Lords Chamber

House of Lords

Tuesday, 6 March 2007.

The House met at half-past two: the LORD SPEAKER on the Woolsack.

Prayers—Read by the Lord Bishop of Liverpool.

English Teaching: Immigrant Workers

Lord Quirk
asked Her Majesty’s Government:

Whether, in view of the Audit Commission report of January 2007, Crossing Borders, they will ensure good provision of English language teaching for immigrant workers.

The Parliamentary Under-Secretary of State, Department for Education and Skills (Lord Adonis)
My Lords, the Government recognise the vital importance of English skills for those who come to live and work in the United Kingdom, which is why we have trebled the funding for this in the past six years. To further improve provision, we will introduce new, specially focused ESOL for work qualifications from this August.

Lord Quirk
My Lords, I am grateful to the Minister for that response. I applaud his wish, which he expressed in the debate on 26 February, to target teaching resources on the neediest and least skilled. But is there not a Catch-22 here, that those who are neediest and least skilled are the very ones who are least able to demonstrate their needs? In the recent debate, the noble Baroness, Lady Walmsley, spoke of a,

“15-page form to fill in, which would challenge the most fluent of us”.—[Official Report, 26/2/07; col. 1442.]

Does the Minister not agree that as well as benefiting the migrants and immigrants themselves, a good knowledge of English makes them more valuable to our economy and that depriving them of that participation serves no interests other than those of gang masters and the BNP?

Lord Adonis
My Lords, we are very mindful indeed of the issue the noble Lord raises. We are considering—and will be announcing shortly—proposals which will specifically help three groups which meet the criteria the noble Lord has set out of being vulnerable with a high demand for English-language skills but unable to meet existing criteria. Those three groups will be: spouses who do not have access to funding or to family benefit documentation; workers on very low wages and not in receipt of working tax credits; and asylum seekers whose cases take much longer than the Home Office targets, or who remain in the UK as a result of a Home Office or a High Court decision. I hope that the measures we announce will meet precisely the concerns the noble Lord has set out.

Lord Geddes
My Lords, in asking my question I declare an interest as chairman of Trinity College, London and congratulate Her Majesty’s Government on the considerable success of their Skills for Life programme. Will the Minister confirm that adequate funding will continue to be available in order that this very successful programme can continue, bearing in mind that its participants are not able to afford it?

Lord Adonis
My Lords, as the noble Lord will know, funding in this area has trebled over the past six years. I can give a commitment that we intend to sustain the currently available funding, but of course we want to see that as many people as possible are helped by it; hence the changes we announced recently.

Lord Anderson of Swansea
My Lords, does my noble friend agree that the response from English UK was very refreshing? It accepted that the current rate of increase in government expenditure was not sustainable, but said that, to be effective, there should be more intensive courses. Is that view shared by the Government?

Lord Adonis
My Lords, we very much share that view, which is why from this August we are introducing these new, more work-focused ESOL courses. They will be shorter and more focused on the English language needs of those going directly into the labour market.

Baroness Walmsley
My Lords, on the Government’s proposals for cutting the number of people who are eligible for free ESOL courses, why did they not conduct their racial impact survey before, rather than after, announcing their proposals? Furthermore, will this assessment also cover the impact on women?

Lord Adonis
My Lords, the impact assessment will cover it, and we intend to publish it very soon. As I said in response to the noble Lord, Lord Quirk, we will also announce measures to address specific concerns that have already been raised with us.

Lord Naseby
My Lords, is it not nonsense that medical staff from the EU who neither understand nor speak English adequately are recruited into posts in the NHS? Does that not put patients’ lives at risk, and are the Government urgently reviewing this terrible loophole?

Lord Adonis
My Lords, I think the National Health Service is very mindful of the issues that the noble Lord has raised and is taking steps to address them.

Lord Alton of Liverpool
My Lords, is the Minister aware of the continuing concerns of people such as Asylum Link Merseyside, on whose behalf I wrote to his department at the beginning of last month, that there will be cuts affecting asylum seekers and refugees? What does he have to say to them about the detrimental effects that this would have on community cohesion and integration? When does he expect to be in a position to reply to my question of 6 February asking to quantify any financial savings that the Government think they might make by making the kind of changes that were mentioned by Mr Bill Rammell in his article in the Guardian in January?

Lord Adonis
My Lords, I expect to be in a position to reply very shortly to the noble Lord’s question. As he will have heard in my response to the noble Lord, Lord Quirk, we intend to address precisely this issue of asylum seekers whose cases take much longer than the Home Office targets or who remain in the UK as a result of a Home Office or High Court decision in the new measures that my honourable friend Bill Rammell will be announcing very shortly.

Baroness Shephard of Northwold
My Lords, the Minister has told us that he is due to announce new measures shortly, and he has described the groups which will be helped by the new measures. Will he be certain that measures will be introduced in such a way that the people in those groups will be aware of them? One of the greatest problems for migrant workers is that, precisely because of their language difficulties, they have not been aware of the help that is available to them.

Lord Adonis
My Lords, we intend to work with community groups which deal with such people to see that there is greater awareness of the opportunities that are available. Further education colleges play a big part in this, too. They market their courses very widely in their communities, including in the different ethnic minority groups. So I hope that there will be a rapid awareness of the opportunities made available.

Lord Roberts of Llandudno
My Lords, given the BBC’s World Service and world programming, what consultation is there on media such as television channels being used not only here in the UK but also worldwide to bring about instruction in English?

Lord Adonis
My Lords, that is more a question for my noble friend Lord Triesman, who I see on the Front Bench and who has responsibility for the World Service. I cannot give the noble Lord a direct answer on the role that the World Service can play, except to say that it does an enormous amount of very valuable work to spread English language skills. I will come back to the noble Lord with more specific answers after I have consulted my noble friend.

Lord Elton
My Lords, is the Minister aware that when I was last in China, I was stopped three times in two days by local Chinese who wanted to practise the English that they had learnt through the BBC World Service?

Lord Adonis
My Lords, it might have helped them to practise on someone who could give them better advice on how to come into this country.

Autism: Inflammatory Bowel Disease

14:44:00

The Countess of Mar
asked Her Majesty’s Government:

Where within the National Health Service diagnosis and treatment are available for autistic children with inflammatory bowel disease.

The Minister of State, Department of Health (Lord Hunt of Kings Heath)
My Lords, children living with autism have access to the full range of local and specialist healthcare for the diagnosis and treatment of inflammatory bowel disease. This includes diagnosis and treatment in primary care, with referral to a paediatric gastroenterologist for specialist investigations, if appropriate.

The Countess of Mar
My Lords, I am grateful to the noble Lord for that Answer, but he is grossly wrong. I know of about 1,500 parents who have children with autism and inflammatory bowel disease, and not one can get treatment in the NHS. They have to pay to go to the United States of America for a proper diagnosis and a treatment regime which they bring to the United Kingdom. Will the Minister persuade Her Majesty’s Government to ensure that doctors are properly trained in the diagnosis and treatment of autism? Autism is not a single diagnosis. It is an imprecise word for a syndrome of about 21 conditions. Doctors need to be trained to recognise these and to provide quick and accurate diagnoses and treatment for these children, who suffer inestimable pain and hardship because they cannot articulate.

Lord Hunt of Kings Heath
My Lords, I certainly agree that the promotion of the early diagnosis of autism is very important; it is part of the general policies that the Government have promoted. I am afraid I cannot accept that treatment is not available for inflammatory bowel disease for NHS patients. I will of course undertake to investigate any specific issues which the noble Countess brings to my attention, but I am not aware of a general problem.

Lord Winston
My Lords, does the Minister know of any proven medical link between autism and inflammatory bowel disease? My impression is that there is none.

Lord Hunt of Kings Heath
My Lords, that is my impression too.

Lord Taverne
My Lords, will the Minister confirm that there is no support whatever for the link that Dr Wakefield claims to have established between MMR vaccine, inflammatory bowel disease and autism?

Lord Hunt of Kings Heath
My Lords, I am very happy to confirm the statement made by the noble Lord. He is absolutely right.

Lord Addington
My Lords, have the Government done any work with children with autism and their parents on how they communicate with not only the health service but also others—for example, the Department for Education and Skills? How wide is the training and how is communication between the child and the professional managed? Surely that is most important. Communication between the autistic person and the professionals is not easy. Will the Minister assure us that this is being addressed for a condition which is growing?

Lord Hunt of Kings Heath
My Lords, recent studies suggest that the prevalence of autism in children under eight is approximately 60 per 10,000 and that a more narrowly defined autism is 10 to 30 per 10,000 children under eight. I accept that more always needs to be done to help those people with autism, and their parents and families, and I well understand the pressures on those families. We are working to take forward a programme in relation to a prevention agenda, better access to services and dealing with education for professionals, to which the noble Countess referred.

Baroness Masham of Ilton
My Lords, does the Minister think that it would be a good idea to have an NHS database where information is available for parents and others on the specialised services of these people, because they cannot be in every district in the country?

Lord Hunt of Kings Heath
My Lords, the noble Baroness has raised a very important question on the availability of information for parents when their child has been diagnosed with a particular ailment or disease. We need to ensure that the relevant information is given to them and that they are given access and information about support groups that can often provide a great deal of information. We do as much as we can to ensure that the NHS has that information available, but we are not complacent and I am very happy to look at the suggestion made by the noble Baroness.

The Countess of Mar
My Lords, is there any reason why a child with autism cannot suffer from inflammatory bowel disease? I made no direct connection between the two. I just asked where children with autism and inflammatory bowel disease could get treatment. Doctors ignore inflammatory bowel disease because they think that the child is autistic.

Lord Hunt of Kings Heath
My Lords, I responded to the question of my noble friend, asking whether there is a causal link between MMR and autism. I refer noble Lords to a review by the Medical Research Council which concludes that there is no such evidence. I do not have evidence that children with inflammatory bowel disease cannot get support, advice and treatment on the National Health Service. However, as I have said to the noble Countess, if she will give me information on where this is a problem, I will certainly investigate it.

Earl Howe
My Lords, is not the noble Countess quite right that the diagnosis of autistic spectrum disorder is a matter for a trained specialist? Does the Minister share my concern that those who do not have the necessary specialist skills, such as social workers and teachers, tend too easily to attribute children’s behaviour to poor parenting when in reality there is an underlying organic cause? What guidance is there in this area?

Lord Hunt of Kings Heath
My Lords, the noble Earl has raised an important issue about awareness of autism, not just among clinical personnel but also across a wider range of professionals. So far as the National Health Service is concerned, we agree that there is scope for further awareness training for health and social care professionals and my department is in discussion with the relevant bodies on these and other matters. With regard to the position for teachers, I would have to find out from another government department. However, the point he has made is entirely relevant.

Cyprus

14:51:00

Baroness Knight of Collingtree
asked Her Majesty’s Government:

What further steps they will take, as a guarantor of the Republic of Cyprus through the treaty of guarantee, in pursuit of an equitable settlement for all communities on the island.

The Parliamentary Under-Secretary of State, Foreign and Commonwealth Office (Lord Triesman)
My Lords, the United Kingdom Government remain committed to achieving a fair, viable and lasting settlement in Cyprus for the benefit of all Cypriots. We believe that this can be achieved only through a UN-led process supported by both communities. We will therefore continue to maintain our contact with all parties and encourage all sides to show the necessary political will to engage constructively with the UN’s efforts aimed at preparing the ground for a fully fledged settlement negotiation.

Baroness Knight of Collingtree
My Lords, does the Minister acknowledge that the severe hardships and trade restrictions imposed daily on the Turkish Cypriots are a gross denial of their political and human rights? Further, if it is true, as many in Europe allege, that Turkey cannot join the EU until the Cyprus problem is settled, is it not pure Catch-22 to claim that Turkish membership will bring about such a settlement? Which comes first, the chicken or the egg? Will the Government at least take steps to assist the Northern Cyprus economy by ensuring that the universities there are able to keep within the Bologna process, which would help a lot?

