations, and also that there will be concurrence from the Lord Chief Justice?

The legal services ombudsman—who, as was demonstrated by my hon. Friend the Member for Bassetlaw (John Mann), has a great deal of power—is currently appointed by the Lord Chancellor, with no recourse to anyone else. What is the difference between that and what is proposed in the Bill?

The hon. Gentleman has raised that question on a number of occasions. He may not have entirely understood this, but the Bill that we want is different from the Bill that we have at present. I am not trying to perpetuate the present system; I am arguing in favour of amending it.

Is the hon. Gentleman saying that the current arrangement—under which the Lord Chancellor appoints the legal services ombudsman, as he has done for quite a few years—is wrong?

I am here to discuss the Legal Services Bill, which talks of the Lord Chancellor appointing the legal services board. If the hon. Gentleman wishes to make a constructive comment on that, rather than repeating the same point over and over again, I am sure that the House will be appreciative.

The independence of the legal system is a matter of serious concern. If the Lord Chancellor alone appoints the board, many will see that as political interference in the regulation of our legal services. That impacts on the independence of the profession and, from an international perspective, it seriously undermines our reputation as having truly independent legal services. To put matters into perspective, the overseas market for legal services contributes more than £2 billion a year to United Kingdom exports. That is a huge sum and we will put it at risk if the rest of the world feels that the British legal system is no longer independent. Moreover, in an increasingly global market, where there are multi-jurisdictional transactions, UK law is often chosen as the preferred legal basis. That, too, will be threatened if there is a question mark over the independence of our legal system.

Is not my hon. Friend’s important point reinforced by the precedent set when Hong Kong was returned to China? The then Government took great pains to ensure that there were significant safeguards to protect the independence of the existing Hong Kong judicial system, recognising that the integrity and international reputation of the Hong Kong judicial and legal system was important for Hong Kong’s future economic viability. Does not the same consideration apply here? It is important that we do not risk having even the perception among the many international organisations that choose to have their contracts dealt with under English law, that there is political interference.

I agree and I am grateful to my hon. Friend for clarifying the point and for making that intervention.

Why has it not happened already? On the hon. Gentleman’s logic, we have political interference with the “political”—his word— appointment of the legal services ombudsman.

I am arguing about the Legal Services Bill. If the hon. Gentleman wishes to perpetuate the system and to argue that we should have a system that continues with political appointments, that is his call. The House took on board all that he had to say in his contribution, which lasted some 40 minutes. I sympathise with the dilemma of many of his constituents, but it would be more useful if he were to make constructive comments as to how the Bill could be improved or be beneficial to his constituents, rather than giving a history lesson about the legal system that the Bill seeks to modernise.

Are the hon. Gentleman and the hon. Member for Bromley and Chislehurst (Robert Neill) both saying that the Bill should be amended to take into account what, for example, Europe and others feel should be the way in which we regulate our services? If that is the case, I am sure that the former Member for Bromley and Chislehurst will be spinning in his grave.

The hon. Gentleman is not following what we are saying.

It is clear that Britain’s legal services should not only be independent of politics but be seen to be independent. To that end, the noble Lords in another place amended the Bill so that the Lord Chief Justice also has a role in the appointment of the board. Specifically, as has been articulated earlier, the Lord Chancellor's appointments should have the concurrence of the Lord Chief Justice. That is not a wrecking amendment. It is anything but. As well as maintaining the independence of the legal system, the amendment reassures the overseas market that the board appointments are not political. Therefore, the amendment helps to safeguard that huge market of billions of pounds from which the UK economy benefits—nothing more, nothing less.

If the Lord Chief Justice alone were to make the appointments, consumers would rightly feel that the legal services were being looked after by their own. In like manner, appointments by the Lord Chancellor alone have an air of political involvement.

I refer the hon. Gentleman to my earlier comments. I am here to debate the Legal Services Bill. He may like to take that on board, as he has regularly interrupted many hon. Members who have spoken.

What the Lords amendment does, by asking that the board appointments have the concurrence of the Lord Chief Justice, is to reach a fair compromise. It tackles the issue of overt political control, but still allows the Lord Chancellor to take the lead in the process.

There is a contradiction in the Government's insistence that the Lord Chancellor should have an unchallenged right to make the appointments. The very first clause of the Bill rightly includes among the regulatory objectives the need for the independence of the legal profession. It is to be applauded that such a sound and clear statement is made so prominently. Why, then, risk undermining that welcome statement by allowing the Lord Chancellor unfettered powers of appointment to the board? Such an approach is in danger of sending out the opposite signal. I urge the Government to retain that sensible amendment.

I now turn to the provisions that allow for alternative business structures. ABSs will allow more flexibility in the market and that will be good for both consumers and the profession itself. I certainly know of many solicitors firms where the finance director is held in high regard by the firm, but he is not made a partner because he is an accountant rather than a solicitor. Allowing for ABSs will, I am sure, enable many such finance directors to become partners, rather than simply be employees of the firm. However, it is important to ensure that any changes made in trying to improve the system do not lead to unintended negative consequences. The debate on ABSs has been going on for years and as firms and practices from a variety of professions seek to cut their overheads, it is only natural that they should consider having multi-disciplinary practices. That is fine in principle, but with it will come new challenges, from which we must not shirk, but which must be closely monitored, in the public interest as well as for the benefit of the consumer.

For example, if there is a high street solicitor who merges with a high street surveyor, a consumer who requires the services of both professions should be free to go to two separate firms if he so wishes, rather than find himself under pressure to use only one firm. Moreover, with a multi-disciplinary practice, there should be vigilance to ensure that no unnecessary burdens are imposed upon a consumer if he wishes to bring a complaint against a firm where he has used the services of several professions within the same firm. For example, if a consumer has used the services of a lawyer, a surveyor and an accountant in the same firm and something goes wrong, the consumer should not suffer if the professionals decide to engage in a buck-passing exercise between themselves.

To conclude, although there are some areas of concern, I support the main thrust of the Bill. It is right that our legal system should modernise, be more transparent and be more flexible—fit for the 21st century global market. The amendments to which I referred earlier do not compromise the principles behind the Bill. Indeed they serve to strengthen the legislation. I hope that the Government will accept them. By doing so, they will not only protect the consumer and the public interest, but safeguard our international standing in the legal world.

