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Legal Services Bill [Lords]

Volume 464: debated on Monday 15 October 2007

As amended in the Public Bill Committee, considered.

New Clause 2

Appeal against public censure

‘(1) An approved regulator in respect of whom the Board decides to publish a statement under section 35 may appeal to the court on one or more of the appeal grounds.

(2) The appeal grounds are —

(a) that the decision was not within the power of the Board under section 35;

(b) that any of the requirements of section 36 have not been complied with in relation to the imposition of the penalty and the interests of the approved regulator have been substantially prejudiced by the non-compliance;

(c) that in all circumstances, the publication of a statement under section 35 is, or the terms of the statement published or to be published are (or would be), manifestly unreasonable or inappropriate;

(d) that the decision is unlawful on any ground that would give rise to a claim for judicial review.

(3) An appeal under subsection (1) must be made within the period of 42 days beginning with the day on which the notice was given to the approved regulator.

(4) Where an appeal is made before the expiry of the 7-day period the Board must not (unless the court otherwise orders) publish the statement until the appeal has been withdrawn or dismissed.

(5) On an appeal under subsection (1), where the court considers it appropriate to do so in all the circumstances of the case and is satisfied of one or more of the appeal grounds, the court may—

(a) quash the decision to publish a statement, or

(b) vary the terms of the statement (and, where the statement has been published, direct the Board to publish to the same extent the statement as varied).

(6) In this section “the court” means the High Court.’.—[Mr. Bellingham.]

Brought up, and read the First time.

With this it will be convenient to discuss the following:

Amendment No. 1, in clause 1, page 2, line 9 at end insert—

‘(ca) that authorised persons should not act where there is a conflict between the interests of two or more of their clients, or between the authorised person and their client,’.

Amendment No. 2, in clause 3, page 2, line 27, leave out

‘, so far as is reasonably practicable,’.

Amendment No. 144, page 2, line 28, after ‘objectives’, insert—

‘(aa) complies with the regulatory principles as set out in section 2 of the Legislative and Regulatory Reform Act 2006, and’.

Amendment No. 64, in clause 28, page 14, line 20, clause 28, leave out

‘, so far as is reasonably practicable,’.

Government amendment No. 83.

Amendment No. 10, in clause 36, page 18, line 32, at end add—

‘(4A) As soon as practicable after deciding to publish a statement, the Board must give notice to the approved regulator stating that it has reached that decision and setting out the terms in which the statement is to be published; and the Board must not publish the statement until after the expiry of seven days beginning with the day on which notice is given under this subsection.’.

Amendment No. 11, in clause 39, page 20, line 21, at end insert—

‘(e) that the imposition of the penalty on any ground would give rise to a claim for judicial review.’.

Amendment No. 12, page 20, line 45, leave out subsection (7).

Amendment No. 66, in clause 49, page 27, line 20, at end insert

‘and that the Board should exercise its powers only where approved regulators are clearly failing’.

Government amendment No. 84.

First, I should like to declare my entry in the Register of Members’ Interests as a qualified, but non-practising, barrister.

We are going to be pushed to get through this programme, because there are some 125 amendments and new clauses to get through. I worked out that if there are a few Divisions, we will devote about one and a half minutes to each amendment or new clause. That does not leave us much time, so we must make as much progress as possible, although that will not be easy, because the Government have come up with a lot of extremely complicated amendments.

The essence of new clause 2 relates to clause 35, which covers public censure and states that

“if the Board is satisfied—

(a) that an act or omission of an approved regulator…has had, or is likely to have, an adverse impact on one or more of the regulatory objectives, and

(b) that, in all the circumstances of the case, it is appropriate to act under this section.

(2) The Board may publish a statement censuring the approved regulator for the act or omission”.

Any publication of a censure against an approved regulator could have wide-ranging and far-reaching consequences for it. Let us consider the example of the Bar Standards Board, which was set up fairly recently to act as an arms-length regulator within the Bar, has done a first-class job of dealing with complaints and has built up a good reputation in a short time. If that approved regulator were censured, its reputation could be demolished overnight. Surely it needs and deserves some form of appeal, and that is what new clause 2 proposes; it would give an appeal against the public censure.

Clause 37 and the part of the Bill that gives the legal services board the scope for imposing a financial penalty contain a clear mechanism for appeal. There is no logic in not having a proper right of appeal when it comes to public censure. It may well be that such censure is well deserved and correct, but given the damage that it can do, surely there should be some right of appeal. Our new clause would provide that, and I recommend it to the House. I hope that the Minister will tell us that she supports the principle of having this right of appeal.

Amendment No. 1 might state the obvious, but it was suggested by the Law Society. Our existing regulatory system has withstood the passage of time over a substantial period, and I should point out one of its great strengths. It engenders a strong ethos of professionalism, which is respected by the vast majority of lawyers. Clause 1(1) does not mention avoiding a conflict of interest, and that is an odd omission.

If the hon. Gentleman thinks that the regulation of solicitors and the legal profession has been without problems, I would ask where he has been for the past few years. Many of my constituents, who have been ripped off by solicitors, have been failed by the Law Society.

In some ways I agree with the hon. Gentleman and I know that he feels that some of his constituents have been let down very badly. Amendment No. 1 is all about removing the conflict of interest, so I would have thought that he would support it.

The charter of core principles for the European legal profession, which has been adopted by the Council of Bars and Law Societies of Europe—an umbrella organisation for all European legal professional bodies—specifically includes avoidance of conflicts of interest. My hon. Friend the Member for Huntingdon (Mr. Djanogly) will speak in a moment about the need for concurrence between the Lord Chancellor and the Lord Chief Justice, and that is related to the need to maintain the independence of the professions, and amendment No. 1 would send a clear statement that the Bill prohibits any conflict of interests.

Various conflicts of interest will arise from time to time, and I note that the Law Society has introduced a tight and tough code to deal with them. It does happen that one part of a large City firm acts for one organisation while another part acts for another. That can happen in shipping cases or in complex commercial law areas. The firm will probably have Chinese walls or barriers between the two different departments, and so the conflict of interest is avoided. However, the amendment simply states something that we feel should be obvious: the need to avoid conflicts of interest should be written into the Bill.

In Committee, the Minister said that she would look carefully at the amendment and come back to us on Report. I am sure that she has looked at it carefully, as she has been assiduous and approachable, and we welcome that. This has been a classic example of how Bills should be considered, with the Front Benchers all getting on well together, meeting regularly and trying to make progress. That is why there are so few areas of disagreement in the Bill. I wonder whether the Minister has been able to look at the amendment carefully.

Amendments Nos. 2 and 64 would delete the words

“so far as is reasonably practicable”.

Those words appear in clause 3(2)(a) and (b) and clause 28(2)(a) and (b). We had a debate on the point in Committee, because those words qualify the essence of clause 1(1), which sets out the regulatory objectives. Why qualify them in that way? Clause 1(1) states clearly what the objectives should be and we do not see why an escape provision should be built into the Bill. It is like saying, “Here are the objectives that we want you to follow, but if you can’t because it is not practicable to do so, it doesn’t really matter.” We should not say that.

In Committee, the Minister again said that she was quite sympathetic to our line of argument and that she felt I had argued the case well. I shall not make such a lengthy argument this afternoon as we are under time constraints, but the Minister said that she might make a sympathetic response to the amendment on Report. I hope that she will be able to do so now, or that our proposal can be looked at when the Bill goes back to the other place. We are keen to avoid unnecessary bureaucracy and we support Sir David Clementi’s flexible and risk-based approach, but we feel that an amendment striking out the words we suggest makes a great deal of sense.

Our amendment No. 10 beefs up clause 36 and provides extra protection to an approved regulator who has been censured. It continues the theme discussed in new clause 2. The amendment makes it clear that the board should give notice to the approved regulator that it has reached a decision and should set out how the statement will be published. Obviously, the approved regulator needs time to consider its response. As I said earlier, reputations take a long time to build up but they can be destroyed overnight. The Minister said in Committee that she would look sympathetically at our proposals and that she might table an amendment on Report. There are Government amendments in the group, so perhaps she will comment on them in more detail and answer some of my questions.

Amendment No. 11 allows for judicial review and amendment No. 12 is consequential. There was a lengthy and learned debate in the other place about judicial review and I do not want to wear the House down with detailed, highly arcane arguments about it, but we believe that there is a clear and unequivocal case for having the right to judicial review written into the Bill. I know the Minister thinks that that is not strictly necessary, but if she thinks there is already sufficient protection for parties who could be fined and censured and lose their career and reputation, she should make it clear that there is no need for judicial review.

I have to tell the Minister that many learned Lords take a contrary view. Many of them have practised law and sat on the bench—many are retired Law Lords—so there is a huge body of expertise that feels strongly that the Bill should include provisions for judicial review. Will the Minister comment on that point in detail?

Amendment No. 66 refers to clause 49 and inserts the words

“and the Board should exercise its powers only where approved regulators are clearly failing”.

The whole intention is to curtail bureaucracy and the scope for unnecessary intervention.

In Committee, we agreed that we would not say “light touch”, as it is a hackneyed expression that has had its day. I want to concentrate on the need for common sense and a delicate, pragmatic and sensitive approach. Of course, we need a Bill that gives the board the power to take necessary decisions, but the approved regulators must be allowed to get on with the job in hand. There must be scope for them to carry out many of the delegated functions. Amendment No. 66 would simply reinforce that point, and when Sir David Clementi produced his excellent report, he certainly anticipated such a delicate, sensitive approach.

Again, the Minister said in Committee that she was sympathetic to amendment No. 66 and that she would return to the issue on Report. So she said that she accepted what we had to say on four amendments and one new clause. She said that she was sympathetic to many of the arguments put forward. I hope that she has listened carefully to what I have said this afternoon and that she can give Opposition Members some comfort in accepting what we say, given that our views are widely endorsed by the professions. Indeed, I hope that, if she cannot accept our amendments and make the changes now, she will at least tell us why she cannot, and perhaps tell us that some further changes may be introduced in other place, although two of the points that I have made might be covered by the Government amendments in this group.

The hon. Member for North-West Norfolk (Mr. Bellingham) is as eloquent and courteous as ever, but he manages yet again to fall into the trap of vested self-interest, despite very honourably declaring his self-interest. We return to a fundamental point that has run throughout the debates on the Bill and well before them: why should the legal profession be allowed special status in society, whereby it can look after itself, by regulating itself and appealing to itself in this case? In which other section of society would we allow that? Would we allow it with the police?

Probably, the only other section of society that tries to befit itself to such self-regulation is politicians, often much to the disgust of the general public. But there is no basis whatsoever for moving to a system whereby the legal profession can appeal to the legal profession. That is precisely what we are talking about. Barristers, whether practising, non-practising, or in the other House or the High Court, or wherever they end up, need to understand that that internalised attempt to set themselves apart from the principles that we expect of the rest of society simply is not acceptable. The reason why it is not acceptable is that it does not work, and the reason why it does not work—doubtless there may be an opportunity for hon. Members to explore this on Third Reading—is the way in which the legal profession uses its privileged position of being able to use the law and take action in an attempt to silence any criticism.

I am interested in what the hon. Gentleman is saying, and we have run over some of it in the past. I will declare my interest as a non-practising member of the Bar and as someone who is very proud of it, because it is a decent and honest profession. Is not the implication of what he is saying that we cannot trust lawyers to appeal by judicial review because we cannot trust the judges? That is what he is almost saying in effect. Does he honestly think that the justices of Her Majesty’s High Court will behave differently if an applicant for judicial review or another form of appeal happens to be a lawyer as opposed to anything else? If he does, I suggest that that is a scandalous thing to say.

It might be scandalous thing to say, but the police have an honourable profession and we do not allow them to sit in judgment on themselves. Doctors and others involved in medicine have an honourable profession, but we do not allow them to sit in judgment on such key decisions. Indeed, we listened earlier today to comments about the roles of trusts and Secretaries of State in the governance of the health service. There are many honourable professions, but there are only two professions that attempt to set themselves above all others. One such group is Members of Parliament, who deem that we are in some way above all others. Some, such as Plaid Cymru Members, would like to put us in the position whereby we are judged by the judiciary rather than through the self-regulatory systems that we have in place. That is an interesting idea, but none of them are in their seats to participate in this debate.

The principle that certain professions should be allowed to sit in judgment on themselves is not one that we would accept in many great and honourable professions in this country. To allow the self-regulators to appeal to their peers in the High Court is total nonsense if we are to have a robust system of regulation that is seen by the rest of the world to be above board.

First, I declare a non-interest: I am not a lawyer or in any way a member of the legal profession. I therefore think that I can safely say that I speak without the vested interest to which the hon. Member for Bassetlaw (John Mann) referred.

I echo a remark made by the hon. Member for North-West Norfolk (Mr. Bellingham): having come to the Bill very late, as a result of a change in responsibilities, I am encouraged by the degree of constructive engagement that I have observed in Members on both sides of the House. He did not include the hon. Members for Bassetlaw and for North Durham (Mr. Jones) in his plaudits in that respect, but I am happy to do so, having read the report of the Committee proceedings, which were characterised by a willingness to engage with the issues and to try to arrive at a sensible consensus. I applaud all those who have attempted to do so.

To start with judicial review, I do not entirely buy the point made by the hon. Member for Bassetlaw. Although I am absolutely clear that the regulatory structure for the legal profession must be seen to be independent and robust, only the judiciary can decide whether there has been an error in law. There is no other mechanism to determine an error in law in regulation. Whether or not that undermines the regulatory process in the hon. Gentleman’s eyes, the fact remains that only the judiciary acting in an independent fashion, which is now guaranteed by statute, can make that judgment.

I agree with the hon. Gentleman about judicial review on a point of law, but that is not what the new clause is saying. Essentially, it provides that if the regulatory body does not agree with criticism levelled at it, it can appeal to a higher body. That is very different from the point that he is outlining.

With all due respect, I am not sure that that is the case. A judicial review can take place only on the basis of a body having misdirected itself—that would be the basis in administrative law. In any case, the Minister can probably deal with the matter by stating what she believes the position to be on the admissibility or otherwise of an application for judicial review of a decision. It certainly should not be seen as a court of appeal on a decision of the regulator. That would be entirely inappropriate—on that, I agree with the hon. Members for Bassetlaw and for North Durham.

On leaving out

“so far as is reasonably practicable”,

I entirely agree with the hon. Member for North-West Norfolk. It seems to be an entirely unnecessary qualification. If we have good principles of regulation, which the Government have stressed in relation to the regulatory objectives, it is entirely perverse to qualify that by saying that the objectives do not have to be met if circumstances do not allow. The regulatory objectives must be consistent and paramount. I believe that the words should be removed, which is why I have put my name to amendment No. 2. Far from reducing the effectiveness of this part of the Bill, I believe that the amendment would strengthen it.

On conflict of interest, I shall be interested to hear what the Minister has to say on whether the provisions represent a significant change from her understanding of the position. I am not prepared to countenance a conflict of interest arising, but if she is confident that the Bill’s structure and wording is sufficient to deal with the issue, without us adding an explicit statement on conflict of interest, I shall be satisfied. I find it hard to believe that that is the case, however, so I have sympathy with what the hon. Member for North-West Norfolk has to say.

My last point is on proportionality. The hon. Member for North-West Norfolk tabled new clause 2, but I have taken a slightly different approach to the issue in my amendment No. 144. I mention it briefly in the forlorn hope of ensuring a degree of joined-up government as regards statute, and in the hope that one statute that we pass might have some relevance to another. Some hon. Members will recall the Legislative and Regulatory Reform Act 2006, which had a chequered parliamentary career. Many of its provisions were hard-fought-for. It ended up being absolutely filleted in another place, and replaced with something a good deal better. Section 2 of that Act explicitly spelled out the regulatory principles—not the regulatory objectives, which are set out in the Bill before us—that were expected to apply to any regulatory body. It states:

“Those principles are that—

(a) regulatory activities should be carried out in a way which is transparent, accountable, proportionate and consistent;

(b) regulatory activities should be targeted only at cases in which action is needed.”

Those two regulatory principles, which the Government have accepted, and which they wrote in to the 2006 Act, are exactly what is required to qualify the regulatory objectives in the Bill so as to ensure proportionality and transparency, and to ensure that action is taken only when it is needed. The Minister should consider amendment No. 144, or perhaps a variation of it in which the cross-reference to the 2006 Act is removed, and those same regulatory principles inserted instead. That would underline what I believe to be the Government’s objective—to have a consistent principle underlying regulatory activities that applies as much to lawyers as to other professions, and to all other regulatory activities. Members’ objective should be to ensure a consistency of legislation that crosses those professional and interest boundaries. That is exactly the point made by the hon. Member for Bassetlaw, who argues that lawyers should not be a special case. I agree; in both positive and negative terms, the same principles should apply to regulatory activities across the board.

First, may I welcome the hon. Member for Somerton and Frome (Mr. Heath) to his responsibilities? I think that we breathed a collective sigh of relief on seeing that the hon. Member for North Southwark and Bermondsey (Simon Hughes) is not here tonight, and that we might get the entire Bill dealt with this evening.

The Minister has made it clear, as have my hon. Friend the Member for Bassetlaw (John Mann) and I, that putting the consumer at the heart of the Bill is key. Hon. Members might not be surprised to hear that I agree with my hon. Friend when he says that we are talking about an attempt to treat the legal profession differently from any other bodies. The measures that we put in place under the Bill should not amount to less than those that were in place in the old system, in which there was a legal services ombudsman who had tough powers of regulation and who could impose fines. Under that system, there was no right of appeal. The legal services ombudsman conducted a tough investigation on miners’ compensation, and I believe that lawyers would certainly have appealed the report. It was not the fact that it was inaccurate—it was the fact that it was tough and critical of the way in which the legal profession preyed on many of my constituents and other people in receipt of miners’ compensation.

I must disagree with the hon. Member for Somerton and Frome about the grounds for appeal. New clause 2 says that one such reason is the fact that publication would be “manifestly unreasonable or inappropriate”. When the legal services ombudsman produced her report, many lawyers could have argued that its contents were unreasonable or inappropriate. That would be the case for someone on the receiving end of a hard, tough report.

In a judicial review, an administrative court would look only at the way in which decisions on the report were arrived at and whether they were reasonable—not at the end result and the conclusions reached in the report.

I agree, but that is not what the new clause says. If a legal point is at stake, one can always have recourse to a review. Proposed section (2)(c), however, states that the provision would apply if

“the publication of a statement under section 35 is, or the terms of the statement published or to be published are (or would be), manifestly unreasonable or inappropriate.”

Who is to decide what, in those circumstances, is unreasonable or inappropriate? The consumer would argue, quite rightly, that the legal services ombudsman’s report was far from unreasonable and inappropriate. From their point of view, it was spot on and she was right to stand up for their rights. The breadth of the provision provides the legal profession with a get-out clause, enabling it to escape reasonable criticism. I am reluctant for the ombudsman’s powers under the Bill to be any less than what they were before, so I hope that the Government resist the attempt, which was made numerous times in Committee, to safeguard the vested interests of the legal profession and enable it to protect its own.

I shall be brief, and shall begin with the point with which the hon. Member for North Durham (Mr. Jones) concluded—the obsession with vested interests among certain Government Members. No one, including all the lawyers I know, wants anything other than effective, robust and strong regulation, which is in the profession’s interests just as much as the consumer’s. It is genuinely sad that some hon. Members cannot get that into their head, although I think that the Minister accepts it. It is sad that our debates are often coloured, dare I say, by an obsession among certain Government Members.

As one of those accused of being an obsessive, may I ask the hon. Gentleman what proportion of solicitors dealing with the enormous £3 billion-plus miners’ compensation scheme have been found guilty of double-charging their clients, whether directly or indirectly? What percentage of the money that they have been paid by the Government have they taken? To give him an opportunity to think, is it under 10 per cent., 50 per cent. or 90 per cent.?

I hope that the hon. Gentleman has the grace to congratulate the Solicitors Regulation Authority on initiating proceedings and recovering considerable amounts of money. To suggest that nothing has been done is unfair. The arrangements are not perfect, I concede and accept—we all want to improve things—but I am sorry that we have to go through this rigmarole.

I should like to make progress, and I hope to conclude shortly.

The Law Society’s president made it quite clear that the society supports the Bill’s basic principles. All the key issues, including the separation of regulation from the representational role, have been accepted by the Bar Council. It is sensible to operate a system in which the regulator works in partnership with the profession. Nobody takes issue with that. I think the Minister has understood that, which is why I echo the comments of my hon. Friends and the hon. Member for Somerton and Frome (Mr. Heath), who say that we hope she will be able to flesh out to us how that can be dealt with constructively.

The second point that I wanted to make relates to judicial review. With all due respect, nobody should be above the law. The system of judicial review ensures that. That applies to a body such as the legal services board as much as to anyone else. It is only common sense that judicial review should remain. The reference in the amendment to a statement being “manifestly unreasonable” is very close to the well-known Wednesbury test of reasonableness. Many of us think it is not unreasonable to give an opportunity of redress, should there ever be—maybe there never will be—a manifestly perverse decision on the part of any regulatory body.

I hope that that will be borne in mind, just as I hope that when Labour Members question the willingness of the legal profession to tackle issues for itself, they will bear in mind the report from the Bar Standards Board for this year, which was published after our Committee discussions. The board pointed out that not only had there been a significant increase in the number of cases referred to disciplinary tribunals, which have a greater independent element than the summary procedure, but interestingly, although the numbers always remain very small, the proportionate increase in the number of cases where complaints were upheld by the Bar Standards Board, acting independently on behalf of the profession, increased to over 82 per cent. That is better than any prosecuting authority usually achieves. Before people criticise the professions for not being prepared to set their own house in order, they ought to bear that in mind. That indicates that what is sensible is a light touch rather than a heavy-handed one, and an approach that does not seek to second-guess the outcome.

I hope the Minister can deal with my final point. The hon. Member for Somerton and Frome made sensible points about the risk of conflict of interests. Given that we will later consider alternative business structures, as my hon. Friend the Member for North-West Norfolk (Mr. Bellingham) said, we are likely to see more and more instances where there may properly be mixtures of competences in firms, and various Chinese walls. I do not have a problem with a greater number of alternative business structures, but that makes it all the more necessary that the conflict of interest point should be dealt with and spelled out as clearly as possible in the Bill.

I am pleased to hear the opening remarks from across the House about how we have reached this stage in the Bill as a result of a great deal of healthy discussion and consensus. I said in Committee that before Report I would consider a number of the issues that have been raised again this evening. As I said then with reference to new clause 2, I do not object in principle to the fact that approved regulators should be able to challenge the decisions of the board. It is of huge importance to the accountability of the board that the approved regulators have recourse to some form of challenge when they feel that the board is being unreasonable. However, I thought that we had established in Committee that the ground for challenge that that creates—that of judicial review—is available automatically under the Bill as it was then. I do not see that new clause 2 adds anything.

On amendment No. 1, there is a real possibility that that would run counter to the best interests of clients and might even cast doubt on the validity of many of the existing rules. Given the role of those broad professional principles, singling out conflict of interest but not being able to define it clearly might risk jeopardising the flexibility of regulators in this area.

Clause 176 already places all authorised persons under a statutory duty to comply with professional rules, which will of course include rules on conflicts of interest, which are clearly stated in the professional bodies’ rules. All those rules will, of course, also be subject to approval by the board; in a sense, there is already a double lock to ensure that rules on conflict of interest are complied with. I am pretty confident that those existing rules provide adequate cover and that the extra provision is not necessary; in fact, it has the potential to be undesirable.

On amendments Nos. 2 and 64, since our discussion of the issue in Committee, I have considered carefully whether

“so far as is reasonably practicable”

should be removed from the duties under clauses 3 and 28. I understand the reasons that the hon. Member for North-West Norfolk (Mr. Bellingham) set out in favour of removal, but I am still not convinced that taking away the phrase is the best way to ensure that the consumer is, as has been mentioned, at the heart of the system. The amendments are neither appropriate nor practical, as under the new framework all regulators will need flexibility to weigh up how each of the objectives will operate in any given situation. The regulators will have to be able to take into account practical considerations—including, for example, the resources available to them. Such issues are key to the principles of proportionate and targeted regulation; I hope that Members on both sides agree that such regulation must be central to the success of the new regime. Retaining

“so far as is reasonably practicable”

makes it clear that regulatory decisions are made with reference to practical constraints, such as the expenditure incurred in meeting the objectives.

The hon. Member for Somerton and Frome (Mr. Heath), who will be pleased that, for once, I have managed to get his constituency right—

I shall keep practising; if I work hard enough, I might even end up with a west country accent.

I understand the sentiment behind the hon. Gentleman’s amendment No. 144. It is important that the board should have regard to the principle of best regulatory practice in all that it does; I cannot see why anyone would resile from that. That is why we have clearly set out in clause 3(3) that the board, as the hon. Gentleman rightly pointed out,

“must have regard to…the principles under which regulatory activities should be transparent, accountable, proportionate, consistent and targeted only at cases in which action is needed, and any other principle appearing to it to represent the best regulatory practice.”

However, as the hon. Gentleman also pointed out, those same principles are already set out in section 2 of the Legislative and Regulatory Reform Act 2006, so I consider it unnecessary to duplicate the provision in the Bill.

I turn to amendment No. 83, a minor amendment to ensure that the board is not prevented from exercising its functions for the purpose of ensuring that the exercise of an approved regulator’s regulatory functions is not prejudiced by its representative functions or that the decision relating to the exercise of an approved regulator’s regulatory functions is taken independently from the representative ones. I do not know whether anyone can understand that gobbledegook; I hope that Hansard will be able to translate it into normal English. In the past, both things had to apply; amendment No. 83 would effect a minor change so that the board would not be prevented from exercising its functions in that way.

