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Lords Chamber

Volume 689: debated on Wednesday 21 February 2007

House of Lords

Wednesday, 21 February 2007.

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

Visas: International Students

asked Her Majesty’s Government:

Whether they will undertake a further consultation on their plans for new procedures for issuing visas to international students.

My Lords, we will continue to engage closely with the education sector through the joint education task force on plans for a new points-based system for students and other policy-related changes. The Government are clear that the right policies on students can be determined only through close collaboration with the education sector. There are no plans for a further formal public consultation on the points-based system.

My Lords, given the benefits—academic, cultural, economic and diplomatic—of recruiting students and academic staff from abroad, do the Government agree that in a highly competitive market, and following the previous large increases in visa charges, the immigration regime should be made no more burdensome than necessary? Given also that when the Government consulted last autumn on the proposed points-based system which will require substantial investment in IT, new enforcement officers and new arrangements for registering sponsorship and employment contracts, they gave no indication of what the costs would be or where they would fall as between applicants, universities and the taxpayer, would it not be appropriate for them to consult again, this time disclosing the anticipated procedures and costs before bringing in the new system?

My Lords, the Government fully agree that foreign students are of enormous value academically, economically and politically. We further agree that the system should not be any more burdensome than necessary. However, we do not believe that it would be appropriate to have a further consultation.

My Lords, I declare an interest as a member of the joint education task force. Does my noble friend agree that it would be disastrous for higher education if the implementation of the points-based system were to be delayed? It is due to come into force in 2009, and its implementation is imperative to avoid fraudulent entry into the United Kingdom. There is no reason whatever why this system should not improve the system of managed migration of students or be any more expensive.

My Lords, the Government fully agree that it is imperative that the system should be introduced in 2008, as envisaged. They further agree that it is extremely important, because education must not be abused as a means of getting legal entry into the UK.

My Lords, will the Minister assure us that under the points-based system we will at last get away from the situation which existed under the previous system when no distinction was made between people coming to this country to attend very small unknown language schools and those coming to the internationally known universities? As a result, the London School of Economic found some of its students being turned down by entry clearance officers. Can she also assure us that under the new system, visas will, as a matter of course, be issued for the length of the course for which the student has been invited to attend in this country?

My Lords, the Government believe that the points-based system will be much more transparent and fair, as requested by the noble Lord. In respect of the length of time that a degree takes, there will, as now, be a multiple entry. However, I know from past Questions that the noble Lord is particularly concerned about postgraduate students. The Government are considering that, because it seems ridiculous for a postgraduate student who is here for three years to have a visa for only two.

My Lords, how will the new student visa scheme and the points-based system be compatible with the Government’s aim, as expressed in phase 2 of the Prime Minister’s initiative, of significantly increasing the number of overseas students for UK universities? Will not the realisation of that objective require much more streamlining of the system than that which is currently planned? I declare an interest as chairman of King’s College.

My Lords, the Government believe that the new points-based system will enable us to achieve our aim of attracting a further 100,000 students by 2011 because the system will be much swifter and more transparent and will enable more bona fide students to come to this country. We believe that it is a win-win situation for students, for the academic institutions and for this country.

My Lords, will the Government consider increasing the number of Chevening scholarships? That would help the situation enormously.

My Lords, many noble Lords have a high regard for the Chevening scholarships: they are extremely important. That is something to which the Government give regular attention.

My Lords, we welcome a system that keeps fraudulent students out; that must be right. But we also agree with the noble Lord, Lord Howarth, and with the Minister herself that the United Kingdom has an immensely valuable role as a receiving place for overseas students. Has she noticed that the UK Council for International Education has drawn attention to the continuing complexity of the whole business of applying for visas, which deters students? While making the whole process fairer and effective, would it not also be possible to make it simpler and thereby avoid turning away students altogether?

My Lords, the points-based system will be simpler and will certainly be fairer. It will also encourage more students to come to this country to study rather than deterring them.

Asylum Seekers: Children

asked Her Majesty’s Government:

Whether their current policy and practice regarding the repatriation of children of unsuccessful asylum applicants meets all the needs of those children.

My Lords, asylum seekers who have been found by the Home Office and independent appeals process not to be in need of international protection and who therefore have no legal basis to stay in the United Kingdom are expected to return, along with their dependants. There are safeguards in place to ensure that those whom we remove are not at risk of persecution or inhuman treatment. We cannot take responsibility for the welfare of families after their return but, when deciding whether return is practicable and when making arrangements for the return, the welfare of any child involved is, of course, an important consideration.

My Lords, I thank the Minister for that Answer, but is he aware that, under the Asylum and Immigration (Treatment of Claimants, etc.) Act 2004, the failure of applications in the three pilot areas has led to destitution for applicants and their children? Is it not time that Section 9 of this Act was repealed? Is the Minister happy that the legislation is compatible with the United Nations Convention on the Rights of the Child, with the Human Rights Act 1998 and with child welfare legislation in the United Kingdom?

My Lords, I am obviously aware of the pilot to which the noble Lord referred. I understand that there are no plans for a wider rollout until outcomes from that pilot have been properly considered. There is provision to repeal the Section 9 measures under Section 44 of the Immigration, Asylum and Nationality Act 2006. In the mean time, there have been a number of significant developments in the management of asylum applications and assisted voluntary returns. As for the second question, opinion was sought on that matter when the legislation was introduced, and it was found that the legislation was compatible.

My Lords, is my noble friend aware of the growing anxiety among those working on the front line with asylum seekers? There is too little evidence that, when decisions are made about the status of asylum seekers, especially decisions that affect the future of failed asylum seekers, the interests and well-being of the children involved—the innocent victims of the situation, who go through immense trauma—are made a consistent and central part of the deliberations.

My Lords, obviously I am concerned that the noble Lord believes that that is the case, because we think that we have processes in place that ensure that the welfare of the child is paramount—and those considerations have to be carefully taken into account. The officials who work in this sector are trained; they are there to be sensitive and act in a humane and proportionate way. I entirely agree with the noble Lord that these children are the unfortunate victims of a difficult situation. They do not wish to be as they are; they are caught up in something that is very complex indeed.

My Lords, in his original Answer the noble Lord mentioned children and “dependants”. That is presumably a technical term that I and many other noble Lords do not understand. Will he explain what he means by “dependants” in this instance?

My Lords, children are obviously dependants of their parents—and, of course, you can have elderly dependants.

My Lords, if the Minister is stating that children are the unintended victims, why are we sending young people back who have been fostered in this country for several years as orphans? Why, when they become 18, is there consideration of repatriating them to their own country, which they do not see as their own country?

My Lords, I understand the point that the noble Baroness makes. Obviously in those cases very careful consideration is given to the circumstances of those who have been resident in the United Kingdom for a long time. Those individual circumstances are considered on a case-by-case basis, and rightly so, because those people may well have developed long-standing roots here. But each case is dealt with in detail and with the utmost sensitivity.

My Lords, the Minister of State, Liam Byrne, told the Joint Committee on Human Rights that the Government regard themselves as complying fully with the international Convention on the Rights of the Child. Can the Minister explain why, if that is so, it is necessary to maintain a general reservation excluding immigration matters from the rights of the child? Which other member states of the European Union or the Council of Europe have in place any similar reservation?

My Lords, we take the view that the reservation is justified because it means that we can retain integrity in how we govern our immigration and nationality policies. I think that that is right. To depart from that would run the risk of seriously compromising our position as a responsive Government in charge of immigration policy.

My Lords, to press the point raised by the noble Lord, Lord Judd, is the Minister aware that the Children’s Commissioner for England, Professor Aynsley-Green, has raised major concerns about the apparent contrast between the Government’s Every Child Matters approach and the treatment of children in the asylum system? If a whole family is to be repatriated, it is clearly desirable that it should be kept together. However, does the Minister agree that the conditions in some of the removal centres—for example, at Yarl’s Wood—are far from satisfactory for children?

My Lords, I have made the point on this occasion and a number of other times that the welfare and care of children is of paramount importance. That informs our whole approach in this policy area. Clearly we act to protect our borders and act as a responsible Government on immigration. We have also tried to ensure that conditions at all the detention and removal centres are of the highest possible standard. I cannot hand on heart say that that is the case on all occasions at all times, but that is our objective. It is what we seek to do, and I entirely agree with noble Lords who express concern that the welfare of children should be protected.

My Lords, what progress has the welcome review instigated by the noble Baroness, Lady Ashton of Upholland, into the welfare of children and families in these circumstances made since last spring?

My Lords, I am not in a position to further advise the noble Earl about that but I am happy to write to him.

My Lords, taking up the point made by the noble Lord, Lord Roberts, can the Minister assure the House that the use of dawn raids on families is kept to a minimum and that such raids are carried out in such a way as to cause the least disruption and upset?

My Lords, this is not a term that we prefer to use. It is an expression that I think is often misused; it is rather emotive language and I do not think that it helps. But it is the case that early morning visits to families are more likely to yield a family being there and together. That is why those visits are made.

My Lords, can the Minister say how many children with HIV or a terminal illness were repatriated last year and, if not, why not? Are inquiries made about whether appropriate treatment is available in their country of origin?

My Lords, that statistic is beyond me this afternoon; I apologise to the noble Baroness for that. I will make inquiries and I will follow up the second point that she quite understandably made.

My Lords, child trafficking is the fastest-growing organised crime internationally, and children have been trafficked illegally into Britain against their will. Will the Minister consider investing in policing in the countries from which the trafficked children originate to stop the problem that they face, as well as that of being thrown out of here again?

My Lords, the noble Baroness makes a very good point. We work internationally to try to stop at source the difficulty arising. Child trafficking is an inhumane and appalling crime—people profit from it—and we must be rigorous in enforcement.

English Heritage

asked Her Majesty’s Government:

When they intend to appoint a new chairman of English Heritage.

My Lords, I thank the Minister for that Answer, but will he explain why, after an extensive recruitment process, subject to all the Nolan criteria, carried out by the DCMS, the two candidates who were recommended by officials to the Secretary of State were summarily turned down? Will he assure me that it was not because of their perceived political connections? Does the Minister realise that if a supporter of the Government is appointed instead, it will be seen as an unwelcome party-political act in an appointment process?

My Lords, if the noble Viscount were correct, I would agree with him, but I will explain briefly what happened. After interviewing five strong candidates, the independent selection committee recommended that the Secretary of State should see two candidates who most closely met the published criteria. She talked to them in great detail and came to the conclusion that neither candidate demonstrated the full range of criteria which were published in the role specification. An independent assessor oversaw the appointments process and was consulted before this decision was reached, and the department also wrote to the Commissioner for Public Appointments before announcing this decision. The process was carried out correctly under the Nolan criteria. The idea that the two candidates were summarily rejected is simply not true.

My Lords, the hours of the prospective chair of English Heritage have been cut to one day a week, and the salary has been reduced from £68,000 to £30,000. Is this not a downgrading of the role of English Heritage? Do the Government really believe that that is the best way of attracting a new chair?

My Lords, again, I am afraid that the noble Lord’s information is totally inaccurate. Remuneration for this post will be at an annual rate of £60,000 for a 90-day-per-year time commitment. This illustrates the importance that we—when I use the word “we”, I mean all of us in this Chamber—attach to English Heritage.

My Lords, is the Minister aware of the very good working relationship which has developed between the present chair, Sir Neil Cossons, and his team and all the churches of this country? Will he use his best endeavours to ensure that the new chair follows up some of the creative thinking outlined in your Lordships' House in the debate initiated by the noble Lord, Lord Howarth, on 7 December last year?

My Lords, the right reverend Prelate the Bishop of Southwell and Nottingham is absolutely right. The debate last December was memorable. Many constructive views on the relationship between English Heritage and the churches were expressed. I can give an assurance that the good relationship which has been established between Sir Neil Cossons and his team and the churches of this country will continue.

My Lords, is there not a lot of mischievous comment in the press surrounding this appointment? Some of us are wondering who is feeding the press.

My Lords, I have absolutely no idea who is feeding the press. I have looked at the papers very carefully and, having sat on the selection committee for more than six years, I am absolutely satisfied that the process was carried out correctly and with some sensitivity. If I did not feel that, I would be asking my noble friend Lord Davies of Oldham here to answer this Question.

My Lords, would the Minister not agree that, as a former DCMS Minister, the noble Viscount would be a good candidate for this post?

My Lords, I do agree, but I know that the noble Viscount already has a job that many of us would love to have ourselves. However, if he is interested, I shall arrange for application forms to be sent to him and I will be one of the referees.

My Lords, if and when the new chairman is appointed, are the Government minded to improve the funding to English Heritage to enable it to carry out more of the activities that it would wish to carry out?

My Lords, English Heritage is well funded. With non-grant income, its total revenue this year is expected to be £165 million, which is a significant sum. There are enormous calls on its funds, but it is such an important organisation that it is in everyone’s interest to ensure that it is properly funded.

My Lords, can I remind my noble friend that many of us on this side are immensely proud of being British and are certainly not too proud to take a job for one day a week at the rate of £30,000 a year?

Schools: GCSE History

asked Her Majesty’s Government:

How many secondary schools in 2006 did not submit candidates for GCSE in history.

My Lords, for maintained mainstream secondary schools, the 2006 figure was 68 and in 1997 it was 94. There are 3,112 secondary schools in England, so I am glad to say that the proportion has declined by a third from 3 per cent to 2 per cent since 1997.

My Lords, is the Minister aware that figures given in the House of Commons in answer to that Question do not reflect what he has just said? They show that about a third of our secondary schools, covering a million pupils, do not offer history after the age of 14—just at the time when Gordon Brown is trying to identify Britishness, which depends upon a knowledge of and an interest in our history. Is the Minister aware that the only other country in Europe that allows history to be dropped at 14 is Albania? Will he ensure that history is restored to the national curriculum for all children up to the age of 16, as it was at the beginning?

My Lords, the noble Lord was the father of the national curriculum, and history was never a compulsory subject at key stage 4. I am sorry that he did not bring it in himself when he had responsibility for these matters. He can hardly blame us for not having done so since, although in many areas we have tried to correct the errors of the previous regime. He may be misconstruing the figures given in the parliamentary Answer. The figure of 1,479 to which he referred does not, I stress, relate to one-third of mainstream secondary schools—only 2 per cent of mainstream secondary schools do not enter candidates for history GCSE. My view is that that is 2 per cent too many, but the figure is none the less 2 per cent. The figure of 1,479 includes 689 independent schools and 722 special schools, and the confusion in the press has come from conflating one figure with the other.

My Lords, the Chancellor has frequently insisted that history is the core of the citizenship agenda and it has been floated in the Ajegbo report and elsewhere that we should have a GCSE in citizenship—which I assume would further displace the GCSE in history. Given that, and the absence of any narrative content in history teaching in secondary schools—I heard Tristram Hunt refer the other day to secondary school history teaching as:

“Hitler and the Henrys, with nothing in between”—

is it not time that there was a broader, independent inquiry on an all-party basis into how we might teach national and international history in our schools?

My Lords, I am glad to say that the number of entries for GCSE history is up from 189,000 in 1998 to 208,000 last year. As the noble Lord rightly says, we are seeking to make citizenship a full GCSE from being a half-GCSE at the moment, but there is no evidence whatever to suggest that that would depress history. On the contrary, I think it is much more likely to strengthen the teaching of history in schools. I should note that the half-GCSE in citizenship is the fastest-growing GCSE, at the same time as we have seen an increase in the number of entries for history GCSE. Being an optimist in these matters, I believe that citizenship and history can co-exist and one will reinforce the other.

My Lords, when will the Minister lend his support to what the noble Lord, Lord Wallace, said about teaching history in broader spans and not concentrating on tiny areas? For example, if you teach Hitler, you ought to teach something about Bismarck and the 19th-century history of Prussia. Without such spans, history is worthless.

My Lords, I strongly agree with teaching the broad sweep of history and we encourage it. In respect of the almost obsessive teaching of the Third Reich in some history courses, we have, for example, worked with the German embassy very successfully to introduce new modules for teaching post-war German history. I do not believe that you just need to look back to the 19th century, which was not always a successful time in that country’s history either. We can look at the much more successful and more recent periods, which are good to study as well.

My Lords, does the noble Lord agree that the love of history is often stimulated when the child is young? Therefore, does he share my anxiety that many primary schools are deterred from educational enrichment and local history activities, such as visits to heritage sites and museums, because of the additional cost and sometimes the risk assessments involved in undertaking them?

My Lords, we are mindful of the red-tape issues and have looked at them. We have simplified the forms and other administrative elements involved in school trips and the evidence is that the numbers of schools trips are rising, not falling. The museums, galleries and other institutions that schools seek to visit are now more proactive in their work with schools, which we think is good, too. We want to see this increase, not decrease, and our evidence is that it is doing so.

My Lords, does the Minister agree that issues such as the Holocaust, famine and slavery are proper ones to be investigated by history students in our schools? However, there is a danger of conflating history with an examination in citizenship. Is it not the case that only in this country would we turn something like community service into a punishment to be dispensed by the courts? We are in grave danger of doing the same thing to citizenship in schools.

My Lords, I do not agree. The study of citizenship in schools has been an immensely positive and worthwhile activity. Sir Keith Ajegbo’s review, which has just been published, strengthens the arguments for it. It draws on the excellent practice of many schools in teaching citizenship where community engagement is part of what students do in their studies, so that it is a practical and not purely a theoretical exercise. I take a much more optimistic view of what is going on in schools and how citizenship is being deployed to strengthen, not weaken, community engagement.

My Lords, in 2003 there were just over 1,000 training places for teachers. This will fall to just over 500 by 2008. There is a crisis in some of our schools in trying to recruit history teachers. Does the noble Lord share my concern that soon we will not have the teachers available to ensure that all pupils have a sound knowledge of British values, traditions and history?

My Lords, the vacancy rate for history teachers is 0.4 per cent, which is down on the number five years ago. The number of training places has come down because of demographics—the number of teachers who will be needed to fill the posts with the declining secondary school rolls is fewer. Our job is to maintain supply so that it matches demand, and that is what is happening.

My Lords, I would like to clarify a point. When the national curriculum was established there were subjects that went up to 16, as the noble Lord well knows, and they were dropped in the mid-1990s—by a Conservative Minister, because not all Conservatives are perfect. The disparity between the figures that the noble Lord has given today and the figures given to the House of Commons by his department is staggering. If he is trying to say that there is 100 per cent take-up of GCSE in secondary schools at 16, that cannot be the case. I think he will find that my figures are much more accurate.