May I start by saying that I am not a solicitor or legally qualified, but I have a vested interest to declare: for the six years that I have been a Member of the House, along with my hon. Friend the Member for Bassetlaw (John Mann), I have been defending and trying to get justice for hundreds of poor and weak constituents who have been treated appallingly by the legal profession and who need the measures that are in this Bill to protect them from some of the sharp practices to which he referred.

I will come on to the Law Society in a minute. I congratulate it on cleaning up its act in terms of the legal complaints service. It has improved and is doing a good job in trying to get justice for many of my constituents, but there is still a sense of denial there. I will refer later to the letter from Fiona Woolf and to the view that a minority of solicitors are involved. It is interesting that the majority of hon. Members who have spoken have direct vested interests, being either solicitors or barristers, or connected in some way with the legal profession. The point has been made that a minority of solicitors are involved. I am sorry, but I do not agree. My hon. Friend the Member for Bassetlaw has mentioned the companies in his area that have been involved, and I do not think that there is a single solicitors’ firm in the north-east which has not taken part in the feeding frenzy in respect of miners’ compensation.

I was first alerted to this issue almost five years ago, when an 86-year-old woman came to see me. She walked into my surgery on crutches. She was a miner’s widow; unfortunately, her husband had died some five years earlier. She had been to a firm of solicitors in Newcastle called Mark Gilbert Morse, which had touted for business by putting advertisements in newspapers and targeting vulnerable people such as my constituent. She had been awarded a claim for the injustice that her husband had suffered, and Mark Gilbert Morse had taken 25 per cent. of that compensation—some £8,000—even though every single penny of its costs was being paid for by the Government.

Yes—and very generously in some cases.

As a result, there was an avalanche of complaints not only about Mark Gilbert Morse but other firms as well, which were double-charging and therefore taking from people’s compensation. The highest proportion was 25 per cent. and the lowest was 3 per cent. Those firms were already being paid for all their costs. A succession of firms were doing that. As a Conservative Front Bencher mentioned, Thompsons Solicitors was in league with the Durham National Union of Mineworkers.

As well as the scandal of double-charging, there is the scandal that poor advice was given to our constituents. There was poor advice not only in terms of how solicitor firms were dealing with their cases, but some companies were taking on claims and sausage-machining them, which is my term for doing nothing at all and not contacting their clients for long periods— for many years in some instances—while as the cases plodded through the system they were taking their cut. The greedy individuals involved could not be content with the generous fees paid by the Department of Trade and Industry, but they had also to raid the victims’ compensation.

Somebody asked me why I keep going on about this matter. I do so because I feel very angry about how the legal profession has dealt with many of my constituents. I challenge anybody—such as Fiona Woolf, president of the Law Society—to come and meet my constituents, and those of my hon. Friend the Member for Bassetlaw, who have put their faith in lawyers and have been cheated. I know that that is a strong word, but it is the only word that can be used to describe what has happened.

I congratulate the Government on introducing the Bill, and also on having brought forward the Compensation Act 2006, which regulates a different area—that of claims handling. Again however, the claims handling industry could not have exploited many thousands of people without the collusion of the lawyers involved. Let me give an example to illustrate my point. People ask whether the companies I mention are merely back-street companies. No, they are not. They are companies such as Watson Burton, a solicitor firm in Newcastle. It sells itself as a big commercial law firm; it has a big banner at Newcastle airport. It went in league with a claims handling company called P and R Associates, which did nothing at all apart from getting people to fill in an application and then passing it on to Watson Burton. Watson Burton then deducted £325,000 from victims’ compensation and passed it to P and R Associates. I have challenged Watson Burton to explain the contractual relationship between the two companies, and it did not do so. Those companies should pay back that money, but they will not because they are adamant that somehow they were contractually obliged to do what they did. However, what they did not do was tell their clients that they did not have to go through middlemen in the first place.

On the subject of Watson Burton, my hon. Friend and I have both got money back for those of our constituents whose cases we know about. Does he not think that there should be powers in the Bill to enable the regulator to force companies such as Watson Burton to pay back everybody?

I am about to get on to that important point. I am pleased that the Minister has stated—not only in her opening remarks today, but in other comments—that the consumer must be at the heart of the Bill. I will not accept any crocodile tears from members of the legal profession saying that it will compromise their independence; I will address that point shortly. It must be recognised that most people have very little or nothing at all to do with the legal profession. As my hon. Friend the Member for Bassetlaw has said, the only time that most clients involved in miners’ compensation cases have contact with a solicitor is if they have done something wrong. Many of the clients are elderly and they trust the solicitor. People have said to me, “But I’ve signed that piece of paper. Doesn’t that mean I have to pay the money?” I then have to explain that their solicitor should have told them that they should not pay it. That shows how those people have been misled.

An education exercise needs to take place. People should be told what different law firms do and what their rights are. The legal services board should undertake that as part of its remit; it should educate the public about the need to ask questions, and what those questions should be. Many constituents of mine have gone along to firms of solicitors and have not questioned what the solicitors have said.

The key point is that solicitors should act in the best interests of their clients, but it is clear that they are not doing so. I mentioned a good example of that in my Adjournment debate just over a week ago: the Durham NUM and Thompsons Solicitors. Thompsons is due a lot of credit for other work that it has done, but its relationship with Durham NUM has been nothing short of a scandal. Their roles have been mixed up. People go to the Durham NUM and are referred on to Thompsons Solicitors. Thompsons take the case, and a fee of 7.5 per cent. is paid back to the Durham NUM. We ask people why they are paying that 7.5 per cent. We also ask Thompsons why it has not advised its clients that they do not need to pay the money. It replies, “Because we’re acting on behalf of the NUM.” Thompsons should be acting in the best interests of its clients, and in these cases it is not doing so.

The legal services complaints service is doing a good job, but have any solicitors been struck off or been heavily censured? No, they have not, because the current system of self-regulation does not work. My hon. Friend the Member for West Bromwich, West (Mr. Bailey) rightly referred to it as the last vestige of the closed shop. It is interesting that although the Conservatives attacked the closed shop throughout the 1980s—rightly, some would say—they did nothing about this closed shop. Clearly, self-regulation has not worked.

