Committee stage in the Lords
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The Parliamentary Under-Secretary of State, Department for Constitutional Affairs (Baroness Ashton of Upholland)Labour- Quote
- My Lords, on behalf of my noble and learned friend, I beg to move that the House do now again resolve itself into Committee on this Bill. Moved accordingly, and, on Question, Motion agreed to. House in Committee accordingly. [The LORD SPEAKER in the Chair.] Clause 32 [Directions: procedure]:
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Lord Campbell of AllowayConservative- Quote
- moved Amendment No. 52:
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Baroness Farrington of RibbletonLabour- Quote
- Would the noble Lord, Lord Campbell of Alloway, be so helpful as to say whether that means that Amendment No. 65 is now re-grouped with these two amendments? It would be helpful to know that when Members debate the group.
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- Lord Campbell of AllowayConservative
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- I did not quite hear what the noble Baroness said, but if I go wrong I would be grateful if she would put me right.
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- Baroness Farrington of RibbletonLabour
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- My understanding is that Amendment No. 65 will be taken later.
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- Lord Campbell of AllowayConservative
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- Yes, but I have to refer to it as relevant. I have had a word with the noble Lord. Thank you very much. Amendment No. 139F would subsume Amendment No. 52 because it is applicable only to directions from the LSB under Clause 31. The situation has changed overnight. My noble friend Lord Kingsland raised the issue of judicial review at Second Reading but there was no response to his question. Yesterday, at about three o'clock, I said: “as matters stand, it”— the LSB— “appears to have … absolute discretion, without means of ultimate judicial resolution”.—[Official Report, 22/1/07; col. 898.] At 10 o'clock it was accepted that the LSB was subject to judicial review, a concession for which I am indeed grateful, so I scrapped my speaking notes. Today, therefore, the question that arises is whether that concession should be in the Bill. Should it be in Amendment No. 139F or Amendment No. 65 or in neither? I am not speaking to the amendment, but merely referring to the dilemma. We now have to address that issue. If that is so, in what form should that amendment be? This is not just a situation in which we can sit back and rely on Pepper v Hart, which is a source of last relief. As appears from yesterday’s debate on the framework within which the LSB operates, it is not at all clear, and clarity is highly relevant to judicial review. We must therefore consider, in summary, what we are dealing with. Today, we are in effect dealing with a continuation of what happened yesterday. It was proposed that the structure of the Bill should define the parameter within which the LSB should exercise its discretion; that the integrity of the approved regulators be acknowledged in the Bill; and that the quality and standards of legal services be maintained, as set by self-regulation, and recognised in the Bill. It was also proposed that a fair balance between the interests of the consumer and the approved regulator be assured; that the LSB should only intervene on the complaint of the consumer after notice has been given to the approved regulator to enable representation; that some acceptable means to that end should be devised; and that the conflict between the regulatory objectives was to be resolved proportionately, taking into account all such obligations of like importance on a balance, if fine, to be tipped in favour of public interest, as spoken to on Clause 1. That could be achieved by a series of piecemeal amendments, or by a trigger clause in primary legislation, requiring the Secretary of State to introduce regulations enabling him to issue and require a code of practice, having full legal efficacy in the civil field, as spoken to by Lord Denning, Lord Elwyn-Jones and Lord Henderson of Brompton, the noble and learned Lord, Lord Cameron of Lochbroom, and other noble Lords in a short debate on 15 January 1986, cols. 1075 to 1104. Such a code could assimilate merely procedural provisions without eroding or overloading the structure of the primary legislation. I do not know how this is to be resolved. It could be a “multi-approach”: some of the procedural provisions could be dealt with in the code, having legal effect; some provisions would essentially have to remain in the Bill. I cannot entertain how that should be done; in fact, I do not know. It is a difficult matter to resolve, but I do know that it must be done. If the Government were to accept Amendment No. 65, then, subject to the advice of my noble friends Lord Kingsland and Lord Hunt of Wirral, one would have to consider whether these judicial review amendments would be required in the amended Bill, or whether they would be otiose, as the principle would have been accepted. I do not wish to take much more time, but I shall conclude with a word to seek to alleviate the concern of the noble Lord, Lord Whitty, who I am glad to see in his place. I have the greatest possible respect for him, and I have disagreed with him on too many occasions. With respect, the noble Lord seems to be unaware that consumer interests can be contrary to public interests and that if they are, as was explained by the noble and learned Baroness, Lady Butler-Sloss, they must be subservient to the public interest. That is the first concept that I ask the noble Lord to consider. The noble Lord does not seem to be aware that it is in the interests of the consumer that the quality and independence of legal services set up and maintained by self-regulation should remain as proposed in yesterday’s debate. I hope that, as chairman of the National Consumer Council, the noble Lord will accept that what he said about limiting the potential for intervention cannot and does not affect judgment on the gravity of a complaint from the council about the conduct of the Law Society, which is only one of the approved regulators. I say nothing about the Bar Council because I have too close an interest to declare. The noble Lord, Lord Whitty, entertains a serious misconception. As chairman of the organisation, I respectfully ask him to reconsider his position. I beg to move.
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Lord Hunt of WirralConservative- Quote
- I am very grateful to my noble friend Lord Campbell of Alloway not only for his tremendously hard work on the Joint Committee, but also for giving us an opportunity to look at what rights of appeal exist about decisions of the Legal Services Board. The amendment, to which I readily put my name, provides for one means of challenge, but the Joint Committee was greatly exercised by the fact that the Bill provides restricted rights of statutory appeal. Paragraph 186 of the Joint Committee’s report states: “Other than in one case, the draft Bill provides no right of appeal against the decisions of the LSB ... In short, an approved regulator has a statutory route of appeal against the imposition of financial penalties, but no access to judicial review. If any other sanction is imposed, there is no statutory right of appeal, but the decision of the LSB may be subject to judicial review”. I find this very confusing.
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Lord Maclennan of RogartLiberal Democrat- Quote
- I welcome the probing amendment of the noble Lord, Lord Campbell of Alloway. I acknowledge, as he did, that it is related to Amendment No. 65. Broadly, the Bill spells out three powers for the Legal Services Board: to give directions, to issue censures and to impose financial penalties. It is perhaps slightly remarkable that such detailed attention is given to the issue of how there may be an appeal against financial penalties but not to appeals against public censure or directions, which may be challengeable in the public interest. The question is very simple: why the distinction?
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Lord Lyell of MarkyateConservative- Quote
- This is an important point, whether one looks at Amendment No. 52, which we are currently discussing, or Amendment No. 139F, which is grouped with it. We shall come to it in a different guise when we come to Amendment No. 56 and the amendment in the name of the noble Lord, Lord Maclennan of Rogart. It is all about the question of appeal, whether in the form of a straightforward appeal to the High Court, as we find in Amendment No. 56, or of judicial review. It comes down to a principle that I think the Government would readily accept, that no body that exercises power ought to exercise it in the absence of review to the courts or some superior appellate body. That is a very important constitutional principle; otherwise the power is potentially unfettered. There should be no worry on that account among those whom the noble Lord, Lord Whitty, represents. If the Legal Services Board exercised power in a way which was seriously not in the interests of consumer bodies, those bodies themselves would be entitled to apply for judicial review. Whether they would be entitled to appeal if the directions were not against them is a more difficult question. In this probing amendment, as my noble friend Lord Campbell of Alloway—to whom I am greatly indebted for raising the matter—said at the outset, one is interested to hear how the Government and the Minister approach the matter. I would hope, as I say, that their approach fully recognised the principle of some form of effective appeal, and gave us some guidance on how they think that can best be dealt with, not just in the comparatively focused—and, to that extent, comparatively narrow—way that which to be covered by the Bill as presently drafted, but in terms of how we should end up.
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Lord WhittyLabour- Quote
- I say to the noble Lord, Lord Campbell of Alloway, that I was not going to oppose this amendment, at least in its substance—although it may be in the wrong place and need redrafting. I recognise the importance of having a judicial review safeguard which can take wider issues into account, including different interpretations of the public interest in these matters. I will, however, be opposing Amendment No. 56. The Government need to make it clear that judicial review would, in certain circumstances at least, be available in this area, as they attempted to do earlier, but that detailed appeal structures, particularly in areas of relatively minor sanctions, would not be appropriate.
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- Lord Campbell of AllowayConservative
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- With respect, I quite understand what the noble Lord, Lord Whitty, is saying. This issue arose with the use of the phrase “raising the threshold” on the Liberal Democrat Benches regarding when the LSB could intervene. That was in the context of the concept that the LSB’s function was to respond to a complaint, particularly from the institution of which the noble Lord is chairman, but not, so to speak, to intervene otherwise within the general province of the regulators. I think that the noble Lord objected to that limitation on the grounds he gave, which I hope he now understands were perhaps not well conceived.
