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Legal Services Bill [HL]

Volume 690: debated on Tuesday 6 March 2007

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 (Lord Allenby of Megiddo) in the Chair.]

139FA: Before Clause 158, insert the following new Clause—

“Duty to consultBoard’s general duty to consult

The Board must make and maintain effective arrangements for consulting representatives of practitioners and consumers on the extent to which its general policies and practices are consistent with its duty under section 3.”

The noble Lord said: The Legal Services Bill requires the Legal Services Board to consult before exercising a number of functions. For example, Clause 49 requires the board to consult before issuing policy statements; Clause 52 requires consultation before the board exercises its powers in relation to regulatory conflict; and Clauses 30 to 36 require the board to consult the approved regulator concerned before exercising powers relating to setting performance targets, making directions, issuing public censure and imposing financial penalties. However, there is no overall requirement to consult on the approach that the board is taking to the discharge of its functions and, in particular, on whether the scale and scope of its proposed activities are both appropriate and proportionate. The new clauses that we propose would fill that gap. A general duty to consult suggested in Amendment No. 139FA would require the board to consult about its general policies and practices. The more specific duty suggested in Amendment No. 139FB would require the board to consult about its annual work plans.

As the Committee is well aware, the Bill already requires the board to consult on the apportionment of the levy, but at present there is no provision requiring it to consult about the range of work that it intends to carry out, which will inevitably largely determine the overall size of the levy. We wish to remedy that gap. Without a provision of this sort, there is a risk that the board will simply expand its activities on an incremental basis, increasing the cost to practitioners and thus, ultimately, to consumers year on year. We want to help to ensure that the board operates as a proportionate supervisory regulator. I beg to move.

I support the amendments proposed by the noble Lord, Lord Kingsland. It is clear that, despite the best efforts of everyone in this Committee, the role of the Legal Services Board remains to be discharged in ways which will be judged by its performance, and we cannot entirely predict how it will satisfy those whom it seeks to regulate and the consumers whom it seeks to assist. The case for a general duty to consult is strong. It will enable the considerations which are unquestionably in the Government’s mind in bringing forward the legislation to be properly weighed and the views to be reacted to as they are forthcoming year on year. It is an admirably sensible proposal.

I agree with the noble Lords, Lord Kingsland and Lord Maclennan of Rogart, that it is essential that the board consults on important points of policy and the framework under which it operates. The combination of the Bill and the regulatory best practice provides that the board will do so and that it must give sufficient regard to representations from consumers and practitioners.

As the noble Lord, Lord Kingsland, said, Amendment No. 139FA duplicates the current provisions of the Bill, ensuring that the board makes arrangements to consult consumers. We think that, in Clauses 8 to 11, we already have the statutory duty to consult consumers which sets up and maintains the Consumer Panel. Clause 10, for example, obliges the board to consider representations made to it by the Consumer Panel. In accepting Amendment No. 38, we have accepted in principle that this requirement should apply also to representations from the approved regulators.

As the noble Lord said in referring to Clause 49, the Bill also ensures that before a statement of policy is issued and before rules are made by the board, they must comply with the procedures in Clauses 49 and 195. Those provide that,

“the Board must have regard to any representations duly made”.

That is not limited to practitioners and consumers. It is a wider duty that encompasses other interested parties; for example, other regulators such as the Financial Services Authority which may wish to inform how the board develops its policies and procedures.

Clause 6 refers to the annual report and,

“the extent to which … the Board has met the regulatory objectives”,

and the discharge of its functions. As we discussed, the Secretary of State must then lay the annual report before Parliament for scrutiny. That is another opportunity to provide ongoing transparency and accountability once the board’s policies are established.

In particular, the board will need to consult the approved regulators and whoever else it feels is necessary to decide on its work plan for the coming year. Amendment No. 139FB seeks to create a statutory obligation for the board to consult in advance of setting its work plan for the year and specifically to consult on the degree to which the activities are appropriately targeted on areas giving rise to the greatest regulatory concern. Clause 3(3)(a) already obliges the board to have regard to the targeting of only those cases where action is needed. As I said, if an approved regulator or consumer has concerns about how the board’s plans will operate, they can make representation to the board. In addition, any allegations of unnecessary regulatory burdens will of course be open to parliamentary scrutiny.

We think that we have captured what the noble Lord is seeking to do in the Bill. Perhaps he will reflect on the references that I have made between now and the next stage. Combined with good regulatory practice, there is nothing between us on what we are seeking to do. We believe that we have captured it in the Bill already. On that basis, I hope that he will withdraw the amendment.

I am grateful to the noble Baroness for her response. I am also extremely grateful to the noble Lord, Lord Maclennan of Rogart, for his support for the amendment.

The noble Baroness is correct to say that there are myriad examples in the Bill of a requirement on the LSB to consult. That is true. But the purpose of this amendment is to ensure that the Legal Services Board will consult when it wishes to make an initiative which is not plainly set out in the Bill with a consultation obligation. What lies behind the amendment is the philosophy, which I think is widely accepted in the Committee, that the LSB should be a light-touch regulator. There is real concern that without a general control on its powers of initiative, it may see its task as going beyond light-touch regulation.

Moreover, there is an important link here with the levy. The Bill has detailed stipulations about how the obligation to pay the levy should be divided between the approved regulators, but there is nothing in the Bill to control the overall scale of the levy. If the Government are going to continue to refuse to insert any sort of control over the overall size of the levy, the only other way in which financial discipline can be introduced upon the LSB in the Bill is through an amendment of this sort—an amendment which seeks to control activities of the LSB at least to some degree. I therefore urge the noble Baroness to look at the amendment in the context not just of the principle of consultation, but also of all the financial provisions.

The noble Baroness is not only nodding but smiling. This combination leads me to the ineluctable conclusion that she agrees with everything that I have said. I hope, therefore, that the implication to be drawn is that she will look again at the amendment between now and Report. She has clearly grasped the reasons for tabling it.

I was saying under my breath that it is early in the day—hence the smiling. I was interested in what the noble Lord said. We will come on to talk about the levy issues in more detail, but, as I think I have said on every occasion that we have discussed the Bill, I am extremely interested in ensuring that we have the right safeguards in the Bill. Of course I will look at this. I can see what the noble Lord is seeking to achieve and why. I am beholden to him for that and I will look at the proposal carefully.

I am most grateful to the noble Baroness. She will be aware from the previous five sittings that one of the principal concerns on these Benches, and I think also on the Liberal Democrat Benches, is to ensure that the Legal Services Board’s role is consistent with the philosophy laid down by the committee chaired by Sir David Clementi. The Legal Services Board is a supervisor. It is not in itself, at least directly, a regulator of the conduct of solicitors, barristers and other professions covered by the Bill. The amendment, in addition to achieving the other objectives which I set out, would be a further bulwark against the Legal Services Board seeking to trespass beyond that supervisory role. I am delighted that the noble Baroness is sensitive to our concerns. In those circumstances, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 139FB not moved.]

Clauses 158 to 160 agreed to.

Clause 161 [Disclosure of restricted information]:

139G:Clause 161, page 84, line 7, after “persons” insert “(other than approved regulators) who exercise regulatory functions”

On Question, amendment agreed to.

Clause 161, as amended, agreed to.

Clauses 162 to 165 agreed to.

139H: After Clause 165, insert the following new Clause—

“Establishment costs

(1) The Secretary of State shall pay to the Board, and to the OLC, such sums as the Secretary of State may determine to be the costs falling within subsection (2) incurred by each of them in connection with the establishment of the Board and of the OLC respectively.

(2) Costs fall within this section if they are incurred—

(a) before the passing of this Act, or(b) after the passing of this Act but before the last day appointed under section 201(2) in respect of any of sections 2, 111 and 119.(3) There shall be met out of monies provided by Parliament any expenditure incurred by the Secretary of State in connection with the establishment of the Board or of the OLC.”

The noble Lord said: Clause 166 provides for the apportionment of the start-up and running costs of the Legal Services Board and the Office for Legal Complaints. In particular, it gives the Legal Services Board the power to make rules for the imposition of a levy on approved regulators in accordance with “fair principles”. As I understand it, the Government intend that the start-up and the full running costs of the new regulatory arrangements should be borne entirely by the legal profession.

At paragraph 455 of its report, the Joint Committee on the Bill said:

“We recommend that the Government give further consideration to funding the start up costs of the new regulatory system. We understand that such assurances have been given in respect of Part 2 of the Compensation Bill which introduces a new regulatory regime for claims management”.

It went on to say in paragraph 467 that,

“if the start-up costs of the new system are to be met through levies and charges on front line regulators, initial costs to the profession will be high and will be met both by practitioners and consumers. This adds weight to the argument that the start up costs of the LSB and OLC should be borne by Government”.

In response, the Government have confined themselves to the solitary assertion that,

“those being regulated should bear the cost of regulation”.

They have not, for example, sought to explain why different approaches are taken with respect to other regulatory regimes—for example, that pertaining to chartered accountants. Further weight is given to this argument by recent estimates of the scale of start-up costs. They are now estimated at £23.6 million, which is substantially up from the £9 million initially estimated by Ernst & Young in the regulatory impact assessment.

As far as running costs are concerned, in its so-called simplification plans, which were published in December 2006, the Department for Constitutional Affairs predicted that, after short-term transition costs, there would be long-term annual savings of £9.6 million, of which £6.5 million would accrue to the approved regulators. However, even the department described the figures as,

“indicative rather than statistically robust”.

They appear to be founded on the rather flimsy assumption that savings will flow from the fact that the cost of complaints handling will no longer be spread over several organisations but,

“will solely be incurred by a single, independent body”.

The regulatory impact assessment carried out by PricewaterhouseCoopers and published with the draft Bill estimated that there would be only a modest increase in the overall annual regulatory cost. However, that conclusion depends upon assumptions about efficiency improvements and the absence of increases in the number of complaints—assumptions that are plainly open to question. The consequences of the Bill’s approach will be especially severe for junior members of the Bar, in particular recent entrants. This is of special concern to the Bar Council, which regards the proposed financial arrangements as exceedingly damaging to the future of the profession.

There is a particularly powerful argument for modifying the proposed regime where the start-up and running costs cover activities that were formerly those of public bodies—for example, the Lord Chancellor’s functions under the Courts and Legal Services Act 1990 and the functions of the Legal Services Ombudsman. In our submission, there should continue to be, at the very least, a taxpayer contribution to start-up and running costs to reflect the costs that would have fallen on the public purse had the present regulatory arrangements been retained.

Moreover, the Legal Services Board has a wider public interest role than just overseeing the conduct of practitioners; for example, it has a role with respect to access to justice and its responsibilities under Part 5 of the Bill. Why should these costs be borne by the professions? I shall further pursue the points that I have just made under Amendment No. 142.

The proposed new clause provides for the start-up costs of the new system to be funded by the Secretary of State. The amendments to subsection (1) and subsections (6) to (9) of Clause 166 prevent those costs from being included in the leviable expenditure of the Legal Services Board, the Office for Legal Complaints or the Secretary of State. They also exclude from the net levy a sum representing an estimate of year-on-year costs of the existing public sector machinery. Those amendments would leave ongoing costs incurred by the Legal Services Board, the Office for Legal Complaints and the Secretary of State included in the net leviable expenditure.

Clause 166(3) requires the apportionment of the levy to be in accordance with “fair principles”. The levy should be not only fair but also proportionate to the regulatory burden that any particular approved regulator places on the system. The Joint Committee proposed in recommendation 56 that,

“levy rules must be fair and proportionate”.

Proportionality is an express principle of other parts of the Bill. There are extremely good reasons for applying it here. The insertion of new subsection (3)(a) into Clause 166 seeks to achieve that. I beg to move.

I support the noble Lord, Lord Kingsland, in his Amendment No. 139H and those associated with it in the group, which seek to ensure that the start-up costs of the Legal Services Board and the Office for Legal Complaints are not fully met by the professions, which would unquestionably be damaged by that. I strongly take the point made by the Bar Council of the potential impact on young barristers.

It is not self-evidently true that those being regulated should bear the cost of regulation. Regulation is being introduced—not phased in over the period—to protect the public interest and, if the full costs of establishment are be met by the professions, there must be a concern that those costs would be lumped on to those who have to purchase the services of the professions. Such a concentration of the burden is unacceptable. It is desirable that these regulatory supervision changes are phased in as smoothly as possible, and thus become as acceptable as possible.

It is unlikely that the PricewaterhouseCoopers regulatory impact assessment, which predicted an absence of increases in the number of complaints, will be met. That prediction is slightly surprising, given the extent of dissatisfaction with the existing complaints procedures and the probability that the failure of the present system has acted as a disincentive to pursuing existing courses. Consequently, we can anticipate that there will be somewhat increased costs, which I hope can be shared between the general public and the professions, if the amendment tabled by the noble Lord, Lord Kingsland, is accepted.

I support the amendments, for the reasons given by my noble friend Lord Kingsland and the noble Lord, Lord Maclennan of Rogart. Basically, they are wholly requisite as a matter of due and fair administration according to the ordinary, accepted principles of justice.

It is worth recalling that, in so far as cash burdens are imposed on the legal profession, these will be charges on access to justice for those who are consumers of legal services. That aspect of the matter must be borne in mind, particularly in relation to start-up costs. It is not very fair that a particular group should be penalised by having to bear the start-up costs of an enterprise that is quite large. Light touch it may be, but it is certainly not without pretty substantial costs. I venture to think that it is unlikely that the number of complaints dealt with by the system will remain constant in the years to come. In the years that have passed, the number of complaints has not been fixed, but has generally increased. If this system is as good as we hope it may be, it is highly likely that people who rightly or wrongly feel aggrieved will want to have recourse to it, whereas people in similar positions in the past may have felt that it was not worth embarking on the process. I am an honorary Bencher of the Inner Temple, but otherwise am completely unaffected by any of these proposals.

I am grateful to noble Lords for this very important debate on the levy. However, the Government begin by not accepting that they should contribute to the establishment costs or running costs of the board and the OLC, as it has been said they should. I know what the noble Lord, Lord Kingsland, said about the Compensation Act, which I had the privilege to pilot through your Lordships’ House, and about the policy for which I was responsible. However, we were creating something entirely new; there had been nothing to base our policy on before. We believe that legal services providers enjoy exclusive access in the provision of reserved legal services, which can lead to them providing ancillary legal services. We hope and expect the profession will gain from the increased consumer confidence that these reforms will generate and that consumers will enjoy greater access to justice when things have gone wrong for them. We hold to the view that the costs should be met by the professions.

Having said that as our backdrop principle, I understand the concerns that Members of the Committee have raised. The noble Lord, Lord Kingsland, in his previous amendment was worried that there should be a focus on how that cost would be contained and that it did not simply escalate. There is real critical importance in value for money being one of the core principles which must underpin the way in which the implementation process is managed and the future operation of the board and the OLC. We believe that the Bill builds in a number of safeguards to ensure this is the case.

First, Clause 195 sets out in detail the consultation procedure that the board will have to follow when consulting on rules, including the levy rules. Secondly, Clause 166 prevents the board making levy rules except with the consent of the Lord Chancellor. Thirdly, as we will discuss in due course, following the report of the Delegated Powers Committee, I have brought forward amendments that will see the levy rules subject to parliamentary scrutiny through the negative resolution procedure.

I hope that I may also offer reassurance to Members of the Committee in relation to establishment costs if I expand on how we anticipate that we will recover the costs incurred. As I have explained, while I believe it is appropriate that the costs should be met by the approved regulators, the mechanism through which this will happen is through the levy and until the board is appointed there can be no levy rules. Therefore, the Government will fund the costs of establishing the board and the OLC, and recover that expenditure once the board has been appointed and is in a position to make the levy rules. To minimise any potential pressure on approved regulators and their members, the recovery of this expenditure will be done on a phased basis rather than in a single year.

I also want to reassure Members of the Committee that we will continue to involve stakeholders in the implementation process to ensure that they have the opportunity to input and to ensure transparency. On 15 March, my honourable colleague Bridget Prentice is meeting a variety of stakeholders to discuss implementation and how we will continue to engage with them as we take these issues forward.

The third effect of this group of amendments would define in the Bill, as the noble Lord, Lord Kingsland, said, the fair principles. Amendment No. 142AA sets out to define “fair principles”. I could not agree more that it is very important that the board has regard to fair principles when apportioning the levy, which is why Clause 166 expressly includes this requirement. But I am not sure that I agree with the noble Lord that we can define them. We believe it is better that the board considers all appropriate factors and determines how a fair apportionment should be achieved.

The Committee will know of my aversion to lists in principle, and to not being able to take into account factors that will at the time be very relevant, bearing in mind the numbers and size of regulators and so on. It is important that the board has the discretion to set out the factors it considers appropriate in its levy rules, which will be made by statutory instrument.

The PricewaterhouseCoopers report began afresh with a bottoms-up approach. It did not seek to identify the processes already operating and to validate the cost of each activity. Instead, it built a completely new cost model for the OLC, which is important and entirely consistent with what we seek to achieve; namely, a wholly new organisation with new procedures, new processes and a new culture, which again we have debated in your Lordships’ House. My understanding is that it costed an increase of 25 per cent in the volume of complaints that the OLC might receive, but it also took into account that all authorised persons would have in-house complaints-handling arrangements. The aspiration is for that first port of call to successfully sort out the complaint before it needs to go on.

Between now and the next stage, I am more than happy to set out in greater detail the costings included in the PricewaterhouseCoopers report and to answer any further questions that would be best dealt with in that way. But I go back to where I began, which is the principle we hold to as we believe it is right; it is not unprecedented, of course. The costs should be borne in the way I have set out, recognising fair principles and enabling phasing in so that the burden is reduced.

The noble Baroness has just dealt with the question of principle, but what is the justification for imposing a levy at all? The Government want to introduce a regulatory system, but why should they impose a levy on those concerned rather than meet the costs themselves? Is this a sort of political justification to generate consumer confidence, or something like that? Can she deal with the justification for this?

I shall certainly seek to do that for the noble Lord. We have set up a system in response to a concern which noble Lords have also expressed: that the complaints system was not being handled effectively. Certainly, noble Lords have referred on more than one occasion in Committee to this as a real problem that they want to see addressed. It is a problem that has been recognised by the organisations concerned and indeed we have had many debates about whether we are simply building on what noble Lords felt could be considered to be failure rather than creating something new. We have responded to a problem.

On top of that, we have to consider how best to provide an appropriate response, and who should pay. It is our view that a considered, phased approach of the kind I have identified is right. As I have already indicated, it is not unprecedented and it is an appropriate way of dealing with the issues here. We do not think that we should spend taxpayers’ money in this way. There are always competing priorities in government; in the end everything is political. We seek to do this in a right and appropriate manner to resolve an issue, and to make sure that we provide not only strong consumer confidence but a good service for practitioners and regulatory bodies. That is our principle. Noble Lords may choose to disagree with it, but that is where we stand.