My Lords, I think that the noble Lord simply has to read the Answer that was given in the House of Commons. That makes it clear that the figure of 1,373 schools that do not do history includes special schools and independent schools. Sometimes Members simply need to read the words on the page to understand what is being said. It does not say, “One-third of mainstream secondary schools”, which was the point then made in the press; that was completely unfounded on the basis of the reply.

As for the noble Lord’s first point about what different Conservative Ministers do, I am afraid that I am not accountable for reversals and changes of policy on the part of different Conservative Ministers, but I look forward to him taking up that case with his successors. If they can come to a common view, we might be able to operate on the basis of it.

Planning-gain Supplement (Preparations) Bill

Brought from the Commons; read a first time, and ordered to be printed.

Income Tax Bill

Brought from the Commons endorsed with the certificate of the Speaker that the Bill is a money Bill, and read a first time.

Iraq and the Middle East

My Lords, I would like to repeat a Statement made by my right honourable friend the Prime Minister in another place. The Statement is as follows:

“With permission, Mr Speaker, I shall make a Statement on recent developments in Iraq and across the Middle East.

“Saddam Hussein was removed from power in May 2003. In June 2004, the UNSC passed a resolution setting out the support of the international community for the incoming Interim Government of Iraq, for a political process leading to full democratic elections overseen by the UN itself and for Iraq’s reconstruction and development after decades of oppression and impoverishment under Saddam’s dictatorship.

“In January 2005, the first elections were held for a Transitional National Assembly. Seven million people voted. A new constitution was agreed. In December 2005, full parliamentary elections were held. Twelve million Iraqis voted and in May 2006 the first fully elected Government of Iraq were formed. They were expressly non-sectarian, including all the main elements of Iraqi society—Shia, Sunni and Kurdish. Throughout, there has been full UN backing for the political process and now for the Government of Prime Minister Maliki.

“Successive UN resolutions have given explicit approval for the presence of the multinational force. The political process has thus continued through these years. For example, as we speak, the Iraqi Parliament is awaiting: the report on amending the constitution from its constitutional review committee; a draft law on de-Ba’athification, relaxing some of the restrictions on former Ba’ath Party members; and the new hydrocarbon legislation, which will attempt to spread fairly and evenly the proceeds of Iraq’s considerable oil wealth.

“However, the political process, the reconstruction, the reconciliation and everything that the UN has set out as the will of the international community and for which Iraqis have voted has been thwarted or put at risk by the violence and terrorism that have beset the country and its people. From the appalling terrorist outrage in August 2003, which killed the UN Special Representative and many of his colleagues, to this day, Iraq—and Baghdad in particular—has been subject to a sickening level of carnage, some aimed at the multinational force but much aimed deliberately to provoke a sectarian struggle between Sunni and Shia. The bombing of the shrine at Samarra in February 2006 was designed precisely to provoke Shia death squads to retaliate against Sunni.

“The violence comes from different sources. Some of it originates from former Saddamists and some from Sunnis who are worried that they will be excluded from the political future of Iraq. Much of the so-called ‘spectacular’ suicide bombings are the work of al-Qaeda, whose grisly presence in Iraq since 2002 has been part of its wider battle with the forces of progress across the world. Now Shia militant groups such as Jaish al-Mahdi—JAM—are responsible for the abduction and execution of innocent Sunni. These groups have different aims and different ideologies but one common purpose: to prevent Iraq’s democracy from working.

“Throughout all the wretched and inexcusable bloodshed, one hope remains. Talk to anyone in Iraq of whatever denomination, whether Iraqi or part of the multinational force, whether civilian or military, and they all say the same thing: the majority of Iraqis do not want it to be like this. They voted despite the violence. They know its purpose and its effect and they hate both.

“There can be legitimate debate about what was right and what was wrong in respect of the original decision to remove Saddam. There can be no debate about the rights and wrongs of what is happening in Iraq today. The desire for democracy is good. The attempt to destroy it through terrorism is evil. Unfortunately that is not the question. The question is not should we, but can we defeat this evil; do we have a plan to succeed?

“Since the outset, our plan, agreed by Iraq and the United Nations, has been to build up Iraqi capability in order to let Iraqis take control of their own destiny. As they would step up, we would, increasingly, step back. For three years, therefore, we have been working to create, train and equip Iraqi security forces capable of taking on the security of the country themselves. In normal circumstances, the progress would be considered remarkable. There are now 10 divisions of the Iraqi army, with over 130,000 soldiers who are able, in significant parts of the country, to provide order. There are 135,000 in the Iraqi police service. There the progress has been more constrained and is frequently hampered by corruption and sectarianism but, none the less, in normal circumstances it would, again, be considered a remarkable effort. The plan of General Petraeus—then an army commander in Iraq and now the head of the coalition forces there—which was conceived in 2004, has in its essential respects been put in place.

“But these are not normal circumstances. The Iraqi forces have often proved valiant, but the various forces against them have also redoubled their efforts. In particular, in and around Baghdad, where 80 to 90 per cent of the violence is centred, they have engaged in a systematic attempt to bring the city to chaos. It is the capital of Iraq. Its strategic importance is fundamental. There has been an orgy of terrorism unleashed upon it in order to crush any possibility of it functioning.

“It does not much matter if elsewhere in Iraq—not least in Basra—change is happening. If Baghdad cannot be secured, the future of the country is in peril. The enemies of Iraq understand that. We understand it. So, last year, in concert with our allies and the Iraqi Government, a new plan was formulated, and promulgated by President Bush in January of this year. The purpose is unchanged. There can be only one purpose in Iraq: to support the Government and people of the country to attain the necessary capability to run their own affairs as a sovereign, independent state. But the means of achieving the purpose were adjusted to meet the changing nature of the threat. The Baker-Hamilton report, to which I pay tribute, also informed the strategy.

“There are three elements to the plan. First, there is the Baghdad security initiative, drawn up by Prime Minister Maliki and currently under way. It aims, as the operation in Basra has done, to take the city, district by district, to drive out the extremists, to put the legitimate Iraqi forces in charge and then to make it fit for development, with a special fund in place able to deliver rapid improvement. It began last Tuesday. It is far too early to tell its results, although early indications are more promising than what was tried, unsuccessfully, some months back. In particular, there is no doubt of its welcome among ordinary people in Baghdad.

“The second part of the plan is a massive effort to gear up the capability of the Iraqi forces and to plug any gaps in command, logistics, training and equipment. Thirdly, there is a new and far more focused effort on reconciliation, reconstruction and development. There are now talks between Iraqi officials and both Sunni and Shia elements that have been engaged in fighting. It is again too early to draw conclusions, but this is being given a wholly different priority within the Iraqi Government and by the multinational force.

“In addition, there have been changes made by Prime Minister Maliki—to whose leadership I pay tribute—to the way in which economic development and reconstruction moneys are administered within the Iraqi Government, with Deputy Prime Minister Barham Saleh being given specific responsibility. This will allow the disbursement of funds to be made and will allow, in Baghdad and elsewhere, development and reconstruction to follow closely on the heels of improved security.

“The objective of all this is to show the terrorists that they cannot win; to show those who can be reconciled that they have a place in the new Iraq; and to show the Iraqi people that, however long it takes, the legitimate Iraqi Government, whom they elected and whom the international community supports, will prevail.

“The aim of the additional US forces announced by President Bush is precisely to demonstrate that determination. If the plan succeeds, then, of course, the requirement for the multinational force reduces, including in Baghdad. It is important to show, and particularly to show the Iraqi people, that we do not desire our forces to remain any longer than they are needed; but, while they are needed, we will be at their side.

“In this context, what is happening in Basra is of huge importance. Over the past months, we have been conducting an operation in Basra, with the 10th Division of the Iraqi army, to reach the stage where Basra can be secured by the Iraqis themselves.

“The situation in Basra is very different from that in Baghdad. There is no Sunni insurgency; there is no al-Qaeda base; there is little Shia on Sunni violence; and the bulk of the attacks are on the multinational force. It has never presented anything like the challenge of Baghdad. That said, British soldiers are under regular and often intense fire from extremist groups, notably elements of JAM. I would like, as I have often done in this House, to pay my profound respects to the British Armed Forces. Whatever views people have about Iraq, our forces are dedicated, professional, committed and brave beyond belief. This country can be immensely proud of them. We send again our wholehearted sympathy to the families of those who have fallen, and to the injured and their families.

“As a result of this operation in Basra, which is now complete, the Iraqi forces now have the primary role for security in most parts of the city. It is still a difficult and sometimes dangerous place, but many extremists have been arrested or left the city. The reported levels of murder and kidnapping are significantly down. Surveys of Basrawis, after the operations had been conducted, show a much greater sense of security. Reconstruction is now happening in schools and health centres—in fact, around 300 projects altogether.

“A few days ago, Deputy Prime Minister Barham Saleh organised the Basra Development Forum. He announced a $200 million programme of development in infrastructure and public services. In addition, the international community—with Britain in the lead—has developed projects to increase power supply, put in place proper sewage systems and increased the supply of drinking water to thousands of homes. The plan to develop Basra port will be published later this year. The problems remain formidable, not least in providing work where, for decades, 50 per cent or more of the city has been unemployed.

“In an extraordinary development, the Marsh Arabs, driven from one of the world’s foremost ecological sites by Saddam, have been able to resettle there.

“What all this means is not that Basra is how we want it to be, but it does mean that the next chapter in Basra’s history can be written by Iraqis. I have discussed this with Prime Minister Maliki and our proposals have his full support and, indeed, represent his wishes.

“Already we have handed over prime responsibility for security to the Iraqi authorities in Al Muthanna and Dhi Qar. Now in Basra, over the coming months, we will transfer more of the responsibility directly to Iraqis. I should say that none of this will mean a diminution in our combat capability. The actual reduction in forces will be from the present 7,100—itself down from over 9,000 two years ago and 40,000 at the time of the conflict—to roughly 5,500. However, with the exception of forces that will remain at Basra Palace, the British forces will be located at Basra air base and will be in a support role. They will transfer Shaibah logistics base, the Old State Building and the Shaat Al’Arab Hotel to full Iraqi control.

“The British forces who remain in Iraq will have the following tasks: training and support to Iraqi forces; securing the Iraq/Iran border; and securing supply routes. Above all, they will have the ability to conduct operations against extremist groups and to be there in support of the Iraq army when called upon.

“Over time and depending naturally on progress and the capability of the ISF, we will be able to draw down further, possibly to below 5,000 once the Basra Palace site has been transferred to the Iraqis in late summer. We hope that Maysan province can be transferred to full Iraqi control in the next few months and Basra in the second half of the year. The UK military presence will continue into 2008, for as long as we are wanted and have a job to do. Increasingly, our role will be support and training, and our numbers will be able to reduce accordingly.

“Throughout the whole of this part of the south-east, the UK depends on the steadfastness of our coalition partners—Denmark, Australia, Romania, the Czech Republic and Lithuania. I pay tribute to them. I welcome the continuing Australian presence at Tallil in Dhi Qar province. We are keeping in close touch with our allies as the transition proceeds.

“The speed at which this happens depends, of course, in part on what we do, and what the Iraqi authorities themselves do. But it also depends on the attitude of those whom we are, together, fighting. Their claim to be fighting for the liberation of their country is a palpable lie. They know perfectly well that if they stopped the terror, agreed to let the United Nations democratic process work and allowed the natural talent and wealth of the country to emerge, Iraq would prosper. We would be able to leave. It is precisely their intent to eliminate such a possibility. In truth, this is part of a wider struggle taking place across the region. The Middle East is facing a struggle between the forces of progress and the forces of reaction.

“The same elements of extremism trying to submerge Iraq—or Afghanistan for that matter—are the same elements that across the region stand in the way of a different and better future. None of this absolves us from responsibility. In fact, for too long we believed that, provided regimes were ‘on our side’, what they did to their own people was their own business. We must never forget that Saddam inflicted 1 million casualties in the Iran/Iraq war and butchered hundreds of thousands of his citizens, including by chemical weapons attack, wiping out whole villages of people.

“We need now to recognise that the spread of greater freedom, democracy and justice to the region is the best guarantee of our future security as well as the region’s prosperity. That is why peace between Israel and Palestine is not an issue inhabiting a different domain of policy. It is a crucial part of the whole piece. I shall meet President Abbas later today, talk also to Prime Minister Olmert, and within the past 24 hours have had detailed discussions both with President Bush and Secretary Rice. I will once again today emphasise the importance of basing the proposed national unity Government on the principles of the quartet. I will also stress our complete and total determination to use the new opportunity to create the chance for peace.

“I have always been a supporter of the state of Israel. I will always remain so. But for the sake of Israel, as well as for all we want to achieve in the Middle East, we need a proper, well functioning, independent and viable state of Palestine. We should support all those across the region who are treading the path of progress: from the Government of Lebanon, whose Prime Minister courageously holds firm to democracy, to those countries—and there are many now in the region—that are taking the first fledgling steps to a different and more democratic governance.

“As for Iran and Syria, they should not be treated as if the same. There is recent evidence that Syria has realised the threat that al-Qaeda poses and is acting against it. But its intentions towards Iraq remain ambiguous and towards Lebanon hostile. The statements emanating from Iran are contradictory but, as the words yesterday of the head of the IAEA indicate, its nuclear weapons ambitions appear to continue. But both countries—though very different—have a clear choice: work with the international community or defy it. They can support peace in Palestine, democracy in Lebanon, the elected Government of Iraq, in which case they will find us willing to respond, or they can undermine every chance of progress, uniting with the worst and most violent elements, in which case they will become increasingly isolated, politically and economically.

“But what nobody should doubt is that, whatever the debates about tactics, the strategy must be clear: to bring about enduring change in the Middle East as an indispensable part of our own enduring security. The poisonous ideology that erupted after 9/11 has its roots there and is still nurtured and supported there. It has chosen Iraq as the battleground. Defeating it is essential—essential to Iraq, but also essential for us here in our own country. Self-evidently, the challenge is enormous. It is the purpose of our enemies to make it so, but our purpose in the face of their threat should be to stand up to them and to make it clear that, however arduous the challenge, the values that they represent will not win and the values that we represent will”.

My Lords, that concludes the Statement.

My Lords, I am sure that we are all immensely grateful to the noble Baroness the Leader of the House for repeating this enormously full Statement of intention and roundup of the Middle East situation generally.

Obviously, it is welcome news that some of our brave troops are coming home. It will be particularly welcome to the families of those who are serving and have served there, and to the Armed Forces generally in their present state of chronic overstretch. It is equally obvious that the drawdown raises a set of vital questions, of which the first must be about the security and positioning of our remaining troops, for whom our admiration is unlimited. In the past three years since the invasion, the situation in Basra has declined tragically; since, if I may add a personal note, 2004 when my son served there and found a thoroughly co-operative and even friendly atmosphere. We are now told that after that serious decline, things are looking better again and that therefore troops can be removed.

We all hope and trust that that assessment is right, when so many assessments about Iraq have proved wrong. I trust that there is nothing artificial or wishful about the discovery of improvements in Basra which allow the withdrawal. I hope and trust that our troops left there will be able to carry out their new duties of supporting Iraqi army training, border supervision and securing supply routes with reasonable, although obviously not complete, safety. We would value assurances on that. Above all, I hope and trust—we all need reassurance on this—that our troops will be properly equipped and not left, in the words of the noble and gallant Lord, Lord Guthrie, yesterday, when addressing the Global Strategy Forum,

“at the end of their tether”,

and,

“close to operational failure”,

through lack of the right equipment, sometimes even having to borrow superior kit from other forces such as, in one recent incident, the Estonian contingent.

Turning to the overall situation, which the Prime Minister covered, can the noble Baroness explain exactly how we see our plans fitting in with current American intentions? We had the Baker-Hamilton report in Washington the other day, which called for much more involvement with neighbours and other powers in coping with the Iraq situation and for the more intensive use of diplomacy on all fronts. We agree with that approach. Yet the next moment we had the Prime Minister and the Foreign Secretary applauding the US Administration’s decision not to follow that route but to send in 21,500 more troops to the Iraq maelstrom and to ignore the proposals for seeking closer linkages with neighbours such as Iran and Syria, as well as with other regional and world powers.

We recognise the difficulty of dealing with Iran when its leader makes such wild and aggressive statements and it is right that if Iran is encouraging mischief-making in Iraq, as it certainly has been, that should be sharply and effectively confronted. Today is the UN deadline for Iran to suspend its unauthorised uranium enrichment activities. Will the noble Baroness confirm that we continue to put diplomacy and negotiation first in engaging with Iran? Will she confirm the UK’s agreement reached last week with US Under-Secretary Burns, who took a very wise approach, that while using sanctions against Iran, the exit door should be kept open, everything done to keep contact with the people of Iran and diplomatic solutions sought?

Speaking of sanctions, the one sort that seems to work in putting pressure on the Iranian leadership is the financial sort imposed particularly through the American banking system. What steps have we taken on this side of the Atlantic to persuade the European Union membership to follow suit?

The Prime Minister also spoke of the Israel-Palestine situation, on which of course we all hope for progress, especially if Al Fatah and Hamas can sort out their differences. Are the Government still focusing, however, as much as I believe they should, on the critical situation in Lebanon, where Israeli, Iranian and Syrian pressures and ambitions all dangerously collide? Do the Government regret being quite so unequivocal in supporting the misguided Israeli strategy of smashing Lebanon to get at Hezbollah? What steps are we taking now to see that the legitimate Lebanese Government of Mr Siniora are not undermined by extremists and street violence, egged on by Iranian and Syrian resources, and carried through by the apparently undefeated Hezbollah movement?

The Prime Minister talks in his Statement of “an epochal struggle” in the Middle East. These generalisations sound good, but in fact there are numerous complex and different struggles in the region, which need to be understood and dealt with in a whole variety of ways, mixing hard-power and soft-power methods. We on this side supported the decision to overthrow Saddam—although we were given faulty intelligence on Iraq—but the string of errors since then confirms our view that subsequent events have not been well handled; that strategy has not been clear, steady, or well thought out; and that very serious mistakes and omissions have occurred in the shaping of Cabinet decisions and of government policy at the highest level.