How should we move forward? We need a simple system—a one-stop shop where people who have complaints about the legal profession can go. That one body should be the office for legal complaints. However, it must be independent; it must not have any connection with the legal profession. I have taken account of all tonight’s crocodile tears about political interference, but the Law Society and the professional legal services have brought this on themselves by the cavalier way in which they have dealt with my constituents, and those of many other Members.

During the speech of the hon. Member for North Southwark and Bermondsey (Simon Hughes), I thought at one point that he was going to start crying about the wonderful job that he thought the House of Lords had done on the Bill. I am sorry, but I have to say that this is what the House of Lords has done to the Bill: the vested interests have gutted it; that is clear from the Hansard record. Apart from a few exceptions, there was little resistance to the idea that it is a great attack on the legal profession. I congratulate Lord Bach—who I understand is a barrister by profession—alone. He said clearly that

“Critics should think carefully before attacking the Bill on the grounds that it threatens or removes the independence of the English legal system. In my view, it does no such thing.”—[Official Report, House of Lords, 6 December 2006; Vol. 687, c. 1177.]

The only other person in the other place who comes out of this very well is Lord Whitty, who is chairman of the National Consumer Council. He said something with which I agree totally—that

“self-regulation does not work for the consumer”

and that

“the consumer has the right to demand that Government intervene”.—[Official Report, House of Lords, 6 December 2006; Vol. 687, c. 1192.]

That is where we are. The Government are intervening, and although the legal profession might not like it, it has, as I have said, brought this upon itself. We have a duty to protect our weak and vulnerable citizens. That is one of the reasons why I went into politics, and one reason why I became a trade union officer was to protect the vulnerable at work.

We have also witnessed the use of a back-door argument. It has been suggested that the Bar should somehow be exempt, or be left to self-regulate. The issue is whether the Bar should be brought under the remit of the Bill, and all the arguments that we have heard today from barristers in this place were rehashes of those used in the other place. I do not agree with the idea of taking the Bar out of the system. We need a system that enables people to know where to go to make a complaint—be it about a solicitor or a barrister—and it should be dealt with, and seen to be dealt with, independently of the legal profession. A few weeks ago I had to deal with a complaint to the legal services body which, unusually, was about not miners’ compensation but a divorce case. It was clear that the lady in question had been given very bad service by the local firm of solicitors, who had employed barristers who did not need to be employed. She wanted one point of contact, which is an important issue. Trying to separate the points of contact into two is not acceptable.

I am not unsympathetic to all the points that the hon. Gentleman is making, but for the sake of fairness, will he concede that part 6 of the Bill does not seek to take the Bar out of the system, but to give some flexibility to the office for legal complaints? If the OCL is satisfied that the Bar, which attracts only some 3 per cent. of complaints, has a robust system of its own that works satisfactorily—both the Government and the legal services ombudsman, in whom the hon. Gentleman sets considerable store, repeatedly say that it does—dealing with such complaints could be delegated to those approved regulators. That is not exempting the Bar from the system, but trying to make it work sensibly.

That is a good try, and if I were attempting to protect my own profession, I too would probably try any last-ditch method that I could find. The situation was summed up well in the Lords debate by Lord Whitty, when he disagreed with his noble Friend Lord Borrie. On delegation back to the Bar Council, he said:

“Even though I recognise that its past performance has been somewhat better than that of the Law Society, I think that we are then back into the judge and jury territory.”—[Official Report, House of Lords, 6 December 2006; Vol. 687, c. 1193.]

That is the point. The Bar cannot act as judge and jury, just as the Law Society has not managed that to date, and the Bill will help to increase the standing of the complaints that go before it. I do not agree with the argument of the hon. Member for Bromley and Chislehurst (Robert Neill).

A lot of rubbish has been spoken today about how the Bill is somehow an attack on the independence of the law. That is absolute nonsense. Currently, the legal services ombudsman is appointed directly by the Lord Chancellor, with no remit from any outside body. The hon. Member for North-West Cambridgeshire (Mr. Vara) dismissed that as irrelevant, but it is very relevant. As I said earlier, it is important that the proposed board be seen to be totally independent from any form of legal intervention. I support totally the Nolan commission recommendations in this regard, and I agree with Conservative Front Benchers that the issue should be depoliticised. However, if the board is to have credibility, it should not be tainted in any way by the legal profession.

For the record, I am not saying that the appointment of the legal ombudsman is an irrelevance. I am simply saying that for the purposes of this debate, I did not find his arguments particularly relevant.

The hon. Gentleman said in his earlier contribution that the proposal was somehow an attack on the fundamental independence of the law, and he refused to answer the question that my hon. Friend the Member for Bassetlaw and I put to him in that regard. The current body has a lot more powers—to fine, for example—than the legal services board will have, and the ombudsman is appointed by the Lord Chancellor, not the Lord Chief Justice. I am clear that the board must be independent, and be seen to be independent, if it is to have the credibility and teeth that it needs.

I would like to make one or two other points about the detail of the Bill. I want the legal services board to have more teeth, in terms of the fines that it can impose on solicitors firms. The figure proposed in the Bill is £20,000, but that is nowhere near enough, and I shall give an example that shows why. A woman, whom I shall call Mrs. X, from Stanley in my constituency, came to see me before Christmas. She had the misfortune of having gone to the law firm Mark Gilbert Morse. She was pursuing a miners’ compensation case on behalf of her husband, and Mark Gilbert Morse was given a settlement figure of £42,000 for that case by the Department of Trade and Industry. The solicitors rejected it on her behalf, without even telling her. Lo and behold, some six months later they came back with an offer of some £23,000.

Under the Bill, the maximum compensation figure for that case would be £20,000. Here, I give credit to the Legal Complaints Service. Thanks to the shame that was felt, and how appalled the service was by this case, Mark Gilbert Morse paid the £42,000 that had originally been offered. If the new body is to have teeth, as my hon. Friend the Member for Bassetlaw said, it must be able to hit solicitors where it hurts—in the monetary award.