Amendments Nos. 10, 11 and 12 ask for the seven-day requirement. The Bill already provides for a 28-day period before which the board can take action, and I do not believe that an additional seven days would achieve anything. It is also important that the board and approved regulators should remain in close contact throughout the period; the board, of course, is under a duty to be transparent. The approved regulator will be able to challenge the board, but obviously the board must be able to act swiftly and appropriately. When considering amendments Nos. 11 and 12, it is important that we remember that an appeal is available.

Amendment No. 11 would simply duplicate the appeals process, which could ultimately waste valuable time and resources to arrive at what would inevitably be the same conclusion. The current provisions do not prevent the case from proceeding to the Court of Appeal, in the event that that is appropriate.

Amendment No. 12 would remove an important provision and could produce the unwelcome effect of allowing for the possibility of two separate challenges being brought by the same applicant against the same decision on essentially the same grounds.

On amendment No. 66, it is clearly right that the board should act only where an approved regulator is “clearly failing”. However, that is a very imprecise term that does not translate well into legislation. There is the potential for creating confusion and contradicting the thresholds that already apply to the exercise of the board’s regulatory powers. Instead, I believe that the combination of the existing thresholds, the clause 3 duties and the amended clause 49 provisions should ensure that the board exercises its powers only where it is right to do so. I continue to believe that the Bill as currently drafted properly addresses all the concerns that hon. Members have raised.

Government amendment No. 84 will put it beyond doubt, in the Bill, that the legal services board may, if acting as an approved regulator and if set out in an order modifying the board’s functions, provide the people whom it regulates with an appeal to the High Court against any decision that it makes. The effect of the amendment is that those bodies whose functions are modified under section 69 or paragraph 2 of schedule 22 can also receive a similar power.

For those reasons, I ask the hon. Gentleman to withdraw his amendments and ask the House to approve amendments Nos. 83 and 84.

I am grateful to the Minister for her explanation of Government amendments Nos. 83 and 84. She has made a strong case. Having listened to what she said, I can tell her that we support the Government on both those amendments.

I am also grateful to the Minister for explaining and clarifying some of the points that I made in proposing new clause 2 and the other amendments in my name and those of my hon. Friends. She made it clear that there is already sufficient protection for approved regulators who are censured or heavily fined.

I am glad that we had a debate on the very important matter of judicial review. That is a fairly specialised and arcane procedure but, on the other hand, it is a very important ultimate protection for people who feel that they have a grievance that needs to be righted in the courts. I am grateful to the Minister for clearly spelling out exactly what its scope is and how far it can go. That will be considered carefully in another place.

On conflicts of interest, I am glad that the Minister confirmed that there is a double lock. She is clearly confident that the existing rules remove any need for amendment No. 1. People who are taking a close interest in the Bill will look at the debate underlying some of the clauses. In my experience as a lawyer, there are occasions when people look carefully at the intent of Parliament in terms of how matters are handled in future, and I think that that will apply to what the Minister has said.

We had a debate in Committee, and there was a debate in the other place, on the wording,

“so far as is reasonably practicable”.

We have given that sufficient attention again this afternoon. I am glad that the Minister has had the opportunity to put her view on the record. She is keen to ensure maximum flexibility and to honour the principles behind Clementi. On that basis, I can understand exactly where she is coming from. I should tell her, however, that this particular issue will probably be returned to in another place. I hope that the Government have not given up completely on what we have said. It is the view of both main Opposition parties that there is a problem which, although minor, could and should be corrected.

I take on board the Minister’s point that she feels that amendment No. 66 would not translate very well into legislation. I accept that, and perhaps in another place a new attempt could be made to improve the drafting. For the time being, I am grateful to the Minister for her reply, and on that basis I beg to ask leave to withdraw the motion.

Motion and clause, by leave, withdrawn.

Clause 8

The Consumer Panel

I beg to move amendment No. 78, in page 3, line 33, leave out subsection (2) and insert—

‘( ) The Consumer Panel is to consist of such consumers, or persons representing the interests of consumers, as the Board may appoint with the approval of the Lord Chancellor.’.

With this it will be convenient to discuss the following:

Amendment No. 6, in page 3, line 36, at end insert—

‘( ) The approval of the Lord Chancellor is required for the appointment of a person to be the chairman or to be another member of the Panel.’.

Amendment No. 7, in page 4, line 25, after ‘appointed’, insert

‘by the Board following public advertisement and selection by the prevailing standards for selection of members of public bodies and’.

Government amendments Nos. 79 and 80.

Amendment No. 8, in page 5, line 19, clause 11, at end insert—

‘(4) It shall be the duty of the Board (subject to subsection (5))—

(a) to provide the Consumer Panel with all such information as, having regard, in particular, to the need to preserve commercial confidentiality, the Board considers appropriate to disclose to the Panel for the purpose of enabling the Panel to carry out their functions; and

(b) to provide the Panel with all such further information as the Panel may require.

(5) The Board is not required to provide information by virtue of subsection (4)(b) if, having regard to—

(a) the need to preserve commercial confidentiality, and

(b) any other matters that appear to the Board to be relevant,

it is reasonable for the Board to refuse to disclose it to the Panel.’.

Amendment No. 24, in page 120, line 6, schedule 1, at end insert

‘with the concurrence of the Lord Chief Justice’.

Amendment No. 147, in page 120, line 9, schedule 1, after ‘Chancellor’, insert

‘with the approval of the Lord Chief Justice’.

Amendment No. 25, in page 120, line 9, schedule 1, at end insert

‘with the concurrence of the Lord Chief Justice’.

Government amendment No. 102.

Amendment No. 26, in page 120, line 15, schedule 1, after ‘Chancellor’, insert ‘and Lord Chief Justice’.

Amendment No. 75, in page 120, line 17, schedule 1, leave out ‘first’.

Government amendments Nos. 103 and 104.

Amendment No. 27, in page 121, line 17, schedule 1, after ‘Chancellor’, insert ‘and Lord Chief Justice’.

Amendment No. 28, in page 122, line 6, schedule 1, after ‘Chancellor’, insert

‘with the concurrence of the Lord Chief Justice’.

Amendment No. 29, in page 122, line 7, schedule 1, after ‘Chancellor’, insert ‘and Lord Chief Justice’.

Amendment No. 30, in page 122, line 9, schedule 1, leave out ‘is’ and insert ‘and Lord Chief Justice are’.

Amendment No. 31, in page 122, line 18, schedule 1, at end insert—

‘(4A) Before removing the chairman under sub-paragraph (1)(b), the Lord Chancellor must seek the approval of the Lord Chief Justice.’.

Amendment No. 32, in page 122, line 19, schedule 1, leave out ‘removing’ and insert

‘the Lord Chancellor and Lord Chief Justice remove’.

Government amendment No. 106.

Amendment No. 33, in page 122, line 20, schedule 1, after ‘Chancellor’, insert ‘and the Lord Chief Justice’.

Amendment No. 34, in page 122, line 21, schedule 1, after ‘Chancellor’, insert ‘and Lord Chief Justice’.

As you were reading out that list of amendments. Mr. Deputy Speaker, you reminded me of what the hon. Member for North-West Norfolk (Mr. Bellingham) said earlier about the debate and the number of amendments to be considered. I hope that hon. Members in all parties realise that the Government amendments are included because we have been listening to what Members have been saying in Committee and elsewhere. Hopefully, that should help us to speed through the debate, but I will not hold my breath.

A number of the points relating to the Government amendments and those tabled by others have been discussed at some length in Committee and in the other place, and the hon. Member for Huntingdon (Mr. Djanogly) made some valid points in Committee about the consumer panel and its appointments. Those should be independent and objective, and should be seen to be so. I said at the time that there was very little between us on that question of independence, and it is appropriate that the Lord Chancellor’s approval of appointments to the consumer panel should be obtained. That is why I have tabled Government amendments Nos. 78, 79 and 80. I hope that the hon. Gentleman can see that those amendments will achieve what is sought by amendment No. 6. Together the amendments not only ensure independence, but they add a level of parliamentary scrutiny and set out further detail on the terms and conditions under which appointments will be made, so that the process is absolutely transparent.

On amendment No. 7, hon. Members might be encouraged to know that as a consequence of the move to involve the Lord Chancellor in appointments to the consumer panel, there will be some degree of parliamentary accountability. Amendment No. 7 would set out requirements for the procedure for making appointments to the consumer panel, and I was concerned that setting out specific requirements in the Bill, such as a public advertisement, might reduce the flexibility of the appointments process, should it have to adapt to changing best practice. For example, the majority of the panel might already have been appointed and they may be looking for someone with particular skills or experience. In such a case, it might be unnecessary to have a widespread public advertisement when advertising in specialist publications or using some other techniques might enable them to get to more appropriate people, more quickly and at lower cost.

I am listening carefully to the Minister. I hope that I am not understanding her to say that the Nolan principles should be set aside in certain circumstances.

I absolutely reassure the hon. Gentleman that under no circumstances would that be the case. I am talking purely about the practicalities of where the best place might be to look for someone with specialist knowledge.

I know that consumer groups have been very supportive of amendment No. 8, and they are keen that the consumer panel should be properly equipped to fulfil its role effectively. However, I am not convinced that there should be an explicit duty on the board obliging it to provide the panel with any information that the panel regards as appropriate. Under clause 168, the board can already give the panel any information that will assist the board in exercising its statutory functions. We could get into a burdensome situation if it also had a duty to provide any information for which the panel might ask. There is a possibility of creating a knock-on effect, with the board having to defend itself with judicial review if it judged that it would be inappropriate to provide certain information, even if sound reasons underpinned that decision.

Let me deal with amendments Nos. 24 to 34 and 147, and Government amendments Nos. 102 and 106. I know that hon. Members appreciate the importance of independent appointment of members of the board—that has been debated at almost every stage in the Bill’s passage. We must all ensure that we achieve that. However, I explained at length in Committee why I cannot accept concurrence of the Lord Chief Justice in appointing the chair of the board.

The Bill is drafted to make it compatible with best practice, which, as the hon. Member for Somerton and Frome (Mr. Heath) said, means being compatible with the code of practice of the Commissioner for Public Appointments. The first principle of that code requires ultimate ministerial responsibility for appointments. That is essential to ensure that those who make appointments are properly accountable to Parliament.

Concurrence with the Lord Chief Justice would undermine that process because it gives someone other than a Minister a veto on appointments to the board. That runs contrary to the principle of ultimate ministerial responsibility. It removes the formal role of the Commissioner for Public Appointments in the oversight and regulation of public appointments and undermines parliamentary scrutiny and accountability in the process. I have therefore suggested that the Lord Chancellor should consult the Lord Chief Justice on appointments to and removals from the board. I have listened carefully to views in the House and I want to ensure that the board is not only independent but seen to be independent, without conflicting with the commissioner’s code at the same time as maintaining channels for proper parliamentary accountability.

I experienced the same difficulty during pre-legislative scrutiny and in Committee in understanding how, if the Minister appoints and removes the legal services board chair, the body is independent of Government. The Under-Secretary essentially proposes a system whereby the Government are in control of the legal services board.

If the hon. Gentleman looks back at our debate in Committee, he will read that I said—I repeat the point here—that it is odd that Liberal Democrats object to proper parliamentary scrutiny by, in this case, the Lord Chancellor, and of the appointment of the legal services board. The fact that it must be done under the rules of the Commissioner for Public Appointments makes it clear that the person has to be independent of Government and Ministers. I am determined that that should be the case.

As the Under-Secretary may know, I have had some involvement in the private sector, where shares are owned, directors can be appointed and so on. If one appoints directors to a body, it is deemed to be a subsidiary, not independent. It may have some legal independence as an entity, but it is a subsidiary and controlled in that way. Does the Under-Secretary not accept that there is some merit in separating the estates of the constitution so that the judiciary and its associated links are independent of the Government?

We all accept that the judiciary, solicitors and barristers are independent of Government. If I may put it gently to the hon. Gentleman, he is perhaps living in the past. The Liberal Democrats, if not the hon. Gentleman, supported the Lord Chancellor having some oversight of appointments to the consumer panel, yet he suggests that there should not be oversight of the chair of the legal services board.

Although I have conceded that it is important for the Lord Chancellor to consult the Lord Chief Justice, some may feel that if the Lord Chief Justice’s view of the appointment were very different from that of the Lord Chancellor, it should not be suppressed. Let me make it absolutely clear that if in consultation the Lord Chief Justice took a view contrary to that of the Lord Chancellor, the Lord Chief Justice would be perfectly entitled, and able, to make his view public. I do not think for a moment that Ministers would be able to apply pressure to him—or her, if we ever have a female Lord Chief Justice.

I welcome the last part of what the Minister said, but, with respect, I fail to understand the argument that because the Lord Chancellor—who is accountable to Parliament—must obtain someone else’s agreement to an appointment that he himself ultimately makes anyway, that somehow undermines his accountability. That does not strike me as logical. If consultation takes place, ultimately it is the Lord Chancellor’s decision; it is just that he has to get someone else to agree with it.

I am glad the Minister has said that if the Lord Chief Justice really thought there was to be an inappropriate appointment, he would have the right to go public. Will she consider entrenching the process by at some point giving the Lord Chief Justice the same right to make a statement to Parliament as he has in relation to other matters under the Constitutional Reform Act 2005?

Let me deal with the second point first. Discussions about constitutional reform are not relevant to this Bill. Perhaps what the hon. Gentleman has said should be referred to those who are dealing with such issues; he may have an opportunity to raise them in another forum.

I am pretty sure that if I looked up “concurrence” in a dictionary, I would learn that it meant that if two people were involved, they would have to agree.

If both must agree, it is not concurrence when only one can make the decision. I am not sure what the right phrase is in this context, but while I am aware that lawyers like to dance on the heads of pins when it comes to definitions, I think that the hon. Gentleman needs to reflect on the meaning of “concurrence” and my reason for rejecting it in this instance. As I said in Committee, the decision should be made in consultation with the Lord Chief Justice, and no doubt with others—that will be in the Bill—and the Lord Chief Justice will be able to make his views known.

Members will recall that I wanted to re-examine the question of the lay chair following our robust debate in Committee about what should happen if for some reason the first chair—who, under the Bill as it stands, must be a lay chair—vacates office prematurely. The possibility was mooted that a lawyer might be able to become chair of the board earlier than had been intended. I therefore tabled amendments Nos. 103 and 104 to ensure that all chairs appointed in the first five years must be lay. Now my hon. Friends the Members for North Durham (Mr. Jones) and for Bassetlaw (John Mann) have tabled an amendment providing for the chair always to be lay, and for that reason I shall not pursue amendment No. 103. I think that the arguments my hon. Friends advanced in Committee—which I hope they will reinforce this evening—are excellent.

Those arguments will give the consumer confidence that the regulatory system is designed to protect them, which is why we already require a majority of the board to be lay. That does not prevent people who have qualified as lawyers from sitting on the board; after all, they will be able to provide an essential insight into the profession. However, I have been persuaded by the arguments. I note that my hon. Friend the Member for North Durham tabled another amendment that has not been selected, but he will find that amendment No. 104 achieves the same end. For that reason, I hope that the Government amendments that I have set out will be accepted.

First, I declare an interest as member of the Law Society and of the corporate finance faculty of the Institute of Chartered Accountants.

The group covers two distinct areas: first, the consumer panel, which will represent the interests of consumers of legal services—we are now almost in agreement with the Government’s position—and secondly, the legal services board, on which there are important outstanding issues. We appreciate the Government’ acceptance of our position regarding the need for appointments to the consumer panel to be made objectively and to be seen to be made objectively. Such a need is fulfilled by the Lord Chancellor’s approval of such appointments.

The Government’s concession on the issue, through amendment. No. 78, is on the same terms as those suggested by my hon. Friends and me in Committee, and thus removes the need for our amendment No. 6. This is a welcome development.

Government amendments Nos. 78 and 79 provide for members of the consumer panel to be appointed for a fixed period and on other terms and conditions as determined by the board. They also provide for the removal of a member of the consumer panel in accordance with those terms and conditions that would require the approval of the Lord Chancellor. Again we are pleased to see the Government’s movement, but I should like some minor clarification. The terms and conditions of appointment will be fixed and known to the Lord Chancellor before removal. Surely we only need to cater for the situation where a removal is carried out other than in accordance with what has been previously approved. If this is the intention, I suggest that the wording in clause 8 should be that a person may be removed from office otherwise than in accordance with those terms and conditions and only with the approval of the Lord Chancellor. In effect, I believe that these new provisions, while moving in the right direction, may require some further thought; perhaps the Minister might clarify the existing wording.

Our amendment No. 7 would mean that the chairman and other members of the consumer panel would not be appointed simply on terms and conditions determined by the board, but following public advertisement and selection by the pervading standards for selection of members of public bodies. This wording is to be added so that appointments to the consumer panel are made and seen to be made objectively. This will give all applicants a fair opportunity to apply for the panel. As a consumer panel, it needs to represent the public and therefore a public advertisement would be the best means of ensuring that that is the case.

Additionally, it is important that the current criterion for selecting members of a public body is employed so that all applicants are given and are seen to be given an equal opportunity to be selected. We see this as important, as the consumer panel is the voice of the public and ensures that consumers are given adequate representation. Also, it is necessary explicitly to set out in the Bill that the pervading standards for selection of members of public bodies must be followed. Given that the appointments are to be made by the board and not by Ministers, strictly speaking, there will be no compulsion to follow the Commissioner for Public Appointments’ code of practice. The hon. Member for Somerton and Frome (Mr. Heath) made a valid intervention on that issue. Our amendment follows that line of thought and would plug the gap.

Our amendment No. 8 to clause 11 would ensure that the consumer panel has access to the information held by the board which it needs to carry out its functions, subject to appropriate restrictions. In the same way that a person needs the appropriate resources in order to do their work, the consumer panel will require access to certain information in order to carry out its work to the highest possible level.

However, amendment No. 8 also recognises that there might be some instances when it is inappropriate for the consumer panel to receive such information. Therefore, its proposed new subsection (5) gives the legal services board the discretion to decide whether that is the case. The Minister was previously unwilling to move on this issue, fearing, I believe, that it could lead to empire building by the consumer panel rather than consumer interests being represented, and we share that concern. However, she agreed that she would consider an amendment ensuring that the board provides the consumer panel with the necessary information for it to discharge its functions. This amendment does that; it would improve clause 11 as it would enable the consumer panel better to represent the consumers’ interests. The Minister has considered this issue again, and we are sorry that there has not been a little movement in that direction.

Amendment No. 75 was tabled by the hon. Member for North Durham (Mr. Jones), whose contribution to our deliberations on the Bill deserves recognition—even if it has not always won our agreement. It would result in the chairman of the legal services board always having to be a lay person. We remain unconvinced of the necessity for such an amendment. It is not sensible for lawyers to be unable to take on the chairmanship of the board and for the prohibition period to be extended indefinitely. Would people qualified as lawyers but who work in business and have not practised as a lawyer for a number of years be among those discriminated against? Such prejudice is unjust and nonsensical.

Does the hon. Gentleman not accept that there is an argument for the legal services board, and particularly its chair, to be seen to be independent of the legal profession?

That argument can certainly be made, but I am saying that it will not apply to all lawyers in all cases. It might apply to certain lawyers; in some circumstances, a lawyer’s practice might negate their suitability for the position. That will not, however, be the case in all instances. The problem with this proposal is that it would create a non-adaptable set of circumstances. That would not be suitable. We have recently had a Prime Minister who was a lawyer, and lawyers can be chairmen of various sorts of organisations, from banks to voluntary agencies. There is no justification for excluding an entire profession from the role of chairman of the legal services board. It is in the public interest that the best person for the job is appointed as chairman, and I see no reason why the best person might not be, for instance, a qualified non-practising lawyer. We shall therefore seek to divide the House on amendment No. 75 at the appropriate time, which will be when we debate a later group of amendments.

Government amendment No. 103 would ensure that the chairman of the legal services board must be a lay person for the first five years. Again, we see no justification for that requirement and believe that the chairman should simply be the best person for the job. I note that the Government have withdrawn the amendment, so this point has in effect become irrelevant.

Government amendment No. 104 clarifies the fact that the chairman, and not simply “any subsequent” chairman, must not carry out reserved legal activities during the appointment. That simply follows on from other points.

Let me now turn to what in constitutional terms is the core of the proposed legislation: the appointment and removal of members of the legal services board. We appreciate the Minister accepting that her position in Committee—the simple reliance on Nolan principles to ensure that appointments to the board are made independently of Government—was insufficient. Appointments to the board being made by the Lord Chancellor alone could have had serious implications. It would have meant that a senior member of the Executive would have had the ultimate responsibility for governing how the legal profession was regulated. Such a structure could have dramatically undermined the crucial principle of the independence of the legal services board from Government.

I am glad that the Minister has changed the Government’s stance, adopted in Committee, of simply tabling amendments to wreck what we felt was the good work carried out in the other place, and that she has instead come back with the constructive suggestion, contained in Government amendments Nos. 102 and 106, that appointments and removals from the legal services board be made following consultation with the Lord Chief Justice.

I spoke at some length in Committee about the serious concerns of many groups about the potential effect on the legal profession’s independence if the Lord Chancellor could make appointments to the LSB alone. The Government appear finally to have listened to the views of the legal profession, the Law Society, the Bar Council, other regulators—both national and, I have to say, international—Conservatives, Liberal Democrats and Cross-Bench peers, who amended the Bill in the House of Lords to ensure that a check exists on the Lord Chancellor’s power to make appointments to the LSB. However, I still question whether the Government’s amendments go far enough to protect the legal profession’s independence. I still believe that ideally, the Lord Chief Justice’s concurrence would be the most appropriate check on the Lord Chancellor’s powers. It is for that reason that my hon. Friends and I tabled amendments Nos. 24 to 34.

The Law Society has expressed concerns about the position under the Government amendments, which provide only for “consultation” with the Lord Chief Justice. In a letter to Lord Kingsland of 10 September, the Law Society stated:

“We think it is important that the Government should make it clear that ‘consultation’ will amount to much more than merely inviting the Lord Chief Justice to comment on a list of names of those the Lord Chancellor proposes to appoint. Consultation should cover all aspects of the appointment process. In particular, the Lord Chancellor should consult the Lord Chief Justice about the specification of the skills and experience required of the Chair and other members of the Legal Services Board, and also about the composition of the panel which will interview candidates.”

I very much hope that the Minister can provide such assurances to address the Law Society’s concerns, which we share. However, requiring appointments to be made with the Lord Chief Justice’s concurrence would ensure that his or her opinion was given sufficient sway, and that appointments were wholly independent of Government influence.

Indeed, we say that this requirement for concurrence is the best protection to bolster the independence of the legal profession from the Government. Simple consultation, with no clarification of what it will involve, does not go far enough on such an important issue. An independent legal profession provides the ultimate safeguard of the rights of the individual against abuse of power by the state. Lord Woolf, the former Lord Chief Justice, has wisely pointed out that

“the independence of our judiciary is dependent on the independence of our legal profession.”—[Official Report, House of Lords, 16 April 2007; Vol. 691, c. 52.]

Simply requiring consultation with the Lord Chief Justice may, in some circumstances, not be sufficient to ensure that any doubt about the independence of the legal profession is removed.

In discussions with the Minister, which were certainly helpful, the question was raised of using a parliamentary confirmation hearing for appointments to the LSB, along the lines announced by the Prime Minister in relation to senior appointments. The Minister stated that she would look into the possibility of using such hearings, and I should be pleased to hear her views on that in relation to all board appointments, or just chairman appointments. I point out, however, that even if such hearings were put in place, they might not go far enough to protect the legal profession’s independence. The Lord Chancellor would not need to listen to any recommendations, and could be seen to be following unchecked some form of political agenda in relation to the appointment of the board. It does not matter how much consultation with the Lord Chief Justice or a parliamentary Committee takes place if it is simply ignored. For this reason, we still see the concurrence of the Lord Chief Justice as the ideal.

The position under the Government’s amendments is that simple “consultation” would suffice. This issue must be addressed again if consultation is ever to be sufficient. At the very least, written guidelines on what that consultation will involve must be provided. For instance, is it agreed that the Lord Chief Justice’s views on appointments to the legal services board should be publishable? We are not yet there on these vital provisions. The concurrence position was that agreed by all Opposition Members and passed in the other place. That is where it will go again, as would be the case in any event, because it is essentially the amendment from the other place that this House has turned down. The Government will have difficulties unless much more flesh is placed on the bones of their concession. On that basis, I shall ask for a Division at the appropriate time in these proceedings to allow hon. Members to vote for concurrence, on amendment No. 24.

I shall speak to amendment No. 75, which stands in my name and that of my hon. Friend the Member for Bassetlaw (John Mann). This simple amendment is of great importance to this Bill, because it reinforces what the Minister has said throughout its passage about putting the consumer at its heart.

The amendment proposes to remove the word “first” from paragraph 2(2) to schedule 1, which states:

“The first chairman must be a lay person.”

For the purposes of the Bill, a lay person is defined as someone who has never acted as a legal professional. The amendment is important in ensuring that the legal services board is seen to be independent, because having someone in place who is not a legal professional in any shape or form is vital, given that we have seen vested interests demonstrated in Committee and again here tonight.

The legal services ombudsman, to whom I referred earlier, is appointed by the Lord Chancellor in accordance with section 21 of the Courts and Legal Services Act 1990, which stipulates that the ombudsman shall not be a qualified lawyer and shall be independent of the legal profession. It is important that the chair of the new legal services board is not only independent but seen to be so. That cannot be achieved if he or she has connections with the legal profession. The Bill provides that the first chairman should be a lay person—I am happy that the Conservatives support that—so why not continue that? The amendment, which I am pleased that the Government now accept, will reinforce the importance of that lay position; many of my constituents need its protection.