Lord Triesman
My Lords, that was a complex question, if I may say so. I start with the general proposition that we fully support Turkey’s entrance into the EU. In doing so, we insist that Turkey must meet the obligations of being a member, and those obligations must extend to rights in Cyprus as a whole. We plainly need a comprehensive settlement. Everyone agrees that the UN will have to deal with a wide variety of issues, covering property, education, access, offshore exploration and so on—and that is why it requires the UN. The interests are very wide and no one country, I am afraid, is going to break through this conundrum.

Lord Wallace of Saltaire
My Lords, the Minister has stressed the United Nations’ role but, as we are all aware, both the EU and NATO not only are involved in the Cyprus question but are considerably obstructed by it, particularly as it affects the relationship between NATO and the EU. Since the whole question of EU engagement in Cyprus is central to resolving the issue of Northern Cyprus, can Her Majesty’s Government assure us that they are working as hard as they can with their partner Governments within the European Union to move the deadlock in a more positive direction?

Lord Triesman
My Lords, I hope that we have been doing exactly that. If we had been looking at the issue towards the end of last year, we would probably have detected some momentum. I greatly regret that that momentum has been lost. However, we are working not only in the EU but at the UN to see whether, with a new UN Secretary-General, there can be a new initiative with some strength and some purpose. That is plainly what is needed.

The Lord Bishop of Exeter
My Lords, one of the unresolved issues, and a cause of continuing tension between the two communities on the island, relates to those who disappeared during previous troubles. What support are Her Majesty’s Government giving to the UN missing persons committee in tracing, identifying and returning remains? What progress has so far been made in bringing some degree of closure to the many relatives for whom this is a continuing painful issue in both communities?

Lord Triesman
My Lords, it indeed remains a source of great pain. We have done all we can, not least because we have considerable resources in Cyprus, to assist in that work. It is slow work, however, and neither community has been wholly forthcoming in assisting each other. We need to persuade them that they should. The comprehensive settlement which I have tried to describe must, in the final analysis, give greater comfort to those who have lost their loved ones.

Lord Kilclooney
My Lords, I have just returned from a parliamentary delegation to Cyprus, where regrettably our Greek Cypriot hosts would not allow us to visit Northern Cyprus. Is the Minister aware that there is a growing acceptance among the Greek Cypriots that there can be no settlement unless Turkey enters the European Union—that the two are interlinked? Is he aware that there is increasing acceptance among Greek Cypriots that a permanent partition of the island is now likely? That being so, why is it that the United Nations initiative last summer to get the leaderships of both communities to enter into dialogue has not yet happened? What are Her Majesty’s Government doing to help bring about such a dialogue?

Lord Triesman
My Lords, it is our intention to ensure that there is a new and strong United Nations initiative. At different times, each of the communities—I want to be deliberately even-handed about this—has resisted that initiative. We must try to move both together, or it is extremely unlikely to succeed. I do not, however, think it inevitable that we cannot make progress—not least because the assessment is right. The accession discussions with the EU hold the keys to a number of changes that would make a fundamental shift in the position in Cyprus possible.

Lord Howell of Guildford
My Lords, in the forthcoming EU summit, which I think is this weekend, will this issue have a high priority? Does the Minister accept that developments are becoming quite dangerous, with the mood in Turkey changing to a distinctly hostile attitude towards the European Union, and talk being circulated of Turkey looking eastwards rather than westwards? Does he agree that it is becoming one of the priorities of the European Union to prepare itself and get into better shape to meet the network demands of the 21st century?

Lord Triesman
My Lords, I have much sympathy with the thought that underpins that question. There will of course be an assessment of the rate of progress of discussion of the chapters to see what has been achieved under the German presidency. A number of chapters have been opened and I believe that there are good signs of progress on them. We will have to press hard for other chapters to be opened at the very first moment that it is possible to do so. In those circumstances, I hope that Turkish public opinion will conclude that the process is worth continuing to engage in. That is what is needed, because it is absolutely right to say that public sentiment is drifting away as people strike postures saying that they do not want to see Turkey admitted at all. Turkish public opinion suggests that in some circles they are finding the process too unrewarding and too hostile.

Cultural Diplomacy

14:59:00

Baroness McIntosh of Hudnall
asked Her Majesty’s Government:

What is their response to the Demos publication Cultural Diplomacy on the value of culture in the United Kingdom’s international relations.

The Parliamentary Under-Secretary of State, Foreign and Commonwealth Office (Lord Triesman)
My Lords, I welcome the report as a contribution to thinking on the role of culture in international relations. The work that I have been leading on implementation of the recommendations made by my noble friend Lord Carter of Coles in his review of United Kingdom public diplomacy has focused on better strategic planning and co-ordination. We have put in place new structures for planning and governance, including a Public Diplomacy Board. We are undertaking joint planning with key partners to address the major opportunities presented by the 2012 Olympic Games.

Baroness McIntosh of Hudnall
My Lords, I thank my noble friend for that encouraging reply. Does he agree with the Demos authors that this country’s arts and cultural institutions are widely respected and admired all around the world? Does he also agree that in the past decade the Government have invested in them significantly, helping to create new opportunities for international works, such as the British Museum’s Africa programme, which have contributed greatly to programmes of cultural diplomacy? Does he accept, however, that for the role of culture in international relations to develop, we need to maintain the investment that we are making in our arts and culture and should not allow them to fall victim to competing demands? I am thinking particularly of the forthcoming spending review.

Lord Triesman
My Lords, a number of cultural organisations make an extraordinary contribution to our diplomatic effort; even if it is not always identified as being a diplomatic effort, it has that impact. The DCMS has taken a pivotal role in co-ordinating many of those organisations. In the case of the FCO, we are working very hard through our new system and in particular through the British Council, which carries a huge burden for us in this respect, to make sure that the world knows about the cultural achievements and products of the United Kingdom. We will fight very hard to make sure that the funding remains in place.

Lord Chidgey
My Lords, the Minister may be aware that the Demos report, too, states:

“The United Kingdom boasts a strong tradition of international cultural exchange through the British Council’s presence around the globe”.
 

It also makes the point that we cannot afford to rest on our laurels. In 2005-06, the British Council was considering closing teaching centres in Istanbul and four other cities where public diplomacy benefit was thought to be “not that considerable”. This year, the British Council will be closing several other regional offices because of the reduction in numbers of government-funded overseas scholars coming to the UK. What assessment have the Government made of the effect of this withdrawal from locations around the globe in terms of the loss of benefit that their presence was and is bringing to the United Kingdom’s overall cultural policy?

Lord Triesman
My Lords, the report of my noble friend Lord Carter made it clear to all of us that we needed to have much clearer criteria when we established our priorities and that we needed to direct our resources to those priorities. That view has been shared by the British Council and other public diplomacy entities. The world moves, and the priorities will plainly move along with it. We now have greater coherence and are introducing, perhaps for the first time, methods of measuring whether we are beginning to achieve the things that we are setting out to achieve, rather than doing things and hoping that they will somehow work.

Lord Inglewood
My Lords, I declare an interest as chairman of the Reviewing Committee on the Export of Works of Art. Bearing in mind the widely expressed concerns about funding in all quarters of the cultural sector, does the Minister agree that it would make a major contribution towards relieving some of the problems that exist if financial mechanisms could be devised by his right honourable friend the Chancellor of the Exchequer to encourage philanthropy from many of our fellow citizens who have made very large sums of money in recent years?

Lord Triesman
My Lords, I certainly acknowledge the role of philanthropy. There have been a number of other sources of funding, including very substantial ones from private businesses, which have supported exhibitions, musical tours through the British Council network, and so on. All these give us a greater capacity than if we were simply to rely on the Exchequer. We need to encourage all of that. There is a great benefit to everyone involved; philanthropists, of course, do it out of the goodness of their heart.

Lord Howarth of Newport
My Lords, does my noble friend recall that, when Nelson Mandela gave a talk at the British Museum, he said how proud he was that some of the most beautiful artefacts ever created on the continent of Africa were in the museum’s collection? Equally, was it not helpful when the British Museum's exhibition of classical Persian art and archaeology was jointly opened by our Foreign Secretary and the Vice-President of Iran? Will the Government consider how we can more systematically enable our culture to support our diplomacy and our diplomacy to support our culture? I declare an interest as a trustee of the Foundation for International Cultural Diplomacy.

Lord Triesman
My Lords, that is an excellent organisation. Of course, that is exactly what we must do, which is why I emphasise the work of the new Public Diplomacy Board in achieving that focus, making sure that we deliver it and that we can give good account of the public money that we spend; there is other money, as I have said. But the DCMS also does an outstanding job with the arts and cultural organisations to ensure that their international contribution is considerable. We have a new architecture and I genuinely believe that it is beginning to show the results that the House would wish.

Lord Howell of Guildford
My Lords, does the Minister agree that one of the best avenues for cultural diplomacy is the Commonwealth network? Does he share my dismay that the last annual report of the Foreign Office’s activities and priorities did not mention the Commonwealth at all, except on the front cover, where it could not avoid it? Secondly, he said a moment ago that he was fighting hard to preserve the cultural diplomacy budgets of the British Council and the World Service and so on. Who is he fighting and what is the problem?

Lord Triesman
My Lords, in the lead-up to every Comprehensive Spending Review, a large number of people compete for funds, and I am not afraid or ashamed to say that I compete along with them. That is the nature of the work that we do, and I am doing it. The last report, to which the noble Lord has drawn our attention on one or two occasions, was constructed around thematic priorities and therefore probably did not refer to international organisations or individual countries by name. However, I wholly share his view about the importance of the Commonwealth. At the last CHOGM meeting, I was able to see some of that work in Malta and, happily, large numbers of people from Malta going to see it.

Smoke-free (Penalties and Discounted Amounts) Regulations 2007

Smoke-free (Exemptions and Vehicles) Regulations 2007

Children and Young Persons (Sale of Tobacco etc.) Order 2007

15:07:00

Baroness Royall of Blaisdon
My Lords, I beg to move the three Motions standing in my name on the Order Paper.

Moved, That the draft order and regulations laid before the House on 31 January and 1 February be approved. Considered in Grand Committee on 27 February, Eighth Report from the Statutory Instruments Committee.—(Baroness Royall of Blaisdon.)

On Question, Motions agreed to.

Mental Health Bill [HL]

15:08:00

Read a third time.

The Minister of State, Department of Health (Lord Hunt of Kings Heath)
moved Amendment No. 1:

1: After Clause 9 , insert the following new Clause—
 “Fundamental principles The fundamental principles
 After section 118(2) of the 1983 Act (code of practice) insert—
 “(2A) The code shall include a statement of the principles which the Secretary of State thinks should inform decisions under this Act.
 (2B) In preparing the statement of principles the Secretary of State shall, in particular, ensure that each of the following matters is addressed—
 (a) respect for patients’ past and present wishes and feelings, (b) minimising restrictions on liberty, (c) involvement of patients in planning, developing and delivering care and treatment appropriate to them, (d) avoidance of unlawful discrimination, (e) effectiveness of treatment, (f) views of carers and other interested parties, (g) patient wellbeing and safety, and (h) public safety. (2C) The Secretary of State shall also have regard to the desirability of ensuring—
 (a) the efficient use of resources, and (b) the equitable distribution of services. (2D) In performing functions under this Act persons mentioned in subsection (1)(a) or (b) shall have regard to the code.””

The noble Lord said: My Lords, the question of how the Government should express principles to inform practitioners making decisions under the 1983 Act as amended by the Bill has dominated our discussions and caused a great deal of interest, as evidenced this afternoon.

On Report I said that I would introduce an amendment at Third Reading to address the concerns raised. I pay tribute to noble Lords on all sides of the House who have taken part in discussions on this. I very much appreciate their co-operation and help. We first opened our discussions on the Bill in Committee on Monday 8 January. Understandably, the question of principles is very important. The Bill has been the subject of a great deal of debate both in your Lordships' House and in the community, among mental health patients and stakeholders, and it is not surprising that, with so many varied views about the legislation, the principles under which it will operate have been a matter of great interest and concern.