Another issue that I am concerned about, and which needs to be examined, is the idea of forcing claimants to pay costs for frivolous and vexatious cases. This is a complete red herring, and I resist at all points the idea that anyone should be discouraged from bringing a case forward for fear of a compensation award against them. The hon. Member for North Southwark and Bermondsey said that that would not happen. Unfortunately, it does happen, and people will not come forward if they feel that costs will be awarded against them. In my experience, even the most brazen solicitors who have been taking money left, right and centre will use every means possible to frighten victims into withdrawing their complaint. To judge by my experience to date of the Legal Complaints Service, any complaint that is clearly frivolous and vexatious never gets off the ground. It is for the service to fillet out cases in which there is no case to answer, and that should not involve a threat against the individuals involved, because that would act as a disincentive to their coming forward.

The miners’ compensation cases show that, as even the Legal Complaints Service recognises, we have merely touched the tip of the iceberg of this issue. Many people simply do not know that they have a complaint. They are in awe of solicitors. They sign a piece of paper, and having done so, they think that they are legally obliged to pay the amount in question. As a result, they are not coming forward with complaints.

Does my hon. Friend not find that, invariably, the solicitors write to the individual saying that they have to pay because they have signed the paper—as if that were a legal document in itself?

They certainly do. Watson Burton’s defence in Newcastle’s The Journal last week was that it had a “legal obligation” to pass the money over to the other side—P and R Associates. That is part of my earlier point about education: we need education on this subject.

The legal services board must be seen to be independent, and it must be independent from the legal profession. I also welcome the creation of the consumer panel to ensure that the administration of consumer services is properly conducted. It is important that the Minister—in her opening remarks today and in her continuing rhetoric—says that the consumer must be at the heart of the matter. If that upsets the legal profession—tough. From my experience of the way in which it has handled many cases in my constituency, frankly, it does not give a damn. It has created much hardship and heartache for many individuals.

I turn to one final issue: the alternative business model. I welcome it, because I recognise that there are other ways of delivering legal services. However, although I, like my hon. Friend, will not oppose the provision, I think that we should tread very carefully to ensure that we do not maintain the vested interests of the legal profession, about which we have heard tonight. If high street solicitors go out of business—good. In my experience, they provide a second-rate and substandard service, and do not do what the hon. Member for North Southwark and Bermondsey says they do, and refer cases that they are not capable of dealing with. They do not do that; they take those cases on, give the impression that they know what they are talking about, and give people a substandard service.

However, we need to tread very carefully. We do not want the same situation as we had with the growth of claims handlers, with middlemen and spivs setting up organisations that claim to be solicitors when they clearly are not. I emphasise that if we have alternative business models, the individual consumer must be clear about who is legally qualified to give advice. In the cases that my hon. Friend and I have dealt with, claims-handling companies have knocked on people’s doors and rung people up. If we ask people, “Are they solicitors?” they say, “Yes, they are.” But if we look at their literature, does it say that they are solicitors? No, it does not. They use language that suggests that they could be legally qualified, when most of them are not. In the worst case that I have come across, their previous company sold double glazing.

With that caveat, if the alternative business model is properly set up, with organisations that my hon. Friend the Member for West Bromwich, West mentioned, such as the Co-op and others, it could provide added service to the consumer. However, we must tread carefully to ensure that it is clear to the consumer who is, and who is not, legally qualified to give advice.

I shall finish where I started, and say that I welcome the Bill. It is a great move forward in trying to give legal protection to some of the most vulnerable people in our society. The Law Society has blown hot and cold on the issue, however. I read the Hansard report of the evidence from the other place, in which Fiona Wolfe said that the Bill had been much improved, but it has not; it has been filleted. This is where the Law Society needs to come clean and say that the miners’ compensation scheme has clearly demonstrated that huge numbers of its members have taken advantage of the poor and weak in society—but in many cases, the Law Society has stood by and done very little.

As my hon. Friend the Member for Bassetlaw has argued, the Law Society should argue for more robust controls over those rogue solicitors—the rotten apples in the barrel. Unfortunately, there are far too many, and I do not accept Fiona Wolfe’s point that only a minority have become involved in the feeding frenzy. If the society did that, it would be doing a service to the consumer, and to its genuine members. Its attempts to weaken the Bill by lobbying in the other place for its vested interests has not brought it any credit.

Like my hon. Friend, I offer my services in Committee. I do not know whether I shall be chosen, but I would certainly enjoy some of the exchanges. I would also table some amendments that would not only improve the Bill, but make it more effective at protecting the weak and vulnerable who need to be protected from certain sections of the legal profession.

I start by declaring my interest. I am a non-practising solicitor, although a Scottish solicitor, and a member of the Law Society of Scotland. It is many years since I have set foot in a court, and I hope that it will be many years before I have to do so again. Although the Bill is primarily concerned with England and Wales, two matters impact on Scotland, and it is to those that I confine my brief contribution. I shall not touch on the regulation of solicitors, because we have a separate system in Scotland, and I gently remind the hon. Member for North-West Cambridgeshire (Mr. Vara), who talked about a UK legal system, that there is no such thing. There are three separate legal systems within the United Kingdom.

The first point of concern is the proposals in part 5 to allow for the creation of alternative business structures. Much has been said about alternative ways of delivering legal services, but in effect, the Bill will allow multi-disciplinary partnerships to be formed, as the hon. Gentleman said. There has been a strong debate about that in Scotland, and from what I understand, in England for many years, and although the Bill affects only England and Wales, there is great concern in Scotland and other jurisdictions about the way in which the territoriality will be contained, because such entities are not allowed under the law of Scotland. There is a fair amount of cross-border activity between law firms and tie-ups between Scottish and English law firms. Some Scottish firms operate in England and some English firms operate in Scotland. Indeed, I am told that there are about 600 Scots lawyers working in London alone, many of them for the type of firms that are likely to be attracted to the alternative business structures. That does not include retired solicitors acting as MPs.

There is nothing unusual about that situation, as many of the large commercial firms, especially in London, operate in many other jurisdictions. Liberalisation of services has been touched upon, and it is one of the sticking points in the current Doha discussions. Those Members who sit on the Trade and Industry Committee will recall receiving evidence on the issue from one large firm of commercial solicitors in London about our reports on trade with India and with the Mercosur nations of South America. It is conceivable therefore that such a practice established in London could in fact operate in several different jurisdictions.

