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Lords Chamber

Volume 687: debated on Wednesday 6 December 2006

House of Lords

Wednesday, 6 December 2006.

The House met at three o’clock (Prayers having been read earlier at the Judicial Sitting by the Lord Bishop of Chelmsford): the LORD SPEAKER on the Woolsack.

Shipping: Naval Wrecks

asked Her Majesty’s Government:

What steps they are taking to protect the wrecks of HMS “Prince of Wales” and HMS “Repulse” from the activities of foreign nationals undertaking penetration dives and disturbing the human remains which lie there.

My Lords, the wrecks of HMS “Prince of Wales” and HMS “Repulse”, which lie in international waters off the coast of Malaysia, are designated as protected places under the United Kingdom’s Protection of Military Remains Act 1986. However, the Act applies only to British citizens and British flagged vessels. Her Majesty’s Government therefore continue to work closely with regional Governments, diving groups and others to prevent inappropriate activity on the wreck sites by foreign nationals.

My Lords, I thank my noble friend for that reply. These two ships were sunk 65 years ago this week and the wrecks are the final resting place of 840 officers and men. Is my noble friend aware of the activities of foreign-owned diving companies, such as Rec ‘N’ Tec and White Manta, which have promoted themselves by placing pictures of human remains on their websites and, in one case, producing for sale a DVD of a full penetration dive on HMS “Repulse” carried out by a US citizen? Does my noble friend agree that the survivors and the relatives of the deceased deserve rather better than that?

Yes, my Lords, I agree absolutely. I have seen stills from the DVD and they are extremely distressing and must be extremely painful for the families and the survivors. The British Government, via the British High Commission in Malaysia, have asked the company to remove the video from its website. It has done so and apologised for the distress caused. The Ministry has also made its concerns known to a number of Malaysian government agencies and to the navies of the region, and of course the Royal Navy itself makes several trips to the site.

My Lords, we on these Benches welcome anything that the Government can do to protect these war grave sites. Those tragic sinkings taught us the importance of air cover. In the light of that, can the noble Baroness confirm that there will be no further delays to the new carriers?

A good try, my Lords, but it is slightly outwith the brief in front of me. I will, with all due respect to the noble Lord, write to him on his question.

My Lords, what plans do the Government have for more proactive management of historic wreck sites so that they are physically assessed by people with relevant expertise, and management plans are drawn up which would be sensitive to them both as war graves, if that is what they are, and as archaeological sites?

My Lords, we are signatories to several international conventions, most notably the United Nations Convention on the Law of the Sea, and have therefore signed up to the responsibilities under them. We have also begun to designate sites. I was astonished to learn in my brief that there are 15,000 naval and merchant wrecks from the two world wars. Not all of those will be designated, but the most significant wrecks are being designated as protected sites or controlled sites, with all the management that that involves.

My Lords, can the Minister assure us that international bodies such as the Commonwealth will be made aware of the situation? An international approach is probably what is required; indeed, that is what the Minister has suggested in her earlier answers.

My Lords, there is good communication between those responsible in the Commonwealth War Graves Commission and those responsible for the shipwrecks which have become maritime graves.

My Lords, the noble Baroness has not referred to the interests of the New Zealand Government in the “Prince of Wales” and the “Repulse”. There is a very active interest in New Zealand in the fates of the ships and of the bodies of those who were drowned. Are the Government, as I trust they are, in close contact with the Government of New Zealand and listening sympathetically to their interests?

Baroness Crawley: Yes, my Lords. I will write to the noble Lord about the detail of our contact, but, as I understand it, we are in contact with the regional Governments, the Australian Navy and the New Zealand agencies.

My Lords, will the Minister consider contacting the various dive centres which operate in that area? Most SCUBA divers—recreational divers, of which I am one—would operate from such sites.

My Lords, I thank the noble Baroness for her intervention. The diving companies in the region are contacted and we are in close co-operation with them. But in the end, however many international or national laws we sign up to, we need to educate the diving companies and the individual divers. We are therefore in constant contact with them.

My Lords, can the noble Baroness explain why, if the American Government can protect their wrecks, we cannot?

My Lords, I would say that we do protect our wrecks with the Protection of Military Remains Act 1986. Although it has limitations in applying only to British nationals and to British vessels, we certainly use it as fully as we can.

My Lords, have the Government made a formal approach to the Malaysian and Singaporean Governments to ask them to co-operate informally in restricting activities from their ports?

Yes, my Lords; we are in constant contact with the Governments through the high commissions. However, after our short debate today, I will certainly ensure that we once again underline our concerns with both Governments.

My Lords, does the Minister agree that, in addition to the dreadful personal tragedies referred to by the noble Lord, Lord Faulkner of Worcester, this is a site of particular historical significance? It proved once and for all that capital ships—as my noble friend Lord Astor made clear in his “outwith” question—could no longer operate without adequate air defences. As such, it is the place where the course of naval warfare changed for ever.

Absolutely, my Lords; that was a very significant event on 10 December 1941. Naval historians consider it a turning point in history.

Export Licences

asked Her Majesty’s Government:

Whether, in light of the ongoing Serious Fraud Office investigation, they have reassessed their view of the granting of an export licence for the sale of an air traffic control system from BAE to the Government of Tanzania.

My Lords, it would not be appropriate for me to comment on the Serious Fraud Office investigation, but I can say that the Government have not reassessed their granting of the export licences in this case as the licences have now expired.

The Government’s decision to issue export licences for an air traffic control system for Tanzania was taken after careful consideration, on a case-by-case basis, of each licence application against the Government’s consolidated EU and national arms export licensing criteria. The Government listened and responded at the time to concerns expressed in Parliament and elsewhere.

Noble Lords may know that I was an associate fellow of the Royal United Services Institute for Defence and Security Studies. I resigned that fellowship on taking up my ministerial post.

My Lords, I thank the Minister for that Answer. Although it was before his time, he obviously has been well briefed on the controversy that arose when this export licence was granted. He will of course have been informed that a lot of the opposition to the granting of the licence was led by Clare Short when she was the relevant Cabinet Minister. Does he not agree that, in the light of what has happened since, her judgment on that, and indeed on many other things, was entirely correct?

My Lords, the noble Lord, Lord Razzall, should know that the Cabinet is bound by collective responsibility and that any decision of the Cabinet binds all its members, so I do not really agree with his point. The fact is that the Government took the decision to issue the licences after careful and detailed assessment against the consolidated criteria. That was the decision of the Government, and that is what the Cabinet signed up to.

My Lords, how long has the Serious Fraud Office investigation been going on? In the light of the significance of all this to an important British company, is it not vital that it be concluded as quickly as possible?

My Lords, I cannot, for legal reasons, reply in detail to noble Baroness, Lady Wilcox, but I will say that the Government's decision to issue export licences for an air traffic control system for Tanzania, as in the case of all export licence decisions, was taken after careful consideration. Those criteria included whether the proposed export would seriously undermine the sustainable development of the importing country. I understand that an investigation is going on, but at the time of the licensing decision the Government had no evidence that there was anything untoward about it.

My Lords, I declare an interest as an adviser to Transparency International in its studies into prevention of corruption in the official arms trade. Do Her Majesty's Government plan to use their considerable leverage with the UK defence industry, they being its major customer and also the granter of export licences, so that they can put in place greater anti-corruption safeguards? If there are such plans, what are they?

My Lords, I can inform the House that the Government are committed to working with all our international partners and the business community to ensure that there is effective action both here and abroad to tackle corruption. That is underlined by the UK's ratification of the OECD convention on combating the bribery of foreign public officials and the Anti-terrorism, Crime and Security Act 2001.

Further to the point made by the noble Lord, Lord Garden, I should mention that the DTI processes about 10,000 applications for export licences each year. In doing so, it takes advice from the Foreign Office, the Ministry of Defence, the Department for International Development and Customs and Excise. That takes into account issues such as national security, regional stability and human rights. In each case, the Government always ensure that any relevant UK, EU or UN embargoes are taken into account.

My Lords, from the opposition Front Bench, the noble Baroness, Lady Wilcox, mentioned the inquiry. I remind the House of my declared interest in this matter. Another SFO inquiry, not the one into this Tanzania case, has been in existence since the first part of 2004, so it is about to celebrate its third birthday. Does my noble friend agree that it is not acceptable that any inquiry should continue without decision endlessly? Does he understand that if the present position continues noble Lords on all sides of this House fear that many thousands of British skilled workers could lose their jobs for ever, that important contracts, defence and civil, could be lost, costing this country billions of pounds, and that the United Kingdom could become a laughing stock with our international competitors?

My Lords, my noble friend Lord Bach has a great deal of experience in the defence field and I always listen carefully to his contributions. I can assure him that my department is aware of the concern on all sides.

The UK has a vibrant defence industry—one of the strongest and most open in the world. It produces excellent equipment and secures thousands of highly skilled British jobs.

My Lords, does the Deputy Leader of the House not agree that Questions and Answers should be short and not read?

My Lords, apart from noticing that I seem to have been promoted, I do not think there is anything I can say.

My Lords, does my noble friend agree that all UK businesses, including the defence industry, have said that if corruption can be eradicated, they will have the level playing field that will enable them to be really competitive?

My Lords, is the Minister aware, however, that that level playing field will never arise, and that many countries—I will not mention names—are committed to continuing the present process, which involves “corruption”—to use the word that has been used? The question before the Government and Parliament is: are we going to say that we will play the same dirty game that everyone else plays, or are we going to go it alone, or relatively alone, in being clean? That is the issue. To talk of some international agreement is nonsense, because either it will not be reached or, if it is reached, it will not be honoured.

My Lords, a number of countries have their own legislation to cover these matters, as we do. There is, of course, the European Union’s code of conduct for arms exports; so there are many moves internationally to co-ordinate an approach to this matter. That should be welcomed.

Railways: Channel Tunnel

asked Her Majesty’s Government:

What plans they have for the development of rail freight through the Channel Tunnel.

My Lords, to support the development of rail freight through the Channel Tunnel, we will encourage the introduction of robust commercial arrangements between the parties, coupled with the liberalisation of access to the wider European rail freight market and an increase in competition both within Europe and through the Channel Tunnel.

My Lords, I thank the Minister for that reply. Bearing in mind the forecasted freight traffic when the Channel Tunnel opened—we all know why those levels went down with illegal immigrants—does he foresee the growth of traffic to reach again the forecast levels?

My Lords, the whole House will be pleased at the growth in freight traffic in the United Kingdom, by 55 per cent in the past eight years. There is a particular difficulty with the level of charges for going through the Channel Tunnel, and we have been in substantial discussions with Eurotunnel to guarantee that the present freight services can continue and, in due course, expand. We are pleased to note that the difficulties have been overcome, and that EWSI is to continue its Channel Tunnel freight services.

My Lords, given the cost and disruption that this would involve, and the shambles over the original Channel Tunnel created by the then Government, of whom I was a member, what real benefit would flow from such a massive disruption?

My Lords, the problem is that the capital costs of the tunnel hang like a huge, dead weight on its viability. It is therefore prone to put very heavy tolls on current users, with the result that EWSI, the British company solely operating freight services from this country through the Channel Tunnel, is running at a loss and will continue to do so for the immediate future. We are concerned as a Government to give what support we can. State aid ended on 30 November this year, in line with European agreements, but we are giving environmental support to the tune of £6.5 million a year, which demonstrates how much rail use saves in environmental terms compared with the use of lorries and ships to cross to the continent. The noble Lord is right; there are very real difficulties in the operation of Eurotunnel.

My Lords, I declare an interest as secretary of the All-Party Group on Rail. I thank the Minister for his answers and congratulate the Government on participating in keeping the service going. Does the noble Lord agree that the current charges for using Channel Tunnel rail freight are probably illegal under the EU rules, which were designed to encourage rail freight? What action could the Government take to ensure compliance for this very important rail link?

My Lords, my noble friend is very knowledgeable on these issues and therefore will know that EWSI is to appeal against the charges, on which I cannot directly comment. Suffice it to say that the French state railways complain as vociferously as EWSI about the cost of running trains through the tunnel.

My Lords, the Minister sounded a little equivocal in his previous answer. Will he confirm that, because it literally has to, the Channel Tunnel will remain viable and open, and that the scheme with the bankers will succeed because it must? After all, it should have been a public-sector scheme in the first place.

My Lords, it might well have been a public-sector scheme but that does not mean we countenance a loss-making operation. The problem is that the tunnel is sustaining very significant losses. The solution is certainly not to reduce usage of the tunnel. We and the French are at one. We want to see expanded usage of the tunnel—both by passengers and for freight—which is why, when EWSI threatened to withdraw freight services through the tunnel, the Government did their best to ensure that that threat was withdrawn, which it has been.

My Lords, we all want to get more freight on to rail, particularly through the Channel Tunnel. Why have the Government cut in half the grant to encourage that over the past three years? Is the Minister also telling us that because of European regulations we cannot use grants to encourage more freight through the Channel Tunnel?

My Lords, we are inhibited in the degree of state aid that we can offer. We gave state aid for 12 years; it was worth £26 million last year. Under European rules, that must come to an end. I thought that the party opposite was in favour of organisations being run without state subsidy. The position is clear: we want negotiations to arrive at a position whereby the tunnel is viable and freight traffic, in particular, expanded. That would reduce lorry loads on our overcrowded roads and all the environmental difficulties associated with that. That is why we made strenuous efforts to ensure that EWSI could continue its services, but it is running at a loss, therefore the problems remain. That is why we are in vigorous discussions on these matters.

My Lords, some of us who were around at the time consistently voted for this to be a public-sector project, unlike some who have recently come to that point of view.

It might be a shame but it is true. Does the Minister agree that this somewhat bizarre charging regime has almost halved the amount of freight through the Channel Tunnel since the project was completed? Bearing in mind that every cancelled freight train means about another 30 heavy goods vehicles on Britain’s roads, as well as those of northern France, how does such a policy equate with the Government’s concern about global warming?

My Lords, the Government agree with the point that my noble friend is making, not for the first time. They are in favour of sustaining freight flows through the Channel Tunnel because of environmental considerations, but we are limited in the financial support we both ought to and can contribute.

Immigration: Harmondsworth Removal Centre

asked Her Majesty’s Government:

Which recommendations of the Owers report on the Harmondsworth immigration removal centre they intend to implement.

My Lords, Her Majesty’s Chief Inspector of Prisons published her report of the inspection of Harmondsworth removal centre on 28 November. We are in the process of drawing up an action plan, in response to which we will incorporate initial lessons from last week’s disturbance.

My Lords, I thank the Minister for that reply. There was a major riot on 29 November, the day after the report appeared, which was described by Her Majesty’s inspector of prisons as “the poorest report” she had ever delivered on any immigration centre. The riots began when a guard refused to allow the detainees to see on television Anne Owers’s report into their own detention centre. Will the action plan, which I welcome, look at the issue on which Anne Owers puts her finger: the very bad relations between the staff and detainees? More particularly, will it look at the fact that staff were not trained to recognise torture victims, of whom there were a substantial number in the detention centre? Incidentally, torture victims should not have been returned.

My Lords, we intend to look at all the issues raised by Her Majesty’s inspector of prisons in her report. I can reassure the noble Baroness that many of the issues had already been raised with the contractors. She will be aware that we were in dispute with the contractors until September this year, when the matter was settled. We received £5,096,000 as a result, together with some guarantees about behaviour, but there is much to do.

My Lords, when I inspected Campsfield House immigration centre some seven years ago, one of the problems was a lack of line management by officials from the Immigration and Nationality Directorate. Can the Minister confirm whether it is true that officials from the Immigration and Nationality Directorate have been withdrawn from Harmondsworth for other tasks and replaced by administrators, which is not the same thing as regards helping the staff to look after detainees?

My Lords, the plan in place involves rigorous attempts to manage the situation in Harmondsworth. That was the basis of the concerns expressed and of the disagreement, therefore, between management. There is no suggestion that the management put in place by IND was in any way defective.

My Lords, why are so many failed asylum seekers detained for so long at Harmondsworth? I have read about some examples of the difficulties of deportation, which lies behind the high numbers being kept there for such long periods.

My Lords, the period that people now spend at Harmondsworth has greatly decreased. About 50 per cent now stay for approximately seven days, and I am given to understand that the longest period, for a small percentage, is about two months. The number of people going through Harmondsworth has greatly increased, as has the speed at which they do so.

My Lords, what about the risk posed by detainees transferred from the prison estate to Harmondsworth? The report clearly states that the information about the risk such people pose is still of very poor quality. Why has the Home Office allowed that to happen with information from prisons, when it prejudices safety at Harmondsworth? What will it do to address that problem?

My Lords, the director-general of the IND and the director-general of NOMS have been working very closely together for a number of months to ensure that the risks involved in moving detainees from one area to another are limited to the narrowest base possible.

My Lords, further to the question of the noble Lord, Lord Corbett, did the Minister notice that Anne Owers commented on the increase in the average length of detention from two to six weeks? To what extent does she think this is a product of the combined effects of the Legal Services Commission’s merits testing, cuts in legal aid in 2005 and the heavy burden of paperwork on practitioners, which has resulted in many going out of business or refusing to take some cases, leading to an increased caseload at Harmondsworth?

My Lords, I am not aware that that has made a significant impact but I shall be happy to find out what contribution, if any, it has made. The Legal Services Commission has been working very hard to enhance the quality of those who undertake that work because unskilled staff tend to work more slowly, to the burden of the system and the people they purport to advise.

My Lords, does the noble Baroness accept that when 500 people—mainly young men, multinational and multi-faith—who are on their way out of the country are locked up in an institution and treated like some of the worst criminals in the Prison Service, that is a pretty lethal cocktail? Will she not only consider what needs to be done at Harmondsworth but look more radically at this policy?

My Lords, the question of relationship is very important, and I agree with the right reverend Prelate on that point. However, it is also fair to say that Anne Owers’s report identified good relations with senior officers and poorer relations with other officers and a need to change. We are addressing that matter; a new centre manager has been put in place. He was previously an inspector and knows precisely what needs to be done to improve the situation.

Business of the House: Extradition Act 2003 (Amendment to Designations) Order 2006

My Lords, I beg to move the Motion on the Order Paper standing in the name of the Lord President.

Moved, That leave be given to advance the Motion for the approval of the draft Extradition Act 2003 (Amendment to Designations) Order 2006 from Tuesday 12 December to Monday 11 December.—(Lord Rooker.)

On Question, Motion agreed to.

Representation of the People (Combination of Polls) (England and Wales) (Amendment) Regulations 2006

My Lords, I beg to move the first Motion standing in my name on the Order Paper.

Moved, That the draft regulations laid before the House on 7 November be approved. Considered in Grand Committee on 5 December, First Report from the Statutory Instruments Committee.—(Lord Evans of Temple Guiting.)

On Question, Motion agreed to.

Animal Health and Welfare (Scotland) Act 2006 (Consequential Provisions) (England and Wales) Order 2006

My Lords, I beg to move the second Motion standing in my name on the Order Paper.

Moved, That the draft order laid before the House on 6 November be approved. Considered in Grand Committee on 5 December, First Report from the Statutory Instruments Committee.—(Lord Evans of Temple Guiting.)

On Question, Motion agreed to.

Scotland Act 1998 (Transfer of Functions to the Scottish Ministers etc.) (No. 3) Order 2006

My Lords, I beg to move the third Motion standing in my name on the Order Paper.

Moved, That the draft order laid before the House on 6 November be approved. Considered in Grand Committee on 5 December, First Report from the Statutory Instruments Committee.—(Lord Evans of Temple Guiting).

On Question, Motion agreed to.

Legal Services Bill [HL]

My Lords, I beg to move that this Bill be now read a second time.

The Legal Services Bill is an important landmark in the development, reform and modernisation of our framework for legal services regulation and provision. The Bill puts consumers’ interests at the heart of the regulatory arrangements. It provides for a Legal Services Board to provide strong, independent oversight with day-to-day regulation left to front-line regulators; statutory objectives for those with regulatory duties and principles for the legal profession; alternative business structures to enable lawyers and non-lawyers to work together on an equal footing to deliver legal and other services—external investment will also be possible; a single and fully independent Office for Legal Complaints; and a mechanism to protect consumers if new problems occur.

I pay tribute to Sir David Clementi, whose independent review brought a refreshing new dimension to the debate and set the direction for change which has shaped the thinking of not only Government but the stakeholders. I also thank those members of Which?, the National Consumer Council, Citizens Advice, the Federation of Small Businesses, and the Office of Fair Trading who, through membership of our Consumer Advisory Panel, have helped to shape the Bill before your Lordships today. I would also like to record my appreciation for the constructive way in which the leaders of the professional bodies—the Law Society, the Bar Council and others—have approached this major programme of change.

The Bill was published in draft earlier this year. I pay a genuine and particular tribute to the members of the Joint Committee on the draft Legal Services Bill, chaired by the noble Lord, Lord Hunt of Wirral, whom I am glad to see in his place. The committee carried out a very thorough scrutiny of the draft Bill against a pressing timetable. I consider that the Bill before the House today is now much improved as a result of the committee’s invaluable work.

The law and lawyers will at some stage touch the lives of just about every member of our society. We have a duty to ensure that the regulatory arrangements are fit for purpose. Our analysis is clear. Three underlying issues have led us to conclude that change in this sector is long overdue. First, there is a lack of consumer confidence in the way in which complaints about lawyers are dealt with. This is rooted partly in the way in which complaints have historically been handled by the Law Society, with well documented problems over the speed and quality of complaints-handling dating back to the 1980s. But it is not the Law Society’s problem alone. We hear a great deal about how much better the Bar is at handling complaints. One third of complaints dealt with by the Bar are referred to the Legal Services Ombudsman for reconsideration.

Consumers argue that the handling of complaints takes too long, focusing on technicalities rather than on providing quick and fair redress to the consumer. They argue that they can have no confidence in a system where complaints are dealt with by a lawyer’s own professional body. These public perceptions can have a corrosive effect on the reputation of the sector more generally.

The second issue is the potentially restrictive effect of the way in which the professions operate. In March 2001, the Office of Fair Trading published a report, Competition in Professions, which argued that such restrictions had the potential to drive up costs and prices, limit access and choice, reduce value for money, and inhibit innovation in the supply of services. That is all to the ultimate detriment of the public.

The third issue is what some have called the “regulatory maze”, under which we see a wide range of oversight regulators with overlapping responsibilities and few clear objectives. In July 2003, following an analysis of the regulatory framework, my department published a report which concluded that the current regulatory system was,

“outdated, inflexible, over complex and insufficiently transparent”,

and we recommended that an independent review be carried out. Later that month, I appointed Sir David Clementi to carry out that review. Sir David published his final report in December 2004. In his foreword, he observed:

“Nothing that I have learnt during the 18 month period of my Review has caused me to doubt the broad validity of the Government’s conclusion. The current system is flawed”.

The problems are not restricted to oversight regulators. The legal professional bodies have contributed to the “maze” by failing to separate the exercise of their regulatory and representative functions until now. I congratulate both the Law Society and the Bar on their positive and proactive approach to this problem. They have already established separate regulatory boards to provide for a clear separation of these functions. I am very happy to see many members of those bodies watching in the Gallery today.