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- Lord WhittyLabour
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- I am not sure whether I should continue this dialogue for much longer, but I did object to the threshold being lowered. I object to a series of amendments that seem to be proposed in this Committee which would somehow hobble the Legal Services Board, leaving it a toothless tiger, if I can mix my minor veterinary operation metaphors. I accept, however—I think that I made this clear last night—that the ideal position is that the Legal Services Board would be a light-touch regulator, intervening very rarely. But it is a supervisory board, and in any supervisory situation, whether in the workplace or in structures of institutions, the secret of being a good supervisor is to tread softly and carry a big stick which you occasionally show but, if possible, never use. It seems that the same relationship exists between the LSB and the front-line regulators. It has to have theoretically strong powers to enable the Law Society, in particular, to raise its game in fear of those deterrents; but the objective of the whole structure is that it would not have to use it very often, if at all, once the Law Society had raised its game.
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- Lord Maclennan of RogartLiberal Democrat
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- Surely the noble Lord will concede that it would be unacceptable to use a big stick to thrash an innocent person on the basis of inadequate information and that it would be reasonable to try to prevent it happening.
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- Lord WhittyLabour
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- If the noble Lord heard me right, he will know that I said “carry” a big stick—that is, have sanctions available—show it occasionally as a threat, but, if possible, never use it. That seems a good metaphor for the Legal Services Board.
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- Baroness Ashton of UphollandLabour
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- What an interesting start to our deliberations—
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- Baroness Ashton of UphollandLabour
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- Before I failed to realise that the noble Lord, Lord Kingsland, had not spoken, I was about to say what an interesting start to our debate this has been. I, too, am grateful to the noble Lord, Lord Campbell of Alloway, for not only moving his amendment but reminding us of the range of issues that we debated yesterday. I was reflecting on those with my officials this morning and how important I felt our discussions had been. I was able to consider a number of matters, as I had agreed to do, and look forward to discussing those away from your Lordships' House as well as on the Floor of the House at Report. I intend to try and be the sensitive parliamentarian to whom the noble Lord referred. This fits in with the jigsaw he described to us yesterday that he wants us to put together. I will wait until the final day of Committee to ask whether he thinks that we have completed the jigsaw puzzle in taking forward all these issues. The noble Lord, Lord Kingsland, is right that we have before us a number of amendments that deal with the specifics on appeal. Let me answer the specific amendments, as I would find it helpful to put that on the record, and deal as well with the particular questions that were so succinctly put by the noble Lord. I agree with the noble Lord, Lord Campbell of Alloway, and other noble Lords that judicial review will be the appropriate remedy in instances where approved regulators want to challenge the lawfulness of the board’s regulatory decisions. As it is a public body, the board’s decisions are already subject to judicial review. We have drafted the Bill to allow for this; we do not think that it has to be stated in the Bill because that is the way that it will work. We do not want to set out in the Bill what the judiciary may consider when reviewing the legality of the board’s regulatory decisions. For example, compliance with the European Convention on Human Rights is already a matter for consideration on judicial review. The noble Lord, Lord Campbell of Alloway, knows that well, not least from his distinguished work on the Joint Committee on Human Rights, before which, as Minister responsible for human rights, I have had the privilege to appear. We do not see the need to remind the judiciary of what should be considered in the exercise of their supervisory jurisdiction. We are concerned that putting things in the Bill might inadvertently restrict the ambit of any such review or suggest that other grounds are less valid or are to be accorded less weight. We would not wish to do that accidentally, so we are not drawn to putting such provisions in the Bill. The noble Lord has drawn to our attention a number of important points which he believes may require consideration in judicial review proceedings. I should like to speak briefly about each of those. On proportionality and independence, the board is already under a duty to be proportionate—we discussed this at great length yesterday under Clause 3(3)—and to act in a way that is compatible with the regulatory objectives, which includes encouraging an independent profession. If the board has not complied with these requirements, that would of course form part of a review. I have already dealt with the point about the European Court of Human Rights. Suffice to say, this has already been taken into account and does not need a specific mention in the Bill. I agree with the noble Lord’s sentiment that the quality of legal advice should be kept at the highest standard. When taken together, my view is that the regulatory objectives ensure that the quality of the legal profession and its services, including advice to consumers, is maintained. But we do not think it should be given special consideration over and above other issues. In Amendment No. 139F, the same concerns apply, but to a greater extent, given that it sets out the grounds on which judicial review can be applied for rather than considerations that may be considered. Again, I am not drawn to putting the conditions in the Bill because I do not want to narrow or limit the breadth of judicial review. That would not be beneficial for consumers or for the approved regulators. I do not want to reopen the debate on public interest—we have already debated that at length. Suffice to say, the board has a duty in this regard, and its failure to comply with it could be a ground for judicial review. Similarly, an approved regulator could and should apply to the court for judicial review if the board’s decision fails to comply with the European Court of Human Rights or the tenets of natural justice, however inconceivable that is. I hope that when the noble Lord reflects on the detailed response I have given to the points in his amendments, he will feel that I have covered them.
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- Lord Hunt of WirralConservative
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- I am fascinated by some of the Minister’s comments. The procedure of judicial review has arisen—this was borne out by the quotations that I utilised—out of the fact that the Government left no other course. As Michael Fordham put it very well in his Judicial Review Handbook, “By judicial review, the judiciary assumes the constitutional responsibility of curbing executive power”. For the Government now to encourage judicial review, when it was only spawned as the sole real method of curbing executive power, is fascinating. I believe the Minister said that she did not want to limit the extent of judicial review. I well remember the words of former Home Secretary David Blunkett about the result of one or two such reviews, but it is strange for the Government to be contemplating that it is the right remedy. We will come to that matter later, but surely it is better to include in the Bill clear appeal procedures rather than leave it to a procedure that has evolved as the only means of curbing executive power.
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- Baroness Ashton of UphollandLabour
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- I take the view that public bodies operate in a way that means that there is a right of judicial review. I was seeking to deal with the detail of the points made by the noble Lord, Lord Campbell of Alloway, by going through them line by line and addressing where judicial review would apply. The noble Lord, Lord Hunt, is a lawyer and I am not, but one thing I know for sure about legislation is that it is always difficult to set out all the circumstances that might apply when one makes application to the court. Indeed, in other parts of our legislative duty, the noble Lord and I would probably argue in opposite directions because it is important that we do not curb the rights of those who are entitled to judicial review. I have sought to explain that, in our view, that would be inappropriate. The right of judicial review is there because the board is a public body. It is an appropriate remedy if people believe that there has been unreasonable behaviour or seek judicial review for other reasons. But to say that it is available on these or other grounds would curb something inappropriately. The noble Lord, Lord Kingsland, very reasonably said that you can lodge an appeal later. Although we will come to the detail of that, it is reasonable for him to ask a general question. We have established that judicial review is available. However, the fining power within the Bill is, we believe, a stronger power. Noble Lords and those who are being regulated may also feel that it is stronger, more definitive and has potentially greater and far-reaching consequences. We therefore wanted to add the ability to go to appeal specifically around that power. So we did so, by saying that there would be leave to go to the High Court to appeal on that power. In order to ensure that we did not end up in a situation where someone could appeal on that and have a judicial review, the ouster clause simply says, “If you're doing that, you can't have the judicial review as well because you already have the right to appeal”. That is what it is for. The purpose of the measure is to provide a judicial review in general and an appeal specifically around fining, but if there is an appeal around fining there is no need for a judicial review as well. The ouster clause therefore says that you cannot do both. That is what this part of the Bill seeks to do.
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- Lord Campbell of AllowayConservative
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- I sincerely thank all noble Lords who have spoken. One has to accept that it is inevitable that some decisions of the LSB are bound to be flawed for the reasons given as grounds in the two amendments to which I have spoken. Perhaps I should accept, having reread the Official Report after I tore up my notes, that I got it wrong when I referred to assembling pieces in a jigsaw to make a pattern. I had it in mind that perhaps—and I think that my noble and learned friend Lord Lyell of Markyate got near the point—there should be one or two amendments to the Bill to cover matters of principle. But so much of a change in structure, to which my noble friend Lord Hunt of Wirral referred, really should not be like pieces of a jigsaw. These are procedural provisions that should really be introduced by secondary legislation or a code of practice, to which Lord Denning and Lord Elwyn-Jones spoke, to relieve the structure of the Bill from erosion and being over-burdened with detail. We have reached the stage when nothing more can be said of any constructive value until consultation has ensued with the Minister and my noble friends, to whom I defer—although I do not necessarily defer to the Minister. I should be most interested to hear about the consultations—and perhaps I shall be allowed to attend them—and what the noble Lord, Lord Thomas of Gresford, who has made a great contribution, and the noble Lord, Lord Maclennan of Rogart, have to say. We need to have a constructive meeting to get this Bill into shape. It is idle for the Minister to say—and I quote her very words—that the “framework is very clear”. It is not clear at all; it is in a most frightful mess and must be put right. This is the object of the consultation which, I am sure, can be undertaken with considerable constructive purpose. I hope that the noble Lord, Lord Whitty, will have time—although he will disagree—at least to attend the consultation, so that he knows what is going on and realises that it is certainly not my purpose to put hurdles in the way of the LSB to prevent it fulfilling its proper function. On that basis, thanking all noble Lords, I beg leave to withdraw the amendment. Amendment, by leave, withdrawn. Clause 32 agreed to. Schedule 7 agreed to. Clause 33 agreed to. Clause 34 [Public censure]: [Amendments Nos. 53 to 55 not moved.] Clause 34 agreed to.