During the passage of this Bill, both in this Chamber and in the other place, we have seen a rearguard action fought by the vested interests of the legal profession to protect anything and to fillet the Bill. I am pleased that the Minister has not given in to that pressure and has ensured that the Bill has the consumer at heart, as she has always stated. This proposal is an important part of that. I am also pleased that Which? has been campaigning for this amendment and supporting the call for the chair to be a lay person.

We have heard from vested interests during discussion of the Bill. It is a badge of honour that the Conservatives are to divide the House on my amendment. I am pleased because it shows, as has been demonstrated during progress of the Bill, that no matter what is said by the sleek packaging of the new Conservative party, when it comes to legislation the old Tory party of vested interests and conservative nature emerges. The way in which the Conservatives have conducted themselves on this Bill is a great example of that. I am pleased that the amendment will be supported—[Interruption.] The hon. Member for Huntingdon (Mr. Djanogly) asks whether all lawyers are Tories. No, they are not, but he and his colleagues are doing a damned good job of protecting the vested interests of the legal profession. I would have thought that were he into this new cuddly, friendly, consumer-orientated Conservative party—

Sorry, as my hon. Friend says, that was last week. Were the hon. Gentleman into that approach, he would embrace something that gives the little people in this society some rights and powers and that puts the consumer, rather than vested interests, at its heart. I am pleased that the amendment will be put to a vote. I hope that it will be agreed and that we ensure that we get a legal services board that is not only independent from the legal profession but is seen to be so. People will gain confidence from that. I am sad that that will ensure that Members such as the hon. Member for Bromley and Chislehurst (Robert Neill) will not be able, following his retirement, to sit on the board, but I am sure that he will find a quango to add to his already long list.

Obviously, the hon. Gentleman’s arguments for the independence of the chair of the legal services board from the legal profession are strong. However, does he accept that the legal profession should be independent of Government and not be in a situation in which a Government appointee can sack people from practising?

I am sad that the Liberals have fallen for that nonsense. The hon. Member for North Southwark and Bermondsey (Simon Hughes) was good in Committee at championing the consumer interest, as was the hon. Gentleman, but he does himself no favours by falling for the old turkey that somehow the amendment would mean Government interfering directly in the legal profession. I know of no other organisation that would insist on having a direct say in how it is regulated or on the board that regulates it. I mentioned in Committee the example of the certification officer. The Conservatives would certainly frown on the idea that a full-time trade unionist, or someone with a trade union background, should be the certification officer, but if we do not accept the amendment, that is what will happen in the legal profession.

I am pleased that the Government have listened and the Bill’s passage has been conducted in a good spirit. To give the Minister credit, she has taken on board points that have been made about the consumer interest, which is after all the core of the Bill.

This is an important group of amendments, dealing as it does with the constitution, the consumer panel and the legal services board. I recognise the moves made by the Minister in the direction of other members of the Committee in recognising some of the problems with the Bill. I especially welcome the change in the provision for the appointment of the consumer panel, which now requires the approval of the Lord Chief Justice.

I hear what the Minister says about information, and I shall look carefully at the Official Report when it comes to the information provided to the panel. It is essential that the panel has all the information that it requires to do its work effectively. There have been instances of consumer panels in other areas of government and industry that have not had all the information that they need. It is crucial that there should be no suggestion that the panel is kept in the dark about key issues relating to the legal profession and its relationship with its consumers. I will look closely at what the Minister says to see whether it allays the fears of consumer groups that think that the provision of such information should be a statutory requirement.

I entirely agree with amendment No. 75, tabled by the hon. Member for North Durham (Mr. Jones). There is a strong argument that the chair of the legal services board should be not only independent but seen to be independent of the profession that is being regulated. Even if a person who has qualified but has been out of practice for 25 years is appointed as chairman of the LSB, he or she will not be seen as an entirely independent arbiter. It is therefore very much in the interests of the system that the Government are promoting and of the professions themselves that the person appointed is seen to be beyond reproach. Having a lay chairman would strengthen the whole principle of the LSB, in the same way as arrangements for disciplinary matters in Parliament are strengthened by an Opposition Member—who is seen to be independent of the majority in the House—chairing the Committee in question. Such independence is important and, if we are to have a Division, I shall recommend to my right hon. and hon. Friends that they support the amendment.

I part company with the Government on the requirement in respect of the Lord Chief Justice. It would be wrong to fail to recognise that the Government have added a provision requiring consultation, and that is a move in the right direction. However, I have tabled amendment No. 147, which would require the approval of the Lord Chief Justice. I had a brief discussion with the hon. Member for Huntingdon (Mr. Djanogly) the other day about whether the word “approval” had any different connotations to the word “concurrence”. On reflection, I am not sure that it does, except for the fact that the Government clearly prefer the word “approval”, as they used it in their amendments on the consumer panel. Therefore, if there is any nuance in that word that will secure the agreement of the Government it is worth exploiting. The honest truth, however, is that I tabled the amendment having temporarily mislaid amendment No. 24, which the hon. Gentleman had tabled. They come to the same thing, and that is why I have now added my name to amendment No. 24.

Why is it important that we have the concurrence of the Lord Chief Justice? It is not because he is someone who will impose the will of the legal profession on the appointment. That is not the role that the Lord Chief Justice would exercise in that respect. Is there a difference between the approval and the consultation that the Minister is proposing? There is a difference in precise terms, but I am less confident in claiming that there is a difference in practice. I find it difficult to imagine circumstances in which a Lord Chancellor would proceed as chair of the LSB with the appointment of someone whom the Lord Chief Justice had considered, rejected and told the world why he had rejected them. The Lord Chancellor would be in a very difficult position.

The intervention by the hon. Member for Bromley and Chislehurst (Robert Neill) was interesting. Would the Lord Chief Justice have the statutory right to report that disagreement to the House? I think that he would. In that case, the Lord Chancellor would be proceeding with the appointment of someone in whom the Lord Chief Justice had no confidence and could report that fact in open session to this House and the other place. Would the Lord Chancellor proceed with the appointment in such circumstances? If that is the case, the Government’s resistance to the amendment becomes even more difficult to sustain, because the practical consequence would be the same.

I have dealt with the practicalities, and I shall now deal with the theory. The intervention by my hon. Friend the Member for Birmingham, Yardley (John Hemming) was right: the appointment must be independent of the legal profession, but it must also be independent of the Government. We know what happens in those jurisdictions where lawyers are appointed—or their appointment is in any way constrained—by the Government. That is the way to tyranny, which is why we have always maintained the independence of the legal profession and why we have written into statute the independence of the judiciary and the particular role of the Lord Chief Justice, not as head of the profession but as head of the law in terms of the judiciary. Removing any suspicion that the Government may want to manipulate the membership of the legal services board by ensuring that the Lord Chief Justice has not only been consulted but is actually prepared to support the appointment of a given person is an important safeguard for that body.

In the business context one talks about hiring and firing, so does my hon. Friend agree that the power to fire is a much stronger control over the board than the power to hire?

I would agree, except that I do not believe that power under the Bill would be exercised in any real sense unless there was a case of gross misconduct. There may be such cases and one hopes that they do not arise, but one must at least make provision. My point is that the concurrence of the Lord Chief Justice is the imprimatur that ensures that the Lord Chancellor is acting properly in making appointments to the legal services board.

My last point is to rebut what the Minister said about accountability. I do not understand how the concurrence, approval or agreement of the Lord Chief Justice in any way removes the accountability of the Lord Chancellor—happily to this place rather than to an unelected place down the Corridor—in the exercise of the political judgment that that Minister makes. It will still be for the Lord Chancellor to initiate the appointment process. It will still be for the Lord Chancellor to determine the criteria for appointment. It will still be for the Lord Chancellor to arrive at the name that is submitted, and it will still be for the Lord Chancellor, having secured or otherwise the agreement of the Lord Chief Justice, to propose it to the House. Of course, if the Lord Chief Justice says that a person is grossly unsuitable, the appointment procedure will come to a halt, but the person who is appointed with the approval of the Lord Chief Justice is subject to the accountability of the House on the part of the Lord Chancellor. That seems entirely right and proper and I do not believe the Minister’s assertion that the provision undermines the accountability of Ministers or the role of the House in securing proper consideration of such appointments.

For all those reasons amendment No. 24 is well founded. Whatever view the Minister and her right hon. and hon. Friends take tonight is almost irrelevant because the proposal will return from another place. I am sure that people there feel strongly that the role of the Lord Chief Justice in the matter needs to be secured and buttressed, not for narrow sectional or vested interests but because it will ensure that the independence of the legal services board is maintained with a double lock—a political one, independent of the professions, and a judicial one, independent of the Government. Both of those working together will ensure that we have a legal services board that does the job the House wants it to do. If the amendment is moved later, I shall recommend that my hon. Friends support it.

We shall support amendment No. 75. We are nearing a satisfactory conclusion to this part of the Bill, but we are not quite there yet.

Unfortunately, the hon. Member for Bromley and Chislehurst (Robert Neill) is no longer in the Chamber. He described some Members on the Labour Benches as obsessed. He chose his terminology injudiciously; a better description would be “diligent”. The people who are obsessed in this debate, as they have been throughout the two years of the Bill’s proceedings, are those who want to maintain the privileged position of the legal profession and everything to do with it. We have heard the same thing again today.

The suggestion that the prospect of the board’s having a permanent lay chairperson could lead to a Division called by Her Majesty’s Opposition casts some doubt over the wisdom of the Conservative party and about its contact with the real world. However, in the real politics, I shall be generous to the Opposition. The obsession seems to be with preserving the status quo and the privileges of the legal profession, and in my brief remarks I shall speak in support of the amendment that I have signed. I shall cite as closely as I can the words of the late James Sheppard, who was one of my constituents, because I always like to ensure that the House comes into the real world when we are discussing the problems of regulating the legal profession.

When I first called meetings of miners—usually those who had retired—and their widows, they had no understanding of what the Law Society was and had never heard of the Bar Standards Board or the Bar Council. I had never taken cases to court and had no knowledge whatever but I realised that something was going wrong. I received backing at every one of my initial meetings from Mr. James Sheppard, a retired miner who was very ill. He was probably also very aged, but it was hard to tell because he was so ill that one could not be certain of his age. One could be certain, however, that he would ensure that all my meetings were wheelchair-accessible, because his emphysema meant that he was permanently wheelchair-bound. Despite that, at every meeting he insisted on getting out of his wheelchair—initially, much to my fear—to deliver a speech. I watched him teeter to his feet and wondered how long he could stand before falling down, but on every occasion—from first to last—he raised himself to his feet with the aid of his sticks and delivered the most eloquent of speeches.

Mr. Sheppard spoke on behalf of retired miners everywhere. He explained his life and work, and told us how during the war coal was dug by people such as him to ensure that we could produce armaments and keep the power going to sustain the war effort. Their service was belatedly recognised by the Ministry of Defence through the Bevin boys medal. Throughout the post-war period, miners in constituencies such as mine worked in collieries where health and safety was an afterthought. That is why miners won a court battle on emphysema. Such stories are mere words when they are bandied around in this place, but they are not mere words when someone such as Mr. Sheppard is struggling for breath and demanding to know why a solicitor took part of his industrial disease compensation with no right to do so.

When I first heard Mr. Sheppard, neither he nor I had a clue about the regulations or how he could take his case forward. It took me 18 months to devise a mechanism so that one of the cases would hold up before the Law Society and my miners could get their money back. That was eventually too late for Mr. James Sheppard, because he did not see justice; his wife had to get justice for the late Mr. Sheppard. That is the kind of problem that we are dealing with, and it is why when we make a proposal suggesting that a lay person should chair the board that oversees the regulation of the profession, it seems to me and to all my constituents that we are being rather modest in doing so.

If one wants to take the other extreme, I note how, when the Bill was first proposed, all parties in the House ensured that every member of the Joint Committee on the draft Bill came from the legal profession. Some of us are not obsessed; we are diligent on behalf of our constituents in ensuring that those who do not earn a good living from the legal profession have a system in place that allows them access to justice. That access to justice did not exist for my constituents because they could not see it. Only when the scale of the solicitors’ greed came to the fore did we begin to win some changes. If that had not happened, such things would still be going on.

I remind the House that, even today, the vast majority of cases that have been settled come from three constituencies. If I get the opportunity later in the proceedings, I will name three new solicitors today. One of them has been in my sights for some time; the other two have come to light just this weekend. They are new solicitors, and I have not had the opportunity to deal with them, unlike the 45 from whom I have got money back before.

I hope that some Opposition Members will be courageous enough to think things through. A person in my constituency or others who has an average knowledge of the law—Mr. Sheppard was far from average—wants a legal profession that is confident enough in itself and in its own decency confidently to welcome someone who is independent of that profession overseeing and regulating the board. I have received a large number of letters from legal professionals shocked by the minority who have abused the honour of their profession, and none of them are worrying about the independence of a lay chair. So I hope that the Opposition will rethink their disgraceful call to push the issue to a vote.

I was a member of the Joint Committee on the draft Bill, and I declare an interest as a non-practising solicitor. I have been non-practising for 10 years now, so I hope that my hon. Friend the Member for Bassetlaw (John Mann) will not be too hard on me as one of the lawyers whom he is attacking.

I give great credit to my hon. Friends the Members for Bassetlaw and for North Durham (Mr. Jones) for being so persistent about a lay chair for the legal services board. I congratulate them on what appears to have been their successful conversion of the Government to their cause. I also want to congratulate the Minister. The hon. Member for Huntingdon (Mr. Djanogly) mentioned that she has taken care to listen to all points of view and has carefully considered all the arguments. She has been very deliberate in her decision to propose her amendment on the consultation between the Lord Chancellor and the Lord Chief Justice. I will support her final judgment, because I appreciate the care that she has taken in coming to that decision.

I want to say briefly why I support both proposals. First, on the lay chair of the legal services board, clearly the board will comprise a number of lawyers and non-lawyers. It is important that it should have a lay chair, because the crunch decision will come one day when the legal services board explains why it has not decided to intervene in a crisis that involves legal services. The person whom the whole country will see on television screens, hear reported on the radio and see reported in the newspapers will be the chair of the legal services board. Public confidence will be maintained if no one says that the board decided not to intervene because that person was a lawyer and that, “They’re all the same, these lawyers; they stick together.” That is a matter of public interest, which is also a regulatory objective in the Bill.

As for consulting the Lord Chancellor, my hon. Friend the Member for North Durham mocked the official Opposition for being behind the rest of us and stuck with the vested interests of lawyers in opposing the consultation provision and in seeking the concurrence provision. The official Opposition are in a worse position than he suggests. In fact, they have been left behind by everyone else. The solicitors’ representative body, the Law Society, now supports the Government amendment. The representative body of the Bar, the Bar Council, and the Chartered Institute of Patent Attorneys now support the provision. Clearly, Which? supports it.

At least half of the organisations that the hon. Gentleman mentions as having accepted the Government’s position have done so reluctantly on the basis that the Government have made a concession from the position that they actually want, which is concurrence. Recent missives from the Bar Council say that quite clearly.

I am grateful to the hon. Gentleman for that intervention, because I have in front of me the briefings from those bodies, each of which says that it supports the Government amendment. I do not know about their motivations and how strongly they feel about supporting the Government, but they say in writing that they support the provision; only Opposition Members say that they do not support the provision.

The other suggestion that the hon. Gentleman mentioned is one that I made in a meeting with the Minister, and it relates to confirmation hearings for the chair of the board. If that suggestion becomes adopted practice, it might provide some comfort to the Opposition, because the representation of the public interest in such appointments should lie with Parliament, which represents the people of this country.

I served on the Treasury Committee in the 1997 to 2001 Parliament, when we introduced confirmation hearings for the members of the Monetary Policy Committee. Admittedly, that is a non-statutory arrangement, which is not binding on the Treasury. Nevertheless, that process has survived to this day. I was interested in the Prime Minister’s statement on constitutional change, when he expressed his interest in confirmation hearings. We could reach a stage where confirmation hearings are binding and statutory. They could reassure some hon. Members about their fear that appointments made by the Lord Chancellor, after consultation with the Lord Chief Justice, would not show sufficient independence. I should like the House to put down a marker today, so that if we set up confirmation hearings, one of the posts that should be subject to them is the chair of the legal services board.

I shall be very brief, because it is clear where the House agrees and disagrees on these issues.

On confirmation hearings, I accept what my hon. Friend the Member for Stafford (Mr. Kidney) has said. The hon. Member for Huntingdon (Mr. Djanogly) raised the issue, which is receiving consideration elsewhere in the Government. Given what has been said tonight, the appointment of the chair of the legal services board might well be appropriate for a confirmation hearing. Of course, it is also possible for a Select Committee to scrutinise the appointment. We said that in our response to the Joint Committee.

With this issue going back to the Lords in the very near future and there not being much time, an early indication from the Government on confirmation hearings would be helpful.

I can tell the House that, between now and the Bill going to the Lords, I will do my best to speak to my colleagues to find out whether we can discuss further the possibility of that type of appointment.

On Government amendment No. 80, it is important that removals are made in accordance and consistent with the terms and conditions of appointment. It is under those conditions that the board, with the approval of the Lord Chancellor, can remove members of the consumer panel. The Bill makes no express provision in that respect, because it is for the board to decide, but if we are to require the Lord Chancellor’s approval for appointments, it follows that we also need his approval for removals. We needed to put that in the Bill to cover the period of appointment.

It is normal practice for appointments to bodies such as the consumer panel to be for fixed periods. The amendments allow members to be reappointed, or to be removed either because the board chooses not to reappoint them or because it actively removes a member in accordance with those terms and conditions.

The hon. Member for Somerton and Frome (Mr. Heath) rightly mentioned narrow sectional interests, but it seems to me that his arguments—saying that it would be right to have a lay chair, but then supporting the concurrence of the Lord Chancellor—are entirely contradictory. Incidentally, I understand that there is no legal difference between approval and concurrence, so he will be pleased to know that his amendment would have been just as appropriate in that respect. However, if he agrees with us that consumer confidence requires that the chair always be a layperson, he must see that the logic of that would be undermined by requiring the agreement of the Lord Chancellor to the appointment.

That would be the case only if the Lord Chief Justice was seen simply as a representative of the legal profession, rather than as the head of the judiciary. I make a clear distinction between the two. If it were suggested that the appointment would need the concurrence of someone from the Law Society or the Bar Council, rather than the concurrence of the Lord Chief Justice, the Minister’s point would have a strong degree of validity.

I have just been reminded that I keep saying “the Lord Chancellor” instead of “the Lord Chief Justice”. I hope that that will be corrected in Hansard.

I had hoped that we had reached the point where we all agree that the consumer is at the heart of the Bill. It is important for the consumer to believe that there is no bias, but, inevitably, the Lord Chief Justice is an ex-lawyer who has at one time or another been a member of the Bar Council or the Law Society. The hon. Gentleman talked about perception, but the consumer would perceive the Lord Chief Justice to be a reflection of the legal profession. That is why concurrence is not appropriate.

Does my hon. Friend agree that, as my hon. Friend the Member for Bassetlaw (John Mann) said, the way to look at the matter is through the prism of the consumer?

If he were still with us, Mr. Sheppard would see no difference between the Lord Chief Justice and any other lawyer or person connected with the legal profession; he would see his involvement as the legal profession having a say in the appointment. Is it not important that laypeople such as Mr. Sheppard, who are both consumers and the victims of the legal professions, understand that the appointment is independent of that profession?

My hon. Friend, as always, makes the case eloquently. We will have to agree to disagree on this matter, and the House will divide on the amendment.

The Minister says, rightly, that we disagree. However, if we are to go down the consultation route, will she give the House some idea how the plans for consultation will be fleshed out? The Bill is shortly to return to the other place; I know that their lordships will want the meaning of consultation to be fleshed out. Will she do that before the Bill goes back to the other place?

I have already engaged in correspondence with the Lord Chief Justice and in discussions on how consultation would take place. I shall try to ensure that that information is made available to both Houses before the debate continues in the other place.

To make a final point to Conservative Members on why they might want to rethink their approach to having a lay chair, I explained to the Lord Chancellor that our amendment would ensure that, whatever he may intend to do after he leaves Parliament, the one thing that he will not do is chair the legal services board. The amendment will ensure that neither he nor any other eminent politician and lawyer will be able to do so. He agrees that that is quite right.

Amendment agreed to.

Amendments made: No. 79, page 4, line 25, leave out ‘on terms and conditions’ and insert

‘for a fixed period, and on other terms and conditions,’.

No. 80, page 4, line 27, at end insert—

‘( ) But a person may be removed from office in accordance with those terms and conditions only with the approval of the Lord Chancellor.

( ) A person who ceases to be chairman or another member of the Consumer Panel may be re-appointed.’.—[Bridget Prentice.]

Clause 15

Carrying on of a reserved legal activity: employers and employees etc

I beg to move amendment No. 152, in page 7, line 13, at end insert—

‘(3A) Where “B” is an organisation whose members are carrying on a particular trade or profession for the purposes of which that organisation exists, the provision of relevant services to members for no charge (or by providing an indemnity in respect of unrecovered costs) shall not constitute the provision of relevant services to the public or a section of the public.’.

With this it will be convenient to discuss the following amendments: No. 35, in page 7, line 20, leave out subsection (6).

No. 36, in page 7, line 25, leave out ‘Subject to that’.

No. 37, in clause 23, page 12, line 12, leave out ‘an independent’ and insert ‘a’.

No. 39, in clause 105, page 57, line 24, leave out ‘an independent’ and insert ‘a’.

No. 40, page 57, line 26, leave out ‘an independent’ and insert ‘a’.

No. 41, in clause 106, page 57, line 29, leave out ‘an independent’ and insert ‘a’.

No. 38, in schedule 12, page 189, line 42, leave out ‘an independent’ and insert ‘a’.

No. 42, in clause 207, page 117, line 9, leave out from ‘“independent’ to ‘Act);’ in line 11.

No. 43, page 117, line 26, leave out ‘an independent’ and insert ‘a’.

No. 44, page 117, line 40, at end insert

‘“trade union” means a trade union for the time being included in the list of trade unions kept under section 2 of the Trade Union and Labour Relations (Consolidation) Act 1992 (c. 52).’.

No. 45, in schedule 23, page 383, leave out line 21.

No. 46, page 385, line 10, at end insert

‘trade union | section 207’.

The hon. Member for Bassetlaw (John Mann) has made some valid points about the need for regulation and eloquently explained how it is possible for professionals to work against the interests of their clients. Hon. Members will be well aware of my interest in what happens in the family division. There, for anyone other than the individual concerned or a lawyer to report bad behaviour to the regulators is contempt of court, which means that there is a lot more bad behaviour.

The question is: how far should regulation go? Historically, many organisations and corporate entities have employed solicitors—for example, trade unions, the Medical Protection Society and city councils. What sort of regulation is appropriate in those circumstances? One of the difficulties the trade unions face is that the day-to-day activity of a trade union convenor representing their members in a workplace is often a negotiation, and if the trade union had to regulate itself as an alternative business structure, ordinary day-to-day trade union activity might be regulated in the same way as legal activity. That would obviously be completely wrong. To that extent, the Government’s approach of aiming to exempt trade unions from much of the regulatory process is sensible.

However, other organisations—mutual organisations that are not trade unions, such as the Medical Protection Society—could also be trapped by the ABS regulations. I accept that the drafting of my amendment may not be the only way to crack this nut; perhaps in another place the nut will have to be cracked in a more subtle manner. However, in completely rewriting the regulation of the legal profession as we are doing, we should not, through over-regulation, trample on some of the mutual organisations that do a good job for their members.

Amendment No. 152 considers the issue from the point of view of mutual organisations that are not trade unions. I do not say that the amendment is necessarily the best way of going about the matter, but the issue needs to be resolved. It is important to introduce adequate regulation and to make sure that we protect the interests of people who deal with the legal profession.

The issue particularly affects situations in which someone employs a firm of lawyers to act for them. Of course, the fact that the Legal Services Commission is paying for things presents a challenge; there is the question of whether that means that people do not act as well as they would if clients paid them directly. The case of mutual organisations that employ in-house lawyers does not really fit in with that; such lawyers should and will be regulated. There is the argument that one should limit what is done by the mutual organisation—in other words, if we give exemptions to mutual organisations or trade unions, we should limit that exemption, so that trade unions and mutual bodies cannot suddenly set up as conveyancing operations and benefit from the exemptions. There is an argument for that, but I think that we are generating a sledgehammer to crack nuts, and in the case of some of the mutual organisations, there are no nuts to be cracked. The amendment aims to be a way forward for dealing with that issue.

I shall speak to amendment No. 35 and other amendments in my name and the names of my hon. Friends on the position of trade unions under the Bill. The purpose of amendments Nos. 35 and 36 is to reverse the trade unions’ extremely wide-ranging exemption from the regulatory requirements under the alternative business structure regime of part 5. The exemption, which the Government shuffled in at the last minute in Committee, would mean that trade unions were not subject to any form of regulation under the Bill. Given that the benefit of the consumer has been touted as a key objective of the Bill throughout its stages, I cannot understand why the Government are now prepared to exclude unions from the regulatory framework and subject trade union members to a greater likelihood of receiving poor legal services from providers who are not accountable. Do the Government really think so little of union members that they will allow them to accept legal services of a lower quality than those that non-members would enjoy? It has been clearly highlighted that the behaviour of some trade unions has been wholly unacceptable—for example, in relation to miners’ compensation schemes.

The hon. Gentleman will have his chance to speak. I ask him to let me make my case. The Minister was happy to accept that the behaviour of some trade unions was appalling, but she also states that the purpose of the exemption is to maintain the status quo with regard to the unions. We will not accept such a weak position. We are here to improve things for the consumer, and not simply to maintain the status quo. Perhaps she should think a little more about union members and a little less about union bosses.

