asked Her Majesty's Government:

What response they have made to the consultations on the monitoring of the Organisation for Economic Co-operation and Development anti-bribery convention.

My Lords, the Government have participated fully in the first phase of the monitoring process of the OECD Convention Combating Bribery of Foreign Public Officials. We shall consider carefully, in the context of the reform of UK legislation on corruption, how best to ensure that UK law is as effective as possible in the fight against corruption in international trade.

My Lords, I thank the Minister for that Answer. Is he aware that the United Kingdom branch of Transparency International, an organisation that carries out good work in this area, strongly believes that, in order for the United Kingdom Government properly to fulfil their obligations, there ought to be a relatively simple amendment made to our domestic law in the area of corrupt practices that would enable British citizens who commit an act of bribery overseas to be prosecuted in this country?

My Lords, the Government are determined to tackle corruption. We have played a leading role in the negotiation of the convention. Last year we were among the first to ratify the convention. The convention, of course, requires that we review the existing jurisdictional basis of legislation in order to judge whether it is effective in combating international bribery. We shall do that as part of the review that the Home Office is conducting into existing anti-corruption legislation.

My Lords, will the Minister undertake to look at the audit carried out in December into legal compliance by British legislation and, having done so, will he report to the House? As president of Transparency International, I hear that that audit is highly critical of the UK's efforts so far. While I accept that the Minister and perhaps his colleagues in the Home Office are doing their best, it will not help us to continue our lead role if there is a highly critical audit of our progress to date.

My Lords, we have already looked at that audit and we take it most seriously. It will form part of the review and we shall take any appropriate action.

My Lords, will the Minister answer the Question posed by my noble friend? Are the Government willing or not to take control over acts of bribery committed by British citizens in foreign countries and to criminalise them in our courts?

My Lords, we are carrying out the review for that reason. If, in the spirit of prevention, that will improve the effectiveness, yes, in principle we shall do so. We are asking the working party to look at the mechanics.

My Lords, will the Government publish the audit that was mentioned by my noble friend Lady Chalker so that we can all see what it says?

My Lords, at the moment we cannot report the outcome of the recent examination by the OECD working group on bribery into our anti-bribery legislation because all signatories to the OECD convention have agreed not to make public the outcome of a phase one examination until after the OECD ministerial meeting in May.

asked Her Majesty's Government:

When they will propose to Parliament that a Joint Committee to consider the report of the Royal Commission on reform of the House of Lords should be appointed.

My Lords, as the House is well aware, the Royal Commission report was published just four days ago. In common, I expect, with many other Members of the House, over the weekend I spent some interesting hours reading it. It contains a wide-ranging and complex set of recommendations which deserve and will receive from the Government proper consideration.

We have said that a Joint Committee will be appointed to consider the parliamentary aspects of implementing any proposed reform. We expect to set that up once more detailed positions have been reached. I hope that those detailed positions may be reached in conjunction with other political parties on the policies and procedures for achieving the next stage of change.

My Lords, in thanking the Leader of the House for her somewhat uninformative reply, I ask for three undertakings: first, that this House will shortly have an opportunity to debate the Wakeham Commission report; secondly, that the Joint Committee will be set up and start work within a reasonable time—by that I mean certainly not later than the end of March—and, thirdly, that the remit of the Joint Committee will not be restricted simply to considering the proposals in the report, which many of us regard as deeply flawed?

My Lords, I can certainly give an absolutely categorical assurance about the debate. I believe that my noble friend the Chief Whip, through the usual channels, has already discussed the possibility of such a debate. Last week, before the report was published, I wrote to the noble Lord the Leader of the Opposition, who has specifically requested a debate, saying that that would follow the report of the Royal Commission.

On the timing of the setting up of the Joint Committee, I can go no further than my original reply. I am sorry that the noble Lord regards it as uninformative. It was intended to set an appropriate context for the establishment of the Joint Committee. That refers to the third point raised by the noble Lord about the agenda for the Joint Committee. We said in our White Paper on House of Lords reform, published approximately a year ago, that the Joint Committee would be established in order to consider the parliamentary aspects of any reform. We stand by that. The noble Lord's understanding of "reasonable time" being by the end of next month is perhaps slightly more optimistic than my own.

My Lords, does my noble friend agree that it is important to read the report? Am I correct in thinking that volume two will contain a lot of interesting suggestions and evidence that are not yet in printed form? When I collected volume one it contained a disk at the back, which is useful, but not entirely so for my purposes.

My Lords, I cannot answer for the mechanisms of the Royal Commission on the printing or publishing of its evidence and findings. As I understand it, the CD-ROM to which my noble friend refers is intended to be the basis for public consumption of the report.

My Lords, I cannot be the only one who found it difficult to understand what the noble Baroness the Leader of the House meant in her first reply. It was my understanding that the Joint Committee of both Houses, announced in the White Paper as long as a year ago, would automatically follow the publication of the Royal Commission's report. What strikes me this afternoon is that the noble Baroness is saying that it will only deal with the parliamentary aspects of the conclusions and not the wider issue of reform of this House.

Secondly, while I am on my feet, may I ask the noble Baroness what happened to the appointments commission? That was announced a year ago and in November the noble Baroness said that it was to be set up imminently. May I ask also whether there has been discussion of these matters in the Cabinet?

My Lords, the answer to the third question is yes. Perhaps I can go backwards. I believe one of the conventions of this House is that one does not normally answer more than two supplementary questions but as they are relatively straightforward in the noble Lord's case, I am happy to do so. On the question of the appointments commission, the noble Lord may have noticed the announcement by the Cabinet Office last week that PriceWaterhouseCoopers was appointed as a result of the tendering exercise to assist the Cabinet Office in the appointment and recruitment of the independent members of the appointments commission. The Secretary of the Cabinet is even now finalising the advertisements for the positions, which will soon be made public.

As to the nature of the Joint Committee following the Royal Commission, I am sure the noble Lord will recall our many debates during the passage of the House of Lords Bill on precisely what form the committee might take in the light of the report of the Royal Commission. I am sure he will also recall that in our White Paper we made specific reference to the committee looking at the parliamentary aspects of any reform. That is what I referred to in my original Answer.

My Lords, does my noble friend agree that it is important that, whenever the Joint Committee is set up, there will be need for its representatives to know the views of your Lordships? Should we have a debate before it is set up?

My Lords, my noble friend makes reference to a point about which I was obviously somewhat obscure in my original reply, given the nature of the two supplementary questions. Of course, there should be a debate. I thought I had made that clear in my response to the noble Lord, Lord Goodhart. On the question of your Lordships' views, that is precisely what I meant when I said it would be helpful to take the discussion of the Royal Commission forward in the context, as the Government have always said, of trying to achieve some basic consensus of an agenda for a Joint Committee.

My Lords, the noble Baroness has been good enough to explain how the independent members of the appointments commission will be found by PriceWaterhouse. Is she able to tell the House what guidance PriceWaterhouse has been given in relation to the type of member and whether any can be found from this House or all found from this House?

My Lords, I did not say that the process had been handed over to PriceWaterhouse. What I said, and I repeat, is that that company has been appointed to assist in the recruitment of the chairman and independent members of the House of Lords appointments commission. In colloquial language, it is acting as a professional headhunter in this area, which will be extremely useful. It is important to remember that it is looking at the independent members of the commission. They will be joined by those nominated by the political parties.

My Lords, will the noble Baroness clarify something she said regarding the circumstances which will lead to the setting up of the Joint Committee of both Houses. In the first instance, the noble Baroness referred to policies and procedures: later, she referred to an "agenda". Those are very different things. I am a little concerned by her suggestion, if I understand her right, that there may be some object in getting common ground before the committee meets. The noble Baroness shakes her head. I took for granted that the terms of reference of the Joint Committee were stage two reform of the House—nothing narrower than that.

My Lords, the noble Lord, Lord Rodgers, is obviously not aware of what is said in the White Paper. As I tried to outline in my response to the noble Lord, Lord Goodhart, it is that, given the establishment of the wide-ranging review of House of Lords reform that the Royal Commission undertook, it is not appropriate, in the Government's view, to invite a subsequent approach on that wide basis. That is why we said in the White Paper that we would ask the Joint Committee to look at the parliamentary aspects of implementing any reform. The Government do not feel that it would be appropriate to invite another, new type of Royal Commission drawn from within the Palace of Westminster to look at precisely the same issues as the noble Lord, Lord Wakeham, and his colleagues usefully spent the past year doing.

My Lords, does my noble friend the Minister agree that it is very kind and considerate of the noble Lord, Lord Goodhart, to give such advance notice of the new targets and aspirations of Charter 88 and the chattering classes?

My Lords, my noble friend characterises the position of the noble Lord, Lord Goodhart, in slightly acerbic terms, but perhaps they do derive from that particular environment.

My Lords, can the noble Baroness tell me why this particular firm has been appointed? My understanding is that it consists of accountants, not headhunters.

My Lords, I am afraid the noble Baroness is slightly misinformed. It is indeed a firm of accountants, but a very important part of its business focuses on recruitment consultancy. After a tendering exercise, in which I as a Minister was not involved, this firm is the one that has been invited by the Cabinet Office to offer its professional advice in the area.

My Lords, given the fact that we are talking about reform of the people's Parliament, the fact that the noble Baroness the Leader of the House said a year ago in answer to my question that she would ensure that there was,

"a campaign of public information and consultation",

around the reform issue and the fact that there were only seven meetings held by the commission out of London none of which was advertised—drawing attendances below 100, can the noble Baroness give any indication as to whether the Government plan, even now, to engage in a thorough-going, public consultation and information exercise?

My Lords, I am surprised by the noble Lord's question and the assumptions on which he bases it in relation to the activities of the Royal Commission. From reading the report and the interviews and bearing in mind the context in which the noble Lord, Lord Wakeham, expresses the findings, I understand that he feels there was very good public consultation. Indeed, I know for a fact that local commission meetings were publicised. I believe that the Government were the only political party that had a very structured consultation procedure within the party to produce the evidence that we submitted to the Royal Commission.

My Lords, does the noble Baroness not feel that it is a reflection on the dignity and sovereignty of Parliament to ask a commercial firm to choose people for a constitutional commission? Does that worry her?

My Lords, if I may say so, I believe that the noble Lord and others who have raised points on the relationship of PriceWaterhouseCoopers have misunderstood the position. I shall be a little clearer about it. The Cabinet Office was very concerned about the nature and breadth of the recruitment process for this very important constitutional role, which the noble Lord quite rightly identified. In addition to the normal processes of going through the public appointments lists and the list of the Cabinet Office, it seemed sensible to invite a more positive approach in terms of going out to recruit people in the headhunting sense—which, I have to say, is not unconventional in relation to public appointments of many kinds—to see whether a wider trawl could be achieved. Had the Cabinet Office or the Government said, "We have appointed X to be the chairman of this committee", without any reference to a wider body, I suspect that we would no doubt have been accused of "cronyism", if I may use that word.

asked Her Majesty's Government:

What representations they have received about their proposal to change the name of the Probation Service to the "Community Punishment and Rehabilitation Service".

My Lords, to date a total of 60 written representations have been received from Members of Parliament, the National Association of Probation Officers, Probation Service staff, probation committee chairs and members of the public. In addition, representatives of the Association of Chief Officers of Probation and the Central Probation Council have raised the issue in discussions with Home Office Ministers.

My Lords, I thank the Minister for that reply, although it did not tell us what those representations said. However, I can guess. This Government have acquired quite a reputation as a name changer, but does the Minister agree that not much good is done in the real world by altering the labels on people's official notepaper and on their office doors? There is a good deal of resentment, even ridicule, about this particular proposal. If the Government are determined for reasons of show to alter the respected, and I believe accepted, name of the Probation Service, could they not happen on something a little crisper and less clumsy than what is now proposed?

My Lords, I respect the noble Lord's great knowledge in this area but we take a different view. As a member of the previous government, the noble Lord will be well aware that they were happy to see the Probation Service as simply assisting and befriending offenders. We take a rather different view. We believe that the service should be there to protect the public, enforce community punishments and reduce re-offending. That is why we have come forward with this particular name-change proposal.

My Lords, although it is a very good idea to change the name to something more specific, does not my noble friend agree that it is wrong to change a name to something which is unwieldy, ugly and unusable? A probation officer will become a community punishment and rehabilitation officer and that is only one better than being a community rehabilitation and punishment officer, which would produce a very unpleasant acronym.

My Lords, I am not a great friend of unwieldy and unfriendly acronyms. I am sure that only a mischievous mind could misconstrue this particular set of initials in that form.

My Lords, is the Minister aware that the proposed title, which I believe was personally selected by the Home Secretary from a list of alternatives, has indeed been greeted with ridicule throughout the criminal justice system? As the Home Secretary changed his mind and was converted on the policy of restricting the availability of jury trial after our debate last week, can the noble Lord say whether he will change his mind again?

My Lords, your Lordships will have the opportunity to debate this particular name change when the Crime and Public Protection Bill comes before this House. Noble Lords will then be able to debate the ideas behind the legislation, so there is still some opportunity for further consideration of the matter.

My Lords, on the question of representations, will the Minister be good enough to tell the House who has made representations in favour of this name change?

My Lords, I can tell the noble Lord that no representations have been made in favour of the name change. However, given that there are about 17,000 members of staff in the Probation Service, the fact that we have received only 60 representations illustrates that, although the name change may not yet have gained great popularity within the service, there is no significant opposition to it.

My Lords, can the Minister tell us how much this extraordinary and stupid name change will cost?

My Lords, I am not aware of the additional cost—if any—that this name change will involve.

My Lords, does the Minister agree that the new title is cumbersome and easily forgettable, especially among those people to whom it is likely to apply in a rather more personal and direct way? Further, will the noble Lord give consideration to a simpler title like, "Community Justice Service", which I believe many staff in the Probation Service actually favour?

My Lords, I am grateful to the right reverend Prelate for his helpful suggestion in this regard. However, we believe that the proposed name change reflects the kind of change that we are trying to make within the service. That is very important: it is a change in the nature and the culture of the Probation Service to one that will be involved in punishment and rehabilitation, thereby focusing people on challenging their own offending behaviour.

My Lords, is the Minister aware that he gave a ridiculous description of the previous government's policy with regard to the Probation Service? Has he considered the effect on morale of a change of name of this character, especially the depressing effect on long-serving members of a service who may feel that the change of name means that their previous service has not been respected? Is there not a read-across here to the RUC and, for that matter, to New Labour?

My Lords, I cannot possibly agree with those sentiments. I believe that the term "assist and befriend" is taken from the Probation Service Act 1993, so it is actually on the statute book. As for the noble Lord's other comments, I can only say that we have confidence in what we are trying to achieve. We believe it to be right for the service. We also believe that we should re-focus the way that the service works. I cannot agree with the noble Lord's comment about the RUC.

My Lords, what will someone who previously called himself or herself a probation officer now call themselves?

My Lords, a community punishment and rehabilitation officer.

My Lords, I am sure that there is a good reason, but why was it felt necessary to include the word "punishment" in the new title?

My Lords, it was felt necessary because we believe that the service should focus on the effects of community sentencing, which is a form of punishment. It is not a soft option. Those matters need to be focused on. That is what the general orientation of the new service is to be.

asked Her Majesty's Government:

What proportion of those who die in custody are black or Asian.