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Lord Thomas of GresfordLiberal Democrat- Quote
- We support the amendment in principle, but it is encapsulated in my Amendment No. 65, which we shall reach later, where I seek an assurance from the Minister that judicial review is available, not just for the question of public censure, but for the imposition of directions, performance targets and financial penalties. This amendment only restates what is available by way of judicial review, because the grounds of appeal are that the decision was either unlawful, ultra vires, or manifestly unreasonable. Any of those grounds would give rise to a successful application for judicial review. The amendment suggests that the first remedy available on judicial review should be the quashing of the decision, or varying the terms of the statement; perhaps the High Court may not dictate what a statement should be, but it can indicate in its judgment what is or is not acceptable. Although I support the principle of this amendment, I hope that, in the event, the Minister will accept Amendment No. 65, which would make this unnecessary. It would have wider implications, and I shall address it in due course.
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- Lord Hunt of WirralConservative
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- I agree with the point of my noble friend Lord Kingsland. I do not want to repeat the comments that I have already made about how preferable it is to have the appeal procedure set out in the Bill, as my noble friend suggests. That is why I so warmly approve of what he has just said.
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- Lord Campbell of AllowayConservative
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- On a matter of principle, I draw the attention of the noble Lord, Lord Kingsland, to Amendment No. 79. I know that it has to do with licensing, but it could have to do with anything else: “The Secretary of State may, by order … establish a body to hear and determine appeals from decisions, made by a person specified in the order in the person’s capacity as a licensing authority”. Does my noble friend really think that for the Secretary of State to appoint a body of persons, unspecified and at his discretion, to deal with and determine appeal, is at all appropriate machinery? I would just like to know whether my noble friend has any ideas about it.
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- Lord Campbell of AllowayConservative
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- I meant Clause 79, which says that the Secretary of State can set up anyone he likes as a body to hear and determine an appeal. I wonder what my noble friend thinks about that. It seems wrong to me.
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- Lord WhittyLabour
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- I indicated earlier that I would oppose Amendment No. 56; what has been said has not changed my mind. I completely accept the role of judicial review in the decisions of the LSB, as do—I think—the Government. We are setting out, in the Bill grounds of appeal to relatively minor sanctions. We have an appellate procedure as regards fines, but when it comes to public censure and variation, we are dealing with relatively minor interventions by the LSB. Normally, appellate bodies are confined to points of law; these are essentially points of judgment. Unless we seriously restrict the LSB in such a way that every one of its relatively minor interventions, or threats of intervention, could lead to the High Court, we are in danger of reducing the influence of the LSB over the behaviour of the Law Society. People will tell me that such appeals will not happen frequently, but we are dealing with lawyers and the legal system. The more we put in the Bill to restrict or second-guess the LSB, the less effective it will become in changing the behaviour of the frontline regulators, which is the objective of this Bill.
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- Lord Hunt of WirralConservative
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- Lying behind a lot of concerns expressed about the lack of appeal procedures in the Legal Services Bill is the fact that the Legal Services Board is being given such wide powers that it can introduce sanctions against an approved regulator for actions by individuals or organisations over which the approved regulator can have no control. It is in the context of the lack of appeal procedures that most of the concerns arise. Everyone wants this new system to succeed. Perhaps we have already made clear to this Committee our concerns that the powers may be too wide, in particular those to impose sanctions on approved regulators in respect of actions over which they had no influence or control. That lies behind a lot of the points that are being made.
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- Baroness Ashton of UphollandLabour
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- I shall try to deal with the points that have been raised. My noble friend Lord Whitty raised a fundamental question about the effect of providing for appeal structures. When I was taking legislation on education through your Lordships' House, I remember that we often debated whether the opportunity to have every possible decision reviewed by an appeals body had a detrimental effect on the regulatory body. We agreed that it was therefore important to be clear about the processes involved, as we have sought to be in this legislation. I have already indicated the appropriate role for judicial review in the context of public bodies. I shall also explain financial penalties when we come to the next group of amendments. For the purposes of addressing this amendment, I shall restate our position on public censure. We have been very clear in saying that there should not be a general need for appeals from decisions of the board, subject to the exception that I have made for financial penalties, and I shall spell out three reasons why. First, the board will be independent in its composition and decision-making, which is of great importance. Secondly, there are statutory safeguards in the Bill to ensure that fair and transparent procedures must at all times be followed if the board sees fit to sanction an approved regulator. Clause 35 provides that the board may not publish a statement to censure an approved regulator unless it has first given notice to the regulator and considered representations. The clause also provides that where the board proposes to publish a statement, it must allow a period of 28 days or more to allow the approved regulator to make representations. That deals with the understandable concern raised through Amendment No. 57 to ensure that there is time for representations to be made in response. We have allowed for 28 days, which is considerably longer than seven days. Thirdly, for the reasons that I have already indicated, recourse to judicial review will be available in appropriate cases, ensuring that the board may be held to account without the need for a separate appeals procedure. A statement of public censure will be made only where the board considers it appropriate to do so and has followed the prescribed procedure set out in Clause 35. If it publishes a statement where it is unreasonable to do so, or without due regard for the procedural rights of approved regulators, it may be held liable in the courts. To provide for a statutory right of appeal would be unnecessary for those reasons. I hope that noble Lords will reflect on the way in which I have set out my response. Clause 79 is about alternative business structures. It enables those bodies that wish to be designated as a licensing authority to comply, because they will need to have an appeals body in place. Its aims are quite different and distinct, and it will be extremely helpful. We shall debate it in due course. I mention it now because it is important to make the distinction. Reading the provisions out of its context might give rise to concerns that can be allayed when we get to that part.
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- Lord Campbell of AllowayConservative
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- That is right: it is to do with ABS. You cannot totally isolate this. By the time you have an obligatory regulatory objective to safeguard the independence and quality of advice, across the board you will get conflicts with the ABS situation, where you have the promotion of competition. I dealt with this briefly before and the noble Baroness said that it was another part of the Bill. I know that, but in a sense it is this part too, because a balance has to be struck. In principle, I merely suggest that this machinery is wholly unsatisfactory.
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- Baroness Ashton of UphollandLabour
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- My ambition would be that it never need use that power. It would be foolish for me to try to determine what would require that use, as I am not the LSB. We need to make sure that the LSB has available a range of ways to deal with different degrees of problems, concerns and omissions that may arise. We have spent a lot of time in useful conversation looking at the regulatory objectives and what the LSB would seek to do. We are describing the things it can do, and putting safeguards within that, like the 28 days, to ensure that it must behave openly, transparently, independently and so on—the three grounds I laid out for why I do not want to accept the amendment. I do not want to try to give examples. I know why the noble Lord might feel that to be important but I think that it would be wrong to do so. It is much more a question of what power would be available, should there be a severe problem. However, I hope that the power is never used.
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- Baroness Ashton of UphollandLabour
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- With respect, the question should be how the board would arrive at its decisions. In other words, we are trying to determine not the way in which a regulatory body might have behaved that would lead to the board’s decisions but the way in which the board would decide how to use its powers. There is a need to be transparent, accountable, proportionate, consistent and targeted only at cases where action is needed. Noble Lords have questioned whether we need to strengthen the Bill in part, and, as they know, I am looking at that. We have tried to litter this Bill with references to make it clear that the board has to operate transparently, appropriately and proportionately. For me, designing a board by saying, “This is how you must behave” is a better way of achieving what I think the noble Lord is seeking—that is, it ensures that the board does not exercise its power inappropriately or heavy-handedly and so on. There is unanimity in the Committee about light-touch supervisory regulation. No one has argued against that and the Government do not either. Therefore, how the board uses its powers is about saying, “You must behave in this way”, rather than trying to develop criteria for when it would use them.
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- Baroness Ashton of UphollandLabour
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- I suppose that one could begin with the definition of “public censure”. If one took the extreme view, which the noble Lord has put very well, and said, “In these circumstances, this would happen”, then the board, within its 28 days, would make representations to the LSB and would consider whether it wished to apply for judicial review if it felt that the circumstances warranted it. But we have to start from the principle that the LSB would only ever use that power when it was clearly a proportionate and appropriate measure to take and where it was doing so because it felt that the circumstances warranted it. In such a situation, that option would have to be available to the board. I understand what the noble Lord says but I would argue that there could be gradations of public censure. Noble Lords will recognise that there are circumstances in which organisations are rapped across the knuckles in different ways. It is not always necessary for the organisation’s chairman to resign; public censure is used in all sorts of circumstances. It is not a clear-cut issue, but we have identified the one area of penalty where we think that it is right and proper for such censure to be automatic. However, the public body would be treated appropriately, and we are ensuring that the powers are used appropriately. If the regulator could demonstrate, by leave to the court, that there were grounds that warranted review it would be available. We think that that is the right balance. To open up a statutory right of appeal is to change the nature of the regulator and in a sense to enable a supra-regulator to be on top.