That is why we think the time is coming for a full-scale inquiry into the conduct of the whole war operation. We note that in the USA several such inquiries are being held, uncovering new evidence, and going wider and deeper than the various reports we have been given, for example, by the noble and learned Lord, Lord Hutton, the noble Lord, Lord Butler, and others. We believe that we owe it to our brave Armed Forces, who are so dedicated and professional, to look frankly and honestly at the way in which things have gone wrong, so as to learn and apply the lessons swiftly. Your Lordships will debate this very issue tomorrow, when I hope this viewpoint will be endorsed and pressed home firmly.

The vision of a peaceful, prosperous, western-model, democratic Middle East is, frankly, today as far away as ever. Perhaps it was too naïve a vision in the first place. We should certainly fight for our values and our security—we should fight not with slogans, but with subtlety, experience, understanding and dexterity. These are the qualities that have been missing in government policy.

It is good that some of our brave troops should now be progressively withdrawn from a dire situation, in a dangerous region, which, frankly, will never be solved entirely by military force alone. It is bad, however, that there have been so many faults and impulsive errors along the way. The sooner we learn the full story, the full lessons from what has gone wrong, and how, even now, to help set it all on a more promising and constructive path, the better.

My Lords, I, too, thank the Lord President of the Council for repeating this Statement made by the Prime Minister, giving his personal résumé of the history of Iraq over the past four years. I am not a marcher by nature, but I took part in the march against the war. I have to say that the Iraq adventure has produced chaos on a grand scale. On these Benches, we have no regret for condemning the policy four years ago, and for condemning it as a blot which will never be erased from the Blair record or the Blair legacy. However, on the Prime Minister’s commitment to peace in Israel and Palestine, we fully support his commitment to establish a,

“well functioning, independent and viable state of Palestine”.

We hope that during his remaining months in office he will continue to give priority to an Israel-Palestine settlement.

On Iraq, however, as the noble Lord, Lord Howell, has indicated, there are many serious questions to be asked. How conditional is the timetable for withdrawal? The phrase,

“as long as they are needed”,

keeps recurring. Will not the reduction in numbers, while leaving the remaining forces with a considerable task, continue to lead to the danger of overstretch? Let me remind the House of those tasks: training and supporting the Iraqi forces; securing the Iraq/Iran border; and securing supply routes. Those are the tasks listed by the Prime Minister in his Statement.

I endorse the tributes paid by the Lord President and the noble Lord, Lord Howell, to our Armed Forces, but I still have in mind a speech made right at the beginning of this tragedy by the noble and gallant Lord, Lord Bramall. On the eve of invasion he said he hoped that the politicians were as sure about how they were going to get out of Iraq as they were about how to get in. I fear that this Statement makes us no clearer on that point.

I want to raise a side issue. Last night I was at the Royal Television Society’s annual journalism awards ceremony. At the beginning they present a roll of honour of those reporters who have lost their lives during the previous year. It was chilling to note the number of journalists who have died in Iraq. This has been a war fought on our television screens and marks a contrast between what I can only say is the slightly rosy picture painted by the Prime Minister and the reality we see every night on our televisions. I have also watched the events at the other end of this place. When Sir Menzies Campbell called for a phased and timed withdrawal, he was hooted and howled at by the Labour Back-Benchers, and yet now the Prime Minister seems to be announcing his own phased and timed withdrawal. The Prime Minister pays tribute to the Baker-Hamilton report, but surely that report has to be taken as a whole and should not be cherry-picked. How you can pay tribute to that report while in the same breath pledge full support to the Bush surge just seems to defy reason.

I want to ask the Lord President about something that comes within her own particular area of expertise. The Prime Minister has spoken of a new and far more focused effort on reconciliation, reconstruction and development. Will DfID’s strategy and responsibilities in Iraq be changed by today’s announcement? Is there any intention to increase aid to Iraq on the reconstruction side to match the military withdrawal? It would be interesting to know the position on this. On the call for a full public inquiry, of course I endorse it and I am glad that we now have the support of the Conservatives. I note also that of the seven candidates for the Deputy Leadership, questioned in the Guardian today, two are now calling for a public inquiry. I wonder whether the Lord President agrees with them or with the three who said that they were too busy to answer the question.

We share the concerns expressed about policy towards Syria and Iran, and wonder whether there are any further Government initiatives towards either country. In the past, with the Prime Minister in Syria and the Foreign Secretary in Iran, they have taken to direct diplomacy, and we certainly urge the wise words of the noble Lord, Lord Howell, about soft diplomacy. We continue to worry that talk still comes out of the United States that part of the final Bush legacy might be a direct attack on Iran. However, the real worry is that this Statement is not a strategy, it is a wing and a prayer, often at odds with the reality we see each evening on our television screens.

My Lords, I will try to respond quickly to the points made by the noble Lords, Lord Howell of Guildford and Lord McNally. I first want to tell the noble Lord, Lord Howell, that the security of our remaining troops is our first concern; he will realise from the Statement that the decision made has been based on conditions on the ground. I can also tell the noble Lord, Lord McNally, that we are not working to a predetermined timetable. The transfer of security responsibilities to the Iraqis is the ultimate goal, but that is based on what happens on the ground. Following Operation Sinbad, we believe that we can best create the conditions for that by reducing our footprint on the ground and focusing our efforts on training the Iraqi police and security forces.

The noble Lord, Lord Howell, mentioned the equipment available to our Armed Forces. We take the protection of our servicemen and servicewomen very seriously. We have rapidly procured a number of vehicles to enhance force protection, while substantial improvements have been made in recent years to the standard and quantity of body armour available to armed forces personnel; commanders in Iraq now have a range of that. There are also, of course, our military aircraft, which are fitted with defensive systems and other aids to mitigate threats present in the operational environments in which they are deployed.

On the Baker-Hamilton issue, and following down the diplomatic route, I constantly hear these arguments about the US and UK strategies being at odds with each other. We are at the point in Basra where we are able to talk about troop drawdown precisely because of Operation Sinbad and what it has been seeking to put in place. In Baghdad, the United States, with the Iraqi Government, is seeking to use the increased troop levels to secure and then to hold areas of the city to enable reconstruction to take place. These are not mutually exclusive things, but a recognition that the situation differs in the two parts of the country and that Baghdad is particularly difficult. Given that 80 per cent of the conflict occurs within a 30-mile radius of Baghdad, the city has to be made secure. The decision has been taken that it can be made secure only on the basis of additional troops.

At the same time, there is of course a diplomatic route that we want to follow. Noble Lords will again know that the previous and present Foreign Secretaries, Jack Straw and Margaret Beckett, have been involved with EU colleagues in negotiating with the Iranians on their nuclear ambitions. In fact, EU foreign Ministers discussed Iran briefly at their meeting on 22 January, and with our full support they agreed that, in order to ensure effective implementation of the United Nations resolutions, the European Union,

“should prevent the export to and import from Iran of the goods on the NSG and MTCR lists; ban transactions with and freeze the assets of individuals and entities covered by the criteria”,

in that Security Council resolution, and,

“ban travel to the EU of the individuals covered by these criteria”.

Officials are drafting a common position to take that decision forward. I also want to assure the noble Lord, Lord Howell, that we support the Lebanese Government and the efforts that they are making, as the Statement made absolutely clear.

We have already had four independent inquiries into Iraq: the Butler inquiry, the Hutton inquiry, the ISC inquiry and the FAC inquiry. I remember that everyone was very pleased when we first announced the Hutton inquiry but, because they did not like the outcome, they immediately asked for another inquiry. In answer to the question raised by the noble Lord, Lord McNally, I do not believe that we should divert the attention of those working on this critical issue by holding a further inquiry at this time. The time to make such a decision will be when all our troops have come home from Iraq. We are constantly learning the lessons of the conflict.

The noble Lord, Lord McNally, raised a number of further questions and in particular said that the leader of the Liberal Democrats had developed his own plan for drawdown. In December 2005, my right honourable friend the Prime Minister said:

“It is our strategy to draw down forces and we don’t want to leave people here longer than we need to. The whole process is to build up the Iraqi capability in the armed forces and police so we can draw down our own forces. The political aspect can only be buttressed by a strong security aspect increasingly taken over by the Iraqis themselves”.

That was the position in December 2005 and is the position now. We have made some progress in that some of that drawdown will begin to happen. However, I can assure the noble Lord that we will retain a robust re-intervention capacity.

On Baker-Hamilton, the noble Lord may recall that, at what was seen as great personal political risk, my right honourable friend the Prime Minister invited the President of Syria to the United Kingdom in 2002. Indeed, he was criticised by many for seeking to engage through diplomatic channels with Syria. That engagement broke down subsequently but we will continue to go down the diplomatic route.

We will continue to work closely with the Iraqi Government on reconstruction and development. Our total pledge for humanitarian and reconstruction aid for Iraq for 2003-06 was £544 million; a further pledge of £100 million was announced by the Chancellor in late 2006; and over the next year the Department for International Development’s water and electricity projects will improve access to water for 1 million people living in southern Iraq and a further 328 megawatts of power will be added or secured to the Iraqi national grid. With the work already under way, this will help to supply almost 1 million people with 24-hour power.

We intend to continue to work in partnership with our colleagues in the multinational force and the Iraqi Government, but bringing our troops home when the conditions are right is also an important element of the strategy.

My Lords, I, too, thank the Lord President for repeating the Statement made in another place. I, for one, welcome its future aspirations for the phased withdrawal of our troops. I am sure that it is a step in the right direction. Our forces have obviously done extremely well, intelligently and professionally, to prepare the ground. I only hope that there will not be too many slips between the cup and the lip over the withdrawal. Does the Minister agree—or, at least, does the Ministry of Defence advise her, perhaps through the noble Lord sitting beside her—that it would be virtually impossible for our forces in Afghanistan to do an even more important job there as well as it could be done as long as we still have a significant war on two fronts?

My Lords, I think that we all recognise that having our troops in Afghanistan and Iraq would be difficult to sustain over the long term. That said, we all commend what our troops have been doing in theatre in Afghanistan and Iraq, and we will continue to look at the force levels in both those countries because this is about the conditions on the ground and the support that we need to give our troops to ensure that they are able to function effectively.

My Lords, I thank my noble friend for repeating the Statement, which contained such very welcome news about Iraq. In view of what was said in it about the Sunni insurgency, will she confirm the reports that, even in al-Anbar, the Sunnis are turning against the al-Qaeda element in their midst? This is partly because of the brutality of that element, but also because of the exposure of al-Qaeda’s opportunism in espousing, or appearing to espouse, the Sunni cause, since it cares no more for mainstream Iraqi Sunnis than it does for mainstream Palestinians or any other group that does not share its extremist views.

My Lords, we are aware of reports that Sunni tribes in Iraq have been turning their backs on al-Qaeda and other extremist groups that have been espousing militant ideologies. I agree with my noble friend that this is about ordinary Iraqis making it clear that they do not want to be involved in this kind of violence in their country. Groups such as al-Qaeda have no place in a representative and democratic Iraq. Undermining that democracy is what this level of terrorism is about.

My Lords, the Statement rightly pays tribute to our coalition partners in MND South-East. We are the lead nation, but will the noble Baroness assure us that we are concerned about our partners’ safety and security as well? Have the Government consulted Denmark, Australia, Romania, the Czech Republic and Lithuania about this change of plans? What are those countries going to do? Are they going to reduce in parallel with us? Will they all come and be a single target at Basra air station?

My Lords, we continue to work closely with our partners, and their security is intertwined with ours. Yes, we have consulted. I understand that a statement will be made by one of those partner countries later today, but I am not at present at liberty to say which one.

My Lords, since the Statement referred to current contacts with the Prime Minister of Israel and Mahmoud Abbas, can the Minister confirm the statement attributed to Ehud Olmert in the press two days ago that he had received assurances from President Bush that the Americans had no intention of stopping the boycott of the Palestinian Government? If that is true, is it not a deplorable reaction to the diplomatic efforts of the Saudi Arabian Government and Mahmoud Abbas himself, and of both Fatah and Hamas, in having reached agreement on a coalition Government?

I shall also make one remark about Iran. For the first time in my 13 years in this House, I regret that we do not have the practice of the United States Congress of reading articles and speeches into Hansard. I commend to the Minister, and to all your Lordships, an article on Iran in today’s Financial Times by my former Diplomatic Service colleague Sir Rodric Braithwaite. The article eloquently supports the points, which I fully endorse, made by the noble Lords, Lord Howell and Lord McNally.

My Lords, I am unable to give any assurances with respect to the statement made by Prime Minister Olmert. I cannot of course speak for United States policy, but we have been working extremely closely with all those in the region. There cannot be a solution to what is happening in the Middle East without neighbouring countries being involved in the debates and discussions. I commend the work which has been done on this issue.

My Lords, on Israel-Palestine, the Statement refers to the importance of basing the proposed national unity Government on the principles of the quartet. Does that include the recognition of the two-state solution? Does it include the recognition of Israel? Does it include the renunciation of violence, recognising that very recently Hamas designated the atrocity in Eilat as legitimate?

Whatever our views on the invasion of Iraq—and there are many in the House and the country—we should at least recognise that had the invasion not taken place, Saddam Hussein would still be in Iraq, preparing the succession for one or other of his evil sons. Whatever lack of unity there may be in this country on that issue, there is considerable unity on the magnificent work of our troops in the field. Have the Government given any thought to preparing some national recognition of that service by our troops as thanks for a job well done?

My Lords, on my noble friend’s final point, we have not got to that stage yet, but I am certain that there will be some mark of recognition. On the national unity Government and the principles of the quartet, of course the recognition of the two-state solution is essential to the work we are seeking to do with respect to Israel and Palestine. The renunciation of violence is also a key part of that. My noble friend may recall that one of the problems posed by the election of the Hamas Government is the difficulty the European Union, the United States and other Governments have in working with a Government who refuse to recognise Israel and to renounce violence.

My Lords, I welcome the Statement and congratulate the Government on finally adopting the policy that was put to us by many in the Iraqi leadership in late 2004—that the commencement of troop withdrawal should begin by June 2005. Is my noble friend aware of any work going on in the Foreign Office on a federal arrangement within Iraq which is supported by the Kurds on the street in Kurdistan, talked about extensively behind closed doors within the Sunni community in northern Iraq and welcomed by many Shia groups in the south? Has she had the opportunity of reading the book by Peter Galbraith, the former American ambassador in Croatia, entitled The End of Iraq, which has some very interesting points to make on this subject?

My Lords, I have not read that book. I know that there are a number of debates and discussions about whether autonomous sectarian regions should be created within Iraq. Our view is that that would lead to increased conflict. All 18 provinces and many cities of Iraq, including Baghdad, have mixed ethnic and religious communities which have lived in close proximity, largely peacefully, for decades. It is important that that continues and that we work with the Iraqi Government to sustain it.

My Lords, I agree with my noble and gallant friend Lord Bramall about the welcome news that troops will be brought home. I am also glad that in the comments since, various other points have come up. I support the noble Lord, Lord Howell, in his call for an inquiry into all that has not gone right with this campaign and note the comments of the noble Lord, Lord McNally, that this campaign did not enjoy the support of the whole British public. When taking part in operations in Borneo and Northern Ireland, I remember that one thing that was helpful was that we felt we had the support of the country behind us. One of the unique characteristics of operations in Iraq is that our soldiers there have not felt that from the moment the operation started.

The Lord President said that we would not want an inquiry until the soldiers came home. I entirely agree, because of soldiers’ uncertainty in the operations that are continuing. They could do without an inquiry, but that inquiry ought to happen when they are home to make certain that the lessons are learnt and all the points that have been brought up time and again in your Lordships' House are examined.

My Lords, it is important that we learn the lessons, but we do not have to wait for any large-scale inquiry to do that. We should continue to learn them as the process develops.

My Lords, does my noble friend accept that, for many of us, the emphasis in this important and significant Statement on remaining committed to the regional approach is very reassuring? In that context the determination to stay with the diplomatic approach, if a tough one, towards Iran is also welcome.

As far as the Israel/Palestine situation is concerned, does my noble friend accept that peace-building is a process and it is not possible to achieve all the objectives at the beginning of the process, as we have learnt in the saga of Northern Ireland? If we are to find success in the process that we hope has begun, there will have to be patience, understanding and inclusiveness. Finally, does my noble friend agree that, in Iraq itself, the human resource issue is crucial? It is distressing to see the number of qualified people who have fled the country. Will she assure the House that specific plans are in place to ensure that human resources, not least in the administration of justice, can be rapidly built up?

My Lords, I entirely agree with my noble friend that peace-building is a continuous process. We have seen that not only in Northern Ireland, but over many years in the Middle East conflict. We have made progress and many of us felt helpful on some occasions. On other occasions, there have been significant setbacks. In that context, of course inclusiveness is a key element. On the issue of human resources in Iraq, the key is security. We are working with the Iraqi Government to build up capacity within the justice sector, but qualified Iraqis living outside Iraq will feel able to return only when there is a degree of stability and security in the country.

My Lords, as one who opposed the war in the first place, I am pleased that 1,600 troops will be brought home very shortly. I hope that the rest of them will be brought home in not too long. There is a great deal of concern about the sabre-rattling in the United States over Iran. I hope that the Government are warning the United States that to take military action in Iran would be a huge disaster and bring about even graver consequences than those that exist in Iraq.

Finally, has it ever been suggested to Iran, especially since the Prime Minister of Israel has accepted and admitted that Israel has nuclear weapons, that as a quid pro quo for Iran stopping its enrichment programme Israel would be disarmed of any nuclear weapons that it had?

My Lords, in relation to that last point, I am not aware of any such proposal having been made. With respect to the Government’s policy in Iran, I explained earlier that our strategy is very clear. We have been working with European Union partners pursuing a diplomatic route. We will continue to do that and, of course, we will continue to work through the United Nations.

My Lords, would the Minister acknowledge that the most troubling aspect of the Prime Minister’s Statement was his attempt to characterise the complex and very different situations in a number of different parts of the region as,

“an epochal struggle between the forces of progress and the forces of reaction”?

This light and dark approach brings no practical help to the diplomacy that needs to be deployed by any country that cares for democracy and justice in tackling these historic and long-rooted problems. Will the Minister also retreat from the expression in the Statement about the spread of these things to the region, for force is surely discredited in that part of the world when it is deployed by external nations, whatever the rhetoric used by their political leaders?