My Lords, for England and Wales, 29 or 12 per cent of those dying in police custody since 1st April 1996 and 52 or 10 per cent of those dying in prisons since 1st January 1996 have been black or Asian. Black and Asian people constitute approximately 5 per cent of the population of England and Wales. However, they form 11 per cent of those arrested and 15 per cent of those in prisons. Many deaths included in the figures are the result of self-harm or natural causes, involve alcohol or drugs, or are included because the definition on the police side extends to cover those who die while trying to evade arrest. Every death in custody is an individual tragedy, but only a small proportion are genuinely contentious.

My Lords, I thank my noble friend the Minister for that helpful reply. Will he further illuminate three areas? Is he aware of concern about the possible use of excessive force and in how many of the cases that he mentioned was that alleged? Does my noble friend agree that it would be useful to know in how many cases the deceased was mentally ill? Has indirect discrimination ever been investigated in relation to deaths in any form of custody?

My Lords, this is a sensitive area. I shall try to answer the questions as best I can. I do not think that we have considered indirect discrimination with regard to deaths in any form of custody. There have been no restraint-related deaths in prison since 1995. Since April 1996 there have been a small number of deaths in police custody where restraint may have been a factor. As to knowing whether many of those in custody suffer from mental health problems, that is undoubtedly the case, but precise statistics in the form requested this afternoon are not available.

My Lords, has the Minister noted that no persons detained in military custody—that is, persons convicted of military offences—have died in custody in the past few years? Would it not he worth the Government investigating the reasons for the vastly better performance in that respect of military custodial sentences over civilian ones?

My Lords, I am grateful to the noble Lord for his useful contribution to the Question. However, it is worth reminding the House that recent reports, particularly the report produced by the Police Complaints Authority, have commended the Police Service on the way in which it has improved the monitoring of those detained and on the effect that has had on the number of deaths in custody The Prison Service is at this moment busy implementing the findings of a thematic report of April of last year from the inspectorate of prisons which is also designed to improve the way in which deaths in custody are processed and to ensure that the issues which may lead to them are dealt with by the Prison Service.

My Lords, presumably a post-mortem is carried out in all these cases. Is there a record of the proportion of those who have died in custody who were under the influence of either drugs or alcohol?

My Lords, those figures exist. There are figures as regards self-harm, natural causes and alcohol and drugs. Since 1st April 1996, for example, 53 prisoners in police custody died from alcohol or drugs, 41 died from natural causes and 60 as a result of self-harm. Those are important and telling factors which have a great impact on the statistics. Similar data and figures exist as regards the Prison Service. Rather than bore your Lordships with them this afternoon, I am more than happy to place them in the Library.

My Lords, can we take it that the Minister's initial Answer confirms that, if anyone should think or allege that discriminatory treatment was a contributory factor in these figures, that would be indirect discrimination as defined by the Race Relations (Amendment) Bill, which we shall discuss again on Thursday?

My Lords, that may well be the case. We are concerned to ensure that there is no discrimination in the Prison or Police Services. Those are important objectives for the Home Office as part of our modernisation programme.

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

moved Amendment No. 1:

Page 2, line 38, at end insert (", and

(c) that having regard to all the circumstances (including over-riding operational requirements) prevailing at the relevant time it is not practicable for the investigation to be launched diligently and expeditiously").

My Lords, I have taken considerable trouble to talk to the military—not only to its lawyers but to other members, particularly in the Army. I am grateful to the noble Lord, Lord Burnham, for outlining his understanding of the implications of applying the Bill under operational circumstances.

I have been assured by, what I would call, the "foot soldiers", like myself, and the Army lawyers that this matter is covered elsewhere in the amended—I stress the word "amended"—Army Act at Section 75A. Operational considerations are given effect in that Act, as they are in the discipline Acts of the Royal Navy and the Royal Air Force. I believe the amendment is unnecessary.

My Lords, I shared the endeavours of my noble friend Lord Burnham that it was not practicable to apply the Bill on active service, a point taken by me on Report and at Third Reading of the Human Rights Bill, and by several noble and gallant Lords at Second Reading and on Report of this Bill, which I supported. Amendments Nos. 1 to 4, which are grouped, are concerned with custody, as indeed is the whole range of Amendments Nos. 1 to 9.

On Report, one has to accept that the noble and gallant Lord, Lord Carver, took the view that at times of active service and high intensity warfare, the Bill could not be made to work. But the noble and gallant Lord said that,

"there need not be anything in the Bill to cover that situation".—[Official Report, 18/1/00; col. 983.]

On Report, at col. 1000 of Hansard, my noble friend Lord Vivian—who has had far more active experience relevant to modern conditions than I have ever had—took the view that Section 75B(4) afforded adequate flexibility in those instances where operating imperatives made it impossible to conform with the legal requirements.

The noble Baroness, Lady Symons of Vernham Dean, has given a series of important assurances. The Bill was designed,

"so as to be compatible with all circumstances in which the Services might find themselves".

That, in a sense, remains to be seen.

She said also that,

"operational considerations will remain paramount".

That no doubt is a firm and genuine intention. She said that commanders will,

"give appropriate priority to the operational imperatives of the situation",—[Official Report, 18/1/00; col. 1004.]

which will not conflict with the procedures in the Bill.

As part of these assurances she said that commanding officers,

"must be given proper guidance in the application of these new procedures and the way in which they should exercise the flexibilities that are inherent in this Bill".—[Official Report, 18/1/00; col. 1005.]

Finally, the noble Baroness advocated the need for a single operating system in all circumstances to reduce the scope for confusion, as was spoken to by other noble Lords.

It is of vital consequence that guidance to commanding officers as to operational considerations and having regard to the imperatives of the situation should be codified—perhaps in some kind of code of practice—and that this should be made available not only to commanding officers but to all courts martial, the courts martial appeal court and the summary appeal court. Perhaps the Minister will be able to give a formal undertaking to that effect. But, if such be the case, what is the objection to primary legislation which has the authority of permanent effect until the next amendment of the service discipline Acts, which are amended regularly from time to time?

My Lords, my first duty is to apologise to the House on behalf of my noble friend Lord Wallace of Saltaire, who has been leading on our behalf on the Bill. He is absent from the House because he is today fulfilling a long-standing commitment abroad. So I will speak very briefly to the amendments of the noble Lord, Lord Burnham—although perhaps not quite as briefly as he did.

As the noble Lord said, he tabled a series of amendments to the effect of the present amendments. These reflected the anxiety in certain quarters at earlier stages of the Bill as to the ability of commanding officers to ensure compliance with the ECHR at time of war or when on active service. The noble Lord mentioned that he had tabled other amendments to a similar effect on Report. On that occasion, no less than three gallant and noble Members spoke to the effect that existing legislation, as amended, provides sufficient flexibility for commanders in the field to act in a sensible way.

During the debate on the amendment of the noble Lord, Lord Burnham, on Report, the Minister confirmed the soundness of that thinking and also assured the House that,

"operational considerations will remain paramount".—[Official Report, 18/1/00; col. 1004.]

There is a whole paragraph to that effect, which the noble Lord can find in Hansard.

We do not support any amendment to the Bill along these lines. If the noble Lord, Lord Burnham, decides to test the opinion of the House, I will advise my noble friends to vote against his amendment.

My Lords, I admire the doggedness and determination of the noble Lord, Lord Burnham. He has returned to this issue time after time. I hope that when he read my comments on Report he found them favourable. It appears that, once again, noble and gallant Members of the House have said to him that the issue is covered by legislation. I remind him again that the present Chiefs of Staff support this measure and that they would be against duplication of the system. Rather than the tide running for the noble Lord, it seems to be ebbing a little more against him each time he speaks. I hope that after taking everything into consideration he will not press his amendment today.

My Lords, the noble Lord, Lord Campbell of Alloway, referred to the line that I had taken at Second Reading and in Committee about this issue. There was never any doubt in my mind that operational requirements would take priority; it was a question of whether the system could be made to work. I also accept that on Report I suggested that derogation under Article 15 might be enough but that there are cases in which that might be difficult to apply, as the noble Baroness said when summing up. However, on Report, I was greatly impressed with the words of the noble Lord, Lord Vivian. He spurred me on to look again more carefully at Sections 75A and 75B of the Army Act as revised by the Bill.

I draw the attention of noble Lords to the words on page 2, line 22 where it states that:

"After receiving a report under subsection (1) above the commanding officer shall as soon as practicable determine".

The same kind of provision is made on page 3, line 35 where it states that:

"If a review is postponed under subsection (3) above—

(a) it shall be carried out as soon as practicable".

I accept that sufficient flexibility has been provided to make it possible, if constant reference to the judge advocate is not practicable under the circumstances, for the review to be delayed. For that reason, I regret to have to say to the noble Lord, Lord Burnham, that I cannot support his amendment.

My Lords, perhaps I may begin by assuring the noble Lord, Lord Burnham, that I should not in the least have minded discussing medical services or fuel for the Armed Forces, except that neither topic is relevant to the Bill before us. However, no doubt we shall be able to discuss those matters should the noble Lord decide at any point to table Questions on them.

The noble Lord is seeking once again to include some kind of opt-out amendment in the Bill concerning the arrangements that will permit an individual to be arrested and held in custody without charge. The noble Lord has tabled three substantive amendments, repeated three times, for each of the armed services. We addressed the difficulties with this type of amendment in Committee. I regret to inform the noble Lord that the new amendments contain nothing compelling to persuade the Government that they should be incorporated into the Bill. However, I can think of three very compelling reasons why they should not be included.

The first reason relates to Amendments Nos. 3, 6 and 9. They provide that a person may be kept in military custody without charge for more than 48 hours, because an investigation could not be launched. In effect, that could prolong indefinitely the period before which a person must be brought before a judicial officer. The effect of the drafting of the noble Lord's amendment would override the provisions in the Bill which limit to 96 hours the total custody of an individual without charge, because the wording of the amendment provides an alternative to the current provisions which include the 96-hour limit. Indeed, they are completely open-ended in terms of the length of custody without charge that would be permissible.

In relation to the convention, we have been advised that in order to comply with the principle of fairness, 96 hours is the maximum period of custody without charge that is likely to be compatible. On that point alone, it is my understanding that we do not have flexibility and I appreciate the reasons for that. A period of 96 hours—four days—is a long time in which to be deprived of one's liberty. In any event, we do not expect the 96-hour limit to create any problems because we would expect charges to be laid before someone within that period or for the person to be released while investigations continued. Furthermore, the Bill does not affect the ability of the commanding officer to restrict an individual's movements; for example, an individual could be confined to barracks.

As I have said on previous occasions, the Bill offers a great deal of flexibility in relation to timing, as several noble Lords have already pointed out. It also offers flexibility in relation to enabling the commanding officer to delegate certain of his powers. This flexibility has been developed with the services to meet those needs which I appreciate have been of great concern to many noble Lords, foremost among whom has been the noble Lord, Lord Burnham. However, the provisions have been designed to accommodate the kind of situations that we have discussed during the passage of the Bill, such as the events in East Timor, a submarine under the polar ice cap, or the demands of operational flying.

The second reason why the amendments are unnecessary is that, as drafted, what will be new Section 75A of the Army Act allows flexibility in relation to custody which may be required in difficult operational circumstances. Therefore, this has already been dealt with on the face of the Bill. The legislation allows the person who made the arrest to keep an individual in custody without charge until the commanding officer has received a report from the arresting officer advising him of the individual's arrest and has made his own decision on whether to keep the individual in custody. Additionally, the Bill requires the commanding officer to make his decision on custody only "as soon as practicable". Flexibility for operational exigencies is already on the face of the Bill, as the noble Lord, Lord Campbell of Alloway, reminded us when he referred to the words of his noble friend Lord Vivian on Report, and as the noble and gallant Lord, Lord Carver, also reminded us today.

Finally, any argument that the commanding officer should not be troubled in operational circumstances with questions of custody can be countered by the provisions in new Section 75E. In effect, this provides for the functions of the commanding officer in relation to custody to be delegated. For example, if the commanding officer of a flying station is absent for regular operational reasons, he can delegate his powers in relation to the matter to an officer under his command.

I must say that my third reason for not accepting these amendments is because Amendments Nos. 1, 4 and 7 contain drafting flaws which appear to me to be pretty much fatal and to render them inoperable. The flaws result from the very first word used—"and"—which requires the amendments to be read in conjunction with the words immediately preceding them. Those words, which are of course already in the Bill, lay down the conditions that enable the commanding officer to authorise custody. Essentially that custody is necessary to secure evidence and the commanding officer must be confident that the investigation is being conducted speedily. As I see it, because the amendments are prefaced with the word "and" to add a third condition about the operational circumstances prevailing at the time, that would mean that the commanding officer would find it more rather than less difficult to justify custody. I suspect that that was not the intention of the noble Lord. It is possible that the word he sought may be been "or". However, the House can consider only the amendment as drafted.

In any case, the overriding point I wish to make is that the Bill does not need the additional flexibility which the noble Lord purports to achieve with these amendments. The detailed proposals in the Bill, which, I remind noble Lords, have been closely developed over many months with the services who will be responsible for the operation of the new procedures, provide all the flexibility they need. For that reason, I urge the noble Lord, Lord Burnham, to listen carefully to the words of the noble and gallant Lord, Lord Inge, who told us that he has taken advice from those whose judgment he trusts. It must be said that the noble and gallant Lord has more experience in these matters than either the noble Lord, Lord Burnham, or myself. The noble and gallant Lord is satisfied on the point. Furthermore, the House is aware that the noble and gallant Lord, Lord Carver, has rightly and properly scrutinised the Bill in great detail. He, too, has expressed himself satisfied on this point. The Government are satisfied and, most importantly, all three of the armed services are satisfied. For the reasons I have given, I hope that the noble Lord will see fit to withdraw his amendment.

My Lords, during the course of all the stages of the Bill it has been the aim of my noble friends and myself and those who are like-minded on this matter to ensure the maintenance, at the highest level, of service discipline and morale. Whatever the Chiefs of Staff may have assured the Minister—that the people who come under their command are entirely happy with the terms of the Bill—that is not my information or that of my noble friends.

Having said that, I am surprised and depressed by the speeches of the noble and gallant Lords, Lord Inge and Lord Carver, who state that they cannot see any cause for the amendment which I have put forward. I believe that they and others are wrong in their attitude to the Bill. If the Bill enables the Armed Forces to work exactly according to the terms of the European convention and of the Human Rights Act, so be it, but I do not believe that it does; nor do I believe that in marry aspects the Bill fulfils its aims; nor will it be readily acceptable to many members of the Armed Forces on the ground.

However, in the light of the attitude of the noble and gallant Lords, and very reluctantly—because I repeat I think it is wrong—I feel I have no alternative but to withdraw my amendment.

had given notice of his intention to move Amendment No. 10:

After Clause 13, insert the following new clause—

My Lords, I think that the noble Lord, Lord Renton, knows what I am going to say. I am advised by the House authorities that Amendment No. 10, which the noble Lord was about to move, is not relevant to the subject matter of the Bill. As your Lordships will know, the Companion states quite clearly that the amendments must be relevant to the subject matter of the Bill and that the advice of the Clerks should be taken in relation to matters such as these. The Clerks in the Public Bill Office advise that whereas this Bill deals with matters of criminal procedure, the amendment does not confine itself to matters of procedure, but extends more generally to the application of substantive criminal law in military courts and the rights of defendants there. The advice therefore is that the amendment is not relevant to the Bill.