I do not disagree for that reason, but where is the problem to which the noble Baroness refers in the complaints mechanism of the Bar Council? We have a clean bill of health on this. What is the justification for it? I am speaking of what I know something about—the Bar Council. I do not know much about patent agents and so on, but I suppose there is no justification there. The only justification seems to be the mess the Law Society has made of its complaints procedure. Why should everybody else pay a levy because the Law Society complaints machinery is in a mess, if the Committee will forgive me for saying so?

We have also debated at great length the whole question of delegation and I continue in my discussions with the Bar Council. I have sought not to get into a debate about who is better than whom percentage-wise. Lots of figures have been bandied about. I recognise the work of the Bar Council and the way in which it has handled complaints and I can probably reassure the noble Lord that, while it is not perfect in that regard, it does a pretty good job. I also recognise that there are more concerns regarding the Law Society, but it would be the first to acknowledge that.

We have sought to provide something brand new: everyone will be brought into this regime. I know that for some that feels inappropriate and perhaps too much, but I hope that the noble Lord will look again at the principle which states that it is very important to regulate across the sector, and to do it properly.

As ever I am most grateful to the noble Baroness for her reply. I want to make just a few observations in response. First, I would be very happy if, at some point between now and Report, she could conduct an analysis of the difference between the legal profession and the accountancy profession in the context of the appropriate share of the costs that should be borne by the public sector.

Secondly, the scale of the start-up costs as estimated today vastly exceeds the scale that the Government thought would be the case when the Bill was in its early stages of drafting. I believe that the amount we are talking about has increased almost threefold. I submit to the noble Baroness that that ought to influence her approach to the question of sharing at least a part of the costs of the start-up.

Thirdly, the responsibilities of the Legal Services Board are not limited simply to disciplining miscreant behaviour in the professions. They concern much wider issues than that. Access to justice, as a number of noble Lords have observed, is one of the objectives. That is an objective very much in the realm of public policy. The licensing of the new business structures under Part 5, again, has nothing whatsoever to do with the disciplining of individual members of the profession. These are matters of public policy pursued in the public interest by the Legal Services Board. Why on earth should the professions be required to fund them? The noble Baroness really must come up with some good answers on Report if she is going to persist with the current financial structure.

Finally, there is the question of whether “proportionate” should be added to “fair”. I believe that the case for this is strong, and not just because it was looked at very carefully by the Joint Committee. Fairness is a value judgment. For example, it might be concluded by the Legal Services Board that although the contribution of one approved regulator to the overall costs of regulation was very low, because that regulator had a deep pocket it would be only fair that it be required to pay a disproportionately large amount towards the levy. That is why “proportionate” provides the guarantee that I believe each approved regulator ought to have; namely, that it will pay no more than the costs incurred for its regulation. “Proportionate” is crucial to the whole structure of the Government’s levy system.

I shall be able to pursue the question of public interest further when I move Amendment No. 142B. Therefore, in those circumstances, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 166 [The levy]:

[Amendments Nos. 140 and 141 had been withdrawn from the Marshalled List.]

[Amendment No. 141A not moved.]

[Amendment No. 142 had been withdrawn from the Marshalled List.]

142A:Clause 166 , page 85, line 40, at end insert—

“( ) In apportioning or imposing a levy the Board shall have regard, inter alia, to—

(a) the extent to which any resulting increase in the regulatory fees of a regulator will be reasonable and proportionate in comparison to the fees already levied on relevant regulated persons;(b) the extent to which the levy might discourage entry to or retention in the regulated sector;(c) the extent to which the number of persons regulated by a regulator might be reduced in consequence of the amount of the levy;(d) the extent to which the regulator might be disadvantaged and another regulator might derive an advantage, in particular through the movement between regulators of regulated persons as a consequence of any differences in the levy imposed;(e) the likely ability of the regulator to raise the levy from regulated persons;(f) the impact of the levy on the regulator’s viability.”

The noble Lord said: This amendment overlaps to some extent with the ideas behind those tabled in the previous grouping. This time, we are hoping to find an appropriate solution for apportioning the costs fairly between the various approved regulators. One of the ideas behind this amendment is that the distribution of costs should be done proportionately according to the extent that the regulator causes any burden on the board, not merely a proportionate fee purely in terms of numbers of members. The amendment is therefore particularly in the interests of those smaller bodies which traditionally have extremely low regulatory rates. It will come as no surprise to the Minister that the inspiration for our tabling the amendment came from the patent and trademark attorneys.

The amendment introduces a number of considerations to the imposition of a levy that are important to the unique environment of the patent and trademark profession. As these attorneys can easily trade without carrying out reserved activities and without being registered or regulated, the charge of a significant fee to raise funds for a levy could simply drive them out of the regime. If some opt simply to practise outside the regulated sector, that will only increase the burden on the remainder. A system that discourages submission to regulation cannot be in either the public or the consumer interest, or indeed support the Government’s intentions.

A further consideration is that many patent attorneys are dual qualified as trademark attorneys, but would resign from ITMA rather than pay two regulatory fees, making the ITMA levy even harder to raise. Similarly, many patent attorneys are also qualified as European patent attorneys and could therefore easily opt to practise solely in that capacity and thus, again, outside the board’s regulatory reach. In addition, many practitioners operate in industrial departments that will not bear the cost of practising fees. The smaller the pool of regulated persons, the greater the burden of the fixed, irreducible costs of regulation on the remainder.

As the levy itself is imposed on the regulator, not the regulated persons, the viability of the regulator may fall into question if the collection of fees proves impossible. I beg to move.

I had guessed where this amendment might have come from. As the noble Lord has indicated, it is very similar to Amendment No. 33, which we debated on the second day in Committee. As I indicated then, I met the trademark attorneys and patent agents on 5 February, and was keen to listen to their concerns in respect of proportionality in the Bill, particularly in relation to the proportion of costs that falls upon small regulators. They were very keen to ensure that the Bill should not take a one-size-fits-all approach, and I agree completely with that.

When we were talking about Amendment No. 33, the noble Lord referred to such considerations as the fact that the extent to which the board acts might discourage entry or retention in the regulated sector, and he returns to that theme again. I agreed then, and agree now, that some of those considerations are extremely sensible. I agreed during that debate that I would envisage the board considering such factors as the regulator’s resources, the effect of the fees, and the extent of entry or retention in the regulated sector—which, as the noble Lord has indicated, arise in this amendment.

I disagree with the noble Lord on the setting out of those considerations in the Bill. If we look at the board’s duty under Clause 3 to act proportionately, and under Clause 166 to satisfy itself that the apportionment of the levy will be in accordance with fair principles, we have established, in both those clauses, principles that are not usually—in fact, I do not think they have ever been—defined elsewhere in legislation. We think those principles are established, and would inform the board and ensure that it took into account precisely the considerations the noble Lord has raised.

I am also keen that the board is able to consider what is appropriate on a case-by-case basis. The trademark attorneys and patent agents felt strongly about that. I would be worried that setting out considerations in the Bill could restrict the ability of the board to consider factors that were appropriate in the particular circumstances that were being faced, if those had not been set out in the Bill. It could mean that the board felt pressure to consider what was in legislation before considering what was actually appropriate according to its rules. It is possible that the board might feel it could only consider what was prescribed in legislation, which would certainly not be in the interests of the bodies we are concerned about.

We think it is right that the board has the discretion to set out the factors that are appropriate in its rules. Those will be made by statutory instrument, as I have already indicated, and they are covered by established principles. That does not take away from the validity of the concerns of the two bodies that have raised them, nor from our absolute desire to ensure that their concerns are met under the Bill.

Before the Minister sits down, would she clarify her last point? Is she saying that, although she does not think these principles should be spelt out in the Bill, she would be quite content to see them spelt out in the statutory instrument?

I am saying, and I will reiterate it, that I do not want these considerations in the Bill, for the reasons I have given, but I think the issues that have been raised by the noble Lord, Lord Kingsland, are of genuine concern, and I would expect the board to take them into account. It will make its decision about how it wishes the rules to be, taking into account the issues that will have been raised with it, just as they have been raised with me and my honourable friend Bridget Prentice. The board will then set out the rules, which will come to your Lordships’ House and another place under a statutory instrument. I hope the noble Lord, Lord Maclennan of Rogart, will see that as a consequence those issues have been addressed. I was saying that from the Government’s perspective, these are issues of genuine concern that we accept need to be addressed properly. We will leave it up to the board how it does that.

I am most grateful for the Minister’s reply. To some degree, it may be that the problems anticipated by the trademark and patent attorneys are specific to their profession. Nevertheless, they are a regulated body, and I know the Minister would be dismayed if, as a consequence of the operation of this new regulatory regime, all the things those attorneys fear came to pass. That would be extremely damaging to a thriving profession. The Government must be alert, either in the Bill or in the subsequent regulation, to the particular problems of this regulated group.

The Minister expressed her hesitation in putting the amendment in the Bill, while accepting that the underlying concern it sought to address was a real one. Would she agree, in the context of the debate on the previous amendment, that Amendment No. 142A adds considerable force to our contention that the word “proportionate” needs to be in the Bill? There are many particular stipulations in this amendment, but the principle that lies behind them is the principle of proportionality. The Minister has a golden opportunity to confront at least some of the problems of the patent attorneys, while at the same time meeting the more general problem that we sought to deal with in discussing the previous amendment to place proportionality in the Bill, thereby at a stroke not only doing much to deal with the general problems but also to help this potentially beleaguered profession.

The noble Lord is far too clever for me. He will not be surprised that I will want to go away and think about that, for all sorts of reasons. We are at one in making sure that these bodies continue to thrive. We are trying to work out the most appropriate way to achieve that. As ever, I will reflect on what the noble Lord has said.

I find the thought that the Minister is thinking exceedingly reassuring. In those circumstances, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 142AA to 142AC not moved.]

142B:Clause 166 , page 86, line 8, after “means” insert “two-thirds of”

The noble Lord said: Amendment No. 142B has to some extent been foreshadowed by the previous debates on the levy; it is designed to ensure that the Government meet a proportion of the running costs of the Legal Services Board.

As the Bill stands, the entire cost of the new regulatory framework will be met by the private sector. Amendment No. 142B would at least ensure that the Government contribute one-third of the running costs of the board, and would remove an inconsistency in the Government’s approach to Sir David Clementi’s report. The Government accepted Sir David’s advice in creating a supervisory tier to regulation but then ignored his recommendation that the board should, at least in part, be funded by public money. He made several forceful arguments to that effect.

First, the current position is that the Government contribute to the cost of supervisory functions through judicial oversight and the oversight function carried out by government departments. Secondly, the board has a wider remit than simply the oversight of practitioners in the legal professions, a point I made in speaking to a previous amendment. By giving the board regulatory objectives that include, for example, access to justice, the Bill has widened the authority of the Legal Services Board beyond that which should be reasonably funded by the professions.

As already pointed out in the debate on the amendments grouped with Amendment No. 139H, the Joint Committee concluded that the legal profession should not reasonably be expected to bear the burden of public policy consideration currently funded by the Government, such as the consideration of whether additional legal services should come within the regulatory framework.

The third justification that Sir David offered recalls the subject of the independence of the profession. This is a very important point in the context of a Bill that is in no small part designed to improve the public perception of the legal profession and the provision of legal services. As Sir David himself said,

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

Finally, the Government have provided a helpful precedent in the form of the Financial Reporting Council. The Government meet one-third of the cost of the Financial Reporting Council, so Amendment No. 142B would do no more than bring the Legal Services Board in line with that. We would press the Government for justification as to why they are prepared to bear partially the costs of the supervisory tier of regulation in the accountancy field but not to make an equivalent commitment in the legal environment. It is also the case that the state meets the full cost of the supervisory tier of healthcare regulation in respect of the Council for Healthcare Regulatory Excellence.

For all these reasons, and with the weight of Sir David’s report behind us, we urge the Government to consider contributing to the ongoing costs of the Legal Services Board. I beg to move.

We on these Benches take a broadly similar view to that enunciated by the noble Lord, Lord Kingsland. It is desirable that the work of the Legal Services Board should, as has been said in previous debates, be conducted with a light touch and not be inflated beyond the necessities of the discharge of its duties. The Government have subscribed to this view and no doubt have an interest in the underlying purposes of the legislation being met. But the Government’s continuing involvement in the scrutiny of what is being done would scarcely be more effectively ensured than if they are required, on behalf of the public, to make some contribution to the costs. If the costs became over-inflated because of a misdirection of the board’s activities, it would unquestionably be possible for the Government to enter into a dialogue directly about that. Candidly, I would welcome that.

There is a lot in the Bill that gives the power—or, rather, the potentiality—to the Legal Services Board to outgrow the function that has been described in previous debates by the Minister. We have to avoid a propensity towards inflation of activity. A financial check of this kind is entirely justifiable as a matter of principle, since it is the public interest and that of the consumer generally which is benefiting from this important measure to sustain public satisfaction in the work of the legal professions and access to a proper complaints system. All these factors justify some involvement and spreading of the burden beyond those who are being regulated and those who are involved in complaints. We all have an interest in ensuring that this is done properly; we may all, at some time or another, have need of such a system. It is not just those who are availing themselves of it at the present who ought to be responsible for the present charges.

For broad reasons of principle and for the practical reason of giving the Government a locus, which I do not doubt they would use, to oversee or at least keep an eye on the work of the Legal Services Board, I strongly support the amendment.

I agree with the remarks of the noble Lord, Lord Maclennan, about the importance of light-touch regulation. I agree that we need to ensure that there is not a propensity for the board to grow like Topsy; we must avoid inflation in the way that the noble Lord described. As I have said consistently throughout our proceedings, I will look again to ensure that we have recognised those issues properly.

There are different models to choose from, and I guess that the Financial Reporting Council model applies in this case. I have also been looking at the models that support my case that such organisations should be paid for by the professions. I will not reiterate what I said about the benefits we believe there would be. The different models include the Financial Services Authority and the Financial Ombudsman Service, which is funded entirely by the financial sector. The pensions regulator is also entirely funded by the industry. The funding of Ofcom is split 45 per cent and 55 per cent, while two-thirds of the Financial Reporting Council’s funding comes from the sector it regulates. There are different reasons why the funding regimes have been set up in this way. The Council for Healthcare Regulatory Excellence, which has been quoted, is required to be seen to be completely independent of the medical professions. That is why it is funded in that way. There are lots of different models. In choosing what to do, the Government have to be mindful of the variety of models and mindful of what they are seeking to achieve.

I know that I am not going to persuade the Committee of the merits of my case because I already tried to do so in the last amendment. However, we did not consider the matter lightly. We looked at all the models and talked to those who have a similar regime to the one we propose. We have thought carefully about the best use of government money and resources, and, overall, we believe that the system we have in place for the payments which will be made—regardless of an understanding that it is beyond complaints, which I completely accept—is the right one in the circumstances.

There may be a principled objection in parts of the Committee, and certainly outside it, about who should pay for something that the Government are doing. But underlying the amendment is an issue about ensuring that the situation cannot escalate to the point where the levy required is unchecked. We believe that we have safeguards in the Bill, not least because we have now agreed that the regulations would come before the other place and your Lordships' House under the negative procedure. As I indicated, I will look to ensure that that is correct. I am afraid that, at this point, we will just have to disagree on the principle. As ever, however, I will continue to think.

Can the Minister tell the Committee, from her examination of the comparisons, what differences between the accountancy profession and the legal profession make the arrangements different?

As I indicated to the noble Lord, Lord Kingsland, I think that the best way of tackling the accountancy issues he raised would be to set out in a letter before the next stage the details of our comparators and figures. I think it would help the Committee to have the PricewaterhouseCoopers assumptions and the way that it approached the issue. I would like to do that. I think that I would do a much better job by doing that than by trying to tackle the subject in the Committee this evening.

Once again, I am grateful for the Minister's reply. Towards the end of her observations, the Minister prayed in aid the negative procedure as a guarantee that the regulations would reflect the desires that we have for financial discipline in the LSB. Unfortunately, as she well knows, there is a convention in this House that we pray against instruments of that kind only in the most exceptional circumstances, circumstances which usually involve matters pertaining to the constitution. I therefore wonder whether we should be as confident as the Minister about that safeguard. She might consider shifting the procedure from a negative to an affirmative procedure. I am sure that she will be reflecting on that between now and Report.

The Minister kindly said that she would write to us in response to the question posed by my noble friend Lady Carnegy of Lour, but she trespassed on that ground a little in her answer when she referred to the healthcare regulator. She said that the healthcare regulator was financed entirely by the Government because it was important to demonstrate that it was wholly distinct from the medical profession. But the provisions that the Government have inserted in the Bill about the separation between the representative and the regulatory role of the professions achieves precisely the same objective. I put it to the Minister that the legal profession is in fact in exactly the same position under these regulatory arrangements as the medical profession is under the healthcare regulator.

The Minister has kindly agreed to write and I will let her off the hook. But I would be content if she reflected on the matter and came back to me in writing if she thinks she has a more powerful case than the one that I outlined.

I was trying to demonstrate the different financial systems that have been set up and the reasons why they were set up in that way. I am told that there are very particular reasons why the Healthcare Commission had to be that way. The independence of the medical profession in this context is not exactly the same as the independence of the legal profession in the context of the LSB. Of course, I will write to the noble Lord and spell that out properly.

I am most grateful. But the Minister must accept that, as matters stand, the legal profession has, at least presumptively, very good grounds for saying, “Why are we so different from the accountants and the health carers?”. It is a perfectly legitimate question for the legal profession to ask when it faces having to bear the burden not only of enormous start-up costs but of enormous running costs. I would go as far as to say that it is in the Government's interest that the objective case for treating the legal profession differently from those other professions is thoroughly made out.

I will go a step further. In my submission—I am repeating myself but I make no apology—there are two very good reasons of principle why the Government should bear part of the running costs. The Legal Services Board is engaged in a number of activities that have nothing whatever to do with disciplining the profession in terms of lax service to consumers or disciplinary misdemeanours. Moreover, under this system, there is a shift of the obligation to bear costs from the public sector to the private sector. At the moment the public sector bears all sorts of responsibilities under the 1990 Act, the cost of which is now being shifted to the legal profession through the regulatory arrangements. At least in respect of those costs, surely it is appropriate for the tax payer to bear the burden.

I make no apology for repeating those submissions, which the Minister has heard already. The regulatory arrangements, to some extent, involve a shift of responsibility from the tax payer to the legal profession, in circumstances where many of the new regulatory arrangements have nothing to do with regulating the legal profession whatever. However, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 143 to145A not moved.]

[Amendments Nos. 146 and 147 had been withdrawn from the Marshalled List.]