While our proposals are based largely on those of Sir David Clementi, a number of stakeholders saw a need for further analysis to underpin some of his main recommendations. The department therefore commissioned leading academics to carry out independent research in the following specific areas: how to make an oversight regulator an effective partner of front-line regulators; drivers for, and benefits of, external financing of law firms; internal incentives under various ownership structures; and the competition impact of restrictions on various forms of partnerships. The academics presented their work to the department in July 2005 and this informed the White Paper which we published in October of that year. As I have said, we have also had the benefit of pre-legislative scrutiny and have further refined our proposals in the light of the Joint Committee’s very helpful consideration. I shall now try to summarise the Bill.

Part 1 sets out the statutory objectives. Regulators must have clear objectives to guide them in exercising their functions and to provide a basis on which consumers can hold them to account. Part 1 sets out these objectives and principles. They will apply to the LSB, approved regulators and the Office for Legal Complaints. Here we have moved further than Sir David’s recommendation and have refined his suggested objective of,

“encouraging a confident, strong and effective legal profession”

so that the Bill refers to,

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

“Independent” was added at the suggestion of the Joint Committee. “Diverse” was added to ensure that the board and approved regulators work together to remove the barriers that exist in the recruitment, retention and progression of legal professionals. We have also included a specific duty for the LSB to have regard to the public interest, again at the suggestion of the Joint Committee.

Part 2 of the Bill makes provision for the new oversight regulator, the Legal Services Board, to provide independent oversight of legal regulatory bodies. While day-to-day regulation should remain with the professions, the LSB will have a range of powers available to oversee approved regulators. The Secretary of State will appoint the chair and members of the LSB, and will do so subject to oversight of the Commissioner for Public Appointments. The Secretary of State can also remove members of the LSB subject only to strict criteria set out at Schedule 1 to the Bill. The Joint Committee expressed concerns about this and suggested that such appointments and dismissals should be made only after full consultation with the Lord Chief Justice. While I can see why that would give comfort to members of the legal profession, I have to say it gives little comfort to consumers, who rightly see the Lord Chief Justice, although he is a man beyond reproach, as another lawyer in the process.

There is nothing unusual about the arrangement proposed in this Bill. The chair and board members of many other regulators may be appointed and dismissed by the relevant Secretary of State; for example, the chair of the Financial Services Authority has been appointed since its creation by the Chancellor. I see no evidence that the financial sector is either not independent or suffering as a result of that. The chair and members of the boards of the Competition Commission and the Office of Fair Trading are appointed by the Secretary of State for Trade and Industry, without the requirement for external consultation. Again, I see no indication that the UK is any less competitive as a result of that. Of course the Lord Chief Justice himself has been appointed by the Prime Minister for many years. Nobody has suggested that the judiciary lacks independence as a result.

Part 3 of the Bill deals with activities described as “reserved legal activities”. These are the activities that will come under the regulatory control of the LSB such as the provision of advocacy and litigation services. It provides for the offences of offering or providing these services when not entitled to do so. It provides, too, for alterations to be made to the list of these activities by affirmative order. This is an important change because under the present arrangements additional activities cannot be brought under regulatory control without primary legislation. This involves a delay which can mean that consumers remain unprotected for months or even years.

Part 4 of the Bill sets out the arrangements under which the LSB will regulate “approved regulators” such as the Law Society and the Bar Council. This defines the regulatory and representative functions of approved regulators and importantly, at Clauses 28 and 29, provides for a proper separation in the exercise of these functions. While the LSB is prohibited from interfering in their representative functions it requires approved regulators to have internal governance arrangements that prevent regulatory decisions being unduly influenced by representative interests. The proper resourcing of regulatory boards is also required.

This part of the Bill also provides the LSB with its range of powers. These are that the LSB may set performance targets relating to the performance of approved regulators and that it may monitor their performance, in Clause 30; exercise a power of direction over approved regulators, in Clauses 31 to 33; publicly censure an approved regulator, in Clauses 34 and 35; fine approved regulators, in Clauses 36 to 39; take over a function or functions of an approved regulator, in Clauses 40 to 43; and remove the designation of an approved regulator, in Clauses 44 to 47. These are significant powers but I believe that the LSB must have available to it the widest range of powers possible. There must be safeguards in the exercise of these powers, and I believe that the Bill provides for this.

This part also sets out the purposes for which a practising certificate fee may be levied by approved regulators and provides for the level of these fees to be approved by the LSB, in Clause 50. It requires approved regulators to have rules to prevent conflicts with the rules of other applicable regulators, in Clauses 51 to 53. It provides a power for the LSB to require information from approved regulators, in Clauses 54 and 55. And it provides for the Office of Fair Trading to make a report to the LSB where it is concerned about competition matters. In cases where the OFT and the LSB’s views conflict, the Bill provides for the Secretary of State to decide the matter after taking advice from the Competition Commission, in Clauses 56 to 60. There is also a provision for the LSB, where there is no suitable regulator and following an affirmative order by the Secretary of State, to act as an approved regulator, in Clauses 61 to 67. Finally, it provides a power, subject to affirmative order, for the Secretary of State to modify the functions of approved regulators in order that they may effectively discharge their regulatory responsibilities, in Clauses 68 and 69.

I move from regulation to alternative business structures. Part 5 provides a means of increasing competition and choice for the consumer. Companies and firms will now be permitted to have different types of lawyers and non-lawyers working together on an equal footing and will be able to do so with the benefit of external investment. In the Bill these alternative business structures are termed “licensed bodies”. The Bill requires any firm or company with non-lawyer owners or managers to be licensed under Part 5 if it wishes to carry out reserved legal activities. These firms and companies will have to seek a licence, either from the board or a designated licensing authority, which must be an approved regulator, and will be regulated by licensing rules and by the requirements of Part 5.

It is important to note that the Bill also allows practices with different types of lawyers, but no external managers or owners, to emerge in advance of the Part 5 framework being commenced. These “legal disciplinary practices” are not alternative business structures under the Bill, and will not be regulated under Part 5, but the fact that we are allowing them to emerge in advance of alternative business structures answers a key recommendation from the Joint Committee chaired by the noble Lord, Lord Hunt of Wirral.

This also reflects the substance of Sir David Clementi’s proposals for alternative business structures. Mixed lawyer practices, a type of legal disciplinary practice, will come first. Alternative business structures, including multi-disciplinary practices, can then form the next step, but only where the board and licensing authorities judge that these can be regulated effectively. Sir David Clementi supported this approach in his evidence to the Joint Committee, saying:

“I think LDPs are walking and we should learn to walk before we get into the running and sprinting involved in MDPs, but I think it is right that the Bill does not preclude them and actually the Bill facilitates them”.

The Bill provides a number of important safeguards, which also answer the Joint Committee’s concerns about the impact of non-lawyer ownership and management on legal services. These safeguards include: a focus on the work and professional conduct standards of lawyers within alternative business structures, and a duty on non-lawyers to refrain from causing breaches of these standards; requirements for a head of legal practice and head of finance and administration; approval requirements that must be met in relation to external investors; a power for licensing authorities to apply financial penalties, including an appeals procedure and arrangements for recovery of any penalties; the referral of employees and managers to appropriate regulators; arrangements for the disqualification of persons from being involved with alternative business structures; the suspension and revocation of licences; powers of intervention for licensing authorities; and arrangements for the avoidance of regulatory conflict.

Additionally, we have accepted the Joint Committee’s advice that clients of alternative business structures firms should have the same rights to legal professional privilege in their communications with lawyers in these firms as they would if they retained traditional law firms. Clause 182(3) to (6) in Part 8 provide for this. Clause 182(1) and (2) maintain the privilege of certain authorised persons other than barristers or solicitors, currently provided for by Section 63 of the Courts and Legal Services Act 1990.

Clauses 103 to 106 also provide that special kinds of bodies that represent a lower regulatory risk may be treated differently for the purposes of some of the normal requirements of the licensing regime. Such bodies include trade unions, not-for-profit bodies, community interest companies, and other low risk bodies with less than 10 per cent external investment or management. The lesser regulatory impact on those bodies is consistent with the Joint Committee’s recommendation. We should make it clear that we do not intend the Bill to regulate in any way lay trade union representation, whether whole or part-time in the workplace, nor to place additional burdens on those unions that provide legal advice or representation to their members.

Part 6 deals with legal complaints. This part of the Bill provides for the establishment of a new and independent Office for Legal Complaints. This will provide quick and fair redress and will improve consumer confidence in the system. It also provides that every authorised person must have internal complaints handling arrangements, and approved regulators must set standards for that. We have accepted the Joint Committee’s advice that the OLC will operate a scheme with the word “ombudsman” in the title. There will be a chief ombudsman and assistant ombudsman making decisions on individual cases. The Bill provides for the OLC to levy an additional charge on respondents when a complaint is made; a “polluter pays” levy. That is an important measure. It will act as an incentive on providers to place more emphasis on client care and settling complaints “in house” before they reach a stage of no return for both parties.

The Bill provides that an ombudsman may make orders for redress of up to £20,000. While consumers have argued that the level of redress should be set at a higher level, the highest level of redress in the legal sector is currently £15,000; which is for the Law Society. Implementation of the proposals in the Bill will take some time. We have therefore set the level of redress for the OLC at £20,000, but the Bill allows the limit to be altered by negative order of the Secretary of State following a recommendation from the LSB, its consumer panel, or the Office for Legal Complaints. The Bill also recognises the importance of the legal professions in continuing to discipline their members and provides for any matters of professional misconduct to be referred by an ombudsman to the approved regulator concerned for consideration of disciplinary action. Some have argued that the OLC should have the power to delegate the handling of complaints to approved regulators. I do not consider that would command consumer confidence. However, I do think it is right that an ombudsman should be able to seek expert assistance, and that is enabled by paragraph 15 of Schedule 15.

There have been concerns that there should be an appeal from decisions of an ombudsman. Our aim is to strike a balance between quick, informal redress on the one hand and the rights of the parties to challenge the result on the other. The model that we have chosen, based on the Financial Ombudsman Service, does just that. It combines both adequate protection for the parties’ human rights with a swift and fair redress system. We envisage the scheme having an internal review mechanism, so that parties can challenge a caseworker’s recommendation and request that an ombudsman reconsider that recommendation. We do not think that an external appeal mechanism is required—it is not required by Article 6(1) and it is not a feature of ombudsman scheme best practice. That approach is supported by Which?, which, in its evidence to the Joint Committee, said:

“We support the view that there should be no external appeal body for decisions of the OLC, providing consumers still have the right to go to court”.

Consumers will have the right to go to court and judicial review will be available to both parties.

Part 7 provides for the LSB to publish guidance about the operation of the Bill or the regulatory arrangements generally. It provides for the LSB to enter into voluntary arrangements with the intention of improving standards of service and promoting best practice in connection with the carrying on of any legal activity. It is right that those who are subject to regulation should pay the cost of that regulation, as in Clauses 166 and 167. The alternative, that the changes should be funded through general taxation, does not seem appropriate. The Bill therefore provides for the LSB to make rules providing for the imposition of a levy on approved regulators, bodies designated under Section 5(1) of the Compensation Act 2006, or any other persons prescribed by the Secretary of State by order.

Parts 8 and 9 provide for amendments to existing legislation to align it with the provisions of this Bill. The rules of the Solicitors Disciplinary Tribunal are to be subject to oversight of the LSB. The courts will be able to make a costs order in civil cases in favour of a party whose legal representation has been provided on a pro bono basis. Any such awards will be at the discretion of the court and will be paid directly to a designated charitable body established to administer moneys to organisations who undertake pro bono work. Also, the Bill will give effect to the Legal Profession and Legal Aid (Scotland) Act 2006, once enacted, which provides for new arrangements for handling complaints about lawyers in Scotland and removes functions from the existing Scottish legal services ombudsman. Those parts contain arrangements for the parliamentary control of orders and regulations made under the Bill.

Overall, these measures will help to restore consumer confidence in the handling of complaints and regulation generally. They will enhance competition by enabling lawyers to provide services in new ways. They will sweep away the decades of piecemeal reform, putting in its place a new regulatory system with clear statutory objectives and a single and independent regulator which is fully and publicly accountable.

I realise that the proposals I have set out represent significant reforms. But I believe they are essential to ensure that consumers can have confidence that there is a modern, flexible, transparent and independent system of regulation in place that can and will act to protect their interests.

I apologise for taking so long, but the provisions of the Bill are complicated. While it is right that over the coming months we should consider the detail of these proposals, I hope we can agree that there is a compelling case for change. I commend the Bill to the House.

Moved, That the Bill be now read a second time.—(Lord Falconer of Thoroton.)

My Lords, I am honoured to open the batting, if that is the right description, but I do so with an apology to the noble and learned Lord the Lord Chancellor and to the House. As the result of a medical appointment which over-ran at Moorfields, I missed the first few minutes of the noble and learned Lord’s speech. However, it was a very helpful speech that set out the intentions of the Bill, which I think has a wide measure of support in the House and has been carefully prepared over some time. I would make only one point on its preparation, which I hope is not too cavilling. Only eight weeks were allowed for pre-legislative scrutiny whereas 12 weeks are usually desirable. I hope that the Government might be able to meet that in future.

Clause 1 sets out the regulatory objectives, which I strongly support. I anticipate that they also have the strong support of the Government who have proposed them. The Government may agree—and I would be grateful if the noble Baroness could confirm this—that they have a duty to facilitate those regulatory objectives. One extremely important regulatory objective is to encourage an independent, strong, diverse and effective legal profession. The importance of such a profession to the constitution of any free society can hardly be overestimated. It dates back to the famous case—not within the memory of noble Lords, but they will know about it—in which Sir Thomas Erskine defended Tom Paine over his publication of the Rights of Man at a time when those views, which are now almost universally accepted, were deeply unpopular and controversial. The legal profession must be able to stand up for those who are under attack under very difficult circumstances. That must apply also to those who are under attack and do not have the means themselves or through their friends—as Tom Paine did—to pay for their defence. Consequently, it is important that the legal aid scheme should be adequately funded. I am sure that the Lord Chancellor will agree that it should be adequately funded. There will be some argument about what is adequate, but I hope that he will take a generous view on that.

As for the cost of setting up these proceedings, the importance of an independent and strong legal profession is a matter of very strong public interest. The Bill is intended to further that public interest. But it is heaping considerably more costs on the profession. I ask the Government to think charitably and kindly on the idea that they should pay at least a proportion of those costs, which are for the public benefit and not for the benefit of the profession and will not increase the fees that the profession can properly charge. Otherwise the means of paying the costs will come from the professionals themselves, some of whom are not highly paid although their work is very important, as is that of those who do publicly funded work. Consequently, either they will suffer loss or the public will suffer loss of service. I hope that the Government might reflect a little further on that.

The main point that I want to deal with, in what I hope will be a short speech, is the importance of light-touch regulation. Unfortunately I was not in the Chamber to hear the first few minutes of the speech of the noble and learned Lord the Lord Chancellor but I suspect that he said—as has been rightly said in the past—that the Government are at least aiming at reasonably light-touch regulation. I support the notion that, under that regulation, the Office for Legal Complaints should provide one point of entry. That is obviously sensible. However, there may be a difference in the position of solicitors and barristers. I ought to declare an interest because I still hold a practising certificate as a barrister, although I do not do a great deal of private work at present.

There is a distinction between solicitors and barristers in this respect. I think that solicitors will rightly and warmly welcome an independent solicitors’ complaints system. It has been a deep trial for the solicitors’ profession—for which I have a high regard indeed—to deal with the number of complaints that they have had to handle. We must remember that there are at least 10 times as many solicitors as barristers and they are first in the line of attack when there are complaints. They provide a very important nationwide service although they are sometimes quite small firms and—though it is mildly to be discouraged—often sole practitioners. Handling the kind of complaints that arise in those circumstances has proved seriously difficult over the years. It will be a real benefit that that is no longer placed directly on the Law Society, although it is good to know that a high proportion of those who have been working in the current system will be transferred over—no doubt, if it be relevant, under the TUPE protection of employment provisions—to the new system.

As for the position of barristers, the Legal Services Ombudsman has repeatedly praised the system that the Bar has managed to provide as highly satisfactory. In relation to the Bar—it may also be true of solicitors but I am not as well informed about them—a very high proportion of complaints deal not only with matters of redress but also with matters of discipline. Matters of discipline will be for the profession; matters of redress might be dealt with by the ombudsman. It seems clumsy and unnecessary to divide the two. Therefore, I ask Government to think again on the question of delegating those powers, or at least to think about giving the Office for Legal Complaints the opportunity and power to delegate both discipline and redress to the profession, provided that it continues to carry that out as satisfactorily as it does at present.

The Bar is fortunate as the number of complaints is not massive and it can draw on a great deal of pro bono work that is freely provided by senior members of the profession. They provide a good service at low cost. That is something of value which should be maintained if possible.

This is necessarily a long and detailed Bill and we shall want to consider a large number of points in Committee. That applies also to alternative business structures. The opportunity to have wider business structures and more competition in the provision of legal services has a great deal to commend it, provided that it is very carefully thought through. We will assist in attempting to think that through, and I hope to play my part.

My Lords, with the leave of your Lordships, I shall speak in place of my noble friend Lord Maclennan of Rogart, who will reply on behalf of the Liberal Democrats.

First, I declare an interest: I am proud to be a lawyer. I started my career as a solicitor in a coal-mining and steel-making community, very similar to the sort of community that the noble Lord, Lord Lofthouse, was talking about when he addressed us on the tribunals Bill. It was a small firm in a small town and actually on the high street. It follows that I have considerable feelings on the importance of the high street solicitor. We covered the whole gamut of legal activity and had access to a highly specialised Bar. Even as an articled clerk I was privileged to instruct Lord Elwyn-Jones, as he later became, leading the noble Lord, Lord Hooson. That was a fairly formidable team.

One part of the job was working for nothing. In the side of the firm that I worked on, which was essentially advocacy and litigation, certainly when it came to tribunals, we worked for nothing—pro bono. There was a cross-subsidy from the more profitable work that my brother and other partners did in conveyancing, probate and so on which enabled us to carry out our service to a community that was not the most wealthy, as your Lordships can imagine, particularly at a time when coal mines were closing and steelworks were disappearing.

I later joined the Bar, with, at that time, some difficulty in crossing over the professions. In case your Lordships should think that I am critical of the Government’s proposals at a later stage in my remarks, I should say that it is not because I approach the proposals from a conservative point of view, thinking that all was well in the past. I have always advocated a fused profession and a common qualification for lawyers, advocacy and the disciplines of the Bar being something that should be adopted at a later stage when the person knows the client face to face and has an understanding of the problems that solicitors face.

Since I started, the language of the market has intruded into the legal profession. We used to talk of clients; now we talk of consumers and stakeholders. It was a profession; in the Bill, it is called a “legal service provider”. Advertising was regarded as touting and ambulance chasing; now it is acceptable and promoted. Under the Bill, legal services are to be sold along with a tin of beans. It is interesting that when the Co-operative Society expressed an interest in setting up a legal division in May, Bridget Prentice, the Minister in charge of the Bill in another place, said in a press release that we should perhaps call the Bill “Co-op Law”. It sums up the Bill’s ambition quite well.

We have moved to a consumer-directed legal profession. The proposal is to put the “consumer first”—a phrase in the title of the White Paper. I have always believed that the public interest comes first, but that is not at all the same thing. The Bill will be judged by its ability to maintain the essentials of the legal profession—its integrity and its independence. Contained in those essentials is the basic concept that the lawyer’s primary duty is to the administration of justice and to the court. That was starkly illustrated for me by a client, a barrister, who insisted on disclosing to Her Majesty’s coroner in another jurisdiction an adverse and critical internal report of an accident in which his client, a powerful utility company, was involved. His client sought through its in-house lawyers to withhold the report from the court and instructed him to put forward an edited and anodyne version. Following the basic principle of duty to the administration of justice, he refused. His health was wrecked and so was his career.

The duty to the client as consumer is vitally important although it is secondary to that prime duty that I spoke of. The duty to the client includes client confidentiality, the avoidance of conflicts of interest, and, importantly, the ability and willingness to challenge the various organs of state in whatever guise they impact upon the rights of the citizen. It is interesting that in Clause 184 an automatic exemption from the scope of the regulatory regime is given to government lawyers and that the Government have rejected recommendation 29 of the Joint Committee’s report, to remove that exemption. I would like the Minister to tell us who we complain to about government lawyers if they do not come within the proposed regulatory regime.

Perhaps I may say a word about independence. It was no surprise to me that the draft Bill put before us in July set out a list of objectives that did not include any reference to the public interest, the duty to the court or the independence of the profession. However, following the comments of the Joint Committee so ably chaired by the noble Lord, Lord Hunt, they are included now as either objectives or principles. It may be right to replace the patchwork of supervisors—what the noble and learned Lord the Lord Chancellor described as the “regulatory maze”—with a single, overarching Legal Services Board, as Sir David Clementi proposed in his report. But it must not be a creature of government.

We will want to know why the noble and learned Lord the Lord Chancellor says that it is necessary for him to maintain the Government’s grip over appointments, not only initial appointments but the whole appointments system. That approach was rejected by Sir David Clementi but nevertheless appears in the Bill. It flies in the face of the Government’s policies elsewhere in the judicial system for an independent commission to appoint judges and so on. We have a proposal for the Secretary of State to take power to appoint members of the board personally, and that is matched by his power to remove them. The noble and learned Lord referred to the fact that nobody suggests that the Lord Chief Justice appointed by the Prime Minister is not independent. The Lord Chief Justice has the tenure of his office. He cannot be removed by any Minister. He can be removed only by the votes of Parliament. But here is a system where the Lord Chancellor appoints and the Lord Chancellor removes. In the Bill he also takes the power to amend at will the objectives and powers of the Legal Services Board. Is that independence? I respectfully suggest to your Lordships that it is not.

It is unclear to what degree the Legal Services Board will seek to interfere with or second guess the front-line regulators—the Law Society and the Bar Council being the prime front-line regulators. Is there to be a light touch or not? In response to the Joint Committee’s report, the Government said that,

“the intention of the LSB should be to work in partnership with the authorised regulators, leaving them with the responsibility for day to day regulation. The LSB should exercise its powers only where approved regulators are clearly failing”.

A system which has regulations granting the Legal Services Board swingeing powers to give directions to the Bar Council or the Law Society to “take specific regulatory action” and to issue financial penalties may be quite disproportionate to the powers that should be granted to this overarching body. If the Legal Services Board is to consist of lay persons, how are they qualified to give detailed directions on technical regulatory issues?

I move to the issue of complaints. It is an unfortunate fact, as the noble and learned Lords, the Lord Chancellor and Lord Lyell, said, that the Law Society complaints procedure was a failure. I fully accept that the regulatory functions of the Bar Council and the Law Society should be separated from their representative functions. That, indeed, has already been done. However, looking at the body of complaints, I am not impressed by the percentages of those who complain that they have had a poor service. There are certainly unforgivable delays and incompetence, but that is not always the root cause of a complaint.

In disputes between citizens and conflicts between the citizen and the state, there are winners and losers. The winners never complain but the losers may. Sometimes it is the fault of the lawyers for giving bad advice, but much more often—I do not have to say, in a lengthy experience on both sides of the coin, that I have not received a complaint myself; I just make the point—the advice given is based on inaccurate instructions from the client. The successful lawyer challenges and tests his instructions with the client, and in criminal cases he often has to plead with his clients, “For goodness’ sake, tell me the truth”. Often this attitude of having to test what the client says triggers complaints, particularly when the client loses, of arrogance and hostility because the lawyer does not swallow without question everything that the client tells him. The less successful lawyers, on the other hand, are those who accept everything their client tells them without question and then lose.