I am neutral on the question of multidisciplinary practices. The Front-Bench spokesmen from the Conservative and Liberal parties both rightly raised concerns about their local effect, but my concerns are about their cross-border implications. The Law Society of Scotland has raised concerns that the licensing provisions in clauses 71 to 111 and the relevant schedules are only framework provisions and that they lack detail.

There are concerns about the way in which the new business structures will be licensed, and in particular about the way in which they comply with the law, professional rules and statutory and non-statutory provisions that apply outside England and Wales. That is important, because many people working in those large firms are regulated by others. They could, for example, be subject even within the UK to the professional regulation of the Faculty of Advocates, the General Council of the Bar of Northern Ireland, the Law Society of Scotland or the Law Society of Northern Ireland. It is important that any non-authorised person who manages such a firm does not act in such a way as to cause professional difficulty to such employees. That detail—the way in which the measures will apply to those new entities—must be teased out

Indeed, much more prosaic concerns could arise. If, for example, a multidisciplinary partnership includes solicitors, advocates or barristers, architects and surveyors, how will the various professional organisations fit into the structure of the legal services board in dealing with the other non-lawyer members? In Scotland, and I am sure in England, solicitors firms have to pay into a guarantee fund that pays out should a member be found to have had their fingers in the till—to put it succinctly. Firms also have their own professional indemnity insurance. How would such a fund come into play in the event of a non-solicitor member of a multidisciplinary practice default? Would it work in the same way?

I am following what the hon. Gentleman says. Will he tell us whether the Scottish National party, which now forms the minority Administration in Scotland, has any proposals on the overarching regulation of the legal profession in Scotland, or on any of the other points that he is discussing, which might interact with what the Government propose?

I shall come to that. The Legal Profession and Legal Aid (Scotland) Act 2007 that was passed earlier this year, and the Bill, touch on that point, but multidisciplinary partnerships are a new concept. There has been much discussion about the idea in Scotland, but the debate has not moved forward. Scottish law firms are expanding overseas in the same way as English legal firms. Unlike English common law, Scots law is based on the Roman law, so it is well placed to expand into continental systems that are also based on Roman law. I am sure that as Scotland prospers under the new SNP Administration, many more firms will take up the advantages of expanding into Europe, as Scotland takes a much greater interest in Europe without having to come to it through the UK.

When the Bill was debated in another place, an amendment was proposed that would have provided for those new entities to be monitored in the first few years of their existence. When the Minister introduced the debate, we discussed whether the provision is a sunrise or sunset clause, or something in between. The hon. Member for Stafford (Mr. Kidney) made a good point when he said that those organisations should be monitored in their first few years of existence to see how they prosper. I suspect that they are coming and that they will spread to other jurisdictions, and we need to have some information on them.

I appreciate that the Minister might not be able to respond to these matters in detail in her winding up, but I shall raise some of my concerns so that they can be given some other consideration. The Bill includes two clauses—196 and 197—and two schedules that will have a direct impact in Scotland. They make changes to the system of regulating Scottish practitioners in reserved areas such as financial services and immigration and asylum cases. I have no great points to make about them, as they come under the Legal Profession and Legal Aid (Scotland) Act 2007, but I note that those measures make several repeals of provisions in both the 2007 Act and the Solicitors (Scotland) Act 1980. Will those repeals require the consent of the Scottish Parliament? If so, has such agreement been sought and obtained?

This has been an interesting, albeit sometimes technical, debate on a matter that is certainly of constitutional importance. All hon. Members have made thoughtful contributions and, although there are significant differences in detail, the Bill has generally been welcomed by everyone who has spoken.

The report that Sir David Clementi produced on legal services was a visionary one, and we recognise, as do many hon. Members, that the Bill has come a long way since it was first introduced. I pay tribute both to the Joint Committee’s work and its comprehensive review, and not least to its Chairman, Lord Hunt, as well as to the input of my hon. Friend the Member for Enfield, Southgate (Mr. Burrowes), who made a significant contribution to today’s debate. In many ways, they moved the Bill back to the original Clementi vision. That was even before it went to the other place, where it was substantially improved by Conservative, Liberal Democrat and Cross-Bencher Lords, led frequently by my noble Friend Lord Kingsland.

We believe that the Bill is now pretty much there, and are not pleased, therefore, to hear from the Under-Secretary of State for Justice, the hon. Member for Lewisham, East (Bridget Prentice), how most of the improvements are to be reversed by the Government in Committee. The Minister and the hon. Members for Stafford (Mr. Kidney), for Bassetlaw (John Mann) and for North Durham (Mr. Jones) described the changing mechanical, technical and cultural issues that led to the need for the Bill. There is certainly no complacency among the Opposition about the need to improve legal services, not least given the polls saying that no more than 44 per cent. of consumers have a favourable opinion of lawyers, the evidence on miners’ compensation given by the hon. Member for Bassetlaw and the current regulatory framework, which includes some 22 different regulators.

The Lord Chancellor identified the lack of consumer confidence in the way in which lawyers are regulated, and highlighted the potentially restrictive way in which the legal profession operates and how to enhance competition in the profession. He then spoke of the regulatory maze that baffles consumers and thwarts effective oversight and which even Sir David Clementi’s report agreed was flawed. I shall examine each of those issues in the context of our debate, keeping in mind the fact that lawyers play an extremely important role as a thriving, independent profession in the life and economy of our nation, and we need an appropriate and modern regulator system that reflects that.

The Clementi report concluded that there was considerable concern about how consumer complaints were dealt with. There is no argument about the fact that solicitors in particular recognise the need for reform of the complaints-handling system. There are now no fewer than 118,000 solicitors practising which is itself a testament to the success of the profession—having grown from only 31,000 in 1976—and has enabled Britain to become a worldwide centre for legal excellence. By the way, all of that occurred despite the Government’s attempt to wreck the infrastructure of our legal system by their swingeing cuts to the Court Service while squandering millions on a new so-called supreme courthouse, their attack on criminal and civil legal aid and their ham-fisted blundering into the new Ministry of Justice.