We all have a responsibility to see that our procedures are governed by the House as a whole. Accordingly, with that short explanation, which I hope neither the noble Lord, Lord Renton, nor your noble Lordships, think is intended to be anything other than helpful, I ask the noble Lord, Lord Renton, to accept the advice which the Clerks have offered, and not to move Amendment No. 10. I do understand that the Clerk of Public Bills has given notice to the noble Lord, Lord Renton, that he was writing with this advice.

My Lords, before the noble and learned Lord sits down, and before my noble friend, Lord Renton, replies, perhaps I may ask the noble and learned Lord whether, if the amendment of my noble friend was phrased in the terms of his amendment at Report stage, which in fact he withdrew, it would be acceptable and whether at this stage in the proceedings a manuscript amendment in those terms would be acceptable. I have to say that I have not spoken to my noble friend Lord Renton on this matter.

My Lords, before the noble and learned Lord replies, perhaps I may say that the amendment which I have tabled for Third Reading is narrower in its effect than the amendment that I tabled in Committee, and tabled again but withdrew before it was discussed on Report. Perhaps I may also say that the amendment that I have tabled today is intended to help the Government by resolving the conflict which will arise, admittedly on rare occasions—but it must be covered in case it does arise—between a conviction for a breach of good order and military discipline on the one hand and the assertion of the rights of the accused person under the Human Rights Act on the other hand.

One should draw attention to the fact that the Clerks at the Table allowed the broader amendment for the Committee and Report stages. The broader amendment referred to "proceedings", but this amendment refers to merely a part of the proceedings—although a pretty vital part—namely, a conviction. It is utterly illogical, especially when the Long Title of the Bill refers to,

"findings made or punishments awarded on summary dealing or summary trial; and for connected purposes".

Could there be a more connected purpose than a conviction?

Perhaps I may conclude on a purely personal matter. I have been in Parliament for 54 years. I have been in your Lordships' House for 20 years. As far as I can remember, this is the very first time since I came to your Lordships' House that an amendment of mine has been rejected by the Table.

My Lords, I am sure that that is right, because although the noble Lord arid I may have disagreed on matters of principle, I do not think that we have ever disagreed on matters of procedure. What I am transmitting is the advice that has been given. I respectfully repeat the observation that I made earlier: the Companion makes it perfectly plain that the advice of the Clerks should be taken in relation to matters such as these.

I take the noble Lord's point that this is a different amendment in terms of phraseology from the one that was accepted earlier, as he put it. However, the very firm, unambiguous advice that we have—I know that it has been transmitted to a number of your Lordships—is that this is not an amendment capable of being relevant. That does sound rather harsh and discourteous. It is not intended to be. "Relevance" there is used, as I understand it, as a term of art; namely, outside the scope of the Bill. Despite what the noble Lord, Lord Renton, says about connected purposes, our perfectly clear advice is that that does not make this a relevant amendment capable of being discussed.

The noble Lord, Lord Burnham, asked whether at this stage it would be possible to have a manuscript amendment in different terms. I understand that it is not possible.

My Lords, did the noble and learned Lord say "possible" or "not possible"?

It is not possible, my Lords, at Third Reading.

My Lords, with the leave of the House, perhaps I may make a constructive suggestion. If, for example, the noble Baroness, Lady Symons of Vernham Dean, were able to give the kind of undertaking which I suggested as to a code of practice, would that not go a very long way to meet the concerns of my noble friend Lord Renton?

My Lords, I do not think that I can answer for the noble Baroness as I am addressing the House at the moment, and I am not sure whether I can answer for the noble Lord, Lord Renton, when such a question is put to me, perfectly understandably and courteously. It is really a matter for the noble Lord. What I would say is that this is an important matter. We do regulate our own procedure. The advice is perfectly plain. I would, therefore, after this brief discussion, invite the noble Lord, Lord Renton, not to persist with this amendment.

My Lords, perhaps I may have your Lordships' leave to speak again because this is an important matter. The noble and learned Lord seemed to suggest that the advice of the Clerks at the Table had to be accepted. But that assumes that they are always right. I must say that I would have put much greater faith in the judgment of the noble and learned Lord than in any of the officials of the House in view of his tremendous experience and learning—and not all of them are even lawyers. With great respect, the reasons which I have put forward carry weight. I cannot use another expression. To say that the amendment, which is more narrow than the one accepted for the Committee stage and which deals with a conviction rather than with proceedings—convictions are merely part of proceedings—is irrelevant is, with the deepest respect, invalid.

My Lords, I am not sure how much I can usefully further contribute. I have to say—I think it will be the general experience of the overwhelming majority of your Lordships—that I have always found the quality of the advice given admirably conscientious and thoroughly well considered. I know that the noble Lord will not wish to suggest anything to the contrary. I am not going to offer my own advice. It is not appropriate for me to do so. I am simply making two points to your Lordships. First, I did not say that the advice had to be taken; I said that the Companion makes it clear that the advice should be taken. Secondly, the reason the amendment is not relevant—that is not, I repeat, an offensive word; it is a term of art: in other words, the amendment is outside the scope of the Bill—is that it does not limit itself to procedure, which your Lordships have discussed on quite a number of occasions. It extends to substantive criminal law and the rights of defendants there. That is why it is not an apt, appropriate or relevant amendment to the Bill.

moved Amendment No. 11:

Page 39, line 34, leave out ("in respect of whom").

My Lords, I appreciate that the amendments arise from a desire to ensure that the authority of the commanding officer and his ability to maintain discipline are not undermined. It is claimed that the undermining effect would result from the gap between the award of a sentence by the commanding officer and its commencement. I remind the House that there will be such a gap only where a sentence of detention is handed down. All other sentences will commence immediately.

I understand that the purpose of the amendments is benign. However, I cannot recommend that your Lordships agree to them, for two reasons. The first is that they are simply not necessary. We believe that most service personnel who have been dealt with summarily will accept their punishment and will want to get it over and done with, just as they do now. Because of that, we thought that it would he unacceptable to insist that an individual waited for the full 21, now 14, days before he or she was allowed to begin the sentence, if that is what the individual wished to do. We have therefore included a provision in Schedule 3 of the Bill which allows an individual to begin his or her sentence of detention straight away. It does not require him or her to sign and lodge any certificates. He or she can simply get on with it.

The second reason I cannot accept the amendments is that I am afraid they are flawed, in so far as they do not provide an adequate link with the current provisions in the Bill relating to commencement of sentences of detention, and will not necessarily work to achieve what we believe is the purpose behind the noble Earl's amendments.

The amendments as drafted do nothing more than allow an accused to submit a certificate to the commanding officer saying that he or she does not intend to appeal. But it is not mandatory for an individual who is accused to do that. The amendments do not in any way compel an individual to make a decision whether or not to appeal in seven days. An accused may still choose not to appeal but not mention that to anyone for a full 14-day period; or he or she may take the decision after nine, 10 or 11 days and seek to begin the sentence then.

Moreover, the amendment is flawed in so far as it does not require an individual who has certified that he or she does not intend to appeal to begin the sentence before the expiry of 14 days. Presumably, the lack of compulsion upon the accused then to begin the sentence defeats the very purpose of the amendments tabled by the noble Earl.

I have assumed that the purpose of the amendments—in many ways a very worthy purpose—is to help to accelerate the carrying out of justice. The noble Earl made that clear in introducing his amendments. However, we find ourselves again in a position of having to examine the terms of the amendments as drafted. I fear that they fail in their own terms. They are simply not drafted in a way that would ensure that matters were expedited in the way in which the noble Earl believes they would be. I suspect that the deficiency is in the drafting, and that defeats the purpose of the amendments.

I have little to add as to whether we ought to revert to an appeal period of 21 days. The services have agreed that we can live with the status quo; namely, the 14 days now on the face of the Bill. I see no reason to tinker with the Bill again unless it is entirely necessary.

I do not want to appear ungracious about the noble Earl's amendments. I know that he has tabled all of them with the best interests of the services in mind. I am grateful to him for that, and for the explanations that he has provided on the amendments. However, I assure the noble Earl and his noble friend Lord Burnham that the provisions have been carefully scrutinised by the services, and they are satisfied that no further changes are necessary. I hope that on that basis the noble Earl will feel able to withdraw his amendment.

My Lords, I am grateful to the Minister for that response. I was not so concerned about the gap between the imposition of the sentence and the summary dealing. The problem for all officers involved and for the unit is not knowing when the issue is over and whether or not the soldier will appeal. I deliberately designed the amendment so that it was not mandatory to decide. I knew that it was not mandatory. If an individual wanted to take the full 21 days to decide whether to appeal, that would be perfectly in order. If on the other hand he wanted to say, "Yes, I want to take it on the chin", he could then sign a certificate and life could return to normal.

The amendment was designed to be helpful in seeking another way to reduce the period of uncertainty. I am slightly disappointed that the Minister did not like the thrust of the amendment, although I can understand her dislike of the drafting. I beg leave to withdraw the amendment.

My Lords, I beg to move that the Bill do now pass.

My Lords, the Minister has claimed that the ECHR and the Human Rights Act are not the only reasons for the Bill. I hope that the belief that these are the reasons is correct, for if they are not this is an even worse Bill than we thought. The argument that one of the reasons for the Bill is to fall in line with modern thought is a poor one. It fails to recognise that the military ethos is different from the civilian. In signing on to join any of the Armed Forces, a man or woman voluntarily gives up a number of rights as a citizen in favour of military efficiency and the ability to do his or her job in the way that is expected. A serviceman is entitled to his rights under the Human Rights Act, but he must also be expected to give up some of his freedom of action.

That being the case, it is essential that the Bill fulfils its main function; namely, to ensure the military discipline comes into line with the terms of the Human Rights Act. It is clear that the Chiefs of Staff have been convinced that that is the case; the Minister has told us so. However, a number of officers with great experience of the Armed Forces and of military discipline are not so convinced; nor are some of my noble and honourable friends who are learned in the law. My noble friends would no doubt say so were they not exercising their legal expertise elsewhere. I seem to suffer from that.

The Government have made it clear that they are in a hurry: they want to have the Bill in place and enacted by the time the Human Rights Act comes into force in October. My honourable friends in another place, who have yet to have the opportunity to debate the Bill, recognise the timing problem, but are far from happy about the way in which the Bill has been framed. Irrespective of what is resolved today in this House, they are likely to argue against it in principle.

My noble friends and some noble and gallant Lords have at various stages during the passage of the Bill moved amendments which have attacked its worst features. But, having got to the end, we are still deeply worried, having failed to persuade the Government to make any substantial changes to the principles which govern it.

The Bill may damage the Armed Forces in a way that is irrecoverable. It introduces changes which will strike at the ethos of military discipline. When an individual is on a charge which renders him liable to face a court martial and a custodial sentence, it may well he that in some cases—it will not arise in every case, or possibly even in the majority of cases—he is a bad man. If such a man can taunt his commanding officer or defy the requirements of discipline without danger of immediate retribution, it must damage discipline and the morale of the whole unit.

One has in mind the old adage: act in haste, repent at leisure. The deadline of 1st October is clear, but if, as we believe, much of the Bill is unnecessary it is better to withdraw it and re-examine it fully. I am not so naive as to believe that the Government will agree to that just because I suggest it, but they may do so before the Bill reaches another place. There are many flaws in the Bill as we have pointed out during its passage through your Lordships' House. The Opposition's case is that it is only common sense to withdraw the Bill for further examination. If that happens and the aims of the Bill can be shown to be fulfilled, I believe that it will be given a speedy passage through both this House and another place. The Bill has too many flaws, which I shall not reiterate because they have been debated at every stage.

As a general point, it has been made clear that the various service discipline Acts are a hotchpotch which even the Manual of Military Law (in the case of the Army) cannot disentangle. At Report stage I moved an amendment which sought to reconcile the Acts. I did so deliberately, knowing that it would not be accepted, nor with any intention that it should be, but in the hope that the Minister would give us comfort by agreeing that this would be done in the quinquennial Act next year. This she sadly failed to do, saying only that her department would get down to what was an undoubted problem after that legislation had been introduced. Clearly, the Government need time.

A number of my noble friends, including my noble friends Lord Kingsland and Lord Campbell of Alloway, have drawn attention to the words of the noble and learned Lord the Lord Chancellor during Third Reading of the Human Rights Bill. His assurances that the ECHR posed no threat to the effectiveness of the Armed Forces have clearly been ignored in this Bill. It would have been agreeable to hear from the noble and learned Lord what he had to say on the subject, but we have not heard from him. Clearly, the Government need time to consider what he said then.

All these points combine to cast doubt upon the effectiveness of the Bill and reinforce the suggestion that the Government would be well advised to wait and look at it again. As I began by saying at Second Reading and have said ever since, this is a bad Bill and I hope that the Government will put a wet towel round their head and think again. In the mean time, reluctantly I am content that this Bill should be passed to another place.

My Lords, as this Bill passes I acknowledge with gratitude the constructive and courteous manner in which the noble Baroness has dealt with it. I also respectfully ask that the Government reconsider the amendment moved at Report stage to set up an Armed Forces human rights court when the services Acts are amended by primary legislation for consolidation. That amendment had the support of my noble friend Lord Kingsland, who pointed out that it was wholly consistent with the proposals of the noble and learned Lord the Lord Chancellor at the Third Reading of the Human Rights Bill. It also had the support of the noble and gallant Lord, Lord Bramall, my noble friend Lord Renton and my noble friend Lord Burnham on the Opposition Front Bench. The object of the amendment was not, as stated rather ungenerously by my noble friend Lord Burnham,

"to get in first and to generate a full-blooded debate".—[Official Report, 18/1/00; col. 991.]

The true object was to test whether the MoD's solution was the best one as expounded and accepted by the noble and gallant Lord, Lord Craig of Radley. At all events, is it not evident from the shape of the Marshalled List today and the short conduct of this debate that that amendment served to clarify the issues and the purpose for which it was designed?

My Lords, I am sure that my noble friend Lord Wallace would wish me to thank the Minister on his behalf for the courtesy that she has extended to everyone who has taken part in the Bill, both in this Chamber and outside. The House will be aware that we have supported the passage of this Bill in general and in particular. For my part, the time that I have spent on the Bill has been extremely educational. I have learnt things that I never thought I would learn under any circumstances, and I am sure that I am the better for it. We wish the Bill well.

My Lords, with the leave of House perhaps I may rise to speak again. I have been more than ungenerous to the noble Baroness—I make no political point of any kind—in failing to mention the immense help that she has given during the passage of this Bill, for the letters that she has written on various points and her assistance throughout. I hope that the whole House will join with me in thanking her for all that she has done.

My Lords, I too endorse the way in which the Minister has handled this Bill on behalf of the Government. We have not agreed with the noble Baroness, but we have found her open-minded and, within her limitations—I refer to the Minister's political limitations, not her ability—helpful. During Committee stage the noble Baroness said:

"I can assure the noble Lord [Lord Renton] that there is nothing in either the Act or the Bill to prevent proceedings against good order and discipline. It would clearly be of great concern to the services and to the Ministry of Defence if that were to be the case".—[Official Report, 16/12/99; col. 383.]