I accept that complaints of delay and incompetence should nevertheless be dealt with by an independent office of legal complaints. As I say, the Law Society consumer complaints service was not a success. It was therefore surprising to discover that the proposal for the new office is that it be in the same town as the current Law Society consumer complaints service. That suggests that what is happening is merely a re-badging of a failing service.

It is also proposed that the service will encompass complaints against barristers. That may be very unsatisfactory for them. The noble and learned Lord suggested that all was not well with the Bar complaints system, but the Legal Services Ombudsman has praised the performance of the Bar Council in its handling of complainants. Let us suppose that one-third of Bar Council complaints—which represent only 3 per cent of all the complaints that are made about lawyers—go to the ombudsman. In her report for 2005-06, the ombudsman said:

“I can report that I have seen an increase in the percentage of Bar Council investigations that I was satisfied with, up from 78.7% last year to 88% this year. I welcome this improved performance”.

So, of the one-third of complaints that go on to the ombudsman, she is satisfied that 88 per cent of them have been properly handled. It is not surprising that, in the same report, she said:

“I find my interactions with the Bar Council to be constructive and professional, and I thank them for their openness and transparency in the dealings with my Office”.

The problem that the Bill is designed to overcome has not been a problem with the complaints-handling of the Bar Council.

The division that the Bill proposes between service and conduct complaints may be quite artificial. Often, certainly for barristers, a complaint of poor service includes a complaint of misconduct but, under the Bill, there will be one body considering the service side of the complaint while the Bar Council will consider the conduct side of the complaint. In trying to improve the Bill, we will seek the possibility of the OLC transferring mixed complaints of conduct and service to the Bar Council for its determination. That would give a certain amount of flexibility to the system to be introduced.

I turn to “alternative business structures”. The Bill allows lawyers and non-lawyers to form legal partnerships, as the noble and learned Lord the Lord Chancellor said. There is undoubtedly a case for a one-stop professional service so that accountants, insurance agents, estate agents or architects may make cost savings in marketing, administration and office expenses. There are certainly benefits for the professionals, but I query whether there are benefits for the consumer of having only one door to go through, but then being directed to various offices inside a single building.

So there are benefits to professionals in cost savings—I have no doubt that that is why the Law Society has expressed such support for the idea—but I have considerable doubt that it is possible to ring-fence legal services within a multidisciplinary organisation so as to preserve that important principle to which I referred at the beginning of my remarks: client confidentiality. Do you, as the Bill seems to suggest, extend legal professional privilege to accountants, estate agents and insurance agents just because they are in partnership with lawyers, provided that they can be brought within the provision of some form of legal advice?

Similarly, the scope for conflicts of interest—the second principle to which I referred—seems to me to be considerably widened and may cause serious problems. “Alternative business structures” also allows for outside investment in legal partnerships: for a large, multiple firm or organisation such as the AA, an insurance company, a bank, or a supermarket to get involved in providing legal services. Why? People who are afraid to step inside a solicitor's office on the high street are not likely to step with any greater celerity into a lawyer's office that is part of a bank, an insurance company or a supermarket.

No one enjoys going to a lawyer. Let us face it: it is always because there is a problem. Even when you are making a will, you are contemplating your own mortality, which is not a very pleasant thing to do, especially if someone charges you money for the purpose. In the criminal law, some of us have clients who, even though acquitted, say, “I hope I never see you again”. The experience of contact with a lawyer is not necessarily a happy one.

If you bring in outside money, it will enable partners in a large legal firm to sell out to shareholders and realise the value of their stake in the business. The Government can expect support from that quarter. As for the client, the consumer, he will lose out. If there is national marketing by a large concern with special offers to kill off local competition, the high street firm—the sort of firm for which I work happily and, I hope, with some benefit to my community—cannot survive. The large organisations will concentrate on the profitable side of the business. You can forget about legal aid, access to justice and pro bono work. The Tescos and insurance companies of this nation are not interested in working for nothing.

There are other problems. Lawyers, whether in chambers or a solicitor’s office, enjoy the support of their peers and the ability to discuss the problems that they face. The interest of a bank towards its shareholders may therefore conflict easily with the interest of the customer or consumer. I see there are signs of impatience among your Lordships; I have detained you too long.

The Bill is a free-for-all. It enables investors through the market, without any legal training or qualification, to make a profit out of the provision of legal services. That is new Labour, but I oppose that. The case has not been made out.

My Lords, as a Bishop entering a debate involving the world of lawyers and their language, I am beginning to understand what it feels like to be a lay person caught up in a theological discussion. I therefore hope that the noble and learned Lord will be patient with me and gently direct me when I get things wrong.

I am speaking in the debate because the Bill gives rise to issues affecting the powers and responsibilities of the Archbishop of Canterbury. I know that the noble and learned Lord has given careful thought to these matters, so I thought it right to put something on the record. The Bill provides for the Master of the Faculties, who is responsible for the Faculty Office of the Archbishop of Canterbury—an office that is combined with the Dean of the Arches and Auditor—to continue to regulate the notarial profession. This person is named as an approved regulator. I understand that the Archbishop is content for the Master of the Faculties to come within the terms of the Bill, provided that the office holder continues to exercise the regulatory role that has historically been held by that office.

I further understand that the Government are content not to disturb these historic arrangements, which were established in 1533, for the appointment of the master by the Archbishops of York and Canterbury, with the approval of Her Majesty the Queen. I understand that the Government have established and agreed that the master may continue to be a member of the Church of England in line with the 1533 Act, and that, because of the character of the duties associated with this office, this does not breach the European Convention on Human Rights or the 2006 regulations on employment equality relating to religion or belief.

In 1998, the Society of Scrivener Notaries was admitted as a member of the International Union of Latin Notaries—a non-governmental organisation with associations from 70 countries as its members. Before the society was admitted, the regulatory regime exercised by the Faculty Office was carefully examined. The fact that the regime is independent of government was an important element in securing admission. I gather that there is a real desire that this continues and that the Master of the Faculties continues to regulate it. We might sum this up as, “That which is not broke should not be fixed”; in other words, we have a service that works extremely well and is cost-effective, and we have an agreement with the Archbishop’s office that it falls within the regulation of the new legal board. I simply want the Government to put on record this afternoon that my reading of this is also their reading.

My Lords, I declare my interests: I am a non-practising barrister and a former head of chambers. I was also, albeit briefly but enjoyably, a Minister in the Lord Chancellor’s Department. It is a pleasure to be taking part in the Second Reading of this important Bill. Noble Lords will be pleased to hear that my remarks are few and I will try to keep them short. I congratulate the Government on including this Bill in their programme for this Session and on their decision to start it in this House, as it is just the sort of Bill that should start here.

Of course, the Bill deals with very important subjects. In a free society, how legal services are provided and what protection there is for the consumer are obviously significant issues. But this is the sort of Bill that could have slipped through the net. It is to the credit of my noble and learned friend the Secretary of State and his department that they should have succeeded in the battle over what legislation is in and what is out—a constant battle that, so rumour has it, is engaged in throughout Whitehall. It is a Bill, too, that was eminently suitable for scrutiny in draft form by a Joint Committee of both Houses.

Some years ago, I had the pleasure of sitting on a committee of this House that looked at the draft Freedom of Information Bill. Unfortunately, it was not a Joint Committee—the other place had its own committee. However, having served on that committee, I am convinced that in the right case Joint Committees looking at draft Bills are a real asset to the difficult task of law making. That was certainly the case in this instance. I am determined not to sound overenthusiastic because one of the main factors, if not the main factor, in making this Joint Committee such a success was the performance of the chairman, the noble Lord, Lord Hunt of Wirral. It is the delightful, constant practice of this House to congratulate noble Lords, but on this occasion I really mean it. So, I am sure, would all members of the committee. The noble Lord led the committee with patience, tact and tolerance. I am sure that the House will understand that all those qualities were needed in order to chair a Joint Committee.

Let me make my position clear. I strongly support the changes that the Bill proposes. I am a Clementi man. Sir David’s analysis seems unanswerable and I am delighted that the Government have adopted his proposals. Three main changes are proposed: the creation of the Legal Services Board; the setting up of an office for legal complaints; and the cautious introduction of alternative business structures. They each have my wholehearted support. These changes are needed so that legal services and how they are delivered are brought into the 21st century. Of course, changes of this importance are bound to be difficult for some. There are those, on the one hand, who will feel that this is a mile too far and others, on the other hand, who, while accepting the broad principles behind the Bill, will feel that there are areas where the Government have just got it plain wrong.

The exacting scrutiny that the Bill will undoubtedly receive in this House will, I hope, calm some fears. All I would ask is that the debate remains proportionate. What do I mean by that? Critics should think carefully before attacking the Bill on the grounds that it threatens or removes the independence of the English legal system. In my view, it does no such thing. For example, the provisions for appointment are subject of course to Nolan principles. It is just going over the top for critics to claim that issues of independence are somehow at the forefront of this Bill. I would say to those who argue in this way, “Criticise the Bill. There are of course improvements that should and must be made to it, but just because you do not like it, do not exaggerate it or attack it for something that is not there”.

I am afraid that the press release that went out with the Joint Committee’s report was guilty of some exaggeration in this way. It did not get the agreement of all members of the committee; it was not practical to seek that. In my view, the press release did not represent the conclusions reached by the Joint Committee. Of course, it was picked up by the press, which is what it was for, and I believe that a false impression was gained.

Before completing my speech, I want to say a few words about costs. I have a couple of concerns relating to start-up costs and the potential costs of complaint. On start-up costs, my experience of government invariably leads me—

My Lords, I am obliged to the noble Lord for giving way. The suggestion that the press release was not objective is not right, in my opinion. It was prepared by those who assisted us, who had no political axe to grind whatever; it was an objective presentation. With respect, I hope that the noble Lord, who is a friend of mine—but not a political friend—will accept that what he has said is not right.

My Lords, I am grateful to the noble Lord. Let me make it absolutely clear that I am not criticising in any way the staff of the committee, who did a fantastic job in a very short period of time. Whoever formed the draft release does not matter; it had to go through certain senior members of the committee, of course, otherwise it could not have gone out. So my criticism—if there is criticism—is not directed, nor would it ever be, at the staff of this House and another place who, I repeat, did a fantastic job in a very short period of time last summer.

I was saying a word or two about costs. One of my concerns relates to start-up costs and the other to the costs of complaints. On start-up costs, as I think I began to say, all my experience of government leads me to the very firm view that costs are always understated at this stage. It happens with this Government, it happened with previous Governments—it is in the nature of Governments. I fear that the start-up costs may be understated in this case, too. I very much hope that the Government will look yet again at this issue—I know that they have reviewed it—to see whether current forecast costs are realistic.

As to complaints, I have yet to be convinced that it is appropriate for someone who has been unsuccessfully complained against to have to meet the costs of the complainant. That seems on the face of it unfair. I know that there are problems in meeting costs in questions of complaint and I hope that we will be able to clarify the position at a later stage of the Bill’s progress.

But overall, in my view, this is an excellent Bill. I wish it good fortune and I look forward to playing some small part in debating its detailed contents in due course.

My Lords, I declare my interests as set out in the register, particularly my role as a partner in Beachcroft LLP, a national commercial firm of solicitors.

I, too, thank the noble and learned Lord the Lord Chancellor on behalf of the Joint Select Committee for his generous words. I immediately passed them on to the members, because they did all the hard work. As their chairman, I merely had to hold the ring, so to speak. As just demonstrated by my good friend, if I may refer to him as such, the noble Lord, Lord Bach, that was quite a significant achievement because there was strong feeling on all sides. I thank the noble and learned Lord for his generous praise, which I would also like to pass on to our advisers, particularly our Clerk, and the many witnesses who, at very short notice, virtually dropped everything to assist us. We are very grateful indeed.

The independence of the legal profession was a huge issue for the Select Committee. As my noble friend Lord Campbell of Alloway has pointed out, at the beginning of the report—not in a press release—under the heading,

“A threat to the independence of the legal profession”,

we said how concerned we were about the level of involvement of the Secretary of State in the regulation of legal services. We continued:

“It would be wrong to create any perception of government seeking to exert day-to-day control over the legal profession”.

This is an important issue, which we have to get right for various reasons. I recognise that the Government have accepted a number of the Select Committee’s recommendations, for which I thank the noble and learned Lord and his colleagues.

Because of the speed with which we had to deal with the Bill, we will want to raise a number of issues in Committee. I know that many members of the Select Committee will do so. We missed one or two points. The noble and learned Lord may have thought he had got away with one provision in particular: the old Clause 57(6). What is now Clause 68(6) gives the Secretary of State power to bring forward an order which,

“may modify provisions made by or under any enactment (including this Act or any Act passed after this Act), prerogative instrument or other instrument or document”.

What tremendous powers he is seeking.

Yes it is, my Lords, but it is still a power to modify any Act of Parliament or enactment, including any future Act. I have drawn this to the attention of the chairman of the Delegated Powers and Regulatory Reform Committee. I congratulate the noble Lord, Lord Goodhart; as I have mentioned to him, I cannot think of anyone better to deal with such an issue. I hope that the committee will carefully consider the extent to which these powers are being sought. We will want to raise these and other points in Committee.

We all accept that the Bill is necessary. It was originally prompted by concerns over the complaints procedures but now we have a far broader Bill. We inevitably have a serious responsibility to ensure that this much larger Bill will not make things worse or have unintended consequences. The crucial matter is how to safeguard and entrench the independence of the legal profession. If we fail, the effects will be felt far beyond these shores. If protectionist-minded lawyers elsewhere are able to argue that our profession has become little more than an adjunct of Government, they will be able to force shut the door for our lawyers, which would be highly undesirable.

This is all about balance; it would be quite wrong—indefensible, even—to establish an appointments process so self-evidently lacking in checks and balances. The Legal Services Board must not only be independent, it must be seen to be independent. Sir David Clementi made this one of the key points in his excellent report. I have to say in support of the noble Lord, Lord Bach, that the Select Committee sought to “Clementi-ise” the Bill because we agreed with so much of Sir David’s report, particularly where the Government had departed from the original recommendations. Sir David said:

“Given the need for independence, and the objective of the rule of law, it seems right that the judiciary should be involved in the appointment … The proposal of this Review is that the appointment of the Chairman and Chief Executive should be made by the Secretary of State in consultation with a senior member of the judiciary”.

The noble Lord, Lord Bach, moved an amendment to the original report which stated that provision should be made for the Secretary of State to make the appointment in consultation with the Lord Chief Justice. That very much follows what Sir David recommended. I hope that the Government will think again on that issue.

Another key issue is that the Government are always looking for ways in which they can exercise more power and control. The noble and learned Lord shakes his head. When I had the privilege of serving in government, I found that tendency from time to time, but of course I resisted it; the noble and learned Lord has not done so.

In the draft Bill with which members of the Select Committee were presented, there were 111 references, not to the Lord Chancellor, but to the Secretary of State—any Secretary of State. So the noble and learned Lord can imagine the enthusiasm with which I made the same check in the new Bill, which is not much longer but has been split into two volumes. By how much had he reduced the number of references to power for himself from 111? The result of my word-count—I have since cleared this with all sorts of more technical people—showed that the number of references to the Secretary of State had increased from 111 to 288.

I could not believe it at first. I would love it if the noble Baroness, Lady Ashton, who will make the winding-up speech, explained why the Secretary of State has to take these powers. There is a paradox here. If the Government are seeking to tighten up regulation of the sector, why are they pushing through what looks and smells like a measure which will increase the powers of the Secretary of State to an unparalleled degree? We are talking about not just a government quango but one which will be controlled more tightly by government than any other.

I hope that the noble and learned Lord, when he gazes back over his opening speech in this debate, will recognise that the word “quality” did not appear often enough. We have the highest-quality legal service in this country and we should entrench it. The vital roles of the Law Society and the Inns of Court in education, training and competence must be maintained, because they have established these exceedingly high standards. Some reassurance on that point would be much appreciated.

Furthermore, it is patently absurd to propose that the Secretary of State should enjoy the untrammelled and direct power of appointing the head of the new Legal Services Board while expecting the industry to fund it in its entirety. There are clear parallels with other bodies such as the Financial Reporting Council, whose running costs are one-third funded by the taxpayer. In paragraphs 35 and 36 of his report, Clementi agrees and reinforces the precedent that I have given by stating:

“There is an interesting precedent in the proposed funding of the Financial Reporting Council. Its funding is to be split, two thirds falling to the private sector and one third to Government”.

I hope that the Government will think again on that. It would surely be more sensible, fairer and more balanced for the start-up costs of the Legal Services Board and a proportion of its ongoing costs to be borne by the taxpayer. How else will it be seen to be independent and not merely a creature of the Government or the legal profession?

I am also very concerned about the powers of the Legal Services Board to intervene when the front-line regulator is deemed to have underperformed. Surely the LSB should be a regulator of last resort, no more and no less, and that should be made penny plain in the Bill. Such intervention should be the exception not the rule. I am especially concerned, as was the Select Committee, about the power to impose fines on the front-line regulator. Surely that should apply only when the approved regulator has ignored a direction by the LSB. I would welcome an assurance from the Minister on that point, on which I hope the Government will concede.

Like the noble Lord, I should like the “only the polluter pays” principle to be enshrined within the reconstituted complaints system. The noble and learned Lord will be aware of the Select Committee’s concern about the headlong rush towards alternative business structures. Sir David Clementi made the very good point that there should be a step-by-step approach, and I detected an indication that the noble and learned Lord agreed. No doubt in Committee we shall be able to introduce provisions that would secure what he indicated earlier.

There are widespread worries about conflicts of interest, which will—not may—be created if Ministers press ahead with the ABS reforms. Sir David drew attention to that concern in his report, as did the Joint Select Committee that I chaired, which was unanimous in its report. The provisions in the Bill are very weak and will have to be strengthened considerably, but that will be a matter for Committee stage.

Like many others in this House and elsewhere, I sincerely hope to be able to support not only the principles behind the Bill but its detailed provisions, but I admit to having serious reservations. I will be greatly assisted by the initiative of the noble Lord, Lord Brennan, who led the formation earlier this week of the new UK All-Party Parliamentary Group for Legal and Constitutional Affairs. I warmly applaud his initiative and have the honour to be one of his qualifying members. I look forward to working with colleagues of all parties and none as we approach Committee stage.

My Lords, the noble Lord reminds me of something that I should have declared at the outset. He put in play in the debate the Inns of Court, and I should formally declare that I am a member and bencher of an Inn of Court. I thoroughly endorse what he said about the thoroughly good work that Inns do.

My Lords, I declare my interest. I am a practising member of the Bar; for some years I was on the Bar Council and I was once chairman of the Bar.

I was also a member of the Joint Committee of both Houses which considered this Bill. It was a very interesting process. There are two things to be said about it. On the first point, the noble Lord, Lord Hunt of Wirral, was a little inaccurate when he gave all the praise to the committee members and not himself. No doubt that was modesty, but he was a fantastic chairman of the committee and managed to lead us down paths of tranquillity, which might have been of a different character but for his benign and skilful influence on the conduct of our affairs.

The second point, which I believe the Government have taken on board, is that the time allowed for the preparation of the report was inadequate. At one time we wondered whether we should carry on, because it was uphill work, since we started from scratch and there were a whole lot of background papers to be read. We had to decide which witnesses we wanted to call; we then had to give them time to prepare, call them and then consider the great body of evidence and the written material coming in. To do all that in eight weeks is very tough going. I respectfully suggest that it really should not happen again. I think that that has been taken on board.

I shall deal with one or two major themes. On the independence theme, I know that to a great extent I am preaching to the converted, but it is important. An aspect arises out of one or two observations that have been made. What we do with this Bill is being watched in other countries to see whether we are doing anything that will destroy the perception of independence of this country’s Bar. Frankly, in other countries jealous eyes are cast on the huge success of our legal profession. If it could be shown that it had ceased to be independent, perhaps road blocks could be put in its path. The president of the Law Society is much exercised by this matter. We should not ignore it.

The noble and learned Lord, Lord Lyell of Markyate, referred to the importance of having an independent legal profession. It is vitally important that people should be willing to take up difficult cases and have the moral courage to appear in cases where the forces of power are rallied on the other side. Nothing must be done that alters that. I draw attention to two points in that regard. A very good paper was produced. The only matter in which I played any part in the committee concerned my asking whether the Bar Council could produce a paper on the duty owed to the court by advocates. An excellent paper, which appears on page 70 of volume II of our work, was the response to that request. It has two striking elements. I am ashamed to say that I was not aware that the measure was already embodied in a statute of 1999. One of the Law Lords, the noble and learned Lord, Lord Hope of Craighead, who was present earlier but had to leave to attend to other duties, commented on the matter in a very good passage. The relevant statute is the Access to Justice Act 1999, Section 27 of which provides that every duly authorised advocate has a duty to the court to act with independence in the interests of justice. That is already a statutory requirement. While not talking about the Act specifically but referring more generally to Hall v Simons 2000, the noble and learned Lord, Lord Hope, said:

“While the advocate owes a duty to his client, he is also under a duty to assist the administration of justice ... his duty to the court and to the public requires that he must be free, in the conduct of his client’s case at all times, to exercise his independent judgment as to what is required to serve the interests of justice. He is not bound by the wishes of his client in that respect, and the mere fact that he has declined to do what his client wishes will not expose him to any kind of liability”.

That is an extreme manifestation. You get cases where you come across an authority you previously did not know—a decided case—which is dead against you but your duty is to inform the court. If you come across a highly embarrassing document, every dishonest instinct might tell you to shred it. Your duty is to hand it over, but by so doing you lose the case. The client is not very pleased, but that is your duty. Those are the rules of the game.

I am pleased that the Government have gone a long way to meet us on this. Following one of our recommendations, they have included in the Bill’s general principles, the regulatory objectives, the adjective “independent” in Clause 1(1)(e). Again following one of our recommendations, the duty to the court has been added in Clause 1(3)(d). So far, so good. However, noble Lords would not expect my entire speech to be full of praise. We suggested that the regulatory objectives ought to include a reference to the public interest, with words such as “protecting and promoting the public interest”. That has not been accepted in full, although possibly we will pick up references to the public interest elsewhere. The committee would like to have seen that put squarely on the front of the Bill.

What are the threats to the perception of independence? I identify three, most of which have been identified already. The first is the appointment of the chairman of the Legal Services Board. The Joint Committee, following Sir David, was very keen on involving the higher judiciary. There would be no better person now than the Lord Chief Justice. With great respect to the noble and learned Lord the Lord Chancellor, I cannot accept the populist view is that the Lord Chief Justice is regarded by the public as just another lawyer. He happens to be the head of the legal profession, and he would have attained that position only after an impeccable and very successful career as a lawyer and as a man of the greatest possible integrity. In other contexts, we rely and depend on him. So the view that he would be unacceptable as a person who must be consulted is completely wrong and mistaken. I have begun to think that we should have gone a bit further than “consult”. We should perhaps have said, “with the concurrence of” the Lord Chief Justice on the appointment. For my part, I would go further. I do not see why, once the original appointment has been made and you have a reappointment, you should not just have the Lord Chief Justice as the appointing body. He should certainly be involved in the appointment. That is the first possible threat to the perceived independence.