My Lords, I agree with the noble Lord that we are tackling historic and long-rooted problems, but I cannot agree with any of his other statements. Of course, this is about deploying diplomacy, but it is also about recognising the kinds of issues and forces with which we are dealing, and we have to be clear about that.

My Lords, can the Minister confirm that one in five Iraqis is now homeless, either abroad or internally displaced? What contingency plan is the coalition making for the protection of the displaced—and not least of United Nations workers who will have to deal with them?

My Lords, I am afraid that I cannot confirm or deny those figures, although I am very happy to go back and check them. The Government have just announced a £4 million contribution to the International Committee of the Red Cross to provide emergency assistance to those who are internally displaced. We are also considering an appeal by the UNHCR about helping refugees who have fled into neighbouring countries. The noble Earl is right in saying that this is an issue that the humanitarian and refugee agencies will need to deal with. Of course there is considerable expertise but that is not the point—the point is that people will want as quickly as possible to return to their homes, which is why ensuring stability and security is at the top of our agenda.

Legal Services Bill [HL]

My Lords, on behalf of my noble and learned friend Lord Falconer of Thoroton, I beg to move that the House do now again resolve itself into Committee on this Bill.

Moved accordingly, and, on Question, Motion agreed to.

House in Committee accordingly.

[The DEPUTY CHAIRMAN OF COMMITTEES (Baroness Thomas of Walliswood) in the Chair.]

Schedule 15 [The Office for Legal Complaints]:

[Amendment No. 111 had been withdrawn from the Marshalled List.]

112: Schedule 15 , page 212, line 16, leave out sub- paragraph (2)

The noble Lord said: Amendments Nos. 112 and 113, which are grouped, relate to the Secretary of State’s influence over the Office for Legal Complaints. They to some degree rehearse the issues raised on the first day of the Committee in relation to the Legal Services Board.

Amendment No. 112 would remove the provision which enables the Secretary of State to alter the number of members of the Office for Legal Complaints. Why should the Secretary of State have any role in fixing that number? While such a provision may have been a useful emergency power over the Legal Services Board, it is plainly unnecessary and undesirable here. The Legal Services Board is in charge of the OLC; the OLC is responsible to it. To insinuate the Secretary of State will confuse the chain of command.

Amendment No. 113 would ensure that the chairman of the Office for Legal Complaints could be removed only with the consent of the Lord Chief Justice rather than the Secretary of State. The amendment underlines the importance of ensuring the independence of the legal profession. It must be seen as absolutely essential, whether for the sake of consumers of legal services or that of our international reputation, that the profession’s major complaints-handler and redress system are entirely free from government influence. I beg to move.

I strongly support my noble friend Lord Kingsland in these amendments, particularly in the second amendment, which relates to the removal of the chairman of the board. Removal of somebody in a responsible position where independence is an essential part of their role is a very serious step, and it would be deeply unfortunate if it were thought to be being exercised by the Executive. It is therefore extremely wise to require the Lord Chief Justice’s approval. It should not cause problems for any Government, unless they have reached some constitutional crisis of proportions which we hope we never see. Consequently, I hope that the Minister will look kindly on that amendment.

The amendments are very important. For the reasons that have been given by my noble friend and my noble and learned friend, I support the amendment in the hope that it will be favourably received by the Government as a matter of general principle.

I am grateful to the noble Lord, Lord Kingsland, for giving me the opportunity to talk about the role of the OLC. As he said, the amendments are similar to those in respect of the Legal Services Board which we debated on the first day of Committee. Let us be clear that the OLC is a completely different organisation from the LSB. First, it is subordinate to the Legal Services Board; the Legal Services Board approves its budget and its rules. Secondly, it will not be involved in the regulation of the legal profession, so concerns about its independence are different from those which were expressed in respect of the Legal Services Board.

The role of the members of the Office for Legal Complaints will be to make rules about how the complaints scheme will work; to appoint the chief ombudsman and any assistant ombudsman; generally to run and manage the organisation in which the ombudsman and caseworkers will work, including managing the budget that has been agreed with the Legal Services Board; and to prepare the annual report on its performance of those functions.

Looking at the two amendments in that context, at the moment we have set the size of the Office for Legal Complaints at between six and eight members plus the chairman. Paragraph 4 of Schedule 15 sets out a list of nine areas of which we consider it desirable for members of the OLC between them to have knowledge or experience—the handling of complaints, the provision of legal services, legal education and legal training, consumer affairs, civil or criminal proceedings and the working of the courts, the maintenance of the professional standards of persons who provide legal services, non-commercial legal services, the differing needs of consumers, and the provision of claims management services.

While we hope that the members of the OLC will have this knowledge and experience between them once it is set up, that may not always be the case. We want to create a system with enough flexibility. For example, if there were six candidates with good experience of the first five attributes set out in paragraph 4, but with little experience of the last four, the LSB might want to appoint further people to fill those skills gaps. Unless there was some way of making the Office for Legal Complaints bigger, that could not happen. On the other hand, we do not want the OLC to become so large that it is unnecessarily bureaucratic or costly. We are trying to balance the interests of both the consumer and the profession. The Secretary of State, who is accountable to Parliament, is best placed to do that and that is why that power exists under Schedule 15.

On Amendment No. 113, I have explained the differences between the OLC and the LSB, and those differences are also important in respect of this amendment. Under paragraph 8(2) of Schedule 15, members of the OLC, including the chairman, cannot be removed unless they have failed without reasonable excuse to discharge the functions of the Office for Legal Complaints for a continuous period of six months, have been convicted of an offence, are an undischarged bankrupt, or are otherwise unfit to hold the office or unable to discharge its functions. Members of the OLC are appointed by the LSB and can be removed by the LSB only if those conditions are met.

The requirement that the Secretary of State, who is accountable to Parliament, consents to the removal of the chairman does not affect the independence of the OLC in carrying out its duties. Instead, it acts as a check on precipitate or unreasonable removal of the chairman by the Legal Services Board. That is a different proposition from that which the noble Lord, Lord Kingsland, and the noble and learned Lord, Lord Lyell, are concerned about.

That in no way grapples with the fundamental point being made by my noble friend and my noble and learned friend. The fact that the OLC is subservient to the board is neither here nor there, other than to advance their argument, and it does not detract from it.

I disagree with the noble Lord and I am sorry about that. If you have a non-departmental public body chaired by a lay person with a specific function, and if it is responsible to a board that has been set up and specific criteria are laid out under which people can be removed—they can be removed under those criteria because it is important that there is a check on that—the question is whether that should be the responsibility of the Lord Chief Justice, as the amendment suggests. I do not believe that that would be an appropriate role for him; he has very important functions but I do not think that they should include overseeing whether the Legal Services Board removes a lay chair of a non-departmental public body. I do think that the Secretary of State, who is accountable to Parliament, should have the opportunity to confirm that the Legal Services Board has acted properly within the legislation that has been laid down by Parliament. That is an appropriate way forward.

Can the noble Baroness clarify this matter? Before the chairman can be removed, some grave default has to be shown against him. In that unhappy situation, which one hopes would never arise—and I am not suggesting that it would do so under this Government, but it could in the future—whereby a chairman was being removed because he had not complied with the current wishes of the Government of the day, would the decision that he had gravely defaulted, presumably made by the board, be subject to judicial review?

I do not believe that it is, but I will confirm that with the noble and learned Lord shortly. Oh! I apologise; the information I was getting by nods and shakes of the head was inaccurate. The decision is subject to judicial review. I can confirm that for the purposes of our deliberations. Let us be clear: the Legal Services Board is set up under this legislation. It is a separate body. It determines the work of the Office for Legal Complaints. The legislation determines the only circumstances—which we expect never to arise, as the noble and learned Lord said—under which someone could be removed. Were they to be removed, the Secretary of State would have to confirm that, and be accountable to Parliament for having so done. I understand noble Lords’ concerns about the Legal Services Board, but this feels to me an appropriate role for the Secretary of State.

On the first day of Committee, I agreed to a number of amendments which transfer responsibility for exercise of the regulation functions from the Secretary of State to the Lord Chancellor. Noble Lords will know, by reason of the Lord Chancellor’s oath of office and the Constitutional Reform Act 2005, that there are a range of unique duties and responsibilities not shared by other Ministers. Included in those are,

“the need for the public interest in regard to matters relating to the judiciary or otherwise to the administration of justice to be properly represented in decisions affecting those matters”.

The Lord Chancellor must be qualified by experience in law or Parliament, and has a duty to respect the rule of law. We have therefore ensured that the proposed arrangements are independent but properly accountable to Parliament. That is where the accountability should lie. That is with the greatest respect to the role of the Lord Chief Justice, I hasten to add.

If it is not the Lord Chief Justice, it could be the Lord Chancellor. If we had a Minister of Justice, it could be the Minister of Justice. What is wrong is that the matter should be dealt with by the Secretary of State intervening in this affair. That is the fundamental objection. There has not been a very convincing argument why the Bill should stand in its present form.

The Lord Chancellor, as it would be, is not intervening in the decision, except if the Legal Services Board considered that the chairman had breached their responsibilities in the precise ways laid out by the legislation. Before the Legal Services Board can remove that individual, it must go back to the Secretary of State and have that confirmed. At that point, the accountability comes into Parliament. We are talking about a lay person in a non-departmental public body operating in relation to an independent board. This is based on other models that noble Lords will be more familiar with than I am. The Legal Services Board must follow the legislation and the Secretary of State—or Lord Chancellor, as it will be—confirms that that has happened appropriately. It cannot dismiss the chairman; all it can do is say that they have not behaved properly within the legislation or accept the decision that has been made.

Could the noble Baroness clarify something? She refers in one sentence to the Secretary of State and in the next to the Lord Chancellor. Is it going to be the Lord Chancellor or the Secretary of State? I would prefer the Lord Chancellor.

I am grateful to the noble Baroness for her full reply. Indeed, she is right that the substitution of the Lord Chancellor for the Secretary of State is reassuring in the context of these two amendments. However, with great respect, it does not satisfy our concerns. The noble Baroness said that the scheme of the Bill was that the Office for Legal Complaints was subject to the Legal Services Board—that it was in a sense its creature—and that because the Legal Services Board is independent of the state, we should have no worries about the independence of the OLC. That, I think, is the fundamental proposition that the noble Baroness has been making; I see that she is nodding.

In relation to that proposition, we have two concerns. The first is about the independence of the Legal Services Board. In our debate on Clause 1, several noble Lords—I see, for example, the noble Lord, Lord Neill of Bladen, in his place—expressed serious concerns about the independence of the Legal Services Board. To the extent that the board is not independent, we should be concerned about the independence of the Office for Legal Complaints.

Secondly, even if the noble Baroness is right about the independence of the Legal Services Board, why is it necessary to interpose a figure who is as authoritative and above the legal battle as the Lord Chancellor to second-guess, in some circumstances, the independent judgment of the Legal Services Board, to which the Office for Legal Complaints is supposed to be responsible? In our submission, the Bill does not reflect the proposition that the noble Baroness has put before the Chamber—that the independence of the Legal Services Board should allay any concerns we have about the independence of the Office for Legal Complaints.

Perhaps I could put the point this way. I agree entirely with what the noble Baroness is trying to achieve; I simply do not think that the Bill reflects her objective.

I am sorry that the noble Lord does not agree with me. I want to make one point about a matter that puzzles me. One of the threads of our deliberations in Committee over the past few days—it feels longer—has been to ensure that there is the right level of accountability. Noble Lords, particularly those with professional experience within the legal world, have been concerned about issues such as public interest and making sure that no funny business can go on. One issue that I have been interested in in this Bill—as the noble Lord knows, it is not my policy area, so in a sense I look at it in a slightly fresh way—involves providing the opportunity for Parliament to hold to account independent bodies. The traditional way, which has worked through generations of different Governments, has been that the Secretary of State and the Lord Chancellor—I agree that it should involve the Lord Chancellor—are able to be held to account. If there was a feeling that the Legal Services Board had acted inappropriately for whatever reason—we do not expect that and I know that noble Lords do not do so—the Secretary of State would have to have agreed that and would be accountable to Parliament, a Select Committee or whatever for that decision. To remove that is in a sense to move away from what I understood to be one of the threads underlying the Bill.

The noble Baroness makes a good point about accountability to Parliament; I am always banging on about it myself. It is very important. Might not the answer here be to add the consent of the Lord Chief Justice to that of the Lord Chancellor? That way, the Lord Chancellor would be accounting on a very strong wicket.

Not surprisingly, I disagree with that; I do so because the Lord Chief Justice has many functions and plays an incredibly important role. He has a particularly important role in relation to the judiciary. This involves a layperson being appointed on a non-departmental public body, and accountability should be through the Government to Parliament.

Of course the Lord Chancellor is accountable to Parliament, but, in basing her arguments on the political accountability of the Lord Chancellor’s department the noble Baroness makes the point that I was trying to make for me. What I thought the noble Baroness was trying to achieve, as a matter of principle here, was independence of the political process. To fall back on the accountability of the Lord Chancellor to Parliament is to rely on the political process to justify the way in which the Government have drafted these provisions.

No, I disagree with that. We are relying on legislation that sets out how independent bodies will operate in conjunction with each other. Noble Lords would wish us to set that out as firmly as we can, recognising the advantages in primary and secondary legislation of the flexibility that we need. We sought to do that by clarifying the circumstances in which it operates. However, we want to add that if something as critical as the removal of the chairman were to occur, it is important that there should be an accountability process and that the Secretary of State or the Lord Chancellor should play that role. I do not think that there is anything contradictory in this. This is about independence but it is also about accountability on an area of policy that is, as noble Lords have made very clear over the past few days in Committee, of critical importance in our recognising the roles played by the professional legal services. That is what we have sought to do.

I am most grateful to the noble Baroness. I think we have taken this as far as we need to in Committee. On Report, I shall suggest to the noble Baroness that if the Lord Chancellor disagrees with a decision made by the Legal Services Board in respect of either the chairmanship of the Office for Legal Complaints or the number of members on the Office for Legal Complaints’ board, the appropriate remedy for him would not be to intervene directly at the Office for Legal Complaints level, but to intervene at the Legal Services Board level, because he would have disagreed with a decision of the Legal Services Board. Between now and Report, I shall reflect on these matters and return with a further amendment. Meanwhile, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 113 not moved.]

[Amendment No. 114 had been withdrawn from the Marshalled List.]

114A: Schedule 15, page 214, line 28, at end insert “but, for the avoidance of doubt, such persons shall not include approved regulators”

The noble Lord said: I shall not move the amendment, but I want to record my appreciation of the noble Lord, Lord Thomas of Gresford, for moving amendments the other night on my behalf. He and I have not always agreed in these debates but he moved them most eloquently—certainly far more eloquently than I could have done. I also thank the Minister for making it clear that the clause as it stands does not allow a redelegation back to the professional bodies by the back door. I abuse the procedure by making it clear that I shall oppose any amendments that allow redelegation to professional bodies by the front door.

[Amendment No. 114A not moved.]

[Amendment No. 115 had been withdrawn from the Marshalled List.]

115A: Schedule 15, page 216, line 3, leave out paragraphs 21 and 22

The noble Lord said: The paragraphs that I seek to remove from the Bill raise questions that flow naturally from the debate we have just had about the independence of the Office for Legal Complaints. The treatment of the authority of the Office for Legal Complaints in paragraphs 21 and 22 is rather different, for example, from that in the previous paragraph dealing with the Office for Legal Complaints budget. I am moved to inquire why there is the requirement that powers over the acquisition or disposal of land should be subject to the approval of the Secretary of State.

That has the appearance of interfering with what seems to be a purely operational matter. It is not suggested that a move in those directions in respect of land should be subject to the Legal Services Board, but it has to go all the way to the top, which seems rather odd. These matters appear to be suitable for a determination by the board itself and such a provision may inhibit the freedom of the Office for Legal Complaints to act decisively and quickly and to react to changing circumstances.

There is some suspicion in certain consumer quarters, which no doubt has passed the ears of the noble Lord, Lord Whitty, that this is actually about—the clue may be in the limitation of this power in sub-paragraph (2) to the initial five-year period—the present office being located in the West Midlands. There is only one new element, which may be dissipated, and that is the building, as it is thought likely that the incumbent staff will move across from the Law Society’s consumer complaints service en masse. We had some discussion about that earlier but the concern remains.

The Bill also appears to include a provision in Schedule 15 that could make the preferred West Midlands location binding for at least five years. I admit that curiosity, at least as much as a firm intention to push this matter, lies behind the tabling of the amendment. I beg to move.

I echo the words of the noble Lord, Lord Maclennan of Rogart. So far as I can tell, there is no equivalent provision for the Legal Services Board and, in those circumstances, we cannot underestimate the significance of the public perception that might conclude that what we have here is simply a rebranding of the old solicitors’ complaints system. As the noble Lord, Lord Maclennan, said, the restrictions on the OLC are quite startling and could inhibit its operational independence. I refer not only to matters concerning the acquisition and disposal of land but also to the power to borrow money. So I, like the noble Lord, am looking forward to hearing the noble Baroness’s response.

As the noble Lord, Lord Maclennan, said, we have touched previously on location, and I shall try to tackle that first. When we were considering the location, there were a number of factors to take into account. Criticisms have been levied at the current organisation—I shall not reiterate them—but that does not mean, as I know noble Lords accept, that everyone in the organisation is not able to do a good and viable job responsibly.

It will be three years before the OLC comes into being, during which complaints will still need to be dealt with. We have to think about ensuring that we retain staff whom we wish to see transferred across under existing TUPE rules and also that we think through appropriately value for money, the skills and experience that we will need, the commitment to TUPE, and the presumption against London as a location, following the Lyons review.

If you put all those factors into the mix, in our view you end up saying that it is appropriate that the new organisation should be able to build on the skills of some, if not all, of the people currently involved. It will be a different structure, and we believe that it will certainly be a different culture due to the way in which it is being set up. None the less, there will be people who are fully able to do a good job, and we have therefore indicated that it would be appropriate to enable them to move across to the new organisation. We do not want difficulties for the Law Society, which there would be if over the three years people bled away and got new jobs because they were not prepared to relocate perhaps hundreds of miles away. That would create a very difficult set of circumstances over the next three years.