We share the concern of many, including the Bar Council, the Institute of Legal Executives, the Institute of Chartered Accountants, Which? and the Law Society to ensure that the legal services board operates with the light touch recommended by Clementi and in an appropriate way, rather than micro-managing the approved regulators. As my noble Friend Lord Hunt of Wirral put it, before the amendments were made in the other place:

“There is nothing in the Bill to indicate that the Legal Services Board is intended to act as a supervisory regulator, which would leave day-to-day responsibility with the approved regulators and exercising its powers only when they are clearly failing.”—[Official Report, House of Lords, 23 January 2007; Vol. 688, c. 1040.]

We hope that the Government will change their mind about removing the amendments that regulate the role of the board. Such moves will not in themselves help consumers—despite the Minister saying that they would—or keep costs down. We are all keen that the measure should not become an expensive rebadging exercise of the legal services ombudsman.

As my hon. Friend the Member for North-East Hertfordshire (Mr. Heald) said, the value of the new complaints arrangements for barristers is not as clear cut; the Bar Council has not come in for the same level of criticism and according to most commentators, including the ombudsman, is generally recognised for its responsive handling of complaints. The Minister said that the Bar Council is the only body that wants different treatment, but she did not mention the fact that the Law Society has accepted the Bar Council’s position—for the Bar, albeit not for the Law Society itself. Even if a third of complaints currently dealt with by the Bar are referred back to the legal services ombudsman for reconsideration, two thirds are not, so the proposed changes might not improve consumer satisfaction in relation to such complaints. There are only 9,000 barristers, and their complaints are dealt with by a body made up of unpaid professionals and lay persons who operate the complaints board reasonably satisfactorily and certainly cheaply. Nevertheless, the Bar Council is also generally supportive of the Bill, as long as the amendments made by the Lords are not removed, especially those in respect of complaints delegation back to the approved regulators.

However, most of the current regulators are understandably concerned that without delegation back, the approach will be to bring everyone down to the lowest common denominator. After all, the Joint Committee considered that the cost of the new regulatory system was “speculative at best” and it is conceivable that the costs of reforming the system will spiral out of control with no corresponding improvement in quality. The Minister said that the costs would be £32 million, but is that because she separated start-up and first year running costs? We heard that start-up and first year running costs are estimated at about £57 million. Will she clarify what the costs will actually be by the time the Bill is passed?

As my hon. Friend the Member for North-East Hertfordshire said, we hope that the Government will change their mind and move back to the polluter pays principle. As my noble Friend Lord Kingsland said in the other place:

“Those exonerated following investigation or litigation should not be penalised for being found blameless.”—[Official Report, House of Lords, 8 May 2007; Vol. 691, c. 1277.]

We do not want an unjust system, which would have the effect of deterring practitioners from acting in certain fields of law, such as criminal or family law where unjustified complaints are disproportionately likely.

The whole exercise will be costly for smaller regulators, for whom it is very doubtful that it will increase consumer confidence. The Chartered Institute of Patent Attorneys typically receives fewer than 10 complaints a year, while the Institute of Trade Mark Attorneys has received only three complaints since 2001. The Institute of Legal Executives, which has a membership of 22,000, received only 19 complaints against its members in 2004-05. All those practitioners considered it extremely rare for their claims not to be settled amicably through conciliation.

I am interested in the hon. Gentleman’s comments on legal executives, but is not the reason for that low number the fact that solicitors’ clients rarely know that legal executives carry out most of the work?

As the hon. Gentleman knows, if a complaint is made, it is firstly made against the law firm, and most complaints are sorted out at that stage. If a complaint goes further, the regulators come into play. That is a pretty telling figure. The Institute of Paralegals and the Council for Licensed Conveyancers also have similar concerns. So a one-size-fits-all approach is not necessarily suitable.

Finally on consumer complaints, the Government have referred to Which? and the National Consumer Council, but other consumers should also be represented, not least the corporate consumers—the thousands of in-house lawyers. The Government are not giving enough thought to those consumers, not least in respect of giving them a voice on the LSB. Will the Minister reconsider that? In that vein, the line of the hon. Member for West Bromwich, West (Mr. Bailey) that this is a Bill for lawyers, run by lawyers and against the consumer is somewhat undermined.

Moving on to alternative business structures, we believe that, subject to safeguards and the continued consideration of the impact on access to justice, entities should be able to participate in law firms and to provide multidisciplinary services to the public. The influx of external capital is likely to change the market for the better, by providing greater competition. That point was expressed strongly by my hon. Friend the Member for North-West Cambridgeshire (Mr. Vara). Which? and the National Consumer Council believe that proposals to make the legal services market more competitive will bring significant benefits for consumers, including more choice and higher standards. However, we remain concerned that, once the Bill is passed into law, the ABS proposals should not be rushed into practice without adequate care and thought. The hon. Member for Angus (Mr. Weir) noted his caution over the possible pitfalls, although I am not sure to what extent he sees the reality of the marketplace. However, the retention of professional values is key, as is how that relates to actual or potential conflicts of interest that might arise in ABSs.

As my hon. Friend the Member for North-East Hertfordshire identified and as was very well expressed by my hon. Friend the Member for North-West Cambridgeshire, borrowing from his significant experience, London is now the international legal centre and City lawyers are at the forefront of the boom, earning some £2 billion a year for this country. As a peer recognised, we are the best international lawyers in the world and people come to us and our courts because of our quality. That profit to this country could be put at risk if the images given by the Bill are ones of interference with the independence that leads to our getting so much work from abroad. That is one reason why we should be concerned to ensure that the independence of the LSB remains a priority in the Bill. That point was made very well by my hon. Friend the Member for Enfield, Southgate, whose comments were supported by his extensive legal experience. The Minister replied to an intervention from, I believe, the hon. Member for Wolverhampton, South-West (Rob Marris) by saying that the views of foreign Governments were not relevant. That goes somewhat against what we understood to be the case, and we will wish to look into that further in Committee.