The second thing would be to have a very interventionist Legal Services Board. Sir David Clementi talked about a “light touch”. If I had been a parliamentary draftsman and someone said to me, “Would you mind putting in some words to say that there has got to be a light touch?”, I would not find that very easy to do. We see the direct opposite of the light touch in the power of intervention to give directions, which has already been mentioned. That appears in Clause 31(1)(a). The intervention can take place if the board perceives that there has been a threat to any one of the objectives in the principles set out in Clause 1. As noble Lords know, there are about seven of them, and if we get our way there will eventually be eight. To some extent, they point in different directions. Many possible actions taken by a regulatory authority could be thought to be a threat to one or other of them. That needs to be changed by amendment in Committee to make the trigger for intervention more difficult.

Thirdly, there is the matter that has been mentioned by the noble Lord, Lord Hunt; our recommendation concerned with the frequent use of the term, “the Secretary of State shall have power to do x, y and z”, right through the alphabet. I had not done the arithmetic that the noble Lord has carried out to see that they double the figure. I am a bit surprised, because the Government responded to our criticism by saying:

“The Government accepts that it should reconsider whether each of the powers proposed for the Secretary of State in the draft Bill is necessary, and [is] currently working with stakeholders to review this”.

The stakeholders must have come along with shovels and added a very great deal more in the way of the need for the Secretary of State. That has got to be looked at.

My next area for discussion is complaints. The Bar has had some of these; the figure that it gives is that 3 per cent of complaints against the legal profession come to the Bar. It has a pretty good record with the Legal Services Ombudsman, which has been mentioned. The thing to concentrate on is the supposed possible split between complaints that relate to service and those relating to conduct. The Bar’s evidence to us is that 70 per cent are hybrid, with allegations of bad service and bad conduct. It would be absurd to have two different bodies; to have an ombudsman looking at part of it and the Bar conduct regulator people looking at something else. Some flexibility is required, as is a power to hand over to the Bar the combined issue that arises on a case, if it is thought appropriate. For example, how do you classify a case where the client says, “I want you to call X. He’s a star witness; he’ll win the case for us”, and the barrister has his own good reasons for thinking that would be a disaster and refuses to call him? Is that service or conduct? It is only one example; we might be able to come up with the answer to it, but I am sure that I could come back with others that are impossible to clarify as truly one or the other. Flexibility must be brought into the Bill, so that the matter can be transferred to the professionals.

We should watch carefully the dogma that professionals cannot be trusted to judge professionals. As a junior barrister, I used to appear in front of various bodies of professionals on behalf of some miscreant professional, and I constantly failed. It may have been my fault, but they were the toughest bunch. If you appeared in front of a lot of surveyors to try to acquit, in the old days, a chartered surveyor on a charge of advertising, or similarly in front of the Institute of Chartered Accountants, you had a snowball’s chance in hell. It is a complete fallacy that such bodies are not to be trusted; they are very tough.

The “polluter must pay” doctrine cannot be fair or right. 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.

I have a concern on how the costs will add up and escalate. At the moment, we have an estimate of £20 million for set-up and another of £20 million for the annual charge, so you start year 1 at £40 million and have the professions paying under the present scheme without any government contribution. We do not want another Dome—I think I can safely say that; the noble and learned Lord has withdrawn—or another Olympic city, with the estimates being blown through the roof. We must try to exercise control, and the Government ought to contribute largely to set-up costs and annually to the annual costs.

My Lords, this is a considerable Bill. Behind it lies work from not only the Government and the key departments of state, but the Office of Fair Trading, Sir David Clementi, and the Joint Committee under the notable chairmanship of the noble Lord, Lord Hunt of Wirral. I want to concentrate on two matters only: complaints about the conduct or service provided by members of the legal profession, which are dealt with in Parts 6 and 7; and alternative business structures—the possibility of legal services being provided with a mixed discipline team of providers—which are considered in Part 5.

The Government are rightly committed to setting up an Office for Legal Complaints that comprises an ombudsman scheme, following 20 or 30 years of ombudsman schemes in central government, local government and a number of private sectors. I shall refer to both “clients” and “consumers” for the benefit of the noble Lord, Lord Thomas, but he is not present; I use the words rather interchangeably myself. Clients, consumers and customers would benefit from a clearly identifiable single point of entry for complaints and towards any redress scheme. But in the detail of working out this scheme for the Bill, the Government have been so concerned to create a nice, tidy scheme, with every complaint about solicitors and barristers being not just sent to the OLC but adjudicated on by it, they have ignored the fact, referred to by several noble Lords already—the noble and learned Lord, Lord Lyell, and the noble Lords, Lord Thomas and Lord Neill of Bladen—that it has been the independent, fair-minded opinion of successive legal ombudsmen in recent years that, whereas the Bar has a very high reputation for handling complaints in a fair, just and effective way, over the years, the solicitors’ profession has lamentably failed in that respect. I am not here to cast blame, but to suggest, in line with other noble Lords, that that is a great distinction. I am all in favour of the OLC being a single point of entry for all complaints about legal services, but we should not lose the many advantages that have been provided by the Bar’s handling of complaints, including the free time at present given by members of the Bar in analysing complaints.

The Bar has properly and rapidly separated its representational functions from its regulatory functions, with the latter being the responsibility of the Bar Standards Board, which has a lay chairman whom I have known for many years—Ruth Evans was the director of the National Consumer Council and has a number of other significant achievements behind her. So it is most appropriate that the Government should listen carefully to the Bar’s case that the OLC should delegate to it the handling of complaints against barristers.

I happen to have a little experience that I can contribute to the debate. I am chairman of the Advertising Standards Authority and we have delegated to us from a statutory body, Ofcom, under the Communications Act 2003, its statutory job of adjudicating on complaints about advertisements. That was achieved between ourselves and Ofcom. I note that the chairman of Ofcom has arrived in his seat at a convenient time for me and he will know that there are agreements and concordats between us whereby Ofcom’s statutory duty is delegated to us, only as long as, through accountability or reporting and so on, the job is properly done.

It would seem a great pity to equate treatment of the Bar and the solicitors’ profession just because solicitors are unable at present to show themselves as fit to handle complaints. As the noble Lord, Lord Neill of Bladen, has indicated, a high percentage of complaints against barristers are hybrid, involving both matters of discipline that the Bar is given to deal with, and complaints about the service provided by a barrister, which involve claims for compensation.

I am not sure that the Lord Chancellor referred to it, but Clause 154 specifically prevents the Bar and the Bar Standards Board providing any redress or compensation. That clause should disappear from the Bill, because if there is the delegation that I desire, that discretionary power to delegate would have to be followed by the ability in law for the Bar Standards Board, the Bar itself, to award compensation.

Incidentally, I—and, I suspect, a number of other noble Lords—question paragraph 2 of Schedule 15, which states that the chairman of the OLC,

“must be a lay person”.

Many of the most successful ombudsmen in recent years in this country happen to have been lawyers. The Financial Ombudsman Service, which is one of the biggest ombudsmen schemes in the country, has had a lawyer as its chairman for some time. The parliamentary and local government ombudsmen have not always been lawyers. I make the simple point that banning lawyers from holding the post is an extreme measure. A legal qualification may not be the only qualification that may be useful in this field but banning lawyers from holding the office is to carry too far the view that lawyers must give way to lay men in this modern age.

I also want to say a few words about alternative business structures. Even in the 1980s, when I was head of the Office of Fair Trading, we began to be concerned, on behalf of the consumer, with restrictions on competition and innovation. That was usually constituted by the professional rules of barristers, solicitors and a number of other professions. Some of those restrictions, such as those on advertising, have been long gone or radically modified. However, there are long-established rules preventing different types of lawyers working together on an equal basis and other rules preventing them working in partnership with others, such as accountants and businessmen, to provide for the customer under one roof a range of legal, financial and commercial advice and assistance.

In more recent years, the Office of Fair Trading has published various reports proposing that alternative business structures, under suitable safeguards, should, to preserve professional integrity, be permitted. Clauses 70 to 105—noble Lords will see in a moment why I refer to the clause numbers—provide for a licensing scheme so that firms offering clients a number of different skills in collaboration may be set up. The positive case for the client being able to purchase under one roof legal, financial and other services and facilitating the injection of capital into such firms has somewhat been lost sight of in recent years in the clamour for safeguards and reassurances. Of course we need safeguards and reassurances but I am worried that in this Bill one has 35 relevant clauses. There may be many potentially useful enterprises of a mixed disciplinary nature that could usefully be set up for the benefit of clients but this mass—I hope that I do not exaggerate too much—provision of 35 clauses on safeguards and so on may be so off-putting that some of the desirable objectives and multidisciplinary firms, which would be for the benefit of clients, will not be obtained.

My Lords, as one of the Members of the House of Lords who sat on the pre-legislative scrutiny committee that considered this Bill in draft form, I would like to contribute to this debate. I do so rather apprehensively as one of the few non-lawyers speaking this afternoon. At the outset, I point out that this is a very important Bill that will improve the quality of legal services available to ordinary people. I agree wholeheartedly with the noble Lord, Lord Hunt, about the fundamental significance of the quality of service offered; that is why I so strongly support its major provisions.

First, I emphasise how effective the pre-legislative process was. It was a short and rather intensive process with a lot of work crammed into June and July, but the committee was able to take the views on the draft legislation of a wide range of legal experts and organisations, and of bodies representing consumers. It did indeed, as the noble Lord, Lord Hunt, said, try hard to embed the essence of the Clementi proposals into the Bill's provisions.

We put forward 58 recommendations, of which 32 were agreed to in principle, and only 14 were rejected by the Government. I think that that is why this Bill now commands wide support in principle, although inevitably there are some important details still to be debated and satisfactorily resolved. The scrutiny certainly improved the quality of the proposed legislation, and I offer my congratulations to the chairman, Lord Hunt of Wirral, for all his hard work and, particularly, his consummate skill in maximising consensus, and to the Clerk, advisers and support team who gave us so much help.

It should come as no surprise that the strongest supporters of this Bill are consumer groups because, as they rightly point out, a sizeable minority of the general public are not well served at the moment by the legal services they receive—mainly from solicitors. There are far too many complaints, not at the highest level of seriousness of gross negligence, but of poor service, incompetence, excessive delays or costs not being clearly spelt out at the outset. Going to a local solicitor is clearly not always a happy experience for people who are often under pressure already, which is why they are seeking legal help.

As Which? has pointed out, in 2005-06 the Law Society received more than one complaint for every six solicitors practising in England and Wales. However, it is not just consumer champions who support the Bill. I am pleased that the Law Society supports the main proposals in principle, albeit with some important qualifications.

Like the previous speaker, I shall focus on two aspects of the Bill—alternative business structures and the proposed Office for Legal Complaints. I particularly welcome the proposals for ABSs, which not only will give existing law firms more flexibility in how they operate, but will bring about significant change for the customer. As a result of the provisions, we can expect to see improved services for consumers and greater convenience, with the establishment, for example, of one-stop shops for related services. Alternative business structures will open the door to the provision of legal services by supermarket chains or high street banks. Your Lordships may refer dismissively to Tesco law, but Tesco has proved itself extremely adept at providing services in a way and at a cost that the consumer values. These proposals will lead to more choice for consumers; they will stimulate competition; and I believe that they will drive up standards.

The Law Society gives alternative business structures a cautious welcome, but is worried that the outcome might be to create legal deserts, especially in rural areas, and rightly emphasises that it is important to preserve access to justice on people's doorsteps. I agree with that view, but I would argue that under the new proposals, access to legal services will be enhanced for the vast majority of people. We will see a greater variety and diversity of legal services being provided, probably at a lower price, and no doubt including the use of the internet. This could indeed lead to a significant shift in the way legal services are provided, and will certainly have implications for many firms of high street solicitors. In future, they will neglect the needs of their clients at their peril, because providing a high quality of service and satisfaction will be the only way to make sure that clients do not vote with their feet for a perhaps more impersonal but certainly more accessible service provided by Tesco or the Co-op.

The establishment of the Office for Legal Complaints is a welcome step forward—not before time—from self-regulation of the legal profession to an independent body that will deal with all consumer complaints, and which will have a majority of members who are non-lawyers and experts in consumer affairs, complaints handling and customer service. I have already indicated how necessary this change is, with levels of dissatisfaction with how the Law Society handles complaints remaining very high. In her most recent report, for 2005-06, the Legal Services Complaints Commissioner pointed out that four of every 10 people remained dissatisfied with how the Law Society handled their complaint. As we know from the work of consumer organisations, large numbers of people do not submit formal complaints about their treatment because they doubt that anything positive will result.

The introduction of the alternative business structures framework and the Office for Legal Complaints are major changes which will bring about a significant improvement in the quality and accessibility of legal services, and in levels of consumer satisfaction in an area of provision which, as noble Lords have pointed out, is crucial to individuals at particular times of need. That is why the Bill is so important.

I realise that I probably address the independence of the Legal Services Board at my peril, but some points must be made. I accept that the board should not just be independent of government, but must be perceived as such. The independence of our legal system is an essential element of its strength, not just in this country but worldwide, and must be cherished and preserved. However, in my experience, the way that current Secretary of State appointments are handled—according to Nolan rules and in strict accordance with the Office of the Commissioner for Public Appointments code of practice—should remove any apprehensions about the suitability, qualifications or independence of the chair and members of the new board. A selection panel, including an independent assessor, will conduct the key stages of the appointments process and recommend specific individuals to the Secretary of State.

I have recently been through such a process myself and can vouch for both how stringent and how independent of government it is. However, if it is felt that, exceptionally, at the end of this process, the Secretary of State should submit the final couple of names for each position to significant individuals—such as the Lord Chief Justice or the chair of the National Consumer Council—in a sort of final vetting stage, I would have no objection. I certainly do not believe that it should be spelt out in the Bill, however. Finally, I share the hope and expectation of the Law Society that the Legal Services Board will operate with a light touch and in a proportionate manner.

My Lords, I declare an interest as the chair of the National Consumer Council, but make it clear that I am not making a bid for the job my noble friend just suggested. It is quite a significant interest, however, since the National Consumer Council is one of the bodies that initiated the process of convincing the Government of the need to regulate legal services some years ago. After the lengthy period of Clementi and its consultation, and then an intense period of Joint Committee consideration, the Bill is close to being fit for purpose. I am not saying that it cannot be improved, or that some noble Lords’ points should not be addressed. The overall direction and structure, however, are right.

The lawyers among us must recognise that the system of self-regulation—certainly that of the Law Society and, to some extent, the Bar—is not held in high regard by the general public. My noble friend Lady Henig has just gone through some of the background figures and I will not repeat them, but the fact is that lawyers are up there with estate agents, builders and garage owners—and possibly politicians—as one of the service providers they are least impressed with. They are also unimpressed with the complaints system that has operated hitherto. As my noble friend just said, very few of them think it more than a waste of time to put in a complaint.

The record shows that there was a need for action. By setting up the Legal Services Board and the Office for Legal Complaints, the Bill reflects the need for independent scrutiny of the provision of legal services. However, the Bill also recognises that the existing bodies should be incorporated within this structure as approved regulators, as a sort of franchising operation, as long as they do their job effectively. This is a typical British compromise and a robust one at that.

Some of the reactions to the Bill seem hugely exaggerated. As almost my first re-entry to public life, about nine months after retiring as a Minister, in my present job, I went along to a discussion arranged by the International Bar Association on the very day that my noble and learned friend the Lord Chancellor announced his intention to proceed with these proposals. I thought it would be a fairly quiet affair, nothing like the meetings with farmers and hunters that I was used to. In fact, it was far worse. I was accused by the assembled luminaries of supporting a proposal that was close to those of Hitler, Stalin and Idi Amin. Given the international context in which people were talking, I can understand where they were coming from, and I am glad that the noble Lord, Lord Thomas, did not express his views about the noble and learned Lord the Lord Chancellor in quite the same way. However, the reaction from the British legal profession is a bit over the top and hysterical.

It may be true that the Bill could say a bit more about independence and could establish a few mechanisms to ensure that independence, but the reaction, including that in this debate, has been an overreaction. Most other industries and services are subject to some form of regulation, and where there is no formal statutory regulation, we rely on general trading standards enforcement or have forms of self-regulation that are more effective than those that appear to operate in the legal field. In others areas, we rely on effective competition to deliver consumer benefits and avoid consumer detriment. However, none of those applies in the legal profession. When self-regulation does not work for the consumer, the consumer has the right to demand that the Government intervene to impose independent scrutiny of the delivery of the service. In that sense, legal services are no different from any other service.

In this system of partial self-regulation, it is important that the role of the regulator is completely separate from the trade union function of the Law Society and the Bar Council. To achieve that, the approved regulators—the Law Society and the Bar Council—should have a majority of lay members on their governance boards. It is important that the consumer voice is effectively heard on the Legal Services Board, which is why I welcome the inclusion of a consumer panel. Indeed, its role could be strengthened to make it closer to that of Ofcom or the Financial Services Authority. However, I do not accept the argument that that panel should be balanced by an additional panel for practitioners. The analogy with the FSA in that respect is flawed. In legal services, the front-line regulator would continue to be professionally based. To mix my food metaphors, it would be having your cake and eating it to have a second bite of the cherry by having a separate practitioners’ professional panel in the LSB.

Often the most important strand of consumer pressure in any industry is to allow competition to flourish. The ABS proposals in the Bill would allow limited competition in the provision of some legal services. That has also been greeted by an overreaction bordering on hysteria. I am not a complete freemarketeer, and I recognise that some inhibitions have to be put on the labour market and, in particular, on the market for professional services. I recognise that some legal services might be provided effectively only by enterprises consisting solely of legally qualified practitioners. However, there is a range of other services in which lawyers are involved that require the skills and expertise of other professions. The concept of alternative business structures of lawyers and non-lawyers is a sensible way to provide a flexible one-stop-shop service to consumers with greater convenience and, potentially, lower costs. I have no objection if people find it easier to seek their legal services in Tesco or, preferably, the Co-op than with a high street solicitor, but it is important that there is some quality control on the licensing system introduced by the Bill. My noble friend Lord Borrie suggested that the provision might be over-onerous, but nevertheless we need a serious licensing system.

The licensing system need not extend to some areas—for example, will writing is not subject to huge consumer detriment, so the mandatory licensing system need not apply. There are other areas—and I was glad to welcome the Lord Chancellor’s remarks about trade union provision of services in employment cases—where again the full provision does not apply, but for services that have hitherto been provided by lawyers we need a robust licensing system.

The licensing system must, as I think my noble friend Lord Borrie hinted, allow for innovation in order for alternative businesses to develop and to deliver services that might be quite mundane for lawyers but which can frequently be traumatic for the people seeking legal services. It is also true that the conditions of licensing will meet some of the objections raised that the system could end up in cherry-picking and drive out services to the most vulnerable potential clients and consumers. I notice that our former colleague, now styling himself Andrew Phillips, had an article in the Guardian today arguing this case. That is hugely exaggerated, but we would rely on a licensing system to minimise it. It would help if the Government felt inclined to improve the provision of legal aid in this context as well—but perhaps that is another point.

I welcome the proposals on the complaints system—the OLC—but I think that they could be strengthened a bit. A compensation limit of £20,000 seems unnecessarily low. The financial services equivalent provision stands at £100,000. I do not think that compensation will frequently reach those levels, but when dealing, for example, with very important property transactions, and sometimes probate, such sums of compensation will need to be paid. To facilitate full protection redress all lawyers should be required, as a condition of practice, to carry professional indemnity insurance. Although many do so, it is not a requirement. Again, that would put lawyers closer to other businesses and professions.

I disagree with my noble friend Lord Borrie on the point about delegation back to the Bar Council. Even though I recognise that its past performance has been somewhat better than that of the Law Society, I think that we are then back into the judge and jury territory. I also disagree with him in relation to the requirement that the chair of the OLC should be a non-lawyer. Lawyers are brilliant at analysing other people’s professions, but for public trust we need a non-lawyer to head this institution.

My final point on the effective implementation of the OLC’s role regards transparency. We should know the names of those who are found wanting, and such names should be made publicly available. The fact is that one-third of all complaints under the present Law Society system are accounted for by only 7 per cent of solicitors. Potential clients should know that. It is also a serious protection for the good practitioners within the profession.

Therefore, I think that the Bill can be improved in some ways, but it is a good Bill. It moves us in the right direction and it will restore consumer trust to the legal profession in a way that present arrangements do not. I do not think that the general provisions of the Bill should be undermined and nor should we be convinced by the rather specious protestations about state control and lack of independence.

My Lords, I declare an interest, in that I was at one time a barrister, then a judge and am now a deputy coroner and assistant deputy coroner. I support the Bill in general, and I am reminded of what Shakespeare put into the mouth of one of the characters in Henry VI, Part II:

“First thing we do is kill all the lawyers”.

Clearly, the public have not changed today.

I am concerned about several matters in this Bill but I shall confine my comments to four. I hope that I shall not be accused either of exaggeration or of hysteria in making these points. What I am about to say has already been said by several noble Lords, but, since there is disagreement on some of them, they bear repetition, even from me.

First, there is Clause 1(1)(c), which refers to the objective of,

“protecting and promoting the interests of consumers”.

The joint report of the two Houses pointed out that there had been a shift from public interest to consumer interest. The government consultation paper issued in 2002 was entitled In the Public Interest? and placed an emphasis on the wider public interest. The terms of reference set by the Government for the Clementi report included consideration of the “public and consumer interest”. The protection and promotion of the interests of those who use legal services is enormously important, but it is not always identical with the public interest. It is possible for narrow consumer interests to be contrary to the wider public interest. At present, there is no provision for promotion or protection of the public interest and there appears to be no explanation for its omission from the Bill. I support the recommendation of the Joint Committee at paragraph 78 that subsection (1)(c) should be redrafted to read “protecting and promoting the public interest and the interests of consumers”.

My second concern arises from a possible threat to the independence of the legal profession—although that has, to some extent, been politely rubbished in this House. I should also like to comment on the perception of a threat to that independence by the impression that the Government have been seeking to exert day-to-day control over the Bar and solicitors. I am, of course, referring to the level of involvement of the Lord Chancellor in the regulation of the legal profession, particularly in his appointment of the chairman and members of the board. A clear and open commitment to the Nolan principles in appointments would go a long way to dispelling that concern—together, despite the view of the noble and learned Lord the Lord Chancellor, with a requirement for full consultation with the Lord Chief Justice in the appointment or removal of the chairman.

I share the view of the noble Lord, Lord Neill of Bladen, that the public do not see the Lord Chief Justice as just another lawyer—certainly not ordinary members of the public whom I meet from time to time, who see him as the head of our profession and as a great man. That was below what might have been said about the Lord Chief Justice.

I am told that at least one European Union country has already expressed concern about the perceived control by the Government over the legal profession. If that were to be the view of countries across the world, it would have a seriously adverse effect upon the high reputation of the English and Welsh legal system held overseas. That is not just a matter for lawyers; it would be to the public detriment. I entirely agree with the recommendations of the Joint Committee on appointments.

My third point is the proposed control by the Legal Services Board (LSB) of the regulators who have been put in place by the Bar and by the solicitors. I support the noble and learned Lord, Lord Lyell of Markyate, on this point. As the other noble Lords have said, the Clementi report recommended a light touch, which is not reflected in the powers of the board contained in the Bill. There is a low threshold for intervention by the board, particularly in Clause 31(1)(a), which entitles the board to intervene if,

“an act or omission … has had, or is likely to have, an adverse impact on one or more of the regulatory objectives”.