That does not mean that we are recreating an organisation which, in general, people feel has not been able to do the job as well as it might, but it does recognise that lots of people within that organisation probably do a very good job and that they need to have the opportunity to work within the new structure. That is the business case that we have evolved. So we said that the new office would not be in Leamington Spa, where the current arrangements are but that it would be in the West Midlands. Thus the staff who currently work there know that there are potential jobs for them.

The new structure will be different. We do not know how many people will be able to transfer across in the way that TUPE allows but we certainly do not want to rule out any opportunities for people. I think that that is absolutely the right approach. However, as noble Lords made clear to me in Committee, it will be very important that it feels like a new organisation, not least for the good people who are going to work in it, and that it will be able to carry the confidence of the professions, the public and consumers. That is what we seek to achieve, and why it will be set up in this way.

On the specific issues the noble Lord raised, he will know that, particularly as regards his first amendment about locations, we have put in a sunset clause after five years. We think that that is right and proper because the circumstances will change. We have therefore enabled the provision to disappear after five years. So it is not for ever and that appropriately tackles the problems I have identified as important.

Paragraph 22 of Schedule 15 provides that any borrowing the OLC might do would need to have authorisation from the Legal Services Board and, through it, the consent of the Lord Chancellor. It enables a provision to exist in legislation that if the circumstances arise—currently unforeseen—the OLC would not be able to borrow any money without the agreement of the Legal Services Board and the Lord Chancellor. We have done that for reasons similar to those I have already given; not least because if it were to do that, there would be concerns in the context of how it is funded—a matter which I know we will discuss, no doubt at great length, later. But it is important to have those safeguards in place. So there is one safeguard with the sunset clause; there is another with the safeguards built into it which would enable that action to happen, should that be necessary.

I hope that the noble Lord, Lord Maclennan, will understand our rationale in thinking that there is a very good business case for the location of the OLC so that the current work can continue, there will be the opportunity for skilled people to move across to it, and it is recognised that this needs to be a new organisation.

I am grateful to the noble Baroness for explaining what lies behind this slightly, on the face of it, odd provision. It is a transitional arrangement written into the Bill, but of course there will be a price to be paid. I understand what she says about the rights and interests of those currently employed in the Law Society’s consumer complaints service, but they are taken care of in the law. The noble Baroness referred to TUPE.

The main concern that this gives rise to is the perception that the Government are making less of a change than had been heralded by making such a remarkable provision in primary legislation to ensure that the location of the OLC does not lie in its hands for a number of years to come, and that it will be where it has been determined in the manner that the Minister described. However, she has elucidated the thinking, and it is a matter of judgment whether that perception vitiates the wider purpose of the Bill and the wider purpose of seeking to strengthen not only the appearance of independence, but also the actuality. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 116 and 117 had been withdrawn from the Marshalled List.]

Schedule 15 agreed to.

Clauses 112 to 117 agreed to.

Clause 118 [Performance targets and monitoring]:

117ZA: Clause 118, page 61, line 32, at end insert “, or

( ) investigate the handling of complaints by the OLC (complaints under this subsection include those handled on behalf of the OLC and those referred to approved regulators by the OLC).”

The noble Lord said: My amendment is fairly straightforward; the other grouped amendments in the names of the noble Lords, Lord Maclennan and Lord Thomas of Gresford, spell out its implications.

My concern is that, as was said in the first debate this afternoon, while the OLC is the creature of the Legal Services Board in one sense, the fact that both are prescribed in statute means that we have to be clear what the relationship between the two is. All my amendment would do is make it clear that, if the Legal Services Board is to be effective, its powers must be adequate for the purpose of ensuring the performance of its duties by the OLC. If the OLC fails in its duty to handle complaints, the powers of the Legal Services Board need to be at least as great as the current powers of the Office of the Legal Services Complaints Commissioner. Therefore, at the very least, the power to investigate should be included in the Bill.

That is all that my amendment suggests. The subsequent amendments in the group deal with the process and sanctions available to the LSB. I hope that my noble friend will explain that the amendments are unnecessary, but we ought to be clear at this stage that the powers of the LSB are at least as great as those that exist at present and adequate for the task that we are now placing on it and on the OLC. I beg to move.

I oppose the amendment for the reason that it has been in effect opposed already. It brings into play the issue that we discussed of whether the board should have an initiative role to investigate on its own when no complaint and no cause for investigation have been submitted to it. Inevitably, for that reason, I oppose the amendment.

I am grateful to the noble Lord, Lord Whitty, for trailing the amendments standing in my name and that of my noble friend Lord Thomas of Gresford. He is right in describing their purpose, which is not to empower the Legal Services Board to initiate new investigations but, rather, to give it a power that already exists in the hands of the Legal Services Complaints Commissioner, for which no provision is made in the Bill. It is the power to intervene if the OLC is failing to meet the purposes for which it has been established and to consider strategically what is being done by the OLC. If the OLC is not seen to be handling complaints effectively and efficiently, some such power is required. My amendments spell out how those powers might be exercisable.

It is important, and I understood it to be an underlying purpose of the Bill, that the whole system of legal complaints should be subject to independent scrutiny and review. If the operational decisions by the Office for Legal Complaints are not giving rise to the satisfaction that it is hoped that they will elicit, the system ought to provide a remedy. That is the purpose of the three amendments that I have tabled.

In considering the amendment moved by the noble Lord, Lord Whitty, on its own, my only concern in this area is whether there is any suggestion that there might be intervention in a particular ongoing complaint that is being adjudicated. In other words, could the OLC be told what decision it is to arrive at, or is this all intended to operate ex post? You have a decision, maybe half a dozen decisions, and then there is public concern, or a number of people are concerned, about the way in which the OLC has been doing its job. Intervention in current decisions would be completely undesirable as it would completely destroy the independent stature of the OLC. I cannot believe that that is intended.

The noble Lord, Lord Neill of Bladen, has made a very good point on this line of amendments. My understanding is that the amendment of the noble Lord, Lord Whitty, and indeed the Liberal amendments, which are in the same line, are intended to be directed not at an individual complaint, but at the system that is being operated by the Office for Legal Complaints. If there is a systematic failure by the Office for Legal Complaints to fulfil its role in the way the Legal Services Board thinks it ought to be fulfilled, that would give the Legal Services Board the opportunity to issue directions ex post, which would correct the conduct of the OLC. That is what I understood by this line of amendments. We have not tabled any amendments; but if their approach is the one that ought to be adopted by your Lordships, then they would be, in my submission, the proper way of achieving it.

These amendments have made me look in a little more detail at Clauses 111 to 118. I must confess to your Lordships—particularly in the context of the Minister’s earlier remarks about the accountability of the OLC to the Legal Services Board—that these provisions give rise to considerable cause for concern, at least to me. This is because Clause 115 requires the Office for Legal Complaints to prepare an annual report, which will go to the Secretary of State—soon to be substituted by the Lord Chancellor—and then be laid before Parliament. That suggests an entirely different line of accountability for the OLC from the one suggested by the noble Baroness, which is accountability to the Legal Services Board.

Would it not be more appropriate for the Legal Services Board’s annual report to contain everything that it is necessary to say about the Office for Legal Complaints, making Clause 115 surplus to requirements? Indeed, if Parliament discussed an annual report under Clause 115, prepared by the Office for Legal Complaints, there might be a danger that it would come to an entirely different view about how the Office for Legal Complaints ought to operate from the one taken by the Legal Services Board. Surely parliamentary accountability ought exclusively to lie in the relationship between the Legal Services Board and Parliament. If both these institutions independently account to Parliament, the potential for confusion is considerable.

The noble Baroness might be saying to the Committee in response to these amendments that Clause 118 requires the OLC to meet performance targets and, if it does not, the Legal Services Board has certain powers in relation to the OLC. Performance targets, however, are quite different from those matters raised by the noble Lords, Lord Whitty and Lord Maclennan of Rogart.

I can summarise my observations by saying that if the noble Baroness wishes to sustain her earlier argument that the Office for Legal Complaints is accountable to the Legal Services Board, Clauses 111 to 118 do not properly reflect that.

We have had an interesting debate and I shall reflect on the specific points made by the noble Lord, Lord Kingsland, on Clauses 111 to 118. I start by responding to the wonderfully numbered Amendment No. 117ZA—the numbering of these amendments becomes more extraordinary by the day—tabled by my noble friend. We think that the LSB already has the tools to assess whether the OLC is performing effectively and I agree with the noble Lords, Lord Neill and Lord Kingsland, that the issue is about systemic processes rather than individual complaints.

The amendment is very widely drawn. Clause 153 provides that the LSB is able to direct the OLC to modify its rules. We have already talked about removing the chairman or members, but if the OLC should fail in its duties, under Clause 153 the board is able to direct it to make changes. For the reasons already outlined, we do not want the board to reopen or intervene in the determination of individual cases. The ombudsmen are independent and we do not want to see any interference in their decisions, which would be the unfortunate result of this amendment. We think that we have captured what noble Lords are seeking in Clause 153. Systemic issues will be dealt with by the LSB, but we would not want to see individual cases being reopened. I hope that my noble friend will feel able happily to withdraw his amendment if I am right in assuming that he agrees with the noble Lord, Lord Campbell of Alloway, and others that this is an issue where the systemic approach is fine, but it is not for individual cases.

I turn to the group of amendments spoken to by the noble Lord, Lord Maclennan of Rogart. We are setting up a very different kind of relationship between the OLC and the LSB from that which exists currently for the LSO or the LSCC in terms of their relationships with the approved regulators. We have already talked about the role of the LSB in terms of appointing the members of the OLC and, of course, removing them if they fail to perform adequately. Simply to transfer across what we have currently got in the system would be to fail to acknowledge that we are creating a new system. We will not be in the position of having legal professional bodies involved in the handling of complaints in the same way. This will be a completely separate organisation led by ombudsmen who, as I have indicated, will be independent. So we do not accept that there is a need to replicate what we had before, because this is different. For that reason, we would not accept these amendments.

The noble Lord, Lord Kingsland, considered the role of Clauses 111 to 118. As I understand it, the annual report provides an opportunity for Parliament to look at what the OLC is doing. I presume noble Lords would like that to be the case. However, the noble Lord said that we could have a situation in which the Secretary of State and the Legal Services Board were in different places, which might in itself be quite interesting. I understand that both will receive copies of the report and that the Secretary of State would lay it before Parliament. That is a normal route for putting things before noble Lords and the other place. In the policy areas in which I have been involved, that is ordinary practice. I do not think that there is any potential for conflict. It is important that we are given the opportunity to see these reports and to consider how things are working, not only in the light of what noble Lords have said but also because we want to secure, along with professional confidence, public and consumer confidence in the system.

I am not sure that I accept fully the proposal that we do not need these clauses. While I hasten to add that I am always keen to make Bills shorter, it is important to set out in the Bill precisely what we are asking the Office for Legal Complaints to do. There is a tension between wanting to be as clear as possible in the Bill and allowing for the flexibility that is always desirable beyond it. So while I am happy to look at these again, I think that they give a general sense of what the OLC is being required to do in work that it undertakes. I am also pleased that noble Lords will be able to look at an annual report from it.

Before the noble Lord, Lord Whitty, replies—and I think that the noble Lord, Lord Maclennan, also wishes to intervene—I may have unintentionally confused the noble Baroness. I am suggesting not that we should expunge Clauses 111 to 118 from the Bill, but that some of those clauses might need amending to conform with the principle that the noble Baroness has laid down—that the Office for Legal Complaints is, in effect, a creature of the Legal Services Board.

On Clause 115 in particular, I am not suggesting that we do not need the information that the annual report would contain laid before Parliament, as set out in that clause. I am, however, suggesting that that information ought to be contained in a report made not by the OLC but by the Legal Services Board. That is because Parliament may well take views on the annual reports of the Legal Services Board and of the OLC that are not consistent, which would create much confusion. I therefore suggest to the noble Baroness that we would be better to have a single report presented by the Legal Services Board incorporating what the OLC report would have said.

I am perfectly happy to say that I am easily confused, as the noble Lord, Lord Kingsland, knows well, and I apologise for not quite understanding what he meant. I am happy to look at that, as one issue has been to make sure that the OLC—I would probably not go as far as saying that is a creature of the other body, but it certainly has responsibilities to it—is aware of its responsibilities as an NDPB and is functioning properly. These clauses are, in part, designed to achieve that and we therefore felt that it was important to look at the OLC as an entity. However, the noble Lord makes a good point and, if I might, I will talk to my colleagues about it.

I am grateful to the Minister for her reply, but I confess that I am not wholly satisfied that she has addressed the point with sufficient force to convince me that this series of amendments is misdirected. She seems to recognise that, in the relationship between the OLC and the board, there ought to be some capability to intervene if the OLC is systemically not delivering what it is expected to do. Yet, in order to ensure that that is possible, the Minister is relying on a quite limited power in Clause 153, which allows the board to,

“direct the OLC to … modify its scheme rules”,

or to,

“make a specified modification to its scheme rules”.

However, the fault that gives rise to concern may have nothing to do with the scheme rules. It may be an operational matter not directly related to them, so an amendment to the framework within which the OLC operates might actually be futile.

Under Clauses 111 to 118, it is clear that the Office for Legal Complaints has wide powers that are not necessarily contained within the scheme rules. These powers are set out most widely in Clause 116, which allows the OLC to,

“do anything calculated”—

it does not state whether it is a subjective or objective calculation—

“to facilitate, or incidental or conducive to, the carrying out of any of its functions”.

If I were satisfied that the Bill provided for interventions of the kind that I have suggested could be necessary to rectify the continuing dissatisfaction felt and perceived by the board with the performance of the OLC, I would be greatly reassured and would consider again whether these amendments are apposite. But the Minister relied simply on one clause, which by no means covers the situation.

The noble Lord is right: I should have referred also to Clauses 117 and 118. When he reflects on what I have said, will he be kind enough to put together Clauses 117, 118 and 153? These clauses provide that the board may require the OLC to prepare reports in respect of any specified matter; that the board may set and monitor performance targets; that directions can impose conditions with which the performance targets must conform; that the board must publish any target set or direction given by it under the clause so that the OLC knows what it has to do; and that the board may take such steps as it regards as appropriate to monitor the extent to which targets are being met. The noble Lord is right to say that I relied far too much on one clause, but I hope that he will feel that we have captured what he is after in the context of all of these clauses.

I am reassured to the extent that the Minister is anxious to ensure that the powers that I suggest the board should have ought to be in the Bill. However, I am by no means certain that the performance target requirements deal with the issue either. Performance targets are very often concerned with percentages, costs and many other things that are not necessarily directly to do with a pattern of consumer dissatisfaction. It is those concerns that I am seeking to address.

I am not unresponsive to what the Minister said—I have no doubt that she has this in mind—but the question of who deals with a failing OLC needs to be answered comprehensively. There are certain instrumentalities for dealing with certain shortcomings, but they are not sufficiently comprehensive. I hope that the Minister will look again at this matter and consider whether it is possible to meet these concerns by importing something into the Bill.

Of course. I hope that the noble Lord will discuss with me our interpretation of what we believe we have captured within the Bill to see whether that addresses his concerns. I believe that there is very little between us in what we are seeking to achieve.

I shall not pursue the amendment because, if it is capable of the interpretations of the noble Lords, Lord Neill of Bladen and Lord Campbell of Alloway, it is drafted far too widely. I am certainly not suggesting that the board should interfere in ongoing investigations by the OLC. However, like the noble Lord, Lord Maclennan, I am still slightly uneasy and I would be grateful if the Minister would either pursue the matter further or write to us.

We are dealing here with the history of the previous system of complaints handling under the Law Society. I do not want to reopen old controversies, but that system has not been widely regarded as being up to scratch for the task. In a relatively recent change, we gave certain powers to the Office of the Legal Services Complaints Commissioner. The Minister has referred us to several clauses, but I am slightly anxious that they do not add up to the same powers that the commissioner had under the previous system, particularly on initiating investigation; rather, they largely relate to sanctions, or to requirements for the OLC to report upwards to the board. They do not actually give the LSB the powers to initiate investigations of systemic failings or individual cases. They do not seem to meet that. I would be grateful, in withdrawing this amendment, if my noble friend could indicate that she would be prepared to give this a little further thought and, if necessary, write to me and other noble Lords.

I will give anything further thought, as my noble friend would expect. The only comment I would make is that the powers may not look the same because this is a different system, and the role that my noble friend describes would not be the same. We think that we have captured what my noble friend is seeking, which is the opportunity for the Legal Services Board to be sure, in a systemic way, that clear areas of concern can be dealt with. We think that the combination of monitoring, targets, requiring reports and, at the end of the day, being able to remove people is a good one, and will tackle that issue. Of course I will look further at it, though, to ensure that we have captured that. I think that there is nothing between the two of us on this matter, except to say that the Government are not recreating the system as it stands because the position of this body is not equivalent to that of the current body.

I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 117A to 118C had been withdrawn from the Marshalled List.]

Clause 118 agreed to.

[Amendments Nos. 118D to 118F not moved.]

Clauses 119 to 121 agreed to.

Clause 122 [Jurisdiction of the ombudsman scheme]:

119: Clause 122 , page 63, line 19, at end insert “, and

(d) the activity is a legal activity.”

The noble Lord said: I shall also speak to Amendment No. 120A. These amendments have been grouped together as they relate to the extent of the jurisdiction of the ombudsman scheme.

In Clause 125 the jurisdiction of the ombudsman scheme is stated to cover an authorised person, regardless of whether the complaint relates to the performance of legal services. That appears to be unnecessarily broad. The amendment therefore provides that there should be jurisdiction only for complaints about the respondent’s legal activities.

Amendment No. 120A has been inspired by the silence of the Bill on paralegals. The amendment seeks to include them within the jurisdiction of the ombudsman scheme of the OLC. The Bill as drafted does not give any adequate means of address for those with complaints about paralegals working outside law firms, which, as noble Lords discovered on the second day of Committee, concerns a considerable number of individuals. The amendment would enable the OLC to have the power to intervene in complaints against these non-law-firm paralegals, especially when they are giving legal advice directly to clients. As highlighted in the earlier debate, paralegals are unregulated and very often untrained. Some sort of redress for the consumer against these individuals must be in the consumer interest, and indeed has been requested by the paralegal profession itself. I beg to move.