As noble Lords will know, the Government have no argument, and have not had any argument, with noble Lords who emphasised the importance of transparent principles to govern the behaviour of professionals. The problem all along for the Government was the technical difficulty of grafting new principles on to existing legislation, in contrast to the approach in Scotland, for example, where they started from scratch, or the “long” Bill, which we have discussed often during the passage of this Bill. Our amendment responds to the technical problems in noble Lords’ original amendments, and I hope that it answers the question posed by the noble Earl, Lord Howe, when he opened the debate on Report. The noble Earl explained that his amendment would provide for a clear statement from Parliament about the values that should inform and guide practitioners. This amendment achieves that.

The noble Baroness, Lady Barker, asked that we had a clear explanation of how the code of practice and the legislation work together so that practitioners were not confused. I readily agree with her that it is very important that practitioners who will work under this legislation and the code of practice are very clear on what is required of them. The request for transparency is clearly very important, which is why our amendment also relates to the relationship between the legislation and the code of practice.

Our amendment places in statute a new requirement that the Secretary of State and Welsh Ministers include a statement of principles in the respective codes of practice for England and Wales, which should inform decision-making under the 1983 Act. The amendment legally obliges the Secretary of State and the Welsh Ministers to address certain fundamental issues in preparing this statement of principles. It also enshrines in legislation the duty of practitioners to have regard to the code in performing their functions under the Act, as elaborated by the judicial arm of this House in the case of Munjaz.

We listened to the debate on this issue very carefully. It is clear that there are certain values that this House regards as fundamental in the exercise of powers under the Act. We share those views and have given careful thought to those fundamental values and how they might be most effectively brought to bear in the context of the Act. We have included them as matters that must be addressed in preparing a statement of principles to be included in the code of practice for England and Wales. That will ensure that the key values expressed in Committee and on Report are given effect.

I need not go through the entire list of issues, as they are self-explanatory, but perhaps I might comment on two of them. In Committee, the noble Lord, Lord Williamson, drew attention to the importance of patients participating as fully as possible. Indeed, much of the debates around principles focused on the benefits and desirability of patient autonomy. That is why the fundamental issues include respect for patients and involvement of patients in planning, developing and delivering care and treatment appropriate to themselves. That will support the best practice of considering the past and present wishes and feelings of patients and treating them with dignity to improve their well-being.

We listened to the concerns raised in the House, including those of the noble Lords, Lord Adebowale, Lord Bragg and Lord Patel of Bradford, regarding the treatment of black and minority-ethnic groups. A number of noble Lords have pointed it out at various stages of the Bill, and we agree that there is evidence of disproportionate use of detention, seclusion and restraint for patients from a black and minority-ethnic background. As I stated in previous debates, we are addressing this issue through Delivering Race Equality, in England, and the Race Equality Action Plan, in Wales. But we will include a requirement to address unlawful discrimination. That is up front in the legislation as a fundamental matter that must be addressed in the principles to guide practitioners.

15:15:00

We have listened carefully to Peers’ concerns regarding the legal effect of these principles and the code generally, in particular those of the noble Lord, Lord Carlile. As I said, the status of the code has been reviewed by the judicial arm of this House in the case of Munjaz. In the light of that case, no one should be under any illusion that principles expressed in the code can lightly be ignored. They must be properly and carefully considered. We have given effect to this in the duty of practitioners to have regard to the code, a duty that must and will continue to be read in the light of Munjaz.

We support the idea of principles and we believe that the implementation of the legislation should be undertaken in a principled manner, but there are serious difficulties with grafting new principles on to existing legislation. That is why we think that the code of practice is the best vehicle to convey those principles to inform practitioners’ decisions under the Act. I hope that this amendment convinces noble Lords that we are serious and that we agree with the sentiment behind the amendments tabled in Committee and on Report. We have listened carefully to noble Lords. I hope that we reach a satisfactory conclusion of very constructive debates in your Lordships’ House and outside on the critical area of principles. I beg to move.

Earl Howe
My Lords, I express my personal and very considerable appreciation for the Minister’s constructive approach to this important issue following our debates at earlier stages of the Bill and for the efforts that he has personally made in helping to frame the amendment now before us. I also thank him for facilitating discussions between noble Lords on this side of the House and the Cross Benches and members of the Bill team over the past two weeks, and for his willingness to allow some of our suggestions to be incorporated in the wording of the amendment. At the start of Committee I frankly did not think that we would reach this position. Without the Minister’s commitment that simply could not have happened.

I am sure that the Minister will not take it amiss if I say that what we have here is not perfection. Perfection, from our point of view, would have been a set of clear, overarching principles in the Mental Health Act. For reasons that we know about—mainly practical and legal ones—the Government did not feel that this idea could be taken forward. I was sorry about that but, given that this was how they felt, this amendment represents a more than acceptable second best, which should achieve much of what we were hoping to achieve through our amendment in Committee. In particular, it demonstrates to service users and professionals in mental health care that Parliament has put its imprint not only on the code, which is, of course, important, but also on the Act itself as regards the basic principles that should govern it and be read into it. It is a message that Parliament itself rather than officials, managers or doctors, regards the subject headings set out in proposed new subsection (2B) of the amendment as matters of universal applicability in the way that the Mental Health Act is to be interpreted and implemented. That signal should be understood within the framework of our earlier debates, when noble Lords spoke of the values that should permeate decisions and actions taken under the Act and what those values should be. I hope that the Minister will agree with that broad analysis. From his remarks, I believe that he does.

If we are to embrace this amendment, we need to do so with our eyes open. Although the Secretary of State is bound by the amendment to act in certain ways, we can see that much of what happens will depend on his or her own opinions and decisions. That aspect of the drafting is less tight than I would have liked; nevertheless, we should not overlook the considerable significance of subsection (2D), which expressly binds the code of practice and the implementation of its principles into the Act. That is a major plus.

Perhaps I may put some brief questions to the Minister on the detail; if he cannot reply today, I would appreciate it if he could do so in writing later. Can he confirm that when the principles in the code are drawn up, the language used will reflect the intention and the underlying sense of each paragraph in subsection (2B)? We do not want to see any watering down of the principles when they are translated into the code; for example, the “wishes and feelings” of patients should include the past and present wishes and feelings, as the amendment specifies, and should not be taken to mean something more general or nebulous. “Minimising restrictions on liberty” should encompass the inclusion of a preference for informal care over compulsory care unless compulsion is absolutely necessary in the circumstances of the case. It should include also the idea of least restriction, once a person has been compulsorily detained.

I welcome the principle of,

“involvement of patients in planning, developing and delivering care and treatment appropriate to them”,

but we need to be sure that, when it is incorporated into the code, it conveys what I hope the Government intend: that the individual patient should, as a matter of course, be consulted on the care and treatment that is right for him and his opinions should be respected.

The “avoidance of unlawful discrimination” should not be taken simply as prohibition of an obvious, negative kind, but rather as a positive rallying call for respect and equal treatment of all patients, no matter what their characteristics or background may be. This principle is about banishing the culture of stereotyping in mental health care and about promoting in its place a culture of respect and confidence.

Proposed paragraph (e) refers to the “effectiveness of treatment”. This idea is somewhat condensed. I would like to think—and perhaps the Minister could comment—that it opened up the concept of maximum benefit to the patient, which our original amendment specified. In so far as there is an interaction between this principle and the principle of respect for the patient’s wishes and feelings, the concept of maximum benefit would appear to be covered.

One of the principles that we had hoped to be included, but that is not there, is the need to consider the full range of options available in the patient’s case, both during assessment and after. Can the Minister confirm my understanding, arising out of helpful discussions with officials, that this principle is effectively covered by considering three principles together: the need to respect the patient’s wishes and feelings, the principle of minimum restriction and the effectiveness of the treatment considered? If one were to overlay those principles with the Secretary of State’s duty to ensure the equitable distribution of services, the substantive point at issue would seem to have been addressed. If that is so, will the Minister undertake to ensure that that is made explicit in the code?

The amendment refers also to the Secretary of State’s duty to,

“have regard to the desirability of ensuring … the efficient use of resources”.

I am sure that none of us here would deny her that responsibility in the general exercise of her functions. However, one could envisage circumstances whereby the need to make efficient use of resources could be used as a reason for diluting or even negating the practical force of the main principles. That would be highly undesirable. Can the Minister explain what is intended by the “efficient use of resources” in that context?

I hope that the Minister can also confirm that the principles foreshadowed and signposted by this amendment will be the only ones to be contained in the code and that no extraneous ones will creep in. Does he accept that the amendment confers a special status on to the principles set out in the code such that any departure from them would be unlawful and therefore, in practice, unthinkable?

As this may be the last opportunity to do so, I end by expressing my appreciation for the courtesy and helpfulness of the Minister throughout the passage of the Bill. He has never been less than utterly straightforward and equable, even when, regrettably, we had to disagree. I thank him for that. If he will allow me to say so, I cannot help being fearful that the same spirit of open and constructive engagement may not be carried over into the debates in another place. Last week the Minister’s right honourable friend Rosie Winterton made several public pronouncements about the effect of the amendments carried by your Lordships’ House that were, to be frank, grossly misleading. I stop short of saying that they were wilfully misleading because I have no grounds for going that far, but the Minister was certainly ill briefed. This is not the moment to issue a line-by-line rebuttal of what she said, but I hope that it will be in order for me to do that by way of a letter before the Bill has its Second Reading in the Commons.

Lord Soley
My Lords, I congratulate my noble friend on his amendment. I think it is basically right, but he will be aware that I have always taken the view that principles in a Bill are not a good idea. We always need to remember that courts of law are required to interpret Acts of Parliament and if you end up balancing clauses with principles, you open the door to some interesting legal squabbles which, in my experience, are usually very expensive for the taxpayer. That brings me to the warning point on this. I like the way it has been approached and it is right that we have sought to meet the concerns of Members of this House on the issue. But my word of caution is to ask that we have the lawyers check out the way the code is worded because, as my noble friend will remember, it was only a few years ago that the NHS was paying out large sums of money in out-of-court settlements because the health service feared that if it went to court, even though it felt that its case was good, it would cost it much more than settling out of court.

If we ask people to balance a code with the requirements of the Act, there is a danger of reopening that door, which has in recent years been closed. That does not in any way imply that people should not be able to go to the courts if they feel that aspects of the Act have not been fully and properly dealt with, and that their rights have not been acknowledged. But it is a warning that this can be an expensive way of meeting that need.

We have all known for many years the over-representation of certain ethnic-minority groups within patients having compulsory treatment. There are at least three areas that we need to address. One is the recognition that social and economic factors, not least racism itself, put extra pressures on some groups within the ethnic-minority community to the extent that they either exacerbate or trigger a mental illness. That is a wider social issue.

Secondly, certain sections of the ethnic-minority groups are seriously under-represented in the professions themselves. Perhaps we could put on the record again that it is high time that some of these professional groups took a leaf out of the Army’s book. When it realised what a serious problem it had, it began to go around schools, clubs and other organisations in ethnic-minority areas to make a far greater effort to recruit and educate people about opportunities, whether in psychiatric nursing or medicine. The professions to some extent have responsibility here.

The third factor, which I hope will not be taken out of context, has to be addressed by the Government. It is hard to believe that there is not an element of institutional racism in this context. The concerns that have rightly worried those on all Benches may be dealt with more effectively by addressing those areas than by drawing up codes, which are useful but whose effectiveness should not be overestimated.

15:30:00

Baroness Carnegy of Lour
My Lords, does the Minister consider that the principles in the amendment apply to what is now Clause 37, entitled “Cross-border arrangements”? In Committee, I asked the Minister a question and he was kind enough to write to me at some length on the matter. He confirmed that the implications of Clause 37 are that if a Scot, say, is detained in Edinburgh against his will on the grounds that his decision-making ability is impaired by his mental illness, and if that patient’s family are in London, he could not be moved south to be near them because the law in England would be different. He could no longer be detained there on the grounds that he is detained in Scotland; that is, his diminished decision-making ability. In that case, what may well be his wishes and feelings could not be met because his safety could not be assured if he was moved south.