The regulatory objectives are, of course, expressed very broadly. There is a lack of guidance on when it would be appropriate to intervene in the work of approved regulators. This is rightly a cause of concern both for the Bar Council and for the Bar-approved regulator, the Bar Standards Board (BSB). The approved regulator may have to exercise discretion in balancing the objectives and to decide that one objective takes precedence over another, in which case there is likely to be an adverse effect on one of the objectives. Consumer protection or the rule of law may, for example, need to take precedence over competition. Under the Bill, that would entitle the board to intervene unnecessarily and in a way that is over-regulatory and might penalise a regulator who had exercised legitimate discretion in a balancing exercise. I urge the Government to amend Clause 31(1)(a) to include “substantial” so that it refers to a “substantial adverse impact”.

My last point relates to the relationship between the proposed Office for Legal Complaints (OLC) and the Bar Standards Board, which, as noble Lords have already heard, is the regulator of the Bar and has a lay chairman. I strongly support what my noble friends Lord Neill and Lord Borrie said about this. My concern arises from a one-size-fits-all scheme for dealing with legal complaints separately from issues of discipline. Clause 154(1) specifically states:

“The regulatory arrangements of an approved regulator must not include any provision relating to redress”.

This prohibits complaints and discipline issues being heard and decided by the same tribunal.

Under the scheme, the Bar Standards Board, for instance, will have the responsibility of dealing with issues of discipline arising from the behaviour of a barrister, whereas there is an entirely separate complaints procedure through the OLC, which can provide redress but may not take any disciplinary action against the respondent to the claim. In some cases, complaints may have nothing whatever to do with discipline, but life is seldom kept in neat compartments. In many cases—one noble Lord has said that the figure is about 70 per cent—the complaint by a dissatisfied litigant against a barrister includes an issue of discipline. Under the scheme, the discipline part of the complaint will go to the Bar Standards Board. On the same facts, the BSB will adjudicate on the part of the complaint that relates to discipline, and the OLC will adjudicate on the part that does not affect discipline.

What happens if one body accepts the complaint and the other does not? It is rather like two referees, one of whom gives the player a red card while the other says that the player was not to blame. I think I am right in saying that, in Adelaide, Strauss was out according to the umpire but the television image showed that he was not out. In that case, the umpire was in control, and Strauss was out, but if there are inconsistent results in which one board accepts a complaint and the other does not, what are the complainant or the public to think? I am not talking of a matter which was sufficient to warrant redress as a complaint but not sufficient for it to be a disciplinary matter. I have in mind a much more basic point: that the facts of an incident involving the complainant and the barrister—I repeat, the facts—are accepted by one board and rejected by another. Apart from anything else, there will be unnecessary duplication and considerable extra expense, but access to the ombudsman would not address this problem. I urge the Government to look again at the interrelationship between the Bar Standards Board and the OLC. In my view, a power is required in the OLC to delegate in suitable cases a dual complaint to the BSB. There should be an amendment to that effect and Clause 154(1) should be deleted.

My Lords, I declare the interest of having been a chairman of the Bar during the passage of the Access to Justice Bill and a practising barrister. However, I must reassure noble Lords that my years in your Lordships’ House have nurtured a complete sense of objectivity about my profession, which I hope to display in my remarks. Regulation is not an end in itself; it is a means by which the consumer or public interest can be balanced in protecting it through the way in which a profession or a financial system operates.

There is no spiritual context to regulation; it is a mechanical system operated by people to help others. So, when we look at this Bill, which I welcome, we should test a new set of regulations about an important profession against the following criteria: are they necessary, proportionate and cost-effective? Do they avoid doing irreparable damage to the profession and service which they seek to regulate? Is this Bill and the new regulation of the entire legal profession, necessary? I say yes, and I am gratified to note that the Bar Council has plainly stated that it supports this Bill. Such concerns that it has go to individual components of it, not in any way to its principle, and I agree. I do not agree that the regulation of a profession should be mixed with its representation. In this day and age they should be separate and be seen to operate separately. This Bill seeks to achieve that. I agree that the profession should be accountable to a Legal Services Board.

I want to reassure the House that my profession, the Bar, recognised that some time ago. In January 2006, we created the Bar Standards Board, which was specifically designed to protect consumer interests and maintain professional standards. It is chaired by a lay person, who is a director of the National Consumer Council. The balance of lay members and professionals on it is entirely reasonable. Its purpose is to give the consumer confidence in the regulation of my profession. That has already happened; the arrangements have been successful. My side of the profession is already doing that which this Bill seeks to develop.

The next and fundamental question about why this Bill is necessary relates to alternative business structures. I very much regret the emphasis placed on the introduction of finance—in capital letters—to law practices by so many of my personal friends in the law. There is an entirely different aspect of alternative business structures, which has thus far been entirely neglected. We must accept that legal aid has reached its ceiling. The impact of that on the provision of legal services nationally is really serious. There is no reason, in my opinion, why alternative business structures cannot be developed to operate legal practices to favour the poor and the disadvantaged—for instance, through social enterprise systems joining in with law firms, and trade unions doing the same—to achieve a new means of ensuring access to justice.

The Bill is therefore necessary, but is it proportionate? That will be tested in Committee by probing and by amendments, but I raise three points. The first concerns the independence of the new system. This is not an opinion put forward by the Bar to protect itself, or by solicitors to protect themselves, from government interference and so on. That would be a staggeringly superficial description of our concerns. We are concerned about powers and appointments because of the principle of independence.

We are also concerned about it at a very practical level. A small group of lawyers—solicitors and barristers—generate for this country in invisible earnings sums approaching £1.5 billion a year. We are the best international lawyers in the world and people come to us and our courts because of our quality. That profit to this country could be put at risk if the images given by the Bill are of interference with the independence which leads to our getting so much work from abroad. Lawyers from other countries, if they can, will seek to use anything they find in our future debates and in the future context of the Bill to undermine our position in international markets. So it is an important question.

My second point concerns the Office for Legal Complaints and its relationship to authorised regulators. If I may be allowed to state the obvious, a solicitor will administer your legal problem, which may or may not go to court; a barrister will advise you, sometimes when there is no question of going to court, but mostly when there is. The two functions are very different. The solicitor’s function raises, in its daily context, the provision of the kind of services which the consumer expects to be given at a proper standard, without which he or she will complain. A barrister’s function is to give advice—often unpalatable, often harsh and often difficult to accept—and if the case goes wrong, the way it was dealt with is never forgotten. This gives rise to a different kind of complaint—not “He kept me waiting months for an opinion”, not “He charged too much and did not tell me that he was going to”, but “He did not look after me professionally”.

The ordinary person makes no distinction between the quality of service and the professional standard which is subject to discipline. What will the Office for Legal Complaints do if it deprives the Bar of dealing with the two kinds of complaints? In 70 per cent of complaints to the Bar system, both types are inextricably mixed. Are we to protect, I say sardonically and intentionally, the consumer in relation to Bar complaints by having parallel proceedings for service and discipline? Is the consumer to be exposed to involvement in two processes when there could be one? If the processes are not to be parallel, which comes first? It is not a position that any reasonable consumer will expect to be put in. The OLC cannot deal with discipline effectively; the profession can. The Bar is simply seeking flexibility—flexibility that serves the consumer—not any special position.

My last point concerns the alternative business structure. I invite my noble and learned friend the Lord Chancellor, during the conduct of the Bill, to make it abundantly clear that the regulatory objectives of Clause 1 apply to all alternative business structures with the same force as they do to ordinary legal practice, especially if we find that one of the clauses provides for foreign investment in an English legal practice. It is asking nothing save for an emphasis that the objectives apply across the board.

On cost-effectiveness, Which? says that consumer complaint handling in the law is a number-one priority, and that consumers deserve quick, fair and accessible treatment. I have no doubt that the Department for Constitutional Affairs will be investigating seriously how the new system will work so as to be reasonably quick, always fair—in so far as one can be—and accessible, not drowning the consumer in a barrage of paper passing between the consumer, the person complained against and the office, and seemingly never coming to an end. That is the risk and it has to be avoided. I cannot imagine that it is seriously contemplated that we can look forward to the assimilation of the failed Law Society system—same people, same arrangements—into a new system. I am sure that that will not happen.

If it will cost £20 million a year to run the LSB and the OLC and more than £20 million to set up the OLC, we are talking about serious money; we expect serious value for the consumer. In Clauses 111 to 118, which create the Office for Legal Complaints, and Schedule 15, I looked for the ultimate sanction. What happens if the system is not working and there is no sanction? I hope that we would not have to look forward to an amendment to an Act of Parliament to change a failing system if it were irreparably failing. I also note that in the structure there is control by the Legal Services Board, but who is to answer for it if it fails? The people who run it and the Legal Services Board? The Secretary of State? If it goes wrong, who can the public look to? I hope that that will not arise; if it works successfully, we might want to find out who has got it right.

My final point is about the impact on the profession that is being regulated. The phrase “legal services provider” is linguistically and intellectually inane. We are talking about professionals—lawyers, doctors. They should give the client the capacity to trust in the ability and service they provide as professionals. That is a fundamental part of our British way of life. Those of us who travel abroad in a legal capacity are always told, “You must really treasure your legal system. Do you know how much we think of it, how much we value it, how much we would like to have it?”. Let us not, in discussing problems like this, forget the much greater importance to us of our legal profession, our system of law, than the essentially important consumer interest.

I am sure that during the conduct of the Bill the Government will look to be astute to proper amendment, reasonably brought, to make this a better Bill.

My Lords, I should like to speak briefly in the gap. I shall be talking about miners and I refer to my interest as declared in my speeches of 11 July and 23 November of this year.

It is beyond doubt that the miners and many other people have been let down by some members of the legal profession. I highlighted this in my speech of 23 November so I have no need to go over it again this evening. I was pleased that the noble Lord, Lord Thomas of Gresford, referred to it. I took no great pleasure in having to name people who, in my view, had been dishonest with some of the miners and their widows, but I know of no other way of trying to get justice for these people. I welcome the Bill and hope that we might reach a situation where regulation will put a stop to the practices that have been followed by a minority of the legal profession.

I have always been keen to ensure that all consumers receive good service from the Law Society. Unfortunately, this has not been the case, and the poor way in which the Law Society has handled complaints about miners’ compensation cases is an example. The Law Society’s complaints office at Leamington Spa has over the years been recognised as a failing organisation; this year it was fined by the Legal Services Complaints Commissioner. It is therefore imperative to restore consumer confidence that the new Office for Legal Complaints, as mentioned in the Bill, is truly a new body and not simply a transfer of current staff and management to the new organisation. It is essential that people such as miners are confident that their cases have been dealt with expeditiously and fairly. There should be regulations to deal with the solicitors who have been reducing miners’ compensation after they have been paid a fee of £2,100 for each case by the Government.

Only a few weeks ago, a gentleman who lives not far from me wrote to me and sent me a cheque. I wondered what it was all about and rang him up. He said, “I have just received a cheque, which I have sent to you”. It was for 37p, to a miner suffering from bronchitis and emphysema. I hope that regulations under the Bill will put a stop to that kind of practice.

My Lords, this has been a truly remarkable debate. In the compass of less than three hours, it has ranged widely and penetratingly across the issues raised by this substantive Bill, which will have a profound effect on the handling of consumer complaints about the provision of legal services, the structuring of the legal profession and the regulation of legal services. It will have an effect also on the perception of the profession.

If I have any note of complaint, it is not about the way in which the noble and learned Lord the Lord Chancellor presented these issues; it is rather that, at some points in the debate, there was an implication that the interests of the law profession and consumers were almost ineluctably opposed. The failure of a part of the profession to provide an adequate system for handling consumer complaints, of which the noble Lord, Lord Brennan, spoke trenchantly, is not an indication of anything that should lead to the legal profession being written off as being incapable of reform. That is clear in the response to the Bill from both the Bar Council and the Law Society, which have broadly welcomed the provisions, subject to some suggested amendments.

The remarkable thing about the Bill—it is in some ways historic—is the detailed pre-legislative consideration that it has been given by the committee chaired by the noble Lord, Lord Hunt of Wirral. Candidly, I doubt that our parliamentary procedures are apt to deal with a Bill of such detail, complexity and size as effectively as has been done in this instance by the committee of the noble Lord, Lord Hunt, the members of which have uniformly testified to his superior chairmanship.

The noble and learned Lord the Lord Chancellor mentioned the pressing timetable under which the committee operated. I have no doubt that working to a timetable of eight weeks, as the noble Lord, Lord Neill of Bladen, said, presented its members with an extraordinarily difficult task, but it is clear that they have performed a high public service in the work that they have done. I have no doubt, too, that there will be further opportunities during the Bill’s passage through the House to raise points that may have come to light too late for the committee to have been able fully to consider in its deliberations.

The general welcome for the purposes of the Bill is clear. It has united those such as the noble Lord, Lord Whitty, who spoke on behalf of consumers and who still hopes to see improvements made to the Bill to strengthen some of its provisions, and those who would like to be careful not to undermine the strength of the legal professions and their perceived independence—their independence in the eyes of those overseas who look covetously on their business. The legal professions generally provide an unrivalled service.

I suppose that I should have declared a past, if not a present, interest in these issues, for I practised briefly at the Bar and served as a consultant for an American law firm for many years and as a consumer Minister in the late 1970s, for which I did not consider myself disqualified by virtue of my legal interest or training.

The underlying question about regulation is whether it in some way jeopardises the independence of the new body. Is the Legal Services Board truly independent as it is being constituted? One can make too much of appointments being separated from the Secretary of State, but I cannot quite understand why the noble and learned Lord the Lord Chancellor takes such strong exception to consulting the Lord Chief Justice, as was proposed by Sir David Clementi. I cannot see that that consultation process would alter the perception of the work of the Legal Services Board, and I hope that the proposal will be reconsidered.

Attention has been drawn by a number of those who have contributed so thoughtfully to this debate to the extraordinary number of times that the Bill provides for the intervention of the Secretary of State in the work of the Legal Services Board. We were assisted by the arithmetic of the noble Lord, Lord Hunt, who said that these powers could be exercised on 288 separate occasions. I believe that the noble and learned Lord the Lord Chancellor has in some respects modified some of these powers in the time between the committee’s report and the publication of the Bill in its present form, but the issue causes eyebrows to be raised. I hope that he will not rest in seeking to eliminate unnecessary interventions.

Will the Secretary of State contemplate importing regulatory principles into the Bill, particularly that of proportionality? This could quieten some of the concerns that have been expressed about the necessarily wide and sweeping circumstances in which it is possible for the Legal Services Board to intervene. Another concern may be—I believe that it has been expressed by the Bar Council—that there is no direct provision for a right of appeal to the High Court on the conclusion on regulation by the Legal Services Board. I understand that recourse to judicial review will be available, but it may be thought that under Article 6 of the European Convention on Human Rights it is necessary to go further. Although that point has not been made so far in the debate, I would be interested to hear the noble Baroness, Lady Ashton, when she winds up, say whether she thinks that an Article 6 issue arises. That applies also to the provisions on the complaints procedures.

Several noble Lords mentioned another important point. The noble and learned Lord the Lord Chancellor in his response to the Joint Committee indicated that he was considering the issue of the trigger as a regulatory action by the Legal Services Board since it should clearly not be set too low. I hope that that will be animadverted on in the winding up.

The single entry point for the complainant is very important. The complexities of service provision, cutting across all the different professions and organisations, make the system difficult for a lay man, as anyone who has served in another place will know. The only difficulty that I have in understanding how this is intended to work in practice is in respect of a complaint that is clearly about professional conduct. The natural route would be to the authorised regulatory body, but that cannot necessarily provide redress. Is it the view of the Government, and will it be clear in the Bill, that such complaints, although they will be ultimately handled by the professional regulatory bodies, should be channelled through the Office for Legal Complaints? Lay complainants will not necessarily have a view about whether or not it is appropriate to go to the professional bodies because the matter was primarily about conduct. It would be helpful to hear what the Government have in mind.

The issue of redress has been raised again in the context of the appropriateness or otherwise of the ceiling of £20,000. I found the argument of the noble and learned Lord the Lord Chancellor very compelling on that point. As the power is being taken in the Bill to raise that level, considerations of its being too low might later cause changes to be made. But at this stage, in the light of the evidence on £15,000 as a summit of compensation awarded for legal inadequacies, what the Bill provides makes a good deal of sense. I do not agree with the noble Lord, Lord Whitty, on that point.

The issue of who is to pay for the complaint is not so satisfactory. The suggestion that the burden should be borne entirely by the “polluter” seems somewhat doubtful. I have been able to find no suggestion in the Bill, although I have not combed it in such a way that would make me confident about my sleuth work, of how to deal with the problem of vexatious or frivolous complaints. Anyone who has had to deal with public complaints is quite aware that there are such complaints—and it would be wrong that the full burden of that should be borne by the person against whom the complaint was made. That raises the wider question whether there should be some sort of compensation fund. I look forward with interest to hearing what the Minister has to say about the Government’s consideration of that issue, which does not lie clearly on the face of the Bill.

The Office for Legal Complaints deals with individual complaints. It is not entirely clear that it will have a specific role in advising how to amend procedures that have given rise to complaints or in advising about professional best practice. Is that intended to be part of the mandate of the Office for Legal Complaints? If it is not, there must be some kind of interface between the Office for Legal Complaints and the Legal Services Board to determine where that responsibility lies, because in that way we will improve our systems to enable a diminution in the total number of causes for complaint.

I raise one question that may be thought to be of less importance than some others. What is to happen to the reports of the inquiry on particular complaints? Are they to be published? There are cost implications of doing that, but there are transparency virtues in publication, not simply because of naming and shaming but because publication could assist in determining what practices are acceptable and what are not. That merits examination in Committee, if not resolution this evening.

Proposals on alternative business structures have been driven very largely by competition considerations. I pay tribute to the noble Lord, Lord Borrie, whom I have known for some time, and his successors at the Office of Fair Trading, who have recognised that the one-stop shop argument is on the face of it attractive and that there are some sections of our community for which and parts of our country in which access to legal advice is not readily obtainable. However, unsurprisingly, I share the views of my noble friend Lord Thomas that these proposals will not necessarily deal with all the problems that arise on access and provision. I cite my own example of representing in another place a very sparsely populated rural constituency where there were important relationships between lawyers and clients. I wonder how such practitioners will be affected by the Tescos of this world. The rural issue has been raised, but I do not think that it has been answered.

I hope, too, that the Minister may have something more to say on the potential conflicts of interest between the legal service providers and the shareholders, for example. Many of these questions seem to point to the necessity not of a headlong rush towards the establishment of these alternative business structures but of the cautious approach that I think the noble and learned Lord the Lord Chancellor was adumbrating.

Finally, is it intended that, in the regulation of these business structures, the rules should be applicable to sectors or to individual applicants? The licensing is of individuals, but if the regulatory system is in place for a sector, would it be automatic that a licence would be given if the criteria were observed? That is very important because we should not nod through structures that would be legally acceptable on the face of it but not apt for particular individual proposals.

My Lords, I begin by associating myself entirely with all noble Lords who underlined the importance of the work that the Joint Committee has done. We could not have had anything like as well informed a debate as we have had today without the work that that committee engaged in during a very short and demanding period. I also congratulate my noble friend Lord Hunt of Wirral on his outstanding chairmanship, which was recognised by noble Lords on all sides of your Lordships' House.

Part 1 is very short, containing only one clause with four subsections. It sets out the regulatory objectives in paragraphs (a) to (g) of Clause 1(1). But apart from the statement of what they are, we learn nothing further about them in the rest of the Bill. Yet they are crucial to the operation of the Bill because these duties are the duties which the Legal Services Board has to address in its regulatory role. I suggest to the noble Baroness that, in order properly to define the role of the LSB, we need a lot more detail in Part 1 than we have.

Three or four years ago I had the dubious honour of leading for the opposition on the Financial Services and Markets Act. Looking at the equivalent passages in that Act, one sees a much more detailed framework. The duties are set out in Section 2, but each duty in Sections 3, 4, 5 and 6 is given about half a page, in which Parliament explains in some detail exactly how it interprets those duties. It goes on to define the functions of the FSA and what it should have regard to in undertaking those functions.

None of that is in this Bill. There is a real concern across the board that there will be a temptation—I put it that way—for the regulator to make up his own law as he goes along. I suggest that, between now and the Committee stage, the noble Baroness might like to glance at the Financial Services and Markets Act and compare it with Part 1 of this Bill.

I give one example. Clause 1(1)(b) refers to “improving access to justice”. That is the only instruction the Legal Services Board has on that very important area. Many noble Lords talked today about alternative business structures. The noble Baroness, Lady Henig, was rather optimistic about the ability of alternative business structures to deliver better access to justice. I listened very carefully to her and I thought that her optimism was commendable. But there is, by contrast, another view; that alternative business structures will effectively cherry pick in the legal area, going only to those areas which are most profitable.

How will the Legal Services Board approach the question of improving access to justice? For example, will it have a universal service obligation rather like regulators in the world of the Post Office, the provision of gas supplies or electricity? Will it take the view that there is a minimum requirement for the provision of legal services in all parts of the United Kingdom? What about the very large number of people who are not very well off and have housing, social security, education or family problems? How will the Legal Services Board address those problems in the context of the access to justice requirement? I think that I have made my point. In Committee we ought to look very carefully at how we can unpack these duties in such a way that we and, indeed, the Legal Services Board, understand much better how it should interpret its duties throughout the Bill.

The second point I want to make is about independence. I think that almost every speaker mentioned this issue. It seems to me that there are two aspects to this question of independence. The first one is the relationship between the noble and learned Lord the Lord Chancellor and the Legal Services Board. The second is the relationship between the Legal Services Board and the authorised bodies, the authorised regulators.

On the first relationship, I must say that I listened with considerable surprise to the arguments of the noble and learned Lord the Lord Chancellor about the importance of his having the kind of powers he has in the Bill in relation to appointments and dismissal. I recall that in 2004, during those long months when we discussed the Constitutional Reform Bill, the noble and learned Lord the Lord Chancellor said that while there was no evidence at all in our constitution of impropriety concerning the Lords of Appeal in Ordinary, or the noble and learned Lord himself in exercising his functions of judicial selection, there might be a perception that there is. As a result of that perception, dramatic changes were made, which included the noble and learned Lord's selfless decision to cease to make judicial appointments and hand them over to the Judicial Appointments Board.

As I understood it, the principle behind all this was that of separation of powers; the importance of the political element being completely divorced from the judicial element. In my respectful submission to the noble and learned Lord, he is advancing completely the opposite philosophy in relation to the independence of the legal profession. I say that with great respect to the noble and learned Lord. He gets so many things right, the law of averages must dictate that he occasionally gets something wrong. I hope that during the Christmas break the noble and learned Lord will reflect on this matter. It must be perfectly clear to him from the speeches made on all sides of the House that there is deep concern about the issue of independence. In my submission that is legitimate concern. It is also a concern that goes beyond our national borders because it involves international perceptions about the provision of our legal services.

There is the second question of the Legal Services Board and the seven regulators. The noble Baroness, Lady Butler-Sloss, made an extremely good analysis of Clause 30. Essentially, what lay behind her intervention was the notion that the ability of the LSB to intervene is made too easy by the Bill. That is precisely why the noble Baroness suggested that the word “substantial” should be interposed. It would be very easy indeed for the LSB to claim that one of the objectives in paragraphs (a) to (g) was threatened in some way and use that as a basis for intervention. I suggest that some sort of guarantee ought to be put in the Bill to make sure that the threshold condition for intervention by the LSB is raised and that it is more difficult for it to intervene. Otherwise, we will find that a wide range of decisions that are taken, as it were on the shop floor, are interfered with by the Legal Services Board. That is the second part of the independence argument.