My Amendment No. 119A is in this group. Unlike the noble Lord’s amendment, it would not extend mandatory jurisdiction to other areas but would allow for a voluntary extension. The Bill makes the majority of legal activities reserved activities but there are legal and quasi-legal activities which are not reserved, usually for good reason. The full regulation of the legislation would probably inhibit competition regarding will-writing, for example, and the effects would be detrimental to the consumer. However, it means that non-reserved activities are not allowably covered by the ombudsman system.

The amendment would allow non-reserved legal service providers to come within the jurisdiction of the ombudsman on a voluntary basis. The model I am thinking of is the financial services sector. Financial services which are not legislatively required to come under the regulatory or ombudsman service can voluntarily, through their own trade association or individual firms, opt to become part of the ombudsman service as a reassurance to the consumers of those services. Normally, a trade association would apply to bring its membership in bulk into the system, but an individual firm could enter. In either case, the conditions would be that voluntary subscription to the ombudsman service would entail acceptance of the terms of the redress rules, compensation limits, information-gathering powers, and so on.

The amendment would extend consumer protection into unregulated areas without subjecting those activities to the full burden of regulation operated by the LSB. It would have the other advantage of preventing a new regulatory maze confusing the consumer. If parts of the unregulated sector an entirely different system of redress and dispute resolution chose it would be a recipe for confusion and inconsistency.

Legal service providers would also benefit because it would lend their services added credibility and status. Displaying the ombudsman logo on their premises and paperwork will enable providers to differentiate themselves from their perhaps less scrupulous rivals who decide, on whatever basis, not to join the ombudsman scheme. I commend the amendment; it would increase consumer protection and the ability to differentiate with regard to the good performers in the non-reserved sector of legal and quasi-legal services.

I am grateful to noble Lords for raising these issues. It might seem obvious to the noble Lord, Lord Kingsland, that there should be a requirement that the jurisdiction of the Office for Legal Complaints be limited to complaints about legal activities. In general, I accept and expect that complaints will relate to acts and omissions in carrying out legal activities, but I want to resist putting this in the Bill, and I shall explain why.

A respondent to a complaint must be someone capable of being complained about under the scheme. That means that at the time the act or omission to which the complaint relates occurred they must have been an authorised person in relation to an activity which is a reserved legal activity. It does not matter under the Bill whether the act or omission in question relates to a reserved legal activity—advocacy, litigation, licensed conveyancing, and so on—or some other legal activity or service that the respondent was providing. That is partly because we have taken the view that what matters is that the person is authorised; therefore, as their client, the complainant should be capable of complaining about any aspect of the service provided. It is also because in the world of alternative business structures, firms will be providing packages of services, and a complaint may therefore wholly or partly relate to other non-legal services. We do not want those complaints to be excluded simply because the activity was not wholly or partly a legal activity or service.

In those circumstances, an ombudsman will need to judge whether the complaint is best dealt with under the OLC scheme or another scheme. Where a complaint is purely about financial advice, for example, the ombudsman may decide, with the consent of the complainant, that it would be more appropriate to pass it on to the Financial Ombudsman Service under the scheme rules in Clause 130(3)(b). But where the complaint contains aspects covered by different jurisdictions, the OLC might want to consider the complaint and provide redress in the round. It is better to leave the jurisdiction as open as possible, albeit with the safeguards that we have put in Clauses 123 to 125, so that the ombudsman can take into account all the factors. We would not want to see a genuine complaint excluded because the aspect being complained about was not quality of legal service, but simply quality of service; for example, the legal advice was fine but the lawyer was rude or condescending or whatever reasons might be given.

I am also keen for consumers not to have to work out to whom they should complain. We want there to be a one-stop shop and for the ombudsman to determine where that complaint should go. Although I understand the principle behind what the noble Lord is seeking to achieve, I expect the ombudsman to be looking primarily at legal complaints. I do not want to reach the point where the consumer is unable to raise complaints and have the ombudsman look at them in the round, work with others or pass them on as appropriate.

The amendment of my noble friend Lord Whitty raises an interesting point about the voluntary basis that we could see the jurisdiction being extended to. I understand what my noble friend seeks to achieve. In fact, the Financial Ombudsman Service’s voluntary jurisdiction has worked very well in practice and has been a useful transitional arrangement for those who are not yet regulated by the Financial Services Authority, but who may be regulated in time. So I can see the merit in enabling such a voluntary jurisdiction to be established.

However, at this stage it is important that the OLC deals with complaints against those providing reserved legal activities as set out in the Bill. As my noble friend knows well, there is real consumer concern in this area. I want the OLC to look at those issues first. That said, I see the potential benefit of allowing for a voluntary jurisdiction to be established, subject of course to the consultation and consent that would need to go alongside that. I will take this away with a view to bringing something back at the next stage of this Bill, with what I have said about the focus of the OLC but none the less recognising that this is important.

Amendment No. 120A, moved by the noble Lord, Lord Kingsland, would extend the jurisdiction, but on a compulsory rather than voluntary basis. Aside from all the practical questions about the standards to which people who are not regulated would be held, how we would define “legal advice and assistance” and who would pay for this—it would be a vast expansion of the ombudsman scheme’s jurisdiction—we think it runs contrary to the position set out by Clementi and our position set out in the White Paper. I accept that it leaves some consumers unprotected, but it is a question at this stage of how far we can cast the regulatory net. That decision is based on a risk-based approach to regulation, and the Legal Services Board, under the legislation, will be able to take decisions to expand or even to reduce the scope of regulation should it be clear that it is appropriate to do so. We have already discussed some areas that noble Lords are concerned about which, ultimately, the Legal Services Board might consider it wished to move into. There are also issues of educating consumers about different legal service providers; which are regulated and which therefore offer them greater protection.

I have already said that we could look at the voluntary jurisdiction scheme. If we were to provide for that and the OLC decided to set up such a scheme, we could bring currently unregulated activities or unregulated providers within that. There could be real benefits in that, but at the moment, we would rather be clear about where the regulatory net sits in terms of the compulsion and invite the LSB in looking at its future to determine where else it thinks the regulatory net should be cast. On that basis, I hope that the noble Lord will be able to withdraw his amendment.

I am most grateful to the noble Baroness for her reply. I accept that some complaints, particularly those involving organisations under Part 5 of the Bill, may concern a multitude of disciplines and that somebody has to sift the problems out and place them into the appropriate professional compartments. At the same time, the clause is cast very wide and gives unnecessarily broad discretion to the OLC. I invite the Minister between now and Report to consider an alternative way of drafting that on one hand ensures that there will not be any loopholes in the system and on the other constrains the discretion of the OLC as much as possible.

On Amendment No. 120A, I recognise that there must be some limit to the scope of the scheme. There are a large number of paralegals and, by the very nature of the circumstances in which they give their advice, regulating them might prove extremely complex and therefore extremely expensive. I was reassured by the Minister’s observations that the Legal Services Board will keep the matter under review and, if it transpires that this is a growing problem, the question of whether some form of regulation should be introduced will be reconsidered. In those circumstances, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 119A not moved.]

Clause 122 agreed to.

Clause 123 [Complaints excluded because respondent's complaints procedures not used]:

[Amendment No. 120 not moved.]

Clause 123 agreed to.

Clause 124 agreed to.

Clause 125 [Parties]:

[Amendment No. 120A not moved.]

[Amendments Nos. 121 and 121A had been withdrawn from the Marshalled List.]

Clause 125 agreed to.

Clauses 126 to 128 agreed to.

Clause 129 [Continuity of complaints]:

122: Clause 129 , page 66, line 21, leave out “may” and insert “must”

The noble Lord said: I shall also speak to Amendment No. 123. The amendments would protect the interests of complainants when, for whatever reason, they are unable to include provision for payment of redress into a person’s estate. The amendments would make such a provision mandatory for the scheme rules. Once the OLC has upheld a complaint it seems only equitable that redress must be paid. It would be wrong for the party at fault to escape redress because of some misfortune befalling the complainant. The amendment would ensure that such rights to compensation or other redress continue. Since Clause 129(4) already grants the power to legislate for such a provision, we are not asking the Government to accept a new matter of principle, merely to put it in the Bill. I beg to move.

My preference is to leave to the OLC the issue of whether to allow complaints to be continued when the original complainant has died. Of course, there will be some very clear-cut cases in which it would appear very unfair for a case to fall just before redress is rewarded because a complainant has died, but there may be other cases in which we have a less clear-cut situation. In general the scheme is designed for the clients of the lawyer in question, not for families or third parties. There are only a handful of places in which we are clear that we have strict requirements on the OLC to make rules, and we would rather leave this because we believe that there could be circumstances in which it might not be appropriate to do so.

The critical point that the noble Lord was making falls under Amendment No. 123, with the question of redress and making sure that rights are preserved. Absolutely. When a person gains the right to continue a complaint under rules under Clause 129(4), he will step into the shoes of the original complainant, so any redress will be rewarded as it would have been to the original complainant. I am assured that that is captured in the Bill, but I will look at the provision again, as I absolutely agree with the noble Lord that if someone is allowed to move in to the complainant’s shoes the redress should continue as expected.

I am most grateful to the Minister. I recognise that there are some circumstances which are complex and for which it would be difficult to provide, in terms, in the Bill. Nevertheless, there is one obvious situation about which there can be no argument; that is, the circumstances which would follow the death of the complainant. There is no good reason for not making specific reference to that in the Bill. I thought that I saw the Minister nodding.

I was not disagreeing with the noble Lord. There will definitely be circumstances where it is absolutely right that that should continue. The question is whether “may” should be changed to “must” and what the implications are of doing so. I will look at the matter again, but there will be circumstances where what is needed is an apology. That is all that I am concerned about. I will check that the noble Lord and I are in the same place in this respect.

I see that the Minister is grappling with the matter. I could not possibly ask for more. In those circumstances, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 123 not moved.]

Clause 129 agreed to.

Clause 130 [Operation of the ombudsman scheme]:

[Amendments Nos. 124 and 124A had been withdrawn from the Marshalled List.]

[Amendments Nos. 125 to 127 not moved.]

128: Clause 130, page 66, line 39, at end insert “only by the Chief Ombudsman or an assistant ombudsman”

The noble Lord said: I shall speak also to Amendments Nos. 131 and 132. Here, I can be telegraphic. Amendment No. 128 raises a simple point which is designed to ensure that complaints can be dismissed entirely only by an ombudsman and not by a caseworker. I am really asking the Minister whether she will confirm this and, if so, why not put it in the Bill.

Amendments Nos. 131 and 132 relate to the delegation of the ombudsman’s functions. As they stand, the powers of delegation in the Bill are excessive. We appreciate that the ombudsman may be under considerable logistical pressure, and there is obviously a need for some powers of delegation. However, the amendments would ensure that those powers are limited to appropriate functions. In other words, we want to avoid a situation where, for example, decisions to delegate are made, because of an excessive workload, to inappropriate decision makers. The proposed amendment would assist in guarding against the closure of contested cases by decision makers below the level of ombudsmen. I beg to move.

I shall attempt to be similarly telegraphic. I agree with the noble Lord completely in his Amendment No. 128. If I might, I will take it away to make sure that we have captured it by the next stage. I agree that there should be no uncertainty in this area. If I have not quite captured that in the Bill, I agree that we should do so. Therefore, I would like to take the matter away for consideration.

I understand what the noble Lord is seeking to achieve in his Amendments Nos. 131 and 132, but we make it clear that safeguards are in place to monitor what functions the ombudsman can delegate. I say “delegate” and not “transfer”, because it is a fundamental difference. The Bill allows the ombudsman to delegate only in relation to making an investigation in consideration of a complaint. They cannot delegate their function to a member of staff in respect of determining a complaint. That is a fundamental and critical difference. We hope that the staff appointed by the OLC will be the first port of call for complaints. We want it to investigate and, we hope, to resolve complaints, where possible by mediation. That would be the best possible outcome. We hope that the delegation of the functions that I have described will help to facilitate the speedy and—dare I say?—inexpensive resolution of consumer complaints. I am not sure that much would be gained by requiring those functions to be specified in the scheme rules.

The OLC and the chief ombudsman will ultimately be responsible for all of the actions of the caseworkers. They will oversee the exercise of the functions and, if those functions are not being exercised appropriately, they will not be delegated. As I have already indicated, there is no question that those functions are not being transferred to enable the frontline staff to deal with the issues that I have identified and the OLC and the chief ombudsman will not be able to delegate the determination of a complaint to any member of staff.

I am reassured by much of what the noble Baroness has said. She made a distinction between delegation and transfer; but if delegation means what she said—in other words, it is not a delegation of the ultimate responsibility to take the decision—is it necessary to have that provision in the Bill at all?

In normal circumstances, responsible decision-makers will delegate to other members of staff some of the work that they require to be carried out in order to take that decision. That is a normal part of daily working relations. I would not have thought that it was necessary to refer to that in the Bill. The reference to delegation in the Bill suggested to me that it was a delegation of responsibility as well as work. If the noble Baroness is saying to me that it is not a delegation of responsibility, but merely a delegation of work, I am reassured. But I am surprised that it was felt necessary to put that on the face of the Bill.

I can see why the noble Lord would be concerned. My understanding is that it was partly to make clear that we were not delegating determination and to make clear in this part of the Bill what the responsibilities would be and how they would work. That is about confidence as much as anything; it is about people being able clearly to see on the face of the legislation what can and cannot be done. This is not a transfer of responsibility; this is appropriate delegation to caseworkers, but they cannot determine the case.

I shall look carefully at the record of these exchanges so that I understand precisely what the noble Baroness has said. If there is not to be a transfer of responsibility, there will be no need for me to raise this matter on Report. For now, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 129 had been withdrawn from the Marshalled List.]

[Amendment No.129A not moved.]

[Amendment No. 130 had been withdrawn from the Marshalled List.]

130A: Clause 130, page 67, line 13, leave out “the complainant or”

The noble Lord said: The amendment is concerned with the possibility of costs being awarded against a complainant. I am concerned there is a real danger that a bona fide complainant could be deterred by the risk of costs at the end of a complaint. That is particularly so in circumstances that I am sure all respectable lawyers will deny could ever occur; but circumstances do occur whereby the lawyer against whom the complaint is being contemplated forcefully reminds his former client that at the end of the day they may face substantial costs if they pursue the case.

I appreciate that if the noble Baroness were to accept the amendment, she may need a substitute clause to deal with vexatious complaints. Although that danger exists, there are other methods of tackling it. However, removing from the Bill the possibility that in all circumstances the potential complainant could face costs could make the situation worse than is presently the case and lay him open to unscrupulous lawyers. I hope that the noble Baroness could at least look at this matter and see whether that threat could be removed from the Bill. If it remained there, one could hardly complain about the lawyer drawing the potential complainant’s attention to it. On the other hand, it could seriously deter important and bona fide complaints. I beg to move.

I rise briefly to support the concerns of the noble Lord, Lord Whitty, and to encourage the Minister to respond positively. There is a legitimate anxiety that threats of costs can, for lay people, end their natural inclination and proper exercise of their rights. If that took place in clandestine circumstances without provision being openly discussed or made clear, that risk might be augmented by unscrupulous behaviour. If this amendment is not precisely the way to deal with the problem, it still needs to be dealt with and, perhaps, an up-front provision for openness on costs might be another approach. However, I am broadly in support of what the noble Lord, Lord Whitty, said.

I have not contributed to the Bill, but I do so now in support of the amendment tabled by the noble Lord, Lord Whitty. I want in particular to underline the need for the widest possible protection for the consumer—or in this case the complainant. I underline what has already been said so eloquently that without this amendment, the complainant may well be a worse position than under existing arrangements. Additionally, an unscrupulous lawyer could not be challenged or criticised for such unfair discouragement if he or she proffered it to his or her client.

Perhaps I may look at the other side of the situation. I totally understand what lies behind the amendment proposed by the noble Lord, Lord Whitty, but, if the Committee were to approve it, it is important that the second part of what he said should be taken into account also. There are unscrupulous lawyers, but there are also unscrupulous complainants. It is important that the concept lying behind the clause is recognised and, at the very least, if people put forward utterly unreasonable complaints, the ombudsman should have a power to deal with them. There may be a need to strengthen subsections (1) and (2), by using either the word “vexatious” or a similar word. However, not giving the ombudsman any power to deal with an utterly unreasonable complainant who has, no doubt, caused the lawyer to spend a lot of money, when that lawyer has been reasonable in dealing with that litigant, would be going to the other extreme. Consequently, one should balance the importance of protecting the consumer with protection against the unreasonable complaint.

I add my voice to those of my two noble friends and support the amendment of the noble Lord, Lord Whitty. He made both points very well and they have been reinforced. Clearly, vexatious litigants must be dissuaded, but the consumer is very important here.

I agree with the view of the noble and learned Baroness, Lady Butler-Sloss. If I follow the argument correctly, the premise for the making of an award of costs against a complainant would be that the ombudsman had formed an opinion, under either subsections (1) or (2), that the complainant had acted improperly or unreasonably in relation to the complaint, or had been responsible for an unreasonable delay. That is culpable conduct.

There is a provision in the financial services legislation in more or less the same terms, although I am not aware of any case in which an award has been made. However, it is a residual power intended to deal with the sort of complainants I referred to when speaking to the amendment tabled by the noble Lord, Lord Kingsland, on the previous occasion. I said that there was such a thing as an unreasonable complainant. I do not view this as an unreasonable provision. It need not act as a deterrent to any complainant who comes forward with a case because if they take advice, they will be told, as I have said, “You will not get an order made against you unless you have behaved in this unreasonable manner. So you need have no fear”.

I have listened carefully to the speeches of the noble and learned Baroness, Lady Butler-Sloss, and the noble Lord, Lord Neill of Bladen, and I agree with them in their entirety.

I had written “listen” on my speaking notes. I absolutely understand that my noble friend is trying to deal with the possibility that a genuine complainant could be deterred because they felt that their complaint was not very worthy or terribly important, and that would lead them into a situation where they would have to pay costs. On the other hand, the Financial Ombudsman Service told us that it has never used the provision, as the noble Lord, Neill of Bladen, said, but that it regards it as important. It has said that it is about balance. It hopes that by making sure people understand the circumstances in which the provision could be used, it will deter those who would otherwise come forward.