I should like to repeat the Solicitors Regulation Authority’s opinion on the trade union exemption. It asks hon. Members to reject the original Government amendment, which it says

“will have the effect of exempting trade unions from being regulated in the same way as other bodies who provide legal services to the extent that they provide such services to their membership. The SRA are opposed to any route that would exempt trade unions from part 5 in relation to reserved legal activities. The SRA’s view is that trade union members deserve the same protection in relation to reserved activities as any other consumer of legal services”.

The SRA goes on to say that it is

“a matter of principle—the principle that the Bill is seeking to achieve for the future, and the principle envisaged by the Clementi Report. This principle is that any organisation providing reserved legal services to the public or a section of the public needs to be properly and proportionately regulated”.

In a memorandum of 10 October this year, the SRA again highlighted its concerns about the trade union exemption.

I foresee that attempts will be made to defend the Government amendments by stating that if the unions were to provide reserved legal services to the public rather than to members, advice given by lay officials would have to fall within the alternative business structure licensing regime. The SRA’s view, which I quoted, is that members deserve the same protection as any other consumers of legal services. Even if one accepted, for some reason, that trade union members did not deserve such protection, the question of what constitutes a member is open for interpretation. I would like to express our extreme uneasiness about who could be considered a member of a union, and who would therefore not be classed as a protected member of the public.

In a letter to me of 21 June this year, the Minister helpfully clarified her position on the union exemption. She wrote that in Committee

“Members raised the issue of whether a union would be able to grant ‘associate membership’ to unconnected people and provide services to them within the exception made through the amendments that were passed. I should make it clear that the terms of the amendments are that a union is excepted where it is providing services by virtue of membership. The detailed drafting makes clear that this includes retired members and family members, but it does not otherwise distinguish between classes of membership. It will be up to the unions to determine who is a member and to whom they want to make membership-based services available. If they want to extend services to associate members, that will be a matter for them.”

It is astounding that it will be up to the unions to determine who is classed as a member, and therefore to whom they can extend reserved legal activities without needing to be licensed under part 5. That clearly creates the possibility of unions bringing in associate members and providing a poor service to them, as happened in many of the miners’ compensation cases. The Minister went on to highlight the weakness of the position under the amendments that the Government proposed in Committee:

“I do not think that similar problems can be tackled by restricting the categories of ‘member’ to whom clause 15 should apply. If we were explicitly to exclude associated members, unions might instead create other classes of member, or simply give people bogus ‘membership’. And even if we did restrict the clause 15 exception, there would still be the deeper problem of the unions not providing a good enough service. The solution to that is regulation: through the authorised persons providing the service and, for claims management, through the framework and code of conduct that we have established”.

I find it almost unbelievable that, on one hand, the Minister fully admits that the unions could become involved in dodgy practices such as giving people bogus membership so that they can give them advice while remaining outside the licensing requirements of part 5, and that, on the other, she says that the issue of who is classed as a member is completely up to the unions. That highlights the fact that the exemption is not only unacceptable in principle but simply far too wide-ranging in practice.

The Minister states that the deep problem is with the unions not providing a good enough service, and that the solution to it is the regulation of authorised persons by existing regulators such as the Law Society. Why are we bothering to pass the Bill if sub-standard service on the part of the legal profession can be sorted out by existing regulators under the existing regime? I fully understand that if trade unions were to become fully licensable under the alternative business structure regime, advice on potential employment disputes given by lay shop stewards could fall within the ambit of the regulations. I understand that it might be undesirable, from the unions’ viewpoint, for such advice to come within the ambit of legal services regulation, although I think that that should be debated further. What I cannot understand, however, is providing such a wide exemption.

In a letter of 10 September to Lord Kingsland, the Law Society stated that

“Under the current formulation, trade unions will be able to provide reserved legal services of any sort to members, without requiring to be regulated under the Act as all law firms (and not for profit organisations) will be. Trade unions could, for example, provide conveyancing services or representation in divorce proceedings, as well as advice in relation to employment disputes. Indeed, because the question of membership of a trade union is simply a matter for the trade union’s own rules, there would be nothing to stop a trade union from offering membership to the public at large and then providing reserved legal services to those newly recruited members. I should say that there is no reason to suppose that any trade union currently has plans to develop its services in that way. But that hardly seems a justification for creating such a wide potential regulatory gap".

The Law Society stated that it thinks that the problem could be easily solved if the exemption for trade unions applied only to services that are ancillary to the trade unions’ main function of representing employees in relation to their employer. That would mean that a trade union would be exempt from regulation under the Legal Services Act if it was providing representation in relation to, say, a contractual dispute with the employer, or an accident at work, but not when it provided legal services on an unrelated matter. If trade unions wish to provide reserved legal services unrelated to main functions, they should be able to do so only by obtaining an alternative business structure licence under part 5. The inherent weakness of the decision to exempt trade unions is highlighted by the Minister’s letter to me of 21 June:

“If a union extends services to anyone other than members, it has to be regulated as an entity and licensed as an ABS body. But the key to members’ protection is, as I took pains to explain at Committee, that reserved activities still have to be carried out by authorised lawyers, who still have to be regulated by approved regulators. If a regulator concludes that the public interest requires that lawyers in these situations work in a regulated environment it will be able to make appropriate rules. This will of course be subject to the Legal Services Board being satisfied that those rules are proportionate to the problem and consistent with the regulatory objectives. I made this clear in the debate and I am happy to confirm it now. If the circumstances warrant it, a regulator such as the Law Society will be able to introduce a rule that allows a solicitor employed by a union to practise only through a regulated entity. Alternatively, it will be able to limit the services that lawyers are allowed to provide while working within a union.”

May I just finish this point, as it gets more interesting?

That means that a regulator such as the Law Society could determine, if the public interest requires it, that a trade union should be subject to the ABS licensing regime in certain circumstances. The exceptionally wide-ranging nature of the trade unions’ exemption is highlighted by the fact that the Minister went on to say:

“I must clarify that this does not necessarily mean that rules could force any particular trade union to opt in to the ABS framework or to create a subsidiary that operates under the ABS framework. Under Part 5 a body is licensed to carry on reserved legal activities. But an independent trade union that carries out services as described in the new clause 15 provision would be considered not to be carrying out a reserved legal activity. Similarly, a subsidiary body of the union may find that it falls under clause 15(4), which would mean that it would not be carrying out reserved legal activities either. In those circumstances there would be neither an obligation to be licensed nor a possibility of a licence, because there is no reserved legal activity for which to provide a licence.

I am sorry that, even after lengthy discussion in Committee during which I explained to the hon. Gentleman the way in which legal services are provided by trade unions, we should return to this old chestnut. Can I clarify the position that he has just set out? If a trade union employs a solicitor directly and they are legally qualified, his opening statement that trade unions will not be regulated is not true. As a qualified solicitor, that individual would be regulated under the existing law and, under the proposals, as a member of the legal profession.

The problem with that argument is that in the rest of the Bill, it has been decided that entities should be regulated, so there is a carve-out from the very principles that the Government introduced in the Bill. Let us face it: the provision was not in the Bill when it was first introduced in Parliament—it was included after union lobbying. To give an example, if a trade union provides through its in-house legal team litigation and advocacy services relating to occupational disease cases, and evidence comes to light that a union employee has been acting improperly, it may not be clear whether the in-house lawyers providing the litigation and advocacy services were aware of, or complicit in, any improper action. If the SRA regulates only the in-house solicitor, and not the union, the SRA’s investigatory powers in seeking information from union officials and interviewing others to find out whether a solicitor was involved would be limited. Any investigation would be compromised, and it may not be possible for the SRA to determine appropriate responsibility and take the relevant disciplinary or regulatory action.

As someone who used to run a legal department for a trade union, may I tell the hon. Gentleman what happened on my watch when bad advice was given, not by a solicitor, but by a trade union official? The individual sued the trade union because they had been given bad legal advice, and it is still open to people to take any trade union to court for any advice that they are given. In that respect unions are more open than any other public body I know of.

The hon. Gentleman should be concerned that the union is not regulated. In previous debates on the Bill—and I am pleased that he did not repeat this—it was said that the lawyer should take the hit. That is quite right. If a lawyer has provided bad advice, they should be regulated and take the rap from the SRA. If the union just gets rid of that solicitor and carries on doing the things that it should not be doing with the new solicitor, because it is not regulated, that is unacceptable.

I shall not give way, as we have covered the point pretty well.

I simply do not understand how the wide-ranging exemption for trade unions can be regarded as acceptable. It could lead to a situation whereby a union provides conveyancing services, for example, to its members and the Law Society believes that it requires further regulation. As the Minister pointed out, further regulation under the ABS regime to which other legal service providers are subject would not be a possibility. There is no justification for exempting trade unions completely from the ABS licensing regime when providing services to their members, particularly as “members” is such a loose term, the definition of which is completely at the discretion of the trade unions. Perhaps, as the Law Society suggested, a solution can be found by limiting the exemption to services that are ancillary to the unions’ main function of representing employees in relation to their employer, and therefore ensuring that lay advice on employment issues is not caught, but that would still drive a coach and horses through the principle of the Bill that applies to all other entities.

We can see that that principle applies to all entities from the concerns set out to me in a letter of 26 June from the Medical Protection Society. MPS is a mutual, not-for-profit organisation that has offered expert medico-legal support and advice, as well as discretionary indemnity for civil claims to doctors, dentists and other health care professionals on matters arising from their professional practice, for more than 100 years. It stated:

“The Legal Services Bill makes no special provisions for membership organisations such as MPS. Instead such organisations would be required to set up Alternative Business Structures. We believe that this approach is disproportionate to the level of risk presented by membership organisations...We believe that there is a clear case for MPS to be classed as one of the bodies eligible to apply for special licences in which the statutory requirements would be waived or otherwise modified.”

That point highlights the unjustified special treatment of trade unions and the unsatisfactory nature of the legislation in relation to genuine not-for-profit organisations such as MPS. Perhaps the Minster can enlighten us as to why groups such as MPS will be forced to go through the full ABS licensing process while trade unions will not be regulated at all.

Amendment No. 152, which was tabled by the Liberal Democrats, addresses that anomaly by giving not-for-profit bodies the exemption enjoyed by unions. That may be fairer to not-for-profit bodies but, as the hon. Member for Birmingham, Yardley (John Hemming) said, it may be a hammer to crack a nut, and it would still be inconsistent with the basic thinking behind the Bill. It would certainly not improve the position for consumers. The Government’s position is as confused as it is unacceptable. The matter needs a thorough rethink, and our amendments provide an opportunity for that to happen. On that basis, we shall urge the House to divide on amendment No. 35, which removes the exemption, and I hope that hon. Members will support it.

I oppose the amendment tabled by the hon. Member for Huntingdon (Mr. Djanogly) on trade unions.

I thought that the hon. Gentleman was a clever chap, and that he might have learned something from our debates in Committee. If he had at least listened to them he would understand how trade union legal services are provided. He made a statement in The Times this morning—and he repeated it in our debate—that the Bill will mean that trade unions will not be regulated at all. That is just not true, so I have to go through the educational process with him again and repeat what I said in Committee. Trade unions are a key institution in offering legal services to vast numbers of people. They have secured justice for mineworkers, as we have heard, and from my previous job, I know that without them many people would not have gained justice or cheap access to legal services.

Trade unions provide legal services in various ways. Most trade unions employ a panel of solicitors who are accessible to members. Those solicitors are legally qualified and fall within the ambit of the Bill, so anything that they do will be covered by the regulation that we are putting in place. It is not the case that trade union legal services offered in that way are not regulated. Another way in which trade unions provide legal services, which was mentioned by the hon. Member for Birmingham, Yardley (John Hemming), is by providing advice and guidance on a lay basis on, for example, employment issues in the workplace.

If the hon. Member for Huntingdon is suggesting that regulation should apply to any advice given by any shop steward on the shop floor, that would be unenforceable. The hon. Gentleman gives the impression that there is no recourse for people who are not satisfied with the advice that they get from a trade union lay member or a full-time official. Again, that is not the case. I shall cite a couple of examples. First, there is the trade union certification officer. I have some criticisms about the system’s lack of teeth, having dealt with such officers recently in connection with the Durham National Union of Mineworkers, but they are there to deal with members’ complaints.

If someone is given bad advice by a trade union lay official or full-time official—a situation that I encountered when I was a trade union legal officer—they can sue, as happened on at least three occasions on my watch.

Another aspect to consider is lay representation on industrial tribunals. People ask what recourse is available to someone who is given bad advice in that situation. Most cases are handled by solicitors, and the client can use the Legal Complaints Service procedure. On one occasion that I know about, when someone was given very bad advice, the individual took legal action against the trade union and was successful.

The hon. Member for Huntingdon does not understand how trade union legal services operate. The amendment seeks to extend regulation right down into the relationship between the shop steward and the member on the shop floor. First, that would not be practical. Secondly, it would not be good regulation.

On the other point that the hon. Gentleman makes, I feel a little guilty. I think I may have set off his train of thought with my examples about the NUM in Durham, which does not present a happy scenario. The Durham NUM employed Thompsons Solicitors to deal with miners’ compensation cases and charged a 7.5 per cent. levy, which was given to the Durham NUM. According to the hon. Member for Huntingdon, those people had no recourse by which to get the money back. Yes, they do. I have lost count of the number of individuals for whom we have got money back by making a complaint to the Legal Complaints Service about Thompsons. In the early days Thompsons resisted giving the money back, but is now doing so voluntarily. That is a case of the union employing a regulated solicitor.

The hon. Gentleman mentioned a problem related to associate membership, which may also stem from the Durham NUM case. People were asked to join the NUM as associate members. They did not have full legal rights as NUM members, but they were accessing legal services to take forward their cases in the mineworkers’ compensation scheme. That was a unique case. The complaints of those individuals were dealt with—very well, in my opinion—by the Legal Complaints Service. It made no difference whether they were full members of a trade union or associate members.

To suggest that trade unions will start offering legal services such as conveyancing, which they do now, by giving lay advice, is nonsense. Most trade unions offer legal services such as conveyancing and will-writing via the panel of solicitors which they retain or to which they pass work. The hon. Gentleman says that the Bill will ensure that trade union legal services are not regulated in any way—far from it. They are covered by existing legislation applying to trade unions and fall within the ambit of the Bill.

There is not a yes or no answer. If the hon. Gentleman took the time to understand the subject that he talks about, it might help. I thought that we covered much of the argument in Committee. I am confident that the legal services are properly regulated within the terms of the Bill. Beefing up the powers of the certification officer is a different matter. I would not try to do that by seeking to destroy trade unions, like the hon. Gentleman. I would try to ensure that individual trade union members are protected in their relationships with the trade union. That is the fundamental difference.

It has been stated that trade union legal services are not regulated. That is not the case. I urge the House to resist the amendment.

I begin by congratulating my hon. Friend the Member for Birmingham, Yardley (John Hemming) on his amendment, which is the lead amendment in the group. He recognises that in the exemption set out by the Government, there is an issue that needs to be addressed. He has already said that his drafting does not necessarily cover all the points that we wish to raise. He is right, but that does not reduce the effectiveness of his arguments. This is an appropriate time to say how much I appreciate the work that he and my hon. Friend the Member for North Southwark and Bermondsey (Simon Hughes) did in Committee and on previous stages of the Bill.

There is a serious argument to be had about the very wide exemption proposed by the Government for trade unions, and only trade unions, among not-for-profit entities. My hon. Friend the Member for Birmingham, Yardley spoke about mutuals and others. The argument does not revolve around the specific topics identified by the hon. Member for North Durham (Mr. Jones).

The hon. Gentleman is right to say that it is not true that in the provision of legal services trade unions will be unregulated. That is transparently not the case. In support of his contention that they are regulated, he argues, first, that the individual practitioners are regulated by their professional bodies. Yes, that is correct. The hon. Gentleman argues, secondly, that trade unions are subject to litigation instigated by those to whom they owe a duty of care in the provision of those services. Yes, again, that is true, but both arguments are true of any other body regulated by the Bill.

If it is argued that bodies—alternative business structures or others—require additional regulation beyond—[Interruption.] The hon. Gentleman says they do not. It is a rather worrying development for the Minister if the view from the Back Benches is that alternative business structures need no regulation beyond the professional regulation of individual practitioners and the threat of litigation in the case of a failure of duty to care. I do not believe that that is what Ministers are suggesting in the context of the Bill.

My hon. Friend the Member for North Durham (Mr. Jones) gave one other reason why trade unions are different, and the hon. Gentleman has missed it out. Trade unions are regulated as trade unions. The relations between a union and its members are regulated; my hon. Friend mentioned the certification officer.

Does the hon. Gentleman recognise that the Joint Committee had concerns about regulating the trade unions as entities under the regime that we are discussing because of the existing regulations to which the unions are already subject?

Yes; the hon. Gentleman has pre-empted my third point. The hon. Member for North Durham is absolutely correct about there being a separate area of regulation for trade unions via certification. He argued that that is sometimes insufficiently strong and robust to do its job. Nevertheless, it marks trade unions out as different from a commercial structure doing the same thing.

Clearly, trade unions—and, incidentally, some other bodies—do types of work that are not appropriate for the sort of regulation provided by the Bill. I am more than happy to consider that issue. I am thinking of work done on behalf of trade union members in pursuit of the core business of the trade union. I entirely agree that regulation that got down to the level of shop steward intervention or advice would not be appropriate. If that is the mischief that the Government are trying to remedy, I am with them. That is right.

Like the hon. Member for Huntingdon (Mr. Djanogly), I have read the Law Society brief. It says that the answer is to limit the exemption to the

“provision of legal services ancillary or incidental to the trade unions’ main employment relations functions.”

That is precisely what the hon. Member for Somerton and Frome (Mr. Heath) has just said. Do any of the amendments do that?

My candid view is that they do not. That is why I hope that other wording that does the job will emerge as part of our consideration subsequent to this debate and in another place. There is some common ground—certainly between the hon. Gentleman and me; I am not sure about others—on what is required. We need something in respect of not only trade unions but the other bodies that we have mentioned.

With the honourable exception of the amendment tabled by my hon. Friend the Member for Birmingham, Yardley, the amendments have the deficiency of not dealing with the other mutual bodies that provide services. There should be provision for a kick-in of regulation when the trade union or other body is effectively competing in the marketplace—albeit a limited one, given its membership or associate membership—for the provision of general legal services. I am talking about when there is a legal practice that happens to be within a trade union or mutual context, rather than about the provision of the sort of services that it is reasonable to assume would be provided for members in the pursuit of the objectives of a trade union or other mutual organisation.

I agree with the hon. Gentleman. Does he agree that some such issues are caught by the claims-handling regulations? I understand that Durham NUM has now registered with the claims-handling authority as a claims handler.

It is interesting; yes, the hon. Gentleman is right in that particular instance. As he knows, I also come from a mining constituency and have also had to deal with the sort of cases that he and the hon. Member for Bassetlaw (John Mann) have had to deal with. I know perfectly well how much the current system has failed individuals who deserve better.

It is right that the issue should be addressed. However, I do not think that the Minister’s blanket exemption fits the bill. It is entirely possible that, with careful drafting, we can arrive at a form of words that exempts the core activities of a trade union but catches activities that fall into the category of general legal practice provided by lawyers who happen to be employed or subject to the supervision of a trade union. Such wording would apply to other mutual bodies as well as trade unions, so that they were put on an equal footing. There would then be the proverbial level playing field for all concerned.

I look to the Minister to provide assurances that she will explore such issues before the Bill goes to the other place. I hope that a formulation appears that satisfies the conflicting requirements. If we can do that, we will have achieved all our objectives. I am not persuaded by the exemption before us; it would be better if it were taken away and we looked at it again, and if it were considered again at the other end of the corridor. Hopefully, there would be a much better formulation at the end of the day.

I invite my hon. Friend the Member for Birmingham, Yardley to withdraw his amendment. Despite its good intentions and the excellence of much of its content, it, too, does not fit the bill as I have set it out.

To varying degrees, there is support on both sides of the House for an exemption for trade unions. I was pleased to see the movement, which Hansard will accurately record, in the speech made by the hon. Member for Huntingdon (Mr. Djanogly). That movement is welcome.

I wish not to repeat the informed comments made in the debate, but merely to pick up on the one inaccuracy in it—an inaccuracy also trailed in The Times today. Presumably to try to create a basis for suggesting that there needs to be a vote, when clearly there need not be, the hon. Gentleman attempts to jump on the coat tails of the scandal of double-charging solicitors and miners’ compensation. To make the record clear and assist in the hon. Gentleman’s and the House’s understanding of the matter, I should say that the four unions that benefited from the double-charging have all done so via solicitors. None has done so through any other mechanisms, except the Union of Democratic Mineworkers, which has used a claims-handling company called Vendside Ltd. That company is not and never could be regulated by the Solicitors Regulation Authority under any of the options before us.

Justice will be done only through legal action in the civil courts. I feel confident that a large number of retired miners and miners’ widows will seek a remedy through the civil courts. If there is a weakness, it is in the claims-handling regulator’s apparent lack of teeth in dealing with such claims handlers.

However, when it comes to those who have gone through solicitors, the Solicitors Disciplinary Tribunal and its misconduct hearings in the next four weeks demonstrate not only that there is regulation through the Law Society, but that that regulation is effective. Later this month, the first of the UDM solicitors will be in front of the tribunal on misconduct charges. Wake Smith and Beresford’s solicitors both go this month, and a series of others will follow them. In November, the solicitors for the Yorkshire NUM, Raley’s, which, the House may recall, double-charged not only miners but their widows, against the rulebook, will go in front of the disciplinary tribunal.

People using the existing systems have been able to get their money back and, when their solicitors have fought, have got compensation on top. There are many more to go. Just this weekend, I discovered that a management union called the Colliery Officials and Staff Association had been using a solicitors firm called Browells. I have had no cause to take issue with the firm until now; it was collecting 4 per cent. for COSA from one of my constituents. It is not entitled to do so.

The remedy is straightforward. That cosy relationship has been exposed. If parts of the NUM, the UDM or COSA, via Browells, and if the National Association of Colliery Overmen, Deputies and Shotfirers in south Wales—one of the unions that has profited most via its solicitors—choose to profit through their solicitors, the remedies exist. It is disingenuous for the hon. Member for Huntingdon to throw such issues into the debate when he knows full well that they have nothing to do with it. I suggest that in future he should stick to the facts instead of embellishing his case in a most unbecoming manner.

I begin by pointing out to the House that I had to miss the earlier part of the debate because I had to go to this evening’s meeting of the parliamentary Labour party.

My hon. Friend the Member for Bassetlaw (John Mann) touched on an important point. A very badly written article that appeared in The Times this morning seemed to imply that the amendments were something to do with the miners’ compensation scheme, which, in reality, is completely irrelevant to the impact of the Bill. The hon. Member for Huntingdon (Mr. Djanogly) shakes his head. I am happy to give way if he can demonstrate how they are connected. He chooses not to do that, which is interesting in itself because it begins to get us to the whole Conservative—

The hon. Gentleman is right inasmuch as the miners’ compensation scheme refers to incidents that happened before the Bill, so I suppose that he could say it is irrelevant. However, the issues involved in the scheme are directly relevant to the issues in the Bill, as I made clear—if he had been here for my earlier remarks, he would understand that.

The hon. Gentleman simply digs a bigger hole for himself. The simple truth is that, as my hon. Friends the Members for Bassetlaw and for North Durham (Mr. Jones) demonstrated, there was a remedy, which has been sought and taken in some cases. To that extent, there was no relevance in the charge made by the hon. Member for Huntingdon. I hope he will accept that that leads us to the view that this is rather more a splenetic attack on trade unions than a considered assault on real events on the basis of which a case could be made for the need for further regulation of trade unions. Neither the hon. Gentleman, in the remarks of his that I heard, nor the hon. Member for Somerton and Frome (Mr. Heath) gave us any examples of where there is a problem caused by representatives of trade unions—shop stewards or others—that would be remedied were the amendments to be accepted. That is a very important point. I hope that my hon. Friend the Minister takes this strongly on board, because it would be absurd to move unions along a track that is not necessary at this time.

The majority of trade unions now subcontract out, to solicitors or elsewhere, the provision of their legal services, so they would be beyond the impact of the Bill. A small number of trade unions still maintain an in-house professional legal service but, as my hon. Friends have pointed out, such services are regulated in any case. We would end up with the absurd situation whereby if two shop stewards from two different unions were advising members of their union in the same workplace on the same series of events, the union that contracted out its legal services would be able to do that without any concern whatsoever, while the union that did not would find itself in a much more restricted position and would be unable to provide the same service to its members. It would be absurd to have that difference in standards between trade unions.

Many words have already been spoken about this. Let me conclude by saying that it will be viewed as scandalous by ordinary trade unionists throughout the country that trade unions are being attacked not because of any real offence that has existed in the past and would be remedied by these amendments but because, once again, the Opposition parties are combining to attack free trade unions in our society. That is very regrettable, and I hope that it will be registered by the public. I notice that the Opposition have not managed to assemble enormous support for this on their own Benches; I hope that that, too, will register with the public. On that basis, I hope that the House will resist the amendments as being unworthy and irrelevant.

This has been a very interesting debate, and it is not surprising that it has divided us in this way. As my hon. Friend the Member for Manchester, Central (Tony Lloyd) said, perhaps some Opposition Members have not yet come into the real world and understood the role of trade unions within it.

I shall begin with the amendment tabled by the hon. Member for Birmingham, Yardley (John Hemming) and explain why I do not think that it is necessary or desirable. Yes indeed, special provision has been made for trade unions, and it might be tempting to make similar provision for other membership bodies, but it is not necessary and there would be risks in going down that road.

Let me deal first with the question of whether the provision is necessary. The reason why we have made special provision for trade unions, as we were at pains to explain in Committee, and as my hon. Friends have said this evening, is to deal with the special position that they are in. A lot of valuable advice is given by non-lawyer union staff to their fellow members. If unions had to be regulated as entities, some of them would be unable to put into position the necessary arrangements and would therefore have to stop their officials giving that advice. The amendments agreed in Committee ensure that there is absolutely no doubt about the unions’ position. They give clarity by setting out that services provided to union members are not being provided to the rest of the public.