The third point that I want to make is about appeals. This has not been touched on this afternoon. As your Lordships know, the LSB has a large number of instruments at its disposal—set out in Clauses 30 to 45—to discipline the front-line authorities. The only one that provides an appeals structure in the Bill—at Clause 38(2)—relates to financial penalties. An appeal is admissible only if what the Legal Services Board has done is not within the power of the board. The scope of the appeal is not clear. Would it entail giving the full range of judicial review options to the litigator; or is it intended to be narrower than judicial review? If it is narrower than judicial review, is judicial review also available under Clause 38(2)?

I note that Clause 38(7) has the expression,

“not to be questioned by any legal proceedings whatever”.

That is an ouster clause. I thought that, after the experience of the asylum Bill in 2004, the Government had at last decided to abandon ouster clauses; but it seems to me that there is an ouster clause in the Bill. What about the exercise of the powers in Clauses 30 to 45, other than those involving financial penalties, where there is no provision for appeal at all? Can we assume that, in those cases, judicial review will always be available?

On the question of the OLC, the noble Lord, Lord Brennan, among others, made the point that in 70 per cent of cases it is very difficult to distinguish between service and conduct; and that many of the issues raised by complaints involve an amalgam of both. The noble Lord, Lord Neill of Bladen, made that point most eloquently as well. There is a real difficulty in trying to divide up conduct and service, especially since neither is defined in the Bill. The result is that we may find that a single complaint is, in the end, dealt with both by the OLC and by the frontline regulator. This is a problem that needs managing; it is not a political problem between the Opposition and the Government. It is a problem about the way in which the system works. In Committee, we will have to think very carefully about finding a way around this problem. In my submission, it would help if the power of the OLC to delegate to the frontline authorities was made much clearer in the Bill, and if the Bill made it much easier for the OLC to delegate.

I have already talked about alternative business structures in relation to Clause 1, and the way in which the access to justice obligation might bear on decisions by the Legal Services Board to approve, or otherwise, a proposal. There are, in fact, a lot of other difficulties about alternative business structures. Many noble Lords have already mentioned the international dimension and the issue of legal privilege. There are also, as I am sure the noble Lord, Lord Borrie, would acknowledge, some important competition issues; for example, the issue of cross-subsidisation. You might get a very powerful ABS deciding to try to drive a legal firm out of a particular market by predatory pricing; by subsidising from profitable legal activities in the other part of a firm a particular section of a firm that would sell its legal services below cost to gain a competitive advantage and probably drive several of its competitors out of the market. Those are the sort of problems that will need very careful handling by the Legal Services Board if we are not to have a whole range of competition problems, which seem to me so far to have been unforeseen.

Then there is the question of Chinese walls. Let us suppose that an ABS is instructed on two separate matters by the same client—a client who on the one hand wants to raise money but on the other hand wants to take over another company. Clearly, the information gained in those two separate areas has got to be kept separate. How will that be done? There are a range of technical issues on ABSs which we have not yet begun to confront.

I share the view of all noble Lords who have expressed concerns about the principle of polluter pays. I simply do not believe that it is acceptable under Clause 133 that someone against whom a compliant has been lodged, had it investigated and is found to have behaved faultlessly, is vulnerable to having to contribute financially to the whole process. In my submission, it is more than valueless; it is a corrupt principle. It should not be in the Bill.

Having said all that, I would not want the noble Baroness to get the impression that there are not many things in the Bill that we welcome. As an Opposition, we shall seek to table amendments and argue our corner in the most constructive manner that we can.

My Lords, I am very grateful to the noble Lord, Lord Kingsland, not only for giving me his advice which, as he probably knows, I am often very prone to take, but for his words as he ended his contribution. He echoed much that has been said in your Lordships’ House this evening about the Bill. It is obvious that there are particular issues that we will need to discuss in Committee, and I very much look forward to doing so. In general, there is much to welcome in the Bill. I declare my interest that I am not a lawyer. I was delighted that the noble Baroness, Lady Butler-Sloss, joined us this evening, not least because, with my noble friend Lady Henig, we are starting to have more women involved in our debates; and what women we are.

I add my thanks to those of my noble and learned friend the Secretary of State and Lord Chancellor to all those who have brought this Bill to fruition in your Lordships’ House. I would single out many people, not least the noble Lord, Lord Hunt of Wirral, and his colleagues—as many others have done—for their work on the pre-legislative scrutiny. I hear what they are saying about the timetable, but in a sense they have proved that the timetable was perfect, because their work was extraordinary.

I am fascinated by the new word “Clementi-ise”, which I fear may become a symbol of this Bill in the future. Noble Lords have also talked with great passion about aspects of the backdrop to the Bill. The noble Lord, Lord Thomas of Gresford, talked about integrity, independence and the importance of challenging organs of the state. The noble and learned Lord, Lord Lyell of Markyate, talked about a strong, diverse and effective legal profession. Those are all sentiments with which I can agree. I also agree with the noble Lord, Lord Thomas of Gresford, that working in partnership is an important principle in the Bill, and we will look at that more carefully in the coming weeks.

I am grateful to the noble Lord, Lord Hunt of Wirral, for bringing to my attention—both this morning when we met and in correspondence this afternoon—the additional role of my noble friend Lord Brennan in the new group that is being set up. Noble Lords will be pleased to know that we now have an All-Party Group on Legal and Constitutional Affairs. I gather that my noble friend Lord Brennan is to chair that group; I am delighted that he is doing so. No doubt my noble and learned friend the Secretary of State and Lord Chancellor and I will be summoned before it at some point, with luck, and we very much look forward to the opportunity that will afford us.

It is also extraordinarily helpful in these debates that, when we are inevitably thinking about the legal professions and have before us many people involved in the legal and judicial world, we also have my noble friends Lord Whitty and Lord Lofthouse to remind us of the consumer interest. My noble friend Lord Lofthouse does so passionately and based on his long experience and my noble friend Lord Whitty does so with passion and in his extraordinary new guise.

Four issues have dominated the debate—independence, cost, the complaints system, and alternative business structures—but I will not forget the right reverend Prelate’s desire for me to say something on the issues that he raised; I will do so. Without trying to address all the detailed points—I fear that it would be completely impossible in the time available—I reiterate, as I always do, that I will address all the points that I fail to address this evening in correspondence before Committee.

I will start by thinking about what is at the front of the Bill. I take the point raised by the noble Lord, Lord Kingsland—that it is important to look at previous legislation, and with his help I shall certainly do that. I shall also consider the points about public interest in the front of the Bill raised by the noble Baroness, Lady Butler-Sloss, and about proportionality raised by the noble Lord, Lord Maclennan of Rogart. Noble Lords will know that, in Clause 3(3)(a), we have tried to address the issue in the context of the work of the board. We think that that is appropriate, as opposed to using Clause 1 as noble Lords have suggested. Because we have talked about accountability, proportionality, consistency and so on, we think that that is a way to tackle the issues that noble Lords have raised. However, I would be grateful to discuss whether they think that we have captured that appropriately. The principles of regulation that the noble Lord, Lord Maclennan, raised were important, of course. I think that my noble and learned friend said, “We will have a think about it”, when I asked him about it; we will certainly do so. We think that we have positioned the matter correctly but, as you know, I am always open to discussions about what we might do.

No doubt we will spend a huge amount of our glorious days in Committee on independence, and I want to make a few basic points about it. The first is that the appointment of the chairman of the Legal Services Board is important, and it is important that it be done appropriately. I have five and a half years’ experience as a Minister in the way in which the Commissioner for Public Appointments and the code have been established and developed. The noble Lord, Lord Hunt of Wirral, was involved in such issues in earlier days, in his life in government. He was kind enough to have a preliminary conversation with me about that this morning, and I am sure that we will have more. I think that we have the best practice available in making appointments. To be frank, I do not understand why we should move away from that. The basis on which the Lord Chancellor and Secretary of State will operate is a well trodden road and has served us well so far.

Noble Lords asked about putting more detail in the Bill. The difficulty and danger with that is that best practice is inevitably a moving feast; what is best practice today may develop over time. I would not wish us to run the risk of being inconsistent with current best practice. The Bill gives specific instances in the limited number of circumstances where the Secretary of State could remove the chairman or a board member, which demonstrates that the provision would be used appropriately. No doubt we will discuss that in greater detail, but I wanted to set out clearly the position from which we start.

I cannot resist the Secretary of State’s 288 powers. The noble Lord, Lord Hunt of Wirral, was kind enough to mention them to me earlier, so we have had a look at them. I hope that he will not mind me saying so, but there is no doubt that we are not equating the 288 references to 288 separate powers. Clause 61 is one power with six references. Clause 136 has eight references but one power. I am not sure whether we examined whether the powers had changed—perhaps we will—but one of the arguments put to us is about making sure that we clarify where the Secretary of State will do things, and we have sought to do that. I know that the noble Lord would not wish your Lordships to go away with the assumption that everything had increased; the references have increased, which is a positive move because it gives greater clarity.

I shall turn to the consultation and the role of the Lord Chief Justice, an important and sometimes recurring theme when we look at the relationships between our most senior holder of a judicial office and government and Parliament. My noble friend Lady Henig talked about consultation being an important part of what anyone should do when making appointments. No doubt my noble and learned friend will wish to consult a number of people when doing so, depending on the appointment and candidate. That is appropriate. However, I agree with my noble friend that we should not put that in the Bill. The reason is twofold; again, I am sure that we will debate it at great length. First, however eminent and important the Lord Chief Justice is—I agree that he is both—the provision is about trying to develop consumer confidence and make people believe that we have tackled the issue effectively. To simply have a consultation with the head, if you like, of the judiciary and legal professions does not feel right to me. The argument could be—I have certainly debated it in the past few days—that you balance that with consultation of consumer groups. Then you quickly get into the area that I find deeply difficult. Noble Lords who remember me from my days—

My Lords, I am a little unhappy with the expression about the Lord Chief Justice being the head of the legal professions. I understood that it had been written instead by the Lord Chancellor that he was a highly distinguished lawyer, which indeed he is. I do not think that it is quite accurate. Perhaps the noble Baroness will reflect on that.

My Lords, as I said it I knew that someone was about to leap up and correct me, because the noble and learned Lord is entirely right. I apologise to the Lord Chief Justice for giving him an additional burden to the one that he already carries.

I was trying to make the point that we quickly get into the realms of making lists about which organisations should be consulted in particular circumstances. I am always deeply reluctant to do that. It is appropriate that my noble and learned friend consult where he feels appropriate, no doubt with good advice. That may or may not include a variety of people. We should hesitate to put that into the Bill.

My noble friend Lord Brennan and others raised international concerns that have come forward. I know from discussions over the past couple of days that issues are being raised, particularly in Germany and possibly in France. It is important to think about the role of our legal professions internationally; I raise the matter partly because I have just come back from the Justice and Home Affairs Council in Brussels, where I spent some time talking with the Competition Commissioner, Neelie Kroes, who is a huge fan of what we have done in Britain and is keen to see how the Bill is implemented. I hope that she will visit us and talk to us about that. Also last night, I entertained a delegation of parliamentarians from South Africa including the Deputy Justice Minister, who expressed in clear terms their delight to see increasingly how the UK operates in such circumstances. International concerns are important, but I wanted to temper the concerns raised. People are worried out there—some feel passionately about what we are doing—but we will be mindful of the concerns raised.

The noble Lords, Lord Hunt of Wirral and Lord Borrie, raised issues about the powers of direction and whether the chair should be a lay person. It is a requirement that the majority of board members be lay; there is no reason why eminent lawyers should not be appointed on merit to the board as well. We have set out in paragraph 3 of Schedule 1 the experience that the board must have for us to make sure that it is representative, in the best sense of the word. It must have a broad range of experience that allows it to carry out its functions effectively, including the power to direct. As a lay person, I have no difficulty with the chair being a lay person. From my perspective, it feels that too often you have to have a legal qualification to do things, so at last there is a job that I can go for when I finish being a Minister. It is an important issue of confidence as well, concerning the messages that we send out. We will be fortunate when we find the right person to take on that role.

The noble Baroness, Lady Butler-Sloss, and the noble Lord, Lord Kingsland, raised the question of whether we ought to have a threshold condition in terms of the adverse impact on the objectives. She used “substantial”; others have talked to me about using “significant”. As noble Lords who have dealt with legislation before know, the trouble is that there are issues about the definition of “substantial” or “significant” in terms of being clear what we are trying to do. “Substantial” would also be difficult because it might mean that the board could not take action where it was required. If you have a regulator regulating a small number of people, the impact may not be substantial even where they are not meeting the regulatory standards. So by requiring the board to act in accordance with the principles of proportionality and accountability, we will get to the same point that noble Lords seek. No doubt we will discuss that in Committee.

The noble Lord, Lord Thomas of Gresford, asked about government solicitors. We do not think that we need to consider them within these provisions; they can still be disciplined if necessary. The cost of including them would be £800,000, which would have to come out of general taxation. We do not think that that is appropriate, but we do think that we have the right framework for them.

My noble friend Lord Whitty and other noble Lords were concerned whether the compensation levels for the OLC were too low. Ultimately, that can be varied by order. We think, recognising the current situation, that we have the balance right, but I know that my noble friend and consumer groups have raised the issue with us. I am sure that we will debate it during the Bill’s passage. I say to my noble friend Lord Brennan that it is not just a re-badged consumer complaints service. It will be located in the West Midlands, but it will be outside Leamington Spa, as I understand it. It will take advantage of a good existing skills base but will be very different—which I think is what my noble friend was looking for .

We had some work on costs done by PricewaterhouseCoopers and the assumptions in the report were its, not ours. We are broadly content with the projections but will of course continue to work with stakeholders to refine them as we implement the new arrangements. As noble Lords will know, PwC believes that there is a saving to be had within the projected costs for the new body.

I am grateful for the work that my noble friend Lord Bach did on the committee and for his support of the Bill. He was concerned about the contribution which the Government might make particularly in starting up the new body. We believe that the cost should be covered by those who are being regulated. One could do a cost-benefit analysis about what might happen to those organisations when the provisions come into force. They will have increased confidence and it is very possible that the new system could reduce vexatious complaints—which I will return to in a moment. We recognise the importance of having the flexibility to differentiate, and the Bill has the capacity to do precisely that—to waive fees in certain circumstances and to differentiate the fees in others. We hope that that power will enable those issues to be dealt with appropriately.

Perhaps I may interject on a point here for the benefit of the right reverend Prelate the Bishop of Chelmsford lest he should think that I had forgotten him. He mentioned the year 1533—which I think proves that we do not rush into change. But we agree entirely with his reading of the situation. I am grateful that he described the situation so succinctly, as it saves me having to repeat anything, and for his support for the Bill.

I shall begin with the role of the Bar on complaints and the questions raised by noble Lords on delegation. It is right that the number of complaints against the Bar is 560, compared with 18,299 for solicitors, which is perhaps largely explained in terms of numbers. A third of the complaints against the Bar were forwarded to the Legal Services Ombudsman compared with 10 per cent of complaints against solicitors being forwarded to the Law Society. So, factually, without putting any spin on this, one-third of complainants were not happy with the way that the Bar dealt with their complaints. That issue is worthy of consideration. However, the issue on which I wish to focus is the importance of consistency and clarity for the public.

Providing for different levels of service and different assumptions would send completely the wrong signal. We should regulate very clearly and very precisely, and that is not a reflection on the Bar. In Schedule 15 we allow expertise to be brought in, which would include the expertise of the Bar. There is no desire to do anything other than that, but it is important to make the system clear, straightforward and consistent.

A number of noble Lords including the noble and learned Lord, Lord Lyell, my noble friend Lord Brennan, the noble Lord, Lord Kingsland, and the noble Baroness, Lady Butler-Sloss, were concerned that if we do not delegate complaints, we might end up with unnecessary delays and concerns about what kind of complaint would be dealt with. When an ombudsman receives a complaint that he considers to contain service and conduct issues, he will send a copy of the complaint to the relevant professional body. So such complaints can be considered in parallel and there should not be a delay for consumers. I would argue that that is a much better outcome than having to wait until a finding of misconduct is made before any redress can be considered.

The noble Baroness also suggested that different conclusions might be arrived at. It is technically possible that someone not in breach of what was required by a regulator might be considered to have provided a bad service. In a sense, so be it. That will be for them to define very clearly.

My Lords, forgive me for interrupting. I am much more concerned about situations where the facts are seen one way by one board but differently by another. So they come to two different conclusions, like two referees on a football pitch.

My Lords, the noble Baroness makes a point. We do not believe that that is likely but we will certainly look at it and consider how the noble Baroness might suggest we should tackle it without moving away from all the principles that we have established.

Noble Lords have raised the issue of vexatious complaints and the question of what we have described as the “polluter pays” mechanism. We have clearly stated the principle of who pays both in the Clementi proposals and again in the White Paper. We expect that a substantial proportion of the complaints that reach the OLC will be of some merit because otherwise they would have been dealt with at an in-house level. We hope that that will be an incentive to deal effectively with complaints in-house. There will of course be a handling fee if they end up with the OLC. It is right that those against whom complaints have been made, rather than the profession as a whole, should contribute to the cost of processing. But noble Lords are right to say that there are circumstances where it would be unfair to charge those who are subject to complaints, especially if they are frivolous or vexatious complaints. That is precisely why we have provided flexibility in the Bill to set different charges—or to waive them altogether.

The noble Lord, Lord Kingsland, asked about Clause 38 and judicial review. The grounds in Clause 38 are similar, as the noble Lord said, to traditional review grounds. So we think that we have covered that, but we will discuss it with the noble Lord. The noble Lord, Lord Maclennan, asked whether we had considered Article 6. Indeed we have. We believe that the system that we have set out in the role of the ombudsmen and the role of judicial review fits with Article 6.

Finally, and briefly, I turn to alternative business structures. I am a huge fan of what has happened over the last while in financial and banking services; I have undoubtedly benefited from it as a consumer. I hear what noble Lords say about ensuring that we do this properly and appropriately. Indeed, the noble Lord, Lord Hunt of Wirral, supported by the noble Lord, Lord Maclennan of Rogart, has thought very carefully about how that would come into practice. The legal disciplinary practices will be allowed before Part 5 takes effect and, as noble Lords know, the bodies will be composed only of lawyers. Other practices will be permitted the “mixture of practice” only when the LSB is satisfied that there is a suitable regulator in place.

Noble Lords have occasionally asked me, and have asked today, whether there should be a difference in terms of geography or sector. It is difficult to think about that while bearing in mind how business is now done not least through the internet and advertising. We believe that we have achieved the step-by-step approach that has been looked for. It will be for the licensing authorities to decide who can be part of an alternative business structure. I think that that is the appropriate way forward.

Finally, noble Lords asked about commercial interests conflicting with consumer protection. These firms will be subject to robust safeguards to protect the consumer and will be accountable to the licensing authority. They will also have specific duties to maintain ethical and financial standards and have monitored compliance. We think that in the Bill and the regulations which will follow we have the ability to ensure that consumer protection is taken forward and that commercial interests and conflicts of interest are dealt with appropriately.

I apologise that I have not had a chance to respond on a number of points. I very much look forward to our Committee deliberations. I commend the Bill to the House and I am grateful for the warm welcome that it has already received.

On Question, Bill read a second time, and committed to a Committee of the Whole House.

Curd Cheese (Restriction on Placing on the Market) (England) Regulations 2006

rose to move to resolve, That this House calls upon Her Majesty’s Government to revoke the regulations laid before the House on 17 October (SI 2006/2787). 47th Report from the Merits Committee (Session 2005-06).

The noble Lord said: My Lords, I am grateful for the opportunity this evening to bring this sorry matter to the attention of the House. I will explain why I believe that these regulations are both disproportionate and unnecessary and should be revoked. First let me establish the purpose of these regulations. They will ban, with immediate effect, a product that has been on sale for hundreds of years and which, until the European Commission stuck its oar in, was, one must assume, competently and properly regulated by our own Food Standards Agency without any problem.

What are curds? They are that part of milk that is turned into cheese, the remainder being the whey. We are dealing with a healthy and historic product. I remind noble Lords of the redoubtable nursery rhyme character, Little Miss Muffett, who,

“sat on a tuffet

Eating her curds and whey”.

She ate not just curds but the whey as well. Miss Muffett obviously had no problem with her weight.

One of the curd producers in this country is—or was—a small firm called Bowland Dairies, based in Lancashire. On 3 January this year, the dairy was given its annual inspection by the local environmental health officer, who asked for only minor changes. On 12 June, the Food and Veterinary Office of the European Commission inspected the dairy and raised concerns about Bowland accepting milk that had been subjected to what is called a rapid test for antibiotics. On 14 June, the Commission circulated a rapid alert notice stating that Bowland's products were unsafe. On 20 June, the Food Standards Agency carried out a full audit of the dairy and approved continuing production of curds on 26 June, after Bowland had made changes in procedure that were agreed with the FSA.

However, on 4 July the Commission stated that because the milk used by Bowland had tested positive in the so-called rapid test for antibiotics, it did not comply with EU legislation and should not be used by Bowland for further testing and processing. The FSA stated that there was confusion over the type of milk that Bowland accepted and used, and that Bowland did not accept milk that was suspected of contamination.

On 17 July, the FSA confirmed in a statement to the European Standing Committee on the Food Chain and Animal Health that:

“No evidence was found that contaminated milk was used in the production of curd cheese”.

The FSA also issued an alert advising member states that Bowland’s products and systems were clear and that its products were fit for market. The Commission appended its own comments to this alert, to the effect that it did not accept the FSA's verdict, thus effectively maintaining the block on Bowland's sales throughout the EU.

Bowland reacted by going to the European Court of Justice—in this case, the court of first instance—on 8 September. The court of first instance found in Bowland's favour and ordered the Commission to withdraw both the rapid alert that it had earlier issued and its comments about Bowland Dairies. The Commission twice refused to obey that until 12 September, when the president of the Court ordered the Commission to stand aside. I have a copy of the court order with me. Typically, the Commission attempted to massage its defeat by appending its own statement to the court order, claiming that it had lost on a mere technicality. The Court instructed the Commission to strike this out, which it did. The president of the Court, Judge Vesterdorf, went so far as to say:

“It is sad that a company is dying while giants fight it out”.

However, it turns out that neither the FSA nor the Government were giants when it came to protecting Bowland or the British dairy industry.

Let us be absolutely clear about this; the court order meant that Bowland could resume trading and, of course, that it was safe for it to do so. The Court is the ultimate arbiter of EU legislation, not the Commission. It is significant that the Commission could have appealed against the court order but chose not to do so. It carried out a two-day audit of Bowland Dairies on 26 and 27 September, which found no major failings. In fact, Bowland was informed by the Commission auditor who carried out that inspection that any findings would be classed as “non-emergency”.

However, on 6 October the Commission issued Article 53 emergency measures, with the effect that all Bowland products were recalled or banned from use within the EU. The Commission also announced that it would begin legal proceedings against the UK food safety authorities for failing to protect the public against contaminated milk; never mind the fact that the FSA had consistently given Bowland the all clear and the court of first instance had agreed with it.