Having studied this matter and listened to all else that has been said in your Lordships' House during various stages of the Bill, I remain worried. I am concerned that the conflict between the Service discipline Acts and the Bill on the one hand and the Human Rights Act 1998 on the other does not appear to have been resolved. If it is the hope and expectation of the Government that somehow a finding by a commanding officer, court martial or appeal committee clearly shows that there has been a breach of military discipline and the accused person points to the relevant provisions of the Human Rights Act 1998, confusion will result.

I agree that these provisions would give rise to conflict and confusion only occasionally, and perhaps I may identify them. They are Article 10, Freedom of expression; Article 11, Freedom of assembly and association; and, if one considers it carefully, Article 14, Prohibition of discrimination. Article 14 states:

"The enjoyment of the rights and freedom set forth in this Convention shall be secured without discrimination on any ground such as sex, race, colour, language, religion, political or other opinion, national or social origin, association with a national minority, property, birth or other status".

That is very wide. All kinds of circumstances could arise in which people would maintain that that is contrary to the attitude they had as members of the Armed Forces.

Despite all the Minister has done, I hope that the noble Baroness will listen to my noble friends' remarks about the need for further thought on the Bill. It would be terrible for us to risk giving rise to a conflict. When two Acts of Parliament are abundantly plain but in conflict, they must be reconciled with each other. It has happened in the past time and again. It will happen from time to time always. When national security is at stake, the conflict must be dealt with.

My Lords, I thank noble Lords for their kind words. The passage of the Bill through your Lordships' House has been an example of how the process of debate and scrutiny can illuminate the inner details of a piece of draft legislation. If I can dare to admit this—I think that I can; the noble Baroness, Lady Thomas, has done so already—my understanding of the Bill has increased enormously as a result of participating in the debates.

I had the impression, in particular when listening to some of the contributions at Report stage, that others, too, had cause to examine even more closely than previously the fine detail of the Bill. It would probably be difficult to claim that we have achieved a true meeting of minds as regards some parts of the Bill. I thank your Lordships for the hard work on the amendments tabled and the well argued contributions which have helped to elucidate so much of the Bill.

I thank the noble Lord, Lord Burnham, and the noble Earl, Lord Attlee, who have travailed so hard in the quest of the elusive grail of the opt-out clause. They have rarely appeared to be as convinced by my arguments as I would have hoped. I thank too the noble Lords, Lord Campbell of Alloway and Lord Renton. They have constituted an occasional autonomous but highly independent faction on the Opposition Benches. Some admirable probing amendments have shed light on the inner recesses of the Bill.

I thank, too, the noble and gallant Lords, Lord Bramall, Lord Carver, Lord Craig of Radley and Lord Inge, for the insights they have contributed based on the accumulation of a substantial number of years of experience. I hope that they now have greater confidence that what they value so much in Armed Forces discipline will not be lost.

I thank the noble Lord, Lord Wallace of Saltaire, the noble Baroness, Lady Thomas, and their colleagues on the Liberal Democrat Benches for their welcome support. I thank warmly, of course, my noble friends whose presence was initially perhaps somewhat spasmodic but who have rallied to the cause as the Bill progressed. In particular I thank my Bill team: the combination of officials, lawyers, administrative people and military people who have helped so much in the passage of the Bill. I thank them for their patience with me, for looking again and again—and, I assure noble Lords, again—at whether we could meet some of the well expressed fears and criticisms of the Bill. They have worked extraordinarily hard. The noble Lord, Lord Burnham, urged them to work very hard over the Christmas period. They did, and have continued to do so since. I thank them for everything they have done towards the progress of the Bill. We can now send the Bill on its way. I, for one, shall be very interested indeed to see what another place makes of it.

moved the amendment:

Page 5, line 47, at end insert—

("( ) It shall not be a defence for a person charged with an offence under this section that the actions of any Agency inspector infringe the European Convention on Human Rights.").

My Lords, that was a remarkable speech. In nearly 15 minutes, the noble Lord, Lord Mackay, failed to remind the House that the amendment which he was moving was the exact opposite of the amendment he moved at Committee stage. In Committee he moved the following amendment:

"For the purposes of subsection (6) a certificate authorising entry by an Agency inspector shall be in a form published in regulations and of which due notification has been given in accordance with section 3(5)".

I must confess that when we looked at the new amendment that he tabled last week we were puzzled, because he had added the word "not" to his previous amendment. Now he is saying the exact opposite to what he said at Committee stage.

I had a brief and glorious career in the Royal Artillery many, many years ago, where such manoeuvres were called "bracketing". On the first occasion one shoots a long way short of the target; on the second occasion one hopes to get closer. Having shot short of the target, the noble Lord has now shot long of the target, but he has not got any closer to it. I am not inviting him to try again at Third Reading, but I am truly puzzled by the way in which he has chosen to address this important issue. I do not wish to denigrate or to deny the importance of the issue. Having had my small amount of fun, I propose to address the issue seriously.

The noble Lord is quite right to say that the Government and I should think carefully about the assurance given over my signature on the face of the Bill that, in my view, the Bill's provisions are fully compliant with the European Convention on Human Rights. I am therefore sorry to see that, although he appeared to be concerned to uphold the principles of the convention, the noble Lord is now prepared in his new amendment to defy the convention.

The amendment that he has now tabled would have far wider effects than I imagine he intended and which the Government believe to be undesirable. Specifically, it would prevent anyone prosecuted under Clause 5(7) of the Bill from using the defence that an agency inspector had infringed the European Convention on Human Rights. As I explained in Committee—in what the noble Lord, quite rightly, reminded me was my "cheeky" answer—technically speaking, an inspector could not infringe the convention because the International Atomic Energy Agency is not a party to it. The IAEA and its inspectors cannot breach something to which they are not formally subject. However, we did not rely on that argument in Committee and I do not rely on it now.

We are confident that the rights given to agency inspectors by Clause 5 are consistent with Article 8 of the convention—which the noble Lord read out—to the extent that those rights are exercised in relation to premises within the scope of that article. Article 8 of the convention is, understand, principally concerned with domestic premises, and it is unlikely, although I concede not impossible, that the rights under Clause 5 would ever be exercised in relation to domestic premises. We are confident also that the rights are consistent with Article 1 of the first protocol to the convention on peaceful enjoyment of possessions.

However, if an inspector acted in a way which was—to use a neutral phrase—inconsistent with the rights protected by the convention, we believe that the courts should be able to decide for themselves whether that inconsistency was relevant to any offence with which a person was charged under the Bill; and if it was relevant, what effect, if any, that should have on the outcome of the prosecution. For example, if an agency inspector's actions were inconsistent with a person's rights under the ECHR, that could be relevant to whether the inspector was indeed acting,

"in the exercise of a power under",

Clause 5, for the purposes of an offence under Clause 5(7); or to whether the person charged with an offence under Clause 5(7)(b) or (c) had a "reasonable excuse" for failing to comply with a request of an agency inspector, authorised officer or constable or for interfering with things placed on land by an agency inspector. The defence of "reasonable excuse" is already set out in paragraphs (b) and (c).

Under Clause 5 as drafted, an action by an inspector which was inconsistent with the ECHR could—and should—be capable of providing a defence to such a prosecution if that particular action were relevant to the subject matter of the charge. But the amendment before us would remove from anyone prosecuted under Clause 5(7) any opportunity to rely in his defence on the fact that the inspector's action was inconsistent with the rights protected by the convention, even if the impact on the person's human rights justified the action taken.

Like Amendment No. 10—which I quoted—tabled by the noble Lord at Committee stage, this amendment would cause confusion about the extent to which breaches of the ECHR could be taken into account in deciding whether offences had been committed under other provisions of the Bill and, indeed, possibly under other legislation. It is much better to let the courts decide on normal general principles when, and how far, infringements of human rights are relevant to whether any given offence has been committed under Clause 5(7) or other offence provisions in the Bill or, indeed, elsewhere, instead of trying to tie them down in advance by a provision in the Bill which takes no account of the individual circumstances of each particular case.

In introducing his amendment, the noble Lord correctly described the three arguments I used about the earlier provisions of the Bill concerning enforcement other than by agency inspectors. First, he quite correctly reminded the House of the precedent set by the Chemical Weapons Act 1996. Secondly, he quite reasonably argued that we should not be setting aside our own liberties because of the need for strict enforcement in other countries unless that is absolutely necessary.

That point leads me on to the noble Lord's third argument about the breach of treaty, which is the fundamental point. It is incumbent on all nuclear weapons countries to act in accordance with the Nuclear Non-Proliferation Treaty and to be seen to do so, because that is the way in which the non-nuclear weapons countries may effectively be deterred from becoming nuclear weapons countries. That is a great prize before us: the full implementation throughout the world of the non-proliferation treaty. It could be put at risk—I put it no higher than that. It could be put at risk not only if we fail to comply fully with our obligations under the treaty and the Vienna protocol but if we fail to be seen to do so. I do not believe that that prize should be thrown away for this purpose. I do not believe that the amendment should be supported, even if it were not defective in its wording. I hope that the noble Lord will not press it to a Division.

My Lords, before the Minister sits down, perhaps he can answer a question. If, let us say, a court decides that an agency inspector has infringed the convention rights of an individual and throws out a case against that individual, would not that be in danger of being a breach of the convention and therefore put us in the difficult position which he and I certainly would not want to see?

My Lords, I do not believe so. We must do our best within our own and international law to follow the protocol to the letter and, if necessary, follow the spirit. If we fail to do so because of international obligations under the European Convention on Human Rights, that will be widely understood. However, we must make the effort.

My Lords, I thank the noble Lord for his response. I may resist the temptation to ignore his tease at the beginning. I believed that I was being reasonable. By tabling my amendment, I was trying to be sure that the Government were absolutely right in their assertion in Committee that the Bill squared with the convention. The amendment states that one cannot plead the convention if one is charged.

I believe that the noble Lord knows, and I hope that the House realises, that I shall do nothing to hinder the passage of the Bill. That does not mean that we should not scrutinise these matters carefully and make sure that we are proceeding in the proper manner. I accept the answers which the noble Lord gives. I hope that he takes my point that if this Government or any future government look for a fourth time at another international agency—an agency which may be set up of which as yet we know nothing—we should be a little more careful. We should try to find a way to ensure that inspectors in this country, who are forced to act within our traditions of respect for civil liberties and the rule of law, do not find themselves in a more difficult position than inspectors of an agency which can come into this country and not have to go through the same "hoops" as our own inspectors.

Frankly, it is not a great problem for the authorities to go to a justice of the peace and persuade him of a case. No one knows that they are going to a justice of the peace to do so. The police do so quite happily all the time, asking constantly for warrants to search premises and homes. It does not impede their investigations in any way, shape or form, and it would not impede the investigations of those international agencies.

It is a pity that we have decided to go down this route and I hope that we shall not go down it too often in the future. I certainly hope that the noble Lord is right in his assertions about the relationship between the Bill and the convention and that no one finds that the convention provides a screen behind which to hide. With that, I beg leave to withdraw the amendment.

My Lords, I beg to move that the House do now resolve itself into Committee on this Bill.

moved Amendment No. 1:

Page 1, line 8, after ("is") insert ("a body corporate (with legal personality separate from that of its members) which is").

First, I thank the Minister for giving me and Mr Nicolas Gibb MP the opportunity to discuss a number of key issues which we and other Members of this House raised at Second Reading.

I thank the noble Lord for a most helpful meeting, for the accompanying notes, and for giving them to me now. However, on behalf of so many people with whom we and, I understand, the Government have consulted, I feel that it is my responsibility to make a plea with regard to Clause 1. Our concerns relate to a general application of partnership law. We are interested in retaining the partnership ethos. With that wish, we begin to question the value of a limited liability partnership. Without a partnership ethos which is clear on the face of the Bill, it becomes in a sense something of a hybrid without the culture of a partnership; that is, neither a partnership nor a company. I question whether that is what the Government intend.

Yes, an LLP can enter into contracts and it can hold property. It is a body corporate, separate from its members. I am grateful to the Minister that the amendments help to clarify that point. However, without express application to partnership law on the face of the Bill, I ant still unsure of its worth. That is why I have tabled an amendment to Clause 5 relating to the members of an LLP. That amendment tries to re-establish the relationship of members to differentiate them, if not the body corporate itself, for example, from employers, subject to company and employment law. In a sense, that is intended to demonstrate the existence of the partnership ethos.

I am most grateful to the noble Baroness for what she says. I repeat my apologies that the marked Bill did not reach her in time for her to consider it at greater leisure. I am grateful for what she says in the particular sense that it enables me to set out what became clear to me in the course of the discussions which we had last week with a number of noble Lords. It became clear that the principle on which we must insist all through the Bill is that we are changing as little other law as possible. We are responding to pressure, particularly from professionals, that there should be some way for them to achieve the goal of limited liability. We are considering the pride at which that achievement should be made. Everybody except the noble Lord, Lord Phillips of Sudbury, agreed with the validity of that goal. However, I may not have expressed as clearly as I would want the way in which we seek to achieve that.

We seek to achieve that by creating a new entity—the limited liability partnership—which falls under company law as far as possible and changes company law as little as possible except in respect of taxation. It falls under partnership law as little as possible and changes partnership law as little as possible except in respect of those matters which are the concern of company law.

The taxation of limited liability partnerships will be on the partnership analogy; every other aspect of the limited liability partnership will be on the companies analogy. The bulk of the text of the Bill consists of amendments to company law which are absolutely necessary in order for limited liability partnerships to be established and no further than that.

Similarly, we do not seek in any way to change the law or practice in respect of professional liability. That is a matter for the law and for the professions themselves. We do not want to diminish or increase it in any way. We do not seek to change the law except in so far as it is absolutely necessary in relation to insolvency. We are doing as little as possible in order to achieve this new entity. If we look at all the amendments in the light of those pillars of the temple, perhaps, which are built around that small change in the law, I believe that we shall understand it, as I have come to understand it, rather better than we did at the beginning.

I am grateful for what the noble Baroness said about the amendments to Clause 1. I commend Amendment No. 1 to the Committee.

moved Amendments Nos. 2 to 4:

Page 1, line 10, after first ("in") insert ("the following provisions or).

Page 1, line 14, leave out ("a limited liability partnership so incorporated") and insert ("such a body corporate").

Page 1, line 16, leave out from ("partnership") to first ("to") in line 18 and insert ("has unlimited capacity.

( ) The members of a limited liability partnership have such liability").

moved Amendment No. 5:

Page 1,1ine 27, after ("persons") insert ("associated for carrying on a lawful business with a view to profit").

I thank the noble Lord, Lord McIntosh, for the remarks that he has made vis-à-vis the amendment to exclude charities from the purview of the Bill. Perhaps I may say that his thinking is impeccable. Although charitable status in this country does not attach to a particular format, which sets us apart entirely from the Napoleonic code countries, I believe that it is absolutely right to exclude charities from the provisions of this Bill.

I should like to raise a rather boring point on Amendment No. 6. Perhaps the Minister will consider whether the wording in the proposed paragraph (c) does not give a slightly wrong idea of what is intended. At present the amendment refers to,

"either a solicitor engaged in the formation of the limited liability partnership or anyone named in the incorporation document as a person who is to be a member'",

and then it goes on. That gives a futuristic intention or meaning which is not intended. What is intended is that,

"either a solicitor engaged in the formation of the limited liability partnership",

or anyone who subscribes to the incorporation document is capable of signing that statement. I draw that to the Minister's intention and hope that it will be dealt with in due course.