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- Lord Campbell of AllowayConservative
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- I am totally lost. I am sure that it is my fault. I have been trying to understand. We are not going to have judicial review where one seeks leave: why should one seek leave? My noble friend is putting, as I understood it, a form of general entitlement to appeal. I want to understand the noble Baroness’s answer, which was not a direct no or a direct yes. It was a mixture, which was wholly incomprehensible to me. It was, “Well, yes, but it depends on the circumstances”. How can one deal with such an answer? I am trying to get to grips with the matter and I am prepared to give up the plea for judicial review if my noble friends want a generic appeal. I am not trying to stick to the ground that I have, but I want to understand what ground I am going to enter if I have to give up judicial review. If the noble Baroness cannot do it today, perhaps it can be done in consultation and we could have a written explanation of the circumstances in which the noble Baroness agrees with my noble friend. Then we could start.
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- Baroness Ashton of UphollandLabour
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- It is never my intention to confuse the noble Lord, Lord Campbell of Alloway, and I apologise unreservedly if I did so by being unclear. As the noble Lord will know, I am always available to write to him or to sit down and discuss with him in greater detail. That is always unquestionably available as an option and it might be of some benefit in clarifying the point. I was seeking to argue why we feel that a general right of appeal would be inappropriate. In the context of the financial penalties we believe that it is appropriate to enable people to go directly to appeal. On the specific point that the noble Lord, Lord Kingsland, raised, I feel that public censure is best left out. I apologise if I did not make that clear, but that is what I was seeking to do and it was probably by my reference back to the financial penalties appeal process that I failed to achieve it. In some ways I wish that we had had one big discussion on all the groups because we might have been able to explore the issues more fully, but that is where we are. We think that we have got the balance right. As ever, I will reflect on everything that has been said, but noble Lords will know that as a general position we want to ensure that judicial review is available as it would be for a public body and not to constrain that. We think that there are difficulties and issues with creating a general right of appeal, but we have recognised it in the financial circumstances.
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- Lord Hunt of WirralConservative
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- When the Minister is writing to my noble friend will she reflect on the underlying concern behind many of the contributions we have had in Committee? She has also introduced the wonderful phrase “littering the Bill”, which I want to consider, and a new concept of light-touch public censure. What really lies behind the concern of many of your Lordships is the fact that we are dealing here with a regulator publicly censuring another regulator. That does not sound like the positive partnership structure which the Joint Committee recommended. We all want the regulators to work in partnership and to regulate the sector effectively, but the idea of the General Council of the Bar or the Master of the Faculties or the Chartered Institute of Patent Attorneys being censured publicly by the Legal Services Board for activities that it is carrying out as an approved regulator on a non-commercial basis leads me to ask the Minister to give some examples of where this formula is successful. I speak for all Members of the Joint Committee in saying that we cannot see that as part of a positive partnership, which, as we heard from Bridget Prentice, she wanted to promote.
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- Baroness Ashton of UphollandLabour
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- I am happy to deal with the phrases that I use in trying to express myself—perhaps not as a lawyer. I spoke about a light touch and I think I also used the expression “a rap across the knuckles”. I was trying to point out that, even within a concept such as public censure, I could imagine circumstances where that would not lead to the kind of catastrophic consequences that the noble Lord, Lord Kingsland, raised in his example. I stand by that and I consider it to be appropriate. As regards littering the Bill, that is an expression I use. I am from Lancashire, so what do you expect? I was trying to indicate that if one looks across this legislation one can see examples of that. I turn to the nub of what the noble Lord has said about the partnership between the two. My honourable friend Bridget Prentice, who is the Minister with responsibility for this Bill, rightly indicated, as I hope I have done, that the nature of the relationship between the supervisory regulator and the approved regulator is very important. They should work in concert; we expect them to develop this regulatory framework together. We have tried to set out the framework—whether I have been successful or not in doing so—to enable that to happen. At the end of the day, the supervisory role is real. The body must be able to act if things have gone wrong. It is about regulation. Inevitably, through legislation we focus on the negative side of the equation because we are looking at what might go wrong and the circumstances that might arise. We do not know what they will be; as I have indicated, I trust that they might never happen, but they might. It is quite important that we are clear, for the benefit of the approved regulators and for the supervisory body, so that if those circumstances arise, powers are available to the supervisory regulator. I hope they work closely together and I hope the supervisory body never needs to use these powers. The purpose of the exercise is to set good regulation that will be acclaimed by the public, by the consumer and, I trust, by the profession.
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- Lord Lyell of MarkyateConservative
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- The noble Baroness is so charming with her metaphors but it is interesting that she picks up the metaphor of the noble Lord, Lord Whitty, who wants the big stick to be available, although he hopes that it will never be used and the noble Baroness is using it in public to give people light raps across the knuckles. If censure is proposed, will there be a right of appeal? The discussion has concerned whether the right of appeal should be the right of appeal that exists, without it being put into the Bill, to seek leave of the High Court to bring a judicial review, or whether there should be an express right of appeal on the face of the Bill. I know that that is a later amendment, but it must be discussed in this context. My noble friend Lord Kingsland enlightened me when he pointed out that the right of appeal he has in mind is to the High Court, which would exercise it on judicial review principles. It has always been at the back of my mind—and probably at the front of the Minister’s—that the High Court will not want to substitute its view for that of the Legal Services Board; it will simply wish to steer the Legal Services Board back on to the right course in considering the right matters and being proportionate. I was looking for a light touch in the Bill, and the closest thing to it is in Clause 3(3)(a), which refers to: “the principles under which regulatory activities should be transparent, accountable, proportionate, consistent and targeted only”— the word “only” is important— “at cases in which action is needed”. It is exactly when one of the regulatory bodies feels that it is being unnecessarily or disproportionately targeted that a right of appeal will be healthy. I am inclined to think that it would be wise simply to build that right of appeal into the structure of the Bill, rather than this slightly difficult “dong-dong” position of knowing when one should apply for judicial review. I throw those out as thoughts, and hope that they are of assistance in leading us to the right answer.
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- Baroness Ashton of UphollandLabour
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- I read out exactly what the noble and learned Lord read out in Clause 3(3). I agree with him that the board should operate on those principles. I have made the Government’s position clear: the Legal Services Board should make its decisions based on those principles of proportionality, transparency and so on, and there are opportunities for bodies to come forward with their views within the framework we have identified. On the amendment of the noble Lord, Lord Thomas of Gresford, 28 days would be available to make those representations on public censure. If the body felt that it had been treated in an unreasonable manner, or processes were not appropriately followed, they would have the remedy of judicial review available to them because the board is a public body. To create a situation where every attempt by the Legal Services Board to use its powers would be open to an automatic right to go to the High Court is not the right way forward. It is more appropriate for bodies who feel that the board has genuinely treated them badly to apply to the courts for leave for judicial review. The courts would look at the circumstances and, I have no doubt, if appropriate, allow it. Financial penalties must be looked at in a distinctly separate way. There is a straightforward difference between us. We have covered this appropriately. I am happy to talk about it further outside the committee, and to the noble Lord, Lord Campbell of Alloway, to explain that. To enable bodies to be treated properly and appropriately, however, is the right course of action. The safeguards are exactly as the noble and learned Lord, Lord Lyell, has said: the way in which the board is required to act ensures that it does so appropriately. I go back to my point in answer to the noble Lord, Lord Hunt, who is no longer in his place: it is ultimately a supervisory body that is able to take decisions, acting appropriately, in circumstances where it must. I was not thinking of the big stick when I thought of the rap on the knuckles. I was trying to say that I hope that they do not use these powers. Ultimately, however, the function this regulator has been created to perform includes being able to act on our behalf if it needs to. That must be a part of the legislation.
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- Lord Maclennan of RogartLiberal Democrat
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- I support the amendment. Although I shall listen with great interest to the views of the Minister, this power is undoubtedly draconian. It could be invoked if there is objective evidence of harm flowing from what is described in Clause 36(1)(a) as an “adverse impact” on the regulatory objectives of the approved regulator. It is very much an objective test whether or not there is harm. Nothing is imported into the clause to suggest that that harm might have been reasonably foreseeable, that the action taken was deliberate and reckless, or that there was any kind of mens rea involved; the only test is whether or not there was harm. If harm is considered in all the circumstances to have flowed from the approved regulator’s action then, at the discretion of the LSB, a fine may be imposed. There has to be some sort of consideration of the morality of the clause. This is a powerful discretion to give in the absence of deliberation or awareness of the consequences. It may be argued by the Government that it is the duty of the approved regulator to give such consideration that adverse out-turns would not happen. I am bound to say, however, that it seems possible that with the very best of intentions the approved regulator could take a decision that had an effect that had not been anticipated. It would be wholly inappropriate to allow a discretion to fine the regulator in those circumstances. An altogether more gentle approach would be appropriate in second-guessing the sometimes difficult judgments that have to be made by approved regulators.