Clause 166 agreed to.

Clause 167 [The levy: supplementary provisions]:

[Amendment No. 148 not moved.]

Clause 167 agreed to.

Clause 168 agreed to.

Clause 169 [Duties of regulated persons]:

148A:Clause 169 , page 88, line 20, at end insert—

“( ) The duty to comply with regulatory arrangements overrides any obligations which a person may have, including to shareholders (otherwise than under criminal law), if those obligations are inconsistent with the duty to comply with the regulatory arrangements.”

The noble Lord said: The purpose of this amendment is to make it explicit that, for all those within the regulatory sector, the duty to comply with regulatory arrangements overrides any other obligations that might arise other than those imposed by the criminal law. That, of course, is accepted by the overwhelming proportion of lawyers, who are accustomed to the paramount importance of regulation. However, this amendment becomes important because of the introduction under the Bill of widespread external ownership of legal firms by non-legal commercial bodies. Future alternative business structures may often include managers who enter from business backgrounds and who have no expertise in the legal field.

The amendment is designed to put it beyond doubt that the duty to comply with regulatory arrangements is paramount particularly in comparison with duties to shareholders. It would be wholly unacceptable for anyone involved in an ABS firm to tailor the advice given to a client or adjust the handling of a client’s case in any way in the purported interest of shareholders if to do so were to involve a failure to comply with regulatory arrangements.

The Government may consider that the amendment is unnecessary because the effect is already achieved in the Bill. Nevertheless, it is highly desirable that it should be stated explicitly in the Bill so that there is no possible room for doubt about Parliament’s intention and so that all those operating under the new arrangements are fully aware of where their primary responsibilities lie. I beg to move.

I am grateful to the noble Lord for explaining the purpose behind the amendment so succinctly. I understand why he has picked out shareholders specifically in connection with shareholding in ABS companies, ensuring that the involvement of non-lawyer directors does not jeopardise professional duties. I agree entirely with his objective.

In creating new opportunities to deliver legal services, we must make it clear and beyond doubt that professional duties must apply in the same way as they always have done. This is the key purpose of Clause 169; it places lawyers’ duty to comply with regulatory arrangements on a statutory footing. This duty will cover all professional conduct rules and apply not only to individual lawyers but to all companies and firms providing legal services and to all managers and employees of these providers. Moreover, Clause 88 provides further protection. This clause ensures that if a non-lawyer partner, director, shareholder or employee acts in a way that causes or contributes to a breach of professional duties by the firm or its lawyers, that person will be breaking the law. Non-lawyer directors, partners and shareholders may be disciplined by licensing authorities as a result, and may lose any rights to hold shares in the ABS firm, as provided for by Schedules 11 and 13 to the Bill.

While I agree entirely with what the noble Lord seeks to do, we believe that his amendment is unnecessary, as the Bill already prevents ABS firms and their shareholders or anyone who owes duties to shareholders from acting in a way that conflicts with lawyers’ professional conduct rules. Further, a director of a company could not in good faith argue that to break the law as it applied to his firm was to act in the interests of the company and its shareholders. That applies as much to a licensed ABS body, with its particular legal obligations, as to any other. If a company is authorised to undertake only certain activities by being licensed and the terms of the licence require particular forms of behaviour, including compliance with regulatory arrangements, that behaviour is something that all shareholders must accept and support as well.

I would not wish, by virtue of a provision such as the one proposed here, to cast general doubt on the continuing validity of obligations owed under other law, when it is clear already from the Bill that this will not be able to operate to adversely affect the ability of regulated persons to comply with regulatory arrangements. In other words, as long as we make it clear in the Bill that there is a statutory duty to comply with professional conduct rules, there is no need for an override provision.

On that basis, I hope that the noble Lord will withdraw his amendment.

I am delighted to hear that the Minister agrees with the objectives that the amendment sets out to meet. I am a little disappointed that she thinks that they are completely covered by Clause 169. She is perfectly correct in saying that, as the clause says:

“A person who is a regulated person in relation to an approved regulator has a duty to comply with the regulatory arrangements of the approved regulator as they apply to that person”.

However, that is too narrow an obligation to cope with all the situations that might be met in an alternative business structure. Of course, we cannot predict exactly the nature of the structures that are likely to be licensed either by approved regulators or the LSB. However, although my amendment has perhaps a certain declaratory flavour about it, the principle is extremely important and may not be understood by those who invest money in either firms of solicitors or barristers’ chambers. In my submission, it is a principle that should appear in the Bill. I know that the Minister will reflect on the matter. Meanwhile, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 169 agreed to.

Clause 170 agreed to.

149:After Clause 170 , insert the following new Clause—

“Solicitors’ Disciplinary Tribunal

In section 46(9) of the Solicitors Act 1974 (c. 47) (solicitors disciplinary tribunal), after “Tribunal,” insert “The Legal Services Board and”.”

The noble Lord said: This part of the Bill deals with an organisation which we have not come across in our discussions about the Bill—the Solicitors Disciplinary Tribunal. The Bill makes changes to the tribunal’s rules and procedures which, up to now, have been drafted by the tribunal, though approved by the Master of the Rolls. It deals mainly with such matters as the form of application to the tribunal, rules of evidence and the conduct of hearings.

The rules are designed, as I understand it, to comply with the requirement that the tribunal satisfies conditions of an independent and impartial judicial body with respect to professional misconduct. Clauses 171 to 173 contain provisions allowing the LSB to require changes and the Secretary of State to specify changes to those rules after going through what is—if I can be forgiven saying so by the department—an extremely complicated process of consultation.

The tribunal could not, of course, reasonably object to obtaining the approval of the LSB to any changes to rules as well as or instead of the involvement of the Master of the Rolls. Clause 171 would enable the LSB to impose rule changes on the tribunal and give directions under Clause 172. It is extremely unlikely that sensible changes to the formal rules would not either be proposed by the tribunal or agreed between the tribunal and the LSB. The reservation of the right of the LSB or the Secretary of State to impose rule changes against the wishes of the tribunal seems both unnecessary and undesirable. It undermines the tribunal’s independence. Incidentally, it also seems strange that the Secretary of State can only make changes recommended by the Legal Services Board when it has power to impose such changes anyhow under Clause 171(2)(b) and (4).

Moreover, the mechanism which the Legal Services Board and the Secretary of State have to adopt in order to impose changes is extraordinarily convoluted. Clause 171(2) to (6) and Clauses 172 and 173 contain a mass of requirements which are incorporated by reference to alterations to regulatory arrangements affecting the Law Society. For all those reasons, I ask the noble Baroness to accept our amendment. I beg to move.

I am again grateful to the noble Lord for explaining what he is seeking to do. I shall try to explain the approach that we have taken and the purpose behind these clauses.

We begin from the principle that the new regulatory framework applies to each of the approved regulators and to their regulatory arrangements. As the body that is responsible for adjudicating breaches of the Law Society’s rules of professional conduct, it is essential that the SDT is part of that new framework.

Clause 171 brings the Solicitors Disciplinary Tribunal within the oversight of the Legal Services Board for the purposes of any changes to its rules that it seeks to make. Noble Lords will be aware that under Section 46(9) of the Solicitors Act, rules made by the tribunal about its practice and procedures must be agreed by the Master of the Rolls. This clause provides that in the future alterations in the tribunal’s rules will require the agreement of the Legal Services Board instead. This is in line with a number of other changes we have made in the Bill to the current functions of the Master of the Rolls in relation to the solicitors’ profession, the approval of their professional rules and appeals from the SDT.

It is important to emphasise that the Solicitors Disciplinary Tribunal is a fully independent body. This clause simply brings the tribunal, which is part of the arrangements for regulating lawyers, within the oversight of the LSB. It does not make it an approved regulator. Initially the Joint Committee on Human Rights had some concerns about the impact of this change on the compatibility of the SDT with Article 6(1) of the European Convention on Human Rights. However, in its latest report the Joint Committee now agrees that the transfer of responsibility for rule approval from the Master of the Rolls to the LSB is unlikely to lead to any significant risk of incompatibility with Article 6(1).

As the noble Lord said, Clause 172 allows for the LSB in restricted circumstances to make a direction. It is important that it has this power, which I emphasise is limited in that it can be used only where the SDT is failing to perform its functions to an adequate standard, or at all—for example, dealing with cases unreasonably slowly. The LSB can direct the SDT only to take such steps as are necessary to remedy the failure. The LSB cannot interfere with the determination of any individual case. It is, if you like, a backstop power. Any direction by the LSB under Clause 31 is subject to the procedure and preconditions in Schedule 7, which include the requirement for the board to obtain the advice of the Lord Chief Justice, whose view in relation to the effect of any direction on the independence and impartiality of the SDT will be of great importance.

I would be concerned if there was no high-level oversight over the way in which the SDT operates, not in the determination of individual cases but if the tribunal is failing in its functions. For example, if it is operating in a completely inefficient way and is failing to get through cases within a reasonable time as required by Article 6 of the European convention, it must be absolutely clear that the LSB can step in and direct it to remedy the failure. Without this clause nobody will have that power.

As I said, the SDT will continue to operate as a self-governing entity. Indeed, the Bill reinforces that independence, giving it greater administrative independence by making clear that it can set its own budget. The LSB will have a role in approving that budget. Our intention here is to allow for the possibility—it is important to emphasise that it is just a possibility, and a rather distant one at that—that if it were failing, the LSB may direct it to take steps. I do not believe that this power limits its status as an independent and impartial tribunal. Clause 173 allows for modifications to be made to its functions by order rather than requiring primary legislation. I would not want there to be any suspicion that this seeks to fetter its independence. I make it absolutely clear at the outset that the modifications to its functions can be made only with its consent—Clause 69 as modified by Clause 173. Nothing can be forced on the tribunal. Therefore, I am confident that its independence will not be compromised by this clause and, as I said, so is the Joint Committee on Human Rights.

Currently, changes to the tribunal’s functions have to be made by primary legislation, which does not give it the necessary flexibility. The intention behind this power is to ensure that it is able to modify its functions as quickly and efficiently as possible to reflect changes in the market for legal services and, as a result, in the jurisdiction it may have to exercise. For example, changes under the new ABS regime may occur quickly and it may need to make relatively quick modifications to its statutory functions to address these changes. The clause allows the modifications to be achieved through a recommendation by the LSB to the Lord Chancellor and with the consent of the tribunal. The modification is then made by order. The order can be made only in the same form as that recommended. The clause will allow the SDT to propose modifications of its functions to the Legal Services Board. The LSB is not bound to accept them, but there is clear benefit in the tribunal being able to make these changes by other means than primary legislation.

A further insurance against interference is that modifications can be made only for the purpose of enabling the tribunal to perform its role more effectively and efficiently. The tribunal will be the judge of that. I reiterate that it will remain an independent tribunal. Modifications will be made only with its consent. I hope that gives the reassurance that the noble Lord seeks and that he will feel able to withdraw the amendment.

Once again I am most grateful to the noble Baroness. I quite understand that if the concerns that she expressed about the operation of the Solicitors Disciplinary Tribunal were true, the LSB would need certain powers to correct the situation. But that is not the matter which concerns the solicitors’ disciplinary body. It is concerned about those rules which are necessary for the day-to-day management of cases—rules about evidence, the conduct of hearings and the administration of the tribunal. These rules are manifestly mainly in the purview of the tribunal and have nothing whatever to do with the concerns that she expressed. The tribunal simply wants to be allowed to determine these matters itself, either directly in conjunction with the Legal Services Board or, as before, with the Master of the Rolls. The procedure to do so has been relatively straightforward previously and there is no reason why it should not continue to be. But instead, even to make changes to these matters which are uniquely within its own purview, it is now required to comply with the enormous complexities of Clauses 171 to 173.

If the noble Baroness wants to set up a regime to deal with circumstances in which the tribunal deliberately or negligently does not expedite its work, that is understandable, but that is not the concern that the amendment is designed to address. It is concerned with, I suppose, the equivalent to the rules of conduct in any of our courts; those matters would be most inappropriately handled by the kind of provisions that the Government have inserted in Clause 171 to 173.

I hear what the noble Lord is saying and I need to take more advice on that. I recognise that he is seeking not to have interference, as suggested initially by the Joint Committee, and to ensure that the tribunal is independent in the way that it makes its decisions. We believe that we have captured that but, as ever, I shall look at the matter. Our proposals are based on what Sir David Clementi said originally, which aimed to ensure that there was a process in place—and we have moved off the Master of the Rolls for the reasons that I have given—in which there would be an opportunity to review the way that the tribunal operated by itself. There would be a process, but I shall reflect on what the noble Lord has said.

I would have thought that, from the point of view of independence, you could not have a better guarantee than the Master of the Rolls. His position has been reinforced by the Constitutional Reform Act, and he is a manifestly independent person.

I was not going to reflect on that—that discussion has taken place and the Master of the Rolls is content. As I have indicated, the Lord Chief Justice plays a role in giving advice. We want the consistency of the Legal Services Board in taking this forward. There is no difficulty with that. I understand the reassurances that the tribunal is seeking, and I hope that on reflection it will feel more reassured, but we will continue that dialogue for the reasons given by the noble Lord.

The noble Baroness has a point, which is enough for me at this stage. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Schedule 16 [The Law Society, solicitors, recognised bodies and foreign lawyers]:

149ZA: Schedule 16, page 218, line 37, leave out paragraph 2 and insert—

“2 In section 1A (practising certificates: employed solicitors)—

(a) in paragraph (b) omit “or”,(b) in paragraph (c)—(i) omit “by the Council of the Law Society”, and(ii) at end insert “or”, and(c) after that paragraph insert—“(d) by any other person.”.”

The noble Lord said: The amendment concerns solicitors’ practising certificates. Section 1A of the Solicitors Act 1974 was intended to be an anti-avoidance provision in respect of solicitors employed as solicitors by solicitors’ firms who, by avoiding undertaking reserved activities and avoiding using the title “solicitor”, claimed not to need practising certificates. The same issue now exists in relation to in-house solicitors, some of whom claim not to need practising certificates if they avoid reserved activities and the use of the title “solicitor”. The amendment seeks to put the obligation of in-house solicitors beyond doubt. All solicitors providing legal services would need to come under the society’s regulation.

Solicitors who do not hold a practising certificate are subject to the same provisions in the Solicitors Act 1974 and, in many respects, to the same rules and regulations as solicitors who do. Such solicitors are subject to discipline and, in serious cases, can be struck off the roll of solicitors maintained by the Law Society. The only sanction that is not available in respect of such solicitors is suspension of a practising certificate. In our view, all solicitors should be treated consistently and be subject to the same provision. The practising certificate is an indicator that a solicitor is fully entitled to practise, and it is therefore logical to extend that requirement to all solicitors who are engaged in the provision of legal services.

To make Section 1A cover that situation, it needs to be widened to include circumstances where a solicitor works in-house. The Courts and Legal Services Act 1990 altered the position of solicitors employed in private practice. In effect, it amended Section 1A of the Solicitors Act 1974 to require any solicitor employed in private practice in connection with the provision of legal services to hold a practising certificate. However, the new Section 1A did not affect the position of solicitors employed in commerce, industry and local government.

The position here is that solicitors will need a practising certificate where they are the named solicitor for the employer. In such cases, they will be required to hold themselves out as a solicitor and will have a solicitor-client relationship with the employer. A solicitor employed in commerce, industry or local government will also need a certificate when he or she is held out as practising as a solicitor, whether in a legal department or otherwise, or when he or she wishes to undertake any of the reserved activities. For that category, the position is that the obligation to hold a practising certificate can turn on decisions made by the employer, such as the job title to be used. It is therefore proposed that the requirement to hold a practising certificate be extended to all solicitors employed in commerce, industry and local government in connection with provision of any legal services. I beg to move.

This amendment is the first of a number of amendments proposed to Schedule 16, on an issue on which the Law Society has been very much engaged to ensure that we have effective regulation. Although we agree that some changes may be necessary, we are not persuaded that we should accept the amendment.

If persons who had qualified and enrolled as solicitors were seeking to avoid regulation when carrying out reserved legal activities because they had been employed under an alternative job description, they would be guilty of the offence of carrying on a reserved legal activity when not entitled, which is provided for at Clause 14.

The amendment goes further, as the noble Lord said, in that it relates to the provision of legal services, not reserved legal services. We have no evidence to suggest that persons providing legal services should be under any greater statutory duty to hold a practising certificate than other legal professionals simply because they may have once been enrolled and admitted as solicitors. If they are not carrying out reserved legal activities and not using the title “solicitor” or any other restricted term, they are not required to be authorised by an approved regulator to carry out the services that they provide.

Of course, the Bill captures persons who carry out reserved legal activities when not entitled to do so and persons who pretend to be so entitled when they are not, under the offences in Clauses 14 and 16. However, this is important in relation to reserved legal activities, where there is a greater regulatory risk.

Clause 1A of the Solicitors Act 1974 ensures that persons who have been admitted and enrolled as solicitors and are employed as solicitors must hold practising certificates. However, firms may choose to employ people who are not qualified lawyers, but who nevertheless can provide them with the sort of general advice that they require. Provided no reserved legal activity is involved, I do not see why we should treat persons who may have once qualified as a lawyer any differently from any other person who may provide general advice to their employer. Decisions such as these are purely business decisions for the organisations and individuals concerned.

If we see evidence to the contrary, Clause 68 gives the board power to make appropriate recommendations. As we do not have any evidence at this point to suggest it is an issue, I hope that the noble Lord will withdraw the amendment.

I am of course most grateful. I was interested to hear the noble Baroness use “no evidence” as one reason for not supporting this amendment. There are so many circumstances in the Bill when there has been no evidence of any potential danger to the consumer; nevertheless, the Government have felt obliged, or indeed have been determined, to regulate. I therefore hope that she will forgive me for not putting too much weight on that part of her response.

It is clear that the Law Society has some evidence. If that is cogent evidence, not accepting this amendment would leave a substantial gap in the regulatory system for the Bill.

Evidence is quite central. I was trying to make the distinction about the desire to regulate reserved legal activities where we think it is very important. The noble Lord may feel I am doing it without evidence, but it is important that we capture and cover very particular reserved legal activities. The point I was making was that we have not seen anything from the Law Society, if it has such evidence. The Bill makes provision for us to pick this up and deal with it. I was trying to be helpful with my use of the word “evidence”. We have referred to this a number of times in our deliberations about, for example, areas that we might consider regulating. We have considered voluntary issues too, but if the need arises we have the power in the Bill to make recommendations to tackle that. Let us see what the evidence brings forward.

That was a very helpful invitation from the noble Baroness. It has somewhat stopped me in my tracks because, instead of launching a rhetorical assault on the Government’s policy in this respect, I can gracefully withdraw and hope that between now and Report the department and the Law Society will get together and look at the relevant evidence.