When I explained that in Committee, I mentioned that other types of membership organisation can also benefit from the provisions in clause 15. To remind the House, that clause provides that where a body’s employees are carrying out reserved legal activities, the body itself is not doing so if the provision of services to the public or to a section of the public is not part of its business. A membership organisation whose employees are providing services only to members will generally fall within that definition. If there is any doubt about its position, it can seek an order under subsection (7), which defines what is or is not a section of the public.

By their very nature, trade unions are unlike other organisations, and I do not consider that there is a case for making a provision such as subsection (6) in respect of other bodies. Even if I were persuaded of that, there are potential problems with amendment No. 152. For example, it singles out bodies whose members are engaged in a particular trade or profession. That is, of course, only one type of membership body. In Committee we discussed others, including motoring organisations and even the Hospital Saturday Fund, which was mentioned by the hon. Member for North Southwark and Bermondsey (Simon Hughes). If the House were to agree to the amendment, those bodies would still not be subject to specific provision and would still need to use the general provision in subsection (4) and, if necessary, subsection (7). That might work, but it would be unnecessary and would create risks for the clause 15 exemptions. I find it hard to see why we should make special provision for trade bodies and not for others.

There are other problems. None of those types of body has the special circumstances of trade unions. If we make special provision for one class of bodies, we risk making life harder for others. That could lead to an increase in attempts to abuse the system, as unscrupulous businesses tried to badge themselves as representing members of a trade or profession. Although the legal services board would eventually root them out, there would be a period of time when consumers could suffer. In addition, some might conclude in future that because Parliament had given treatment to one group of people, it must by implication have intended that other groups should not get access to equivalent treatment. That could make it harder for genuine cases, particularly ones which we are unable to anticipate at the moment, including those who may need to secure an exemption under subsection (7). I do not think that that is what the hon. Member for Birmingham, Yardley would want to happen. I assure the House that the order-making power under subsection (7) is available to any category of membership body—to make that absolutely clear, should there be any doubt. Without better evidence that other groups need different treatment, I see no reason why we should provide it and risk undesirable consequences in doing so. On that basis, I hope that the hon. Gentleman will feel able to withdraw his amendment.

The other amendments in this group are clearly intended to reverse the trade union amendments agreed in Committee. We believed that the amendments to clause 15 were necessary in order to give effect to the policy set out by my noble Friend Lord Falconer in the other place. It is unfair for the hon. Member for Huntingdon (Mr. Djanogly) to suggest that they were sneaked in during Committee sittings. The then Lord Chancellor made it absolutely clear in the other place that the amendments would be introduced. I am sorry that we were not able to bring them forward sooner, but it is right that we have introduced them.

It is really important that we do not inhibit the trade unions’ scope to work for their members. They provide a socially useful service to millions of people—one that helps to foster good labour relations while helping union members to stand up for their rights. It seems rather sad that I have to spell that out, but it is obvious that Opposition Members are either deliberately or naively unaware of the important role that trade unions play in our society. To require unions to be regulated as entities and licensed as ABS bodies in all circumstances could cause problems, particularly for the smaller unions. They might have to shut down their legal services altogether, with the result that access to justice, which I know is at the forefront of the minds of Opposition Members, would be reduced, not improved.

The Minister discussed how alternative business structures would apply to trademark attorneys and patent attorneys—small bodies that provide a good service quite separate from mutual societies. They will all have to be licensed and regulated because the Clementi vision was all-encompassing. Why are the Government carving out trade unions from the process?

To be fair to the hon. Gentleman, I have already answered that question with regard to the different role that trade unions play in our society.

In Committee I set out the limitations of the Government amendments. First, they apply only where a union is providing services to its members and others with similar rights. If it expands into more commercial work, it will be regulated as an entity and it will have to be licensed. In other words, the clause 15 exemption would not apply. Secondly, all reserved services still have to be provided by qualified lawyers, subject to the regulation of bodies such as the Law Society, and my hon. Friends have already made that clear. Regulators will be able to change their rules if problems arise so that lawyers could effectively be prevented from working within bodies that are not regulated, or they could be limited in the services that they provide.

Such rules could not force trade unions to become ABS bodies in order to get round the problem. Clause 15 means that they are not carrying out reserved legal activities, which means that they do not need to be licensed under part 5 of the Bill. A regulator’s rules cannot change that. There is, none the less, some scope for regulators to constrain lawyers working in environments where they have cause for concern.

If the Opposition amendments are passed today, they will not guarantee that trade unions will be regulated as entities and licensed as ABSs. The amendments would only remove a clause that confirms an exemption to which trade unions already have access in certain circumstances. To explain, clause 15 contains a general rule about employed lawyers. It provides that, where an employed lawyer is carrying out reserved activities, the employer is not considered to be carrying out such activities for the purposes of regulation under the Bill as long as the provision of reserved services to the public or to a section of the public is not part of the employer’s business. In other words, if a body can establish that its employed lawyers are carrying out a reserved legal activity for a restricted group, such as its membership, and that that service is not part of the body’s business, the body will not be considered under the Bill to be carrying out a reserved legal activity. Consequently, it will not need to be regulated, although the individual lawyer will. As my hon. Friend the Member for Stafford (Mr. Kidney) pointed out, individual lawyers will be regulated by the Law Society, or another appropriate professional body. I hope that the Opposition are content with that in principle, since they have not tabled amendments about it.

The purpose of the provisions is to enable employed lawyers to continue to do the work that they currently do for restricted groups in limited circumstances. It allows them, for example, to work for companies connected with their employers, and it allows in-house lawyers to offer pro bono services without their employers needing to be regulated, providing, of course, that the company employing them is not actually in the business of legal services. A telecommunications company, for example, might want to allow its in-house lawyers to provide a pro bono service from time to time. That in-house lawyer would be fully regulated, but the company would not have to be regulated as an ABS by virtue of the limited service provided by the in-house lawyer. The same provision can apply to trade unions. A union that is providing services only to its members could fit into that definition. If there is any doubt about whether its membership counts as a section of the public, subsection (7) has a route for the Lord Chancellor to make an order clarifying it, on the board’s recommendation.

Subsection (6), which we introduced in Committee, makes the position of unions clear from the start. It provides that persons receiving services by virtue of union membership do not constitute a section of the public. That ensures that unions do not have to be regulated as entities, which in turn ensures that the activities of lay advisers within unions are not regulated, in line with the policy we set out in the other place. Taking out subsection (6) would not necessarily prevent that from happening. Unions could fall under subsection (4), and in cases of uncertainty they would be able to seek an order under subsection (7). The board would be able to recommend an order for a specific union or for classes of activities by unions. If the Opposition believe that the amendments can force unions to be regulated as entities, they are wrong. The Government have considered the position carefully and think that it is right to put trade unions outside the scope of regulation. The safeguards I have outlined will ensure that trade union members are protected.

I understand that the Opposition want to reverse all of the changes agreed in Committee. That includes the restrictions that we added that are available only to independent trade unions as defined in the Trade Union and Labour Relations (Consolidation) Act 1992. We did that because we wanted to match the Bill’s provisions to the current claims management regime, in which only independent unions are able to benefit from the exemption. Reversing those amendments would have an effect that went beyond clause 15. It would allow any trade union, independent or otherwise, to benefit from the exemptions and modifications in part 5, and I cannot believe that the Opposition want to do that.

Finally, there was concern in Committee that we were trying to solve a problem that did not exist: that no unions provide legal services directly to their members. I assure the House that that is not the case. A small number of unions do work for their members. Some of them are quite specialised—in the media professions, for example, and education—and we want to ensure that they are still able to provide those services. However, we also need to look at the underlying principles and our desire to make legal services more widely available. Even if only a few unions currently provide services directly, we want to set up an environment where others can do so if they feel that it is the most cost-effective way to help their membership. Clause 15 enables that, and I urge the House to support it and reject the amendments.

Although I am not entirely persuaded by the Under-Secretary, I should like to ask leave to withdraw the amendment—[Interruption.] Yes, it is part of my leadership bid. The issue remains to be resolved in the other place, but a subtle approach is needed to deal with all the aspects, including the partial exemption of the trade unions. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Amendment proposed: No. 35, in page 7, line 20, leave out subsection (6).—[Mr. Djanogly.]

Question put, That the amendment be made:—

The House proceeded to a Division.

No Member being willing to act as Teller for the Ayes, Madam Deputy Speaker declared that the Noes had it.

Clause 19

Exempt persons

Amendment made: No. 81, in page 9, line 28, leave out from ‘who’ to end of line 29 and insert

‘, for the purposes of carrying on the relevant activity, is an exempt person by virtue of—

(a) Schedule 3 (exempt persons), or

(b) paragraph 13 or 18 of Schedule 5 (additional categories of exempt persons during transitional period).’.—[Bridget Prentice.]

Clause 21

Regulatory arrangements

Amendment made: No. 82, in page 11, line 42, leave out ‘(other than an individual)’.—[Bridget Prentice.]

Clause 29

Prohibition on the Board interfering with representative functions

Amendment made: No. 83, in page 14, line 37, leave out ‘and’ and insert ‘or’.—[Bridget Prentice.]

Clause 64

Modification of the Board’s functions under section 62(1)(b)

Amendment made: No. 84, in page 36, line 25, at end insert—

‘( ) to make regulations or rules providing for appeals to the High Court or another body against decisions made by the Board in its capacity as an approved regulator (including regulations or rules providing for a decision on such an appeal to be final and for orders as to payment of costs).’.—[Bridget Prentice.]

Schedule 1

The Legal Services Board

Amendment proposed: No. 24, in page 120, line 6, at end insert

‘with the concurrence of the Lord Chief Justice’.—[Mr. Djanogly.]

Question put, That the amendment be made:—

Amendment made: No. 102, in page 120, line 11, at end insert—

‘( ) Before appointing an ordinary member, the Lord Chancellor must consult the Lord Chief Justice.’.—[Mr. Wills.]

Amendment proposed: No. 75, in page 120, line 17, leave out ‘first’.—[Mr. Kevan Jones.]

Question put, That the amendment be made:—

Amendments made: No. 104, in page 120, line 18, leave out ‘any subsequent’ and insert ‘the’.

No. 105, in page 121, line 7, after ‘conveyancer;’ insert—

‘( ) granted a certificate issued by the Institute of Legal Executives authorising the person to practise as a legal executive;

( ) a registered patent attorney, within the meaning given by section 275(1) of the Copyright, Designs and Patents Act 1988 (c. 48);

( ) a registered trade mark attorney, within the meaning of the Trade Marks Act 1994 (c. 26);’.

No. 106, in page 122, line 19, leave out from ‘member’ to end of line 20 and insert

‘under sub-paragraph (1)(b), the Lord Chancellor must consult—

(a) the Lord Chief Justice, and

(b) if the ordinary member is not the chairman, the chairman.’.—[Bridget Prentice.]

New Clause 6

Licensing authority

‘(1) A licensing authority may apply to the Board to determine the status of a recognised professional body if it is in any doubt as to whether that professional body meets the criteria set down in this Act.

(2) A licensing authority may determine that a body “B”, which is prima facie “low risk” under section 108(2)(b) (non-authorised managers are all members of recognised professional bodies), should not be treated as low risk if it considers the services to be offered by B are inconsistent with the “professional principles” set out in section 1(3).

(3) Any decision under subsection (2) will follow the procedural requirements set out in Schedule 11(2) and (3).’.—[Mr. Djanogly.]

Brought up, and read the First time.

With this it will be convenient to discuss the following amendments:

No. 65, in clause 71, page 41, line 30, after first ‘activities’, insert ‘(other than notarial activities)’.

Government amendment No. 85.

No. 156, in clause 83, page 49, line 13, at end insert—

‘(da) appropriate provisions reinforcing the independence and integrity of the legal professionals concerned,’.

Government amendment No. 86.

No. 148, in clause 108, page 59, line 21, leave out subsection (2) and insert—

‘(2) The management condition is that—

(a) the number of managers of the body who are non-authorised persons is less than 25 per cent. of the total number of managers; or

(b) the managers who are non-authorised individuals who provide services directly or indirectly to clients within their own professional training, are members of one or more recognised professional bodies and do not account for more than 50 per cent. on a headcount of managers.’.

Government amendment No. 87

No. 149, in page 59, line 23, leave out subsection (3) and insert—

‘(3) The ownership condition for B satisfying the management condition set out in subsection 2(a) is that—

(a) only managers of B can hold shares or exercise voting rights or control unless they are authorised persons, and

(b) the proportion of shares in B held by persons who are non-authorised managers is less than 25 per cent., and

(c) the proportion of the voting rights in B which persons who are non-authorised managers are entitled to exercise, or control the exercise of, is than 25 per cent., and

(d) if B has a parent undertaking (“P”)—

(i) the proportion of shares in P held by persons who are non-authorised managers is less than 25 per cent., and

(ii) the proportion of the voting rights in P which non-authorised non managers are entitled to exercise, or control the exercise of, is less than 25 per cent.’.

Government amendments Nos. 88 to 92.

No. 150, in page 59, line 33, at end insert—

‘(3A) The ownership condition for B satisfying the management condition set out in subsection 2(b) is that shares and voting rights in B—

(a) are only held by authorised persons, or managers who are members of recognised professional bodies, and

(b) the percentage of shares held or proportion of voting rights exercised by non-authorised managers does not account for more than 50 per cent.’.

No. 151, in page 59, line 36, at end insert—

‘(4A) For the purposes of this section “recognised professional body” means a body (other than an approved regulator), incorporated by Royal Charter, and which makes provision for—

(a) testing the competence of those seeking admission to membership of the body as a condition for such admission; and

(b) imposing and maintaining professional and ethical standards for its members, as well as imposing sanctions for non-compliance with those standards.

“member” of a recognised professional body means a member or member firm as defined by the appropriate rules of such a body.’.

In moving new clause 6, I initially note that there is no doubt that the alternative business structure regime will provide a huge set of possibilities for the future provision of legal services and those that provide them. However, in Committee concerns were raised that we were not quite there yet. On the one hand, lawyers will be able to work together almost immediately, and yet the full ABS provisions were unlikely to come into place before 2011. There was a need for a halfway house, so I fully support Government amendments that will enable early consumer benefits by providing new powers and related provisions for the Law Society to regulate bodies with low levels of non-lawyer management during a transitional period before part 5 comes into force. For instance, in-house accountants and managers could now become partners of the law firm. I am glad that the Minister took note of the views of the several bodies whose opinions I highlighted in Committee, and has understood the consumer benefits of not delaying the possibility of practices with limited non-lawyer managers being regulated until the full implementation of part 5.

The Law Society has expressed its views as follows:

“in one important respect, the Bill will be an improvement on the version which left the House of Lords. In the House of Lords, Ministers resisted the amendments which”

Lord Kingsland

“and Lord Hunt tabled which would have enabled the Law Society to regulate LDPs under our existing regulatory regime, rather than having to wait until about 2011 when the Legal Service Board will be in place. However, Ministers have now accepted that it is anomalous for the Council of Licensed Conveyancers (for example) to be able to regulate such firms, whilst the Law Society cannot, and so they have made appropriate amendments to Schedule 16 to cover the point. We think that will enable real benefits for both the public and the profession to be achieved earlier than would have otherwise been the case. It also has the practical effect of ensuring that the incremental approach to the introduction of ABSs—which both Sir David Clementi and the Joint Committee chaired by Lord Hunt favoured—will be followed.”

My party colleagues and I are extremely pleased that the Government came round on this issue, and that the hard work of many in addressing this issue has led to such a satisfactory result. I would like to express my appreciation to the Minister for conceding on this point, as I believe that this is the type of change that will help ensure that Britain maintains its position as the foremost provider of legal services in the world.

I also thank the Minister for listening to the views of the Opposition in Committee and for tabling amendment No. 85, which will take us back to the position under amendments made to the then clause 83 in the other place by my noble Friends, the Liberal Democrats and the Cross-Bench peers to ensure that licensing rules contain provisions requiring the consideration of the impact on access to justice.

The arguments set out in the other place and by my hon. Friends and myself in Committee have obviously proved compelling. I do not propose to repeat them at length, but I would just like to highlight the importance of this Government concession as it will deal with the particular risk to access to justice posed by alternative business structures. We have maintained that whilst the timetable for low-risk alternative business structures should be brought forward, access to justice should not be reduced as a consequence.

Lord Woolf expressed his concern when, in a report of earlier this year, he stated:

“There is no doubt that large businesses could provide legal services in a novel and interesting way. But that could—unintentionally, perhaps—have a devastating effect on those who have traditionally provided services in rural areas in particular. Great care has to be exercised to see that damage does not occur”.

The Law Society was worried that despite the fact that, as they put it:

“New entrants into the market may bring about some benefits…there is a risk that there may be long-term structural effects that destroy service provision and the fabric of small communities. Put bluntly, new entrants might cherry pick more profitable and less complex areas of work, driving down the profitability of established local firms who offer a full range of services at the heart of their communities. If that happened, where would consumers go for advice on complex matters?”

Does my hon. Friend recognise that the Law Society was making the same arguments some 20 or so years ago over the ending of the conveyancing monopoly? What has happened, however? Some of the more innovative firms with flair have been able to thrive in all parts of the country. I do not suggest that there are not issues to do with legal aid—which do not affect this discussion—but does my hon. Friend not recognise that some Law Society fears have been proved wrong in the past?

My hon. Friend makes a good point, but the Law Society welcomes the changes. However, when they are brought in, there ought also to be a concern for access to justice. A balance must be struck.

Before the hon. Gentleman is too persuaded by the argument of his colleague, the hon. Member for Cities of London and Westminster (Mr. Field), I hope that he will continue to recognise that not only the conveyancing issue but a range of other matters—the centralisation of police court work means that duty solicitors are sought only from the main court centres, for example—are all working against small firms in rural communities who provide a range of legal services for constituents such as mine. We must make sure that it is still viable to run a solicitor’s practice in a small town.

The right hon. Gentleman makes an important point that has been supported by both his party and mine throughout the passage of the Bill.

The Law Society concludes:

“The Law Society's conclusion is that whilst the regulatory issues concerning new service providers can be dealt with...there are very serious risks to access to justice from the uncontrolled admission of new entrants. Existing practitioners report that in many areas, a number of existing firms serving small localities would be in jeopardy if large institutions entered the market for legal services”.

The Joint Committee on the draft Legal Services Bill under the chairmanship of Lord Hunt also highlighted the issue, stating that it was,

“persuaded by some of the evidence suggesting that some of the reforms may reduce geographical availability. We consider that ABSs may reduce the number of access points for legal services and we see this as a potential problem. There is clearly an issue here and the only conclusion we are able to draw is that we cannot be sure how it will work out. We recognise that there may be a trade-off between the quality and accessibility of advice—for example, a small, high street solicitor in a rural area may not be able to provide the specialist advice a client requires. We recommend that the Government amends the draft Bill 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”.

The Government’s welcome concession here, via amendment No. 85, will ensure that the licensing authorities consider the possible effect on access to justice and give the issue full weight when determining applications for an ABS licence. This will go some way to allaying the concerns that I set out. I wholeheartedly commend the amendment to the House, and I will not seek to move amendment No. 53, which I feel is no longer necessary in light of the Government’s change of heart.

Amendment No. 156, which is a probing amendment following representations made to me on behalf of the United Kingdom notarial forum and the Law Society of Scotland, forms an alternative to our amendment No 65. The original desire of the UK notarial forum, which amendment No. 65 would put into effect, was to exclude notarial activities from the provisions of part 5 altogether. The Minister expressed her views on this issue in a letter to the director of law reform at the Law Society of Scotland. She said that

“the potential development of Alternative Business Structure (ABS) firms should not present a challenge to professional independence, in relation to notarial services or any other legal services”.

I certainly understand the Minister’s position, and I have no doubt that the Bill’s intention is to ensure that independence is considered when dealing with ABS licences under part 5. However, the question is whether the legislation makes this sufficiently clear. The issue for the Law Society of Scotland is

“whether ‘regulatory arrangements’ as envisaged under clause 176 are the same as the regulatory objectives or the professional principles referred to in clause 1.”

Its concern is that there is no specific link between clauses 1, 90 and 176.

I hope that the Minister can see the possible gap here. Regulatory arrangements are not the same as regulatory objectives. The requirement for a licensing authority to prepare a policy statement on how it will comply with the duty to promote regulatory objectives is not the same as having a rule in place stating that it must comply with the regulatory objectives. Following the Minister’s rebuttal of the Law Society of Scotland’s argument regarding excluding notarial activities from part 5, is she prepared to compromise along the lines of amendment No. 156, which specifically states that licensing rules must provide

“appropriate provisions reinforcing the independence and integrity of the legal professionals concerned”?

Such an amendment would go a long way towards allaying the concerns of the United Kingdom notarial forum, and promoting the independence and integrity of the legal system. I would be interested to hear the Minister’s views on that.

Finally, amendments Nos. 148 to 151 were suggested to us by the Institute of Chartered Accountants in England and Wales on a probing basis. The intention is to ensure that the provisions applying to low-risk bodies under clause 108 are consistent with the Government’s welcome developments in the form of amendments made to schedule 16. Those amendments, which have our support, will allow for bodies with up to 25 per cent. non-lawyer ownership and management to be regulated by the Solicitors Regulation Authority during a transitional period before part 5 comes into force. As a result of those amendments, we will have bodies with up to 25 per cent. non-lawyer ownership that can be in operation before the full implementation of the full ABS regime.

However, as the Bill now stands, when the full ABS regime is finally implemented, such bodies would not fall within the definition of a low-risk body under clause 108, unless non-lawyer ownership and management were below 10 per cent. The amendments suggest that the opportunity should be taken to align the definition of a low-risk body with the new provisions of schedule 16. If that is not done, we risk an almost absurd situation. For example, the law currently considers bodies with up to 25 per cent. non-lawyer ownership and management suitably low risk to see them permitted very quickly following enactment. However, a few years down the line, when they are tried, tested and well established, they will suddenly be regarded as outside the low-risk regime and subject to full licensing rules.

To illustrate how bizarrely that could play out, I shall give an example. At the earliest opportunity post-enactment, a firm comprising three solicitors decides to promote its non-client-facing finance director to partnership, not to widen the services on offer but to retain his talent, which enhances the performance of the firm. On part 5 coming into force, such a firm would be subject to the full licensing regime. The firm will not fall within the low-risk category because it will be 25 per cent. owned and managed by a non-lawyer. There is no basis for suggesting that such a firm has suddenly become more risky. The only option for that firm would be to admit a further six solicitors as partners to water down their non-lawyer holding, to demote the financial director from partnership, or to subject themselves to the full licensing regime. Surely we need to develop a system in which such tried and tested bodies, with up to 25 per cent. non-lawyer managers and owners, are considered low-risk bodies for the purposes of part 5.

Amendments such as those that we have tabled would ensure that the low-risk definition is in line with Government developments in respect of schedule 16. They would help to ensure that firms are not discouraged from coming together to share overheads and offer combined services that will benefit the consumer, because of the regulatory hoops that they will need to jump through once part 5 comes into force. It would be of great concern if the effect was to hinder small and rural practices, depriving them of the benefits of being low risk, while assisting retail giants. I will be interested to hear the Minister’s reaction to these points, as this is an outstanding issue that needs to be looked at.

I want to thank the Minister for the amendments that she is making in respect of “legal practice plus”—allowing people other than lawyers to join lawyers in a practice earlier than the full introduction of the alternative business structure scheme, which will probably be around 2011. I argued in Committee that there should be more flexibility, and as the hon. Member for Huntingdon (Mr. Djanogly) said, Sir David Clementi’s report and the Joint Committee recommended this incremental approach to introducing the provisions. These amendments do provide for a more incremental approach, so I thank the Minister for that.

Like the hon. Gentleman, I also thank the Minister for having regard to the concerns expressed about the difficulty in rural areas of coping with the changes that alternative business structures might bring to access to justice. It is not necessarily all one way, however, in that there might in future be innovative ways of delivering businesses between different types of professionals that actually enhance access to justice, rather than take it away. That point was illustrated by the exchange between the hon. Gentleman and the hon. Member for Cities of London and Westminster (Mr. Field). I remind Members of the success of Which? in Scotland, with its super-complaint about the Scottish legal system, and of the decision by the Office of Fair Trading on 31 July. The OFT concluded that the restrictions in question were unnecessary, and it believes that there would be benefits to consumers if they were lifted, such as efficiency gains and higher levels of innovation in the provision of legal services. So although it is right that we have regard to the people’s worries about the loss of access to justice, we ought to bear in mind the possible benefits to consumers, including residents of rural areas, of introducing alternative business structures and the innovations that they might well bring.

The hon. Member for Stafford (Mr. Kidney) is absolutely right to say that the possibility exists of enhancement of, as well as detriment to, the service in rural areas. However, he also indicated his concern about the potential difficulties. I very much welcome Government amendment No. 85, and I hope that it is sufficient to the task of ensuring that we deal with the access to justice issues that many of us fear will be a reality. I heard the intervention from the hon. Member for Cities of London and Westminster (Mr. Field), and I am sure—given that I am one of his constituents in at least one of those cities for a couple of days each week—that there is no great difficulty in his constituency in accessing lawyers. Were he to come to Somerton and Frome, he might find that the distances involved are a little longer, and that the opportunities to find a suitably qualified lawyer—or, more importantly, a lawyer who has the business capacity to provide services, particularly in legal aid work—are a little more limited.