The Financial Ombudsman Service is very clear that it is not going to use the provision in circumstances where it is obvious that the person was genuine in what they were doing—even if the complaint failed. This goes beyond what we do in the Bill. It is about how we make sure that we explain it to those involved. There may be unscrupulous behaviour on all sides or none. It is possible that somebody could be put off from making a claim because somebody says that they will have to pay. The critical thing is how we deal with it.

I have listened carefully. In a sense, the debate has gone exactly as I expected. My inclination is that we probably need to keep the balance, but make sure that we are not running the risk of people failing to make genuine complaints. However, that goes beyond what we want in the Bill.

I am not quite as encouraged as I was hoping to be by the noble Baroness’s response and her self-injunction to listen. I certainly accept that the amendment as it stands is not sufficiently balanced. I accept that the specific reference to vexatious appeals is needed. On the other hand, I think that we have enough anecdotal evidence to know the degree of threat under the present system—which is not entirely valid because costs cannot be awarded in some of those cases. This clause refers to, for example, a person being responsible for unreasonable delay. An ordinary, relatively vulnerable client will often hesitate for a long time before taking action, not unreasonably expecting the lawyer at some time to take their complaint seriously. The question of unreasonable delay is a little loose. We can meet the balanced approach, but the area for costs to be awarded needs to be a bit narrower than is provided here.

I can say to my noble friend that I am happy to look at the language. I sense from your Lordships that although the balance is probably appropriate, my noble friend is right to say that we need to check that we have not set the provision so wide as to deter people from making genuine complaints, as described by my noble friend. I am sure that the noble Lord, Lord Maclennan, would agree with that. We will look at the language, but keep the principle—if I can put it like that.

With regard to the language, I think that the financial services provision does not have identical language about a contribution to the costs of dealing with the complaint. I think that the order can be made in favour of the other party if there has been unreasonable conduct. As this is rather special, will the Minister look at that and compare the two texts?

I will certainly do that. I have the other relevant text here, which is to be found in Section 230. We have tried to model the provision on that, but I will take the noble Lord’s advice.

In the light of my noble friend’s latest remarks, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 130 agreed to.

Clause 131 [Delegation of an ombudsman's functions]:

[Amendments Nos. 131 and 132 not moved.]

Clause 131 agreed to.

Clause 132 agreed to.

Clause 133 [Charges payable by respondents]:

133: Clause 133, page 68, line 40, after “scheme” insert “which are determined in favour (or substantially in favour) of the complainant”

The noble Lord said: The purpose of this amendment is to enshrine the “polluter pays” principle in the Bill. The amendment would provide that a respondent is required to pay charges under Clause 133 in respect of a complaint against him only where the complaint is upheld, or substantially upheld.

The Bill goes against the recommendations of Sir David Clementi’s report. As it stands, the supposed polluter is required to pay the cost of the complaint even if the complaint proves unfounded. This contravenes the Clementi proposal that payment should be made by,

“those against whom a complaint has been upheld”.

It is manifestly unfair that those who are the subject of a complaint that is not upheld should be required to pay towards the cost of investigation. Let me illustrate the point with respect to junior members of the Bar with criminal and family practices. These are fields of practice in which unjustifiable complaints are constantly an occupational hazard. As the noble Lord, Lord Neill of Bladen, commented during Second Reading,

“It cannot stand up to any outside scrutiny that a man who has a false charge made against him has to pay [for] the costs of the proceedings”.—[Official Report, 6/12/06; col. 1185.]

I should emphasise that this amendment would not affect the power of an ombudsman under Clause 133(1) to require a respondent to pay costs, as a contribution to scheme resources, in cases of improper or unreasonable behaviour or delay. I beg to move.

I have 35 years’ experience as a family judge and 15 years’ experience as barrister before it, much of it in family proceedings. Family cases are highly emotional and very unhappy for those who engage in them. It is almost impossible to be objective about your own family problem. Whether in public law or in private law, the distress caused to litigants is enormous. Almost all litigants go away dissatisfied, most of them with the judge, which is fair enough, and many of them with the lawyer—the solicitor as well as the barrister—who represented them. The idea that unfounded complaints, some of which last for anything up to 10 years after the case is completed, should be met by the respondent having to pay is quite unjust. In that, I respectfully echo what was said by the noble Lord, Lord Kingsland. For this House to pass such a clause would seem to represent an opportunity for those with unjustified complaints to continue to make them in a new scheme as they had under the old schemes.

I strongly support the amendment and wholly agree with my noble friend Lord Kingsland and the noble and learned Baroness. This spreads, in my experience, to the criminal law. In a sense, this is a complete reversal of where we were 30 or 40 years ago, when we were too far pitched the other way. You could not sue a barrister, except in very limited circumstances, and you had very little redress.

In her speech on the previous amendment, the Minister emphasised the importance of fairness. The Chamber was seeking to be fair to complainants and not to have unfair threats hanging over them. It must be important to be fair to both sides. People’s animus and sense of dissatisfaction carries on whether this involves just the Family Division, as the noble and learned Baroness so eloquently said, or all other fields of legal dispute. Many people will never let the subject go; they make complaints that they believe to be well founded but an independent adjudicator—the ombudsman—may not agree and the complaint would not be upheld. It is a strain for any barrister or solicitor who is faced with that problem to have to deal with it in any event, but to have to do so knowing that costs are being run up against you in a wholly unfounded case will be seen by every member of the public and every Member of this House to be deeply unfair, I should have thought. I very much hope that the Minister will reflect on that.

I agree with the three previous speakers. In effect, this is a punishment for being an innocent defendant. It is a totally untenable proposition. You have your property confiscated and are ordered to pay charges because someone has brought an unfounded complaint against you. As a legal proposition that seems to be absolutely impossible. I am very surprised that there are no Human Rights Act implications in relation to property; there may well be—perhaps that could be looked at. We have the usual certificate that this Bill is entirely in accordance with the Human Rights Act, but I find it very odd that your property can be removed for you being innocent and defending yourself.

I agree with all those who have spoken. We on these Benches feel that the clause is most unsatisfactory. It is clear from subsection (2) that the presumption is that charges will be made. The presumption should be that the charges will not be made in the circumstances described by the noble Lord, Lord Kingsland. It is not satisfactory to have to rely on rules that may be set out under the scheme to embody the concerns that have been expressed in this debate. This major, clear and broad principle needs to be asserted firmly in the Bill.

I shall try to explain how we believe the system would work. I trust that that will provide comfort if not complete satisfaction to noble Lords. Under the new system, every lawyer will pay something towards running the OLC through the general levy. It is right that they should; it is a new body. Yes, this involves increasing consumer confidence—every practitioner has a genuine interest in that regardless of whether they themselves received complaints. We believe that the existence of the OLC should ensure that clients have greater peace of mind and that there will be benefits from increasing consumer confidence for those involved in the legal profession. That is an important part of what we are seeking to do.

I completely accept—this was said to me by the chairman of the Bar—that there are issues with, for example, junior barristers in criminal cases. The noble and learned Baroness indicated that there are also very emotive issues in family cases. People may feel aggrieved on the criminal or the family side with the outcome that is set and may wish to complain because they believe—they may well do so wrongly—that they have not been given the best possible advice and support from the legal profession. That is why we put flexibility in the Bill—to ensure that we design a fair system.

One expects that most of the complaints that get as far as the OLC will have some merit; otherwise they should have been provided for in-house and resolved. I can certainly envisage circumstances, as indicated by noble Lords, in which a vexatious complainant simply does not accept the efforts that the legal profession—the lawyer—has gone to in an attempt to resolve the complaint and wants either a second opinion from the OLC or otherwise wishes to pursue it.

Where a complaint is frivolous or vexatious, an ombudsman would have the power to dismiss it, without consideration of its merits, under Clause 130(3)(a); that is an important element in the Bill.

We also recognise that the system of case fees, if not sufficiently sensitive, might unfairly penalise particular areas of legal work or create a potential disincentive to act on behalf of certain clients. Noble Lords did not mention that this evening but I am sure that it is at the back of their minds. We acknowledge this issue. Again, this is why Clause 133 has been drafted to allow the OLC the flexibility to reduce or waive the charge in particular cases, to set different charges for different stages of proceedings and to provide for charges to be refunded in certain circumstances. Taken together, this gives the OLC considerable flexibility to develop a set of rules that operate in an equitable manner. That is the objective.

We hope that the system is capable of avoiding disincentives but there is also the question of incentives. That goes back to the previous amendment about ensuring that the power you have can incentivise. We want complaints to be resolved wherever possible in the first instance through legal firms’ procedures. If the OLC were free of charge to respondents, except where the complaint was upheld, we would be reducing the incentive to try to resolve the complaint in-house because it could simply be batted off to the OLC to be dealt with. That cannot be in anyone’s interests: the cost of the OLC would inevitably rise, and that cost would be passed back to all practitioners through the levy, making the costs higher for those who never receive a complaint; we should not forget them in this arrangement. There is an issue of incentive.

There are other difficulties with limiting the application of the case fee to complaints that are upheld. First, I do not want the OLC to be open to the criticism that it has a financial interest in upholding complaints and that ombudsmen are not acting fairly and impartially. That takes us to the European Convention on Human Rights. That may sound far-fetched but it is a criticism to which the OLC might be open and, as noble Lords know, perception is very important. The incentive should be for OLC staff to try to conciliate cases and achieve an outcome that parties can agree to as early in the process as possible. A formal determination by an ombudsman is at the end of that process.

We believe that the system that we have set up is the right one. The rules are subject to the consultation procedure in Clause 195. They will be developed taking account of the views of the profession. I remind noble Lords that we have already accepted Amendment No. 38 in the name of the noble Lord, Lord Kingsland, which required that Clause 10 will apply mutatis mutandis to representations by proposed regulators, whether in the regulatory or representative capacities. That consultation will have more force as a consequence of my acceptance of that principle.

We recognise the points that have been made but believe that to change the Bill in the proposed way would provide the wrong incentives and disincentives and could open the OLC to the perception that it was behaving inappropriately. I hope that I have persuaded noble Lords that we understand the issues but believe that we can capture this in the Bill as it stands.

Is the Minister actually saying to us that she is leaving to the OLC the power to charge an utterly innocent respondent from what will be an unfounded accusation? That seems to be the bottom line of what she has just said.

On the basis of what I have already said about the acceptance of Amendment No. 38 and the force of the consultation with the professional bodies, I am leaving the OLC to set out how it proposes to operate. I have also made it perfectly clear that the framing of the legislation recognises the genuine concerns of either vexatious complaints or an understanding that there will be different circumstances in which different charges should be made. I am not prepared to accept a position where only if a complaint is upheld would one have to pay, for the reasons that I have already given. We believe that that combination of finance—the general levy combined with what has been proposed for complaints that reach the OLC—is right. Very importantly, it does not seek to do other than understand and accept that the reason we need this flexibility is precisely because we want the OLC to be able to say, “In these circumstances we completely waive the charge, refund it, or set it at a much lower level”. It is precisely to do that; that is very important.

As I have indicated, if the only way in which the body could get the additional income was to find against a respondent, it would then be open to the charge—I do not suggest that it would do it—that it was in its interests to find against people, and we do not want to be in that position.

I have enormous respect for the noble Baroness. She always thinks and applies her mind very carefully, but I seriously believe that she is quite wrong on this and that she will find she is muddled when she looks at what she has said. However, she has said one thing that is completely right and which should be her lodestar. She said that the objective is that the scheme should be operated in an equitable manner. That is absolutely right. Therefore, to be equitable, it must follow that if a complaint is made against someone which turns out to be unfounded, it would be totally unfair for that person then to be charged the cost of that complaint having been made.

Before the noble Baroness intervenes—I can anticipate what she might say—I ask her to reflect on this. She started talking about frivolous and vexatious complaints and the opportunity of the OLC to refund costs, and so on, in certain circumstances. I believe we need to have firmly on the face of the Bill the obligation to do what is fair. I believe that what my noble friend has put forward in his amendments does that in a perfectly straightforward way. Perhaps the noble Baroness wishes to go away and think about other ways of making it perfectly clear that the OLC must be fair. I hope that she will agree that it would be almost impossible to devise a circumstance in which someone had had a complaint made against them which had proved to be unfounded yet it was fair to charge them for that, unless something in their conduct had been unreasonable and had brought the complaint on them. That particular wrinkle might be properly dealt with in rules, but the principle must be set out on the face of the Bill. At the moment it is not and I sincerely believe that the noble Baroness is not quite on the right lines at present.

I am grateful to the noble and learned Lord for being so gallant in the way in which he puts his comments about me not being on the right lines. I think I am, of course, as he will appreciate. Fairness means fairness to all the legal professions that pay towards this, and it means fairness to those who make complaints.

I want a situation in which complaints never reach the OLC because they are dealt with properly in-house. If a complaint reaches the OLC, in some circumstances—and only in some circumstances—that may reflect a failure of lawyers to deal with it properly in-house. When other members of the legal profession would have dealt with it properly, I do not see why they should not bear some responsibility, even if the claim is unfounded, for the fact that it reached the OLC at all. I also want to incentivise them to ensure that they resolve matters in-house. I have tried to indicate that if the system is always free at the OLC, unfounded complaints will be sent up to the OLC.

I am perfectly willing, as the noble and learned Lord would expect me to be, to look at whether I can capture fairness on the face of the Bill. However, my definition of fairness will be to include all those involved in the process, including those against whom a complaint is never made. I do not disagree with the concerns of the noble and learned Lord that when a complaint is not upheld, people should not incur huge costs, but the ambition is that if complaints get to the OLC, in a sense that means that they have not been dealt with properly in-house, as should be the case wherever possible.

I find the reply of the noble Baroness almost more disturbing than her initial remarks. She seems to be saying that because the case gets to the OLC, the person who was complained against was in some way responsible. Frankly, that cannot be right. It is wrong to seek to finance or to sustain, or partially sustain, a body of this kind by contributions from people against whom charges have been brought which have not been found to be substantiated. If there is some administrative problem, that is certainly not a cause for levying a charge against an individual.

I am bound to say that nothing that the Minister has said so far in the debate gives one any cause for satisfaction that this problem has even been recognised by the draftsman of the Bill. It may not be appropriate to divide the Committee—I do not know the intentions of the noble Lord, Lord Kingsland—but I am bound to say that we shall certainly wish to return to this matter, no doubt following wider consultations. This is such an important issue of principle that the idea that it can be sorted out by schemes that will be drafted by this body and which are not clearly part of the law is a wholly unsatisfactory way of dealing with this.

I too was deeply disturbed by the explanation of the noble Baroness. At least twice she spoke of matters getting to the OLC because they had not been dealt with properly in-house. A lot of us say we ought to cash that language. What does “has not been dealt with properly in-house” mean? That would include not caving in and being blackmailed. She shakes her head and looks surprised. On the face of the Bill there is no language at all about this being something that would apply only in circumstances where there was no proper settlement at an earlier stage. That takes one to another line of inquiry, without prejudice—letters, discussions, telephone calls—while this matter is being processed. One is dragged into the whole of that if one goes down that route. I respectfully suggest to her that this really needs to be rethought right from the beginning.

That was not my surprised face; that was my disagreement face. When I talked about the in-house resolution, I was replying to a point made by the noble and learned Lord, Lord Lyell, about fairness. I was very clear in my choice of language and I acknowledged that there could be circumstances in which complaints could have been dealt with in-house but that the procedures in-house were simply not adequate. That was the point that I was trying to make. I was trying to say that fairness is a concept that must incorporate all those involved in the system, whether they have a complaint made against them or not. The consequences of the proposals will have implications for all those people.

There will be people who quite understandably will have done their very best to try to solve matters but cannot, and it is completely reasonable that the OLC needs to think about the circumstances that apply to them—precisely the people mentioned by, I think, the noble Lord, Lord Kingsland, such as junior members of the criminal Bar. That issue was raised with me by the Bar Council and, as I indicated to the noble and learned Baroness, Lady Butler-Sloss, in the context of family cases.

I do not disagree with the issues raised by noble Lords. I was not seeking to suggest that, just because you cannot resolve a matter in-house, somehow you are guilty of something—far from it. I was simply saying that “fairness” is a concept that incorporates everyone involved in the process. I am perfectly happy to look at how we can capture that. I did not want to give the impression that “fairness” meant only one thing; rather, I was saying that we would have to deal with the question of what it means for everyone involved. The noble Lord, Lord Maclennan, is clearly shaking his head, so I have not satisfied him at all.

I am very clear about the principle behind what we are seeking to do here. We cannot capture all this in the Bill because, on the basis of what I have already said about Amendment No. 38, the professions, in conjunction with the OLC, need to be able to be consulted about the circumstances that worry them. The circumstances that noble Lords have indicated are ones that I have heard before, and I am sure that there are others that other members of the legal profession would wish to be taken into account. They would also want to be clear about the circumstances in which charges were waived and so on, so that everyone was clear about the position. That is the right way to proceed in this matter.

I hope that the Committee will forgive me for coming back again; I shall try to be brief. I ask the noble Baroness to look at the situation in employment law, where there is a very well honed path. In employment law, there is no rule that if someone takes an employer to a tribunal and the employer is found to have been right, the employer then has to pay the costs, which is the equivalent of what the noble Baroness suggests. In employment law, there are frequently very sensible settlements at different stages in cases of alleged unfair dismissals and so on. That will happen in any event—I hope that I still have the noble Baroness’s ear—when the proper principles are applied. Those of us on this side of the Chamber are simply arguing that the proper, normal, just and fair principles should apply.

The noble Baroness is an experienced Minister and she has a hint of steel within her, but one has to watch for the word “stubborn” as well—something that I have sometimes been accused of. I think that she is off-beam on this matter and I hope that she will continue to reflect on it.

I was not failing to listen to the noble and learned Lord; I was simply welcoming the noble Lord, Lord Thomas of Gresford, who has now joined us for the rest of our deliberations. I wanted to say hello to him and I apologise, but I was listening.

I am not being stubborn. I have said that I will look at the issue of fairness and I have tried to indicate the approach that I will take. Of course, I will discuss this with my colleagues who have policy responsibilities, some of whom may take an even steelier view. I have listened to noble Lords and have tried to indicate the approach that we will take. I hope that we can all reflect on that between now and Report and I will have a discussion to see whether I can say more in the Bill that might, at least in part, address the concerns raised.