I feel somewhat embarrassed at intervening, having had nothing to do with this Bill so far. As a solicitor—perhaps that does not distinguish me too much from other noble Lords who have taken part—holding a practising certificate, I declare that interest. The main issue must be one of insurance, and I wonder if I could put that into the mix.

I am grateful to the noble Baroness. I do not know if that is the main issue, but when we have discussions on this I shall copy her into our thinking on it.

I am most grateful to the noble Baroness. Insurance will inevitably be an issue in this context but my main preoccupation has been the completeness and the watertightness of the regulatory system. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

149ZB: Schedule 16, page 221, line 2, leave out from “certificate” to end of line 8 and insert “if he has been required by rules made under section 34(1) to provide an accountant’s report and has failed to provide such a report within the time period prescribed under those rules,”

The noble Lord said: Your Lordships will not have failed to observe that there are rather a large number of amendments in this group. They contain technical amendments to Schedule 16 and a certain amount of patience will be required from all of us.

Amendment No. 149ZB would remove the unnecessary reference to a practising certificate free of conditions. The obligation to pay an additional fee should arise simply if the solicitor is in default with his obligation under the Section 34 rules to provide an accountant’s report. Amendments Nos. 149ZC and 149ZD amend what appears to have been a drafting omission. There will be two appeals jurisdictions under both new Section 13 and Section 13A of the Solicitors Act. Therefore, just as will be the case in the new Section 13, the provision stating that the High Court’s decision shall be final should apply to both appeals jurisdictions under Section 13A and not just one of them.

Amendment No. 149ZG is aimed merely to extend the new accounts rule power under Section 32(1)(aa) of the Solicitors Act, which will cover the operation by a solicitor of an account belonging to his or her client which remains in the client’s name. The amendment would include cases where the client’s account is with a financial institution other than a bank or building society, which happens not uncommonly.

Amendment No. 149ZH removes an anomalous function; namely, the Law Society’s function of certifying deposit interest certificates. This is rendered inappropriate by Clause 154 of this Bill, which stipulates that the regulatory arrangements of an approved regulator can contain no provision as to redress. Amendments Nos. 149ZJ, 149ZK and 149ZL all update the accounts rules in the Solicitors Act as it will be amended. Amendments Nos. 150D and 150J also rectify a simple omission in the drafting that did not reflect the extension of the accounts rules to cover amounts with building societies as well as banks.

Amendments Nos. 150XA, 150XB and 150CA would remove the prohibition on solicitors limiting liability for negligence in contentious business agreements. Where there is a dispute between a solicitor and client about the solicitor’s bill, the matter is normally subject to assessment by the court. However, solicitors and clients can—if they so choose—enter into a “contentious business agreement” under which all the terms of business are agreed at the outset and there is no right to assessment in the event of a disagreement.

The current provisions on contentious business agreements provide what appears to be a prohibition on any restriction of liability for negligence. In our submission, this impedes the use of such agreements in commercial cases where solicitors may well wish to agree with their commercial clients a limitation of the solicitor’s liability, often linked to the availability of appropriate top-up insurance. Removal of this prohibition would not adversely affect the interests of the consumers because of existing professional rules and consumer protection legislation.

Amendments Nos. 150XC and 150CB are intended to make it possible for solicitors to take action on bills sent to clients electronically, rather than there being a requirement that a bill should be signed physically. The provisions are necessary in order to comply with this country’s obligations under the EU directive on electronic commerce. Most commercial clients actively prefer to receive electronic, rather than paper, bills. Under these amendments, solicitors will only be able to sue on bills sent electronically where the client has provided them with an e-mail address specifically for that purpose and the provision does not apply if the client has indicated that he or she is not willing to accept delivery of a bill sent by e-mail or by fax. This is therefore a modest, but desirable, improvement of provisions relating to solicitors’ billing which date to 1974 and therefore understandably do not take into account the use of electronic communication.

Amendment No. 150ZZA relates to the matter of delegation. Unless the Law Society has an adequate delegation power, it will not be able to achieve either a proper separation of its representational and regulatory function or a sufficiently effective exercise of its regulatory functions. This amendment therefore makes several necessary changes to achieve that. Most importantly, it would allow the delegator to direct that the delegated function may not be delegated any further.

The other amendments in this group refer to foreign lawyers. Amendment No. 150M removes a serious loophole in the current regulatory structure where there is no power to impose conditions on the registration of a foreign lawyer, except at the annual point of registration. As with all other solicitors, there should be a power to impose such conditions during the currency of the registration.

Finally, Amendment No. 150MA opens up the register of foreign lawyers to public inspection—that is not currently provided for in the legislation. I beg to move.

We must be grateful to the noble Lord, Lord Kingsland, for his exposition, which has made clear many things that did not seem very clear when I first looked at the amendments. There is a great deal of meat in them. I suggest that the Minister takes them away and considers in detail how they may best be incorporated into the Bill.

I, too, am grateful to the noble Lord, Lord Kingsland, for going through the amendments in detail. I smile at the noble Lord, Lord Thomas of Gresford—it is a pleasure to see him joining us for the next part of the Bill.

I will resist the temptation to reply to each of the amendments; I am sure that noble Lords will be grateful for that. We have been working closely with the Law Society and, in particular, representatives from the Solicitors Regulation Authority to update and modernise the powers in the Solicitors Act 1974.

Schedule 16 already sets out a large number of amendments to the 1974 Act, which are necessary to ensure that the Law Society is sufficiently equipped to carry out its role as approved regulator under the new framework in the Bill.

We accept that many of the amendments in this group seek to correct a number of anomalies that have arisen as a result of the changes that we have already made under Schedule 16. In addition, they make a number of alterations that are consistent with the powers conferred on the Law Society under the 1974 Act, as amended by Schedule 16.

However, there are matters of detail that we need to resolve in discussions with the Law Society and the noble Lord, Lord Kingsland. I would be more than happy to accept the suggestion of the noble Lord, Lord Thomas of Gresford, and take the amendments away to consider them further—and to do so in a positive and helpful light. I hope that that will make up for the noble Lord having to read out his speech on the amendments and that he will be happy with what I have done.

I am delighted to say, perhaps for the first time today, that, in view of the noble Baroness’s response, I am content without qualification. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 149ZC and 149ZD not moved.]

149ZE: Schedule 16, page 222, line 41, at end insert—

“( ) in subsection (2) for “six” substitute “nine”,( ) in subsection (4) for “six” substitute “nine”,”

The noble Lord said: This group of amendments relates to paragraph 15 of Schedule 16. Section 13B of the Solicitors Act 1974 empowers the Law Society to suspend the practising certificate of a solicitor who has been convicted of a serious offence, pending an application against the solicitor to the Solicitors Disciplinary Tribunal. However, in our submission, the power is unduly restricted. It permits suspensions of two successive periods of six months only. A total period of one year to take a case to the Solicitors Disciplinary Tribunal and complete it is increasingly very difficult in many cases, as disciplinary cases become more complex. The amendment seeks to extend both periods of suspension from six to nine months so as to give an extra six months to cover such complex and lengthy cases.

Section 13B was inserted by Section 94(3) of the Courts and Legal Services Act 1990. It enables the Solicitors Regulation Authority, where a solicitor has been convicted of offences involving dishonesty or deception, or other forms of serious crime, to direct that his practising certificate be suspended for a limited period prior to a full hearing. It is not proposed by this amendment that Section 13B be removed from primary legislation.

It is accepted that it is important to bring disciplinary proceedings as quickly as possible but, as I have already said, they are becoming more complex. Recent years have seen the Law Society taking action to strike off solicitors who have been involved in such offences as money-laundering and bank instrument fraud. The current time limits simply do not provide sufficient time for cases to be prepared properly. I hope that the Government will accept the amendments. I beg to move.

I am grateful to the noble Lord for discussing the amendments in detail. My concern is about extending the period; I would not want to reduce incentives to try to tackle cases quickly and efficiently. Suspension prevents a solicitor from practising. It is important that determinations are made as swiftly as possible. I do not suggest that this would be a deliberate move, but there is always the possibility that if you have a longer period, people will take longer to reach a decision.

I absolutely accept what the noble Lord said about serious and complex cases; he gave examples. I am not persuaded that an additional six months is required but I would welcome evidence—I am afraid that I am back to my evidence. If we could find more detailed evidence of the type of difficulties that are caused by having only the 12-month suspension period, I would be more than happy to look at this again in light of the noble Lord’s comments and come back to the issue if there was clearly a real need for a review. I can see exactly what the noble Lord is saying but we need more detail about the cases involved and so on; then I will come back on this. We should also bear in mind what I said about not wanting simply to extend and thereby perhaps create a different problem for those who have been suspended. I hope that the noble Lord will feel comfortable in withdrawing the amendment on that basis. I shall come back on this.

I am delighted to hear my noble friend agree to reconsider this issue. I strongly believe that six months is inappropriate and I entirely agree with the arguments adduced by the noble Lord, Lord Kingsland. My noble friend should receive representations from the Law Society.

Precisely; we will discuss this with the Law Society. I do not promise to make the changes but I promise to have the conversation and see what evidence there is and what might be done, if action is necessary, on the basis of what the noble Lord said were the problems.

The Minister should accept that, since 1990, when the six-month rule was established, the nature of financial crime in a number of different contexts, I am afraid to say, has been transformed.

Would the noble Lord be prepared to accept an amendment that said that the normal rule should be six months but that where appropriate that could be extended?

I would certainly be prepared to accept an amendment such as that. It has immediate attractions because it partially meets the noble Baroness’s concern about the importance of expedition and, at the same time, it meets my concern that ill-prepared cases tend not to succeed. That is a characteristically ingenious thought by the noble Lord, Lord Clinton-Davis—arriving, as usual, while he was on his feet. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 149ZF to 149ZL not moved.]

149ZM: Schedule 16, page 228, line 12, at end insert—

“( ) after “relieving that loss” omit “or hardship”,”

The noble Lord said: This amendment concerns the compensation fund, which is a discretionary fund of last resort. It is designed to provide a measure of compensation for clients where legal claims that they may have against solicitors cannot be met. For example, their claims might fall outside the scope of indemnity insurance.

Although it is reasonable that loss to the client should entitle him to consideration for a grant from the fund, it is not so obvious why that should be the case with hardship on its own. The amendment would therefore remove hardship as a criterion of entry to the compensation scheme and loss would become the sole criterion, which seems entirely appropriate.

If the principle of Amendment No. 149ZM were accepted, we would seek a number of consequential amendments. We are asking the Government to provide justification for allowing hardship without loss as a basis for an application to the compensation fund. I beg to move.

Again, I am grateful to the noble Lord for raising this issue. I know that the Law Society has raised concerns about the inclusion of the word “hardship”, and I imagine that that has prompted the amendment. Our purpose in Schedule 16 was to give the Law Society a greater degree of flexibility by establishing a compensation scheme with a greater emphasis on rule-making powers rather than statute-based powers. The flexibility that we are searching for would allow the Law Society to make rules about how moneys for the fund are collected and how, and in what circumstances, payments can be made out of the fund to those who have suffered loss. It says in my note—I cannot resist reading it out—that we accept that the way in which we sought to achieve this increased flexibility may have made it more difficult to understand how the compensation fund is expected to work.

I absolutely understand what the noble Lord is seeking to do. Perhaps I may take this matter away and discuss it further with the Law Society. My intention will be, as with the version already contained in Schedule 16, to give the Law Society greater flexibility in how it administers and operates the compensation fund arrangements but to try to make those arrangements more straightforward. That is what I shall seek to achieve in my discussions with the Law Society and I shall come back to your Lordships on that point.

I could not possibly argue with that very generous offer. In those circumstances, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

149ZN: Schedule 16, page 230, line 45, at end insert—

“(ba) if the body is an individual carrying on a business as a sole principal, that individual;”

The noble Lord said: I shall speak also to a whole raft of related amendments. Amendment No. 149ZN and the other amendments in the group relate to entity-based regulation. This would allow the Solicitors Regulation Authority to focus some of its regulation on the organisation through which the legal services are delivered rather than focus all regulation on the individual solicitor.

The Government have announced that legal disciplinary practices will be in place later this year. Any hope that the profession has of ensuring that legal disciplinary practices can immediately get off the ground will depend on all the technical problems having been removed during the passage of this Bill. The purpose of these amendments, therefore, is to allow the regulation of legal disciplinary practices by entity-based regulation, which has been accepted by both the Government and the SRA as being by far the most practical and easiest way to regulate them. The amendments are largely technical.

Amendments Nos. 150ZF, 150ZN, 150ZQ and 150ZR would make certain that the Law Society had the power to make rules requiring solicitors and registered European lawyers to practise in regulated entities, subject to any exceptions laid down in the rules.

Amendments Nos. 149ZN, 150ZL, 150ZS, 150CZF, 150CZG, 150CZH, 150CC and 150LA provide that the entity-regulation regime extends to sole practitioners and to employees of sole practitioners. A sole practitioner may run a legal services business of considerable size with a large number of qualified and unqualified employees. The Law Society should be able to apply the same regulatory regime to the whole of a business, whether owned by a single solicitor, a partnership or an incorporated business.

Amendment No. 150ZJ would allow the Law Society to impose conditions on the recognition of a recognised body, which is essential for proper regulation. This is a similar provision to the power to place conditions on an individual solicitor’s practising certificate. New alternative business structure licensing bodies will also have a similar power.

Amendments Nos. 149ZP, 150ZM, 150AA, 150AB, 150BA, 150BB, 150CZA, 150CZB, 150CZC, 150CZD, 150CZE and 150CZJ are technical amendments that ensure that the amendments to the Administration of Justice Act do not accidentally prevent some forms of practice which currently exist.

Complex structures involving lawyers and different forms of European corporate practice have evolved. These are essentially legal disciplinary practices and not alternative business structures; but, unless these amendments are made certain, structures which are currently permitted would have to be regulated as alternative business structures under the new regime.

Amendment No. 150ZH is designed to ensure that the Law Society has sufficient flexibility in developing its entity-based regulation requirements with regard to prescribing the manner and form for recognition applications. Amendment No. 150ZK is also intended to allow flexibility. It permits the scheme to be proportionate to the different risks presented by different categories of legal business. I beg to move.

I am extremely grateful to the noble Lord for dealing so succinctly with this huge group of amendments, and for the way in which he was able to read out all the numbers. I am sure that I could not emulate him.

I shall again resist the temptation to go through each amendment. Schedule 16 already extends the Law Society’s powers for the purpose that the noble Lord has indicated, and these further amendments build on that. The most specific changes are to ensure that there are no potential gaps in the Law Society’s powers to regulate different types of practice, including legal disciplinary practices, according to risk-based principles. In particular, the Law Society is seeking powers to ensure that all types of entity through which solicitors practise, including sole practitioner firms and partnerships, must be regulated as practices and not just through the individual lawyers within them.

Although many of the outcomes of the amendments appear justifiable, I can see that some of the proposed changes are quite complex. We will have to look at them and subject them to detailed analysis. The Government do not object to the principle of the amendments. However, I will need to take them away and consider them carefully, particularly if there are complicating factors as we work through them. On that basis, I trust that the noble Lord will be happy to withdraw the amendment.

Did the Law Society see the Bill before it was published? It seems extraordinary that Parliament has to look at redrafting details that the Law Society spots are necessary simply to go on doing what it does or to make the alterations that the Government want. Did the Government talk to the Law Society late in the proceedings before the Bill was published?

The Government have been talking to the Law Society throughout as we have put the Bill together. What looked like huge numbers of amendments were actually small, detailed changes. As the Bill goes through Committee stage in the first House, as it were, it is right and proper that we should listen to what organisations and noble Lords say about how to make it better. Although there is nothing wrong with Schedule 16, I genuinely believe that if we get suggestions to make it even better, even though we have had dialogue all the way through, we should look at those suggestions properly. It is part of the ongoing dialogue. When our proposals are introduced, I hope that noble Lords will agree that, although the amendments look huge, they are actually small, technical changes. But they do make a difference and I think that it is right to respond to them. I am grateful to the noble Lord, Lord Kingsland, for championing them.

In those circumstances, the correct approach for me to adopt is to beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

This may be a convenient moment for the Committee to adjourn for 20 minutes. I beg to move that the Committee do now adjourn until 7.35 pm.

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

[The Sitting was suspended from 7.15 to 7.35 pm.]

[Amendment No. 149ZP not moved.]

149A: Schedule 16, page 231, line 30, leave out paragraph 40 and insert—

“40 Section 44B (examination of files) is amended as follows—

(a) in subsection (1)—(i) for “Council are” substitute “Society is”,(ii) in paragraph (b) for “Council” substitute “Society”,(iii) omit paragraph (c), and(iv) for “the solicitor or his firm” to end substitute “any person requiring the production or delivery of information in accordance with subsection (2) or apply to the High Court for an order requiring the production or delivery of such information.”;(b) for subsection (2) substitute—“(2) A notice by the Society or order of the court under subsection (1) may require— (a) the production or delivery to any person appointed by the Society, at a time and place to be fixed by the Society or the court, of all relevant documents in the possession of that person;(b) the attendance of the person to whom notice is given to provide information by answering questions at a time and place to be fixed by the Society or the court.(3) Subject to subsection (4), a notice under subsection (1) may only be given to or an order made against a person who is regulated by the Society or is connected with a person regulated by the Society.(4) A notice or order under subsection (1) may be given to or made against any person if the Society is satisfied that information relevant to an investigation is likely to be in the possession, custody or power of that person and that there are reasonable grounds for believing that information which may be provided by that person is likely to be of substantial value (whether or not by itself) to the investigation.(5) For the purposes of subsection (3) a person is connected with a person regulated by the Society (“A”) if he is or has at any relevant time been—(a) a partner in a partnership of which A is or was a partner;(b) an employee, officer, member, director, agent, shareholder or shareowner of A;(c) remunerated directly or indirectly by A for activity in connection with the provision of legal services;(d) a controller of A; or(e) a member of A’s group.””

The noble Lord said: Amendments Nos. 149A and 149B relate to the Law Society’s powers to examine files and other documents, even those which are confidential or subject to legal professional privilege. Amendment No. 149B includes a provision that the Law Society may apply to the High Court for an order in the event that a solicitor fails to provide requested information.

Amendments Nos. 149A and 149B will bring the Solicitors Regulation Authority’s powers up to date in this area in two important ways. First, they will introduce a new power to require solicitors or other individuals regulated by the Law Society to attend to answer questions. Secondly, those powers would also be extended, with appropriate safeguards, over third parties. These powers are essential if the SRA is to be able to protect, effectively, consumer interests in the regulatory regime, and continue to retain credibility and authority into the future. Other regulators, such as the Financial Services Authority, already have equivalent powers to require regulated persons to attend to answer questions.