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- Lord Hunt of WirralConservative
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- I hope the Minister will reflect on where we are. The Joint Select Committee, as my noble friend has mentioned, felt strongly that the Government should look again at the relationship between the supervising regulator and the approved regulator and look at the criteria for the use of each of the powers of the LSB. I thank my noble friend for tabling this particular amendment. I agree very much with what he and the noble Lord, Lord Maclennan of Rogart, have just said. My colleagues and I on the Joint Select Committee were worried that this will be a recipe for conflict. The Government’s stated intention is that the Legal Services Board should act in partnership with the approved regulators, seeking to resolve differences by agreement. I hope that very few differences will ever arise. But all this structure, particularly the power of fining, is a bit over the top. I hope the Minister will respond to my noble friend in giving us some examples. I was struck by my noble friend’s examples of the Council for Healthcare Regulatory Excellence, the Financial Reporting Council and other bodies that have a supervisory role over other regulators, but do not have these sorts of draconian powers. We in the Joint Select Committee said that of course the LSB should be allowed to intervene to take over the functions of an approved regulator if, and only if, there is clear evidence that serious damage might otherwise be caused to the regulatory objectives. We agreed with that. However, the exercise of all these powers by one regulator over another has no real precedent, and is, as I have said, a recipe for conflict. I hope that we might return to the notion of positive partnership and try to lead the Minister to make a few concessions here. The Government promised to look again at the whole question in response to the Joint Select Committee report. They have not moved yet, but I detect that they are beginning to second-guess themselves on whether or not they have yet got it right. I hope they will move.
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- Lord WhittyLabour
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- The longer I stay in this Chamber, the more my anxiety mounts about where the opposition parties and others are attempting to take us. I am particularly amazed at the Liberal Democrats, who usually have a pretty good record on defending the rights of the consumer—sometimes better than the Government. I do not understand why those who agreed that they accepted the principle of the establishment of the Legal Services Board are now attempting to reduce it to being a complete paper tiger. Of course we want to get these things resolved by agreement and partnership. That is the ultimate aim. But—
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- Lord Hunt of WirralConservative
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- It is wrong for the noble Lord, Lord Whitty, to seek to make this a party political matter. I am not here to defend the Liberal Democrats or the Conservatives. I am here to express the unanimous view of the Joint Select Committee, which included several members of the noble Lord’s own party. I urge him not to go down that route.
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- Lord WhittyLabour
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- I was simply reflecting on the fact that consumers can usually expect some degree of support within this House and within the political process but that it seems lamentably absent today on the Liberal Democrat Benches. However, I will withdraw that statement if they can prove me wrong. The issue here is whether we are to establish and reach a partnership—that is a partnership in a sense by negotiation. To negotiate you have to have some powers, otherwise nobody will take you seriously. The Legal Services Board must have substantial powers. As I understood the noble Lord, Lord Hunt, just now, he seemed to say that in terms of sanctions you should move straight from a situation where there is some sort of relatively mild public censure to one where there is takeover, with no intervening sanction. Surely that cannot be what he is advocating—either in terms of this amendment, in relation to restricting the ability to fine to where there is a direction being breached, or in terms of the next group of amendments, which would seek to delete the power to fine entirely, which seems to be where the noble Lord was a few minutes ago. The noble Lord, Lord Kingsland, said explicitly that that was his ultimate and preferred aim. Even under the present circumstances there is an ability to fine—circumstances which are well short of directions. The Legal Services Complaints Commissioner has relatively recently fined the Law Society for a persistent failure to deal with complaints handling sensibly. In other words, those that will be front-line approved regulators have some form in this respect. The fine needs to be available when there is a failure to conduct themselves effectively. A range of sanctions is provided within this legislation, as it is in respect of many regulators. Moving from a relatively mild public admonishment—a tap on the wrist—to a complete takeover of the role of the front-line regulator if the breach was persisted in, does not seem to be sensible regulation and would be in breach of many of the principles of better regulation that we have seen in other fields in recent years. This idea that we should remove, or seriously restrict, the ability to fine a priori would be almost to ride a coach and horses through the intent of the Bill.
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- Lord Maclennan of RogartLiberal Democrat
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- I am grateful to the noble Lord for giving way and I will certainly not rise to his fly by seeking to offer him a party political answer. But I must insist that the suggestion that what is an approved regulator, which in many cases is operating in a quasi-judicial role, should be fined in order to carry out that role according to the views of the court of appeal—in this case the Legal Services Board—seems to be preposterous. It is not acting in the interests of the consumer to suggest that a fine will strengthen the consumer’s interest. It is something that is foreign to our system of appeal on these matters. The continuing attempt on the part of the noble Lord, Lord Whitty, to suggest that there is an inevitable opposition between lawyers and consumers is beside the point. It is a knee-jerk reaction which seems to be far removed from the experience of those who have sought to look after consumers’ interests. I remind the noble Lord that I served for more than five years in defence of the consumer interest as a Minister in the Government of the party to which he belongs.
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- Lord WhittyLabour
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- I think I am reflecting the views of consumers of legal services—not all of them, not necessarily the majority, but a significant proportion of people who have some complaints about the legal services that are available to them. If the noble Lord has different statistics and research, no doubt he will share them with us. My objective in intervening in these debates is to ensure that the voice of the consumer is heard and that the structure that we put in place acts in the best interests of the legal profession as well. Ultimately, the legal profession depends on the confidence, trust and good experience of its clients and of society as a whole. At the moment, I am afraid that it does not have that confidence and trust to the degree that any of us would like. I hope that the Bill will help to achieve that. I believe that if the LSB has theoretical strong powers, it will reach an accommodation with the front-line regulators that will improve the profession’s performance, which its recent history suggests it needs. That, surely, is the objective of the Bill. The role of potential fines, as with any regulator, is important. All regulators use very sparingly the power to fine. Ultimately, it is not the Law Society, the front-line regulators or even the members of the profession who bear the cost of that fine but the consumer. That applies whether we are talking about the gas, electricity or any other market. Fines feed their way through to the consumer. I do not want the prospect of anybody in the system operating a policy of imposing reckless fines on anything that moves. That is the last thing we want. But we want a strong Legal Services Board which can inculcate in the front-line regulators greater respect for the position of consumers and greater concern for their interests. I hope that nobody in the Committee disagrees with those objectives.
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- Lord Campbell of AllowayConservative
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- I was not going to speak, but I find it very difficult not to say something. The noble Lord, Lord Whitty, does not like lawyers, the Bar or the Bar Council. He has no use for approved regulators—he thinks they are all no use. He wants to destroy the authority of self-regulation in our profession because he does not like it. You have only to listen to him. One way he thinks he will do it is by imposing fines. He wants a strong board. He has given no justification yet for imposing a fine because there is no board and nobody has given a direction. This approach is so destructive that the amendment has to be supported and, if necessary, we have to leave it that we are in total disagreement. Self-regulation is in the interests of consumers and has been for years. The ombudsman has given the Bar Council a clean bill of health. There is absolutely no need for the noble Lord’s suggestions and approach. I support the amendment. It would be quite wrong to try to improve the situation and qualify a power to impose any fine at all. There is no justification for it whatever.