The Minister amended the Bill, which I appreciated very much, to make it possible for a patient who is detained in Scotland on grounds that do not exist in England to go on a short visit south of the Border—this could also apply to those coming north to Scotland from south of the Border—if they were escorted in safety; if they by chance escaped, they could be recaptured. I very much appreciated that but the Minister was not able to meet the main point, which is that if someone is detained on one side of the Border on a ground that does not exist on the other, he cannot be moved in safety to be detained at the other end.

The amendment states that there should be respect for patients’ “wishes and feelings” and that their “wellbeing and safety” should be taken into account. These things do not apply in this case. The Minister may argue that that is one of the reasons why he does not want to put this principle in the Bill, but it is such a major principle that not doing so would be a great pity. I wonder whether care should be taken in the Scots Parliament and at Westminster to make issues that affect people’s liberty and rights the same north and south of the Border. I know that Scotland legislated first and that the Government here do not wish to follow them in this regard; they have every right not to do so. However, that creates a very awkward situation for a few people who will be disadvantaged. Is the Minister happy with the principles in light of Clause 37?

Lord Ramsbotham
My Lords, I echo the words of the noble Earl, Lord Howe, in thanking the Minister for the courtesy and care that he has taken to keep us informed on all the things he has been thinking about during the Bill’s passage. I welcome the fact that we now have fundamental principles in the Bill. At every stage, I have made the point that there is one minority who have not been mentioned in the principles so far; that is, those in custody. I reminded the House several times that the Government used the word “equivalence” about their treatment. While there is no mention of that word in the Bill’s principles, and it does not look as if there will be much chance of getting it put in, will the Minister assure us that in the code of practice, “equivalence” will be mentioned as a reminder to all those responsible for delivering services to those in custody that that is the standard that they must not only aspire to but maintain?

Baroness Barker
My Lords, I thank the Minister very much for his efforts over the past few weeks to enable me, the noble Earl, Lord Howe, and others to meet the Bill team and parliamentary counsel. I have never had the experience of meeting parliamentary counsel before and it was extraordinarily helpful that we did so, not least because members of the legal profession are often wont to say things by omission rather than put things expressly in terms. It was very helpful to learn directly from them exactly what was meant by omission in the wording.

This amendment is a compromise and, as such, it is unlikely to satisfy anyone. There are things that we would have wished to see in it and there are things that we would rather were not there, but, like the noble Earl, Lord Howe, I accept that this may be as good as we will get. Others—in which I include my noble friend Lord Carlile, who is unable to be here today because he is unwell—are less than happy. They have carefully read the wording of the amendment and are firmly of the view that it offers no legal protection whatever.

The noble Earl, Lord Howe, has already referred to the remarkable speech made by Rosie Winterton on 1 March. As one would expect, I disagree with much of it, but on one point we are in agreement. She said that mental health legislation is an extremely difficult and sensitive issue. So it is, and that is why I do not apologise for asking the noble Lord a series of questions to which I, too, require answers.

People making decisions under this provision are to,

“have regard to the code”.

As I mention that, I notice that the noble Lord, Lord Campbell of Alloway, is in his place. Today, it is our duty to probe the Minister on exactly what those words mean. In particular, do the Government not intend there to be a right to disapply the principles in certain circumstances? I ask that because that was a provision of the 2004 Bill. I am sure that the Minister will be only too well aware that that proposal was firmly rejected by the joint scrutiny committee, so it would be very helpful today if he could answer that point.

The Minister will recognise that the amendment gives a status to the principles in the code. Does that mean that they cannot be departed from? If they can be departed from, can he tell us how and in what circumstances?

Does the Minister agree that minimising restrictions of liberty means that voluntary treatments should be preferred over compulsory ones? That argument has run throughout our deliberations and I should welcome a statement from him on it.

Like the noble Earl, Lord Howe, I should like confirmation that the principle of “efficient use of resources” cannot be used to deny or frustrate the application of the other principles. That leads me to one further point.

We have in front of us a list. That, in itself, is extraordinary: lawyers hate lists, as we are told all the time. Can the Minister confirm that there is no order of precedence in this list and that there is no interplay between the different principles, but that they all have an equal weighting and an equal value? I ask that in order to address the point made by the noble Lord, Lord Soley, about determining the exact words of the code of practice and the relationship between the two. I disagree with him—that will be no surprise to him after the past three months of deliberation. I do not think that lawyers should determine the meaning; it should be a matter that returns to Parliament.

That leads me to another point. The amendment amends Section 118 of the Mental Health Act 1983. Under that section, amendments to change the code come under a negative procedure. Does the Minister agree that this matter is of such importance and has been given such detailed attention in your Lordships’ House that any review should be by the affirmative procedure? Will he please explain how the Secretary of State will arrive at a judgment about whether action should be taken under the code of practice? Will there need to be evidence, and will such decisions by the Secretary of State be subject to judicial review?

I have some further points to make. I rebut firmly one charge made by Rosie Winterton in her speech on 1 March, using arguments and phrases that we have heard a lot in the past few months—principally from the Government’s mental health adviser. She said of your Lordships’ House that we had not put the public at the heart of our deliberations. That is completely and utterly wrong. Even a cursory neutral reading of the proceedings of our debates would show that they have been lengthy, well informed and not without a great deal of argument. They have always been predicated on the understanding that mental health legislation exists to protect patients and the public, and that there will always be a need for compulsory treatment within such measures. Your Lordships’ House is entitled to reject utterly and completely that accusation, which is false and without basis.

We have considered all the information and evidence before us—including that put forward by the Government—to put together legislation that we believe will lead to services that mental health patients will not fear, and from which they will not run. In so doing, we will make this country safer because we will not leave people who are very ill outwith the social services to become more ill and a danger to themselves and others. That has been our central consideration on the Bill.

I too thank the Minister and the noble Baroness, Lady Royall, who in very difficult circumstances and with unhelpful noises off have sought to approach the matter in the spirit of your Lordships’ House by being unendingly courteous and helpful to those of us who have worked on the Bill—at no mean cost to themselves. We would not have managed to improve the Bill as we have done had they not been in charge of it, so I congratulate them.

When the Bill came to the House on Second Reading it was welcomed by many noble Lords who, at the same time, called it deficient, depressing and fundamentally flawed. It is still flawed, but it is a much better Bill than the one that we received. I hope that when it goes to another place, Members, in the spirit of this House, will pass legislation that is strengthened rather than weakened, and which will make this country a safer place for the people who are mentally ill and for all those who care for them.

Lord Williamson of Horton
My Lords, I thank the Minister for his explanation of the amendment. When I saw it, my first thought was to adjourn to the Tea Room so that all of us could eat half a cake. On reflection, I decided that that was not a worthy thought and I welcome the amendment. I have two reasons for saying that: first, it is explicit in the Bill that the code exists in a form that is broadly what we want; and, secondly, it lists the specific issues. The fact that those are included in the legislation means that we do not have to go digging too far into what might actually happen. We have to put some confidence in the operation of the system that the Government have proposed in the amendment. Although I might have preferred something else, given the way the issue has been handled, I have confidence and trust in how it will work, so I welcome the new clause.

15:45:00

Baroness Murphy
My Lords, I was not going to speak to this amendment until goaded into it by the noble Lord, Lord Soley, who rather implied that he would prefer an unprincipled Bill. I welcome the amendment, despite it being only half the measure I had hoped for. I had hoped we would have it right there on the front page of the Mental Capacity Act. Having failed to get that, however, this is a spot-on compromise.

During the passage of the Bill, the tone of the Government’s negotiation has moved more towards giving life to the principles we would like to see enacted, and convincing us that they share them. I hope that that spirit will continue in discussions in the other place, given the concerns raised in the past week that some of our amendments may not be further supported there.

Lord Alderdice
My Lords, the Minister has rightly been recognised for his commitment to the Bill and his work with all of your Lordships to improve what came to your Lordships’ House. It was not, in that sense, his Bill; he inherited it. He has worked hard with us, as has his colleague, to make things better.

I still find myself a little heavy hearted about the Bill, however. A few days ago, a substantial document dropped through my letter-box with a covering letter from Professor Roy McClelland, who is now chairing the Bamford review of mental health and learning disability services in Northern Ireland. That document was a volume of legislative proposals for Northern Ireland. From the beginning, it set out that mental health legislation should be based on fundamental principles, particularly those of the protection of the human rights of the whole community, but particularly those who were to be held and treated under compulsion.

That review, in the Northern Ireland context, brought together a wider range of people, patients, carers, professionals and officials than had ever been done. It mirrored what we have heard when NGOs, carers, people involved in healthcare and patients and their families have expressed their views: they want the legislation to be based on fundamental principles. The Minister will undoubtedly say that it is. Well, perhaps, but reading through this I had the impression that if the officials who had put the material together had been advising the Almighty when he was looking down on Sinai, Moses might have come down with something saying, “The high priest will address questions like murder, theft, respect for the Sabbath and for one’s parents, but only in the context of what is efficient and potentially effective”. I do not think that the right reverend Prelates would be espousing their faith and convictions with quite the passion they do if that had been before them.

I ask myself why the Government have been so adamant that the principles should not be in the Bill, clear and irrefutable. It is said that it is for legal reasons. Lawyers make good servants but bad masters. When I listen to what my noble friend Lord Carlile has said—and I am sorry that he is unable to be with us today—I am affirmed in my view that there is something rather more to it. In this, the noble Lord, Lord Soley, has, as ever, been deeply helpful to the House. He has pointed up the real reasons why the principles cannot be put in the Bill. One reason is that a fundamental principle is an attention to the concern of constituency MPs about the problem of the complaints they receive about difficult people. That is one of the fundamental principles that underlie the Bill. Secondly, one of the reasons for putting these matters in a code of practice in a slightly indefinite way is that it makes them non-justiciable if someone challenges them—here the Minister may be able to put my mind at rest and tell me that I am wrong. The noble Lord, Lord Soley, said that we do not want them challenged because it is very expensive for the NHS. It is, and it is just as expensive for any poor patient, family or carer to confront the courts, but they do not have the resources. One of the things this House is here to do is to protect those who do not have resources or power against those who do, and sometimes that is government. If that is why these matters are not in the Bill, it is not satisfactory and does not give me great comfort.

Singularly in the field of healthcare, this legislation is about compulsion. It is about compelling patients to be where they do not want to be and to take treatment they do not want to take in a context that they do not like. It is also about compelling healthcare workers to do things they must not want to do. Why do I say that? I say it because the Minister made it clear at an earlier stage in the Bill. When I observed that much of the care required by people with disturbed personalities was unavailable because of resources issues, the Minister was at pains to point out that it was a matter of compelling and pressing healthcare workers, particularly psychiatrists, to treat people who they were saying were not treatable. Many psychiatrists will find that difficult to take. It is a serious accusation that, effectively, they have another agenda rather than a commitment to the care of their patients. I do not believe that that is true in the majority of cases. Compulsion as regards carers, those giving treatment and the patients must be taken extremely seriously. I entirely accept and support any compulsion on psychiatrists and others to ensure that they observe the rights of black and minority-ethnic community patients and, indeed, the rights of patients as a whole, but that is not what is being proposed.

I said earlier that I still have a somewhat heavy heart. The Bill is better than before and better than nothing, and we can be grateful for the thoughtful, courteous and respectful way in which Ministers in this House have dealt with genuine concerns and with the material before us. I hope that they have more influence than us to persuade their colleagues in another place to adopt the same approach so that the advances that have been made in the Bill, which are genuine improvements, are maintained and built upon rather than taken to pieces.

Lord Campbell of Alloway
My Lords, my name has been mentioned, so I asked my noble friend Lord Howe whether I should seek the leave of the House to say a few words about this amendment. First, it gives no assurance of any form of legal efficacy; secondly, the code would not be enforceable by judicial review and, in the light of certain decisions on education law to which I shall not refer, the clause about resources could be used as an escape clause. Thank you for the permission to speak.

Lord Hunt of Kings Heath
My Lords, it is always a pleasure to listen to an intervention from the noble Lord, Lord Campbell of Alloway. Some noble Lords will have enjoyed his many interventions on the question of codes of practice and Section 7 statutory guidance with a great deal of interest.