There are two possible answers to that. The first is that the wording comes from other legislation and is therefore sanctioned by precedent. Indeed, that is the answer. It follows the wording in Section 12 of the Companies Act.

However, that does not absolve me from giving my second answer, which is that I shall look at it again to see whether anything further needs to be done. I commend Amendment No. 5 to the Committee.

moved Amendment No. 6:

Page 2, line 3, at end insert (", and

(c) there must have been so delivered a statement in the form prescribed by regulations, made by either a solicitor engaged in the formation of the limited liability partnership or anyone named in the incorporation document as a person who is to be a member, that the requirement imposed by paragraph (a) has been complied with").

moved Amendment No. 7:

Page 2, line 11, after ("and") insert ("home address and business").

I am interested in what the noble Lord says. The complaint that I heard about our provisions was that they were too draconian, rather than not draconian enough. There has always been a trickle, rather than a flood, of complaints by company directors that their security is put at risk by having to give their home addresses in legal documents. However, I do not hear that from the noble Lord, Lord Phillips.

This is a perfect example of what I said in relation to Amendment No. 1. We are making as few amendments to company legislation as possible, not least because the company law review, which started in 1998, is under way. We shall go out to full consultation within the next few months and we shall consider all these matters in great detail.

Here we have required that the incorporation document gives the names and addresses of all members of a limited liability company and that the registrar is notified of any changes in a member's address. That mirrors exactly the provisions of the Companies Act 1985, which in Section 289 requires directors to disclose their "usual residential address". That will be the case for members of a limited liability partnership because Clause 17 of the Bill says,

"'address', in relation to a member of a limited liability partnership, means … his usual residential address".

We do not think that there is a case for members of a limited liability partnership to be treated any differently from a company director by requiring them to give both their home address and their business address.

I know that the objections of the noble Lord, Lord Phillips, go further and that he describes our regime as the slackest limited company regime in the world. However, I am not tempted by his example of Germany where he said that it takes a minimum of 13 weeks to set up a limited company. That does not seem to me to be a desirable objective. If parts of our company legislation are slack and, therefore, damaging, and if there are problems about giving addresses, they can be dealt with in the company law review. In the mean time, it seems right for us to mirror company legislation in this Bill. I ask the noble Lord not to press his amendment.

Before the Minister sits down, can he give me a positive reason why it would not be a good idea to require the business address and the residential address? We are not talking about precisely the same animal as a limited liability company. This is an extension of state privilege to a class of business that hitherto has never been thought to be entitled to it—non-capitalist businesses.

This refers to the relationship with a body corporate which has not existed before. If the noble Lord relies on the analogy with partnerships, a person carrying out business with a partner in a partnership clearly carries out business directly with one person. It is common sense to seek a proper co-ordinate in order to track down that person if there is a problem. Here a body corporate is being created, which is exactly analogous to a limited company and it seems proper that we should mirror the requirements of company legislation.

The noble Lord asked for a positive reason. I suppose it is true to say that already there is a certain amount of work for the Registrar of Companies in recording changes of residential address. That work would increase substantially if he had to record changes of business address as well. Such changes cost money; they would cost the taxpayers money. However, I do not advance those arguments as overwhelming reasons.

I am not surprised by the Minister's reply, but I am disappointed. I believe that the Minister underestimates the degree of reckless incompetence and fraud at the bottom end of the business market behind limited liability. I do not accept his argument that too much expense would be involved. Too many people try to get away with secreting their business addresses as well as their residential addresses.

I do not want to prejudge what the noble Lord wants to do with his amendment, but is it not true that a lot of business addresses are concealed as box numbers? People can give a business address and they would still be covered legitimately by the amendment and it still would riot do any good.

With respect, that is not the case. As a result of this amendment, they would have to give their real business address and not some fictitious business address. However, I withdraw the amendment.

moved Amendment No. 8:

Page 2, line 15, at end insert—

("(3) If a person makes a false statement under subsection (1)(c) which he—

(a) knows to be false, or

(b) does not believe to be true,

he commits an offence.

(4) A person guilty of an offence under subsection (3) is liable—

(a) on summary conviction, to imprisonment for a period not exceeding six months or a fine not exceeding the statutory maximum, or to both, or

(b) on conviction on indictment, to imprisonment for a period not exceeding two years or a fine, or to both.").

moved Amendment No. 9:

Page 2, line 16, leave out ("requirement imposed by paragraph (b) of subsection (1) of section 2 has") and insert ("requirements imposed by paragraphs (b) and (c) of subsection (1) of section 2 have").

moved Amendments Nos. 10 and 11:

Page 2, line 18, leave out from ("unless") to end of line 19 and insert ("the requirement imposed by paragraph (a) of that subsection has not").

Page 2, line 23, at end insert—

("( ) The registrar may accept the statement delivered under paragraph (c) of subsection (1) of section 2 as sufficient evidence that the requirement imposed by paragraph (a) of that subsection has been complied with.").

moved Amendment No. 12:

Page 2, line 38, at end insert—

("(4) A member of a limited liability partnership shall not be regarded for any purpose as employed by the limited liability partnership unless, if he and the other members were partners in a partnership (rather than members of a limited liability partnership), he would be regarded for that purpose as employed by the partnership.").

I thank the Minister for that explanation and for bringing forward this amendment. However, notwithstanding that I am a lawyer, I find it difficult to understand this clause. I have read it more than half a dozen times and wonder whether we can improve on the wording, if I may be so blunt.

Is the clause saying that members can be employed so partners can be employed? What about designated members? I confess that I prefer—although I know the Minister will not warm to this—Amendment No. 17 wherein it becomes clear that the members are as partners and therefore subject to partnership law unless both the incorporation document makes it clear to the contrary together with the provisions of any agreement express or implied between the members of the LLP. As I have heard the Minister say in relation to Clause 1 that there is a move to exclude partnership law as far as possible in preference to company law, I therefore feel that I shall not get far with that amendment either.

However, I suggest that we look again at the wording, wherever possible, to simplify the legislation so that people in the community who want to take part in, and establish, a vehicle such as an LLP can understand with relative ease the parameters of a limited liability partnership and what it really stands for.

I identify myself with the remarks of the noble Baroness, Lady Buscombe. Amendment No. 12 is work for lawyers, however well intentioned.

Two issues arise here. The first is where the amendment should be placed in the Bill. The noble Baroness rightly identified our wish to have it placed here rather than where it can be seen as an amendment to partnership law more generally.

On the issue of the wording, I only wish it were possible to have a simple definition of an "employee". The noble Baroness did not have the misfortune of sitting through as much of the Employment Relations Bill last summer as I did. We spent many happy hours discussing the definition of "employee" and I fear that this is not the legislation to resolve those questions which could not be resolved at that time.

There is not a single test to determine whether or not a person is an employee. Many factors are taken into account. Sharing profits, for example, is prima facie evidence that a person is a partner. If the losses as well as the profits are shared, the presumption is even stronger. But when a person receives both a salary and a share of the profits, there is strong evidence that he is an employee. That was an important consideration when we dealt with employment relations legislation.

There have been requests that any statutory provision should state that members are not employees unless there is an express agreement to the contrary. I believe that is what the noble Baroness is getting at in Amendment No. 17. We feel that that is going too far. If a person receives a salary, does not share profits and exhibits all the characteristics of an employee, it is inappropriate for the LLP to exclude the employee's rights in relation to that person. In addition, such an approach would be inconsistent with the employment law approach under which the description which the parties apply to the relationship—again coming back to Amendment No. 17—is not conclusive.

The noble Baroness referred to designated members. A designated member is a member and is therefore covered by the clause. The intention is not to put a member of an LLP in a different position from that of a partner in a partnership. I found the wording difficult and I promise to look at it again to see whether it can be made clearer. However, I insist on the thinking behind the amendment which is that much different from Amendment No. 17.

moved Amendment No. 13:

Page 2, line 38, at end insert—

("( ) Subject to any agreement with the other members to the contrary, a member of a limited liability partnership may cease to be a member on giving not less than 28 days notice to the limited liability partnership.").

I would not even describe the Liberal Democratic Party as a "partnership", let alone a "corporate body".

Despite the words of the Minister, we regard this as a good Bill, but a Bill capable of improvement and that is why we tabled a series of amendments to it.

Amendment No. 13 is concerned with the right of an individual member of an LLP to retire from an LLP on giving notice. At present the position under partnership law is that any partner can retire from the firm on giving notice unless the partnership agreement specifies otherwise. Clause 4(3) of this Bill provides that,

"A person may cease to be a member of a limited liability partnership (as well as by death or dissolution) in accordance with an agreement with the other members".

Presumably that agreement can either be a membership agreement which specifies the circumstances in which a member can retire, or it could be an ad hoc agreement when one member wishes to go and the other members consent to his or her going. But what is the situation if there is no agreement which allows a member to retire and the other members do not consent to that specific member going? That member will be locked into a business, perhaps for life, in which he or she no longer wishes to participate. That cannot be right.

The Government's answer in the otherwise helpful letter which the Minister sent to the noble Baroness, Lady Buscombe, and copied to me, was that regulations would be made incorporating certain provisions of partnership law including, in the absence of an agreement to the contrary, the right to withdraw from a firm on notice.

I shall look at the whole question of fall-back provisions when we come to Amendment No. 16. But Amendment No. 13 is essential in any case. The right to withdraw on notice in the absence of a partnership agreement specifying otherwise is a basic principle of partnership law and there is no reason why that should be changed in the case of LLPs. Being locked in for an indefinite period may be all right in the case of a Companies Act company where many shareholders are often just investors, but it is not appropriate i n the type of corporation such as an LLP where members are expected to be working members. The right to withdraw should not be left to be dealt with in consequence of regulations and should be brought on to the face of the Bill.

Further, it appears to be possible to read Clause 4(3) as an exhaustive list of the ways in which a person may cease to be a member. If that is so, regulations which authorise someone to retire in the absence of an agreement might themselves be ultra vires. I hope that the Minister will be prepared to look at the issue again. I beg to move.

I very much took on board the Minister's response to my suggestion on Second Reading that, in the event of a member wishing to retire, notice should be given to the LLP rather than to the other members. I appreciate that it does not make good sense to allow an individual to opt out of his or her responsibilities. In the event, say, of there being fundamental problems with the partnership, that could be avoided simply by a member tendering his or her resignation by notice to the body corporate.

There are concerns in this respect. I hope that the Minister will be able to give us some reassurance that there is a way round the problem by, on the one hand, making sure that people respond to their responsibilities and liabilities and, on the other hand, ensuring that they are not locked in against their will ad infinitum.

I certainly recognise that there are concerns, and I am very sympathetic to them. Indeed, I want to see the same result as noble Lords opposite. We want to be sure that we deal with the case where a member wishes to cease to be a member of an LLP but where, due to a disagreement within the firm, the other members fail to give their agreement. That is the problem that the noble Lord has identified.

When the agreement is drawn up the terms and conditions for ceasing to be a member are very likely to be dealt with at that time. Therefore, if there were to be a disagreement, the agreement would come into force. However, I recognise that that is not good enough. There must be some mechanism that comes into play if the LLP fails to have an agreement or has an agreement that does not adequately deal with the departure of a member.

Therefore, we shall be including a default provision, along the lines of Section 24 of the Partnership Act 1890, which will deal with the problem. We shall be including such provision in regulations. This was not published with the draft regulations in July of last year, but our suggestions for that were published on the website in October or November of last year. Such proposals are subject to consultation and are still being consulted upon. We are considering whether something along the lines of Section 24 of that Act would be appropriate for a default, following Section 26, to cover retirement.

If necessary, we can deal with this when we reach Clause 5. However, perhaps I may indicate the areas that we propose to include in default provisions: the right to share equally in capital and profits; the right to be indemnified by the LLP for activities in the course of business; the right to take part in the management of the firm; no entitlement for remuneration; the right to have access to books and records; expulsion and retirement of members; decisions by majority vote; and the application of Section 459 of the Companies Act—protections against unfair prejudice. Members of the Committee should take note that retirement of members is included in that list.

In simple terms, "default provision" means that if the agreement does not contain provision for retirement and for all the other matters to which I referred, the default provisions that will be provided will come into force under the regulations and the member seeking to retire will be protected by them. I hope that the noble Lord will agree that that is a better way to do it than putting the provision on the face of the Bill, as proposed by his amendment. However, it will have the same effect.

Before my noble friend the Minister sits down, perhaps he can clear up a slight problem that I have. We are discussing an important amendment and my noble friend said that certain information relating to the matter was published last October or November on the website. However, can he tell the Committee whether it was published anywhere else?

No, not to my knowledge. However, I shall check on the position and write to my noble friend.

I recognise the Minister's goodwill and good intentions in the matter. At this point I shall deal only with the question of retirement because the other rather wider questions regarding Section 24 of the Partnership Act can be dealt with when we discuss Amendments Nos. 16 and 17.

As far as concerns retirement, it seems to me that this is in a rather special position as it is of particular importance. Unless the partnership agreement provides for the contrary, someone going into an LLP needs to be quite certain that he can get out of it. I wonder whether the Minister will agree to look again at the question of possible difficulties with vires because of the likely interpretation of Clause 4(3) as being an exhaustive list of the circumstances in which it is possible to cease being a member of the partnership. However, subject to that, I am happy to beg leave to withdraw my amendment.

moved Amendment No. 14:

Page 2, line 38, at end insert—

("( ) A limited liability partnership shall maintain at its registered office a current list of the members of the partnership which shall include an explicit description of any limitations on the authority of each member to act for the limited liability partnership in any matter.").

The noble Lord referred to "these amendments". We had not proposed to group this with any other amendments, but I am happy to do so if the noble Lord so wishes. Without trying to put any pressure on him, and unless he is thinking of pressing his amendment to a Division, I wonder whether it might be easier if we dealt with this amendment and Amendment No. 25 when we reach Clause 6?

I apologise to the Committee. I should have said at the beginning that I intended to speak to Amendment No. 25 when moving this amendment. That is what is on my grouping list. I apologise for arriving here in some haste, almost late, and therefore not being as clear as I might have been.

The two amendments certainly go together because they both bear on the substance of Clause 6 and the question of how a third party dealing with a member of an LLP is able to treat that person and, indeed, what assumptions he is allowed to make about the powers that that person has to bind the partnership. As the Bill stands—and we shall deal later with some proposed government amendments—Clause 6 falls into two principal sections; namely, subsections (2) and (3).

Under Clause 6 (2), which relates to the ordinary circumstances of dealing with a member of an LLP, "the person" who is dealing with someone has the right to treat him as an "agent" in all respects of the limited liability partnership if he believes him,

"to be a member of the limited liability partnership".

There will be legal precedents that I do not pretend to be expert in as to what substance lies behind "belief', and that is what I am addressing in Amendment No. 14.

How does a person establish that someone is a member of a limited liability partnership? There will be a list at the registrar's office, but those concerned are not being asked in this subsection to look at that list. Indeed, they a re allowed a more generous interpretation; namely, a belief. However, when we turn to subsection (3), which is where a partner has ceased to be a partner, the third party is supposed to consult the registrar to make sure that the person with whom he is dealing, and whose word he is about to rely on, is still a member of the partnership.