My great concern is that in the sort of communities that I represent, where there is often a dearth of criminal practice solicitors providing legal aid work, for instance, and of those involved in family law under legal aid provision, and where the legal aid regime itself is constantly tightening the screw and concentrating work in a few areas, mainly the urban conurbations, the only way that some of these services are provided to our constituents is via a complex mesh of cross-subsidy within practices. In such a situation, certain work is more profitable and effectively underwrites the ability of the one or, at most, two practitioners who are prepared to do these non-cost-effective parts of the practice. It does not take much disturbance to that system for the remaining partners to say, “Sorry, this cross-subsidy is now more than we can bear.”

The concern about alternative business structures is that the system will provide that level of competition in areas of maximum profitability that will undermine the whole thing and mean that there is a difficulty in access to justice. I hope that what the Government are proposing will mean that not only is that examined carefully, but that we have a constant monitoring role. I hope that my right hon. Friend the Member for Berwick-upon-Tweed (Mr. Beith) and his Committee will play a part in ensuring access to justice for many of our constituents. I am talking not only about those in rural areas but about minority communities within urban areas. Some suburban areas are also remarkable for their lack of legal advice facilities—they include some unexpected places where, by definition of the postcode, it is simply assumed that people have lots of money and can afford to go to expensive practitioners or to the nearest city for advice. As we all know, that is far from the case for all people.

Lastly, I turn to the amendment on notaries tabled by the hon. Member for Huntingdon (Mr. Djanogly). I do not have much to add to what he has said on the issue and I am interested in the Minister’s reply. I simply put on record a caution about notaries public. This is occasioned by a lady who came to my advice surgery in Wincanton just two weeks ago and who was appalled about something. She is a grandmother who has occasion, for reasons that I need not go into, to take her grandchildren across national boundaries on planes to visit their parents, from whom they are currently separated. She found that in order to gain entry to the United States of America she required a notary’s affidavit to establish that she had the right of care for those children. She compared notes with a French citizen who happened to be behind her in the queue and found that in France the affidavit was provided for free by the mayor or the mairie in the village or town from which that person came. She had to pay £50 for that certificate, and will have to pay £50 every time she makes the trip. That is a substantial fee for simply rubber-stamping a piece of paper drawn up by the person making the application.

Are there sufficient numbers of notaries public across the country? Can they justify the fees? Would competition in this area be a good thing? In any case, should we have some system in our municipalities that provides for others to swear declarations of that kind rather than rely on a notary public, because there is often limited access to them in many parts of the country? I leave all that for the Minister to ponder. I dare say that it is not entirely relevant to the hon. Gentleman’s amendment, but I thought that it was a good point to make now, because if it makes a change in the arrangements for the notary public, it will have been worth while.

Understandably, the potentially huge change to the structure of the UK legal practice heralded by the creation of alternative business structures in part 5 of the Bill has been the subject of fevered debate. As a former solicitor who has an ongoing interest in a company that provides professional services to the legal profession, I applaud the sensible way in which the Government have taken on board some of our suggestions during the passage of the Bill. In dealing with the determination of licensing authority rules, I hope that the Minister will also be persuaded that new clause 6, tabled by my hon. Friend the Member for Huntingdon (Mr. Djanogly), is similarly important.

Much of the debate on this matter has focused on access to justice. I accept the concerns that were expressed by the right hon. Member for Berwick-upon-Tweed (Mr. Beith) and the hon. Member for Somerton and Frome (Mr. Heath). Although the provision of legal services should never be considered quite as straightforward as picking up a can of beans from the local supermarket, I appreciate what the Minister was trying to get at when she made her now notorious statement in The Daily Telegraph some months ago.

Perhaps too little parliamentary attention has been given to the effect of part 5 on the largest commercial law firms in the City of London, which I represent and which have an increasingly strong international reach. One of the great success stories of recent years has been the dramatic growth in UK law firms both since the ending of partnership restrictions by the legislation on the issue passed in 1967 and over the past 15 or so years. Many envisage that the changes brought about by this Bill will bring towards law firms the idea of a big bang similar to that which happened in the City of London in 1986.

Perhaps it is inevitable that much of the press speculation on this matter has been on the financial implications of law firms trading their independence by going to the financial markets. The events of 1986 in the City ensured that it was no longer a club. There is already a big distinction, among the larger commercial firms, in legal services, which have already evolved in an international way; I doubt whether many partners in law firms see the alternative business structure route simply as a means of cashing out.

Given that most of the UK’s top 20 law firms are already £100 million a year turnover businesses, a recognition exists of their need to attract the top talent in respect of lawyers and of the running of the business, as my hon. Friend the Member for Huntingdon mentioned in relation to new clause 6. That need applies to finance directors, marketing directors and human resources professionals—a range of different areas. Inevitably, these law firms are on a different scale to the firms that have been discussed by other hon. Members. None the less, they are an important part of the invisible exports of this country. We need to have those individuals—the finance directors and so on—as full equity participants on a par with the lawyers who make up those practices.

There is also little doubt that we are seeing great international expansion among the legal fraternity. We need only consider what is going on in Beijing, Shanghai, Bombay and Delhi to see that. In the future, as the Indian profession begins to open up, there will be tremendous opportunities for British professional services companies, law firms and accountants to make an impact. Increasingly, the middle east, in places such as Dubai, Abu Dhabi, Doha and Qatar, will be an enormous growth market for internationally minded British law firms. It is therefore crucial that the role of the LSB be given full attention at this stage. It needs to be an enabler rather than a restrictor. We need to consider how it can enable such services to be provided, rather than simply being an old-fashioned regulator. I hope that new clause 6 recognises the potential conflict that can arise between shareholders, professionals and their traditional professional bodies, and seeks to define more fully what amounts to low risk in the eyes of the licensing authority.

My hon. Friend the Member for Huntingdon gave a sensible example that would not apply only to large city firms—he mentioned a three-partner firm that fell foul of the current rules. I hope that the Minister will give careful thought to the flexibility that we have requested. I could say much more on this issue, but I appreciate that time is tight.

It is difficult to foresee exactly the effect that the Bill will have on the structure of the UK’s legal profession. We can speculate, but no one foresaw that in the immediate aftermath of the big bang in 1986 no stockbrokers or merchant banks would remain in British hands. I do not think that we face that risk, although foreign money on the stock exchange may play a part for one or two of the more innovative law firms that wish to become fully listed. However, we want the flexibility for the reasons that I have set out. Alongside the importance of protecting the public interest and of access to justice, the licensing authority needs to ensure that our world-class reputation for international legal services is similarly maintained.

I appreciate the comments made by the hon. Member for Huntingdon (Mr. Djanogly), although I am not sure that things were entirely as he describes. I also agree with what my hon. Friend the Member for Stafford (Mr. Kidney) said about the benefits that can accrue from ABS, which I hope will enhance the opportunities and choice for consumers. On the notorious remarks about the can of beans, a journalist suggested that the Bill’s effect on legal services would make it like choosing a can of beans in a supermarket. I thought, “Well, what’s wrong with that?” Given the choice of cans of beans one can get now, I hope that consumers will benefit from the choice that will be available to them in legal services, so I do not regret having that comment attached to me.

In addressing new clause 6, I also wish to address amendments Nos. 148 to 151 and how they would alter the definition of a low-risk body in clause 108. First are bodies that have up to 25 per cent. non-lawyer managers, as long as the non-lawyer managers are the only non-lawyer owners. The second are bodies that have up to 50 per cent. non-lawyer managers, as long as those non-lawyers are members of a “recognised professional body” and are the only non-lawyer owners. That sets the actual threshold for non-lawyer managers at 50 per cent., or 40 per cent. higher than the current threshold we have set out in the Bill. That means that those bodies, which would be multi-disciplinary partnerships, could have up to 50 per cent. external ownership and still be automatically classified as low risk.

As I have said before in relation to similar amendments, I am not convinced that the bodies proposed here would necessarily be low risk. The amended versions of the amendments have not changed my position. Allowing any multi-disciplinary partnership with non-lawyer management or ownership over 10 per cent. to be automatically classed as low risk might be highly inappropriate in any context. The view of Clementi, the Joint Committee, this House and the other place has always been that multi-disciplinary practices might present greater regulatory challenges than other forms of ABS—for example, the non-lawyer-managed LDPs I will be seeking the permission of this House to incorporate that into schedule 16. It is a view that is even more important in multi-disciplinary partnerships where lawyers account for less than 90 per cent. of the management.

However, I recognise that once part 5 comes into force, it might transpire that the board is of the view that certain ABS provisions are not necessary to regulate certain kinds of multi-professional practices. It will be open to the board, should it so choose, to recommend to the Lord Chancellor that certain categories of practices could be regulated more flexibly. The Lord Chancellor could then make an order under section 106(1)(e) to create a new category of special body, which in principle could be a category of multi-professional body that is similar to one proposed here. Given the complex regulatory issues that such bodies could present, it is right that that should be left to the board’s judgement. It will be in a position to make an evidence-based assessment of the risk profile of those bodies, and it should satisfy itself that granting low-risk status would be acceptable, having regard to public and consumer interest. For those reasons, I hope that the hon. Gentleman will withdraw the amendments. However, the low-risk bodies referred to in schedule 16, and for which we allow 25 per cent. non-lawyer management, are completely different from the low-risk bodies described by the hon. Member for Huntingdon. The schedule 16 bodies are approved by the Law Society and work under its rules, so up to 25 per cent. non-lawyer managers may be involved in providing solicitor services. There is no external investment. The part 5 low-risk bodies can be externally owned and may include up to only 10 per cent. non-lawyer management providing legal and other services. I do not think it appropriate to equate the two; there is an important difference and I hope that the hon. Gentleman will understand why I feel unable to accept the amendments.

On notaries, I have said on several occasions that the whole point of the part 5 regime is that it will operate on a voluntary basis; there will be no compulsion on an approved regulator to seek licensing authority status, and no compulsion on firms or individuals to seek an ABS licence or even to become part of an ABS firm. The process is entirely facilitative, so it is right for the notary profession itself—obviously, with its regulator, the Court of Faculty, and the legal services board—to decide, when the time is appropriate, which it clearly is not at present, whether it is desirable and appropriate for notarial services to be provided under that part of the Bill.

Under the arrangements, one of the objectives of the licensing authorities is to maintain professional principles, which include acting with integrity and independence. The special requirements of notarial activity will be recognised. Anyone wanting to provide notarial services will have to demonstrate that their arrangements take the principles into account before they can obtain a licence, so amendments Nos. 65 and 156 are not absolutely necessary.

Government amendment No. 85 adds a duty for licensing authorities to give special attention to access to justice in considering the issue of ABS licences. I appreciate what colleagues have said both in Committee and in the Chamber. Other amendments have been tabled on the subject, and I and my colleagues in both Houses have spoken about some of the problems raised by those proposals. I shall not go into detail, except to say that I felt the amendments were unnecessary because there were already sufficient safeguards in the Bill. However, I have included amendment No. 85 to signal the importance of access to justice to licensing authorities.

Earlier, we talked about perception and it is clearly important in this case. It is important that people perceive that access to justice is a key part of what we are trying to achieve. The amendment is drafted in a way that allows access to justice without sidelining other objectives, and I am pleased that the Opposition support it.

As I have already explained, amendment No. 156 is unnecessary and I hope that our proposed amendment on access to justice will help to clarify the position. I remind the House that I do not want regulatory objectives or professional principles ranked; we do not want any one of them to take priority over the rest—they must all be effective. After all, if everything is a priority, nothing is.

Amendment No. 86 deals with the information powers of licensing authorities set out under clause 93 and provides that they apply to all categories of interest-holder. That brings the clause into line with Clause 85 and will allow licensing authorities to impose obligations on all interest-holders as part of the licence terms. Licensing authorities might want to use their information powers to determine not only whether a body is complying with the licence terms, but also whether its interest-holders are complying with licence terms. They could also be used where an interest-holder might be in possession of information that would help a licensed body ascertain whether the body was complying with its terms.

Finally, I hope that Government amendments Nos. 87 to 92 will enhance consumer protection by amending clause 108, to ensure that a body cannot be entitled to low-risk status if 10 per cent. or more of its ownership is held by another licensed body, which might be 100 per cent. owned by non-lawyers. The existing reference to authorised persons in clause 108 does not distinguish between licensed bodies and other types of authorised person, and it is right that we should do so, since the intention of clause 108 is to confine low-risk status to those bodies in which non-lawyers form a very small proportion of the overall management and ownership. It is not appropriate, however, to apply automatic low-risk status to a body just because it is a subsidiary that is perhaps 90 per cent. or more owned by another licensed body. That is why I have tabled these amendments to correct that. On that basis, I ask the hon. Gentleman to withdraw the motion, but I am grateful to him for the support that he has shown for the amendments that I have tabled.

A lot of important points have been made in the debate, and I wish that we had more time to discuss them, but there are still groups to discuss, so I want briefly to address the key issue on clause 108. The Minister thought that 25 per cent. bodies should not be automatically considered as low risk. I totally agree with that, but such 25 per cent. limited disciplinary partnerships will be much more likely to be low risk and a known entity by the time that the full ABS licensing provision comes into effect. Although I hope that the regulators and the LSB will consider the issue carefully and in good time, so that no upset is caused as a result, I take the Minister’s point that the Lord Chancellor can recognise the need for flexibility based on the board assessment, so I beg to ask leave to withdraw the motion.

Motion and clause, by leave, withdrawn.

Clause 83

Licensing rules

Amendment made: No. 85, page 49, line 7, at end insert—

‘( ) provision as to how the licensing authority, when considering the regulatory objectives (in compliance with its duties under section 3(2) or 28(2)) in connection with an application for a licence, should take account of the objective of improving access to justice;’.—[Bridget Prentice.]

Clause 93

Information

Amendment made: No. 86, page 53, line 5, after ‘who’ insert

‘has an interest or an indirect interest or’.—[Bridget Prentice.]

Clause 108

“Low risk body”

Amendments made: No. 87, in page 59, line 22, leave out ‘non-authorised persons’ and insert ‘within subsection (3A)’.

No. 88, page 59, line 24, leave out ‘non-authorised persons’ and insert ‘persons within subsection (3A)’.

No. 89, page 59, line 26, leave out ‘non-authorised’ and insert ‘such’.

No. 90, page 59, line 29, leave out ‘non-authorised’ and insert ‘such’.

No. 91, page 59, line 31, leave out ‘non-authorised’ and insert ‘such’.

No. 92, page 59, line 33, at end insert—

‘(3A) The persons within this subsection are—

(a) non-authorised persons;

(b) licensed bodies.’.—[Bridget Prentice.]

Schedule 14

Licensing body’s powers of intervention

Amendment made: No. 107, page 214, line 3, at end insert—

‘( ) that a person has been appointed receiver or manager of property of the licensed body;’.—[Bridget Prentice.]

Clause 133

Operation of the ombudsman scheme

With this it will be convenient to discuss the following amendments:

No. 154, page 68, line 41, leave out from ‘circumstances’ to end of line 43 and insert

‘to another body with a view to it being determined by that body instead of by an ombudsman, with particular regard to—

(i) mixed complaints provided by authorised persons under any part of this Act;

(ii) whether determination of the complaint by a body other than the ombudsman will be unduly prejudicial to the complainant or authorised person;

(iii) provisions for managing a complainant’s dissatisfaction regarding the determination of the complaint referred to another body under this subsection.’.

No. 56, page 69, line 14, at end insert—

‘(ha) for an ombudsman to award costs against the respondent in favour of the OLC for the purpose of providing a contribution to resources deployed in dealing with the complaint if—

(i) the complaint against the respondent is determined or otherwise resolved substantially in favour of the complainant, or

(ii) in the ombudsman’s opinion the respondent failed to deal with the complaint in accordance with the regulatory arrangements which the relevant approved regulator has made under section 112’.

No. 57, in clause 136, line 48, after ‘(3)(h)’, insert ‘, (ha),’.

Government amendment No. 93, page 70, line 43, at end insert—

‘(1A) The rules must provide for charges payable in relation to a complaint to be reduced or waived (or partly or wholly refunded) where—

(a) the complaint is determined or otherwise resolved in favour of the respondent, and

(b) the ombudsman is satisfied that the respondent took all reasonable steps to try to resolve the complaint under the respondent’s complaints procedures.

(1B) The rules may make provision as to—

(a) the circumstances in which a complaint is to be treated as determined or otherwise resolved in favour of the respondent (which may include circumstances where a complaint is settled, withdrawn or abandoned (or treated as withdrawn or abandoned by virtue of scheme rules));

(b) matters to be taken into account by the ombudsman for the purposes of subsection (1A)(b).

(1C) The respondent’s complaints procedures are the procedures established by the respondent, or which the respondent participates in or is subject to, in accordance with regulatory arrangements (or licensing rules of the Board) made in accordance with section 112.’.

Amendment (a) thereto, in line 2, leave out ‘reduced or’.

Amendment (b) thereto, in line 2, leave out ‘or partly’.

No. 58, page 70, line 43, at end insert—

‘(1A) The rules must provide for the OLC to reduce or waive a charge in circumstances where—

(a) the complaint relates to activity undertaken otherwise than for reward, or

(b) it appears to the OLC that the amount of a charge, unless reduced or waived, would be disproportionate having regard to the gravity or nature of the complaint, the value (if any) of the subject matter of the activity to which it relates, or the consideration payable for the services used by the complainant which consist of or include that activity, or

(c) it appears to the OLC that the amount of a charge, unless reduced or waived, would cause the respondent undue hardship.

(1B) The rules must also provide for the refund of the whole or part of a charge where circumstances coming to the OLC’s attention since the charge was paid are such that it appears to the OLC that the amount of the charge, unless wholly or partly refunded—

(a) is disproportionate having regard to the gravity or nature of the complaint, the value (if any) of the subject matter of the activity to which it relates, or the consideration payable for the services used by the complainant which consist of or include that activity, or

(b) causes the respondent undue hardship.

(1C) Scheme rules must provide that any charge in relation to a complaint shall not become payable by a respondent unless the complaint is determined or otherwise resolved substantially in favour of the complainant.’.

Government amendment No. 94.

No. 59, page 71, line 2, after ‘case’, insert

‘(other than one to which rules pursuant to subsection (1A) apply)’.

Government amendment No. 95.

No. 60, page 71, line 5, after ‘circumstances’, insert

‘(other than circumstances in which rules pursuant to subsection (1B) apply)’.

Government amendment No. 96.

No. 76, in clause 138, page 72, line 15, leave out ‘£20,000’ and insert ‘£50,000’.

No. 145, page 72, line 15, at end insert

‘or a higher sum which the Lord Chancellor may by order prescribe.’.

No. 77, page 72 , leave out lines 22 to 24.

No. 72, in clause 140, page 73, line 42, at end insert—

‘(10A) Where a determination has become final and binding in accordance with this section, the complainant may appeal to the High Court against the determination, the terms of any direction made under section 137(2), or any omission to make such a direction.’.

No. 73, page 73, line 42, at end insert—

‘(10B) Where a determination has become final and binding in accordance with this section, the respondent may appeal to the High Court against the determination or any direction made under section 137(2).’.

No. 74, page 73, line 44, after ‘proceedings’, insert

‘(except an appeal under subsection (10A) or (10B))’.

Government amendment No. 97, in clause 143, page 75, line 21, at end insert—

‘(2A) The ombudsman must give the complainant a notice stating that a report under subsection (2) has been given to the relevant authorising body.’.

Amendment (a) thereto, in line 3, at end add—

‘(2B) The relevant authorising body must report to the complainant the action which has been or is to be taken by it in response to the report and the reasons for that action being taken.’.

Government amendment No. 98.

Government amendment No. 109.

No. 155, in schedule 15, page 224, line 22, at end insert—

‘(3) The persons with whom the OLC may make arrangements under subparagraph (1) above include approved regulators and external regulators.

(4) The arrangements that the OLC may make include arrangements for assistance to be provided to an ombudsman in relation to the investigation and consideration of a complaint.’.

Amendment No. 153 is the lead amendment in a key group that relates to complaints—in particular, who pays, especially when a complaint fails. Amendment No. 153 would remove the word “may” and insert the word “must”. Amendment No. 154 would provide the opportunity to delegate complaints to a body other than the ombudsman. Amendment No. 56 would enable the ombudsman to award costs against the respondent when the complaint is upheld. Amendment No. 59 is consequential.

Amendment No. 58 is the key amendment on the “polluter pays” principle, and I shall return to that in a moment. Incidentally, it is very similar to Government amendment No. 93, which is subject to amendments (a) and (b), tabled by the Liberal Democrats. Amendments Nos. 72, 73 and 74 are about the complainant and the respondent’s ability to appeal to the High Court. Amendment No. 94 is consequential. Amendment No. 155 relates to the delegation of complaints handling, with special relevance to the Bar Standards Board.

Quite a few of the amendments are pretty technical, so in the short time left I shall concentrate on the two key amendments in the group. One deals with the situation in which someone complains about the conduct of a law firm, a barrister, a trademark attorney or legal executive. When that individual or firm is exonerated—totally vindicated—it is unfair if they have to pay significant costs.

There is an important principle at stake. We have heard today how the legal profession is under pressure as a result of the Carter reforms and their impact on legal aid and on single petitioner companies. We have heard how many market towns throughout the country will see a lot of consolidation and a lot of firms closing. It would be wrong to ignore David Clementi, who made it clear that those who are exonerated and held to be blameless should not have to pay costs.

Let me quote from the Second Reading debate in the other place. Lord Neill of Bladen said:

“It cannot stand up to any outside scrutiny that a man who has a false charge made against him has to pay the costs of the proceedings.”—[Official Report, House of Lords, 6 December 2006; Vol. 687, c. 1185.]

In Committee, I made the point that many younger barristers specialise in the types of law, such as criminal law and family law, where unjustified complaints are likely to be the most prevalent. We do not want young barristers to be put off specialising in those areas of law. I shall not repeat the examples I quoted of an applicant or appellant who loses his case after a long- drawn-out set of proceedings, feels that he has nothing to left to lose, and therefore takes action by way of making a complaint against the firm of solicitors and perhaps the barrister involved in his case. That happens all the time. In Committee in the other place, Baroness Butler-Sloss said:

“Family cases are highly emotional and very unhappy for those who engage in them. It is almost impossible to be objective about your own family problem. Whether in public law or in private law, the distress caused to litigants is enormous. Almost all litigants go away dissatisfied, most of them with the judge, which is fair enough, and many of them with the lawyer—the solicitor as well as the barrister”.—[Official Report, House of Lords, 21 February 2007; Vol. 689, c. 1115.]

We felt strongly that where the “polluter pays” principle was concerned, it was essential that the Government take the time to listen to what we had to say and to react. I am pleased that the Government have tabled an amendment that is very similar to ours—it is a classic example of co-operation and good will on all sides resulting in a favourable decision. Of course we would like to go further—ideally, we would not include the word “reduced”—but we are to some extent happy with the substantial progress that has been made. I would therefore like to say a big thank you to the Minister for what has so far been achieved.

Previously, I have spoken about complaints handling. In another place and in Committee, there was a spirited debate on the delegation of complaints handling. We had a lengthy discussion about the role of the Bar Standards Board and the extent to which it has put in place a lay chair and built up credibility not only within the profession, but across the legal services field and in the outside world, with consumer groups. Understandably, the board was concerned that all its hard work would be emasculated and marginalised. That is why we tabled amendments in Committee and why we are now proposing amendment No. 155. I shall not go into detail, save to say that it has now been overtaken to some extent by Government amendment No. 109.

Let me quote what the consumer group Which? has said. The group made it clear that it was dead against our amendments in Committee, but it now says:

“Over the summer, discussions have continued between the Bar Council and Which?.”

Obviously, it is good news that those discussions took place. It continues:

“We agree that the amendment now tabled by the Government to Schedule 15 meets the concern of the Bar Council but without undermining the OLC.”

In a recent letter to heads of chambers and circuit leaders, the Bar Council said:

“on complaints handling, a compromise satisfactory to us, the BSB and consumer bodies has now been tabled by Ministers…This will mean that the expertise of specialist barristers will not be lost to the complaints process, and we believe that it is a great improvement to the Bill for the benefit of consumers and barristers alike.”

Without going into detail on the technical points of our amendments, I repeat that we had a lengthy debate on the point in Committee. Indeed, there was a certain amount of disappointment among Conservative Members that the Minister was not prepared to go along with what we were asking for, but that was before the summer. I hope that she managed to have some holiday, but I doubt it because she worked very hard on the Bill. I am grateful to her for that hard work; it has delivered a pragmatic, sensible set of Government amendments. I pay tribute to the outside organisations that worked hard on the matter. They never went over the top, but lobbied constructively, enthusiastically and with great effect. The result is that the Government have gone a long away towards where we wanted them to go, and I thank the Minister for that.

I thank the Minister for Government amendments Nos. 93 and 97, but in each case I ask whether she has gone far enough. Amendment No. 93 is about charges that the ombudsman may ask practitioners to pay as a result of a decision on a complaint. I have always argued that the ombudsman ought to be able to match the charge to the degree of culpability. If someone is completely innocent, they should not pay anything; if they are completely guilty, they should pay the lot. But if they fall somewhere in between, because something that they did brought about the complaint, they should pay a share of the charge. I took it that Government amendment No. 93 said just that, but I spoke to the hon. Member for Somerton and Frome (Mr. Heath) and he did not think that it allowed that. If he is right, then perhaps the word “all” should not be included in proposed subsection (1A)(b) of the amendment, which says:

“the ombudsman is satisfied that the respondent took all reasonable steps”.

In amendment No. 97, the Government have tabled half of what I proposed in Committee. If a complainant complains to the ombudsman about bad service, the ombudsman may come to a decision on the matter and decide whether compensation is payable or a refund is due. However, the ombudsman may decide that there is a need for disciplinary investigation and action by the appropriate regulatory body, and they may refer the complaint to that body. As things stood in Committee, the consumer would not necessarily know that action had been taken by the ombudsman, so I am grateful to the Minister for saying that the complainant will receive a notice saying that their complaint has been referred to the appropriate regulator for consideration of disciplinary action. I argue that, at the end of the process, the regulator ought to tell the consumer whether disciplinary action has been taken, and so close the loop. That is the point of my amendment (a) to Government amendment No. 97, and I would be grateful to hear the Minister’s view on it.