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- Baroness Ashton of UphollandLabour
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- I feel compelled to join this conversation. It is important to describe the power and the approach we have taken. I completely accept that it is important for the front-line regulators and the supervisory regulator to have a strong relationship of mutual respect through working closely together. But I would not go as far as the noble Lord, Lord Hunt of Wirral, in describing them as one regulator to another, putting them on the same pegging. There is a difference between the supervisor and those being supervised. I agree that differences should be resolved by agreement where possible. My noble friend Lord Whitty, the noble Lords, Lord Campbell of Alloway, Lord Maclennan of Rogart, Lord Kingsland, and all Members of the Committee who have spoken in this debate would agree with that. We also know that that may happen in most circumstances but not in all. Whereas the noble Lord, Lord Hunt of Wirral, was concerned that we have put a lot of structure in the Bill, in my view, the clearer we are about what is available to the Legal Services Board, the better for all concerned. Clarity about the powers is important; then everyone knows what is available and what could happen. That is fair and proper. Committee Members were concerned that this was an unusual power, but they will know that the Financial Services Authority and Ofgem also have that power and, as my noble friend Lord Whitty said, the Legal Services Complaints Commissioner currently has the power. Much was made of the Council for Healthcare Regulatory Excellence, so I took the opportunity to look up the functions of CHRE, which are very different from the type of body that we are describing, so the comparison does not work effectively. The CHRE promotes the interests of patients and best practice, reports annually to Parliament, promotes co-operation and consistency, develops principles of good regulation and advises Ministers. They are very important objectives, but different from the case before us. Therefore, my first proposition is that the power to fine is available in a regulatory framework and should be clearly available in these particular circumstances. Having said that, I understand to a degree the concerns raised about how that power is exercised. We have talked a lot already today and yesterday about Clause 3(3) and both the noble and learned Lord, Lord Lyell, and I recorded that subsection in Hansard so I will desist from repeating it. But the noble Lord, Lord Kingsland, seeks to go further by constraining the circumstances in which that power could be exercised, specifically in Amendment No. 61. To remind ourselves of that, the noble Lord proposes that the power should be restricted to where the LSB has first issued a direction to an approved regulator under Clause 31 and, “the approved regulator has failed to comply with”, that direction. I understand the intention to ensure that there is a clear indication of what the Legal Services Board sees as a failure. I also understand that the need for assurance is particularly relevant where the approved regulator may, as the noble Lord said in his opening remarks, have separated the regulatory and representative functions we require under Clause 29, and as such, does not have direct control over the exercise of regulatory functions by its regulatory arm. I have some sympathy with the Committee about that. However, I remain concerned that where the regulators do have control over matters it might be appropriate for the LSB to be able to fine without first issuing directions. I am making a distinction in my mind between those matters over which the regulator has direct control and those over which it does not. In particular, one might say that, as in Clause 29, the proper separation of the functions of regulatory and representative functions and the proper resourcing of regulatory arms are clearly a direct responsibility of the approved regulator. That is where it might be appropriate to move to a fine if that is the right thing to do. In Amendment No. 62 the noble Lord, Lord Kingsland, is trying to further restrict the use of the power to fine to situations in which the LSB is satisfied that the matter cannot be adequately addressed by use of any of the other powers available to it—such as the setting of performance targets, issuing a direction or a statement of public censure, if I dare mention that last point. I understand what the noble Lord seeks to achieve. Indeed, it is best practice for a regulator to be satisfied that any sanction that it seeks to apply is appropriate. Again, Clause 3 provides for that and I would expect the board to take full account of it. But I am not persuaded to go as far as the noble Lord wishes me to go under Amendment No. 62, by putting such a responsibility in the Bill, as I do not want to fetter the LSB to exercise effective oversight regulation as completely as the amendment would do. While I accept that it is a condition in respect of an intervention direction and deauthorisation, these are more serious and intrusive powers. Therefore, we do not consider the same threshold should apply to the power to fine. But I should like to look at these points again and, in particular, the points that the noble Lord, Lord Kingsland, raised under Amendment No. 61 in the manner that I described—which is about the ability of the regulator to have direct control over particular issues and whether, when that is not available, those circumstances dictate that a direction might be appropriate first. So if the noble Lord agrees I shall take away Amendments Nos. 61 and 62. I have made it clear that I do not want to go as far as Amendment No. 62 at this point, but I am interested in what the noble Lord seeks to do, at least in part, under Amendment No. 61, without taking away the power to fine which is important and already available in other forms of regulatory regime. We want to have that capacity available but we may need to think a little further to be clear about situations in which there is no direct control. I hope that noble Lords will accept my willingness to do that and to come back with my further thoughts on that.
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- Lord Thomas of GresfordLiberal Democrat
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- That is an encouraging response from the Minister, but would she not agree that the power to impose financial penalties—which, as the noble Lord, Lord Whitty, said, will ultimately fall on the consumer—should be the last resort? The amendment proposed by the noble Lord, Lord Kingsland, would make it the last resort, only to be used if the other remedies that the Government have proposed for powers for the LSB have failed. I encourage the Minister to develop her thinking along those lines.
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- Baroness Ashton of UphollandLabour
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- I always like to be encouraged to develop my thinking. The point that comes to my mind is that “last resort” is difficult to define and that there may be circumstances in which, because of how the regulator has behaved in other areas in which directions have been issued, and so on, the supervisory regulator decides that a fine is actually the most appropriate thing to give. I cannot think of what those circumstances might be and I am not going to give false examples, because it might suggest that I expect that to happen when I hope that it will not. But there could be such circumstances—and I am mindful of not wanting to prevent the LSB having a range of powers, bearing in mind how we would expect the board to use them under Clause 3.
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- Lord Lyell of MarkyateConservative
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- I cannot remember the circumstances in which the Legal Services Ombudsman issued a financial penalty. Could she just remind the Committee?
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- Baroness Ashton of UphollandLabour
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- I do not know what the noble and learned Lord refers to.
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- Lord Lyell of MarkyateConservative
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- The noble Lord, Lord Whitty, referred to an occasion on which that happened. It may be that I should ask him about it at some appropriate moment.
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- Baroness Ashton of UphollandLabour
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- I think that I said that the Legal Services Commissioners have the power to fine—I did not say that they had used that power. I was describing the fact that the Financial Services Authority, Ofgem and the Legal Service Commissioners have the power to fine. One issue that arose at the beginning of our deliberations on this group was whether this was an appropriate thing to have at all. The noble Lord, Lord Maclennan of Rogart, raised a general query about whether it was immoral to have something of this nature. I wanted to respond to him by demonstrating that it exists in this area and other areas of regulatory work. That is what I sought to do—I did not say that it had been used, because I do not know. I can find out, but I do not know. That is a different point.
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- Lord Thomas of GresfordLiberal Democrat
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- My recollection is that a fine of £250,000 was imposed by the Legal Services Ombudsman on the Law Society for its failure to conduct its disciplinary procedures correctly.
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- Baroness Ashton of UphollandLabour
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- I am grateful to the noble Lord and I am sure that he is right. I had hoped that I had finished the point I was making to him about my willingness to look at the issue of when the approved regulator does not have direct control. I will, of course, ponder on the other points that have been raised. I have talked about good practice in the way that regulators work and linked that again to Clause 3 in terms of the way that we would expect them to operate. I am not at this stage prepared to go that step further and say that a fine cannot be imposed unless all other measures have been tried—not least because the question arises as to whether all those other measures would be taken in the context of a particular complaint, or whether a series of issues had arisen for a regulator and a series of other methods had been tried on those different issues. Might the regulator not say at that point, “Actually, yet another thing has occurred. We wish to move directly to a fine”? That would be my difficulty with the use of last resort, because there could be a question of last resort on one issue or last resort on a series of failures. In terms of general good practice, Clause 3(3) moves us in the right direction without setting that in stone, given that other circumstances might occur. However, I have said that I will look at Amendment No. 61 again and I hope that that is of some help to the Committee.
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- Lord Thomas of GresfordLiberal Democrat
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- I mentioned disciplinary procedures a moment ago. I am wrong about that—it is the complaints procedures that there are problems with. I notice that the noble Lord, Lord Whitty, agrees.
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- Lord Lyell of MarkyateConservative
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- The noble Lord is right. I now recall that it did relate to complaints procedures. We have recognised in the Bill that the complaints system is difficult for solicitors. Perhaps they did not get the matter right, but it would be a major improvement to have that responsibility lifted from their shoulders and for it to be carried out more publicly. I am very grateful that the noble Baroness said that she will think again about this matter. We all need again to think carefully about it. Publicly fining and publicly censuring are very strong powers. To fine a regulatory body would be a very tough step. Although the noble Baroness is right that one can see oblique references to light-touch regulation in Clause 3(3), that is the only place where they are made; it does not actually state “light touch”, but simply defines circumstances in which the board may do things, which if it did not do, it would be unable to take action at all. The board would be outwith its powers—so it is not necessarily light touch. I am grateful to the Minister, because she is thinking carefully. I would make one more general point to the noble Lord, Lord Whitty. We are all consumers. I have already declared an interest as a practising member of the Bar. We are also users of legal services and we fully support the desire that our profession should provide the most excellent service possible and should be carefully and properly regulated. I do not think that there is any difference here. There is not a battle. We just have to get it right.
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- Lord Hunt of WirralConservative
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- I, too, am grateful to the Minister for her response to the last amendment. However, I return to Clause 36 itself, on financial penalties. Although the Minister has moved, one further small step needs to be taken to meet, I believe, with the approval of the All-Party Select Committee. The step involves trying to visualise the circumstances in which these financial penalties will be levied by one regulator against another. The noble Lord, Lord Whitty, prompts me to put the record straight. He gave the example of the Law Society being fined by the Legal Services Complaints Commissioner because she was dissatisfied with the plan that the Law Society had prepared for handling complaints. Once again, I declare my interest as a member of the Law Society and a practising solicitor. The Law Society had delegated responsibility for the plan to its independent consumer complaints board. Indeed, on some of the issues between the Legal Services Complaints Commissioner and the consumer complaints board, the Law Society agreed with the commissioner. Nevertheless, because the society had delegated control of complaints-handling to the independent body, it was unable to ensure that the plan met the Legal Services Complaints Commissioner’s requirements. Thus, the Law Society was fined for matters it could not control. I had to put the record straight in light of what the noble Lord said. The approach of the Joint Select Committee keeps returning to the point about partnership. We have to ask ourselves, as my noble friend Lord Kingsland did in the debate on the last amendment: who will pay this fine? Undoubtedly, as my noble and learned friend has just pointed out, it will be consumers of legal services who pay the fine. All those who are regulated are also consumers of those legal services. One has to ask: where are the precedents for good, smooth working between regulators which allow a supervisory regulator to impose a financial penalty on an approved regulator in the circumstances set out in the Bill? I hope that the noble Baroness will not only read again the joint select committee report—which I know she takes home with her every night in order to consider all these amendments—but reflect further. Are we setting up the right structure? We want to get away from this confrontation to reach unanimity on the context in which we are going to put the public and consumer interest right at the heart of this Bill.