This is a very odd dichotomy of systems to find within one clause of the Bill: we have the ordinary circumstances under which a person can act on the basis of reasonable belief; but if the person with whom he is dealing happens to have retired as a partner and he does not know, he will not be able to act on the basis of reasonable belief because a notice has been delivered to the registrar which he is supposed to have seen. I find that an odd combination. I think that it ought to be made consistent by requiring that a limited liability partnership has at its offices a list of members which includes any restrictions on the ability of those members to bind the partnership. I hope that that is what these two amendments achieve, but I should not be at all surprised to be told that they do not achieve that effect.

Amendment No. 14 requires the list to be kept and for data to be held as to how each member may be able to bind the partnership. In a brig accountancy partnership, this is likely to be quite fluid and quite detailed. Different members will have different capacities. It is not something which would easily be held by a registrar. My view is that it is quite sufficient if it is held at the partnership. It also then becomes something which is easily and commonly available to anyone dealing with that partnership and something which under Clause 6(2)(b) he might reasonably be supposed to have consulted in coming to the belief that a person was entitled to act for the partnership on the particular matter that he was discussing with that person.

Amendment No. 25 constitutes another way of looking at this matter. If we are to have Clause 6(3) as it is at present, it should not be possible for this third party access, which relies on dealing with someone, to be cut off at a moment's notice just because a document has been delivered to some remote registrar. There must be a time delay. If someone is to have the whole basis of his o r her dealings with a firm regulated by what has been filed with a registrar, he must be sure that if he looked at the information the registrar had a week ago that is still valid, and that he does not have to check with the registrar every waking moment to see whether or not the person he is dealing with has retired.

Therefore, the proposal in Amendment No. 25 is that if the Government insist on this dichotomy, there must at least be some protection for third parties so that they do not continually have to go back and forwards to the registrar. As I say, I have difficulties with that concept. A list at the limited liability partnership's offices would be commonly available to people to use under subsections (2) and (3) of Clause 6. We would then have just one method of establishing whether a person was entitled to hind the partnership. However, I do not lay any great store by the wording that I have chosen to achieve either of the aims I have mentioned.

The noble Lord, Lord McIntosh, will know that my particular interest in this clause comes from a wish to see this Bill in a form which can be used to fund venture capital funds, which are commonly made up of a group of institutions or rich individuals and a single managing partner. We need to find a practical way of informing a member of the public who is about to deal with someone who is a member of such a limited liability partnership that an individual may not be entitled to bind the partnership in all respects. That member will have an active role in the management of the partnership but it will not be the universal role that the managing partner would take. He or she would not, for instance, be authorised to make investments on behalf of the partnership.

As I said, the big accountancy partnerships commonly have great variations in what an individual partner can do. From my discussions with them it would appear that if there is an easy way in which they can make that information available in a standard form that does not involve having to do it through a registrar, they would feel happy with such a change to the Bill. I look forward to what the Minister may say on these points. I beg to move.

I hope that there is less difference between us on this matter than I had originally suspected. I am grateful to the noble Lord for discussing Amendment No. 25 with Amendment No. 14. I had not recorded that provision in the groupings. I hope that he will forgive me if I say that there is a difficulty here in that he keeps referring to Clause 6 of the Bill as it stands; I have tabled amendments which seek to make substantial changes to Clause 6. I have sent the noble Lord a marked copy of the Bill showing the effect of those changes. I believe, and hope, that the changes that we seek to make to Clause 6 of the Bill—which, of course, we cannot debate yet—will address some of the points that the noble Lord makes.

My understanding has been that the intention behind Amendment No. 14 is to make it easier to allow for "passive" members of a firm, who will not bind the limited liability partnership with their actions. I believe that that has been confirmed by what the noble Lord said about venture capital funds.

Clause 6—this is absolutely fundamental to the Bill—determines that all members are agents of the entity. I understand the concern that a passive member may, inadvertently or otherwise, bind the limited liability partnership when it may not wish to be bound. However, the amendments that we are discussing would provide poorer protection for the third party than we intend.

As I said, agency is fundamental to the principles of a limited liability partnership. It is a necessary protection for creditors that their position should not vary depending on which member they deal with, unless they know that a member does not have authority to act in a particular matter, which is, of course, what our proposed new drafting of Clause 6 allows for. We do not believe that this is an unreasonable requirement—the third party should not be expected to be pro-active; in other words, to go and search the register in order to establish the authority or otherwise of a member. It would, in any case, be possible for the members of an LLP to safeguard their position further by contractually agreeing that a fellow member will not take any action which would bind the firm, and so provide that a member would be contractually liable to the firm if he breached that position.

I believe that Amendment No. 25 expresses a concern that a passive member may, inadvertently or otherwise, bind the limited liability partnership when it may not wish to be bound. However, as I said, agency is fundamental to the principles of a limited liability partnership. We think that it is far more important that the member should have the responsibility of saying to the person with whom he is dealing that he is a member of the partnership, rather than requiring the person outside to refer to the list in the registered office.

The noble Lord said that although third parties are not expected to be pro-active in establishing the authority or otherwise of a member, they are expected to be pro-active in discovering whether someone is an ex-member. We believe the need for this apparent disparity to be clear when one imagines the situation in which a third party may be dealing with an ex-member of a limited liability partnership. If the ex-member was purporting to the third party that he was still a member of the firm, he would be being dishonest, presumably for his own gain. The question here is whether it is right that a limited liability partnership should be bound by the ex-member's actions in such circumstances. We concluded that the limited liability partnership should not be so bound. It would create a risk that any ex-member purporting still to be a member of an LLP could bind that firm by his actions. However, in the situation where a third party is dealing with a bona fide member of an LLP, it is right that the firm should be bound by its member's actions unless the third party is told the extent, or otherwise, of that member's authority.

The noble Lord proposes a "cooling-off" period of 21 days during which an ex-member may still be treated as a member by a third party if he so claims himself to be. I think that that is unfair. The firm can have no control over a person once that person has ceased to be a member and any "cooling-off- period would, in practice, give carte blanche to an ex-member to undertake any act in the name of his old firm. I still hope and believe that we are not that far apart on this issue provided it is understood that the fundamental principle of the Bill is agency; in other words, interaction between the members of the limited liability partnership.

The noble Lord, Lord McIntosh, was kind enough to allow me a meeting with him before Committee stage. He made plain then that agency was not to be challenged; hence the way in which I have phrased the amendments. I do not intend to challenge agency. What I sought to get at here is how a member of the public comes to be in a position where he can reasonably believe a person who is a member of a partnership to have any particular level of authority. There are ways of doing so. If there are only a limited number of partners in the firm, it could put something on its letterhead. But suppose it is one of the big accountancy firms, with 1,000 or 2,000 partners scattered around the UK. How do the Government envisage that the limitations on an individual member's powers will be brought to the notice of a third party dealing with that member?

My proposal in Amendment No. 14 seeks to place a requirement on a limited liability partnership to have a public record which would be easily available and to which it might be assumed a third party would have recourse. If not, presumably something must be stated on a business card or a letterhead which indicates the limitation of a particular partner—otherwise there is no limitation. I should be grateful for the noble Lord's thoughts on that issue.

So far as concerns Amendment No. 25, that is certainly not challenging agency. I understand everything that the noble Lord has said, but he understands what I mean about the third party being in two very different positions under the two subsections. The fact that the Government have conceded Clause 6(3) should allow some flexibility under Clause 6(2) for provision to be made as to what a third party should ordinarily expect to do to arrive at the belief that he is required, presumably reasonably, to reach under Clause 6(2).

I am in some difficulty. I think that our rewording of Clause 6 in Amendments Nos. 18 to 24 and Amendment No. 26 covers the points made. I shall deal with the points in detail when I come to the amendments but it is not easy for me to do so now. Perhaps the noble Lord and I can agree that if he is not satisfied he can still come back to the substance of Amendment No. 14 on Report. We should then be able to make progress by having a single debate rather than two.

My Lords, I may well come back to it when the noble Lord deals with his amendments to Clause 6, but I shall I wait until I have listened to him on those. In the meantime, I beg leave to withdraw Amendment No. 14.

moved Amendment No. 15:

Page 2, line 39, leave out subsection (1).

I am sorry. I am not sure that I understand the noble Lord. I thought that Amendments Nos. 15 and 16 had to go together in the sense that Amendment No. 15 seeks to take out subsection (1) and. Amendment No. 16 seeks to put something in its place. I have clearly misunderstood.

I am dealing with the list as it has been marshalled.

Ishould explain that I asked for the Marshalled List to be changed this morning. The two amendments are not dependent on each other. As my noble friend explained, Amendment No. 15 is a probing amendment to find out what the subsection means. Amendment No. 16 is much wider.

I am grateful. A limited liability partnership allows its members to have the freedom to regulate the internal affairs of a limited liability partnership with the agreement of the other members. One of the key differences between a limited liability partnership and a company is that by allowing the members the freedom to agree how the internal affairs will work, it will be free of the bureaucratic structure of a company. The agreement will remain private between the members.

However, it has never been our intention to allow the agreement between the members to be able to alter what goes into the incorporation document. This is because the incorporation document is published and sets out the public face of the LLP; that is, its name, its address, its initial members and its designated members. So Clause 5(1) imposes a limitation on the freedom of the members to regulate their rights and duties. It does not impose a limitation on their rights to have at any time agreements between themselves about the way in which the business should be conducted.

As I said to the noble Lord, Lord Goodhart, in response to an earlier amendment, we recognise that that does not in itself necessarily provide adequate protection for the outside world; that is, for the people doing business with the LLP. That is why I talked about the default provisions for an agreement which will be established to ensure that not only the interests of members on retirement are protected but, perhaps more importantly, the interests of the outside world are also protected. That is the distinction we seek to make in Clause 5(1).

I am grateful to the Minister for that explanation. I should be grateful if he would read what I said in Hansard and consider whether it might not be of advantage to all to make clear in Clause 5(1) that, whatever is clone under its provisions, it cannot affect the rights of third parties. That is not explicitly stated.

The incorporation document is changeable. If one looks at the provisions of Clause 2(2), there are various aspects of the incorporation document which will be subject to change. Again, I am not sure that Clause 5(1) as drafted takes that into account.

These are all very technical matters and at the moment I am happy to withdraw the amendment.

moved Amendment No. 16:

Page 2, line 44, at end insert—

("( ) Subject to this Act and to the provisions of the incorporation document and of any such agreement as is mentioned in subsection (1), the mutual rights and duties of the members of a limited liability partnership shall be governed by the rules and principles which would apply if the law relating to partnerships applied to them and the property of the limited liability partnership were partnership property.").

I wish to speak briefly to Amendment No. 16 and then move on to speak to Amendment No. 17. The noble Lord, Lord Goodhart, and I are seeking to achieve similar results here, albeit using different wording. In that sense I concur with much of what the noble Lord has already said as regards Clause 5 of the Bill. However, I shall repeat what I said during the Second Reading debate on the Bill; namely, as presently worded, the members of a limited liability partnership will be subject to company law or employment law if no specific provision is made in this clause to the contrary. That would radically alter the nature of the limited liability partnership.

I appreciate that the Government have sought to clarify this in part, certainly with Amendment No. 12. However, I believe that Amendment No. 17 deflects any possible confusion between whether members are employees or partners while enunciating, by reference to the Partnership Act 1890 and the rules of equity in common law applicable to partnerships, the partnership ethos we are endeavouring to maintain on the face of the Bill. Furthermore, as the noble Lord, Lord Goodhart, has already said, we wish to recognise those areas that should be expressed in terms of default provisions modelled on Section 24 of the Partnership Act 1890; or, if not, we would appreciate the opportunity to review the draft regulations setting out those default provisions.

I shall refer briefly to the Minister's letter to me of 10th January 2000. He kindly clarified a number of issues, in particular in relation to Clause 5 of the Bill. He made it clear that there are a number of areas where the Government, through secondary legislation, would like to ensure that the relationship of the members of an LLP is clarified: the right to share equally in capital and profits; the right to be indemnified by the LLP for activities in the course of business; the right to take part in the management of the firm; no entitlement for remuneration for acting in the business of the LLP; the right to have access to books and records and decisions by a majority vote. In essence, we would appreciate some reassurance in relation to Clause 5 that such provisions will be set out in regulations. To that end, we would be grateful to have sight of those draft regulations before final decisions are made.

I should like to make one simple point. The Title of the Bill is thoroughly misleading unless the purport of one of these two amendments is accepted by the Government. The issue of ethos, as the noble Baroness, Lady Buscombe, called it, is crucial. I have been a member of a partnership for ever 30 years and I must say to the House that the spirit of a partnership can in fact be far stronger and more effective than the dry, technical provisions of a limited company. For that reason I do not think that this is a minor matter and I agree entirely with my noble friend Lord Goodhart that the amendments are fundamentally important. I hope very much that the Government will listen to the point being made here.

I thought that we had covered the point of the Short Title of the Bill during the Second Reading debate. I believe that there are two ways in which the Title may be read. The first is that limited liability with the word "partnerships" tacitly held in brackets provides for limited liability to be applied to partnerships. The second is actual limited liability partnerships; namely, the entity that will be created by the Bill before us. That is a completely new entity embodying elements of a partnership and of a limited company.

However, I appreciate the force of the points that have been made from both of the Opposition Benches and I do not wish in any way to underestimate their importance. However, I must return to what I said in response to amendments tabled much earlier this afternoon. The point of the creation of a limited liability partnership is that it is a body corporate which is treated as a partnership only for tax purposes. In other words, in every other respect it is not a partnership. If the noble Lord, Lord Phillips, who told the Committee that he has been a partner for over 30 years, wishes to continue being a partner with unlimited liability, he is entirely free to do so. It is only because members of many partnerships have expressed a wish for limited liability that we have gone to the extent of putting the Bill forward. The only basis on which we can put the Bill forward is to say that, in return for the benefit of limited liability, a price has to be paid.

The price that has to be paid is the price of transparency and, in general, of the application of as many as possible of the rules applying to limited companies. If a director of a company or a partner in a partnership does not like it, they are free not to do it. We are not imposing limited liability partnerships on anyone. We are trying to respond to a legitimate request and, at the same time, to protect the public who deal with these new business entities.

The attempt to provide a default provision that applies partnership law seems to go against the principles that I set out earlier today, and set out, perhaps not entirely clearly, at Second Reading. If we look at the matter in terms of the professional advisers who will be relevant, I take it that it will be tax lawyers with experience of partnerships who will be advising LLPs, and in all other respects corporate lawyers will deal with the issues which LLPs raise. However, as these amendments are drafted, they would create substantial uncertainties in seeking to apply partnership law by default to a corporate body. We are applying the Companies Act provisions by regulations made under the Bill and the application of partnership law in general would lead to confusion as to how they would interact. For example, the rules for winding-up and insolvency for a company are entirely different from those for a partnership. That is why we have decided not to apply partnership law as a default.