I have three amendments in the group before us. I am persuaded that one of them, amendment No. 145, is entirely otiose, and I wish I had not tabled it; I can tell the Minister that I do not intend to press it to a Division. The other two are amendments to Government amendment No. 93. I thank the Minister for tabling Government amendment No. 93; it is a good response to the concerns expressed by all parties, both in Committee and before that. I pay tribute to all those who have argued the case that where there is no blame, there should be no penalty; that is the crux of the issue.

It may help the hon. Gentleman to know that I am pleased to accept his amendments to Government amendment No. 93.

It is a joy to hear that from a Minister. We are always pleased when Ministers accept our amendments, and I need say nothing further. I am grateful to the hon. Lady for her assistance.

May I speak to amendment No. 76, which I tabled with my hon. Friend the Member for Bassetlaw (John Mann)? In Committee, we raised the need to increase the amount of compensation to a more realistic figure. I mentioned the case of Mrs. X of Stanley who could have lost £42,000 because of the negligence of Mark Gilbert Morse—a firm of solicitors in my constituency—regarding a miners’ compensation case. I accept that Government amendment No. 96 increases the amount from £20,000 to £30,000, but the purpose of my amendment is to ensure that the amount of compensation does not stick, as has been the case for many years, at a derisory level and is not out of kilter with the extent of people’s losses. Will the Minister explain what review mechanism is available to change the amount, if we accept the figure of £30,000 proposed in the Government amendment?

First, may I reiterate that I am happy to accept amendments (a) and (b) to Government amendments No. 93, which were tabled by the hon. Member for Somerton and Frome (Mr. Heath). I recognised the force of the argument expressed both in Committee and in the other place that if someone is entirely innocent, it is quite unreasonable to expect them to pay costs. However, they must be able to show—and the office for legal complaints must be able to see—that the in-house complaints system is robust, and has been followed assiduously. On that basis, I am happy to accept the amendments.

May I tell my hon. Friend the Member for Stafford (Mr. Kidney) that Government amendment No. 97 was tabled as a result of his good work and because of his remarks in Committee? I am pleased, too, to tell the hon. Member for North-West Norfolk (Mr. Bellingham) that assistance will be available. The Bar and the Bar Standards Board put the case very strongly. While complaints handling should be seen to be independent of the legal profession, we did not want to lose the board’s expertise, and the discussions over the summer have enabled us to table an amendment that is satisfactory to all, and keeps consumers and consumer protection paramount.

My hon. Friend the Member for North Durham spoke about increasing the limit on compensation. I hope he accepts that the Government amendment that raises the limit from £20,000 to £30,000 provides for a 50 per cent. increase, excluding interest, which is a step forward. He will be aware that the board can, virtually on day one if it so chooses, consider whether the limit ought to be further increased. I have suggested that it should consider the limit annually, and that that figure should be included in its annual report to Parliament so that we know, on consumers’ behalf, whether or not it thinks the limit is adequate.

Does my hon. Friend believe that a good regulator, in a disciplinary matter, would, as a matter of course, inform the consumer of the outcome of the investigation?

I agree that a good regulator would do so. I hope that when the office for legal complaints tells the consumer that it has forwarded the complaint for disciplinary investigation it will encourage the regulator to ensure that the consumer is kept informed. I did not want to table an amendment to that effect, because it would be too cumbersome. On that basis, I urge the House to accept the amendments.

I am grateful to the Minister, who has made our day with this group of amendments. There are two important issues of principle at stake, and I thank her for what she said. I know that all branches of the profession will be extremely grateful as well, so with that in mind, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 136

charges payable by respondents

Amendment proposed: No. 93, page 70, line 43, at end insert—

‘(1A) The rules must provide for charges payable in relation to a complaint to be reduced or waived (or partly or wholly refunded) where—

(a) the complaint is determined or otherwise resolved in favour of the respondent, and

(b) the ombudsman is satisfied that the respondent took all reasonable steps to try to resolve the complaint under the respondent’s complaints procedures.

(1B) The rules may make provision as to—

(a) the circumstances in which a complaint is to be treated as determined or otherwise resolved in favour of the respondent (which may include circumstances where a complaint is settled, withdrawn or abandoned (or treated as withdrawn or abandoned by virtue of scheme rules));

(b) matters to be taken into account by the ombudsman for the purposes of subsection (1A)(b).

(1C) The respondent’s complaints procedures are the procedures established by the respondent, or which the respondent participates in or is subject to, in accordance with regulatory arrangements (or licensing rules of the Board) made in accordance with section 112.’.—[Bridget Prentice.]

Amendments made to the proposed amendment:

(a), line 2, leave out ‘reduced or’.

(b), line 2, leave out ‘or partly’.—[Mr. Heath.]

Amendment, as amended, agreed to.

Amendments made: No. 94, page 71, line 2, leave out ‘a particular case’ and insert

‘such other circumstances as may be specified’.

No. 95, line 5, leave out ‘refunded in specified circumstances’ and insert

‘wholly or partly refunded in such other circumstances as may be specified’.—[Bridget Prentice.]

Clause 138

limitation on value of directions under the ombudsman scheme

Amendment made: No. 96, page 72, line 15, leave out ‘£20,000’ and insert ‘£30,000’.—[Bridget Prentice.]

Clause 143

reporting possible misconduct to approved regulators

Amendment made: No. 97, page 75, line 21, at end insert—

‘(2A) The ombudsman must give the complainant a notice stating that a report under subsection (2) has been given to the relevant authorising body.’.—[Bridget Prentice.]

Clause 157

approved regulators not to make provision for redress

Amendment made: No. 98, page 82, line 28, after ‘provision’ insert ‘made in regulatory arrangements’.—[Bridget Prentice.]

Schedule 15

the office for legal complaints

Amendments made: No. 108, page 222, line 23, after ‘conveyancer,’ insert—

‘( ) granted a certificate issued by the Institute of Legal Executives authorising the person to practise as a legal executive,

( ) a registered patent attorney, within the meaning given by section 275(1) of the Copyright, Designs and Patents Act 1988 (c. 48),

( ) a registered trade mark attorney, within the meaning of the Trade Marks Act 1994 (c. 26),’.

No. 109, page 224, line 22, at end insert—

‘() The persons with whom the OLC may make arrangements include approved regulators; and the arrangements it may make include arrangements for assistance to be provided to an ombudsman in relation to the investigation and consideration of a complaint.’.—[Bridget Prentice.]

Clause 176

duties of regulated persons

Amendment made: No. 99, page 93, line 38, leave out ‘(other than an individual)’.—[Bridget Prentice.]

Clause 184

trade mark attorneys

Amendment made: No. 100, page 98, line 3, after ‘rules’ insert ‘or regulations’.—[Bridget Prentice.]

Clause 185

patent attorneys

Amendment made: No. 101, page 100, line 17, after ‘rules’ insert ‘or regulations’.—[Bridget Prentice.]

Schedule 16

the law society, solicitors, recognised bodies and foreigh lawyers

Amendments made: No. 110, page 270, line 28, at end insert—

‘( ) After that subsection insert—

“(1A) Where the Society makes rules under subsection (1), it must by rules under subsection (1)(c) prescribe the requirement that (subject to any exceptions provided by the rules) recognised bodies must not provide services other than—

(a) solicitor services, or

(b) solicitor services and other relevant legal services.

(1B) “Relevant legal services” means—

(a) solicitor services, and

(b) where authorised persons other than solicitors or registered European lawyers are managers or employees of, or have an interest in, a recognised body, services of the kind provided by individuals practising as such authorised persons (whether or not those services involve the carrying on of reserved legal activities within the meaning of the Legal Services Act 2007).

(1C) The Society may by rules under this section provide that services specified, or of a description specified, in the rules are not to be treated as solicitor services or other relevant legal services.”.’.

No. 111, page 271, line 29, at end insert—

‘(fc) requiring recognised bodies to appoint a person or persons to monitor compliance, by the recognised body, its managers and its employees, with requirements imposed on them by or by virtue of this Act or any rules applicable to them by virtue of this section;”’.

No. 112, page 271, line 30, at end insert—

‘“(2ZA) If rules under this section provide for the recognition of legal services bodies which have one or more managers who are not legally qualified, the rules must make provision—

(a) for the recognition of such bodies to be suspended or revoked, on such grounds and in such circumstances as may be prescribed by the rules;

(b) as to the criteria and procedure for the Society’s approving, as suitable to be a manager of a recognised body, an individual who is not legally qualified (and for the Society’s withdrawing such approval).

(2ZB) Rules under this section may make provision for appeals to the High Court against decisions made by the Society under the rules—

(a) to suspend or revoke the recognition of any body;

(b) not to approve, as suitable to be the manager of a recognised body, an individual who is not legally qualified (or to withdraw such approval).

(2ZC) The rules may provide for appeals against decisions within subsection (2ZB)(b) to be brought by the individual to whom the decision relates (as well as the body).

(2ZD) In relation to an appeal under rules made by virtue of subsection (2ZB), the High Court may make such order as it thinks fit as to payment of costs.

(2ZE) The decision of the High Court on such an appeal shall be final.’.

No. 113, page 271, line 36, leave out from ‘(2B)’ to end and insert

‘While a body is recognised under this section, the Society—

(a) must direct that the body’s recognition is to have effect subject to one or more conditions if—

(i) the case is of a prescribed kind, and

(ii) the Society considers that it is in the public interest to do so;

(b) ’.

No. 114, page 271, line 47, at end insert—

‘(c) if rules under this section provide for the recognition of legal services bodies which have one or more managers who are not legally qualified, a condition that all the managers of the body must be legally qualified.’.

No. 115, page 272, line 17, at end insert ‘, and—

( ) for “the commencement of this section” substitute “or in the same session as the Legal Services Act 2007 was passed”.’.

No. 116, page 272, line 18, at end insert—

‘( ) after the definition of “the 1974 Act” insert—

““authorised person” means an authorised person in relation to an activity which is a reserved legal activity (within the meaning of the Legal Services Act 2007);”,’.

No. 117, page 272, line 22, leave out ‘““legal services body” has’ and insert

‘““legally qualified” and “legal services body” have’.

No. 118, page 272, line 27, leave out from ‘(e)’ to the end and insert

‘after the definition of “registered European lawyer” insert—’.

No. 119, page 272, leave out lines 28 and 29.

No. 120, page 272, line 32, after ‘jurisdictions’ insert ‘;

and a person has an interest in a body if the person has an interest in the body within the meaning of Part 5 of the Legal Services Act 2007 (see sections 72 and 109 of that Act)’.

No. 121, page 272, line 34, leave out paragraph 82 and insert—

‘82 After that section insert—

“9A Legal services bodies

(1) For the purposes of section 9, a “legal services body” means a body (corporate or unincorporate) in respect of which —

(a) the management and control condition, and

(b) the relevant lawyer condition,

are satisfied.

(2) The management and control condition is satisfied if—

(a) at least 75% of the body’s managers are legally qualified,

(b) the proportion of shares in the body held by persons who are legally qualified is at least 75%,

(c) the proportion of voting rights in the body which persons who are legally qualified are entitled to exercise, or control the exercise of, is at least 75%,

(d) all the persons with an interest in the body who are not legally qualified are managers of the body, and

(e) all the managers of the body who are not legally qualified are individuals approved by the Society as suitable to be managers of a recognised body.

(3) The Society may by rules under section 9 provide that, in relation to specified kinds of bodies, subsection (2) applies as if the references to 75% were to such greater percentage as may be specified (and different percentages may be specified for different kinds of bodies).

(4) The relevant lawyer condition is satisfied in relation to a body if at least one manager of the body is—

(a) a solicitor,

(b) a registered European lawyer, or

(c) a qualifying body.

(5) For that purpose a qualifying body is a body in respect of which—

(a) the management and control condition would be satisfied if the references in subsection (2) to persons who are legally qualified were to persons who are legally qualified by virtue of subsection (6)(a) to (c),

(b) the relevant lawyer condition is satisfied by virtue of subsection (4)(a) or (b), and

(c) the services condition is satisfied.

(6) For the purposes of this section the following are legally qualified—

(a) an authorised person who is an individual;

(b) a registered foreign lawyer (within the meaning of section 89 of the Courts and Legal Services Act 1990 (c. 41));

(c) a person entitled to pursue professional activities under a professional title to which the Directive applies in a state to which the Directive applies (other than the title of barrister or solicitor in England and Wales);

(d) an authorised person which is a body in respect of which—

(i) the services condition is satisfied, and

(ii) the management and control condition would be satisfied if the references in subsection (2) to persons who are legally qualified were to persons who are legally qualified by virtue of paragraphs (a) to (c);

(e) a body which provides professional services such as are provided by individuals who are authorised persons or lawyers of other jurisdictions, and in respect of which the management and control condition would be satisfied if the references in subsection (2) to persons who are legally qualified were to persons who are legally qualified by virtue of paragraphs (a) to (c).

(7) For the purposes of this section, the services condition is satisfied in relation to a body if the body provides only services which may be provided by a recognised body (having regard to rules under section 9(1A) and (1C)).

(8) For the purposes of this section—

“authorised person” has the same meaning as in section 9;

“the Directive” means Directive 98/5/EC of the European Parliament and the Council, to facilitate practice of the profession of lawyer on a permanent basis in a Member State other than that in which the qualification was obtained;

“manager”, in relation to a body, has the meaning given by section 9;

“recognised body” has the same meaning as in section 9;

“registered European lawyer” has the same meaning as in section 9;

“shares” has the same meaning as for the purposes of Part 5 of the Legal Services Act 2007 (see sections 72 and 109 of that Act);

“specified” means specified in rules made by the Society;

and a person has an interest in a body if the person has an interest in the body for the purposes of section 9.”’.

No. 122, page 277, line 31, after ‘of’ insert ‘—

(a) ’.

No. 123, page 277, line 33, after ‘generally’ insert ‘, or

(b) that client, person or trust separately’.

No. 124, page 277, line 44, after first ‘of’ insert ‘—

(a) ’.

No. 125, page 277, line 45, after ‘generally’ insert ‘, or

(b) that client, person or trust, separately’.

No. 126, page 280, line 38, at end insert ‘, or

( ) a manager of a recognised body who is not legally qualified (within the meaning of section 9A) continues to be suitable to be a manager of a recognised body.’.

No. 127, page 289, line 45, leave out sub-paragraph (3).

No. 128, page 291, line 16, at end insert ‘, and

( ) in paragraph (a), after “revoked” insert “in accordance with rules under that section or”.’

No. 129, page 292, line 13, at end insert ‘and

( ) after that sub-paragraph insert—

“(4) This paragraph does not apply to a recognised body which holds a licence under Part 5 of the Legal Services Act 2007 (alternative business structures).”’.

No. 130, page 292, line 22, at end insert —

‘( ) in subsection (4), for paragraphs (a) to (d) substitute “to make different provision with respect to registered foreign lawyers to the provision made with respect to solicitors.”,’.

No. 131, page 293, line 9, at end insert ‘and—

(ii) for paragraphs (a) and (b) substitute “for members of that profession to be managers of recognised bodies.”,’.—[Bridget Prentice.]

Schedule 21

minor and consequential amendments

Amendment made: No. 142, page 355, line 44, at end insert ‘and,

(b) in subsection (6), for “counsel or a solicitor” substitute “a person who, for the purposes of the Legal Services Act 2007, is an authorised person in relation to an activity which constitutes the exercise of a right of audience (within the meaning of that Act)”.’.—[Bridget Prentice.]

Schedule 22

transitional and transitory provision

Amendments made: No. 132, page 371, line 10, leave out ‘, 32’.

No. 133, page 371, line 26, leave out ‘(other than a licensable body)’.

No. 134, page 371, line 30, leave out paragraph (i) and insert—

‘(i) a person who (having regard to section 15) carries on notarial activities through an employee or manager of the person who is within paragraph (h),’.

No. 135, page 371, line 36, leave out ‘, other than a licensable body’.

No. 136, page 371, line 40, leave out ‘, other than a licensable body’.

No. 137, page 371, line 43, leave out paragraph (o) and insert—

‘(o) a person who (having regard to section 15) carries on an activity which is a reserved legal activity within paragraph 18(2) of Schedule 5 through an employee or manager of the person who is within paragraph (n).’.

No. 138, page 371, line 45, at end insert—

( ) After the end of the transitional period, any reference in section 9, 9A or 32A of, or Schedule 2 or 6 to, the Administration of Justice Act 1985 (c. 61) to an authorised person includes a person who is an exempt person—

(a) by virtue of paragraph 13 of Schedule 5, in relation to the carrying on of an activity which is a notarial activity, or

(b) by virtue of paragraph 18 of that Schedule, in relation to the carrying on of an activity which is a reserved legal activity within sub-paragraph (2) of that paragraph.’.

No. 139, page 372, line 2, at end insert—

‘15A (1) During the transitional period (within the meaning of paragraph 15), the Law Society may make rules to which this sub-paragraph applies only with the concurrence of the Lord Chancellor (as well as the Master of the Rolls).

(2) Sub-paragraph (1) applies to —

(a) rules made under section 9 of the Administration of Justice Act 1985 (c. 61) by virtue of subsections (1A), (1C), (2A), (2B) or (2D) of that section or section 9A of that Act, and

(b) any other rules made under section 9 of that Act, in so far as they apply in relation to bodies which have one or more managers who are not legally qualified (within the meaning of section 9A of that Act), or managers or employees of such bodies.

15B (1) During the relevant period, the legal professional privilege provisions apply to a body which—

(a) is recognised under section 9 of the 1985 Act, and

(b) has one or more managers who are not legally qualified (within the meaning of section 9A of that Act),

as if the body were a licensed body.

(2) Sub-paragraph (1) applies whether or not the legal professional privilege provisions have been brought into force for other purposes.

(3) The relevant period is the period which—

(a) begins when section 9A of the 1985 Act comes into force, and

(b) ends when paragraph 7 of Schedule 5 ceases to apply in relation to the body.

(4) The legal professional privilege provisions are—

(a) paragraph 36(4) of Schedule 2 to the 1985 Act (as inserted by Schedule 16 to this Act), and

(b) section 190(3) to (7) of this Act.

(5) During the transitional period (within the meaning of paragraph 15), section 190(5)(h) (as it applies by virtue of this paragraph) applies as if for “an authorised person in relation to an activity which is a reserved legal activity” there were substituted “within paragraph 15(1) of Schedule 22”.

(6) “The 1985 Act” means the Administration of Justice Act 1985.’.—[Bridget Prentice.]

Schedule 23

repeals

Amendments made: No. 143, page 377, leave out lines 27 and 28 and insert ‘, “corporate”.’.

No. 140, page 378, line 25, leave out ‘(1)(b) and’.

No. 141, page 383, line 16, leave out ‘Schedule 3’ and insert ‘Schedules 3 and 5’.—[Bridget Prentice.]

Order for Third Reading read.

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

After many hours of debate in Committee and on the Floor of the House, everyone who has paid any attention to the Bill will realise how strongly I feel about putting the consumer at the heart of the legal system. One of the reasons for that, as we have heard in our debates, is that for far too long focus has been too much on the needs and interests of the suppliers.

From the debate this evening, in Committee and well before that, dating back to the Office of Fair Trading report, our consultation, and following that, Sir David Clementi’s independent review, the White Paper in 2005 and the draft Bill 2006, we can see that we became aware that consumers had lost confidence in a system in which they perceived, rightly or wrongly, that lawyers were responsible for judging their own. We know of the potentially unduly restrictive rules of the legal profession, which Sir David Clementi described as an

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

regulatory maze. That was unacceptable.

The Government are committed to delivering a better deal for the consumer. We needed to restore consumer confidence and address the issues at a fundamental level. The Bill does that by sweeping away decades of piecemeal reform and putting in place a robust new regulatory system. Part 1 sets out the objectives and principles that will apply to the legal services board, the approved regulators and the office for legal complaints.

Part 2 makes provision for a new independent oversight regulator. For a long time we have argued that appointments to the board should be made by Ministers alone. We argued that that was necessary because we wanted to retain the oversight of the Commissioner for Public Appointments and an appropriate level of accountability. We have listened to views in the House and elsewhere, which is why we have agreed that the Lord Chancellor should consult the Lord Chief Justice before those appointments are made. The board will have a lay chair, and I am grateful to my hon. Friends the Members for Bassetlaw (John Mann) and for North Durham (Mr. Jones), whose amendment the House accepted today, which will ensure that consumers will always have confidence that the board is independent of the profession which it is regulating.

Part 3 sets out the legal activities that will come under the regulatory control of the board, such as the provision of advocacy and litigation services, and it will ensure that suitable offences apply where someone carries out reserved legal activities when they are not entitled to do so. It also makes important exemptions to the offence provisions to ensure that certain bodies—not-for-profit organisations and trade unions—can continue to provide their legal services to millions of people without needing to alter their existing structures.

Part 4 sets out the arrangements under which the board will regulate approved regulators such as the Law Society and the Bar Council, and requires those approved regulators to separate their regulatory and representative functions.

Although day-to-day regulation should, rightly, remain with the professions, the board will have a range of powers over them. We have debated at length the thresholds for the exercise of those powers, and I hope that the Bill provides reassurance to such bodies. It is clear that the board must be able to exercise appropriate powers when the acts or omissions of an approved regulator damage the regulatory objectives. I do not want to include anything in the Bill that could restrain the board from doing that; it is vital that it should be effective in fully protecting the consumer interest. Through clause 3, the thresholds themselves and clause 49, the Bill sets out clear requirements that ensure that the board will act appropriately; it should not be in the business of micro-managing or second-guessing approved regulators.

Part 5 allows for a framework of alternative business structures, which will provide a means of increasing competition and consumer choice. By becoming licensed bodies, firms will be permitted to have different types of lawyers and non-lawyers working together to provide a range of legal and other services. Such firms will also have access to external investment.

The House should be excited by what we are doing in the Bill and by the benefits that the ABS provisions can bring to consumers and providers alike. Further unnecessary and costly research might bring about a delay in implementation, and I do not want that. We now need to address the issues that concern consumers. The correct way forward is surely for a person in Lewisham high street to be able to go into an office and get the proper financial, legal, conveyancing and other advice that they need as a result of something in their personal life, and we should all persuade anyone with any doubts. Of course, there have to be important and robust safeguards. They include, for example, the requirement for there to be heads of legal practice and of finance and administration, and the “fit and proper” test for any external investor.

We have listened to the concerns raised by hon. Members and I hope that we have made the appropriate changes that will help licensing authorities give special attention to the regulatory objectives, including access to justice—an issue raised tonight and in Committee. The Bill now strikes the right balance. It ensures that the regulatory objectives remain in balance while addressing the concerns raised by right hon. and hon. Members.

On Report, I brought forward amendments to allow the Law Society to regulate limited forms of alternative business structures in advance of the commencement of part 5. In doing that, I do not expect us to delay part 5. I hope, however, that we have adopted a stepped approach that will allow for the introduction of an ABS regime with lawyer-led legal-disciplinary practices, rather than the potentially complex ownership structures of multidisciplinary practices. As the hon. Member for Huntingdon (Mr. Djanogly) said, that is in line with Sir David Clementi’s approach. It is a natural progression for the ABS regime to take shape with the simpler structures developing first.

Part 6 provides for the establishment of a new and independent office for legal complaints, which will provide quick and fair redress and require that every authorised person has internal complaints-handling arrangements. As I said, I have accepted the amendment tabled by the hon. Member for Somerton and Frome (Mr. Heath) on that issue. I congratulate him on coming to terms with a long and complex Bill at relatively short notice. I hope that he did not spend the whole summer reading through the Bill and the earlier debates in Hansard.

We have talked for many hours about the delegation of complaints back to the legal professions. I believe that if we had done that, we would have defeated the whole purpose of this part of the Bill; it certainly would have flown in the face of the deepest concerns of consumers. I am pleased that by working together, those in this House, and the stakeholders, have welcomed the amendments that we have introduced this evening.

There are a couple of other areas that may not have received as much air time but are important. On the level of redress, I hope that I have been able to provide the reassurance that the office for legal complaints will have the ability to examine the level of redress, which has been raised by my hon. Friends, on a regular basis and when it thinks it appropriate or necessary.

Part 7 sets out further provisions relating to the board and the OLC. Parts 8 and 9 provide for amendments to existing legislation to align it with the provisions in the Bill, including amendments to the Solicitors Act 1974, the Administration of Justice Act 1985 and the Courts and Legal Services Act 1990. That is in order to update the Law Society’s regulatory framework and powers, including provision to allow it to regulate the limited forms of ABS that I mentioned earlier.

I hope that our debates on Second Reading, in Committee and today have clarified any outstanding concerns. I am pleased that we now have a Bill that will truly restore consumer confidence in the provision of legal services through a modern, flexible, transparent and independent system of regulation—one that will act in consumers’ interests and enable lawyers to provide services in new and innovative ways.

I should like to thank the hon. Member for Macclesfield (Sir Nicholas Winterton) and my hon. Friend the Member for Stockton, North (Frank Cook), who between them so ably chaired the Public Bill Committee. I also thank members of the Committee from across the House who have contributed to a thorough and useful examination of this important and long overdue Bill. I particularly thank the hon. Members for North-East Hertfordshire (Mr. Heald), for North-West Norfolk (Mr. Bellingham), for Huntingdon, for Somerton and Frome, and for North Southwark and Bermondsey (Simon Hughes), all of whom made constructive comments throughout the course of our debates. I could not say anything other than a very heartfelt thanks to my hon. Friends from the Back Benches who have, in Committee and here, not only supported me throughout the Bill’s passage but moved constructive amendments that have made it even better for the consumer. I am very grateful to them for that.