It is important to extend the power to require information from third parties for a number of reasons. Many wrongdoers whose activities are facilitated by solicitors remove their files from solicitors. Without this power, there would be no way of reaching the information. The same is true of papers with accountants. If a solicitor is in the wrong, files are sometimes moved around between solicitors because the current power to require production of documents only applies to the solicitor under investigation. Another example is solicitors who receive work through non-solicitor businesses which they covertly control, and fail to disclose this to clients who think that they are receiving independent advice. The SRA currently has no direct power to require disclosure of information from the non-solicitor businesses.

The third party need not always be nefarious. It is thought that some third parties that wish to provide information do not do so because they feel that they cannot safely do so unless they can demonstrate that they were obliged to, either through fear of the solicitor’s reaction or unease over what legal protection they will maintain.

Amendment No. 149B states that the legal professional privilege should not apply in particular circumstances. This is a potentially important new section, which should apply to all lawyers. Were the principle of this amendment to be accepted, we would seek for an equivalent provision for licensing of licensed conveyancers and other lawyers. I beg to move.

I am grateful to the noble Lord, Lord Kingsland, for raising these issues. We recognised that the powers to require information currently contained in Section 44B of the Solicitors Act 1974 may indeed need to be revised in some way. We have some concerns; for example, the definition of third party is drafted very widely and may subject more people to the statutory obligation to disclose information than may be desirable or appropriate for the purposes of effective regulation. We would like to take the amendment away and consider it further with the Law Society and with the noble Lord, Lord Kingsland.

Amendment No. 149B does two things. First, it allows the Law Society the power to require production of confidential or privileged information. We do not accept that because there are real sensitivities in relation to allowing a regulator to override professional privilege or have unfettered access to material of a confidential nature in the way proposed. At this stage, we are not persuaded that the Law Society has made the case for this power. Secondly, the amendment provides for an enforcement provision where production of information has been compelled under Section 44B of the 1974 Act, as amended. That would be achieved by the insertion into that Act of a new Section 44E. We think that there needs to be an appropriate enforcement mechanism for any new power to require information. Section 44E also requires more detailed scrutiny of the new offence that the Law Society has suggested. For that reason, I would like to take away that part of Amendment No. 149B, as well as Amendment No. 149A, continue our discussions with the Law Society and come back to the House at the next stage.

I am most grateful to the noble Baroness, who has again assured your Lordships that she will take these amendments away and consider them before the next stage of the legislative procedure. I understand her concerns about the proposals in relation to third parties. On the other hand, without casting the net of the amendment very wide, it is very difficult to predict in advance exactly which third parties it is necessary to cover in order to make the amendment effective. That is why the definition is so all embracing. However, I understand the Minister’s concerns. This will probably be the most important matter that will be under discussion between the Minister, the Law Society and other parties between now and Report. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 149B not moved.]

149C: Schedule 16, page 232, line 6, at end insert—

“(2) After that section insert—

“44F Power for Society to rebuke and reprimand

(1) Where the Society has investigated whether there has been professional misconduct by a solicitor, or whether a solicitor has failed to comply with any requirement imposed by or by virtue of this Act or any rules made by the Society, and the Society is satisfied that there was professional misconduct on the part of the solicitor, or that the solicitor did fail to comply with such a requirement or rule, but the Society is not satisfied that it is in the public interest to make a complaint against the solicitor to the Tribunal, the Society may rebuke or reprimand the solicitor and, unless it considers that it is not in the public interest to do so, may make public both the fact that the solicitor has been rebuked or reprimanded and a summary of the misconduct or failure concerned.

(2) The Society may make rules providing for rights of appeal to the Tribunal against rebukes or reprimands made by the Society where they are made, or proposed to be made, public or in such other circumstances as the Society may prescribe.

(3) Rules made under subsection (2) may also make provision about the procedure and practice to be followed in relation to—

(a) investigations as to whether there has been professional misconduct by a solicitor, or whether a solicitor has failed to comply with any requirement imposed by or by virtue of this Act or any rules made by the Council;(b) the making of rebukes and reprimands; and(c) the making public of rebukes and reprimands under subsection (1).””

The noble Lord said: Amendments Nos. 149C and 149D insert two new powers for the Law Society in the guise of the Solicitors Regulation Authority. Amendment No. 149C introduces a new section into the Solicitors Act that would put the current power of rebuke and reprimand on a secure statutory basis. The SRA can already exercise this power, and this would merely formalise and standardise it. The amendment also makes provision for the publication of such decisions. At present, they are not publicised, but transparency about such matters can only improve client choice and protection. The amendment, importantly, codifies an independent right of appeal to the Solicitors Disciplinary Tribunal.

Amendment No. 149D creates a new section that confers on the regulatory arm of the Law Society a new power to impose financial penalties on solicitors. Under subsection (2) of this proposed new clause, the maximum financial penalty would be £5,000, which is a relatively small amount. The amendment also provides a statutory basis for an independent right of appeal to the tribunal against such financial penalties. As the imposition of a financial penalty is a sanction, an independent right of appeal against such a penalty is appropriate and compliant with the ECHR. I beg to move.

I am again grateful to the noble Lord, and I will be brief. We want to consider the amendments. I understand why the Law Society may wish to have statutory powers to rebuke, reprimand or fine a solicitor, but I am concerned to ensure that we have fully considered the implications in relation to the Law Society’s power to fine, rebuke and reprimand before I agree to take forward amendments similar to those proposed. I want to think a bit more about the circumstances in which a fine or rebuke might be issued, the rights of appeal that could be available to solicitors and the maximum level of financial penalty. Provided that noble Lords are content and that the noble Lord, Lord Kingsland, is happy, I shall take these amendments away, consider them further and return to the issue on Report.

I am once again most grateful to the noble Baroness for agreeing to take these matters away and consider them. I beg leave to withdraw the amendment.

Amendment by leave, withdrawn.

[Amendment No. 149D not moved.]

150: Schedule 16, page 232, line 18, leave out paragraph 43 and insert—

“43 After that section insert—

“46A Funding of the Tribunal

(1) The Tribunal must submit to the Society and the Legal Services Board in respect of each year a budget for the year.

(2) A budget for the year is a statement of the amount of money which the Tribunal estimates is required to enable it to meet all of its expenditure in that year (having regard to any amounts received but not spent in previous years).

(3) The amount budgeted shall be appropriately allocated to each solicitor applying for a practising certificate and shall be collected by the Society on behalf of the Tribunal and the Tribunal may procure that its administration is conducted through a company limited by guarantee or other body controlled by it.

(4) If the amount sought by the Tribunal is in excess of the previous year’s budget by more than 5 per cent such increase over 5 per cent shall require the approval of the Legal Services Board after consultation with the Society and the Tribunal.

(5) Pending such approval as is required by subsection (4), the amount of the previous year’s budgeted amount shall be payable in accordance with subsection (6).

(6) Subject to subsection (5), the amount specified in a budget submitted under subsection (1) shall be received by the Society as agent for the Tribunal and must be paid by the Society to the Tribunal—

(a) in such instalments and at such times as may be agreed between the Society and the Tribunal; or(b) in the absence of such agreement before the beginning of the year to which the budget relates.(7) The Society may pay the Tribunal such other amounts as the Society considers appropriate.

(8) In this section “year” means a calendar year.””

The noble Lord said: The purpose of Amendment No. 150 is to ensure that the Solicitors Disciplinary Tribunal will have full administrative independence from the Law Society. We are concerned that the new Clause 46A in the Solicitors Act be suitably clear and unambiguous, so we ask the Government to consider very carefully the wording in the Bill. We accept that new subsection (3) may not be perfect. It was designed to reduce bureaucracy, but might be unnecessarily restrictive.

The improvements to the Bill that the amendment makes are that the Solicitors Disciplinary Tribunal must be financed by each practising solicitor, not by the Law Society, thus helping to establish the tribunal’s independence. Further, if the tribunal is to provide for its own administration, it should have specific power to do so through an appropriate vehicle. It does not make sense for the Act to give administrative powers to the tribunal itself, so we have suggested a company limited by guarantee, which is what I understand the tribunal would prefer to see. The Solicitors Disciplinary Tribunal would then be able to employ its own staff, run its own premises and provide for its own administration. I beg to move.

I am grateful to the noble Lord. The provisions we have set out in paragraph 43 of Schedule 16 are intended to give the Solicitors Disciplinary Tribunal clear financial independence from the Law Society for the first time by providing that it sets its own budget. I know that this is of great importance to the tribunal. It is envisaged that it will in future be demonstrably independent of the Law Society in administration as well as in functions. The provisions that we have already drafted are intended to achieve that. It is important that we get the drafting of the funding provisions right, and I listened very carefully to what the noble Lord said.

Amendment No. 150 reduces the Legal Services Board’s oversight of the budget to a minimal level by removing the need for approval of the budget at all, as long as it is no more than 5 per cent greater than the previous budget. The LSB’s formal approval is required only for increases of above 5 per cent. It is quite possible that the tribunal’s workload may reduce over time, and in those circumstances any increase or, indeed, maintenance of the status quo in the budget might not be appropriate. For that reason, and because the noble Lord’s amendment would in theory allow for automatic increases—if he gets what I mean by that—quite possibly above inflation each year, that is not the approach that we should take. In practice, we would expect the approval of the budget to be a relatively straightforward process. We do not expect it to be particularly onerous for the Legal Services Board or for the tribunal.

The amendment also seeks to make it clear that the Law Society collects money to meet the tribunal’s budget from each of its individual members as agent for the SDT, and that it must collect that money only from individual solicitors and only as a separately identified element of the fee of each solicitor’s practising certificate. I am not convinced that that is necessary or appropriate. The Law Society and other approved regulators will collect money from their members for a number of different purposes. It is fair to leave it to the approved regulators to decide how to apportion those sums, and I would resist calls to place a statutory requirement for an approved regulator to set out the exact sums required for each of those elements. That would, in practice, cause the Law Society some real difficulties. It will be normal practice for the Law Society to identify to its members the main elements of the practising certificate fee, but I would be concerned about requiring that in statute.

As to how the tribunal will organise its administrative affairs once it has the guaranteed financial independence offered by the new section, it is eminently sensible that the tribunal puts in place effective arrangements for running itself administratively. I consider that the tribunal will have sufficient power within the Bill to do so, so I am not persuaded that we need an explicit reference to setting itself up as a company limited by guarantee. However, I would be prepared to consider that point further in the light of further discussion with the noble Lord, the Law Society and the tribunal.

We want to ensure that the tribunal is independent and has the ability to be demonstrably administratively independent from the Law Society. We have sought to achieve that through the wording in the Bill. I hope that I have given some reassurances on that point. On the basis that I will consider the point about the company, I hope that the noble Lord feels able to withdraw his amendment.

I am most grateful to the noble Baroness. I am not sure. These amendments were inspired by the Solicitors Disciplinary Tribunal. I do not know to what extent there has been communication between the Law Society and the Solicitors Disciplinary Tribunal about the merits of this proposal so, when the noble Baroness undertakes her investigations before Report, I suggest that she takes soundings from both organisations. They may well be in complete agreement; on the other hand there may be a difference of view, in which case the Government will have to make an assessment about what is in the public interest. The two organisations may well be ad idem about the matters; I am just not sure. In any case, it is quite clear that at this stage of the proceedings I must beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 150XA to 150ZZA not moved.]

150ZA: Schedule 16, page 238, line 17, leave out paragraph (a) and insert—

“(a) for sub-paragraph (1)(a) substitute—“(a) the Society has reason to suspect dishonesty on the part of a solicitor;”,(aa) after that sub-paragraph insert—“(aa) the Society has reason to suspect dishonesty on the part of—(i) an employee of a solicitor, or(ii) the personal representatives of a deceased solicitor,in connection with that solicitor’s practice or in connection with any trust of which that solicitor is or formerly was a trustee;”,”

The noble Lord said: This is yet another group of amendments that relate to the Law Society's regulatory powers under Schedule 16. Amendments Nos. 150ZA, 150K, 150L, 150N and 150P relate to the power of intervention. The Law Society's power to intervene in the practice of a solicitor on suspicion of his or her dishonesty is one of its most important regulatory powers.

However, it is limited to a suspicion of dishonesty in connection with a practice. The intervention power in respect of a solicitor’s practice does not arise if there is evidence that a solicitor has been dishonest in connection with a non-legal business. This is an unduly limited and out-of-date power in an environment where solicitors are increasingly involved in non-legal business. The amendments would remove this restriction as regards solicitors, the managers of recognised bodies and registered foreign lawyers, but leave the restriction in place in respect of their employees.

Amendments Nos. 150ZB, 150ZC and 150Q introduce two changes to the grounds on which the Law Society may intervene in a solicitor’s practice or multinational practice under the Solicitors Act. First, it widens the existing ground of abandonment of practice by a sole practitioner to cover abandonment by any solicitor. I understand that, although rare, there have been instances where practices of two or more solicitors have been abandoned by them, and so the existing ground is potentially prohibitively narrow. Secondly, it creates a new intervention ground of failing properly to attend to a practice. Again, there is a regulatory need for such a ground.

Finally, Amendments Nos. 150ZD and 150ZE have been tabled to make it explicit that any obligation that the Law Society may have to trace the beneficiaries of sums that vest with it on interventions is an obligation to take reasonable and proportionate steps to trace them. I beg to move.

Once again, I am grateful to the noble Lord, Lord Kingsland, for explaining the detail behind the amendments. We have discussed a number of groups of amendments around Schedule 16. The purpose of Schedule 16 is, in part, to extend the Law Society’s intervention powers. These amendments build on the changes that have already been made. They would allow the Law Society, as the noble Lord said, to intervene in all cases where dishonesty is suspected or where practices have been abandoned by more than one of the principals, but they would also lower the threshold of steps that must be taken to try to trace the beneficiaries of any funds recovered on intervention.

For the most part, these amendments are justifiable and in the interests of effective regulation. Therefore, I am extremely content to consider them—with one exception. I am not at the moment minded to accept the elements of Amendments Nos. 150ZB and 150Q. These are the elements that allow the Law Society to intervene in cases of a solicitor’s failure to properly attend to a practice. It is too vague a threshold for the exercise of intervention powers. We will need to consider that more, but I want to flag up those areas to the noble Lord as ones that at the moment I am not persuaded on. The others I am very happy to take away and consider. Obviously, we will talk to the Law Society about them.

Once again, I am most grateful to the noble Baroness. I have succeeded for the most part and hope that she will reflect on her hesitations about the two amendments between now and Report stage. Meanwhile, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 150ZB to 150D not moved.]

[Amendments Nos. 150E to 150H had been retabled as Amendments Nos.150ZB to 150ZE.]

[Amendments Nos. 150J to 150Q not moved.]

[Amendment No. 150R had been retabled as Amendment No. 159.]

Schedule 16 agreed to.

Clauses 171 to 173 agreed to.

151: After Clause 173, insert the following new Clause—


(1) A person may not be authorised to carry on a reserved legal activity as a barrister unless he has been called to the Bar by an Inn of Court and is not disbarred by order of an Inn of Court.

(2) References in this Act to a barrister are to a person—

(a) who has been called to the Bar by an Inn of Court and is not disbarred by order of an Inn of Court, and(b) (where the context so requires) who is authorised to practise as a barrister.”

The noble Lord said: I shall also speak to Amendment No. 156. The Minister will be relieved to know that these are not about Schedule 16. The amendments concern the definition of “barrister” and the position of the Inns of Court in relation to it. The Inns of Court, the Bar Council and the Bar Standards Board believe that the role of the Inns in calling to the Bar those who exercise rights of audience as barristers should be recognised in the Bill to protect the interests of consumers. Consumers who engage the services of a legal practitioner called a barrister are entitled to know that the person whom they instruct has completed the training and education required by the Inns. The Bill should, accordingly, be amended so that Clause 173 builds on the previous legislation in this area by continuing to provide statutory recognition of the Inns’ important role in this respect.

The four Inns of Court—Lincoln’s Inn, Inner Temple, Middle Temple and Gray’s Inn—are societies of lawyers which, for more than five centuries, have had the responsibility for educating and training their members, as well as calling to the Bar those members who have qualified to practise. The education and qualification of students and barristers continues to be the core activity of the Inns, bringing together students, practitioners and judges in the communal enterprise of learning excellence in advocacy and legal ethics. Each year, the Inns of Court collectively spend in excess of £6.5 million on education, training and scholarships. In addition, they benefit from both practitioner and judicial members giving freely of their time and expertise to provide education and training. The contribution that they make through their education and training programmes, particularly in advocacy, is unique.

It is in the public interest that the Inns’ role is preserved so that the Bar can ensure that standards are both maintained and enhanced. That will ensure that the public can have confidence that members of the profession will provide the highest-quality legal representation and advice. Both the noble and learned Lord the Lord Chancellor and the noble Lord, Lord Hunt of Wirral, the chairman of the Joint Committee, acknowledged the important work of the Inns of Court in education, training and competence in the Second Reading debate on the Bill.

Section 31 of the Courts and Legal Services Act 1990, as substituted by Section 36 of the Access to Justice Act 1999, recognises the Inns of Court’s role in calling persons to the Bar. Section 36(1) states:

“Every barrister shall be deemed to have been granted by the General Council of the Bar a right of audience before every court in relation to all proceedings”.

Section 36(3) continues:

“A person shall not have a right of audience by virtue of subsection (1) if … he has not been called to the Bar by an Inn of Court”.

There is a strong public interest in amending the Bill in order to recognise that the only people who can call themselves barristers, and practise under that description, are those who have been called to the Bar by an Inn of Court and are therefore subject, and continue to be subject, to training and education in the Inns.

The proposed new clause would retain the important role played by the Inns of Court set out in the Courts and Legal Services Act 1990. It ensures that a person cannot be authorised to practise as a barrister under the regulatory arrangements of an approved regulator unless he or she has been called to the Bar and, of course, is not disbarred. It also supplies a definition of “barrister” that features in various provisions. By contrast, however, the expression “solicitor” is not defined.

Some of but not all the Bill’s references to a barrister are intended to relate to a barrister authorised to practise as such; hence proposed new subsection (2)(b). That will include a person authorised to practise during the transitional period, in accordance with paragraph 6(1)(a) of Schedule 22. I beg to move.

I endorse and unreservedly support what the noble Lord, Lord Kingsland, has said. I declare an interest as a former Treasurer of the Inner Temple. Having been a Treasurer and a Bencher of that Inn for many years, and having engaged from time to time in the education of students and young barristers, I can attest to the fact that the Inner Temple and the other three Inns do exactly the same work in relation to education, although each of us, rather like schools, is proud of our individuality. The important thing is that we treat education as incredibly important. As the noble Lord, Lord Kingsland, has said, more than £6 million a year is spent from money gathered from members of the Bar in the Inns, and from generous donations from those who have been barristers or judges, to train and teach particularly advocacy to those who will be barristers.