After very considerable thought and after the steps that I described in relation to earlier amendments, we have decided that the most practical option is to have this set of default provisions in the regulations which would apply subject to any agreement, express or implied, between the members. In other words, they would come into effect if an agreement did not cover the point. The noble Baroness, Lady Buscombe, read out the list of areas which we propose to include; as indeed I did in response to an earlier amendment. I said that they are available on the website. They are. I shall take them off the website and send them in hard copy to everyone taking part in this debate, and by e-mail to the noble Lord, Lord Lucas, who does not like to see things in hard copy. He has proper concern for the forests of Scandinavia. Whether we can go further right now in providing drafts of the regulations, I do not know. We will certainly have them available before Royal Assent. But we are in the middle of consultation on them and it might be misleading to send draft regulations now. I will do my best. If we can get draft regulations to noble Lords before Report stage we will certainly do so. I can confirm that they cover the points made. I can confirm that we intend that they should be applied and that they should be available to be debated by Parliament as early as possible. I cannot agree with the noble Lord, Lord Goodhart, that they should be on the face of the Bill. Indeed, the noble Baroness, Lady Buscombe, recognised that she might not be able to persuade us of that. We think it is better to provide flexibility for the amendments in case they need to be amended after the Bill has been enacted. A limited liability partnership is not a partnership, and it would be wrong to restrict its future evolution.

I want to say a few words about good faith, as the noble Lord, Lord Goodhart, quite legitimately referred to that. Although he described what I said at Second Reading as "fanciful", nevertheless I am going to have to repeat it. Even though no express duty of good faith is included in the Bill, we believe that as a LLP is a body corporate and the members are agents, the courts would find that a fiduciary duty existed between members and the LLP. If the rules and principles of the Partnership Act were applied to LLPs and the courts were to find that a fiduciary duty existed between members and the LLP, it would mean that an individual member was faced with parallel fiduciary duties: duties that were owed to the LLP and duties owed to fellow members. In such an event the Bill would not be able to provide a mechanism to decide which duty would prevail, even when there was a conflict.

That could result in particular difficulties with regard to the duty contained in the Partnership Act to account for private profits. To whom should the account be made; to the LLP or other members? There would be the potential for double jeopardy and the need to prioritise between the rights of the members and the rights of the LLP.

I know that I have not convinced the noble Lord, Lord Goodhart, on that point. Perhaps it is a subject that we can discuss between now and Report stage. But that is the considered view of the Government. It is also our considered view that we can best deal with these matters by regulation, as I suggested, rather than on the face of the Bill. I invite the noble Lord not to press his amendment.

I have to say that I find the Minister's response somewhat unsatisfactory. I am concerned particularly that the Government have approached this matter on the footing that a LLP is essentially a company similar to the Companies Act companies rather than anything which is in the nature of what we now know as a partnership. It seems to me that it would have been much better to approach the issue from the other direction, and to say that there are partnerships which need protection in the form of limited liability, and that that limited liability should be given to them in a way that does as little damage as possible to existing partnership law.

I accept that the provisions for the winding-up of partnerships are fundamentally inconsistent with the idea of limited liability and that one needs to incorporate the provisions from the Insolvency Act relating to winding-up. I accept also that, given the existence of limited liability, there has to be a great deal more transparency in connection with the financial information about the firm. But it does seem to me that there are a great many principles in partnership law which can, and should, be applied to relations, particularly to the relations between the members of an LLP. I think it is important to preserve what both the noble Baroness, Lady Buscombe, and my noble friend Lord Phillips said about the ethos of the partnership system. I fear very much that that will be lost when we come to LLPs.

I should say that the argument that flexibility is necessary in this case is not correct. It seems to me that what we are looking at is principles of partnership law that have been established, at least since the Partnership Act 1890, and in many cases earlier. Those principles are well-established. It is easy to identify those which are appropriate to LLPs and to weed out those which are not. Certainly I would not expect to see the regulations which apply to parts of partnership law have any need of change. In that case it would have been appropriate for the Government to have introduced these default provisions on the face of the Bill rather than by way of regulation. There is of course a problem with timing. I can understand that it is not easy for the Government, having reached where they are, to go back and have a different approach. It would certainly be much easier for us if we were at least able to see what the Government are actually proposing and not merely what they are consulting about. That is why I regret that it is suggested that the draft regulations will not be available until possibly Royal Assent.

Having said that, at this stage I shall certainly ask leave to withdraw the amendment. We shall have to consider whether, either in this or another form, the amendment should be brought back on Report. I beg leave to withdraw the amendment.

moved Amendment No. 18:

Page 3, line 7, leave out from beginning to ("member") in line 8 and insert ("But a limited liability partnership is not bound by anything done by a member in dealing with a person if—

(a) the").

I rise to speak in support of this group of amendments. For my part, the amendments help to clarify the, meaning of Clause 6. Having cast aspersions on previous amendments in relation to the drafting of the Bill, it is only fair that I say that the drafting in this instance has helped to clarify the parameters of the agent. The Minister is already aware that, in relation to Clause 6 as a whole, we regret the dropping of subsection(1)(c), as it appears in the earlier draft of the Bill. That made specific reference to the law relating to partnerships. Following all that has been said today, it is clear that since the earlier drafting of the Bill the Government have very much moved on in terms of the accent on company law as opposed to partnership law.

I agree that the wording of the clause is much improved, but I want to raise one issue in relation to it. It relates to the particular words to which my noble friend the Minister referred—that the person knows or believes that the member has no authority. It is right to contrast that with Section 5 of the 1890 Act, which uses the expression,

"and the person with whom he is dealing either knows that he has no authority or does lot know or believe him to be a partner".

The concept of belief in relation to "partner" makes a good deal of sense. If one does not believe someone to be a partner, one has no business believing that he has authority to act on behalf of anyone else. But the more I look at it, the more I am troubled by the watering down of knowledge in relation to paragraph (a)—in relation to the question of whether the person who otherwise ought to be able to assume that the member has authority is to be deprived of the benefit of that; that is to say, not to be able to hold the limited liability partnership to account.

If he knows that the person does not have authority, I have no difficulty with the provision at all. That is what the Partnership Act 1890 provided. My question concerns belief. What is it that would justify saying that someone cannot rely on the member binding the firm because he does not know that he does not have authority—yet he believes that to be so? I am worried that that expression should not be taken in any way as amounting to, for example, simply suspicion. I wonder whether it is worth further considering precisely what the expression adds to the wording which otherwise I entirely endorse.

I should be grateful if the Minister could help me by clarifying one or two points on this revised wording. First, under Clause 6(1)(b)., the important thing for a partnership to do if a partnership has such a member—for instance, my accountancy partnership has a member who is not entitled to sign audit reports—is to ensure that third parties dealing with that partner know that he does not have that authority; otherwise, it will be caught by this revised wording. The revised wording takes agency to the point where, if one is dealing with an accountancy firm, one can presume that any individual party with whom one is dealing is omnipotent; that there are no restrictions on his ability. One has every reason to believe that he has the power. He is a partner of the firm and therefore he can do it. However, in order for the revised wording to bite, one must know that he does not have the power.

How does the Minister envisage that a large accountancy firm will bring to the attention of its myriad of clients the restrictions on the ability to act which affect its partners? Will it be sufficient to have a general notice at the bottom of the note paper saying that people ought to consult the partnership about what powers individual partners have? How does he envisage this happening in practice so that a limitation on the partner's ability to act may be made manifest to third parties with whom the person is dealing?

Under Clause 6(3), where a person has been dealing habitually with a partner of a firm and that person then ceases to be a member of the firm, what duties does the limited liability partnership have to inform the client that the person with whom he was dealing is no longer a member? If it neglects to do that, is it still free of all liability just by sending a notice to the registrar? That would seem to be a little unfair.

I absolutely agree with the last point made by the noble Lord, Lord Lucas. I believe that it will be a much more common occurrence than the Committee may think—namely, the active attempt by people to avoid liability under this legislation by chopping and changing registrations of members. If the Committee thinks that I am unduly cynical, I can only say that it is a cynicism born of long experience. I am afraid that in certain sectors of the economy there is a great deal of jiggery-pokery and every advantage will be taken.

I should also like to speak in support of remarks made by the noble Lord, Lord Goldsmith. He is correct in drawing a distinction between knowing and believing. I merely point out that these days solicitors do a multiplicity of things. I refer to them as one example of the professional bodies that will take advantage of the LLP. They sell property; they act as attorneys; they are very often partners and non-executive directors of companies of which their firm is also the solicitor. I suggest that it is extremely difficult to know what someone believes, or believed, given that a court will have to construe that.

A large firm of solicitors or accountants is in an extremely powerful position over and against an individual member of the public in sidelining or derailing a perfectly proper claim brought by an individual by pretending—I use the word advisedly—that they did not believe that the partner concerned did not have authority. In considering the Bill, we need to be extremely careful to give no help at all to those who will, I fear, be unscrupulous in seeking to take undue advantage of what is the extension of an immense public privilege via limited liability.

I have certainly got the big guns raising questions about the new drafting. I acknowledge that. My understanding as we went through the amendments last week was that what we were doing was providing a failsafe on the side of the client—in other words, the provision would make it more difficult for a limited liability partnership to evade any responsibilities. But several noble Lords, including my noble friend Lord Goldsmith, have suggested that the failsafe might be in the other direction. It was certainly not in my mind that that should be the case. However, if the introduction of the words, "or believes", in the part of subsection (2)(b) which refers to authority does go in the other direction and weakens the rights of the third parties, those with whom the LLP is doing business, that is not what is intended.

This is a genuinely difficult issue. I recognise that we have sprung the new wording on the Committee at relatively short notice. I should like to include the wording because I believe it is clearer to do it that way. However, I should like to write to all noble Lords and, if that is their wish, meet with noble Lords before Report stage to make sure that we are of one mind about this matter. I believe that we are all here on the side of the customers rather than on the side of the professionals. I hope that on that basis noble Lords will not resist the amendments which have been agreed to be an improvement in terms of clarity, if not entirely in effect.

moved Amendments Nos. 19 to 24:

Page 3, line 9. leave out ("in a particular matter") and insert ("by doing that thing").

Page 3, line 10, leave out ("with whom he is dealing in that matter either knows") and insert ("knows or believes").

Page 3, line 13, leave out ("person deals with a limited liability partnership after a").

Page 3, line 14, leave out ("the") and insert ("a").

Page 3, line 14, leave out ("he is entitled to treat the former member") and insert ("the former member is to be regarded (in relation to any person dealing with the limited liability partnership)").

Page 3, line 17, leave out ("he") and insert ("the person").

moved Amendment No. 26:

Page 3, line 20, at end insert—

("( ) Where a member of a limited liability partnership is liable to any person (other than another member of the limited liability partnership) as a result of a wrongful act or omission of his in the course of the business of the limited liability partnership or with its authority, the limited liability partnership is liable to the same extent as the member.").

moved Amendment No. 27:

After Clause 6, insert the following new clause—

I had assumed that other noble Lords with more expertise than I would wish to intervene. There are three elements in the amendment. I am duty bound to deal with all three. The first provides that, subject to the agreement between members, the member is not an agent for another member. We do not believe that the provision is necessary. There is nothing in the Bill to provide that one member is an agent of another. The member is only an agent of the LLP.

The second provision is that, subject to the agreement between members, a member is not liable for the debts of the limited liability partnership. Again, we believe the provision to be unnecessary. The LLP is a body corporate and a separate legal person from its members. Under the common law as it applies to corporations, the members of a corporation are not in general liable for its debts. That is subject, of course, to the caveat that our intentions are to ensure, by regulation, that if an LLP becomes insolvent, a member may be required to repay withdrawals made from the LLP in the two years prior to winding up if it is proved that at the time of the withdrawal he knew or had reasonable grounds for believing that the LLP was at the time of the withdrawal unable to pay its debts. I refer to the proposed new Section 214A of the Insolvency Act which we published twice in draft for consultation, most recently in July last year, and which is the subject of a subsequent amendment by the noble Lord, Lord Goodhart.

The third part of the amendment provides that, unless otherwise agreed, a member is not an employee of the limited liability partnership. We dealt with that point in government Amendment No. 12, which has been agreed, by providing that a member of an LLP shall not be considered an employee simply by virtue of being a member. I hope that at that time I explained why it was that we did not believe that this matter should be subject to an agreement of the LLP; it should, in contrast, be part of normal employment law, however opaque that may sometimes be.

For those three reasons, I am afraid that the Government cannot accept the amendment.

I thank the Minister for responding to what I made clear was a probing amendment. I thank him for addressing each of the three areas in detail. I am content to withdraw the amendment.

moved Amendment No. 28:

After Clause 6, insert the following new clause—

I rise to support the amendment. In so doing I repeat the declaration of interest that I made at Second Reading: to wit I was a partner in a large firm of accountants for many years and I continue to act as a paid adviser to that firm.

Of late I have frequently used the words in the Explanatory Notes to explain and justify the Bill. It is very important that the issue which has been raised is specifically addressed. I do not seek to defend the Bill on the footing on which I have defended it; namely, to say that this is a necessary development of the legislation but that nothing in it will in any way change the individual responsibilities of a partner. That is widely believed to be the case outside this House. The point that the noble Lord raises is a valid one, and I support the amendment.

I also support the amendment. I do not seek to repeat everything that the noble Lords, Lord Goldsmith and Lord Sharman, have set out with such clarity. This is a tremendously important matter. During Second Reading there was brief debate on the clarity of the parameters of the liability of the members of a limited liability partnership. Any clause such as this, however difficult to draft, that makes clear on the face of the Bill the general parameters of limited liability, and that individuals will be liable in the same way as they would be liable in certain circumstances as the partners in a normal partnership, can only benefit all those who seek to establish limited liability partnerships following the passing of this Bill.

I agree with a number of the observations that have been made. This is a very important issue and we should see to it that professional liability is not watered down by the Bill. I also agree that it is difficult to see how to achieve that. I do not believe that to apply the law of partnership, as the amendment seeks to do, is the right solution to the problem. My noble friend has highlighted our reliance on the duty of care enshrined in common law to achieve the liability of the negligent member of an LLP. He questions whether that is right or safe.

I recognise that there are concerns about the treatment of professionals and their freedom to operate with limited liability. But with this member we do not want to change the regulation of professionals. We intend to create an alternative corporate form which will be available to anyone carrying on a lawful business with a view to profit—that is, not just to professionals.

My noble friend and others have queried the statement in paragraph 10 of the Explanatory Notes that,

"Members benefit from limited liability because the LLP is a separate legal person. The LLP and not its members will be liable to third parties. However, a negligent member's personal assets will still be at risk. By way of example, under the general law, a professional person owes a duty of care to his client. Negligent advice given in breach of that duty [of care] … will, in general"—

I emphasise the words "in general" because that is meant to be in the form of a qualification—

"give rise to a potential liability on the part of that member as well as the LLP".

We think that that is indeed the case. A negligent member's assets will be at risk. The risk for members of a limited liability partnership may be smaller than for partners in a partnership, but the risk is still there. That is why the Explanatory Notes are worded in that way. It is justifiable because of the additional liability of the partnership as a body corporate. That is where the protection of the third party comes in.

Will the Minister explain the alleged additional protection? The additional liability of the LLP adds nothing to what the liability would have been if it had been operating simply as a partnership.

The intention is for the assets of the LLP to be available to compensate the complainant—I think that that is right term, not the plaintiff—against any claim. I know that the noble Lord is sceptical about that because of the issue of joint and several liability. However, I remind him that from many points of view joint and several liability is a difficult concept to sustain.