I am in debt to the organisations that have worked so closely with us to develop the Bill into a piece of legislation that will meet the concerns of a wide range of people, not only the consumers of legal services but providers. Particular thanks should go to Citizens Advice, the Federation of Small Businesses, the National Consumer Council, the Office of Fair Trading and Which? and the members of those organisations who have worked so hard throughout the Bill’s development and passage to help us to deliver it as a consumer-focused measure through the Government’s consumer advisory panel.

It would be wrong not to thank also the legal services themselves—the professional bodies who have been constructive in their approach from the beginning. Of course, they had concerns about their membership and rightly looked to ensure that it was properly protected. They too have recognised the Bill’s importance to the consumers of their services and the enhancement of their profession. I am very grateful to them for that.

Of course, none of this could have happened without Sir David Clementi, whose review triggered the process and laid the firm foundations for this very significant and ground-breaking piece of legislation. I am grateful to him. I am grateful also to the officials in my Department, who I know have been helpful to Members of all parties, in this House and in the other place. They are absolute experts and have been stalwarts during hours of debate, negotiation and amendment. I am exceptionally grateful to every one of them.

Most of all, I am grateful to the consumers, who persuaded us that it was time to introduce legislation that gives them a voice in one of the most important areas of their lives: dealing with the legal profession. I am grateful to them, because without their constant campaigning and persuasion, we might not have got to where we are today.

Given the significant time since the inspirational and far-thinking Clementi process and report, and the process of the Bill through Parliament, including the summer recess, it seems as though we have been dealing with this legislation for a very long time. The Commons Committee that considered the Bill was one of the most productive on which I have had the opportunity to serve, not least with regard to the level of participation shown by Members of all parties. As a result, the Bill was given the thorough detailed analysis that it deserved in Committee—but today’s Report has been something of a rush.

The Bill has come a long way since it was first introduced, which is a direct result of the hard work of this place, and of the improvements made to it by Conservative, Liberal Democrat and Cross-Bench peers, led frequently by my noble Friends Lord Kingsland and Lord Hunt of Wirral. On Second Reading, I stated that I was understandably not pleased to hear from the Minister how most of the many improvements made to the Bill in the other place were to be reversed by the Government in Committee. Indeed, the Minister was true to her word, and the Government embarked on a mission to reverse much of the good work in the improvements made to the Bill. However, the Minister listened to many of the arguments put forward in Committee and, thankfully, after the summer recess came forward with a broad range of concessionary amendments for today’s Report, which have led to improvements. After the Bill was moved slightly away from the Clementi recommendations, it is now being returned closer to them, which we welcome.

This is a first-class piece of legislation that should maintain the highest standards of legal practice in Britain in regulation, complaints and the structure of the provision of legal services. The consumer will have a single point of contact, instead of the current confusing situation, and the process will also be a smoother one for the legal profession. The Bill provides the regulatory structure that will enable British legal services—we should keep in mind that they now constitute 2 per cent. of gross domestic product—to move forward in a modern and adaptable way. The benefits will be felt by consumers and legal practitioners alike.

I particularly recognise the good work that has been done to ensure that the consumer benefits of legal disciplinary practices can be felt before the full ABS licensing regime comes into force, probably in about 2011. Following enactment, a lot of effort will still be required to put in place rules to allow ABS, but the framework will be there. Following consistent pressure from my party, the Law Society, and input from the hon. Member for Stafford (Mr. Kidney), the Bill will enable the Law Society to regulate firms including a minority of non-lawyer partners within the Law Society’s existing regulatory regime. That will benefit the public and the legal profession, as non-lawyers will be able to take a direct interest in the running of law firms. Sir David Clementi and the Joint Committee that considered the draft Legal Services Bill recommended an incremental approach to the introduction of alternative business structures. The Bill will enable that to be the case.

We fully support the concept of the ABS regime, believing that more flexibility in the market will be good for consumers and the profession itself. We believe that in time the provisions will provide for accountants and other professionals to work with lawyers and provide one-stop shops that benefit the high street, while enabling our international firms to compete at the highest global levels, as my hon. Friend the Member for Cities of London and Westminster (Mr. Field) earlier said.

However, we fully expect no resulting compromise on the quality of standards and the integrity of service provision. The Bill has safeguards to ensure that the quality of legal services for consumers will not be jeopardised by alternative business structures, and the effectiveness of that will need to be kept under review. The Opposition parties pushed hard for proper provision to ensure that the possible negative impacts on access to justice of granting ABS licences were taken into account. I am pleased to acknowledge that the Government have listened to us on that point too.

The Bill goes a long way towards achieving the objectives that resulted from Sir David Clementi’s visionary report on legal services and the Joint Committee’s recommendations. I am pleased to have played a part in its passage. However, as it became clear on Report, several issues remain to be tackled in the other place to ensure that we have genuinely seized a once-in-a-generation chance to reform thoroughly and effectively the legal services industry, for the benefit of consumers and legal professionals.

The independence of the legal profession and its regulation from Government is a key constitutional principle, which underpins the rule of law. The independence of the legal services board from Government is crucial to maintaining the profession’s independence in this country. The Government have come a long way, but I question whether they have yet come far enough.

When the Bill was introduced, the Lord Chief Justice had no statutory role and appointments were to be made by the Secretary of State rather than the Lord Chancellor. The Government’s initial agreement to transfer responsibility to the Lord Chancellor, with his specific responsibility for upholding the rule of law, and to entrench that in the Bill, was a welcome but inadequate development. After Report, we still have not got what we wanted on the role that the Lord Chief Justice should play in appointing members of the legal services board. Although I acknowledge the Government’s movement on the subject in the summer, as matters stand, the Lord Chief Justice is only to be consulted. At the very least, we require clear guidance about what such consultation will involve, and the Lord Chief Justice’s views must be publishable. It remains our ideal position that appointments to the LSB should be made by the Lord Chancellor with the concurrence of the Lord Chief Justice. Such a provision would ensure that the most suitable checks on the Lord Chancellor were in place to guarantee the LSB’s independence.

As I said on Report, we must never take the judiciary’s independence for granted. The deep concern that the German regulators showed about the provisions’ potential to erode the independence of the legal profession in this country were telling. Perhaps Germany’s history has made them aware of the importance of an independent judiciary. I hope that the Government can explain their position more fully in another place, but I have still to be convinced of the reasons for going for second best.

I remain confused about the reasons for the Government’s continued insistence on exempting the provision of legal services by trade unions to their members from the ABS licensing regime under part 5. The Bill is designed to protect consumers and ensure that they are consistently provided with an exemplary legal service. Trade union members should be granted the same protection as other consumers. It is especially wrong that the exemption in the Bill applies to any legal services that a trade union may care to provide to its members. There is not even an exemption restricted to legal work, which is ancillary to the trade union’s main purpose of representing its members in relation to their employers. It will thus be possible under the Bill for a trade union to provide a conveyancing service or representation in divorce proceedings while remaining outside the regulatory structure that applies to all lawyers and most other bodies. I will be interested to hear their lordships’ comments on the matter. After all, they have not yet been afforded the opportunity to examine the provision on trade unions, because the amendments were tabled just before the Commons Committee stage. That will make for an interesting debate in the other place.

It is unfortunate that the Government timetable did not allow for the provisions that cover the office for legal complaints to be tackled in detail on Report. However, we are concerned to ensure that the OLC is genuinely new, not simply a rebranding of the system, with staff transferring to new offices but no accompanying new ethos. We will keep an eye on that.

Despite those important issues, I believe that we are close to producing a highly effective Bill, which will benefit consumers and legal professionals. Again, I commend the hard work done in the other place, and the work done by all the members of the Commons Committee in particular. The Minister has been consistently courteous and helpful, as have her Bill team and the Clerks, and that has made the Bill’s progress a positive, productive and, dare I say, enjoyable experience.

I echo the Minister’s thanks to all the organisations whose invaluable help has been received during the Bill’s passage. The result of that hard work by so many people is a Bill that has been significantly improved since its introduction. I am afraid that there is still a small amount of work to be done, but I have every confidence in my noble Friends’ ability to iron out the remaining issues, and every confidence that we shall be left with a first-class regulatory system that will ensure that Britain maintains its place as the foremost provider of legal services in the world.

I believe that scrutiny and debate of the Bill in this House has been exemplary, and I hope that the other place does not interfere in the arrangements on which we have now settled. We have come a long way since that final report from Sir David Clementi in December 2004. Members will recall that he said at the time that the current system of self-regulation by the providers of legal services—along with the handling of complaints against them by themselves and their inability to set up new structures of business—was flawed. He said that reform of the system was long overdue. Well, this is the reform, and if I am at all impatient now it is because of the timetable: it will take up to three years for these provisions to be implemented.

The reason why we now need independent regulation and an effective system for handling complaints against providers of legal services is that they have shown themselves to be incapable of doing those things for themselves well. They have tolerated poor standards of service, and in some cases self-interest has been placed above the interests of their consumers. That is why we now need to act. I believe that when there is independent regulation and a tough system for complaints, the providers will sharpen up their act and provide better services for consumers.

I want to praise the Minister for constantly focusing on the interests of consumers, and, with the Minister, I want to praise the organisation Which?, which collected its evidence in preparation for the Bill’s passage very carefully and kept Members very well informed and briefed on the relevant issues. I think that it has done much to ensure that the Bill that is now before us is of good quality. I congratulate Which? on reaching its 50th anniversary, and invite all Members to visit its display in the Upper Waiting Hall this week and obtain their free pens.

In my view, alternative business structures are the most exciting element of the reform of legal services. Whether they apply to lawyers providing services in rural areas, providing services in law centres and giving services to communities pro bono, or to lawyers at the other end of the scale—those involved in international mergers and acquisitions—I believe that the edge we already have in terms of the quality of our legal services at their best will serve us well internationally, as well as nationally and in local communities, if the benefits of those alternative structures can be implemented smoothly and ahead of the competition around the world.

An excellent Minister has been in charge of the Bill’s progress through the House. Even when the leader of my party changed, the Prime Minister of the country changed and many Ministers in many other Departments changed, this Minister stayed with this job. I think that that was absolutely the right decision, not just for consistency—for we were reaching the end of a very complex process—but because of the qualities that she brought to the job. She has been unfailingly considerate throughout, and, as a non-lawyer, has listened to all arguments from all sources. I believe that through the care she has taken to get decisions right, she has managed to reach the right conclusion on each of the crucial issues that have faced us. I congratulate her on her contribution to the process, and wish her well in her future career after the Bill is on the statute book.

It was splendid to have a speech with its own commercial break. The Under-Secretary of State for Justice, the hon. Member for Lewisham, East (Bridget Prentice), expressed quite proper concern that as I had been reshuffled into my present responsibilities immediately before the summer recess, I might have spent the entire summer reading the Legal Services Bill and catching up on the Committee stage. I can reassure her that there were brief moments when nothing could have been further from my mind than the Legal Services Bill.

However, I took the time to read the preceding debates and I pay tribute to all who have been involved in the discussions on this complex Bill. I have the easiest job in the world—coming in at the last stages and taking some credit for a Bill to which I have made very little contribution. The Minister who has had sole charge of the Bill—exceptional, for a Bill of this complexity and length—has done extremely well, and I would add other Committee members to that: my hon. Friends the Members for North Southwark and Bermondsey (Simon Hughes) and for Birmingham, Yardley (John Hemming), as well as the hon. Members for Huntingdon (Mr. Djanogly) and for North-West Norfolk (Mr. Bellingham).

Those who were not referred to earlier but whose contribution I certainly appreciate include the hon. Members for North Durham (Mr. Jones), for Stafford (Mr. Kidney) and for Bassetlaw (John Mann). I feel that Bassetlaw is a worthy successor to “LA Law”, and have been trying to get some currency for the adjective “Bassetlegal “ as a way of describing the complex legal arrangements that appear to prevail in the hon. Gentleman’s constituency. He made an important contribution to the Bill as did all hon. Members and those in another place, including Lord Kingsland, my noble Friend Lord Thomas of Gresford and their colleagues, who will have the opportunity to look at some of the changes that we have made to the Bill.

The Bill is hugely improved. The iterative process of negotiation, listening to contributions from Members on both sides, and the amendments that have been tabled, have improved the Bill considerably. There are still some issues, however. The hon. Member for Huntingdon asked whether the legal services board can be perceived as a creature of Government. It is very important that we maintain the independence of the board, not just from the legal profession but from the Government so that it is not perceived in that way. That is why we must return to the appointments process for the chairman of the board.

I am not convinced that there should be no trade union exemption, but I am certainly convinced that we do not have the right wording in the Bill at the moment to exempt those core activities of both trade unions and—I stress this again, despite what the Minister says—other mutual organisations, to differentiate those core activities from other activities that should properly fall within the scope of the Bill.

I am enormously encouraged by the fact that the Minister accepted my amendments earlier. I do not think that that was down to any charm or persuasiveness on my part. It was down to the perspicacity and wisdom of the Minister in recognising that what I was saying was right—that it cannot possibly be right for somebody to be found to be entirely innocent of any blame yet—this is the important conjunction, in answer to the hon. Member for Stafford—with a robust complaints procedure in place, still have to pay a penalty. That will not now apply and I am delighted by that.

The last concern is access to justice and, again, I welcome the amendments made to the Bill this evening. I still worry whether the proposed legislation will have an adverse effect on communities such as those that I represent, where it is increasingly difficult to access good legal services and where any disturbance in the delicate balance of cross-subsidy that applies at present might lead to greater difficulty—a point that particularly applies to legally aided services in rural areas. That worry will not be assuaged until the Bill has been enacted and is in operation. However, at least it now addresses this issue, as it did not an hour ago.

It is a testament to the good work that has been done, including by the Minister’s Bill team, that a disparate group of what I think we are supposed to call stakeholders—the Law Society, the Bar Council and consumer groups—feel that they have had an opportunity to improve the Bill and that it largely meets their different requirements. If we have satisfied all those expert groups, and have also respected the principles of Sir David Clementi’s original review, it seems to me that we have done a pretty good job.

My final point might well be accepted by the Minister and other Labour Members. It is my firm and unshakeable view that law is too important to be left to the lawyers. It is critical to the well-being of everybody in this country. It is an essential part of the welfare state. We must have a good legal profession—and I think that, largely, we do have a good legal profession, despite what has on occasion been said. Unsung and without great reward, many lawyers across the country are doing a very good job. We must maintain those high standards and ensure that everybody has equality before the law—equality of representation and quality in representation. If the Bill achieves all those objectives, it will be a very good Bill.

I welcome the Bill.

The hon. Member for Huntingdon (Mr. Djanogly) accused me of being obsessive, but I prefer the word that my hon. Friend the Member for Bassetlaw (John Mann) applied to me: dedicated. Let me explain why I have become involved in this matter. I have enjoyed fighting the vested interests that have been put up against us, but I first got involved not long after I was first elected, when an 86-year-old miner’s widow came into my surgery on crutches. Her husband had, unfortunately, died the year before, so he had no access to the compensation he was entitled to, and she had been told that 25 per cent. of her compensation was to be taken by Mark Gilbert Morse, a Newcastle-based law firm. It had been paid generously by the Government, but, not satisfied with those legal fees, it had greedily taken—while being able to sleep at night—25 per cent. of the compensation due to an 86-year-old miner’s widow, who, as she described to me, had seen her husband gasp for breath in his last few days before dying. That started me off, and I asked whether that was just a one-off. Sadly, it is not a one-off. If there is one thing that has driven my hon. Friend the Member for Bassetlaw and me, it is the type of constituents we have been dealing with who have been ripped off by law firms that should know better.

The narrative has been put over—certainly by the Law Society and Fiona Woolf—that that is a minority activity involving small firms who do not really understand. That is not the case. Some of them are big firms that claim to be reputable. I shall name one of them again, because it still has not paid the money it has taken: Watson Burton, solicitors in Newcastle. It got in league with a claims handler called P and R Associates and took £325,000 from the compensation of miners in north-east England.

I do not expect the local newspaper to cover this matter, because when I last raised it the principal partner wrote to the paper and I noticed that a lot of adverts for Watson Burton then started appearing in it. Clearly, the local newspapers do not want to upset one of their major sponsors. Recently, however, I found an interesting list. The company concerned is trying to portray itself as a big national company and to reach out to the financial sector. A press release states:

“Watson Burton has been hit by a massive 52 per cent. nosedive in average profit per equity partner for 2006-07…The 41 partner-firm saw its provisional annual PEP tumble to £220,000, down from £460,000 for the equivalent 12-month period last year.”

Guess why, Mr. Speaker? During the last 12 months, Watson Burton has seen a slow-down in work generated from the Government’s coal compensation scheme, which previously employed 60 dedicated lawyers. The company was paid £32 million. It is trying to portray itself as a big, national player from Newcastle, but—not content with the £32 million that it has legitimately received in fees—it is being kept afloat by, and its profits have been boosted over the last few years on the back of, money that it has raided from the compensation of individual miners.

One scandal annoys me. In his very good report, Lord Lofthouse highlighted the fact that a staggering 70 per cent. of claimants received less in compensation than the lawyers received in administration fees for their individual cases. The Law Society keeps trying to tell me that such cases constitute the minority, but they do not. These companies are still not paying up, and are not going to.

I look forward to the role of the Legal Complaints Service, which, to its credit, is doing a very good job in pursuing some of these rogues. It has recently written to every individual claimant in the constituency of my right hon. Friend the Member for Rother Valley (Mr. Barron), who has been inundated with people coming forward with complaints. I look forward to that happening in the north-east—to people coming forward to complain about the likes of Watson Burton.

I am pleased that the Government accepted my amendment No. 75, which means that the chairman of the legal services board will be a layperson. That is important, in order to ensure that regulation is seen to be independent from the legal profession. Like my hon. Friend the Member for Stafford (Mr. Kidney), I want to thank Which? for its campaigning in respect of this Bill. It has been very instrumental in championing the consumer’s cause. I should also like to thank not the many lawyers with whom we have been inundated on this Bill, but, from the other place, one non-lawyer and, admittedly, one lawyer: the Lords Bach and Whitty, both of whom spoke very well. They were lone voices in championing the consumer in a sea of vested interests in the other place, in the form of lawyers and former barristers.

The Bill will ensure that the consumer is at the heart of such legislation, which was the Minister’s aim at the outset. However, we, and the system, now need to educate people about lawyers. People think that when they go to a lawyer, they will get straight advice and that every lawyer is the same. It is important to ensure that they know that when they go to a lawyer, they will get specialist treatment and not second-best treatment, because that is not acceptable. Splitting regulation from the advocacy role of the legal profession was long overdue. My hon. Friend the Member for Stafford described it as the last closed shop. Let us be honest—this Bill is the death knell of the last of the closed shops and vested interests, which is very welcome.

I finish by congratulating the Minister, who, as has been said, has been very approachable regarding representations from me and other Back Benchers. She has also taken on board the legitimate concerns that have been expressed. Fundamentally, her not being a lawyer has been a great asset. She has been able to see through the crocodile tears of the Bar Council and other vested interests protecting their own positions. She said that she wanted the consumer to be at the heart of this Bill, and I congratulate her on achieving that. I want also to thank her officials, who were helpful to members of the Committee—from all parts of the House—in offering advice.

It has not been easy for the Minister at times, but she has done something that is perhaps unique among some Ministers these days: when people were trying to put forward strong arguments on behalf of vested interests, she stuck to the core principle that the consumer is at the heart of this Bill. That is a credit to her. We may yet have another outing, possibly on the coroners Bill that is coming forward in the next Session. I know that she will be going home, but if she is in the Strangers Bar later, I shall buy her a large Jameson’s, if it helps.

Is another Bill coming up? I am always available to serve the House, as required.

When I entered my office this morning, a constituent was waiting for me, and luckily, I had enough time to talk to him. He gave me papers from a company called Midland Claims Specialist Ltd. I had not heard of it before, but it has dealt with industrial deafness. That is a straightforward matter for the coal board, because I believe that more than 100,000 claims have been settled and the process has been going on for a long time. A system is in place, whereby there is a form of a schedule, the sets of costs have been agreed with various solicitors and the procedures have been well established for about 15 years. The situation is relatively easy to address: one gets a hearing test and then, given the work history, it is determined whether there is a liability. Any liability is then settled and the solicitor gets some money. Because we are not talking about a claims handling agreement, the individual may pay some money to the solicitor, and that is all well and good.

My constituent did not have a letter from a solicitor, but instead had a credit agreement, on which the clock was running. We shall see whether things have been done right or wrong in his case, but there is a principle at the heart of why there needs to be robust regulation. I rang up the claims handling company and the solicitors involved. The solicitors, Branton Bridge, said that all the paperwork was in order, as I am sure it must be. What Midland Claims Specialist Ltd said to me was interesting, so I took detailed notes.

I was told, “You should not expect to get copies of legal documents, as an individual taking an industrial deafness case. You should not expect to get anything yet from a solicitor; indeed, you should not have a letter from a solicitor. You should have only a credit agreement at this stage. It does not matter that the solicitors have not been in touch with him.” The company thought that I was a friend and had not realised that I was representing my constituent. I was then asked, “What is a Member of Parliament?”

Well, a Member of Parliament is a person who brings cases such as this one in front of the House to demonstrate that something is not quite right. The solicitor’s letter has not yet reached my constituent, yet a credit agreement has, money is ticking—I believe that the interest rate on this is 14.6 per cent.—but there is no need for him to take out a loan, because there is no risk of adverse cost in taking a case against the Government using the liabilities of the coal board. That has not been done before—there are more than 100,000 cases to demonstrate that. Many solicitors will take the case, so someone would not need to take out a loan.

For some reason, my constituent was persuaded on the same day that he met someone for the first time that he needed to sign various documents. As with many of my constituents, I am not sure that he is exactly clear about what he signed. He has been told that this will not cost him. If he loses the case, it will not cost him, but if he wins, like many others, he will get X but Y will be deducted and Y will be pretty much the same as X. If he is unlucky, Y will be more than X, as has happened to some of my constituents—in other words, it has cost them to win their case. That is why appropriate regulation is so in order.

It is not just these small claims handlers working as solicitors who are a problem. May I tell hon. Members about another case that I have been dealing with in the past week, involving a big firm of solicitors called Brooke North? They are the solicitors for the Union of Democratic Mineworkers. In my Brooke North files, I found an injunction that it said that it would take out against me two years and four months ago, with seven counts. It demanded that within 36 hours I should agree to do seven things that it wanted me to do. I wrote back—I kept a copy, of course—and said, explicitly, no to each item. No injunction followed. The firm would not have won if it had gone to court with that injunction—it also tried to injunct a firm of solicitors, which gave it a similarly robust response—but why was a firm of solicitors threatening an injunction and then not carrying it out? It is too late now, because the action has taken place and it cannot injunct me.

That example gets to the heart of where the regulation now needs to go. Solicitors often threaten me, and I know that my hon. Friend the Member for North Durham (Mr. Jones) has had similar threats. Sometimes that is done behind the scenes and sometimes up front. The same happens to my constituents. The same firm of solicitors, Brooke North, recently wrote to one of my constituents and threatened him with court costs relating to proceedings for a debt. However, my constituent did not have a debt. He was one of those who went through UDM/Vendside—Brooke North is its solicitors—and he had paid the money it had asked for, so there was no debt. However, on the advice of Brooke North, Vendside had set up an escrow account and put my constituent’s money in it. Now the same solicitors who had advised that the escrow account be set up threatened my constituent with court costs if he did not agree to the release of the money. He had never heard of Brooke North, but it was the same firm.

Many of my constituents would panic in that situation, just as they would if other legal threats were made against them. That issue is not spoken about much, but some solicitors abuse their access to the justice system to intimidate the little person, the individual. That is why the Bill and its robustness are so important.

It may come as a surprise, but I think that the Law Society deserves more praise than anyone over the past two and half years. In the early stages, I was very critical of the Law Society, some of the systems that it had in place and its slowness in acting. However, compared with every other regulator that I deal with, the Law Society is leap years ahead in its ability to learn and listen, and in the integrity of the individuals who work at every level, from the top down to the newest caseworker. They showed that integrity in their work with my constituents.

Those working in the Law Society were shocked when they dealt with people, sometimes with limited or no literacy, or who were dying—some of my constituents died during the course of this Bill—and who were misled, deliberately in most cases, into paying out money that they should never have paid out. The Law Society emerges with tremendous credit from the process, because it represents the decent solicitors. The hon. Member for Bromley and Chislehurst (Robert Neill) was wrong in his analysis that we are obsessed with solicitors being bad and evil people. The fact is that a tiny minority of solicitors has brought the profession into disrepute through their greed. The vast majority of solicitors deplore that, and many—from the smallest one-man bands to some of the biggest City firms—have been prepared to assist me in some of the cases that I have fought. When the Law Society has been robust in its approach, it has represented its profession well.

What the Law Society and other regulators throughout the legal profession must do from now on is to think from the point of view of the consumer. I hope that one of the things that will emerge when the Bill becomes law in the near future is that the profession’s ability to use its privileged access to the justice system to issue threats against those who challenge it in any way will be subject to significant investigation. That is what the board, under its independent chairperson, should be doing; it should look at how the legal profession is acting. It is not acceptable for a body to threaten people to consolidate its position. That is not decency, justice or democracy; it is bullying and, like everyone in the House, I abhor bullying of any kind.

I add my congratulations to those given to the Minister and all those involved in creating the Bill, but we should not overlook the fundamental role of the Law Society and the change that has taken place. If other regulators copied the model of the Law Society and its responsiveness to the consumer, all our postbags would be lighter and all our constituents would be better served. I commend the society for its work.

Question put and agreed to.

Bill accordingly read the Third time, and passed, with amendments.