The result is that Bowland's reputation was ruined, its factory closed and 26 people have lost their jobs. Yet it has done nothing wrong. I remind noble Lords that Bowland has always met the requirements of the UK Food Standards Agency. The European Court of Justice found that Bowland’s produce presented no food safety risk and that the Commission had acted beyond its powers. The FSA has repeatedly stated that it disagrees with the Commission's interpretation of its scientific tests.

So where is the beef? Could the Minister please tell the House why the Government have panicked and introduced emergency regulations that are specifically designed to put Bowland Dairies out of business? The regulations are entirely specific to Bowland Dairies. Regulation 3 states:

“No person shall place on the market any curd cheese manufactured by Bowland Dairy Products Limited”.

Those regulations were made on 16 October, laid before Parliament on 17 October and came into force on 18 October. There is not much chance for democratic discussion in that, is there?

Why has Bowland been selected for carpet-bombing like this? Why have the Government and the FSA refused to defend the Commission proceedings and why did they cave in to a Commission line of attack that has been rejected by the European Court of Justice? Is it because they think that curd cheese from Bowland is a health hazard? That cannot be the case because Bowland has always complied with FSA requirements. If the Minister—if I can have his attention for a moment—has any evidence that Bowland's products have ever poisoned anyone, or even that a single sample has been found to be unsafe, I would be pleased to have it. Is it because the Government want to prove their communautaire credentials? That cannot be the case either—Bowland's case has, after all, been vindicated in the European Court of Justice. Or is it because the Government want to deflect the Commission's audit of the UK dairy industry, and busting Bowland is seen as their “Get out of jail” card?

When the Minister replies to these questions, I hope that he will do rather better than the Minister in the other place in the debate on this subject on 7 November. In his winding up, Mr Barry Gardiner, who I understand is a Defra Minister, simply repeated the European Commission’s allegations that Bowland had used contaminated milk. For the record, Bowland has never used products that were not tested and pasteurised as fit for purpose; Bowland did not sell mouldy or contaminated cheese and it did not sell floor waste. But it has been put out of business. Why? I beg to move.

Moved to resolve, That this House calls upon Her Majesty’s Government to revoke the regulations laid before the House on 17 October (SI 2006/2787). 47th Report from the Merits Committee (Session 2005-06).—(Lord Willoughby de Broke.)

My Lords, I thank the noble Lord, Lord Willoughby de Broke, for bringing this Motion to the Floor of the House. It is an important matter and the questions that are raised about the regulations are a source of great disquiet. In many ways, the situation is extraordinary and bizarre because, as the noble Lord made absolutely clear, paragraph 3 refers to only one small company in Barrowford in Lancashire; it does not refer to anybody else anywhere else.

That seems to me arbitrary and discriminatory. If that company was breaking the law in how it made curd cheese, the law should be pressed and it should be taken to court under proper legal action. If the laws of this country are not sufficient to enforce European legislation on food standards, we should have a statutory instrument that applies to anybody and everybody who deals with the particular product. It is unsatisfactory to have a statutory instrument about one small company, employing 22 or 25 people in a part of Lancashire.

I live a few miles away from the company’s base at Fulshaw Head Farm in Barrowford, and if I can do nothing else in this debate, I can teach your Lordships how to pronounce Barrowford, with the emphasis on the last syllable.

I have no connection with the company. My only connection is that I am a member of Pendle Borough Council, which is the environmental health authority that has been involved in enforcing the statutory instrument and in inspecting the company over the years. The company, which has operated for 10 years, and which has been built up to an £8 million business, has been closed down overnight.

That is the second unsatisfactory thing. What was happening there was no secret. It had been inspected over the years by various agencies, and if what was happening was unsatisfactory, that should have been dealt with over time.

The noble Lord quoted Judge Vesterdorf, the president of the court of first instance, who said:

“It is sad that a company is dying while giants fight it out”.

On 7 November in the House of Commons, Gwyneth Dunwoody MP described it better as being,

“an argument between two groups of bureaucrats”.—[Official Report, Commons, 7/11/06; col. 236WH.]

I am not sure that “giants” is the right word in this case.

It is clear that this has arisen because the Food Standards Agency in this country had one set of views about the implementation of the European legislation and the Food and Veterinary Office in Europe had a different view. They both inspected the company within days of each other and came up with a different point of view. There is nothing wrong with that, but the organisations should have got together, sorted out what they thought and come up with a compromise. Instead, they have been fighting each other. The FSA, backed by the Government, spent considerable time supporting the company and opposing the view of the European Commission and the Food and Veterinary Office.

The European Commission, as the noble Lord said, issued one set of instructions to the company, which was overturned in an interim judgment in the European court of first instance. That case is still going on, and I am told that it will take 18 months or two years to come to a conclusion. That court took the view that the company could continue to operate in the mean time. The European Commission then said, “We don’t agree with this. We will bring some different sorts of powers into operation”. Under emergency procedures it issued decision 2006/694 prohibiting the sale of any products. It seems odd that these emergency procedures were brought in when the Commission failed the first time round, but nevertheless, they followed three months after the initial investigation. It does not seem that it was quite such an emergency as to close the company down overnight. Because the Commission issued that decision, and proposed to take infraction measures against the British Government, the Government caved in and stopped fighting the case. They said, “OK, we agree with the Commission after all”.

Some people think that this is the result of big, bad Europe. If blame is to be allocated in this very unsatisfactory situation, at least a substantial proportion of that blame ought to go to the British Government, who have behaved in a way that at best has not been consistent. They stood firm and said that the FSA’s opinions, after inspecting the company and, as the noble Lord said, going back to negotiate some improved practices, were okay and that the company could continue.

As a result of the British Government conceding the case to the European Commission, they have issued this rather shoddy statutory instrument aimed at one particular small company. The FSA has obviously had to issue new guidance, based on the Government’s new views. Was the statutory instrument issued because the Food Standards Agency had changed its view, or simply because the Government were carrying out the instructions of the European Commission? That is the fundamental issue.

Not surprisingly, the company has had a very bad press over this. Living where I do, I have seen local newspapers as well as the nationals, the farming press, and so on. The allegations in public print sound appalling. There has been talk of mouldy cheese, but the company claims that it removed the mould before using the cheese. There is the question of what is known as “interface” milk, which is a mixture of milk and water, which comes from a result of cleaning pipes that milk has flowed through. We now understand that the Government and the European Commission have accepted that at least in some circumstances interface milk can be used and is acceptable as a raw material for this kind of product.

The most controversial part of it is the question of the screening tests for antibiotic residues in the milk. It has been talked about in the local paper as contaminated milk, and so on. The question is whether milk that fails the rapid screening test can be used if it subsequently passes a more rigid scientific test. It is not about whether the antibiotics are present, but whether the level of antibiotics exceeds the permitted thresholds. It seems that on all sides the European Commission, the British Government, the Food Standards Agency, and everyone else accepts now that there is a dispute on how milk should be screened for antibiotics. We understand that the European Commission is setting up an investigation with experts from across Europe to get a clear definition of which tests are required and how they should be carried out. Have the Government any information about when that inquiry will take place, and when any recommendations might be expected? Have they information about how many and which other companies in this country may well be caught by this in the mean time?

The dispute about science is just that—a dispute about science. As lay people we cannot express a proper opinion. We can look at legal judgments and take into account the opinions of experts. I shall quote from the 47th report of the Merits of Statutory Instruments Committee, which states:

“The scientific debate remains over the appropriate way to test for traces of antibiotics in milk”.

If the scientific debate remains, and if it is a grey area, why have this emergency procedure to close the company down and throw people out of work virtually overnight? The report continues:

“The investigation did not identify any specific food safety risks, but did result in the company agreeing to change a number of their processes and working practices and to improve their food safety management system”.

That seems a sensible way forward in a case like this, with a company that has been operating for 10 years. As the noble Lord, Lord Willoughby de Broke, said, nobody has come up with any evidence that anybody has suffered in any way as a result of any product that this company has produced.

It is a sorry story. There has been a lot of conflict and confusion. This statutory instrument is a sledgehammer to crack a nut. One of the MEPs in the north-west, my colleague Sajjad Karim, said:

“All common sense and logic has been thrown out of the window and this row has escalated beyond reason”.

I concur.

Have the infraction proceedings been withdrawn, or are they ongoing? What discussions are currently taking place with the company or the European Commission? What progress is taking place with what we understand to be an ongoing inspection of the British dairy industry on behalf of the European Commission? What sort of scale is it on? We hear of nine sites being inspected. When can we expect results? Why did the Government not defend against the infraction proceedings in view of the robust defence they had mounted, on the advice of the FSA, before they were instituted? Do the Government believe that the use of interface milk—the mixed milk and water from these pipes—is safe? As I asked towards the beginning of my speech, why is this statutory instrument about this particular company, rather than, in a fair and non-discriminatory way, all companies producing this product? Are any other businesses facing closure? If so, how many and where? Are steps being taken on behalf of the Government, the Food Standards Agency or anybody else in this country to conduct a full risk assessment of cheese recovery processes, which is what this is?

I thank the noble Lord for raising this. I look forward to the Minister’s comments.

My Lords, it seems utterly unacceptable that dairy producers in our country—who have, according to our own Food Standards Agency, met the strict standards of hygiene and food safety—are forced to face an uncertain future, with the EU determined to overrule decisions made in Great Britain because of the Government’s refusal to stand up for British dairy producers. That is a shocking example of this country’s inability to set its own food standards and run its own food standards operations.

Either there was an insoluble problem with Bowland Dairy, in which case it should not have been given a clean bill of health by UK officials, or there was no problem that could not be addressed, in which case the EU had no business butting in to close down a small UK firm. Which is it? Can the Minister help the House? Can he confirm that the Food Standards Agency had cleared Bowland and had found no practices that would have justified such draconian actions before EU officials intervened?

Bad practices need to be tested and controlled, but this action has even been condemned by the Liberal Democrat MEP Saj Karim as “knee-jerk and headstrong”. He said that Bowland was being made a scapegoat and that the Commission was not impartial but had an axe to grind. How often do we hear Liberal Democrats condemning the Commission’s actions? When a Liberal Democrat attacks the EU, something must be very wrong. Does that worry the Minister?

Surely you have to be certain that there is no alternative before passing regulations that could bankrupt a small firm and put 22 people out of work. Is the Minister telling the House that there is no alternative and that our Government back EU action to cut Lancashire jobs? If the practices are as bad and uncontrollable as the European Commission’s Food and Veterinary Office claims, why did the UK not support action on Bowland in the Standing Committee vote on 6 October? If they cannot justify the action, why did Britain abstain? It is a spineless attitude from a Government who claim to be a friend of small businesses. Ministers were more fearful of upsetting EU officials than concerned to defend a British firm. In the end, we just sat on the fence, pleasing nobody.

Can the Minister confirm that Bowland exported to Ireland, Denmark, Austria, Germany and France? Which, if any, of those countries complained to the UK Government about its products? Do any of those countries have curd cheese industries? Have any complaints been made by the UK Government about cheese products from those countries? How many other curd cheese manufacturers have been closed by EU regulations throughout the Community? Will the Minister share his research on this with the House?

In his Written Answer of 7 November, the Minister said that Britain had now advised the Commission of,

“a revised approach to the application of EU hygiene rules in the dairy sector which is in line with that taken by the Commission in the decision”.—[Official Report, 7/11/06; col. WA 120.]

Can the Minister explain what he meant by that? Does it mean what I think it means—that the British Government will simply toe the line in any intervention against a UK firm from now on? Can the Minister assure the House that the “revised approach” he talks of will not affect traditional milk or cheese production in this country? Did the department discuss the letter with the industry before announcing absolute compliance?

The unfortunate position of Bowland has now led to a much wider threat to British industry. The House will be alarmed to learn that the UK cheese industry—a £5.6 billion sector—now faces what is termed a “blitz” by EU inspectors. What other countries face such blitzes? What will the Government do to support and protect our dairy products?

I do not often praise Liberal Democrats, but Saj Karim was surely right when he said:

“The commission is playing a dangerous cloak and dagger game with the UK’s … industry”.

What are the Government doing to check this cloak-and-dagger game? As the Minister will be aware, the FVO threatened inspections of the dairy industry across Britain in November. What dairies and cheeses have they targeted? Can the Minister report the latest situation to the House? No doubt his own officials are informed and monitoring the threat closely.

I hope that the Minister can assure the House that there will be no gold-plating by his department. Not long ago, he was defending the regrettable interference of UK agencies as regards traditional Stilton cheese. He said that he would look into that matter further. What has he done about it since then? How has that situation been resolved? In the light of this new threat, can he assure the House that the FVO will not be intervening against Stilton production?

The House will be most grateful to the noble Lord, Lord Willoughby de Broke, for alerting Parliament to this EU action against one small firm, which our officials had not seen a need to close, and for highlighting a wider emerging threat to our cheese industry. That industry is entitled to expect vigorous defence from its Government. I see little evidence of that in response to the FVO’s blitz on British cheese. I, too, ask many of the questions posed from the Liberal Democrat Benches by the noble Lord, Lord Greaves.

My Lords, I understand the importance of supporting the UK dairy industry and the concern over the treatment of a relatively small cheese-maker in Lancashire. The Government have not panicked, but this is a complex case and I need to explain as carefully as possible what has happened in order to answer some of the concerns expressed.

First, I shall speak about the interim judgment, to get it out of the way. It required the Commission to withdraw a notification that it had placed on the rapid-alert system, which is the mechanism to notify other member states of food incidents that may affect them. The court of first instance did not make any judgment about the safety of the curd cheese produced at Bowland, nor did it prevent the Commission taking the further action that it took against the company. People may disagree with the Commission’s action, but the court of first instance did not prevent it doing so and it did not go into the merits of how the curd cheese was produced.

I shall now address the key issues arising in a highly unusual case. I shall begin by describing the background to the event that resulted in the Commission using emergency safeguard provisions to adopt Commission Decision 2006/694/EC prohibiting the marketing throughout the European Union of curd cheese manufactured by Bowland Dairy Products Ltd in Lancashire. I shall also explain why, in the Government’s view, this statutory instrument, which gives effect to that Commission decision in England, should not be annulled.

The background to the decision is complex. During an audit of the UK’s implementation of new EU food hygiene legislation in May and June this year, which was carried out by the Commission’s Food and Veterinary Office, FVO inspectors visited Bowland, which was producing curd cheese for sale to other EU member states for further processing. The FVO inspectors examined documentation at Bowland and identified what they considered to be the sale of dairy products made from raw materials unfit for human consumption. At the end of the audit, the FVO demanded immediate action to address the issues identified. It was supported by officials of the European Commission’s Health and Consumer Protection Directorate General, known as DG SANCO, in Brussels. They immediately called into question a number of the procedures and operations employed at Bowland, including the practice known as cheese cleaning or cheese recovery, involving the removal of mould from cheese, and repackaging the cheese, which was then despatched to other businesses for further processing. The Commission also questioned the production of curd cheese using milk that had been rejected by other companies for failing a rapid screening test for antibiotic residues, but which Bowland tested further and used if the result was negative. The Commission also had concerns about the use of interface milk, which is a mixture of milk and water, and whether such milk contained residues of cleaning chemicals. It argued that all such practices gave rise to unacceptable risks to consumers and should be halted forthwith.

The Food Standards Agency, the central authority in the UK responsible for food safety matters, urgently launched an investigation into the FVO findings. To assist in that process, the company closed voluntarily for 10 days, during which the FSA and enforcement officers from the local authority fully audited the premises and the controls and procedures then in place. The purpose of that investigation was to determine whether the practices identified by the FVO should be allowed to continue and, if so, under what conditions.

I should stress at this point that the FSA investigation did not identify any specific food safety risks arising from the curd cheese production procedures, but the company agreed to implement changes recommended by the FSA to a number of its processes and working practices and to improve its food safety management system. The cheese recovery operation was halted permanently, and the company was informed that it could restart operations only following the granting of the required approval from the local authority. On that basis, the company restarted curd cheese production towards the end of June, and the Commission was informed of the outcome of the FSA’s investigation.

Although the FSA was content for the Bowland curd cheese manufacturing operation to resume, officials in the Commission’s DG SANCO were not so persuaded. The Commission did not inform other member states of the FSA’s position on Bowland by means of the rapid alert system. There followed several months of intense discussion and negotiation between DG SANCO and FSA officials about the legality and safety of the practices in question. Despite those discussions, there remained differences of view about how the legislation should be interpreted and the science underpinning the interpretation. In the mean time, the company found it increasingly difficult to trade, largely because of the reluctance of the authorities in other member states to permit the resumption of trade in a product which the Commission continued to regard as unfit for human consumption.

At DG SANCO’s request, the FVO carried out a further inspection at Bowland at the end of September to audit the company against the revised procedures specified earlier by the FSA. The FVO did not provide any immediate feedback on its findings to the UK authorities. However, it did report to DG SANCO in Brussels that the company was continuing to manufacture curd cheese using milk that had failed a rapid-screening test for antibiotic residues and to use interface milk. The FVO also criticised the UK’s approach to the enforcement of EU food hygiene rules.

As a result of the FVO’s findings, Commission officials announced three related measures: first, that the Commission would take appropriate action itself in respect of Bowland Dairy Products Ltd; secondly, that it would initiate legal proceedings against the UK for failing properly to implement and enforce EU food hygiene legislation; and, thirdly, that the Food and Veterinary Office would be asked to carry out a follow-up mission to the UK in late November to inspect the entire UK dairy industry.

So far as the first of those actions is concerned, the Commission concluded that Bowland’s continued production of curd cheese using milk that did not, in its view, comply with EU hygiene legislation presented unacceptable risks to public health and that such risks could be contained only by Community-wide measures. Accordingly, the Commission used the emergency safeguard measures provided for in the General Food Law Regulation 178/2002 to table a draft decision for consideration and vote by EU member states on 6 October. The purpose of the decision was to require all member states to prohibit the placing on the market of all curd cheese manufactured by Bowland and to trace, detain and dispose of all curd cheese from the company. The decision’s recitals set out in some detail the Commission’s interpretation of the legislative requirements relating to testing milk for antibiotic residues.

The UK was unable to support the Commission’s decision. In a statement for the minutes, the UK made clear that it took food safety matters very seriously and shared the Commission’s desire to protect public health. It indicated that the FSA had taken a number of corrective measures at the company since June and had worked with the Commission to reach an appropriate solution. However, it was necessary for the Food Standards Agency to act on a sound evidence base and, in protecting the consumer, to be proportionate in its actions. In this case, there were genuine differences of view on the science behind testing for antibiotics in milk, and they had not yet been resolved.

Because of different views of the science underpinning the Commission’s interpretation of the rules relating to testing for antibiotics in milk, the UK abstained and made that full statement. Of 25 member states, 22 voted in favour of the Commission’s proposal, so, even if the UK had voted, there would have been an overwhelming majority in favour.

The Commission subsequently formally adopted the decision into Community law, and it fell to all member states to give legal effect to it. In England that was achieved by means of the Curd Cheese (Restriction on Placing on the Market) (England) Regulations 2006. Similar steps have been taken to implement the decision in Scotland, Wales and Northern Ireland. As a consequence, the company’s approved status was withdrawn by the local authority, and measures were put in hand to detain and dispose of the remaining curd cheese stored at Bowland.

As well as taking direct action in respect of Bowland Dairy Products Limited, the Commission initiated accelerated infraction proceedings against the UK for failing in its duty to properly implement and enforce EU food hygiene rules in the dairy sector. In considering how to respond to this legal action, the Government took into consideration a number of different factors. In particular, we recognised that almost all member states had implicitly agreed to the Commission’s interpretation of the legislation regarding the testing of milk for antibiotic residues, as set out in the Commission’s decision applying to Bowland. In addition, the Commission made a commitment to discuss antibiotic testing of milk with a wide range of experts across the EU, and to undertake a risk assessment of cheese recovery operations in the EU.

With the agreement of other relevant government departments, and following discussions with representatives of the dairy industry, the Food Standards Agency subsequently instructed enforcement authorities across the UK to apply a revised approach to the enforcement of EU hygiene rules in the dairy sector, in line with the Commission’s interpretation. In particular, enforcement authorities were advised that where raw milk tests positive in antibiotic screening, the food business operator has two options: either to carry out chemical confirmatory tests that will identify whether any antibiotic exceeds the maximum residue level or to reject the milk and dispose of it as an animal by-product. Appropriate advice was also provided in respect of the other practices about which the Commission had concerns. Given the wider implications of the changed approach, milk producers were also alerted to the issue and advised on measures that they could take to prevent antibiotic contamination of milk in the first place.

In responding to the Commission’s legal action, the UK was therefore able to explain that a revised approach was being implemented in the UK, in line with the Commission’s views. Commission officials have subsequently informed the UK authorities that, on this basis, they are recommending that legal action against the UK be terminated.

The FVO’s follow-up mission to the UK took place a fortnight ago. I am pleased to report that no major issues were identified, and there was general acknowledgement of the steps taken by the UK to conform to the European Commission’s interpretation of the law. We now await the formal report.

Although we have heard today a number of reasons to support the annulment of the statutory instrument, noble Lords will appreciate that, as a member of the European Union, the UK was obliged to implement the terms of the Commission’s decision relating to Bowland. Failure to implement and enforce the decision’s requirements in domestic legislation would constitute a serious breach of our obligations under the EC treaty and would almost certainly result in the Commission reopening infraction proceedings against the UK. It is not immediately apparent that the UK Government would have sufficiently strong reasons to challenge such proceedings in the European Court of Justice.

The European Commission has also signalled its intention to either modify or lift the prohibition on Bowland once it has received the appropriate assurances from the UK authorities that all curd cheese manufactured by Bowland before the prohibition came into force has been properly disposed of as an animal by-product and has not been allowed to enter the food chain. We understand that appropriate disposal plans have been drawn up and are to be put into effect shortly.

I recognise noble Lords’ strong views about how Bowland has been affected, but I hope that I have clearly explained the reasons for the Commission’s decision and the need for the statutory instrument. The Commission’s approach throughout has been motivated by its desire to protect public health, and it would be wrong simply to categorise this as an attempt by it to usurp the authority and powers of the FSA. That is not the UK Government’s view. The fact remains that the Community legislation has been agreed and we are required to implement it. Not to do so would put us in conflict with the European institutions, and it would be a conflict that, in this case, we would not win.

Looking forward, I reiterate that, although there remain differences of view between the UK experts and the Commission about the science underpinning the EU rules on antibiotic testing for milk, the FSA very much welcomes the Commission’s commitment to further consider with member states and others the scientific and practical implications of testing milk for antibiotics. The FSA has urged this for some time, and we hope that such discussions in the expert group can commence in the new year. It goes without saying—but I will say it anyway—that whatever the outcome of those discussions, we will certainly expect the Commission in Brussels to make the necessary changes to legislation and to provide clear guidance for the whole of the Community’s dairy industry to follow. As usual, the UK wants to play a full part in those discussions, working with the Commission in a transparent way to protect consumer health and, more generally, to make the single market work for all its citizens.

This was an unfortunate case, but it is a more complicated case and set of circumstances than some noble Lords acknowledge. We think that we have proceeded in the right way and that this statutory instrument is required legislation.

My Lords, I have listened to the whole of this debate and would like to put four brief questions to the noble Lord, which he does not appear to have answered. First, do the Government think this product is safe? Secondly, has anyone been made ill by it?