The noble Baroness has been uncharacteristically uncompromising in opposing Amendment No. 133. In respect of almost all the other amendments advanced today, she has demonstrated an agreeable suppleness which, in this case, has been totally absent.

The noble Baroness must be aware of the strength of feeling on all sides of the Committee about this matter. I thought that the issue was stated quite brilliantly by the noble Lord, Lord Neill of Bladen, when he said that Clause 133 is punishment for being an innocent party. That surely is a principle that we cannot enshrine in our legislation.

The Minister advanced a number of explanations for Clause 133. Of them all, I was struck perhaps most forcefully when she talked about the relationship between the levy and the costs of individual cases. She suggested that if the rule in Clause 133 were different, the levy would have to be much higher. Well, so be it. After all, the whole scheme is based on the fact that it is self-financing; and if it means that the principle that innocent parties should not have to pay is to be observed and if the cost of that is a higher levy, so be it, for the principle is much more important.

I should have thought that there was an elegant escape route for the noble Baroness. It was suggested by the noble Lord, Lord Maclennan of Rogart; namely, for the noble Baroness to introduce an amendment on Report with the presumption based on the principle adumbrated by the noble Lord, Lord Neill of Bladen, qualified by the fact that there are sometimes circumstances in which an innocent party has nevertheless done things that should mean, in whole or part, that he or she makes some contribution to the costs of the proceeding—in other words, a reversal of the presumption. That would be entirely understood and, indeed, it would reflect the development of the law of costs in the High Court and the county courts.

I think that not to have the principle stated in the Bill would be quite unacceptable to all noble Lords who have spoken. If the noble Baroness is not prepared to move on this point, she will be in no doubt that this will be one of the matters on which we will inevitably vote.

I am beginning to work out very easily where a vote is coming on Report. I do not think that there are a million miles between us on this. I did not really pick up the point made by the noble Lord, Lord Maclennan of Rogart, and I apologise for that.

The point that I was trying to make to the noble and learned Lord, Lord Lyell, was that you could not have something absolute whereby there were never circumstances of any kind in which this could apply. In the Bill, we have tried to create opportunities to waive, reduce or change and so on. I am perfectly happy to see whether there is a kind of upside-down approach that says, “Well, in general you’d want to do this, unless”. The problem with the word “unless” is that one has to try to list the circumstances that might apply. But I shall be happy to look at that, and I am not so foolish or unsupple as to know that my ambition is always to find a way through with legislation, rather than end up with something on which I am voted down. So, with further apologies to the noble Lord, Lord Maclennan, I say again that I will look at the matter. I have no idea whether it is workable in terms of legislation or in terms of those with policy responsibility, but I was trying to make the point that fairness is important.

I am most grateful to the noble Baroness nevertheless. In those circumstances, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 133 agreed to.

Clause 134 [Determination of complaints]:

133A: Clause 134, page 69, line 14, at end insert—

“( ) In considering what is fair and reasonable in the circumstances, the Ombudsman shall take into account the relevant law (including levels of damages awarded by courts in similar circumstances) and relevant codes of practice, professional rules, standards and guidance.”

The noble Lord said: This amendment seeks to give some guidance to the OLC as to the approach to be taken in determining what is fair and reasonable for the purpose of exercising its jurisdiction under the Bill.

The amendment is inspired by, and indeed reflects, a very similar Scottish provision passed at the end of last year in the Legal Profession and Legal Aid (Scotland) Act, which established a new complaints system for Scotland. The Legal Services Bill will change the basis for the jurisdiction for consumer complaint schemes. The main consumer complaint schemes currently operate on a jurisdiction relating to inadequate professional services. They will be replaced by a power for the OLC to decide matters on the back of what it considers fair and reasonable in all the circumstances of the case.

The proposal contained in the Bill accords with the jurisdiction of the Financial Ombudsman Service, which is generally considered to be a successful consumer redress scheme. Furthermore, we entirely accept that there have, on some occasions, been difficulties in determining the appropriate scope of “inadequate professional service”. For example, it was once thought that inadequate professional service did not cover situations in which clients suffered as a result of a breach of conduct rule by the practitioner, or where a remedy for negligence existed.

So we support the change overall, but none the less propose that it would be desirable to include some statutory guidance as to exactly what is meant in the Bill by “fair and reasonable”. The amendment would make it clear to the ombudsman exactly what should be taken into account, by referring him to the law and professional rules that bind authorised persons and to the level of damages awarded by courts in similar circumstances. We therefore believe that this amendment would articulate the Government’s intentions more clearly. I beg to move.

Perhaps I may add a word to this debate. I was interested to hear of the noble Lord’s visit to Scotland to find a precedent. This is in the financial ombudsman’s scheme already. The rules made by the ombudsman, with the approval of the FSA, have exactly this language. Rule 3.8.1(1), as no doubt the noble Baroness knows, says:

“In considering what is fair and reasonable in all the circumstances of the case, the Ombudsman will take into account the relevant law, regulations, regulators’ rules and guidance and standards”,

codes of practice and so on, and,

“good industry practice”.

So there is an English precedent for this. The only thing I thought that I might point out is that it has been construed to not mean exactly what you might think it means. To “take into account” means just that—he takes it into account, but is not bound by it. There is a decision, which the noble Baroness no doubt has been briefed on, in which a High Court judge here held that the overriding principle is that the ombudsman must decide what is fair and reasonable and that, if he thinks that the law does not produce that fair solution, what is fair and reasonable takes precedence. I thought that that might be of some interest.

I am grateful to the noble Lord, Lord Kingsland, for raising this issue. There is nothing difficult with the proposition; it is simply a question of whether we set it out in the Bill. Within the ombudsman scheme, we have tried to make sure that the Bill operates in a way that gives us the flexibility that we need. That means that much of the detail about how a determination is made should be left, as we have indicated, to the scheme rules rather than being provided for in the Bill.

Rules made by the OLC are subject to the consent of the LSB before they can take effect—that is in Clause 152. We believe that we have safeguards in place to ensure that schemes work and, importantly, operate fairly. So our preference is to leave the matter to be dealt with in rules rather than tying the ombudsman to a list of factors that are either not long enough or too long.

The noble Lord, Lord Kingsland, rightly said that the suggested wording is similar to that used in the Legal Profession and Legal Aid (Scotland) Act 2007. But of course there may be factors that the OLC might wish to add or take away from those proposed by the noble Lord. It is probably worth bearing in mind the differences between the ombudsman scheme envisaged by the Bill and the Legal Services Complaints Commission under the Scottish legislation. For example, Ministers do not appoint the ombudsmen who will deal with day-to-day complaints handling, and there is a clear distinction between the OLC and the ombudsmen. We think that it is better to get the OLC and the LSB to decide what factors an ombudsman should take into account when deciding what is fair and reasonable.

This is the model of the Financial Services and Markets Act 2000, as the noble Lord, Lord Neill of Bladen, said, which set up the Financial Ombudsman Service. Section 228 of that Act provides for the ombudsman’s determination to be made according to what the ombudsman considers,

“fair and reasonable in all the circumstances”,

but it leaves any further guidance to the rules, which is what we have sought to do here. The rules provide for the ombudsman to have regard to a list of matters rather similar to those in the noble Lord’s amendment. The model has worked well for the Financial Ombudsman Service and I believe that it will work well for the ombudsman service that we are providing for here. I am convinced that we should not entrench them in the Bill but follow the suggested model in order to achieve in a slightly different way what the noble Lord wants.

I am most grateful to the noble Baroness and to the noble Lord, Lord Neill of Bladen. I think that in my opening remarks I referred to the Financial Ombudsman Service, and I entirely accept that similar words are used in that case. I drew on the Scottish Bill, now an Act, only to emphasise that the principle established by the Financial Ombudsman Service has now been adopted in the context of legal services, and to underline that the Scots have gone further than simply using the words,

“fair and reasonable in all the circumstances of the case”,

and have set out more detailed criteria about how those general words should be interpreted. I am not suggesting that what is good for the Scots ought to be good for us, but I believe that the discretion is unnecessarily wide and should be narrowed down in the Bill, either as has been done in Scottish law or in some other manner. That is the point that I seek to make.

The noble Baroness has explained why she does not think that this amendment is necessary. I shall retire—in relation to this amendment only, I hasten to add—and reflect on that. Meanwhile, I beg leave to withdraw the amendment.

Amendment, by leave withdrawn.

133B: Clause 134 , page 70, line 5, at end insert—

“( ) For the purposes of subsection (2)(d) and (e), in the event of a respondent’s failure to act on a determination within a reasonable period, the ombudsman may order, at the expense of the respondent, the necessary rectification to be secured or action to be taken by an alternative authorised person.”

The noble Lord said: The amendment is designed to probe the Government’s thoughts on situations where a lawyer does not satisfactorily rectify the error identified, which was the original source of a complaint. Inevitably, some complainants will find themselves in this position. This amendment would permit the OLC to direct that the work should be undertaken by another lawyer at the expense of the recalcitrant respondent who has failed to take the required action on behalf of a client. I beg to move.

I am grateful to the noble Lord. He seeks to give an additional back-up power of direction. Where a respondent has failed to take action under Clause 134(2)(d) or (e) the ombudsman has the power to engage another lawyer to take action. We expect—and I am sure that the noble Lord would agree—full compliance in the vast majority of cases in any event. That is certainly the experience of other ombudsman schemes. Failure to comply would be a disciplinary matter.

We have provided enforcement powers so that determinations can be enforced by court order, if necessary, under Clause 138. If I leave that aside, of course it is possible to envisage a situation where the relationship between the lawyer and client has broken down to such an extent that if an ombudsman orders the respondent to redo some work, the respondent may not feel prepared to do it. That would be likely to result in enforcement action and therefore to come to the attention of the relevant approved regulator, so the respondent would have a strong incentive to avoid that. If I leave that likelihood to one side, an ombudsman would want to consider how to make a direction to avoid an outcome that could result in such action being necessary. I think that that is an important point as well.

If it is clear that the relationship between the lawyer and client has broken down, the most sensible course of action might well be to award any compensation as appropriate and perhaps to direct that fees be refunded in respect of the work that had not been carried out properly. The complainant would then be in a position to engage another lawyer to do the work. In those sorts of cases that might be the most appropriate solution.

In other circumstances where the error could be rectified by the lawyer who first did the work, and there is no evidence of a terribly difficult situation, an ombudsman might very well make a direction under Clause 134(2)(d). But the ombudsman could, in making that direction, also give the respondent a choice. That might be that the respondent either rectify the error or engage someone else to do the work, or secure the rectification of the error by paying the complainant to get another lawyer to do the work. The point I want to make by all that is that there is flexibility in the drafting of Clause 134(2)(d) and (e) to provide for the situation alluded to here. In short, ombudsmen are required to act in compliance with the regulatory objectives. That requires them to make determinations appropriate to the circumstances of the complaints, which they have the flexibility to do. To that extent, the amendment is unnecessary.

The key to this is getting the direction right in the first place; and then, as a last resort, to enforce that direction. I am not keen on getting the OLC to engage new lawyers to do the work. That could be very cumbersome and I do not think that it is the right way to proceed. We want to ensure that in making a direction, the OLC is absolutely sure about the circumstances and makes a direction in a way that will provide the appropriate resolution—whether that is compensation; asking the lawyer to redo the work; or asking the lawyer to find an alternative route if that becomes impossible, rather than itself engaging another lawyer.

I hope that the noble Lord is reassured that the flexibility is there to deal with the circumstances—to enforce where necessary, but to try to ensure that the direction does not lead to having to enforce. As I have said, that is what lots of other ombudsmen have found.

I am partially reassured by what the noble Baroness has said. It is extremely important that whatever solution the OLC chooses, it does not let the respondent who has failed to meet his or her obligations off the hook. Simply instructing another solicitor might do that. I should like to think about what the noble Baroness said. The amendment is plainly intended to help the OLC in achieving its objectives. She may think that previous amendments have not always been intended to help the OLC; but this one would indisputably help the OLC. I am rather surprised that she spurns what seems to us to be a wholly sensible proposal.

Perhaps I can explain a bit further. We must have flexibility in the remedies and I agree that there will be circumstances in which instructing another lawyer to take on the work would be better, for all sorts of reasons. The question is: who engages that other lawyer and who is responsible? The difficulty is that if the OLC engages the other lawyer, it has responsibility for what then happens, which takes it into a different role. I want to avoid that.

The flexibility to enable other lawyers to participate is right and proper, but that is in the legislation. I am not spurning the proposal; I am merely saying that the OLC should not have that responsibility itself.

I put it to the noble Baroness that it is in the interests of the OLC to retain control of the situation where the respondent does not fulfil his obligations once the decision has been made against him. If the OLC is not in control of the situation, a number of its decisions will simply not be put into effect. Its image will suffer as a result. It must be in the interests of the OLC to ensure that respondents against whom a finding has been made fulfil all the terms of that finding. The OLC must, in so far as it can, try to remain in control of a procedure that compels the respondent to conform. That is the purpose of the amendment.

I am not disputing the role that the OLC has to play. We want the OLC to be clear that if the situation requires that someone else must do the work, that should happen. The difference between us is about who then makes the decision on employing the other lawyer. We believe that the complainant should take the responsibility and have the right to say, “I would rather have the money back and employ another lawyer whom I will find”, than have the OLC say, “We, on your behalf, will engage another lawyer whom you do not know or have a say in and we will take responsibility for ensuring that the work is done”. That is different.

Yes, the OLC must have control of the process and ensure that it is done, but the question is: if another lawyer is to be engaged, where does that engagement come from? We think that it should be the complainant. The lawyer who is seeking to sort it out might recommend someone to the complainant.

If the OLC is responsible for finding the other lawyer, the cost of that will be charged against the respondent. If the innocent complainant has to go away and instruct a lawyer himself, that raises a whole lot of difficult cost questions for the innocent complainant. If that flaw in the system is often repeated, that will damage the reputation of the OLC. It will seem to be an ineffective organisation in terms of compensation.

I hope that that would never arise. We envisage that the OLC would say that the obvious solution to the question was for another lawyer to take on the case, and would instruct the lawyer who had failed the complainant to pay the costs of employing another lawyer. Ultimately, the difficulty with what the noble Lord proposes could be that the OLC takes responsibility for finding and hiring another lawyer on behalf of the complainant. Then what? What happens if that goes wrong? What happens if the complainant is dissatisfied or decides that he wants to pursue it? With whom does he pursue the fact that the OLC has brought in another lawyer?

The circumstances with which we are trying to deal suggest that either the original lawyer must sort it out and do it properly—there is a whole range of things that he could do—or that another lawyer is engaged. Either the lawyer who has failed must be responsible for working on that or the complainant must be able to find another lawyer and the cost be found. We would change the nature of the OLC if it had to find another lawyer and tell the complainant, “We have found you the right lawyer. Go and get on with it”. If it then goes wrong, to whom does the complainant complain about the OLC?

I think that this would be a good moment to bring the debate on this amendment to a close. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 134 had been withdrawn from the Marshalled List.]

Clause 134 agreed to.

Clause 135 [Limitation on value of directions under the ombudsman scheme]:

134A: Clause 135, page 70, line 12, leave out “£20,000” and insert “£25,000”

The noble Lord said: I shall speak also to Amendment No. 134B. These two amendments, both of which have been inspired by recommendations of the Joint Committee, concern the limit on redress for complaints.

Amendment No. 134A would raise the limit from £20,000 to £25,000. We have no particular attachment to that figure, although, for example, it would bring compensation into line with the estate agency ombudsman limit. The main purpose of the amendment is to follow up the Joint Committee’s request that the Government,

“provides further explanation of the rationale for deciding on this amount”—

that is, £20,000. Evidence received by the committee suggested that the £20,000 redress limit might be too low. The Joint Committee, as many Members of the Committee will be aware, was left unsatisfied by the Government’s reasoning behind settling on the figure of £20,000. We would therefore appreciate a full justification from the Minister.

Amendment No. 134B pursues another Joint Committee recommendation. It would insert in the Bill a requirement that the OLC should consult on the level of the compensation redress limit after a set period. The amendment suggests two years, which is consistent with the Joint Committee’s proposal; but, again, we have no strong attachment to that figure.

What is important is to set down such a requirement for review in the Bill and, similarly, to ensure that there will be regular subsequent reviews. Given the weight of evidence already mentioned in favour of raising the redress limit, and the uncertainty over the new Part 5 ABS regime in particular, a powerful review seems appropriate. I beg to move.

My amendment in this group accepts some of the arguments of the noble Lord, Lord Kingsland, and would go substantially further by putting the limit at £50,000. Earlier, we were subject to all sorts of cross-references to the financial services sector and its ombudsman. The limit there is £100,000, so I am being relatively modest on possible redress in relation to legal services.

There are, of course, arguments about the nature of the firms that operate in this area, and their cost. The key issues are: what is the likely detriment to the consumer in this area that requires a redress on the one hand; and at what level do we have to pitch the maximum potential figure in order to effectively deter such behaviour by others?

Of course, for any maximum, even the current maximum, it is unlikely that in many cases the ombudsman would actually award that figure—that would apply whether the noble Lord’s figure is accepted or my figure is accepted. However, we have to bear in mind the fact that, for a large proportion of complainants who complain about lawyers, the complaint relates to a property transaction. For those individuals, a property transaction is by far the biggest financial transaction that they make in their lives. A mistake or negligence on the part of a lawyer in buying or selling a family home, for example, could easily amount to a £50,000 loss to the individual. That is, after all, only about one-sixth of the average price of a house these days.

I think, therefore, that £50,000 is not an unreasonable maximum. I hope that it would be very rare for that maximum to need to be awarded, but it is not an unreasonable figure. It would also be a significant deterrent to haphazard dealings in what are—let us face it—regarded in many solicitors’ offices as pretty mundane transactions for conveyancing and other property matters. In these cases, it is quite often a pretty mundane mistake of negligence, which has the effect of causing a significant cost to the client. So I think that the figure of £50,000 is justifiable. I certainly would support the second amendment of the noble Lord, Lord Kingsland, which would build into the Bill a review of whatever final figure we end up with, because such maxima can very rapidly become out of date.