I welcome the constructive comments noble Lords have made this afternoon. In essence, we are debating a compromise. Inevitably, compromises do not completely commend themselves to all noble Lords. It is, however, good that we have reached an accommodation on the issue of principles. I have always thought that, if we were able to do so, that would ensure, as the noble Earl, Lord Howe, said, a very important message is being given out regarding parliamentary scrutiny and the importance that Parliament places on the principles that appear in the amendment. That is a very important signal, and I thank all noble Lords for it.

The noble Earl, Lord Howe, invites me to give a guarantee that the principles will not be watered down and that we will not use nebulous language. I will try to do that. I make it clear that we wish these principles to be absolutely transparent and to mean something to the practitioners who have to operate what is, in every sense, difficult legislation in difficult circumstances.

I will come on to talk about how further consultation will take place, but I want to reassure the noble Earl, Lord Howe, that we wish the code to be as clear as possible and to embrace the principles. We are taking note of all comments made in the discussion on legislation. We have a draft code, but it is very much work in progress. I can give an absolute assurance to noble Lords that everything stated in our debates will inform the production of the draft code when it comes up for full parliamentary scrutiny.

I agree with the analysis of the noble Earl, Lord Howe, about the full range of options. He then went through a number of the principles contained within the amendment and he was absolutely right.

I thank the noble Lord, Lord Alderdice, for his acknowledgment of the work that has been done. I understand that it does not meet all that he wants to be met. There is no more to it than the explanation I have given at all stages of the Bill as to why the principles cannot be put in the Bill in the way he wants. There is no hidden agenda. He said, absolutely rightly, that lawyers act under the instructions of their client. But when the advice given to the Government on the matter has been so clear, the last thing we want to do, in the light of everything noble Lords have said about the need for clarity, is to cause confusion regarding interpretation. That is the only reason we were not able to accept the kind of amendments which the noble Lord would have wished to see.

The proposed provision,

“the efficient use of resources, and ... the equitable distribution of services”,

means merely that in carrying out functions under the Act practitioners should consider the efficient use of resources and the equitable distribution of services. This line in the amendment ensures that these broader aspects of service delivery are considered as well as the more individualistic considerations that are to be addressed in the statement of principles. When preparing the statement of principles, the Secretary of State should draft it in such a way that, where she considers it desirable, it addresses the efficient use of resources and the equitable distribution of services.

The noble Baroness, Lady Barker, asked whether there is a preference for the list of fundamental matters. There is none.

16:00:00

I listened with a great deal of interest to the noble Lord, Lord Ramsbotham, who has such wide experience in relation to prisoners. The Act deals with patients transferred from prison to hospital for treatment; it does not cover treatment for prisoners with a mental disorder where that treatment is not required to be given under compulsion. The issue raised by the noble Lord therefore does not arise in the principles relating to the Act, but his general point is well made. I have been very clear that part of the health service’s general role is to treat prisoners, and the changes that have been made to its responsibility are to be greatly encouraged and welcomed.

I have also referred to our debates on prisoners waiting for a place in NHS institutions. We have invested more resources. There is clearly a huge challenge here, which I do not underestimate; but we are at one with the noble Lord on the crucial importance of this area. We must ensure that there is continuity of service when prisoners are discharged. Given the scale of mental health issues among prisoners, it is vital that there is continuity of service and that the health service is geared to meeting the health needs of former prisoners. Again, the active intervention and involvement of the National Health Service is very important in that matter.

On the question of whether the Secretary of State’s decisions on what the principles are are subject to judicial review, my advice is that they are. The noble Baroness, Lady Barker, asked again about the status of the code and whether the principles can be departed from. The answer is yes, but only where there are cogent reasons for doing so that are demonstrably justifiable. That is consistent with the decision being proposed in relation to Munjaz.

I pay tribute to the noble Baroness, Lady Carnegy, for mentioning Scotland again. I will write to her in some detail, if I may, about the specific issues that she raises, but the general point is that the principles apply to patients who are transferred using the cross-border arrangements once they are under the English Act and to all functions dealt with in the code. She raised a rather more general issue when she said that, where we are dealing with people’s liberty, there should be no separate approach between England and Scotland. I understand what she is saying, but in a sense we are governed by devolution legislation and must act within those parameters. She has signalled the fact that, in those circumstances, it is very important that, first, there is clarity and transparency in cross-border arrangements and that, secondly, whatever the different approaches taken by Scotland, England and Wales to mental health legislation, we must ensure that there is as much collaboration as possible.

It is also very important that we learn lessons from the introduction and implementation of different legislation. Noble Lords have pointed out to me the benefits of Scotland’s approach to its legislation, but I would say to them that it is also important to look at some of the practical challenges that are being faced in Scotland; I do not want to repeat the various letters that have appeared in the medical press recently from Scottish practitioners about some of the issues that they face. I do not seek to criticise legislation in Scotland, but I do think that, whether we are talking about English legislation or Scottish legislation, we need to be aware of some of the impact of our legislation on the practical, day-to-day business of practitioners. In a sense, that brings us back to the importance of the code of practice in ensuring as much clarity as possible in giving advice and guidance to practitioners.

The noble Baroness, Lady Barker, asked me about Section 118 and whether it ought to be subject to the affirmative or negative procedure. I was surprised that we did not have an amendment on that. As she suggested, it is currently under the negative procedure, and the Delegated Powers Committee did not recommend that that should be changed to the affirmative procedure. When the code of practice is laid before Parliament we may well have a debate on it, and I would welcome such an important debate. The very fact that it is subject to parliamentary scrutiny emphasises the importance of the code of practice.

Lord Alderdice
My Lords, before the Minister sits down, I seek clarification on whether the code is justiceable and, on a practical note, refer to the phrase “have regard to”. Would it be sufficient, for example, for a mental health practitioner confronted with such a difficult question regarding a patient to make a note in the patient’s record to say, “I have given regard to this question in the code and have decided that I must set it aside for these reasons”? Would that be challengeable legally in any way? The Minister may not be able to give a definitive answer to the question but I raise it because his answer to it in Hansard in this debate will have particular significance. It is the kind of practical issue on which mental health workers will need clear guidance regardless of whether that comes in the code of practice or is clarified by a word in Hansard.

Lord Hunt of Kings Heath
My Lords, the noble Lord tempts me down paths where I do not wish to go. He posed a specific question on a potential action by a practitioner. I do not believe that I am in, or ought to be in, a position to respond to that. The answer to his question is no, as evidenced by the case of Munjaz and the issue of being non-judicial. On the code, I can only repeat what I said about the status. Our understanding is that the code gives practitioners legitimate scope for departure when the individual circumstances of the case make departure appropriate. But decision makers must have cogent reason for any departure, which could be scrutinised carefully by the courts. The status of the code was clarified in the House of Lords ruling on the case of Colonel Munjaz. The code is guidance to which great weight must be given and from which hospitals should depart only where they have cogent reasons for doing so. I do not think that I can add any more on that.

Lord Soley
My Lords, this is precisely the point that I was worried about. One can see in the code—having regard, for example, to patients’ past and present views, and the views of relatives and friends—that there is very real potential for a clash. That is why I asked my noble friend simply to have the lawyers crawl over this provision very carefully before the Bill becomes an Act. Otherwise, a number of professionals who speak in this House may find themselves before a court of law and rather regretting the way in which they voted and spoke in this debate.

Lord Hunt of Kings Heath
My Lords, I was remiss in not referring to my noble friend in my winding-up speech. It has been rather lonely at times during our debates and I wish to pay tribute to him for his very strong support. Of course, this matter has been checked and rechecked with our legal advisers because it is clearly very important. I must pay tribute also to the noble Lord, Lord Elton, for his heroic role in mental health legislation in the past. The framework of the 1983 Act has stood the test of time. The construct of the law, in laying out how patients can be detained and treatment given under compulsion, is very clear. The statutory code of practice has been a very good way not only of informing practitioners working within the auspices of the Act but of allowing the code to change and develop over time in the light of emerging ideas and changes in practice, while at the same time being subject to strong public and parliamentary scrutiny. We have that framework and will continue to do so.

The decision in the Munjaz case is extremely helpful in that practitioners and all concerned understand the status of the code. I do not think that it is possible to give any more clarity than that, and I think we ought to pay tribute to the practitioners who will have to work with the legislation. We will give them as much guidance and help as we can, but we must acknowledge that they will have to use their professional and clinical autonomy to make the best decisions they can in the best interests of their patients. But they will have to do so in the light of the legislation governing their actions and under the guidance that will be given in the code of practice—guidance which is now informed, if noble Lords accept the amendment, by the principles now enunciated. It is impossible to say fairer than that.

On Question, amendment agreed to.

Baroness Neuberger
moved Amendment No. 2:

2: After Clause 24 , insert the following new Clause—
 “Named persons
 (1) Section 26 of the 1983 Act (definitions of relative and nearest relative) is amended as follows.
 (2) In the cross-heading preceding section 26 after “functions of relatives” insert “, persons acting as relatives”.
 (3) Before subsection (1) of that section insert—
 “(A1) In this Part “named person” means—
 (a) any person described in subsection (1) below; or (b) any person not described in subsection (1) below who is the patient’s carer, who has been nominated by the patient in accordance with subsection (1A) below.
 (B1) In this Part “appropriate authority” means—
 (a) in the case of a qualifying patient specified in subsection (C1) below the managers of the responsible hospital; or (b) in the case of any other person not specified in subsection (C1) the responsible social services authority. (C1) For the purposes of subsection (B1) above the following are qualifying patients—
 (a) a patient who is liable to be detained by virtue of an application for admission for assessment or an application for admission for treatment under Part II of this Act; (b) a community patient; (c) an accused person within the meaning of section 35 remanded under that section to hospital for a report on his mental condition; (d) an accused person within the meaning of section 36 remanded under that section to hospital for treatment; (e) a patient in respect of whom there is in force— (i) a hospital order, (ii) a transfer direction, or (iii) a hospital direction; (f) any patient in hospital, not being liable to be detained under this Act. (D1) In this Part of the Act “carer” has the same meaning as in section 1(1)(a) of the Carers and Disabled Children Act 2000.” 
 (4) After subsection (1) insert—
 “(1A) A person is a named person in accordance with this subsection if—
 (a) the nomination is signed by the nominator; (b) the nominator’s signature is witnessed by a prescribed person; (c) the prescribed person certifies that, in the opinion of the prescribed person, the nominator— (i) understands that the effect of nominating a person to be the named person will give him the role of nearest relative; and (ii) has not been subjected to any undue influence in making the nomination; (d) the nomination has been forwarded to the appropriate authority and approved in accordance with subsection (1B) below. (1B) The responsible authority shall approve the nomination of a named person unless—
 (a) the named person is of a description specified in regulations made by the appropriate authority; or (b) the named person appears to be incapable of performing the functions of the nearest relative due to mental disorder. (1C) The powers conferred on any appropriate authority by subsection (1A) above may be exercised by three or more members of that authority or by three or more members of a committee or sub-committee of that authority which has been authorised by them in that behalf.
 (1D) A nomination under subsection (1A) above may be revoked by the nominator in accordance with subsection (1E) below.
 (1E) The nomination of a named person is revoked in accordance with this subsection if—
 (a) the revocation is signed by the nominator; (b) the nominator’s signature is witnessed by a prescribed person; (c) the prescribed person certifies that, in the opinion of the prescribed person, the nominator— (i) understands the effect of revoking the appointment of a person as named person; and (ii) has not been subjected to any undue influence in making the revocation. (1F) The nomination of a named person shall be effective notwithstanding the fact that he has become, after making the nomination, incapable of making a nomination.
 (1G) A person nominated under subsection (1) above may decline to be the nominator’s named person by giving notice to— 
 (a) the nominator; and (b) the appropriate authority in which the nominator resides, to that effect.”
 (5) For subsection (3) substitute—
 “(3) In this Part of this Act, subject to the provisions of this section and to the following provisions of this Part of this Act, the “nearest relative” means, in descending order—
 (a) the named person; (b) the person first described in subsection (1) above who is for the time being surviving, relatives of the whole blood being preferred to relatives of the same description of the halfblood and the elder or eldest of two or more relatives described in any paragraph of that subsection being preferred to the other or others of those relatives, regardless of sex.” (6) In section 26(4) after “his nearest relative” insert “under subsection 3(b) above”.
 (7) In section 26(5) leave out “(3)” and insert “(3)(b)”.