My Lords, I regret that I did not utter those words, but I did not think it was essential. My second question was mentioned by the noble Lord, Lord Greaves, and my noble friend Lord Willoughby de Broke, and I do not think that the Government have answered it. Thirdly, in these circumstance, what about compensation for this wretched company? Fourthly, does not this story, to which I have listened with sadness but no surprise, demonstrate the utter futility and dishonesty of subsidiarity?

My Lords, the noble Lord will be astonished to know that I do not think that this issue in any way affects subsidiarity. I do not know, and have no means of knowing—nor, I suspect, does anybody else—whether anybody has ever been made ill by Bowland’s products because those products were used across Europe. We are talking about the processes agreed across Europe as the basis for investigating products consumed by human beings. I have explained at great length those processes and how things have come to pass in this instance. I must ask the noble Lord, whose views on the European Union I know very well, to accept that there was due process—although he may not like the outcome—in this case.

My Lords, before the Minister sits down again, will he answer the question I asked about interface milk? Do the Commission and the Government now accept that it can be used by processing firms in the dairy industry? Secondly, can he say whether his officials are talking to the owners of Bowland Dairy Products Limited with a view to resuming production under an acceptable regime?

My Lords, as I said, it is down to the local authority initially to decide whether Bowland can resume production. I will have to take advice on the issue of interface milk, but, as I said, the reason for concerns about Bowland was that residues of cleaning materials were found. That is the advice that I was given and the point that I was making. I will look into the more general issue of interface milk and write to the noble Lord.

My Lords, before the noble Lord sits down, can he answer the question raised by the noble Lord, Lord Pearson, about compensation to the firm?

My Lords, I am certainly unable to answer that question. I shall see if I can throw any light on it by taking further advice, but I would not presume to know the intricacies of the law relating to compensation in these circumstances.

My Lords, I am most grateful to all noble Lords who have spoken in this debate, including the noble Lord, Lord Greaves, and my noble friend Lady Verma on the Front Bench, for whom, I gather, it is a first appearance. I am delighted that she gave such a robust performance. They both called it a sorry story; I think that the Minister himself would agree with that. He presented the situation very fairly and clearly. I am grateful to him for that.

What he was really saying—wasn’t it?—was that we do not agree with what the Commission has done, nor does the Food Standards Agency, but we will have to comply anyway because of our so-called treaty obligations through our membership of the European Union. That is not an attractive story.

When I secured this debate, I gave an undertaking that I would not call a vote, although I believe that I am entitled to do so. Although I undertook not to press it to a vote, I am very tempted to be a naughty boy and call one, because I think that we would probably win it. However, under the circumstances, with some reluctance, I feel obliged to withdraw the Motion.

Motion, by leave, withdrawn.

Rehabilitation of Offenders Act 1974: Reform

rose to ask Her Majesty’s Government whether they will bring forward legislation to reform the Rehabilitation of Offenders Act 1974.

The noble Lord said: My Lords, first, I thank my noble friend Lord Addington and the noble Baroness, Lady Seccombe, for putting down their names to speak in this short debate. Dealing with matters affecting offenders is not a very popular cause. There are no thanks but, in a civilised society, we must never be afraid to raise our concerns.

There are some shocking statistics. More than 65 per cent of those released reoffend within two years. One of the most important factors in the rehabilitation process is the ability to hold on to a job. The question is: are we doing enough to achieve that objective? Look at our prisons. They are bursting at the seams. The statutory and voluntary organisations are trying hard to hold the tide. It is the duty of the Government to help in that task. Nowhere is that more important than in the ability of offenders to secure and hold a job.

In April 2003, the Government announced plans for reform of the Rehabilitation of Offenders Act, but since then there has been no sign of legislation coming before Parliament to implement that promised reform. The purpose of this debate is to reinforce the importance of reforming the Act and to press the Government to do so at the earliest practicable date. I do so because I have searched high and low for this subject to appear in the gracious Speech, but alas, despite the Government's emphasis on rehabilitation, nothing seems to have materialised.

The Rehabilitation of Offenders Act 1974 provided that, after specified rehabilitation periods, ex-offenders do not have to declare spent convictions when they are applying for jobs. Let me spell out exceptions, in case someone thinks that this is a blanket provision. Sensitive areas of work, such as criminal justice agencies, financial institutions and work with young people or vulnerable adults are excluded. Since it was enacted, the Act has helped many ex-offenders to live down their past.

What are the facts? More than 30 years after the Act was passed, what do we find? The rehabilitation periods laid down in the Act are lengthy and many genuinely reformed ex-offenders never benefit from it. That is the experience of many agencies involved in rehabilitation work—my organisation, the National Association for the Care and Resettlement of Offenders, is no exception. In fact, we find that it hinders our work in those areas. For example, if an offender is fined, the offence becomes spent after five years from the date of sentence. If an offender is given a three-month prison sentence, the offence takes seven years to become spent. If he or she gets a nine-month sentence, the offence does not become spent until 10 years later. Sentences of more than two and a half years never become spent. Those provisions are notably less generous than the rules that apply in other European nations. Those countries typically apply rehabilitation periods to sentences longer than two-and-a-half years and their rehabilitation periods are much shorter, often half the length of ours or, possibly, less.

Since the Act was implemented, sentence lengths have significantly increased. Many offenders who would have received sentences of two and a half years or less back in 1974 are receiving sentences of between three and four years today. That means that many offenders who would previously have been helped by the Act now find that their offences will never become spent during the whole of their lifetime. That is wrong. Many ex-offenders spend a purposeful life without recourse to crime. If they did not, we would not have enough prisons to hold them. Surely there must be a more constructive way of dealing with the issue.

In 2001, the then Home Secretary, Jack Straw, set up a review group to examine whether, three decades after the Act's implementation, there was a case for reform. The review group was chaired by a senior Home Office official and it included representatives of the police and probation services, the legal profession, the judiciary, employers, voluntary agencies and ex-offenders. My organisation, NACRO, gave evidence to the group.

In 2002, the review group published its conclusions in the report entitled Breaking the Circle. Following a consultation period, the Government published their conclusions in April 2003. The Government accepted a modified version of the review group's proposals. Under the modified version accepted by the Government, the current rehabilitation periods would be replaced by new buffer periods which would begin after the sentence—including any post-release supervision—was completed. The buffer periods would be four years for custodial sentences of four years or more; two years for custodial sentences of less than four years; and one year for non-custodial sentences.

Those periods would apply to all offences except those which resulted in a life sentence. Sentencing courts would have discretion to disapply these provisions in any case where the sentencer decided that there was a particular risk. Again, I stress that the new provision would not apply to jobs in sensitive occupations, for which applicants would still have to declare their full criminal record.

A reformed system on those lines would greatly reduce the scope for unfair discrimination against ex-offenders, especially in the job market. Regrettably, such discrimination is still widespread. Surveys of ex-offenders in some projects undertaken by NACRO have shown that 60 per cent have been explicitly refused jobs because of their criminal records. Of course, it is sometimes reasonable to refuse an ex-offender a job because of his record. For example, we must obviously bar offenders with a history of offences against children from working with children. We should bar offenders with a history of defrauding elderly people from working or caring for elderly people. In many cases, however, employers are turning down applications because of offences that are not relevant to the job, and there is no particular way of examining what precisely has happened in all these instances.

The unemployment rates among black and minority ethnic young people may be of interest to the Minister. Evidence points to the fact that black and minority ethnic young people are twice as likely to be unemployed than their white counterparts. Fifteen to 17 per cent of people in our penal institutions are black, while black people are only 7 per cent of the community. I am not here to argue about how we created this anomaly. Nor am I going to argue about whether the criminal justice system has treated them fairly. I simply want the Minister to reflect on the fact that many will come out of prisons, but their conviction record will not help them; indeed, it will put them at a great disadvantage. Surely this does not assist the process of rehabilitation, which is one of the objectives of our prison service.

The scope of discrimination is indeed very wide, because the decisions to employ or to refuse people jobs are taken not by people at the top of companies but by managers and personnel staff, many of whom have no specific training in how to deal with applications from people with criminal records. A large-scale research study by the Joseph Rowntree Foundation found that no private sector employers in its sample and only one in seven public sector employers provided specific training on this point to staff taking recruitment decisions.

When the review group was set up, there was a particular concern that discrimination could increase when Part 5 of the Police Act 1997 was fully implemented. So far, this legislation has not been fully implemented. If it were, it would enable employers to require any job applicant applying for any job, not only for one of the sensitive occupations, to produce a basic disclosure certificate from the Criminal Records Bureau listing his or her unspent criminal convictions. Government-commissioned research by the National Institute of Economic and Social Research has found that if this provision were implemented, employers would be likely to reject people with criminal records for half their vacancies and to reject those with more serious convictions for 90 per cent of their vacancies. The researchers concluded that the introduction of basic disclosure was likely severely to reduce employment opportunities for people with criminal records. It is unclear when or whether the Government will implement this part of the Police Act 1997. I must stress, however, that the case for reform of the Rehabilitation of Offenders Act remains powerful, whether or not the basic disclosure provisions of the Police Act are implemented. It is powerful because of the extent of discrimination that already exists.

Unfair discrimination against ex-offenders is wrong in principle because it imposes an additional illegitimate penalty of the refusal of employment on people who have already served the judicially ordered punishment for their crime. It also reduces public safety because an ex-offender’s risk of re-offending is reduced by between a third and a half if he or she gets and keeps a job. The whole community benefits when offending is reduced, but employers benefit in particular because crimes such as cheque and credit card fraud, shoplifting and the burglary of commercial premises have a particularly damaging impact on their businesses.

In conclusion, the reforms to which the Government committed themselves in 2003 would allow many more people with criminal records to start again with a clean slate. They would thereby reduce the risk of further offending by former offenders excluded from the job market. I urge the Minister to restate the Government’s commitment to implement these changes, and to do so urgently.

My Lords, I thank my noble friend for bringing this matter to the attention of the House. It is a few years since I worked for the Apex Trust, which tries to get ex-offenders into the job market. I am now vice-president of that organisation. The experience was basically this. When you spoke to the offenders, you generally spoke to a bunch of young men with very low educational attainment and an amazing combination of bluster and servility towards anyone in authority. This group had tremendous difficulty in dealing with the world even-temperedly. They really did not know how to deal with any form of authority other than by cowering or blustering in front of it. They had never passed an exam and, sometimes even in their mid-20s, felt that taking an exam was a sign of weakness. They were probably the worst group for having any idea of what they were capable of. We should remember that exams give marks that show that someone has achieved a certain level; they do not tell you what the full potential of that person will be.

This very odd group then has to go through a process under the law of telling someone that they also have convictions. All this means that you have someone who will probably try to avoid such an interview if they can see any other way out, which brings them back into a cycle of re-offending. Anyone who knows anything about this—I know the Minister will excuse me for teaching grandmothers to suck eggs—knows that it is the under-35s who constantly offend. By the time they are 35 or even 40, with a spent conviction and no history of work, they may be tottering towards being unemployable. There must be some cut-off point at which the person can at least say, “I don’t have to tell you what I have done wrong. Here is what I have done right”. The temptation to go into another diatribe here about the shortcomings of the prison education service is considerable. Then there is the joy of unidentified special needs in prisons—dyslexia is one—but I refer noble Lords to my numerous speeches on the matter, which are already on the record.

This group will be difficult to educate and train in prison because of social conditions, because of needs that are unmet if they are undiagnosed, and because of the process by which people are moved around and education is applied. It may be slightly better than a school education, but it is very difficult. There will be problems unless we adopt a more realistic approach than the current approach of bringing forward sentencing.

When I worked for the Apex Trust—a good few years ago now—I sat in on a series of interviews and helped in minor ways to tell prisoners how to make this disclosure and, indeed, why they should make it. Most people who come from lower social and economic groups tend not to be very mobile and tend to go back into their groups. What happens if someone gets a job but has not disclosed a conviction, and discovers that someone from up the road knows who they are and says, “Wait a minute. Didn’t you do X-amount of time?”? We heard a series of stories about people who ended up being blackmailed, having to steal to pay off the blackmailer to keep their job, being discovered, losing their job and going back to prison. That is the type of pressure. Although there should be safeguards in relation to certain groups—it is understandable that an employer would want time to make checks—if someone has had a period of unemployment but has taken some training, which is probably likely when they leave prison, they will probably be more attuned to keeping a job because they have established that they have broken the pattern. A disclosure made after a short period of time, not a long one, is then probably quite appropriate, or becomes irrelevant. When the Minister replies, will she say what work has been done and how close the Government are to changing this?

Under current sentencing practice, whether that is for good or ill, the length of time that is applied is utterly ridiculous, as my noble friend has said, because it means that people never get a chance to get themselves established in the workplace in that vital first job that they can hold and thus they have no incentive and no period in which to undertake training.

As I said, this is an odd group, but very few of these people will become the compulsive muggers and axe murderers of popular fiction. Certain tabloid press would have it that everyone who goes to prison is a threat to every part of one’s person, property and everything else, but most of them commit economic crime. What have the Government done about training the public to understand the level of risk from offenders and what they have done? In doing that, the Government would be taking a step forward. They should also try to explain to ordinary people who interview ex-offenders—let us face it, senior level management will not do most of the filtering of application forms or interviewing—that they can probably do these interviews in relative safety.

Many years ago, I spoke to someone who said, “Aren’t you frightened by being around all these prisoners”. I said, “Not really”. Neither were the two or three women who were independently making prisoners cups of tea or allowing prisoners to make them cups of tea. The idea that compulsive poisoners were doing a six-month sentence for burglary was interesting. What are the Government doing to get that information into the community? Unless that is done, people are being punished twice and are being given very little incentive to break their patterns of behaviour and even less incentive to undertake training.

My Lords, I congratulate the noble Lord, Lord Dholakia, on securing this important, if exclusive, debate. He has clearly and concisely set out the history and the concerns surrounding the Rehabilitation of Offenders Act, so I will try not to reiterate too much of what he has already said. I would however like to thank him for his kindness in allowing me to see his briefing on the subject before the debate. It is a timely debate as the Offender Management Bill is due its Second Reading in the other place next week. I am sure that the debates around it will touch on the issues raised today. I will watch, as I am sure your Lordships will, with interest its progress towards this Chamber.

A product of the Gardiner committee of 1972, the Rehabilitation of Offenders Act provided a much-needed system limiting disclosure requirements for many offenders who offended once or twice, served their sentence and then tried to settle down to a law-abiding life. The short debate secured in October by the noble Lord, Lord Ramsbotham, highlighted the significant difference that projects such as speech and language therapy in young offender institutions, among others, can have in rehabilitating offenders who are serving their sentence. The vital work that goes into preparing offenders for some form of employment goes hand in hand with the knowledge that the noble Lord shared that the risk of reoffending is reduced by between one-third and one-half if the offender can get and, more importantly, hold down a job. I am sure we all agree that a job can give a person a sense of purpose and self-esteem as well as the finance to help remove the temptation to offend again.

The Rehabilitation of Offenders Act is now more than 20 years old. In 1999—seven years ago—the Home Office admitted that it felt the legislation was,

“cumbersome, anachronistic, and ineffective in its primary aim of reducing offending by helping those with criminal convictions who stay ‘straight’ to leave their offending past behind”.

Yet, despite the announced plans for reform, we have yet to see anything implemented. While there can be no doubt that a careful balance needs to be struck between potential risks to the public and the criminal disclosure regime, checks on those working with vulnerable groups such as children, the disabled and elderly are vital. Issues such as sentence inflation and the introduction of the Criminal Records Bureau, as well as the ever-present factors surrounding Part 5 of the Police Act, have only made the system more complex and increasingly restrictive.

The noble Lord, Lord Dholakia, has put it to the House that these changes are enabling increasing unfair discrimination against ex-offenders in the job market, with many offenders who would previously have been helped by the Act now being unable to take advantage of the balance it was set up to strike. To state the obvious, this means that ex-offenders cannot get the jobs which are one of the keys in preventing their return to crime. In the current climate of crisis in our prison service, I would have thought that cutting the numbers that reoffend would make a significant difference to an already over-stretched system. I believe that the report Breaking the Circle made recommendations that merited further serious consideration. I conclude by again congratulating the noble Lord, Lord Dholakia, on this debate and join him in pressing the noble Baroness, Lady Scotland, on this issue.

My Lords, it was with considerable pleasure that I listened to the way in which this debate was opened by the noble Lord, Lord Dholakia. Perhaps I may respectfully say that it was with even greater pleasure that I listened to the noble Baroness, Lady Seccombe, who appears to agree with every jot and tittle from the noble Lord, Lord Dholakia. It makes me think that we may have unanimity which would send a Bill of this nature seamlessly through the House with great speed and I am much encouraged thereby.

I hope that I will be able to give the noble Lord, Lord Dholakia, the assurance that he seeks, because I agree with him without reservation that these issues need to be addressed. Of course, as the noble Baroness, Lady Seccombe, and the noble Lord, Lord Addington, have acknowledged, there is a tension between the need to increase the opportunity of those who have offended to reform, change and lead law-abiding lives, and the need to protect the public. We have done much in the past seven years, particularly in relation to trying to differentiate between those who are serious and dangerous who need to be dealt with robustly and those others who may have transgressed at a much lower level where reform and change can reasonably be anticipated, and must and should be supported.

We agree that reoffending is one of the most difficult problems facing us today and the Government are committed to putting its prevention at the core of our correctional services. Although punishment and imprisonment are necessary to protect the public and serve justice, we must do more. As well as requiring offenders to be punished, a healthy and safe society needs them to be given every opportunity to reform—to get back on the straight and narrow and to make positive contributions to their communities. This is not just because it is morally right to enable people to change their lives for the better and overcome their failures and mistakes; it is also a practical recognition that more than half of all crime is currently committed by people who have been through the criminal justice system and have not yet changed their behaviour. The annual cost to society of reoffending by ex-prisoners alone is probably around £11 billion.   Reducing reoffending will cut crime and make all our communities safer. I know that the noble Baroness said that this is an “exclusive” debate, but what a wonderful debate where we agree on so much.

A steady job can reduce the risk of reoffending by between 30 per cent and 50 per cent, which all speakers have indicated. There is already a significant amount of ongoing work to improve offenders’ employability and to help them to get and maintain jobs. But there is still much to be done. Approximately 70 per cent of prisoners leave prison without a job to go to and more than 40 per cent of offenders serving their sentences in the community are unemployed. The noble Lord, Lord Dholakia, will know that I am particularly exercised about disproportionality. The Government accept, therefore, the need for the Rehabilitation of Offenders Act 1974 to be reformed as part of the strategy to reduce reoffending.

As all noble Lords have said, the Home Office review of the Rehabilitation of Offenders Act 1974 recommended certain changes to the law governing criminal disclosure, and it remains the Government’s intention to introduce reform. However, since that review we have had to act on the recommendations of the Bichard review into those working with children and vulnerable adults. I endorse what has been said by all noble Lords about the need to protect those vulnerable groups.

Following the Bichard report we are considering what steps need to be taken to provide the most effective disclosure regime, both for the rehabilitation of offenders and for the protection of the public. We will legislate on this when parliamentary time allows us to do so. That is why I am so delighted to see that we might need less parliamentary time than some might have considered necessary. I hear what the noble Lord says about the fact that there are sometimes few who are willing to speak for offenders.

Perhaps we speak more clearly when we remind people that the line between victims and offenders can be very fine. One recent research report showed that 52 per cent of young people who offended had been victims themselves within the previous 12 months and that about 25 per cent of young people had also been victims. Women who are subjected to domestic violence and sexual abuse are over-represented in our prison populations later. We have to keep this line for ever in our minds. Collectively, the implementation programme will continue to underpin the strengthening of systems to reduce the risk to children and vulnerable adults.

The ongoing programme will also deliver business procedures to radically improve the use and sharing of information within policing and between the police and other agencies. We remain fully committed to seeing this important agenda through to full completion and to continuing to provide the resources necessary to ensure implementation of the programme. The difficulty, of course, is that we now have to do the two things at the same time and it has taken us a little longer to get it right.

The Home Office is working closely with the Department for Education and Skills, the Department of Health and the Criminal Records Bureau to amend the rehabilitation of offenders provisions. Following the exceptions order amendment made in July this year, a further statutory instrument is anticipated in spring 2007 to make amendments to the exceptions order to bring arrangements into line with the new vetting and barring scheme to be established under the new Safeguarding Vulnerable Groups Act 2006.

Alongside this, the Government are working constantly towards reducing reoffending rates and improving public protection. A key element of the Home Office five-year strategy for protecting the public and reducing reoffending focuses on further developing partnership working across government with local and regional agencies and, crucially, with employers, the voluntary community and faith sectors. The development of reducing reoffending alliances—which makes crime, if you like, everyone’s concern—is a vital part of that work.

In this context, the corporate alliance may be particularly important. It has been established as one of the three alliances in recognition of the fact that the connection needs to be made within the business community to find employment opportunities for ex-offenders. The alliance will bring together employers of all sizes from the public, private and voluntary sectors. This mix of business-world skills is finding ways of increasing the number of offenders going into jobs. It is also helping to educate employers that they need not be frightened of employing offenders if they are careful about the risk assessments they make; that it is not a total disqualification.

We know that sustained employment can make a significant contribution to reducing reoffending. Improving offenders’ employability and supporting their efforts to compete in the labour market are key components to a successful rehabilitation package. That is why the corporate alliance is working with small and medium businesses and larger organisations nationally, regionally and locally to improve offenders’ chances of getting jobs. There are companies out there who are already doing just that. Some companies have been set up specifically to employ only offenders and they are getting great value from those individuals. They are working well. Ninety-three per cent of those who have been on the National Grid programme, for instance, have successfully completed it and have not reoffended. It has had very good results. These are important contributions.

This is not philanthropy on behalf of the employers; it is also informed self-interest. Eighty-five per cent of employers are currently experiencing difficulties in recruiting staff and one in four men over the age of 25 has a criminal conviction. So this is not a narrow issue; it is important for business and it is important for rehabilitation. As the noble Baroness, Lady Seccombe, said, we shall be legislating through the Offender Management Bill, which was introduced in the other place on Wednesday, 22 November, to reduce reoffending and better protect the public by improving the way in which offenders are managed. We have made it clear that we want everyone to be in a position to help us to do that. We believe that that will lead to success.

We are also working across government to tackle the issue of employment through education. We issued a Green Paper at the end of last year setting out our strategy on how we will build upon what has already been achieved to improve offenders’ skills and job prospects. We want to build a modern correctional system focused on rehabilitation and working in partnership with employers and those able to provide high-quality training. The key proposals include: a stronger focus on jobs and more relevant skills training, led by employer needs; a new employability contract for offenders, with incentives for participation; and a campus model of learning to ensure continuity of education from prisons into the community. The Department for Education and Skills is taking this strategy forward and will be publishing a document outlining its next steps on 13 December. So to answer the question of the noble Lord, Lord Addington, about what we are doing to educate employers and enable them to become better engaged, I respectfully say “Quite a lot”.

I invite any noble Lord, even those who may not have had the joy of participating in this debate but who are here tonight or who read our discussions in Hansard, to take this opportunity to help us to reduce reoffending. It will need all of us.

It is a delight to say to the noble Lord, Lord Dholakia, that he is absolutely right. I, too, thank him for bringing forward the debate and I will note with pleasure in my diary that this is something about which there is unanimity in this House. Therefore, we can all go joyfully to the Whips who, I am sure, will find a space.

House adjourned at 8.39 pm