We agree with the recommendation that the Government adopt a careful approach to the ABS system, with a staged plan for implementation. On the basis of the Clementi report, the Joint Committee recommended starting with structures whereby lawyers and barristers could form partnerships and followed by a gradual move to a system of multidisciplinary practices and free-market ownership. Practically speaking, the Government have said that it is not likely that we will see multidisciplinary practices much before 2011. That date was provided by Baroness Ashton in February. Is it still the date? Will the Minister please identify the current timetable and the format envisaged for rolling out ABSs? We might wish to return to that in more detail in Committee.

The hon. Member for Stafford made a good point on ABSs in suggesting that other regulated professionals, such as patent agents and chartered accountants, should possibly be dealt with using a more open stance than a non-regulated third party—for example, a non-legal investor in a law firm. I think that was the basis of what he was saying, and I agree that that is worth exploring in Committee.

We had concerns that, under the original Bill, ABSs could limit access to justice. Those concerns gave rise to the successful amendment from my noble Friends in the other place. We are therefore truly sorry to hear that the Government intend to go soft on access to justice, by overturning that amendment. However, we also recognise that this should not turn into a case of the Government hindering the development of the legal profession or making it protectionist. As a Financial Times article pointed out,

“Familiar brands have nothing to gain from offering substandard legal services”.

In other words, if a high street brand company were to offer legal services, its systems and rigorous product, services and brand management could provide a better service. However, we maintain that that should be managed in the wider pubic interest, as much as in the consumer interest. There is a balance to be had, and we will wish to ensure that the Bill is capable of delivering it.

The key to resolving the regulatory maze is how to make an oversight regulator an effective partner of front-line regulators. It is therefore important, as was made clear by my hon. Friend the Member for North-East Hertfordshire, that the policy statement amendment should remain, so that we end up with light-touch regulation, and that the thresholds that govern when the LSB can intervene are kept sufficiently high. If the intention behind simplifying such relationships was to build consumer confidence, it would be logical if it also allowed lawyers to make appeals against regulatory decisions. Currently, the provisions only allow for judicial review. That is particularly relevant since the Government have stated that they have no intention of paying the costs of setting up or running either the LSB or the OLC. We should ask ourselves who will end up footing the bill. Let us make no mistake that, as things stand, it will be the consumer, as was quite well set out by my hon. Friend the Member for Enfield, Southgate. I should have thought that that sits somewhat uncomfortably with the Government’s stated intention to put the consumer first.

There are the Government lawyers to consider. To echo Lord Thomas in the other place,

“I would like the Minister to tell us who we complain to about government lawyers if they do not come within the proposed regulatory regime.”—[Official Report, House of Lords, 6 December 2006; Vol. 687, c. 1172.]

Will they contribute to the levy? We will wish to review that issue. Can the Minister tell us how the Government lawyers will be regulated?

The response of the Under-Secretary of State for Justice on how unions will be regulated, considering her stated attempt to exempt them from part 3, was confused and will need careful review in Committee.

I want to end on the regulatory issue by returning to something that the Lord Chancellor said on Second Reading in the other place. He argued that people

“can have no confidence in a system where complaints are dealt with by a lawyer’s own professional body.

He continued:

“These public perceptions can have a corrosive effect on the reputation of the sector more generally.”—[Official Report, House of Lords, 6 December 2006; Vol. 687, c. 1162.]

The Conservative party believes that that is too narrow an interpretation. As my hon. Friend the Member for North-East Hertfordshire and the hon. Member for North Southwark and Bermondsey (Simon Hughes) made quite clear, we feel that the preservation of justice and the constitutional importance of the independence of lawyers are more important than the individual consumer’s interests or their perceptions, and we should be under no illusion that, in any event, the Bill in itself will not somehow make people like lawyers any more or any less than they do now. So we believe that we must take a stand for an independent and well-regulated profession.

We have listened to the Government’s arguments and still have grave concerns that the Government will undermine the experience and expertise of the other place, which could turn the further stages of the Bill in this place into a rather negative and destructive process. This is a once-in-a-generation opportunity to reform the legal services sector. Given our support for the Bill in its current form at this stage, we therefore hope that the Government will take a more positive and constructive approach in the later stages than they have indicated that they will do today.

I thank both Opposition parties for the support that they have broadly given to the Bill. I thank all those hon. Members who have contributed to a good if polarised debate. One could say that people either love lawyers or they hate them, but I sometimes think that people either are one or they hate them, and that is the way the world goes.

Since the principles are broadly agreed—I hope that I do not claim too much in that—there is much more to be done in Committee than in this closing speech. So I hope that no one will take offence if I propose to take new points and then only to address the amendments that have been discussed. I know that the hon. Members for North-East Hertfordshire (Mr. Heald) and for Huntingdon (Mr. Djanogly) will not be offended if I wrap up their comments in dealing with the amendments. However, for the benefit of the hon. Member for Huntingdon, I can say that the calendar about which he specifically asked has not changed since my noble Friend Baroness Ashton set it out. It is likely that 2011 will be the right date, but of course legal disciplinary partnerships, as opposed to multidisciplinary partnerships, will be available from the time of Royal Assent. I hope that the distinction is clear. The hon. Gentleman was wrong to say that there would be no burden on the public purse. The Ministry of Justice has said clearly that it will pay at least £2.4 million for the set-up costs of the new complaints system.

Let me deal with the new points that were made. My hon. Friend the Member for Stafford (Mr. Kidney), a man of considerable perspicacity, raised the question of the solicitors regulatory authority’s wish to fine and publish rebukes. Schedule 22 will allow such an amendment to existing legislation during the transition period. We accept in principle that that should be available and we hope to deal with that matter during the Bill’s passage.

My hon. Friend and the hon. Member for Enfield, Southgate (Mr. Burrowes), who is in the Chamber, referred to the costs of the system. I have already said that the Ministry of Justice will pay £2.4 million. The set-up costs will be phased, rather than chargeable all at once. There is the question of whether this is fair. I understand that when the new regime is brought together, it will cost less overall than the existing system. Professionals, in addition to getting a bargain, will get the benefit of the consumer confidence that comes from a good complaints system, the opposite of which has been discussed today. There will thus probably be a double bargain.