The noble Baroness said: My Lords, I am aware that this is not the sort of amendment normally tabled at Third Reading. I am moving it following discussions with the noble Baroness after Report, in order to give her an opportunity to help noble Lords on all sides of the House to find a way of resolving the problem about named persons. Our discussions have been helpful and informative. I, too, wish to join with others around the House in paying tribute to the Minister and to the noble Baroness. Indeed, I have been greatly encouraged by the Government’s desire to find a way through on this issue as there is a point of principle at stake as well as some practical problems.

The amendment seeks to provide a way whereby a patient can choose from a limited list who should act as his or her nearest relative, and, as a safeguard, the responsible authority will be able to approve that choice. I look forward to hearing what the noble Baroness can tell the House in response. I beg to move.

Baroness Royall of Blaisdon
My Lords, I begin by thanking the noble Baroness for her kind words and courtesy. It is a pleasure to be able to find a resolution to differences whenever possible. The issue of the nearest relative was fully debated in Committee and on Report and, according to the normal practice of the House, it is unusual for us to debate it again today. However, in this exceptional case I am glad that the amendment has been tabled in a revised form because it gives me the opportunity to inform the House that, following a meeting with the noble Baroness, Lady Neuberger, we intend to take the amendment away and explore the issue further. I know that noble Lords will understand that the Government can give no guarantees on the outcome. In the light of this, I hope that the noble Baroness, supported by her noble friend Lady Barker and the noble Lord, Lord Williamson, will agree to withdraw the amendment.

Lord Hylton
My Lords, before the noble Baroness, Lady Neuberger, decides whether to withdraw the amendment, on the general point here, I wonder whether the noble Baroness or her colleague the Minister can give the House any good news about how consolidation of the original Act and this Bill is to be dealt with. I ask that because it is going to be very difficult for practitioners to juggle two pieces of legislation and a code of practice.

Lord Hunt of Kings Heath
My Lords, I should like to respond briefly to the noble Lord. I cannot give a definitive, helpful and constructive answer, but I can say that I fully understand the point that he makes, and it is certainly something that I shall take back to my colleagues.

Baroness Neuberger
My Lords, I thank the noble Baroness for her reply. We have had constructive and helpful discussions thus far. I know that they will go further and that other noble Lords will be involved. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 26 [Discharge and variation of orders appointing nearest relative]:

The Deputy Speaker (Viscount Allenby of Megiddo)
My Lords, the noble Lord, Lord Carlile, cannot move Amendment No. 3, as he is sick.

Lord Hunt of Kings Heath
My Lords, Amendments Nos. 3 and 4 could be moved formally. They are only consequential on decisions made on Report.

Earl Howe
moved Amendment No. 3:

3: Clause 26 , page 22, line 39, leave out “in his opinion,” and insert “he is satisfied, in accordance with subsection (4A) below, that”

The noble Earl said: My Lords, that is exactly the position. I am grateful to the Minister. I beg to move.

Lord Hunt of Kings Heath
My Lords, I shall speak to my amendments in this group. I also have put down some consequential amendments of a technical nature. They are a direct consequence of an amendment moved on Report, to which the House agreed, to remove what was Clause 30. Clause 30 repealed the provisions in Sections 25A to 25J of the 1983 Act concerning aftercare under supervision. The effect of removing what was Clause 30 is to continue the existence of aftercare supervision. That has a number of consequences elsewhere in the Bill, most notably at Clause 52, which concerns commencement generally; Clause 53, which concerns the commencement of what was Clause 30; and part 5 of Schedule 10, which lists the repeals to be made because of the introduction of supervised community treatment.

The purpose of these amendments is to ensure that the provisions of the Bill are technically compatible with the removal of Clause 30. That means that when the Bill leaves this House for the other place, it properly reflects your Lordships’ intentions.

On Question, amendment agreed to.

Earl Howe
moved Amendment No. 4:

4: Clause 26 , page 22, line 43, at end insert—
 “(4A) If the responsible clinician is not a medical practitioner he shall arrange for the patient to be examined by—
 (a) the registered medical practitioner who has been professionally concerned with the medical treatment of the patient; or (b) if no such practitioner is available, a registered medical practitioner who is an approved clinician; and the medical practitioner shall, if he believes the conditions are met, make the written recommendation in the prescribed form including a statement that in the opinion of the practitioner the conditions set out in section 3(2) above are complied with.”

On Question, amendment agreed to.

Clause 52 [Commencement]:

Lord Hunt of Kings Heath
moved Amendments Nos. 5 and 6:

5: Clause 52 , page 44, line 38, leave out “53 to” and insert “54 and”

6: Clause 52 , page 45, line 10, leave out “(including provision within section 53)”

On Question, amendments agreed to.

Clause 53 [Commencement of section 34]:

Lord Hunt of Kings Heath
moved Amendment No. 7:

7: Clause 53 , leave out Clause 53

On Question, amendment agreed to.

Schedule 10 [Repeals and revocations]:

Lord Hunt of Kings Heath
moved Amendments Nos. 8 to 12:

8: Schedule 10 , page 138, leave out line 30

9: Schedule 10 , page 138, line 33, leave out from beginning to end of line 13 on page 139

10: Schedule 10 , page 139, leave out lines 15 to 24

11: Schedule 10 , page 139, leave out lines 27 to 39

12: Schedule 10 , page 139, leave out lines 42 to 47

On Question, amendments agreed to.

An amendment (privilege) made.

Lord Hunt of Kings Heath
My Lords, I beg to move that this Bill do now pass.

Moved accordingly, and, on Question, Bill passed, and sent to the Commons.

Further Education and Training Bill [HL]

16:17:00

Read a third time.

Clause 17 [Power to award foundation degrees]:

Baroness Darcy de Knayth
moved Amendment No. 1:

1: Clause 17 , page 12, line 37, at end insert—
 “(6B) It shall be a condition of the power to specify an institution under subsection (1)(b) that the institution make arrangements with an institution or institutions of higher education for progression from all its foundation degrees to a full degree.”

The noble Baroness said: My Lords, in the absence of the noble Lord, Lord Dearing, I beg to move this amendment.

Baroness Morris of Bolton
My Lords, I support the noble Lord’s amendment to put progression in the Bill. I was glad to see the Minister’s assurances in his letter of 2 March. We have had extensive discussions on these matters already, so I will keep my remarks brief—though not quite as brief as those of the noble Lord, Lord Dearing.

On these Benches we have always been in favour of giving further education colleges more responsibility and independence, to allow them to develop their full potential. The powers in this clause, however, were in danger of causing so much contention and bad feeling that further education would have been damaged rather than strengthened. We feel that this safeguard, confirming foundation degrees as a route to higher education as well as being a valued qualification in their own right, will ensure the higher education involvement in foundation degrees that has contributed so much to their development and success.

I was also happy to see that the Government have taken on board concerns about the independence of the report on the success of these new powers and on franchising. Instead of falling into the trap of political point-scoring and an unhelpful refusal to engage in constructive debate, your Lordships' House has worked on these and other points to improve the Bill considerably.

I am delighted to say that working with the noble Lord, Lord Adonis, has been a pleasure. Once again I thank the noble Lord and Bill Rammell for the genuine efforts they have made to find a way forward. I also acknowledge the sterling efforts of the Association of Colleges, the 157 Group, Universities UK and the CMU in keeping us fully informed on the relevant issues and abreast of opinion among the colleges and universities.

I am aware that there is much which needs further qualification, and I am sure that the noble Lord, Lord Dearing, will speak in a moment on exactly what ensuring progression will entail. I regret that we have run out of time to discuss the matters in this House before the Government have been able to iron out these details. However, I look forward to reading the debates as the Bill passes through another place, and feel considerable satisfaction at what we in this House have achieved.

Lord Dearing
My Lords, I apologise for my tardiness in arriving—I am just in time, I hope.

I welcome the revised criteria for foundation degree-awarding powers that the Minister circulated yesterday afternoon. I found them extremely helpful. I got off to a very good start in my reading; when we last debated Clause 19, I asked that students be consulted, which the Government kindly conceded. I dared go on to suggest that it would be nice if the results of that consultation were passed on to the QAA and I see in these notes that it shall be so. My thanks for that.

The franchising issue, on which I have put down an amendment for the third time, is one of substance. I was concerned only for clarification and found the notes circulated yesterday very helpful. For example, I greatly welcome the clear statement that the college with foundation degree-awarding powers will be responsible for the quality of the award and of the learning experience wherever the learning takes place. That was a major issue. The notes went on to say that the QAA will have a look at the arrangements that the college has in place for monitoring the equality of provision of its foundation degrees, whether they happen in the institution or elsewhere. For me, that was a welcome clarification.

I was glad to see that the QAA will not accept the teaching of students enrolled at the applicant institution in an overseas institution—another major point—or the enrolment of significant numbers of foundation degree students at the applicant institution who are taught at an institution that does not have degree-awarding powers.

Finally, a point I had not completely understood became clear in these notes. During the six-year probationary period, a college granted degree-awarding powers will not be allowed to authorise another institution to make awards on its behalf, nor will it be permitted to make awards to students enrolled at another institution. I thank the Minister for those important clarifications.

The biggest issue was progression, which is the subject of my first amendment. We have all been concerned about that because of the interests of the student, who needs to be satisfied that there are good arrangements with at least one HE institution for progression to a full degree. That needs to be included in the Bill. I was glad to hear the Minister say on Report that he was willing to think about that and he confirmed it in his letter to me.

I like what I read in the notes circulated on 14 February, but it is an important reassurance to all of us who have an interest in the standing of the British brand of degree—everyone in this House shares that concern—that there should be some coverage in the Bill relating to that matter. I agree entirely that the Bill is not the place to set out any details—that should be left to the guidance that the Government give to the QAA and the QAA’s own wisdom and policies—but to have something in the Bill would be valuable. I notice that the Association of Colleges, while recognising the importance of the issue, would prefer not to include something in the Bill. I may understand that view, but I happen not to agree with it. The colleges raised one point in particular—whether a college should get a progression agreement before launching a foundation degree rather than afterwards. I say yes—it should get it in advance.

I will listen with hope to what the Minister has to say and shall review what he has previously said, and may we depart in peace thereafter.

Baroness Walmsley
My Lords, I start by echoing the thanks of the noble Baroness, Lady Morris of Bolton, to all the organisations that have briefed us during our consideration of the Bill. We on these Benches have moved somewhat from our original position because we have listened to the well informed briefings that we received. However, there remain to the last minute a number of concerns. From the start, we have supported the noble Lord, Lord Dearing, in his efforts on the various things that he just outlined. I also echo his welcome for the ways in which the Government have moved on the issue of franchising and the various safeguards that have been put in place. We are very pleased to see those in the revised version of the draft criteria for foundation degree-awarding powers that we recently received.

However, we share the concerns of the noble Lord, Lord Dearing, about progression. I notice that paragraph 35 of the revised draft criteria about flexibility states: “These requirements may include”—I emphasise “may include”—

“flexible progression routes, including links with other professional awards and with at least one identified honours degree programme”.

Like the noble Lord, Lord Dearing, we would prefer to see a requirement in the Bill. I notice that at the end of the first section of the draft criteria, the Minister says:

“The Government is reflecting further on whether a requirement for FE institutions that gain the power to award foundation degrees to put arrangements in place for students to progress to full Honours degrees should be included in primary legislation”.
 

We on these Benches still feel that at least one progression arrangement should be included in the Bill, and we hope that the Minister will be able to assure us today as to what the Government intend to do about it.