We have approached the creation of this entity, therefore, on the basis that it will be a body corporate, and that the principles and regulations applied to companies are the most appropriate ones to apply to the LLP. We see significant disadvantages to what is being proposed. The limited liability partnership will be an entity which can be used by professionals and non-professionals alike. It will create a choice of limited liability entity between a company or an LLP. We believe that it is important to ensure a level playing field between the two entities.

Responsibility and the assumption of responsibility to a third party is a general question which runs through the law of tort. Were we to make a statutory provision, as the amendment suggests, we would be freezing the law for members of a limited liability partnership by putting it into statute law whereas common law would continue to evolve. This is particularly dangerous in the context of the ongoing company law review, to which I have referred. It would create the prospect of an undesirable disparity of treatment.

Further, we do not believe that this Bill is the right way to amend the scope and application of the law of tort. We tread on dangerous ground. Should the courts have to consider whether a member of an LLP had been negligent, they would consider, among other things, whether that member had assumed responsibility sufficient to give rise to liability for economic loss flowing from the reliance placed on that. That is the point of Williams v Natural Life to which my noble friend referred. In Williams it was found that there had been no personal dealings between the director and the plaintiffs and no exchanges or conduct between them which could have conveyed to the plaintiffs that the director was willing to assume personal liability to them. indeed, there was no evidence even that the plaintiffs had believed that the director was undertaking personal responsibility towards them. The point here is that the assumption of responsibility was to be determined objectively so that the primary focus had to be on exchanges between the parties.

Clearly, the courts' decision cannot be forecast with absolute certainty, since their decision in any case would depend not only on the general nature of the relationship between the member of an LLP and his client, but also on the exact facts of that relationship, as is made clear from Williams.

I accept that a consequence of relying on common law is the possibility of a greater degree of evolution through the comet on law than where express provision is made in statute. But we see no reason to make special provision for a limited liability partnership where it does not exist in company law.

In the context of the company law review which will undoubtedly have to consider the important issues raised by the amendment, I hope that my noble friend will not pursue an amendment which would lead at least in the short term to an imbalance between the law for companies and the law for limited liability partnerships.

I confess to being somewhat disappointed and not persuaded by the Minister's reply. I understand that after the Bill becomes law there will be three types of entity: an ordinary partnership; a limited liability partnership; and an ordinary company. In an ordinary company, the shareholders are liable only to the extent of their contributions—the capital—they have put into the company. In an ordinary partnership, the partners are liable for all their assets because of the joint and several liability principle.

I had understood that the principal purpose underlying limited liability partnership was to provide a hybrid in which one did not have all the consequences of an ordinary company but excluded the joint and several liability principle. Therefore, the partner would not be liable for the acts of his partners save to the extent, as in a company, that he had contributed to the assets of the partnership. At present if one sues a partnership, one looks first no doubt to the assets the partnership has built up—its buildings, offices, cash balances, and insurance policies—before turning to the homes and cars of individual partners.

As the noble Lord, Lord Sharman, said, it is understood outside this Chamber that the Bill intends to keep the individual responsibility of the partner as still his personal responsibility. Perhaps that would assist towards maintaining the professionalism and ethos of partnerships to which the noble Baroness, Lady Buscombe, and the noble Lord, Lord Phillips of Sudbury, referred.

One can argue about and differ on the interpretation the courts may give. I have expressed my position in relation to that. In tabling the amendment, I have sought not to change the general law but to give the member of the limited liability partnership the same liability he would have had for his own acts—not others' acts— those circumstances.

Before my noble friend concludes his remarks, I repeat the difficulty which we see. I shall be glad to meet him again to discuss the issue—and indeed any other noble Lords who would care to do so before Report stage. Of course, if we were persuaded, we would put forward appropriate amendments.

I do not know whether I am grossly oversimplifying the issue. We seem to be talking about two aspects of common law: the law of contract; and the law of tort. The law of contract applies to the body corporate; and the law of tort remains applicable to the individual members. That is where negligence comes in. That is why there is a sense in which the individual responsibility of a member is reduced: it is reduced only to obligations under the law of tort. But the important point to establish—we have to arrive there in the end—is that the protection of the clients., the customers, is not diminished in total.

I agree with my noble friend that there are two distinct issues. As regards his first point, I was about to say that I do not intend to press the amendment. I have heard the remarks made by other Members of the Committee and I am happy that the Minister is willing to consider the matter further. I beg leave to withdraw the amendment.

moved Amendment No. 29:

Page 3, line 39, at beginning insert—

("( ) Each limited liability partnership shall have a minimum of two designated members who shall be responsible for complying with the administrative and filing provisions of this Act and regulations made pursuant to this Act.").

Clause 8(2) provides that:

"if there would otherwise be no designated members, or only one, every member is a designated member".

That is supposed to mean that there should be at least two designated members. I do not believe that the amendment makes the role of the limited liability partnership any clearer than the current provisions included in the Bill and the regulations. It provides an inaccurate paraphrase of their function because the amendment adds the requirement that designated members should be responsible for complying with the "administrative and filing provisions" as set out in the Act and regulations.

I understand the difficulty with Clause 8. It sets up all the conditions under which designated members are to be appointed and changed and how notification is to be given, but it does not state what they will do. I apologise for that, but on questioning it appears that the drafting is not uncommon. The reason is that the role and responsibility of designated members is analogous to the phrase "an officer of the company" under the Companies Act. Under that Act, the obligations on an officer of the company appear all over the place in many aspects of company legislation. If we were to say that the role of a designated member is analogous to the role of an officer of the company, we might be trapped into going through company legislation and finding hundreds of instances where we should have to specify what the officer of the company, and therefore the designated member, does. For the sake of saving ink and paper, we did not want to do that.

It is right that in general a designated member has administrative and filing functions, but it would be wrong to limit his role in that way. In some provisions, he is given a task which goes beyond the mere administrative and in which he would take action that is significant for all the members. For example, designated members sign the accounts, appoint the auditors for the first financial year in respect of which auditors are appointed, and may apply to the Registrar of Companies for the LLP's name to be struck off the register.

It would be complicated, and I believe unnecessary, to include this additional provision in the Bill. Despite the clause being counter-intuitive in the sense that it does not spell out the functions, there is a good and rational reason for it and I hope that the noble Baroness will not press her amendment.

I thank the Minister for that explanation, but I remain unconvinced that there is an explanation of a designated member. The difficulty is in the drafting. I agree that the drafting of the amendment is unsatisfactory, but it is important that wherever possible it is clear as to who is what. I am disappointed that the Bill launches into what someone can and cannot do without explaining why a designated member differs from a member. However, I accept the Minister's response and beg leave to withdraw the amendment.

moved Amendment No. 30:

Page 4, line 22, leave out ("fourteen") and insert ("28").

I am pleased to say that I can meet the noble Baroness half way. We will split the difference. I cannot agree to Amendment No. 30 because the 14-day limit on the notification of changes to members is the same as for the notification of changes to directors. It is an important protection for those having business with them that they should be able to know quickly what changes have taken place in the identity of members. We do not see any reason why it should be any different for LLPs and companies.

However, the noble Baroness has a point in Amendment No. 32. Indeed, in our response to the trade and industry committee, we said that we should allow returns to be made within one month of any change and her stipulation of 28 days is closer to one month than ours of 21 days. It is longer than we provide for companies but I take the noble Baroness's point about large partnerships with hundreds of members and I am willing to accept Amendment No. 32.

I should like to return to something the Minister has just said: that the matter of registering members' names and addresses was an important protection for those who deal with an LLP. In what way does Clause 6 not cover that to make such registration unnecessary? There is no obligation on someone dealing with a partnership to inquire into the register at all. As long as he believes the person to be a partner, he is safe. I cannot see what additional protection is afforded by having the register updated so frequently.

If I said that, I was giving the wrong impression. I did not say that registration is unimportant; it is clearly important. I said that we must have a better protection and one which is available without the proactive step of going to the register. That is why I said that, for example, on the letterhead and in any business correspondence, the members of a limited liability partnership must indicate that they are members. The fact which matters in that respect is that we are providing in the Bill a better protection than registration. It does not in any way remove the necessity to have an efficient registration system, which is what is provided for here.

I understand that, but my understanding of the Bill at present is that having the members' names on the register is not important as part of the protection of third parties and therefore it should be perfectly possible to make that time limit 28 days. Third parties gain nothing by the speedy updating of the register. Twenty-eight days would be quite sufficient because the protection is elsewhere in other clauses of the Bill.

The noble Lord may believe that it is belt-and-braces; that nothing is taken away by providing for 14 days. Fourteen days seems to work for limited companies. In a way, it is in the LLP's interest to notify the registrar, but the position must be the same as that for limited companies and there is no reason why it should not be.

I thank the Minister for his response to Amendment No. 30. I apologise for not making it clear at the outset that I would be speaking also to Amendment No. 32. I believe that the Minister judges from my inexperience here, but he obviously realised that I was referring to both amendments. I beg leave to withdraw the amendment.

moved Amendment No. 32:

Page 4, line 25, leave out ("21") and insert ("28").

moved Amendment No. 33:

Page 4, line 42, at end insert—

("(5A) If a limited liability partnership fails to comply with subsection (1), the person who becomes or ceases to be a member or designated member or whose name or address has changed may deliver notice to the registrar.

(5B) Any person who delivers a notice under subsection (1) or (5A) which is materially incorrect shall be guilty of an offence unless he had reasonable grounds for believing the notice to he correct.").

I certainly do not feel strongly about that as an issue of principle. The amendment creates a requirement for an LLP additional to that placed on companies. Under company law, when the details of a director change, the company has the responsibility for informing the registrar. In situations of default, the company and officers are in default and liable to a fine. There is no expectation that the director whose details change needs to inform the registrar and face the risk of a fine if the information is materially incorrect.

If we were to allow a member to inform the registrar of changes there might be confusion both within the LLP and with the registrar, as a member is unlikely to be aware whether or not a registrar had been notified. Therefore, the same notification could go to the registrar twice and a situation could arise where the registrar did not know which to believe; for example, if a member left the LLP and informed the registrar of the fact when the LLP had already done so. That could result in additional work for the registrar and confusion for the outside world. As I said, I do not feel strongly about the matter, but, if the noble Lord has a point, it is one which applies to company law more generally. Since it is not an urgent point, it might be as well for it to be included in the company law review rather than introduced separately for LLPs and not for companies.

I thank the Minister. I accept that this is not the most important amendment that we are discussing today, but it is not right to treat LLPs and ordinary companies on the same footing here, because there is a distinction between membership of a company and directorship in the case of ordinary companies which does not apply to LLPs, where membership and directorship are a single combined function. In those circumstances I believe that there is a justification for treating LLPs differently from directorships. Indeed, there may be cases where a member is more anxious to dissociate himself from a company than a director would be. However, certainly for today I beg leave to withdraw the amendment.

moved Amendment No. 35:

Page 5, line 6, after first ("partnership") insert (", or any other activity or function of such a partnership,").

I have two kinds of difficulty with these amendments. One is a technical difficulty and the other is a difficulty of principle. I shall deal first with the difficulty of principle. The purpose of the Bill as a whole is to ensure that businesses which are currently carried on in partnership can continue to carry on those activities without the disadvantage of unlimited liability. The amendment would mean that activities which cannot be carried on in partnership would be able to be carried on through the medium of an LLP. Therefore, they go beyond the scope of the policy that was behind the introduction of the Bill. The noble Lord has been quite open about that point in saying that he is interested in opening up the matter to venture capital partnerships and, I believe, also to property. I believe that he said that at an earlier stage. I may be wrong.

I do not believe that the noble Lord was present when we debated the earlier part of the Bill this afternoon. We carried Amendment No. 5 to Clause 2. The definition of the purpose of an L LP is,

"carrying on a … business with a view to profit".

That is more explicitly in line with the provisions of the 1890 Act than it was before. I am afraid that what the noble Lord proposes in the amendment would extend the availability of LLPs beyond that which was originally intended with partnerships. Therefore, that is the difficulty of principle.

There is quite a big technical difficulty. As Clause 10 is currently drafted, the special tax treatment of LLPs as though they are a partnership is given only when the LLP carries on a trade, profession or business. When those conditions are not met by an LLP, it will be taxed as though it was a company. The amendments would have the effect that LLPs were taxed as partnerships, irrespective of the activities that they carry on. However, they could then encounter the technical difficulties which I shall set out.

From the point of view of calculating and collecting tax, there would be no difficulty. But taxing LLPs as companies is undesirable to those who believe that they may wish to set up LLPs, and we have agreed to tax them, for the most part, as partnerships. However, the reason that there are no technical difficulties in taxing an LLP as a company is important. That is because, by and large, companies can receive any type of income, and the Taxes Acts have evolved to be sufficiently flexible to deal with that. But Taxes Acts have evolved differently to tax partnerships established under the Partnership Act 1890. Because of the way that that Act defines partnerships as,

"the relationship that exists between persons carrying on business in common with a view of profit",

that, with some updating of wording, is what is now in Clause 2. The Taxes Acts have evolved to tax the income, and only that income, that can arise from such a partnership. As a result, the Taxes Acts provide for the taxation of income received by partnerships from carrying on businesses, which is a wide term that includes trades or professions.

Therefore, it we accepted the amendments, the Taxes Acts would have to be extended (by amendment through this Bill) to provide for taxing partnerships that had been established for purposes beyond those for which they currently cater. We should need to have a special tax regime for LLPs based on that for partnerships but covering non-business LLPs and their non-business activities. That would not be easy. We should need to identify, and probably widen, all the current Taxes Acts provisions that deal with partnerships. In addition, further tax rules for non-business LLPs might need to be created.

I do not want to claim administrative convenience as my only objection to the amendment. However, it is quite a serious objection. I believe that such a provision would make a lot of money for professionals in interpreting it and would involve much time for parliamentary counsel in framing it. Therefore, I rely rather on my objection of principle.

I am grateful for that explanation. Quite clearly, I am overwhelmed and I beg leave to withdraw the amendment.

moved Amendment No. 36:

Page 5, line 10, at end insert—

("( ) In section 362(2)(a) of that Act (loan to buy into partnership), after "partner" insert "in a limited partnership registered under the Limited Partnerships Act 1907".").

moved Amendment No. 40:

Page 5, line 46, leave out from ("partnership") to end of line 4 on page 6 and insert ("in connection with its incorporation within the period of one year beginning with the date of incorporation if the following two conditions are satisfied.

(1A) The first condition is that immediately before its incorporation the person—

(a) is a partner in a partnership comprised of all the persons who subscribe their names to the incorporation document (and no-one else), or

(b) holds the property conveyed or transferred as nominee or bare trustee for one or more of the partners in such a partnership.

(1B) The second condition is that—

(a) the proportions of the property conveyed or transferred to which the persons mentioned in subsection (1A)(a) are entitled immediately after the conveyance or transfer are the same as those to which they were entitled immediately before its incorporation, or

(b) none of the differences in those proportions has arisen as part of a scheme or arrangement of which the main purpose, or one of the main purposes, is avoidance of liability to any duty or tax.

(1C) For the purposes of subsection (1A) a person holds property as bare trustee for a partner if the partner has the exclusive right (subject only to satisfying any outstanding charge, lien or other right of the trustee to resort to the property for payment of duty, taxes, costs or other outgoings) to direct how the property shall be dealt with.").

moved Amendment No. 41:

After Clause 12, insert the following new clause—