We in the Inns consider it to be of the utmost importance that those who will be barristers should be able to provide the best possible service to the public. We are very supportive of continuing training, some of which is done in the Inns and some of which is done at the Bar. The whole purpose of the proposed new clause would fill an undoubted gap in the Bill, which was met by the previous Acts of 1990 and 1999 that the noble Lord, Lord Kingsland, mentioned. If the Government do not put this into the Bill, they will lose something that is of incalculable value to the public. That is the important thing. It is not important to the lawyers; we do not exist just to enjoy ourselves and eat dinners, which we can eat here in the Lords if the House gives us time to do so. The primary importance of the Inns of Court is the education of those who will be in the firing line in the courts, providing the important service that they are peculiarly well trained to provide; that is, to represent the public. I therefore unreservedly support what the noble Lord, Lord Kingsland, said, and would like to hear words of comfort from the Minister.

I declare an interest as a Master of the Bench of the Middle Temple; that is, I am a member of the governing body of my Inn of the Court. In the past, I have acted as chair of the scholarships committee, which has a significant educational role.

It is well known that although the four Inns of Court, about which my noble and learned friend Lady Butler-Sloss has spoken, admit people to be student members and in due course may call them to the Bar as junior barristers, they have delegated many of their traditional educational functions to the universities and central bodies, such as the Inns of Court School of Law, for the study of legal subjects and of course the passing of examinations.

Nevertheless, I agree with my noble and learned friend Lady Butler-Sloss. The Inns retain a number of key educational functions, including the grant of scholarships and other awards that are vital to making it possible for many students, especially those from poorer families, to undergo their legal education. The Inns also provide well stocked libraries, social opportunities to enable students to meet barristers and judges, mentoring through sponsorship schemes of individual students and, increasingly in recent years, the provision of practical training in advocacy and guidance in obtaining places as pupils with practising barristers. The Inns of Court are also involved with the continuing education of barristers after they have been called to the Bar. Between them, the Inns have, I believe, about 500 volunteer advocacy trainers comprising judges and senior barristers.

I support Amendment No. 151 in the name of the noble Lord, Lord Kingsland, which is designed to give formal recognition in the Bill to the role of the Inns of Court in calling to the Bar those who exercise the “reserved legal activity”, as described in Clause 12, of the exercise of certain rights of audience in the courts. The public interest, with which we are all concerned, and public confidence in high-quality service provided by barristers would be underlined by this formal recognition proposed by Amendment No. 151 of the role of the Inns of Court.

I support what has just been said by the noble and learned Baroness, Lady Butler-Sloss, and the noble Lord, Lord Borrie. Two Inns have now been covered. I represent a third Inn and I declare that I am a practising barrister called to the Bar by Gray’s Inn where in my time I had the honour to be the Treasurer. I confirm what they say about the teaching role of the Inns and very much hope that the Minister will be able to accept the amendment or at least give us some encouragement. Members of the Committee will probably recall that Blackstone described the Inns of Court as the third university—they will be able to guess the other two. I am not sure that I would put it quite as high as that today, but the educational role is still extremely strong, particularly in the training of advocates. There has been a resurgence in that over the past 15 to 20 years and a very striking demonstration of the Inns performing their old function up to the hilt. I hope that this amendment will find favour.

I am sorry that representation for Lincoln’s Inn is missing—because I declare an interest as a bencher at Gray’s Inn. A lot has been said about education, but it is much more important than that and I do not think that the general public understand. As I declared to Members of the Committee earlier in Committee, I started my career as a solicitor. For a long time I was in favour of a fused profession. Then I began to realise as a solicitor in a small country practice the value of the divided profession which gave the solicitor, however humble—I was pretty humble—access to the greatest legal expertise there could be through the system that we have.

Having qualified as a barrister, I have realised the way in which the disciplines of the profession of barrister apply. Shakespeare said we should do as lawyers do:

“Strive mightily, but eat and drink as friends”.

Whereas the concept of dining is often completely misunderstood by the public, the social and educational life of the Inn brings people together to respect each other; to trust each other, which is a very important part of the way in which the legal profession works; and to meet in a way which I do not think applies in any other profession. Certainly, it did not for solicitors. From that fusion of social, educational and professional life comes the strongest ethic of serving the law, trusting each other and providing to the public and the consumer—I point in the direction of where the noble Lord, Lord Whitty, should be sitting—the best possible legal profession that there can be.

I do not know why barristers do not appear in the definitions in the Legal Services Bill, because they are referred to in the Bill. Solicitors are defined, but barristers are not. The noble Baroness should accept this excellent amendment moved by the noble Lord, Lord Kingsland.

That was the most animated debate we have had today. I still struggle with what a bencher is, never mind what a Master of the Bench would be. I quite fancy the dining—perhaps that should be my research project between now and Report

I hope that the noble Lord can organise it. I completely recognise the strength of feeling about the role of education and training. The noble and learned Baroness, Lady Butler-Sloss, talked about it with great passion. The noble Lord, Lord Kingsland, described it as unique. The noble Lords, Lord Neill of Bladen and Lord Thomas of Gresford, and my noble friend Lord Borrie each have benefited—if I might describe it as such—from the incredible way in which the Inns have developed their role in education and training, and I take the point about dining.

My noble friend Lady Royall was reminded by the comments of the noble Lord, Lord Thomas of Gresford, of the House of Lords. Conviviality is a fundamental part of being able to strive across the Dispatch Box to achieve what we all wish to see, which is good legislation. I also recognise the role of the Inns in calling and disbarring barristers, currently set out in Section 31 of the Courts and Legal Services Act 1990 in respect of rights of audience. As a result of the changes to the way in which reserved legal activities will be granted in future, we have to repeal that section. The legislation as currently drafted allows flexibility for the Bar Council to make regulatory arrangements maintaining the role of the Inns in calling and disbarring authorised persons. The Government think it very important that the Bar Council, as the approved regulator, has primary responsibility for making the arrangements for the training, practice and discipline of barristers. The detail of the relationship that the Inns have with the Bar Standards Board and the Bar Council is a matter for consideration by those parties and the Legal Services Board when established.

That said, I understand completely the strength of feeling and the need for more certainty to ensure that the role of the Inns in respect of the calling and disbarring of barristers continues in the future. Perhaps I may therefore take away the amendment of the noble Lord, Lord Kingsland. I ask him to withdraw it and I shall consider how to come back on Report to deal with the issues that have been raised so succinctly by Members of the Committee.

I am most grateful to the noble Baroness for her reply, but I am disappointed that she is not able to accept the amendment tonight. I would ask her to glance at Clause 197 on page 108. We reach the word “solicitor” which is defined in the interpretation clause as,

“‘solicitor’ means solicitor of the Senior Courts”.

But nowhere in this clause do we find a definition of “barrister”. That is strange. Is it an accidental omission or a deliberate one? If it is deliberate, why has it been decided not to include a definition of “barrister”?

The noble and learned Baroness, Lady Butler-Sloss, referred to the degree of Barrister-at-Law, which can only be obtained from one of the four Inns as of “incalculable value to the public”. This is the central point. The amendment is designed to protect the consumer by ensuring that anyone using the name of “barrister” must be someone who is a product of the Inns of Court system. The amendment does not seek to claim special privileges for the Inns of Court, but to underline that the Inns are centres of excellence which produce barristers and that any attempt to describe someone as a barrister who has not been to an Inn of Court and through this system would be to undermine the quality of the service the consumer is entitled to enjoy.

We are not seeking some privileged position for the Inns of Court in this Bill. The Inns of Court and what they achieve underline the importance of the word “barrister” and I do not see why the Government have any difficulty in accepting that there should be a unique link between the description of “barrister” and the Inns of Court.

I had hoped that the noble Lord would be more enthusiastic about my words. First, there are some issues of drafting about which we are now in discussion with the Bar Council. Lady Justice Smith, President of the Council of the Inns of Court, has asked us to think about these issues properly and states in her letter:

“I hope that you will urge Lord Kingsland to withdraw his amendments and that the Government will undertake to come back”.

That is what I am seeking to do.

The reason we have a definition of “solicitor” is that apparently it is already defined within statute, but the same is not true of “barrister”. That may not be a satisfactory reason, but that is why the Bill treats this issue as it does. However, I am perfectly reconciled to the fact that if we are going to tackle this properly, we must make sure that the drafting is right. Once I have discussed this fully with the President of the Council of the Inns of Court, we shall be in a good position to move forward.

I wonder if I can point out to the Minister that I understand very well why “barrister” was not included previously. It was because there was a section dealing with the Inns of Court which set out a definition. But once the section that provides for barristers coming from the Inns of Court is removed, it is necessary at the least to have a definition of “barrister”. Otherwise the Bill would appear to be deficient.

After the second intervention of the noble Baroness, I feel much more reassured. In those circumstances, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 174 agreed to.

Schedule 17 [Licensed conveyancing]:

151ZA:Schedule 17 , page 265, line 12, at end insert—

“In section 22 (keeping accounts and establishment of client accounts) omit subsections (4) and (5).”

The noble Lord said: In moving this amendment, I shall also speak to Amendments Nos. 151ZB, 151ZC and 151ZD. These amendments concern licensed conveyancing. The Council for Licensed Conveyancers is one of the approved regulators set out in paragraph 1 of Schedule 4 to the Bill. Schedule 17 contains all the amendments currently proposed to its statutory powers. The further changes contained in Amendments Nos. 151ZA to 151ZD are important to the council. The Bill represents a perfect opportunity to make these long overdue changes to the Council for Licensed Conveyancers’ statutory regime, and we would very much welcome their inclusion.

Amendment No. 151ZA would remove the unnecessarily prescriptive requirement that the reporting accountant is eligible for appointment as a company auditor. Amendment No. 151ZB refers to the power to charge for the costs of investigations and would bring the statutory regime for licensed conveyancers into line with the proposed new Section 44C of the Solicitors Act.

Amendment No. 151ZC is fairly straightforward in that it simply introduces additional disciplinary sanctions available against licensed conveyancers, which would ensure consistency with Section 26(2) of the Administration of Justice Act.

Amendment No. 151ZD is perhaps the most important of all, and concerns the delegation of powers. The council’s current entitlement to delegate powers is extremely narrow, particularly when compared with the proposed amendment in this Bill to Section 79 of the Solicitors Act 1974. This amendment would allow the discharge of functions to a committee, a member of the council staff or any other appropriate person. There would be no requirement for the council to take advantage immediately of the increased flexibility in the delegation of its functions.

We suspect that these amendments are not likely to be controversial with the Government, but are more likely to be the result—dare I say it?—of oversight. These omissions, therefore, perhaps provide additional evidence of the over-expedited nature of this part of the Bill. I beg to move.

I am grateful to the noble Lord. I agree; we need to recognise that it is important to update and streamline the powers of the Council for Licensed Conveyancers. Schedule 17 already makes a number of changes to the Administration of Justice Act 1985 and the Courts and Legal Services Act 1990, to ensure that the council is able to operate effectively under the new framework. As the noble Lord has said, Amendments Nos. 151ZB to 151ZD further augment the 1985 and 1990 Acts by restructuring that disciplinary process. We recognise that these amendments may indeed be cost effective, and could ease administrative burdens by allowing those bodies limited autonomy over disciplinary and regulatory matters. We would like to take them away and consider them further with the council.

Amendment No. 151ZA amends Section 22 of the Administration of Justice Act 1985, as the noble Lord has said, to allow the council to determine the eligibility requirements of accountants auditing licensed conveyancers. We recognise that the provisions in Section 22 may be perceived as overly prescriptive. Again, we would like to give further consideration to whether or not it will be sufficient for the council to make its own rules, which the board would have to approve, regarding the eligibility of accountants to conduct such audits.

I am concerned to ensure that we have fully considered the implications of the amendment, particularly in relation to partnerships, before I go too far in agreeing them. As I have indicated, I would like to talk to the council specifically about that. I hope the noble Lord will allow me to take the amendments away, consider them further and come back on Report.

I am most grateful to the Minister. Of course I will allow her to go away and consider these matters. In those circumstances, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 151ZB to 151ZD not moved.]

Schedule 17 agreed to.

Clause 175 agreed to.

Clause 176 [Trade mark attorneys]:

151A:Clause 176 , page 91, leave out lines 18 to 20 and insert—

“(7) An order under this section may not be made unless a draft of it has been laid before, and approved by a resolution of, each House of Parliament.”

On Question, amendment agreed to.

Clause 176, as amended, agreed to.

Clause 177 [Patent attorneys]:

151B:Clause 177 , page 93, leave out lines 35 to 37 and insert—

“(7) An order under this section may not be made unless a draft of it has been laid before, and approved by a resolution of, each House of Parliament.”

On Question, amendment agreed to.

Clause 177, as amended, agreed to.

Clause 178 [Immigration advisers and immigration service providers]:

On Question, Whether Clause 178 shall stand part of the Bill?

The purpose of encouraging this clause stand part debate is to raise the issue of immigration advice, which has not been considered previously in the Bill. The Immigration and Asylum Act 1999 established a new regulatory structure for immigration advice under the auspices of the Immigration Services Commissioner. Despite the fact that immigration advice is clearly a legal service, responsibility for the Immigration Services Commissioner was granted to the Home Office and not to the Department for Constitutional Affairs.

It was hoped that the Bill might rectify this anomaly, especially as the situation will now become even more curious. The Office of the Immigration Services Commissioner will cede its supervisory role over lawyers to the Legal Services Board, but it will continue in relation to non-lawyer advisers and also, most unsatisfactorily, in respect of any activities which England and Wales lawyers may conduct in other parts of the United Kingdom. The OISC will remain under the supervision of the Home Office while the Legal Services Board will fall under the department’s jurisdiction. Given that the provision of advice in immigration matters is, to all intents and purposes, a reserved legal activity, and it is a criminal offence to provide the service without being regulated, why is it absent from the list under Clause 12 and not treated as a reserved legal activity under the Bill?

Secondly, we have heard from the Government and seen in the Joint Committee report that one of the purposes of the Bill was to simplify the regulatory maze of legal services. Why have the Government, therefore, in attempting to tidy up everything else, left the Immigration Services Commissioner outside the ambit of the Legal Services Board?

Finally, why should responsibility for the commissioner not be given to the Department for Constitutional Affairs, which is generally responsible for legal services, rather than being left to the Home Office, which would clearly be the potential opposing party in virtually all cases conducted by immigration advisers?

I am grateful to the noble Lord for raising these points. I was expecting him to do so, which is why my answer is so readily available.

Whether the provision of immigration advice services should be made a reserved legal activity has been considered by the Government but was not included in the Bill. Immigration advice is regulated by the Immigration Services Commissioner, as the noble Lord said, with a UK-wide remit, whereas this Bill is primarily concerned with the regulation of legal services in England and Wales.

The Government are also mindful of the view that the Immigration Services Commissioner’s oversight of the provisions on immigration advice was an issue of public interest as well as one of consumer protection. However, as part of its programme of reform announced last year, the Home Office is currently carrying out a review of all its non-departmental public bodies and agencies to ensure that it has the right mix of bodies to deliver its priorities and to improve governance and the support that it provides to its delivery bodies. One of the bodies within the scope of the review is the Office of the Immigration Services Commissioner.

As with the other bodies within the scope of the review, the Home Office is looking at the functions of the Office of the Immigration Services Commissioner and whether that body is the most appropriate and effective in delivering the objectives of ensuring that vulnerable groups receive good advice from bona fide advisers, are protected from exploitation by unscrupulous immigration advisers and that public interest in the integrity of the immigration system is maintained. That review is intended to make recommendations to the Home Secretary by the end of this month. The Government will consider the points raised by the noble Lord in the light of the review before the Bill comes back to the House on Report. I hope that that gives the noble Lord the information that he needs at this stage.

I am most grateful to the Minister. I sense that she accepts the logic that lay behind my intervention. If the investigation by the Home Office is near its end, as it appears to be, plainly, it would be appropriate for the Committee to wait until Report before reconsidering this matter. In those circumstances, I am content.

Clause 178 agreed to.

Schedule 18 agreed to.

Clause 179 agreed to.

Schedule 19 agreed to.

Clauses 180 to 183 agreed to.

Clause 184 [Solicitors to public departments and the City of London]:

151C:Clause 184 , page 99, line 4, leave out subsection (2)

The noble Lord said: The amendment would remove the exemption from the need to hold a practising certificate, which currently applies to solicitors in the Government’s service. We believe that all those who are subject to regulation should contribute to regulation. The Government themselves voiced that doctrine in their response to the Joint Committee report by venturing that:

“The basic principle is that those being regulated should bear the cost of regulation”.

Consequently, all solicitors providing legal services in private practice are required to hold a practising certificate and therefore to contribute towards the cost of regulation. The same is true of solicitors in commerce, industry and even local government. However, government solicitors are entirely exempt from the need to hold a certificate. We are aware of no sensible justification for allowing that loophole to continue.

We believe that the Government have already recognised that such a situation is no longer tenable. When the Bar Council's practising certificate fees became enforceable as a result of the Access to Justice Act 1999, there was no provision excluding government barristers from the need to hold a practising certificate. It is, therefore, the current position that government solicitors are exempt from the need to hold a practising certificate while government barristers are required to pay. That is an unfair and indeed discriminatory situation which the Bill provides a perfect opportunity to put right. I beg to move.

My name is attached to this amendment. Of course, we support the noble Lord, Lord Kingsland, who has said everything that needs to be said. I look for an explanation why this historic exemption should continue to apply in a period when the regulatory regime has so much altered from what it used to be. I understand that there was a time when government lawyers might not be required to be members of the Law Society, or matters of that sort. But surely today, when they are subject to regulation, they should pay the same price as everybody else. If it is just a matter of cost—if it is just a Treasury matter—that would be a disgraceful explanation.

As I was responsible on and off for 10 years for the Government Legal Service, I think that my noble friend’s points are very well made and I much look forward to hearing what the Minister has to say.

Again, I am grateful to the noble Lord for raising this issue.

Clause 184 maintains the rights and privileges of solicitors preserved under Section 88 of the Solicitors Act 1974. This is a saving provision which recognises, as legislation has done since the 18th century, the low regulatory risks associated with the roles undertaken by solicitors to the Crown and other public departments. This role has always been, and remains, very different from the role carried out by solicitors working in the private sector, either employed or self-employed, since government solicitors, who are already subject to separate regulation, do not generally provide advice or other services to the public or hold client money. Instead, government solicitors provide advice and representation to the Government and not to the public, and the regulatory risk they present is quite different from the risk represented by solicitors providing services to the public. Similarly, the Treasury Solicitor, solicitors to other public departments, the solicitor to the Church Commissioners and the solicitor to the Duchy of Cornwall have distinct roles in advising the state, and the saving in Clause 184 and Section 88 of the Solicitors Act extends to the functions carried out by those office holders.