Like the noble Lord, Lord Dearing, we believe not only that it is important that at least one progression path should be available, but that it is desirable for a whole lot of partnerships to be in place. However, the fact that there is at least one university prepared to accept the foundation degree delivered in this college as an appropriate foundation to move on, after another 1.3 years of study, to that university’s honours degree is a valuable endorsement from that university about the quality of the foundation degree in question. That is an important aspect of this whole issue and it is part of the reason why we would prefer to see it included in the Bill.

16:30:00

Baroness Warwick of Undercliffe
My Lords, I support the amendment tabled in the name of the noble Lord, Lord Dearing, to which I have added my name. I declare an interest as chief executive of Universities UK.

It would be remiss of me not to say that it remains my view that it is a mistake to extend foundation degree-awarding powers to colleges, but the Government have made some very important improvements to the Bill during Report. As the noble Lord, Lord Dearing, said, the Minister has very helpfully provided additional information alongside our debates in the form of draft guidance and an explanation of how the measures outlined in what is now Clause 17 will work. That detail has provided substantial reassurance to those of us who have serious concerns about the likely impact of these measures.

The amendment asks the Government to go further in two respects, the first being to make it plain in the Bill that securing progression arrangements will be a prerequisite for colleges wishing to apply for their own foundation degree-awarding powers. We have debated the importance of this issue at length in this House, and I do not need to rehearse the arguments that the noble Lord has already made.

The second issue is franchising. I appreciate the improvements that the Minister has already made to the Bill by giving the Privy Council the power to grant foundation degree-awarding powers without the power to franchise provision. I understand the approach that he has taken, which is to suggest that this power be withheld for the probationary period of six years, set out in the draft criteria for the new degree-awarding powers. I understand, too, that there would be nothing to compel the Privy Council to upgrade the degree-awarding powers after the six-year probationary period if there were doubts about a college's ability to manage the complex and difficult business of supporting quality provision in a third-party institution. However, my own view is that the Government have not yet gone quite far enough. Again, I do not think that this is the time to rehearse the arguments at length, but will the Minister think again about a more permanent safeguard against the very substantial risks to quality and perceptions of quality to which the noble Lord referred? I remind the House that franchising powers extend to international provision, which has significant implications for our reputation abroad.

I am convinced, too, that it would not be in the Government's interest or consistent with the policy aim set out when this Bill was first published if foundation degrees became a signature FE qualification, with a small number of large colleges franchising provision in smaller colleges on a large scale, with the possible result that for reputational reasons, higher education institutions no longer wanted to offer the qualification themselves.

I add my thanks to the Minister and his colleagues in another place for the way in which they have helped us through this Bill and conducted very detailed consultation with all those of us who have been and remain concerned about the Bill. I add my thanks to those of other noble Lords.

Lord Bilston
My Lords, the Further Education and Training Bill presents the first major opportunity in seven years to debate legislation that concentrates on learning and skills. It builds on the very welcome commitment that this Government have shown to our further education colleges and the work that they do. This commitment has been richly rewarded with overall success rates in colleges rising from 59 per cent to 72 per cent between 2001 and 2004.

The most important proposal in the Bill is to allow colleges to award their own foundation degrees rather than having to do so via a university. I am delighted that the Government have decided to recognise the excellent work that colleges do in the provision of higher education. Let us face it—without colleges, the 50 per cent target for young people in higher education could not be achieved. I am sure the House will recognise that foundation degrees have been an excellent addition to the range of qualifications available.

Most colleges are working extremely successfully with universities in providing foundation degrees and will probably have no desire to break away from those relationships. In fact, colleges have collaborated with schools, employers and universities for years and this will always remain their first instinct. For instance, the City of Wolverhampton College is working with the University of Wolverhampton to provide foundation degrees for 96 students this year. These cover six different areas, including community health and social care, engineering and broadcast journalism. The businesses they work with range across the public and private sectors to include Goodyear, Turner Powertrain, the Express & Star and Sandwell Hospital. The college is certain that foundation degrees have been a great success and envisage that the close working relationship with the university will continue as they seek to develop more foundation degrees. However, it is important that, where they need to, colleges, including the City of Wolverhampton College, are able to apply for their own right to award foundation degrees.

I am delighted that this House agreed to what was Clause 19 without a vote on Report and that Peers agreed that the government amendments were helpful additions to the Bill. I am sure that there will be further discussions but the important principle should remain—that colleges with the necessary expertise and experience should be able to apply for foundation degree-awarding powers.

With regard to another controversial aspect of this Bill on Report, the House took the decision to delete Clauses 17 and 18, which would have given the Learning and Skills Council and the Welsh Assembly Government power to dismiss senior postholders in colleges. I know that my noble friend the Minister will be disappointed with this decision, although I indicated the strength of concern about these proposals to my honourable friend the Further Education Minister in another place at a meeting of our All-Party Parliamentary Further Education Group before the Bill was introduced in this House. These arguments were well rehearsed in Grand Committee and on Report, but I add my own brief thoughts.

The Secretary of State currently has the power to remove members of college governing bodies under the Further and Higher Education Act 1992. This Bill transfers these powers to the Learning and Skills Council but also adds to the powers by allowing the LSC to dismiss senior college postholders.

The Government seem to have an enthusiasm for transferring their responsibilities to quangos such as the Learning and Skills Council. I ask this more in sorrow than in anger but why, when we campaigned so hard for so many years to get back into government, are we handing over so many responsibilities and key decisions to people with no democratic accountability?

In saying this, however, I would not be completely enamoured with the idea of the Secretary of State having a power to dismiss a college principal or other senior postholder. Of course, he has a responsibility to ensure that taxpayers’ money is well spent, but a lot of money also goes into other areas of the public sector. For example, should we expect a proposal for the Secretary of State to dismiss university vice-chancellors? I think not.

A relevant paragraph of the further education White Paper has been quoted before in this House but it is worth quoting again:

“A college, led by its governing body, is responsible for determining its own mission, managing its own affairs, meeting its statutory responsibilities and managing its own performance”.
 

I agree with that. If and when Ministers bring forward amendments to replace the clauses that this House deleted, I ask that they address the concerns that noble Lords have raised. In particular, we must avoid passing bad law which results in the only winners being lawyers.

In conclusion, I ask noble Lords, if they have not already done so, to visit their local further education and sixth-form colleges to see their excellent and often unsung work. Colleges truly do change people’s lives. In Wolverhampton, I have seen lives literally transformed by the local college—mothers returning to work, youngsters who failed their GCSEs returning to education, adults achieving a lifetime ambition of running their own business, and more personal fulfilment than in any other area of our education system.

Lord Sutherland of Houndwood
My Lords, I apologise for not being in the House at the start of this short debate. There were good reasons for that, but they are not sufficiently good for me to detain noble Lords by elaborating. I apologise and hope that I may make two comments.

The first is to thank the Minister for the characteristic thoroughness and courtesy with which he listened to points made and dealt with them in discussion outside the Chamber. Secondly, I wish simply to emphasise that Amendment No. 2 is important for the reputation of British degrees. The buccaneering spirit is alive and well in the world of education—further, higher and elsewhere—and as long as that is the case, there need to be tight constraints on the whole business of franchising. The stronger they are, the safer our future heritage.

The Parliamentary Under-Secretary of State, Department for Education and Skills (Lord Adonis)
My Lords, there are occasions in life where absence is more eloquent than presence, and I took the absence of the noble Lord, Lord Dearing, to indicate such wholehearted agreement with the Government in their endeavours in this area that he did not even feel the need to be present to move his amendments. However, the noble Baroness, Lady Darcy, stepped in at the last moment to ensure that we could have this debate and I was not able to get away with the Third Reading taking only 10 seconds—which was my expectation at the beginning.

First, I echo the tribute made by my noble friend Lord Bilston to the work of the further education sector, which does absolutely outstanding work in communities up and down the country, and this Bill will enable that sector to flourish still further. I also pay tribute to the work of the noble Lord in the further education group in this House, which does a great deal to raise the flag for further education. I reciprocate the compliments and thanks given to the Government by the noble Baroness, Lady Morris, on behalf of her and her colleagues, and the noble Baroness, Lady Walmsley. The three parties have been engaged in a highly constructive process to get the best legislation we can to enable our further education colleges to develop their missions to serve their local communities more effectively. I thank other noble Lords, including the noble Lords, Lord Dearing and Lord Sutherland, and my noble friend Lady Warwick, who wears a double hat in these debates. She sits behind me in more senses than one, watching what I do in relation to reforms that affect universities, and she very properly safeguards their interests vigilantly.

I shall divide my remarks into two and speak first on articulation and progression, raised by the amendments of the noble Lord, Lord Dearing. For many students taking foundation degree programmes, the qualification will represent the first step of a higher education career. It is essential that all students have the assurance that their qualification will allow them to progress to further, higher-level study; and that is why the articulation agreements that form a core part of all foundation degree programmes are so vital, wherever they are delivered. The draft criteria for foundation degree-awarding powers, which I circulated to the House yesterday, make that very clear.

Paragraph 30 of section 3 states:

“Clear routes that facilitate opportunities for successful progression from Foundation Degrees towards another qualification are an important feature of Foundation Degrees. Such routes should be established when Foundation Degrees are validated, and identify the link(s) between the Foundation Degree and other qualification(s)”.
 

We have given a good deal of thought in response to the earlier debates in the House to whether there should be a statutory underpinning for progression. In response to the arguments made in our earlier debates, the Government have concluded that a statutory requirement about progression arrangements would be an additional means of building the confidence that both learners and institutions can place in the foundation degree and ensuring that the interests of learners are kept at the forefront. We therefore intend to bring forward a government amendment in another place to address progression.

16:45:00

Our aim is to frame an amendment flexible enough to ensure that the criteria are able to evolve over time. It is also extremely important that in adopting this approach we should not inadvertently impose unnecessary restrictions or obligations on institutions. New degree courses are constantly being devised, and some students may not wish to progress directly on to further study once they have completed their foundation degree. We need to take account of that. We would also be concerned to ensure that the amendment does not have a prescriptive effect on the admissions policies of higher education institutions, which are of course independent. We would therefore consult widely on the form of an amendment which underpins progression but which meets the other points I have just made. I hope that this undertaking is sufficient for the noble Lord, Lord Dearing, to feel able to have his amendment withdrawn.

The proposals on foundation degree awarding powers were amended on Report to enable the Privy Council to specify restrictions on how a further education institution may exercise these powers. One of the restrictions is that a further education institution with the power to award foundation degrees may not authorise other institutions to award foundation degrees on its behalf. The other restriction is that the further education institution may only award foundation degrees to students enrolled at that institution at the time they complete the relevant course of study.

The revised QAA draft criteria document that I have circulated to noble Lords specifies that if an institution has been granted this restricted category of foundation degree awarding powers, it is unacceptable for that institution to delegate a significant level of provision to another FE institution without foundation degree awarding powers. The revised criteria also make clear that suitably rigorous controls will be in place to ensure the standard of provision wherever it is delivered, and that includes the workplace.

Only after a probationary period of at least six years, when the QAA is satisfied that an FE institution with degree awarding powers has developed a robust track record in awarding its own foundation degrees, would the QAA be in a position to recommend to the Privy Council that the FE institution’s powers be upgraded to include the power to award foundation degrees to students enrolled at other institutions and the power to authorise other institutions to award foundation degrees on its behalf.

The noble Lord, Lord Dearing, is rightly concerned to maintain high standards while accepting the principle of further education institutions having foundation degree awarding powers beyond the six-year period. During the initial six-year probationary period, an FE institution that is granted foundation degree awarding powers will be expected to establish strong quality-assurance credentials. The QAA will carry out an interim review of the institution’s provision during the six-year period, which will give early warning of any possible area of concern. There will of course be a full assessment at the end of the six years of an application for renewal, if one is made.