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- Lord Thomas of GresfordLiberal Democrat
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- The regulator and the supervisory regulator may both believe that they are acting in the public interest and come to contrary views. The problem arises when one body fines another body such a substantial amount that it eventually falls on the consumer, as the noble Lord, Lord Whitty, said. That may not be a very happy situation, which is why I suggested when we were discussing the previous amendment that the fining power—I agree that the regulatory body must have some teeth—should be seen as a matter of last resort. I shall not develop the matter further. I shall wait to hear what the Minister thinks after reading, bi-nightly, the report.
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- Baroness Ashton of UphollandLabour
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- I thank the noble Lord. I was saying sotto voce that I was reading the report every other night. I think that I am taking three Bills through your Lordships' House, so it is probably every third night that I get round to reading it. I understand and completely accept the principle behind wanting the supervisory regulator and the approved regulator to work as closely together as possible. I have perhaps greater faith than noble Lords in their ability to develop an appropriate working relationship to provide the right kind of regulatory approach that will help support the objectives behind the legislation. I hope that we will be able to achieve that; I am confident that we will. I am also hopeful that the powers invested in the Legal Services Board will not be used. However, those powers need to exist because we are talking about regulation in the interests of the consumer, the public or the profession—one can argue which one. Parliament’s purpose in looking at this matter is to agree that regulation is appropriate. I was pleased to hear the noble Lord, Lord Thomas of Gresford, say that the body needs to have teeth. Teeth are important, but they should be understood and used appropriately. I gave an example to illustrate why I do not want to constrain the body in the way that the noble Lord has just mentioned, but I have also volunteered to take away for consideration Amendment No. 61. We will have further opportunities in your Lordships' House and beyond to discuss it. Clause 36 agreed to. Clause 37 agreed to. Clause 38 [Appeals against financial penalties]:
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- Lord Thomas of GresfordLiberal Democrat
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- We support these amendments. It is clear that Clause 38(7) is an ouster clause. I agree with the noble Lord, Lord Kingsland, that it is of doubtful validity in the light of the Human Rights Act. I hope that the Minister will look at that. The statutory right of appeal is, moreover, limited. You can appeal on the basis that the decision was ultra vires; that the requirements of Section 37 have not been complied with; and that it is unreasonable—but only in the amount of fine or the time in which it is payable. What is left out is a right of appeal on the grounds that it was unreasonable to impose the penalty in the first place. It is an extremely important omission. It is not covered. I am sorry if the Minister missed what I was saying—I think she did. The unreasonableness of the financial penalty is confined to amount or time to pay, not its imposition in the first place. It seems to be a gap. It ought to be open to a regulatory body to go to the court and say, “We do not care about the amount or how long there is to pay it; it should never have been imposed at all. It should never have been imposed at all. It is an unreasonable decision”. That is something that must be addressed.
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- Baroness Ashton of UphollandLabour
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- We have already had some discussion about the rationale behind the approach we have taken, so I will resist the temptation to go over it extensively. Suffice to say, we consider that the financial penalty warranted a specific reference and ability for statutory right of appeal in the Bill. We believe that that is also consistent with precedents in other regulatory areas. We are sure that, with this provision, the court will be in no doubt that the amount of the penalty may be questioned. That could apply even in cases where, although the amount is not so manifestly disproportionate that it could not be the act of a reasonable regulator, it may none the less be too high. The alternative would be to leave approved regulators to a remedy in judicial review. In that case it would still be possible to challenge the imposition of a penalty, and potentially even the amount. Yet, as noble Lords will know, for a challenge on the latter to succeed, it is likely that the amount would have to be more conspicuously unreasonable. And, of course, all challenges would be subject to permission. It is important to lay out those differences on the face of the Bill. Apart from those differences, the grounds on which an appeal against a fine may be brought are already akin to the grounds for judicial review. If the board exceeds its powers, fails to follow proper procedure or acts unreasonably in imposing a penalty, it may be challenged under Clause 38. I think that goes some way to answering the point raised by the noble Lord, Lord Thomas of Gresford. The noble Lord, Lord Kingsland, seeks to add a further ground incorporating any ground that would find a claim in judicial review. I would argue that that is not necessary because it duplicates grounds that already exist as part of the existing appeals process which has been set out. I turn to the second element of the amendment. In this clause we are seeking to avoid any duplication or confusion of procedures. Subsection (7), the ouster clause, sensibly pre-empts the possibility of a parallel challenge being brought by way of judicial review proceedings. It would not do to create a situation where two challenges could be brought on the same decision on substantially the same grounds. I note that Clause 38(7) does not prevent the case proceeding to the Court of Appeal in the event that that is appropriate. The provision exists not to deny rights but to ensure that we are clear about certainty and expediency and to ensure that there is one route through and not two parallel routes. There is case law in the European Court of Human Rights on which I am happy to write to noble Lords, to explain it. But that is the purpose of the provision. It is intended not to deny rights but to say that there is one way through. I hope that the noble Lord will reflect on that explanation.
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- Baroness Ashton of UphollandLabour
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- I was saying that because this is about financial penalties, we have ensured that the procedure covers situations where the amount being challenged may not be considered extremely high or very disproportionate. It can still be challenged, which would be an additional ground; but all other grounds remain.
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- Baroness Ashton of UphollandLabour
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- My notes say that the answer to that question is yes. If I discover in the next minute that that is not accurate, then my notes will have been wrong and I shall apologise to the Committee. However, I understand it to mean that the noble Lord does not need his amendment because judicial review applies; we have simply inserted additional areas because of the nature of the situation.
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- Lord Thomas of GresfordLiberal Democrat
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- moved Amendment No. 65:
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- Baroness Ashton of UphollandLabour
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- I hope that the noble Lord will say what he intended to say about my noble friend Lord Whitty when he is here so that my noble friend can respond. Over the years, I have always seen those on the Liberal Democrat Benches as arguing vociferously for the consumer interest. Indeed, many leading Liberal Democrat figures have been involved in the consumer movement.
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- Lord Thomas of GresfordLiberal Democrat
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- That is the case. When we get to the section on alternative structures, we will be arguing from the point of view of the high-street lawyer, who provides a very necessary service to the consumer but whose interests the Government seem to ignore. As the Minister pointed out, there is absolutely no way that we on these Benches lack a concern for the consumer.
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- Baroness Ashton of UphollandLabour
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- I was not suggesting that the noble Lord was anything other than concerned. I merely pointed out that my noble friend was surely not a lone voice, because we are all interested in the voice of the consumer. The tradition of the noble Lord’s party on this matter should be well remembered as we go through the Bill. I shall deal with the amendment briefly in exactly the way that the noble Lord asked me to do. As I said when I spoke to Amendments Nos. 52 and 56, the board’s actions under Clauses 30 to 35 will be subject to judicial review, and there is no need to prescribe further statutory assurances to that effect.
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- Lord Thomas of GresfordLiberal Democrat
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- In the light of that response, I beg leave to withdraw the amendment. Amendment, by leave, withdrawn. Clause 39 agreed to. Clause 40 [Intervention directions]: [Amendments Nos. 66 to 68 not moved.] [Amendment No. 68A had been withdrawn from the Marshalled List.] Clause 40 agreed to. Clauses 41 to 43 agreed to. Schedule 8 agreed to. Clause 44 [Cancellation of designation as approved regulator]: [Amendments Nos. 69 to 74 had been withdrawn from the Marshalled List.] [Amendments Nos. 75 to 77 not moved.] [Amendments Nos. 78 to 105 had been withdrawn from the Marshalled List.] Clause 44 agreed to. Schedule 9 agreed to. Clause 45 agreed to. Clause 46 [The Board’s power to recommend orders made under section 45]: [Amendment No. 105A not moved.] Clause 46 agreed to. Clause 47 agreed to. Clause 48 [The Board’s policy statements]:
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- Lord Hunt of WirralConservative
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- I agree with my noble friend because although the Minister has given us a great deal of comfortable and comforting words it is still a fact that there is nothing in the Bill to indicate that the Legal Services Board is intended to act as a supervisory regulator, leaving the day-to-day responsibility for regulation with the approved regulators and exercising its powers only where they are clearly failing. I must explain our concerns to the Minister in these terms: that the Bill is cast in a way that would enable the Legal Services Board to set out detailed templates for the way in which it considers approved regulators should discharge their functions, in effect to micromanage them; exactly the opposite of what the Minister says she would like. It is perfectly possible under the Bill as presently set out for the Legal Services Board to substitute the board’s view for the approved regulators even where the approved regulator’s approach is plainly within the range of reasonable decisions. We are all agreed that it would be damaging if the Legal Services Board acted in that way and as we noted in the Joint Committee the cost estimates are based on the assumption that the Legal Services Board will act as a light touch regulator, so there we are. Why does not the Bill reflect the Minister’s words and in particular the policy of the lead Minister, Bridget Prentice? That is why I believe my noble friend’s amendment is so important and I hope that the Minister will continue that movement, accepting the premise on which we are all agreed and trying to make sure that it is reflected in the Bill’s terms.