It is important to remember that regulation should be appropriate and proportionate—a word that has been used a great deal in this Committee—and targeted where action is needed. The Government provide a comprehensive training and development programme for their lawyers which ensures that they are competent to carry out the duties they are charged with and is therefore appropriate given the context in which they operate. An additional requirement to hold practising certificates serves no additional benefit.

While the Bar Council was statutorily recognised as a professional regulator of the Bar in 1990, noble Lords will know well that it was not until 1999 that it was empowered to levy a fee for a right to practise. But the question of who is a practising barrister and who requires a certificate remains in the hands of the Bar Council and is not—as in the case of solicitors—a matter of legislative definition. There is, therefore, no equivalent statutory exemption for government barristers, but that does not mean that we should remove the exemption for government solicitors. I therefore reject the amendment and hope that the noble Lord will withdraw it.

I am of course most grateful to the Minister for her explanation, but I do not understand why the logic that she applies to the existence of an exemption for solicitors does not apply to barristers as well. To the extent that a barrister works in the public sector—and if all the considerations that the Minister said applied to public sector lawyers are cogent and accepted—why on Earth are barristers also not exempt? There is nothing to prevent the Minister introducing an amendment to enable barristers to be exempt, as well as solicitors. I take the point about the excellent training schemes that there are in government; but surely they apply equally to barristers as well as solicitors. So the logic of exemption—to the extent that it is sound—should apply to both professions.

I am now confused about what the noble Lord wants me to do. The noble Lord, Lord Thomas of Gresford, was concerned that the financial implications were the overriding factor. I believe that the relevant cost is £850,000. I thought that the noble Lord was asking me not to exempt solicitors, but now he seems to be asking me to exempt barristers too. Which is it?

I am not asking the noble Baroness to exempt barristers; I am simply using the illustration of barristers who are not exempt to undermine the noble Baroness’s argument that solicitors are exempt because of the special circumstances of centrally employed lawyers. If that argument is to have any weight at all in justifying exemption for solicitors, it must inevitably follow that barristers should also be exempt. But in my submission the argument—which was, of course, extremely skilfully advanced by the noble Baroness—should nevertheless be ignored by your Lordships.

One of the Government’s themes that has run through the Bill is that even if there is no evidence for a restrictive provision that the Government have put into the Bill, such provision is nevertheless vital from the point of view of public perception. Does that not apply to this question of exempting solicitors in government service—even if there is no evidence that there is any adverse impact, or there would be no adverse impact, on the regulatory regime as a result of exempting them?

The perception of central government solicitors being exempt from this obligation is surely a bad one. It is also completely illogical. Why not accept, purely from the point of view of perception, that they ought to be included?

Are barristers employed in public service by government treated differently from solicitors employed in public service by government?

It would cost £850,000. It struck me that the Government were running short of solicitors. How much is the practising certificate at the moment?

Before the noble Baroness answers that, I hope that I may inject one more thought. Although it is true that the Government are primarily the client of solicitors employed in government service, do those solicitors not owe an independent duty to the court? They have a duty of integrity in how they give advice, which will affect the private citizen and is part of the ethos of the profession which needs to be generally overseen. Surely the noble Baroness was not suggesting that any lower or different standards applied to solicitors in the Government Legal Service than apply to any other solicitor. To that degree, I cannot see why they should be exempted. Certainly, from my deep knowledge of solicitors in the Government Legal Service, I know that they would not wish to be thought in any way less obliged to maintain high standards than any other solicitor.

I agree completely with what the noble and learned Lord said about the high standards that they would expect of themselves. They would expect others to view them as having the highest possible regard for those standards. The question that we keep coming back to in the Bill is how to ensure that we are proportionate and regulate where necessary. I contend that it is not appropriate to regard the work provided by government solicitors in precisely the same way as the work of those operating outside that service, for the reasons I have given—not least that they are not facing the public, they are not generally handling clients’ money and so on. We have sought in the Bill to ensure that we regulate where we think it appropriate. There is a long tradition of exempting solicitors in the way that I have described going back to the 18th century. There may be a perception in the Committee that these solicitors should be included but I have picked up no perception among the public that this is something they need to worry about. If there is evidence to prove otherwise, then—as I have indicated throughout this sitting—bring that evidence forward. I shall look at it and refer it to my colleagues. But there is no evidence.

The figure required is £850,000; I am sorry that I garbled it. I mentioned the sum partly to assure the noble Lord, Lord Thomas of Gresford, that although it is significant, it is not the reason why we are not taking the proposal forward. The reasons are those which I have outlined.

I do not really know how to answer the question put by the noble and learned Baroness, Lady Butler-Sloss, on whether barristers employed in the public service by government are treated differently from solicitors. Perhaps we can talk about what precisely was meant by the question.

We are continuing the current position while recognising that the role of solicitors in the public service is different. I have already indicated why barristers are in a different position. Noble Lords can of course consider what they wish to do at the next stage, but we are absolutely clear that we have got this right.

It is clear that the noble Baroness is well dug-in on this issue, in contrast to her reaction to most of our previous amendments. To continue the debate on this amendment would, if not be counterproductive, certainly not get those of us who take the opposite view to the noble Baroness any further. I shall therefore withdraw my amendment. But the noble Baroness should be in no doubt that it will be brought back on Report. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 184 agreed to.

Clause 185 [Payments in respect of pro bono representation]:

151CA:Clause 185 , page 99, line 32, leave out “the prescribed charity” and insert “one or more charities”

The noble Lord said: I shall speak also to Amendments Nos. 151CB and 151CC. These amendments concern payments in respect of pro bono representation.

First, perhaps I may say how pleased I am to see the noble and learned Lord the Attorney-General, who will respond to the amendment, on the government Front Bench. I hasten to add that that is not because the noble Baroness is in any way incapable of responding. The noble and learned Lord is there because he has been intimately associated with the development of pro bono representation. I am extremely grateful to him for taking the trouble to be here.

We welcome the thrust of Clause 185 and the initiative taken in the Bill to provide for costs to be ordered in pro bono cases. However, we are not convinced that the proposed order for costs should be made to a “prescribed charity”. These amendments alter the Bill accordingly. That makes sense as a default position in the event that the successful parties do not nominate a charity; but there are a number of reasons why we believe that it would be appropriate to allow payment of cost orders to any charity that is registered under the Charities Act 1993.

In most instances, pro bono cases will have been referred to law firms through not-for-profit organisations or charities. Charities will often assist with the case and liaise with the client. A discretion that would allow the client to nominate the charity which has helped him to benefit, rather than a prescribed national charity, would seem highly desirable. There is a real concern that prescribing the final destination of costs to a particular charity or organisation would dampen the enthusiasm of firms or individual lawyers to undertake pro bono work.

Many solicitors and firms are particularly attracted to pro bono work because they can help their local community or a particular cause or sector of society. This identity with a particular cause or local community is an important consideration. With no such guarantee, there is a risk that this provision could damage pro bono work more generally.

Finally, the creation of a new national charity to be the prescribed charity may well lead to increased administrative costs which would again reduce the overall benefit of the costs order. Funds which are generated through pro bono litigation currently go directly to the local beneficiaries rather than being fed through a national charity. Firms are concerned that this national charity will end up creating an extra bureaucratic layer, replacing the casual flexibility of a system where individual firms can nominate the charity that will benefit.

There is also a widespread fear that proceeds that go to a prescribed charity are more likely to end up simply subsidising legal aid rather than reaching other causes. I beg to move.

I thank the noble Lord for his kind words of welcome. In responding to the amendment, I should declare an interest both as president of the Bar Pro Bono Unit and as the chairman of the Attorney-General’s National Pro Bono Co-ordinating Committee. The committee was formed five-and-a-half years ago and brings together some of the main pro bono organisations in England and Wales, such as the Free Representation Unit and others; the professional bodies—the Bar Council, the Law Society and the Institute of Legal Executives; representatives of the voluntary advisory sector; and educational organisations. I identify those for a purpose, which I shall come to.

The purpose of the committee is to help to co-ordinate and promote pro bono activities. I should like to take this opportunity to express my admiration and thanks to the many legal professionals and students and those who support them in providing free legal advice and representation. It is not a substitute for public funding for legal services, but it can be an essential adjunct to it for some who would not get through the legal system without expert help which they cannot pay for themselves.

The clause proposes a change to the law which the pro bono organisations strongly support and I have long believed is necessary. It is promoted with the active support of the co-ordinating committee. I am therefore grateful to my noble friend Lady Ashton for having found the legislative vehicle to bring this before the Committee. I am also glad to have the opportunity to respond to this amendment.

The genesis of Clause 185 is the practice in our courts that the unsuccessful party is often ordered to pay towards the cost of the other party, but that can apply only where the other party himself is liable to pay those costs. That is the indemnity principle. The effect is that in cases where an order for costs will be made against the losing party but the winning party is represented pro bono, no order can be made. The end result is that the person who benefits from the fact that the legal services are provided free is not the represented party but the other party, who may well be able to pay legal costs and is relieved of the burden of doing so. The purpose of the clause is to remove the anomaly but at the same time provide valuable additional funds to support pro bono work. The purpose of the clause is not that the moneys ordered go to the lawyers who have acted pro bono—they will continue to have acted free of charge—to a charity prescribed by the Secretary of State, who can then effect a strategic distribution of such funds to where they would be of most use.

Even before this clause was in existence, work had already begun to establish a charitable foundation whose purpose would be to receive and distribute moneys that became available to it to support organisations providing free legal advice and assistance. The Government have that body in mind as the charity to be prescribed, although no decision has been made—nor could it be until the clause became law. The amendments proposed by the noble Lord, Lord Kingsland, would direct those payments instead to a charity selected in a particular case or to the pro bono organisation that happens to be involved in the case. I am not persuaded that the approach suggested would constitute the most effective use; and, more importantly, nor is the committee to which I referred.

The idea that there should be a single body arose out of consultation with the members of the pro bono co-ordinating committee and I have identified—and now it is apparent why—the organisations represented on it. The advantages of the single-body approach are that the prescribed charity is able to effect distribution of moneys in a strategic manner, taking into account national, regional and local considerations; it overcomes the point that a court is ill equipped to decide between competing claims of charities or organisations—and it is not appropriate that it should have to do so; and the body that is prescribed will have had no role in the decision to litigate or in the litigation, which will protect it from perhaps being, as was suggested, liable for the costs of the case.

Giving pro bono organisations a financial interest in the outcome of a case, which was the principal reason put forward by the noble Lord, seems to be a bad rather than a good thing. One would not want pro bono organisations to determine which cases they supported on the basis of which were liable to get them most money. There will be no added layer of bureaucracy that would be caused by the need to sift and assess additional bodies for statutory prescription.

The noble Lord suggests that this might dampen the enthusiasm of pro bono providers. I am absolutely confident that it will do nothing of the sort. Pro bono work is presently undertaken by practitioners simply because the person receiving the help needs it; that is the incentive, and I do not anticipate that that will change one jot. To date, lawyers have not needed any incentive for being able to direct funds to a particular charity in order to undertake pro bono work.

I emphasise that if this is carried into law, it will bring new money into pro bono organisations. This is not money that is being redirected to the charity; it is simply not there at the moment. The key point is that the single charitable foundation will be able to ensure that the new money is distributed strategically. That might be done in part—it is for it to decide. It would have regard to those organisations that had, as it were, generated the funds. There is no reason why it should not do so, but that is for it to decide.

Finally, I reject with as much force as I can the suggestion that somehow this involves subsidising legal aid. I have always made it very clear that neither I nor the organisations regard pro bono as a substitute for legal aid. It is an important adjunct; it will have no impact on the debate about what legal aid should be available for what work.

I hope that the noble Lord sees why the single-body route is preferred, particularly by the committee to which I have drawn attention, and will feel able to withdraw the amendment.

I am most grateful to the noble and learned Lord for his very full explanation. He mentioned that the national foundation that will be involved was set up as a consequence of consultation. I think that he mentioned that there was consultation with the pro bono committee or the pro bono group, but is that as far as the consultation went?

I am not absolutely sure what consultation at this stage there will have been with anyone else. The way in which this took place was to ask the committee, which, as I say, represents all the pro bono organisations—the Bar Council, the Law Society, the education institutions, the voluntary advisory sector, the National Association of Citizens Advice Bureaux and legal advice centres—“What do you think the best solution is?”. It looked at that and set up a working group; it determined that the best way to proceed would be to set up a single charity that would be able to receive moneys, perhaps from other sources as well, and distribute them strategically. The full committee endorsed that proposal. In particular, the noble Lord’s amendment was put to it at its last meeting, it had a debate about it and it said that it still thought that the right course was the single route for the reasons that I have attempted to summarise.

I am most grateful to the noble and learned Lord for that explanation. Quite often pro bono work will emerge from, say, a citizens advice bureau, which will characteristically have put a lot of work into the matter, or at least it may have done so. One can envisage a situation where an organisation such as that, were its case to be won, might want any proceeds to be fed back either to assist its own work or to assist some other local community. The noble and learned Lord the Attorney-General seems to be saying that the views of organisations such as Citizens Advice have been fully canvassed in the consultation. If that is so, that gives me some reassurance about the concern that I have just expressed.

I am most grateful to the noble and learned Lord. I shall go away and look at this amendment again between now and Report. Meanwhile, I beg leave to withdraw it.

Amendment, by leave, withdrawn.

[Amendments Nos. 151CB and 151CC not moved.]

Clause 185 agreed to.

Clause 186 agreed to.

Schedule 20 agreed to.

Clauses 187 to 193 agreed to.

Clause 194 [Orders, regulations and rules]:

151D: Clause 194, page 106, line 9, at end insert—

“( ) Any rules made by the Board under section 36(3), 93(3) or 166 must be made by statutory instrument, and the Statutory Instruments Act 1946 (c. 36) applies to the Board’s powers to make rules under those sections as if the Board were a Minister of the Crown.”

On Question, amendment agreed to.

Clause 194, as amended, agreed to.

Clause 195 [Consultation requirements for rules]:

151E: Clause 195, page 106, line 39, at end insert—

“( ) Subsection (6) does not apply to rules made by the Board under section 36(3), 93(3) or 166.”

On Question, amendment agreed to.

Clause 195, as amended, agreed to.

Clause 196 [Parliamentary control of orders and regulations]:

[Amendment No. 151F had been withdrawn from the Marshalled List.]

152: Clause 196, page 108, line 5, at end insert—

“( ) section 79(1) (functions of appellate bodies);”

On Question, amendment agreed to.

[Amendment No. 152A had been withdrawn from the Marshalled List.]

153: Clause 196, page 108, line 7, at end insert—

“( ) section 107 (foreign bodies);”

On Question, amendment agreed to.

[Amendments Nos. 154 and 155 not moved.]

155A: Clause 196, page 108, line 17, at end insert—

“( ) A statutory instrument containing rules made by the Board under sections 36(3), 93(3) or 166 is subject to annulment in pursuance of a resolution of either House of Parliament.”

On Question, amendment agreed to.

Clause 196, as amended, agreed to.

Clause 197 [Interpretation]:

[Amendment No. 156 not moved.]

[Amendment No. 157 had been withdrawn from the Marshalled List.]

Clause 197 agreed to.

Clauses 198 to 200 agreed to.

Clause 201 [Commencement]:

157ZA:Clause 201 , page 110, line 27, at end insert “provided always that no order may be made by the Secretary of State bringing into force Part 5 of this Act and the related Schedules 10 to 14 until after—

(a) consideration by both Houses of Parliament of a comprehensive report to be commissioned by the Lord Chancellor from an independent source analysing—(i) the advantages or disadvantages (or both) which may realistically be expected to flow from the implementation of Part 5, including the benefits or risks (or both) to consumers;(ii) the potential enhancement or curtailment (or both) of access to justice; and(iii) the threats actual or internationally perceived to the independence of lawyers practising in England and Wales; and(b) the laying of the draft of a statutory instrument designed to bring into force the whole or part of Part 5 and the related Schedules before each House of Parliament and approval thereof by resolution of each House.( ) An “independent source” means a source (such as a research organisation) which is independent of Government, free of connections with any political party and free of connections with any individual or body representing consumer interests,”

The noble Lord said: I move the amendment because of the anxiety that I have come to feel about how we have been dealing with Part 5. To put it briefly, we do not have material evidence on certain key features in relation to Part 5. On one view, you could say that we are really transferring our legislative role to the Legal Services Board and all the licensing authorities; we are just handing it all over to them. More harshly, you could say that we are taking a leap in the dark without having done the necessary work in this area.

What have we made no attempt to investigate? I have three topics to discuss. First, we have done no work to investigate the fragility of the small firms of solicitors—high street firms about which the noble Lord, Lord Thomas of Gresford, spoke, on more than one occasion in Committee. Many are in rural areas; others are in small towns. In the past two or three years, they have been losing their legal aid work and their financial condition has become more perilous, or so I believe, on the basis of some scanty evidence. What is their position today? Will they be able to continue cross-subsidising work which does not pay by using fees from more lucrative work? That is what they have done for many years. What will happen when the alternative business structures roll into action? What will be the fate of those firms? The answer is that nobody knows and nobody has investigated.

I shall cite evidence with which I am familiar that came before the Joint Committee. I should have said earlier what I have said on every previous occasion: that I was a member of the Joint Committee which looked at the Legal Services Bill before it reached this House. There are certain materials showing the anxiety about the fate of small firms.

The second thing that we know next to nothing about is the new entrants who will come into this marketplace. Who will aspire to own law firms? The Joint Committee had very little material about this. We heard from the Co-operative Legal Services, which was launched last year as part of the Co-operative Group. It seemed to show keenness in doing this, but we did not hear, as we might have expected, from people with plenty of money—banks, insurance companies or finance houses. We heard a little about the so-called claims farmers, or claims managers, two of whom had gone to the wall and had brought disrepute to the clan. We had absolutely no feel for the degree of enthusiasm out there today. Who will they be, and what will be the motivations of the wealthy people coming in or the money providers? Will they be coming in to make money? Will that be their motivation? Will it benefit the consumer? Will law firms be bought and sold like football teams so that one tycoon sells to another tycoon, no doubt each demonstrating his fitness and suitability?

There is a third matter which we did not go into. We had no time; we complained about that in the committee’s report, to which I have referred on earlier occasions. We got through our work in eight weeks, which was pretty good going from a standing start, knowing nothing about this area. With a team of 12 from both Houses, we managed to produce a report. There were many things that we could not get into in any depth. My third point, therefore, is that we do not have any information about what has been happening in other countries. We had a witness from the Solicitors Sole Practitioners Group, who said that the only precedent known to him was New South Wales. That is in volume 2 of the Joint Committee’s report on page 218. He said that in America there had been a persistent refusal to go down that route.