This means that the institution will have satisfied quality-control checks at three separate points: during the initial application, at the interim review, and with the application for renewal of the powers. However, let me provide reassurance beyond the six-year period. The QAA will continue to play an audit role in relation to the institution thereafter. If the institution is judged inadequate, it will not achieve a judgment of broad confidence from the QAA. Judgments of limited confidence or no confidence would have very serious and adverse consequences for the institution’s reputation. Furthermore, the independent report on the effect of Clause 17, which we have undertaken to publish and lay before Parliament, could consider franchising. We propose to publish draft terms of reference for this report and will be happy to look at suggestions as to how they can be improved, including whether franchising should be a specific term of reference in that review. I stress that the inquiry is now to be independent; we took that decision in response to the point that my noble friend Lady Blackstone made on Report. I confirmed that in my correspondence with her. My honourable friend Bill Rammell, the Minister for Lifelong Learning, Further and Higher Education, is prepared to repeat this commitment on the record in the other place.

Having said all that, I hope that the noble Lord, Lord Dearing, will feel that his concerns have been addressed. In conclusion, I pay tribute to him personally for all his work to enable a consensus to be formed in this important area.

Lord Dearing
My Lords, how could I resist such an invitation to have my amendment withdrawn? I am grateful to the noble Baroness for holding the fort until I arrived; that enabled us to hear the Minister’s response. We came with great expectations, and we were not disappointed. I assure the Minister that we will give him every possible help in drafting the amendment that he promised us and I thank him very much.

Baroness Darcy de Knayth
My Lords, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 2 not moved.]

Clause 19 [Powers of a further education corporation to form or be involved in certain bodies corporate]:

Lord Adonis
moved Amendment No. 3:

3: Clause 19 , page 13, line 32, at end insert—
 “( ) In subsection (4C), after “subsection (4)(bb) above” insert “or the power conferred by subsection (4)(bc) above”.”

The noble Lord said: My Lords, this is a minor, technical amendment to Clause 19 to ensure that companies and charitable incorporated organisations are treated equally in Section 19 of the Further and Higher Education Act.

Our intention is to enable further education institutions to collaborate with a range of partners, including schools, universities and others, to develop flexible and innovative models of delivery which will improve quality across the system, increase learner choice and enable efficiencies. Further education corporations may form or join companies and charitable incorporated organisations. In the case of companies that are to deliver publicly funded education, this has to be with the agreement of the relevant funding body. As drafted, the Bill does not permit institutions to form charitable incorporated organisations for the purposes of delivering publicly funded education at all. It was always our intention that this power should be available to further education corporations. The amendment ensures that companies and charitable incorporated organisations are treated in the same way. I beg to move.

On Question, amendment agreed to.

Clause 25 [Powers of National Assembly for Wales]:

Lord Adonis
moved Amendment No. 4:

4: Clause 25 , page 17, line 41, leave out from beginning to “insert—” in line 42 and insert—
 “( ) Part 1 of Schedule 5 to the Government of Wales Act 2006 (c. 32) (Assembly Measures) is amended as follows.
 ( ) In field 5 (education and training), after matter 5.10”

The noble Lord said: My Lords, I shall speak also to Amendments Nos. 5 and 6.

Clause 25 enhances the legislative competence of the National Assembly for Wales in a number of policy areas in the field of further education and training. These are listed as matters to be inserted into field 5 of Schedule 5 to the Government of Wales Act 2006. This is a minor, technical amendment that changes the wording, but not the effect, of Clause 25. A draft Order in Council, which converts framework powers in the Education and Inspections Act 2006, has been laid before the National Assembly for Wales. This conversion order inserts matters into field 5 of Schedule 5 to the Government of Wales Act 2006, and so does Clause 25. This amendment ensures that the wording of the matters to be inserted into field 5 under Clause 25 is consistent with the wording of the matters to be inserted into field 5 under the conversion order.

The matters listed in Clause 25 will also need to be renumbered to ensure consistency with the conversion order. That will be done on printing. I beg to move.

On Question, amendment agreed to.

Lord Adonis
moved Amendments Nos. 5 and 6:

5: Clause 25 , page 18, line 50, leave out from “services” to end of line 6 on page 19 and insert “of the kinds mentioned in matter 5.8.”

6: Clause 25 , page 19, leave out lines 11 to 14 and insert—
 “( ) In that field, immediately after the heading “Interpretation of this field”, insert—
 “In this field—”

On Question, amendments agreed to.

Clause 30 [Commencement]:

Lord Adonis
moved Amendment No. 7:

7: Clause 30 , page 20, line 28, leave out subsection (3)

The noble Lord said: My Lords, I shall speak also to Amendments Nos. 8 to 10. These amendments are required as a consequence of the removal of the clauses covering intervention powers in both England and Wales. They will ensure that the Bill is in the correct working order before its introduction to the other place. I beg to move.

On Question, amendment agreed to.

Schedule 1 [Amendments]:

Lord Adonis
moved Amendment No. 8:

8: Schedule 1 , page 23, line 24, leave out paragraph 9

On Question, amendment agreed to.

Schedule 2 [Repeals]:

Lord Adonis
moved Amendments Nos. 9 and 10:

9: Schedule 2 , page 24, leave out line 40

10: Schedule 2 , page 25, leave out lines 15 and 16

On Question, amendments agreed to.

An amendment (privilege) made.

Lord Adonis
My Lords, I beg to move that this Bill do now pass.

Moved accordingly, and, on Question, Bill passed, and sent to the Commons.

Legal Services Bill [HL]

16:55:00

The Parliamentary Under-Secretary of State, Department for Constitutional Affairs (Baroness Ashton of Upholland)
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.]

Lord Kingsland
moved Amendment No. 139FA:

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.

Lord Maclennan of Rogart
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.

17:00:00

Baroness Ashton of Upholland
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.

Lord Kingsland
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.

Baroness Ashton of Upholland
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.

Lord Kingsland
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]:

Baroness Ashton of Upholland
moved Amendment No. 139G:

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.

Lord Kingsland
moved Amendment No. 139H:

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.

17:15:00

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.

Lord Maclennan of Rogart
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.

Lord Campbell of Alloway
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.

Lord Mackay of Clashfern
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.

Baroness Ashton of Upholland
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.

17:30:00

Lord Campbell of Alloway
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?

Baroness Ashton of Upholland
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.

Lord Campbell of Alloway
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?

Baroness Ashton of Upholland
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.

Lord Kingsland
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.]

Lord Kingsland
moved Amendment No. 142A:

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.

Baroness Ashton of Upholland
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.

17:45:00

Lord Maclennan of Rogart
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?

Baroness Ashton of Upholland
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.

Lord Kingsland
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.

Baroness Ashton of Upholland
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.

Lord Kingsland
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.]

Lord Kingsland
moved Amendment No. 142B:

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.

Lord Maclennan of Rogart
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.

Baroness Ashton of Upholland
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.

18:00:00

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.

Baroness Carnegy of Lour
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?

Baroness Ashton of Upholland
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.

Lord Kingsland
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.

Baroness Ashton of Upholland
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.

Lord Kingsland
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]:

Lord Kingsland
moved Amendment No. 148A:

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.

Baroness Ashton of Upholland
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.

18:15:00

Lord Kingsland
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.

Lord Kingsland
moved Amendment No. 149:

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.

Baroness Ashton of Upholland
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.

Lord Kingsland
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.

Baroness Ashton of Upholland
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.

18:30:00

Lord Kingsland
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.

Baroness Ashton of Upholland
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.

Lord Kingsland
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]:

Lord Kingsland
moved Amendment No. 149ZA:

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.

Baroness Ashton of Upholland
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.

Lord Kingsland
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.

Baroness Ashton of Upholland
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.

Lord Kingsland
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.

Baroness Hamwee
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.

Baroness Ashton of Upholland
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.

Lord Kingsland
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.

Lord Kingsland
moved Amendment No. 149ZB:

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.

18:45:00

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.

Lord Thomas of Gresford
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.

Baroness Ashton of Upholland
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.

Lord Kingsland
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.]

Lord Kingsland
moved Amendment No. 149ZE:

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.

Baroness Ashton of Upholland
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.

Lord Clinton-Davis
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.

Baroness Ashton of Upholland
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.

Lord Kingsland
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.

Lord Clinton-Davis
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?

Lord Kingsland
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.]

19:00:00

Lord Kingsland
moved Amendment No. 149ZM:

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.

Baroness Ashton of Upholland
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.

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

Amendment, by leave, withdrawn.

Lord Kingsland
moved Amendment No. 149ZN:

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.

Baroness Ashton of Upholland
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.

Baroness Carnegy of Lour
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?

Baroness Ashton of Upholland
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.

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

Amendment, by leave, withdrawn.

Lord Evans of Temple Guiting
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.]

Lord Kingsland
moved Amendment No. 149A:

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.

Baroness Ashton of Upholland
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.

Lord Kingsland
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.]

Lord Kingsland
moved Amendment No. 149C:

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.

Baroness Ashton of Upholland
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.

Lord Kingsland
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.]

19:45:00

Lord Kingsland
moved Amendment No. 150:

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.

Baroness Ashton of Upholland
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.

Lord Kingsland
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.]

Lord Kingsland
moved Amendment No. 150ZA:

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.

Baroness Ashton of Upholland
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.

Lord Kingsland
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.

20:00:00

Lord Kingsland
moved Amendment No. 151:

151: After Clause 173, insert the following new Clause—
 “BarristersBarristers
 (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.

Baroness Butler-Sloss
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.

Lord Borrie
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.

Lord Neill of Bladen
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.

Lord Thomas of Gresford
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.

20:15:00

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.

Baroness Ashton of Upholland
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

Lord Thomas of Gresford
I think that the noble Baroness has just invited herself to four Inns of Court.

Baroness Ashton of Upholland
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.

Lord Kingsland
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.

Baroness Ashton of Upholland
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.

Baroness Butler-Sloss
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.

Baroness Ashton of Upholland
The point is well made, and well taken. That is why we need to take the issue away and get it right.

Lord Kingsland
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]:

Lord Kingsland
moved Amendment No. 151ZA:

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.

Baroness Ashton of Upholland
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.

Lord Kingsland
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]:

Baroness Ashton of Upholland
moved Amendment No. 151A:

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]:

Baroness Ashton of Upholland
moved Amendment No. 151B:

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.

20:30:00

Clause 178 [Immigration advisers and immigration service providers]:

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

Lord Kingsland
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?

Baroness Ashton of Upholland
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.

Lord Kingsland
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]:

Lord Kingsland
moved Amendment No. 151C:

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.

Lord Thomas of Gresford
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.

Lord Lyell of Markyate
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.

Baroness Ashton of Upholland
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.

Lord Kingsland
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.

20:45:00

Baroness Ashton of Upholland
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?

Lord Kingsland
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?

Baroness Butler-Sloss
Are barristers employed in public service by government treated differently from solicitors employed in public service by government?

Lord Thomas of Gresford
Before the noble Baroness answers that, did I hear her say that the cost would be only £158,000?

Baroness Ashton of Upholland
£850,000!

Lord Thomas of Gresford
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?

Lord Lyell of Markyate
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.

Baroness Ashton of Upholland
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.

Lord Kingsland
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]:

Lord Kingsland
moved Amendment No. 151CA:

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.

The Attorney-General (Lord Goldsmith)
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.

21:00:00

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.

Lord Kingsland
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?

Lord Goldsmith
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.

Lord Kingsland
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]:

Baroness Ashton of Upholland
moved Amendment No. 151D:

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]:

Baroness Ashton of Upholland
moved Amendment No. 151E:

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.]

Lord Thomas of Gresford
moved Amendment No. 152:

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.]

Lord Thomas of Gresford
moved Amendment No. 153:

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.]

Baroness Ashton of Upholland
moved Amendment No. 155A:

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]:

Lord Neill of Bladen
moved Amendment No. 157ZA:

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.

Baroness Butler-Sloss
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.

Lord Thomas of Gresford
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.

Lord Kingsland
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.

Baroness Ashton of Upholland
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.

21:30:00

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.

Lord Neill of Bladen
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.

Lord Lyell of Markyate
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.

Lord Neill of Bladen
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]:

Lord Kingsland
moved Amendment No. 157A:

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.

Lord Thomas of Gresford
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.

Baroness Ashton of Upholland
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—

Lord Thomas of Gresford
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?

Baroness Ashton of Upholland
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.

Lord Kingsland
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.