The hon. Member for North Southwark and Bermondsey (Simon Hughes) talked about will writers, as did the hon. Member for North-East Hertfordshire. As yet, there is no evidence that we need to regulate them. Clause 24 will allow the legal services board to recommend to the Lord Chancellor that there should be more broad regulation. If that proves to be necessary, it can be introduced.

The hon. Member for North Southwark and Bermondsey also talked about vexatious litigants. Following my intervention, I was glad that he agreed that it should be sufficient for the LSB to have the discretion to decide in such a case whether the victim solicitor should pay the costs. We agree that that is the right way forward and we will reverse the amendment made in the other place that would put an absolute bar on orders for costs from being put forward in some cases. Such a provision is utterly unnecessary and over-rigid.

The hon. Gentleman and the hon. Member for Huntingdon raised the question of appeals. This is a matter of judicial review. We think that the whole process must go through a firm’s practices before it even gets to the Office for Legal Complaints. There must be a way to end complaints at some point, so judicial review it is.

My hon. Friend the Member for West Bromwich, West (Mr. Bailey) talked interestingly about a meeting regarding the Carter proposals that was full of lawyers, saying that the most important issue in his constituency was the absence of legal aid. I got an impression of the tone of that meeting—I have been there—and it was not atypical. Having withstood that meeting, it is a great tribute to my hon. Friend that his welcome to the Bill was carefully thought through and balanced. We heard a typical piece of fair mindedness from him.

My hon. Friend the Member for Bassetlaw (John Mann) was right that lawyers must speak in the House about issues that concern them and their livelihoods. He must speak, as he does powerfully, for the working-class lay people whom he and I represent. His idea of a permanent lay chair of the LSB was interesting. However, an interesting point of debate is the question of whether we should fix that for ever, or just establish the culture of the body by ensuring that its first chair is a lay person. The Under-Secretary of State for Justice, my hon. Friend the Member for Lewisham, East (Bridget Prentice), would not mind at all if my hon. Friends the Members for Bassetlaw and for North Durham (Mr. Jones) were members of the Public Bill Committee. I am sure that they would not want the Committee to sit until Christmas, but they would be very welcome.

Let me say briefly to my hon. Friend the Member for Bassetlaw that poorer people sometimes have a better guarantee of quality from lawyers than richer people. If people are on legal aid, the Legal Services Commission, which contracts with them, has powers. For example, the commission can issue a specialist quality mark which people need to carry out certain legal aid work. It also has a system of peer review. That system involves other lawyers reviewing the way in which people conduct their business, so I admit that it might not be perfection incarnate, but it is a pretty potent tool that guarantees some quality. When a person is outside legal aid, none of those mechanisms are available. In addition, for complex cases, case management is available on legal aid through the LSC, so lawyers cannot send a case on legal aid to an expert who is not needed. Standard cases are carried out for a fixed fee, so there is nothing to be gained by prolonging a case unnecessarily in the way in which his constituents have experienced.

My hon. Friend dealt pretty effectively with Liberal Democrat Members’ cosy point that local solicitors are universally good and always act in the interests of their communities. Sometimes that is the case, but small firms must not be preferred at all costs. Such firms are not universally bad either, but they cannot possibly have the range of expertise that is needed in this modern world. Larger community legal advice networks are essential, whether they are actual or virtual. Firms in the not-for-profit sector can work together through such networks to ensure that the poor using legal aid can go through one door for advice, rather than going to the only firm available—although it knows nothing about debt because it spends its life conveyancing and dealing with crime—and thus getting let down. Such a system also means that people do not need to work out what kind of advice they need so that they can decide where to go. If they have a community legal advice network or centre, they can walk through a door and just ask.

I was privileged to open the first community legal advice centre about a week ago in Gateshead. I ask all hon. Members in the Chamber to request that their local authorities enter at once into negotiations with the LSC so that the local authority cash that is available for welfare advice and our cash from the LSC that is available for legal advice can be pooled, to ensure that people who need good legal advice can literally walk through a door of a community legal advice centre and just ask for it.

My last point about the speech made by my hon. Friend the Member for Bassetlaw is that the lawyers complaints system has got significantly better, as even my hon. Friend the Member for North Durham said.

If the hon. Member for North-West Cambridgeshire (Mr. Vara) thinks that measures that say that alternative business structures should not be introduced until endless research has been completed, and which would delegate the power of the office for legal complaints back to the Bar Standards Board, are not wrecking amendments, I am afraid that he is a lost cause.

The hon. Member for Angus (Mr. Weir) rightly perceived that he would need to get some correspondence from me in connection with the points raised in his speech. However, he asked a specific question that I can answer. If an ABS body operates in England and Scotland, it will have to comply with each jurisdiction’s regulatory rules, unless the rules apply to where the work is being done. If alternative business structures are not permitted in a jurisdiction, a firm will have to create a different entity to work there.

The hon. Gentleman asked about the crossover of regulators when multidisciplinary partnerships come into being. The LSB will regulate the economic entity that supplies the legal services, while individuals from different profession will remain regulated by their profession.

My hon. Friend the Member for North Durham champions outstandingly his hard pressed, ill treated, often suffering miner constituents. He makes powerful points but essentially says that the amendments made in the other place weaken the Bill. We agree, and we will not accept them.

The question of appointments has taken a lot of airspace tonight. To speak as the hon. Member for North-East Hertfordshire did of Government controlling lawyers or the Lord Chancellor appointing his friends is silly. Of course the Nolan principles apply, as he knows very well. Appointments will be made in accordance with best practice and they will be scrutinised by the Office of the Commissioner for Public Appointments. The appointments will therefore be made on merit, independently scrutinised by the OCPA and subject to equal opportunities requirements and to the test of probity. That method of ministerial appointment is the norm for all public appointments. There is no reason to distinguish between appointments made in connection with the Bill and any others.

Yes, but let me first make one more point. Perhaps the hon. Gentleman will respond when he intervenes.

A number of people have asked why the Lord Chief Justice should not co-decide the matter. The answer is that if an appointment is a ministerial appointment, there is both parliamentary oversight and scrutiny by the OCPA. What if an appointment were proposed by the Lord Chancellor and passed all the Nolan criteria of merit, equal opportunities and probity, but were then vetoed by the Lord Chief Justice? Who would be accountable then?