The Lord Chief Justice, the noble and learned Lord, Lord Phillips of Worth Matravers, referred to precedents in the plural in oral evidence at question 310 on page 154. We did not investigate that; we have not investigated any of this material. The other aspect is the way in which we will be regarded as a profession in other countries. We have evidence from only one country within the European Union—Germany. An organisation representing well over 100,000 German lawyers is the federal bar regulator. In German, it is abbreviated to BRAK—the Bundes Rechts Anwalts Kammer. They are all represented by this body. It is perfectly clear from their letter that it would be quite out of the question for German lawyers, for whom independence is an absolutely fundamental, basic provision of their life and being, to belong to the organisations—of the most extreme type—being contemplated: a mixture of professions owned by shareholders who do not themselves play any part in the professional work. In Germany, you can be a shareholder, but you are expected to participate; that preserves the professional commitment throughout the firm. You do not have outside shareholders just having an investment in a firm of lawyers. We recommended, in paragraph 330 of the report, that this called for some reconsideration by the Government, because we believed that they were unaware of this provision in German law. Of course, we have not looked at any of the other systems, so do not know what the position is there.

We concluded that we could not form a view on whether the creation of these business structures would reduce or increase the number of access points, but we thought that there was an issue. We were,

“persuaded by some of the evidence suggesting that the reforms may reduce geographical availability”.

Of the witnesses we saw, the Master of the Rolls, Sir Anthony Clarke, was not at all clear how the provision was going to work out in practice, in question 310:

“It is very difficult to see how this suggestion is going to improve access to justice”.

The Lord Chief Justice was equally uncertain at question 306.

We then had evidence from the Legal Aid Practitioners Group, which consists of some 600 members: the small firms and high-street solicitors. Their view, expressed in paragraph 9 of their memorandum on page 131, was one of grave apprehension about the consequences of introducing this new scheme. The Solicitor Sole Practitioners Group had 100,000 members and expressed a similar anxiety.

I shall refer to one or two observations made in this House, because I know your Lordships will want to proceed quickly this evening. I remind your Lordships, once again, of what the noble and learned Lord, Lord Woolf, said:

“For the reasons given by the noble Lord, Lord Kingsland, which were indicated by the Joint Committee, this is an untried situation. Anyone who has in recent years had the responsibility of travelling around the country in the interests of the administration of justice and access to justice knows that there are real problems with the availability of legal services in the country as a whole. That is particularly true in parts of Wales, where I have heard much from high-street solicitors.

“There is no doubt that large businesses could provide legal services in a novel and interesting way. But that could—unintentionally, perhaps—have a devastating effect on those who have traditionally provided services in rural areas in particular. Great care has to be exercised to see that damage does not occur”.—[Official Report, 23/1/07; col. 1057.]

The noble Lord, Lord Thomas of Gresford, spoke about this on the same day, and the problems of Wales in particular. The noble Lord, Lord Whitty, who is unfortunately not here today, said that he was particularly concerned about the effects in rural areas. That does not mean that he wanted to put a brake on everything, but he felt real concern about how these arrangements would work out in these vulnerable areas.

The noble and learned Baroness, Lady Butler-Sloss, said:

“I spend quite a lot of my time in the West Country, which is a rather less well off area of England where the absence of legal aid is hitting quite hard. The effect of the ABS firm may be quite dramatic in an area such as that”.—[Official Report, 6/2/07; cols. 631-32.]

The noble Baroness, Lady Carnegy of Lour, had a similar concern about her part of Scotland—which is, I suppose, off our territory. It was interesting to hear her say that the arrival of a large alternative business structure “might wreck the system”.

The noble Lord, Lord Carlile of Berriew, who is not in his place, said:

“There is a great deal of nervousness in rural areas—the situation in north Wales and mid-Wales is replicated in North Yorkshire, Cumbria and many rural parts of the country—about the effect of liberalisation of the market”.—[Official Report, 6/2/07; col. 632.].

What is there to put against that? What have the Government come back with? We expressed these anxieties in our report, but they have come back with nothing. On 6 February, the noble Lord, Lord Hunt of Wirral, said:

“I do not believe that the Government have ever responded adequately to the Joint Committee’s concerns”.—[Official Report, 6/2/07; col. 631.]

In a similar vein, the noble Lord, Lord Maclennan of Rogart, said at Second Reading:

“The rural issue has been raised, but I do not think that it has been answered”.—[Official Report, 6/12/06; col. 1202.]

My amendment asks the Government to take away Part 5 and let us have a serious report by a research body that will deal with the various aspects that I have been talking about. This House prides itself on the diligence with which it scrutinises legislation. There is no doubt that a theme in the two-day debates that we will be having next week will be that the House has special skill, zeal and rigour. Here is an example of where we should be applying them.

My amendment does not halt the Bill. The Bill goes forward, but there cannot be a commencement order bringing in Part 5 until we have had a report, considered it in both Houses and followed another procedure set up under the Criminal Justice Act, which the noble and learned Lord the Lord Chancellor has in one of his proposals in the amendments we looked at today. There has to be another stage when the draft of the commencement order is brought before the two Houses, considered and approved. Noble Lords may pick up details and criticise my method, but my proposal is that we put a brake on the implementation of Part 5 until we have done some basic work in an important area that goes to the heart of protecting consumers. I beg to move.

I strongly support the noble Lord, Lord Neill of Bladen. I shall deal with points that the Committee has heard me on before. The noble Lord, Lord Neill, has already referred to them: access to justice and the rights of individual consumers. We have already heard of the fragility of small firms of solicitors, which will become even more fragile under the new scheme. That raises the real possibility of an adverse effect on the consumer if those small firms do not survive. Will the new types of firm be prepared to take on unprofitable, difficult and time-consuming litigants who are none the less entitled to consideration as consumers? At Second Reading, we heard that there are already areas, and may well be even more, where certain sections of the public who need, and are entitled to, help from solicitors already do not find solicitors within an acceptable radius of where they live. Whether in small or medium-sized towns or in certain rural areas, the consumer will be the loser if there is not serious reflection and investigation about how Part 5 will work.

The noble Lord, Lord Neill of Bladen, will not be surprised if I tell him that he has the full support of these Benches for his amendment. It seems to me that there is really no rush to bring in alternative business structures. Where is the pressure coming from? It is certainly not coming from any consumer association that I have heard of; it may come from certain business interests who want to fasten in on the more profitable lines in the provision of legal services. But that is no reason for not carrying out the very careful overall look at the proposals and an evaluation of their impact in the areas to which the noble Lord, Lord Neill, referred. I have said a great deal on earlier occasions about this: I need not repeat it. The noble Lord can be assured of our support.

The same applies to this part of the House. The noble Lord, Lord Neill of Bladen, can rely on our support, too. The noble Lord is, after all, only developing the approach set out by Sir David Clementi in his report. While Sir David saw the merits of alternative business structures, he was at pains to emphasise that they should be introduced only gradually. It seems to us that the proposal of the noble Lord, Lord Neill, is the best way of ensuring that Sir David’s approach is adopted.

The speech made by the noble and learned Baroness, Lady Butler-Sloss, reminds us how important it is to give the definition of “consumer” a very wide interpretation. I have felt during the debates on many amendments in this Bill that the Government have had their eyes mainly on what I would describe as the “middle-class consumer”. But the consumer who is really vulnerable under Part 5 is, if I may paraphrase the noble and learned Baroness, the unprofitable, difficult and time-consuming litigant, often to be found in the rather more impoverished areas of large cities or in remote rural locations who desperately needs the small firm that may be under threat and therefore ought to be the result of careful examination before Part 5 comes into effect. I think that the noble Lord, Lord Neill, has done the House a great service by tabling the amendment.

I understand entirely what the noble Lord, Lord Neill of Bladen, seeks to do, and I pay tribute to the enormous amount of work that I know he did on the Joint Committee. He once again reminded us that it sat for only eight weeks, but it clearly successfully gave us a very important report on which the Government have acted in most places, if not all. I am extremely grateful to him.

I do not disagree with the sentiment that lies behind the amendment, nor, indeed, with the concerns that noble Lords have raised, particularly around small firms and rural communities. Noble Lords will know that Sir David Clementi, when talking about rural services, said that the benefits of new service providers,

“are not only that they can bring about lower costs; it is also that through longer opening hours, sophisticated telephony and advanced customer care skills, they may be able to offer consumers better access to certain other types of legal services”.

So I completely accept the issues around rural communities and, indeed, poor communities. I do not, obviously, accept what has been said about how the Government approach this. I am reminded though, in terms of other services we provide for our poorer and more vulnerable communities, that actually one tries to provide the highest quality service one possibly can. That can be provided by the local small supplier, but sometimes it can be provided because you are able to encourage others to come in, invest in the area and provide more sophisticated services that provide greater benefit. I have nothing against the sentiments behind the amendment, and I have striven throughout our discussions on Part 5, which I shall not repeat again, not least because of the lateness of the hour and the fact that noble Lords have heard them well enough, to stress that there are really important issues to be addressed in the context of how this is rolled out.

The question for me is whether the amendment would help us to deliver most appropriately. For me, it would not. There is a real question of how we would do significantly more research. The noble Lord, Lord Neill of Bladen, asked specifically about this. We have research from Australia, and I gather that we have more information on other countries. Perhaps I can send that to the noble Lord and put copies in your Lordships’ Library, as well as copy it to all noble Lords who have spoken in this debate, so that it informs better the information that we currently have.

I have sought to address the concerns that have been expressed by considering a number of things as I have gone through the Bill. Licensing authorities need to satisfy themselves about the range of safeguards and so on. I agreed to see whether we can strengthen the relevant arrangements in the Bill. I have undertaken particularly to look at how we might monitor what has happened. The noble Lord, Lord Kingsland, tabled an amendment that was very helpful to our discussions on Part 5 and which I have said I want to think about and see what we might do.

We believe that in practice licensing authorities are very likely to take a step-by-step approach to ABS, for all the reasons that your Lordships have quite reasonably given and because we wish to see this being developed properly. We also know that the requirements in the legislation can place conditions on ABS firms and can say, in effect, “Sorry, but you have not provided proper services appropriately”. They can also specify that ABS firms must deal with the sort of litigant described by the noble and learned Baroness. We should not, however, think that we can continue to do endless research and come up with any more information than we currently have. We now need to consider in a measured way what has happened and think about the monitoring arrangements. I completely accept that we also need to ensure that we have dealt with access to justice and so on appropriately. I have already begun to spend some time thinking about how we might do that. I have no difficulty with the assumptions that underlie the noble Lord’s amendment; we are arguing merely about how we get there. For me, it is about moving on in a measured way and having hard evidence about what has actually happened in order to take the decisions that we indicated we would take in Part 5. So although I understand what the noble Lord is seeking to do, I hope that he will withdraw his amendment. I will consider all the issues on Report that I already indicated I would consider.

I thank those who have lent support to what I have said, from which I received encouragement. I am grateful to the Minister for the courteous way in which she received my proposal, although she will not be surprised if I am not bowled over by the closing five minutes of her remarks. In effect, she does not accept what I propose. The idea that I, and perhaps the Library, see the legislation that would have been relevant months ago is not very satisfactory. Members of the House may think that all is well and that what we are doing is in accordance with what happens elsewhere. Of course, it is not. It may be done in New South Wales but, so far as I know, it is not done anywhere else. I will, however, gratefully read what the Minister sends me, and I will keep an eye on what transpires between now and Report.

I apologise to the House because I could not hear the amendment in the normal manner, although I did hear it. I very much endorse what the noble Lord is saying.

I am grateful. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 201 agreed to.

Clauses 202 to 204 agreed to.

Schedule 21 agreed to.

Schedule 22 [Transitional provision]:

157A: Schedule 22, page 300, line 29, leave out paragraph 4

The noble Lord said: Amendment No. 157A would remove the transitional provision that allows the Lord Chancellor to appoint an interim chief executive of the Office for Legal Complaints.

The Bill sets out a sequential and ordered process for the appointment of the chair, members and chief executive of the Legal Services Board. They will in turn determine the composition of the Office for Legal Complaints and the appointment of its chair. As this process has been prescribed, we would argue against the need for the inclusion of an interim chief executive, as provided for in Schedule 22. The structure, processes and service standards of the Office for Legal Complaints should be for the first chief ombudsman to determine with assistance from other members.

We cannot see any benefit in appointing an interim chief executive in the short time that it should take between the formation of the Legal Services Board and its appointment of the Office for Legal Complaints members—which should certainly be one of the first tasks that it undertakes. The fear must be that the establishment of an interim chief executive would give the Legal Services Board the unwelcome opportunity to delay its appointment of the members of the Office for Legal Complaints. This is a possibility that we do not wish to facilitate.

Furthermore, if there must be an interim chief executive, we would question whether it is appropriate for the noble and learned Lord the Lord Chancellor to make that appointment. There is no mention of any consultation he must make or approval he must seek, which must again raise questions over the independence of the Office for Legal Complaints. If the noble Baroness is keen to press for an interim chief executive, we would certainly seek some assurance over the appointment process. Would there be open competition for the position? How would that be ensured? Would the noble and learned Lord be required to consult at all? I beg to move.

We fully support this amendment. We do not see why an interim chief executive should be appointed who,

“may incur expenditure and do other things in the name of and on behalf of the OLC from the beginning of the first interim period”,

until such time as “the OLC determines otherwise”. That really means that all the decisions about appointment and offices can be made by a temporary chief executive.

Schedule 15 sets out the membership and so on for the Office for Legal Complaints. Paragraph 21 states:

“During the initial 5 year period, the OLC must not acquire or dispose of an interest in land, except with the approval of the Secretary of State … The initial 5 year period is the period of 5 years beginning with the day on which the appointment of the first Interim Chief Executive … takes effect”.

That means that the interim chief executive can buy the office and set up the staff, and nothing has to happen for five years, which is the interim period. That is wrong. Surely, when it is set up, an organisation such as the Office for Legal Complaints should choose its chief ombudsman or chief executive and that person should make the important executive decisions along the lines that I have mentioned; therefore, this interim chief executive should not exist. We agree with the noble Lord, Lord Kingsland.

I know from discussions that I have had outside the Chamber with the noble Lord, Lord Thomas of Gresford, that he feels strongly about this provision. I shall set out how we think that this will work and the reasons for it. Noble Lords will then have the opportunity to consider it.

We have sought to make sure that we can get the office up and running as soon as possible. I shall make two points straightaway. We have consulted many stakeholders, who are broadly content with what we are doing and why, because they see the need to get on with it. The appointment will be made by open competition. The role of the interim chief executive will be limited to laying the operational foundations of the OLC by taking forward work relating to financial management systems, HR policy and procedure, pay structures, terms and conditions, pensions and IT. He will not be able to make scheme rules because they will be the responsibility—

The noble Baroness has just referred to IT, which is another example of the enormous investment that will be necessary to deal with legal complaints as they come in. The Law Society’s previous system broke down, so it is important that the right system is chosen. Why should it be put into the hands of an interim chief executive?

Perhaps I may explain how the interim chief executive will operate. Someone has to make decisions and the word “interim” does not suggest that the person will be somehow less able to carry out these functions than would otherwise be the case. The question that we had to ask ourselves is this: bearing in mind the length of time that it will take to make all the appointments necessary to set up the organisations, how do we make sure that the transition begins in a seamless and appropriate way? We want someone of extremely high calibre to come in during the interim precisely because ultimately the responsibilities will fall elsewhere and a chief executive will be appointed. In the mean time, it is appropriate to appoint someone to get on with sorting out the basic tasks.

I agree wholeheartedly with the noble Lord about IT systems. We would not appoint someone who did not know how to approach this. They will have the skills and qualifications to know how to seek advice on IT and how to organise the suppliers and so forth. That will be an important part of their functions, which is why I highlighted it specifically. However, the interim chief executive cannot appoint the ombudsmen or make the scheme rules.

We have said that directions will be issued initially by the Lord Chancellor and then, once appointed, the board. In reality, we expect the interim chief executive and the board to be appointed at roughly the same time. As a consequence, the interim chief executive will be subject to directions issued by the Lord Chancellor only for a very short period, if at all. We have developed the timetable for the appointment of the board and the interim chief executive in discussion with people in our department and officials involved in establishing other organisations, including the Judicial Appointments Commission. As I said, they will be subject to directions issued by the Lord Chancellor because we need to make sure that we have accountability. Other independent appointees are subject to directions issued by the Lord Chancellor, too, not least under Schedule 8 to the Access to Justice Act, which enables the Lord Chancellor to give directions to the Legal Services Complaints Commissioner.

The board’s oversight also mitigates any risk that the incoming OLC and the interim appointee’s successor, who will be permanent, may want to move in a different direction and thus unravel the efforts already made. That is because, following the transition period, the board will continue to have oversight of and be able to hold to account the OLC. The continuity of board appointments and the work of the interim chief executive will ensure that the organisation continues to move in the right direction.

Again, we have consulted stakeholders, who are broadly content because these provisions enable us to get the body up and running as soon as possible. The five-year period in the land disposal clause is not connected to the period for the interim chief executive. The OLC, and no one else, will determine when the interim chief executive’s appointment will end.

We are doing this in order to get things moving in the manner that I have described: HR policy, pay structures, pension provision and so forth. We want someone to get on with that side of the work who will not be involved in the critical appointments of ombudsmen and, ultimately, not be involved in the long-term direction of the organisation, but who will have a link to the board, which will be appointed at approximately the same time, enabling the Lord Chancellor to give directions to bridge what we hope will be a short gap between the appointment of the interim chief executive and the board itself. We can then move in the right direction. I hope that this has given some comfort to the noble Lord and that he will feel able to withdraw his amendment.

I am most grateful to the Minister for her response. I am also grateful for the support I have received from the noble Lord, Lord Thomas of Gresford, and for the pertinent observations he made.

It is extremely important that the OLC gets off to a good start. Its predecessor has had an imperfect reputation, and the distinction between what has gone before and what we hope will lie ahead of us must be very clear. I am not satisfied, despite the Minister’s attempts to allay my fears, that the Government have really thought through this difficult period before the Act, as it will be, comes into full effect.

I am also not confident that the noble Baroness has reassured me that the selection process for an interim chief executive, if that is what is going to happen, is sufficiently robust. I will look carefully at what the Minister said; but it is highly likely that we will come back on Report with either the same amendment or one that is very close to it. In the mean time, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 159 not moved.]

Schedule 22 agreed to.

Schedules 23 and 24 agreed to.

House resumed: Bill reported with amendments.

House adjourned at 9.47 pm.