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- Baroness Ashton of UphollandLabour
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- I am grateful to the noble Lord, Lord Kingsland, for giving me an opportunity to say a little more about this. I am not sure about continuing this movement; it suggests that I will end up falling over the cliff any time now—
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- Lord Hunt of WirralConservative
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- No cliff.
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- Baroness Ashton of UphollandLabour
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- No cliff. Thank you so much. The noble Lord, Lord Kingsland is right—
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- Lord Hunt of WirralConservative
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- Perhaps I may explain that it is the sunset uplands we are seeking the Minister to move gently along. In many ways, if the Minister does not change the Bill, I do not see how any approved regulator will be able to attract staff and carry out the services as the noble Baroness would like if it is going to be subjected to such a detailed review. There is no cliff: I reassure the Minister.
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- Baroness Ashton of UphollandLabour
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- That presupposes that the noble Lord is in charge of whether there is a cliff for me. I am not sure that reading that I have continued to move is necessarily the way to enhance my career, sunny uplands or not, from the noble Lord’s point of view. I should begin by saying that of course I have committed to look at all the issues again, but I wanted to place on the record—it is important that we reflect on the matter—why we think we have captured this but with the proviso that I already mentioned. When we discussed Amendment No. 33, as the noble Lords, Lord Kingsland and Lord Hunt, mentioned, we said that the board needs to work in partnership with those it regulates. The Government’s stated policy is that the responsibility for day-to-day regulation should rest with the approved regulators. It is one of the key benefits of what has been described as a B+ model—that the experience and knowledge of approved regulators will be preserved within the new framework—and one of the reasons we agreed was Sir David’s recommendation that that was the best way to reform the legal service. For that model to work, we need a strong and independent oversight regulator that does not second guess and micromanage those approved regulators that are performing their functions well. We believe that the Bill as drafted does establish the Legal Services Board as a proportionate regulator. We have talked a number of times today, and indeed yesterday, about the statutory duty in Clause 3 to ensure that the board has regard to better-regulation principles, including that the activities should be proportionate and targeted only at cases where action is needed, and be accountable to Parliament for how it exercises its functions. Through Clause 48 the board must issue policy statements about how it will use its powers; for example, the power to issue directions. Any policy statement made under the provision can be brought into force only after a draft has been published and the board has considered representations made to it about that draft. We think that that provision is important as a way of ensuring clarity and transparency about how the board will exercise its functions and to give approved regulators—I return to the point about working collaboratively—the opportunity to inform any policy. Paragraph (b) of the amendment limits the circumstances in which the board can take action where the approved regulator is acting or refusing to act unreasonably. It is a high hurdle, which would make it difficult for the board to function as effectively as we would like and to exercise its powers in circumstances where the regulator is failing. There may be circumstances where a regulator is acting in a way that cannot be said to be a way in which a reasonable regulator would act, but there is an adverse effect on the objectives that should be addressed. In this case, it is right for the board to take action, so I would argue that the existing thresholds are the right ones and we do not need to duplicate them in Clause 48. It is to be expected that the board will be in regular communication with the approved regulators in its role as oversight regulator; indeed, it is likely that policy statements under Clause 48 will be the appropriate medium where the board sets out its approach and that relationship more formally, similar to the way in which the Financial Services Authority operates. It uses those statements to clarify its role in relation to the firms that it regulates. I hope that that gives a greater sense and supports what the noble Lords, Lord Kingsland and Lord Hunt, said about not micromanaging and the relationship that needs to exist. I have already indicated that I will reflect whether we have that right in the Bill as it stands but it is our intention to have got it right in the way that the noble Lords would wish.
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- Lord Hunt of WirralConservative
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- I thank the Minister for her words. However, I am slightly concerned by her analogy with the Financial Services Authority because Sir David Clementi said that the Legal Services Board should not in any way reflect the structure of that body. Perhaps I can encapsulate my argument in this way. It is all well and good for the Minister to say what she has just said and for the Government to say what they said in their response to the Joint Committee report, but when the Legal Services Board is established it will not look to those words. It will not look to the Government’s response or to the speech that the Minister has just made; it will look to the words of the statute, as of course it must. Accordingly, if we want the Legal Services Board to act as a supervisory regulator rather than as the lead regulator, it is so important to introduce language to the Bill that makes that intention clear. I welcome the fact that the Minister has said she is going to look at all this. If she does that and does not come forward with the words proposed by my noble friend—I leave him to respond to the amendment—I hope she comes forward with some words that would put into the Bill exactly what she has just said.
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- Baroness Ashton of UphollandLabour
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- I was not seeking to require the Legal Services Board to look at my words for how it should operate and act, but to interpret the statute in plain English for how we believe the board should operate. That is the critical distinction. In moving his amendment, the noble Lord, Lord Kingsland, is saying to me, “You have explained what you wish to achieve”—there is nothing between any of us on that—“but will you please look again at whether that is what you achieve in the Bill?”. My view is that we may have done that, but the noble Lord’s view is that we may not have done that. We need to consider that. I am not asking anyone to rely on my words to interpret the function; people should go to the statute.
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- Lord Maclennan of RogartLiberal Democrat
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- I am grateful to the noble Baroness for her reply to the debate, in which I did not participate. Some of what I wanted to raise might have been better raised on the Question whether the clause stand part. The provisions of Clause 48 impose a mandatory duty on the board to issue statements of policy in seven particular respects. That could create a whole apparatus of guidance that goes far beyond the exercise of discretion to intervene where there is a perceived weakness in the existing regulatory provision. It appears that the board is being invited to do what the noble Baroness herself is clearly and sensibly reluctant to do, which is to spell out the circumstances in which these various powers may be exercised. If that happens, arguments will be made by the regulator about whether the supervision by the Legal Services Board gave no indication about the circumstances that arose in the policy statement. In itself, that is suggestive of a very wide-ranging and detailed role, which I suspect is not necessary. Clearly, it is sensible for the supervisory board to have an interchange of ideas and considerations with the appointed regulators, but this is much more. This is almost the statute book being issued by the supervisory board—by the Legal Services Board. The power to issue not just simple guidance when the Legal Services Board considers it necessary, but a duty to issue statements of policy right across the board in this way, is a very heavy burden indeed. I hesitate to reuse the word that I used, which caused some eyebrows to be raised in an earlier debate—incubus—but that is how it strikes me. The motivation behind the amendment seems to me quite a helpful indication that these policy statements should not have that encyclopaedic nature; they should not necessarily be regarded as all-encompassing. They are there as an aid to the Legal Services Board and are not intended to be used, save in the very limited way that it thinks is appropriate.
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- Baroness Ashton of UphollandLabour
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- I am grateful to noble Lords. I do not think any eyebrows were raised; I just did not know what “incubus” meant. I was not educated at Balliol, which I believe is where the noble Lord was educated.
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- Lord Maclennan of RogartLiberal Democrat
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- Clearly the Minister has not read enough Edgar Allan Poe.
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- Baroness Ashton of UphollandLabour
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- Not for a long time. I have been too busy reading the Select Committee reports to have time to read Edgar Allan Poe at the moment, but now that the noble Lord has reminded me, that is what I shall do. The policy statements set out in the clause relate back to the powers of the board. We laid them out because we believe it is right and proper that the regulators should know the policy of the supervisory board for the areas where it has clear powers. They are not meant to be detailed, over dramatic policy statements, but it is important that people know the direction and the way in which we propose to tackle and to handle these issues. That is how I see them. It is worth reminding the Committee that although, mutatis mutandis, I accepted things in principle yesterday, I have been very clear about the nature of the representations of the professional bodies. It is worth referring back to that as well. That is why those are laid out in that way; it is not an attempt to be heavy-handed but to make it clear that the board has responsibilities to the regulators.
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- Baroness Ashton of UphollandLabour
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- I am sorry to interrupt the noble Lord, but I am not sure about the imminent risk of significant damage. I have already agreed to ensure that we set out the principles in the right way. I would have some difficulty with the wording, in particular, of paragraph (c) because I am not quite sure how to define it.
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- Baroness Ashton of UphollandLabour
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- My position is that, yesterday and today, I agreed to look at whether we have a correct explanation, a correct approach to setting out the role of the supervisory regulator, the model B+. If, on reflection, having reread our debates and having discussed the matter with noble Lords, more needs to be done, I feel comfortable in saying that I shall see whether I need to bring something forward. I hesitate to say that I will bring something forward now, partly because I do not have policy responsibility and partly because I need to reflect on all these discussions, as a number of issues have been raised that I need to think about.
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- Baroness Ashton of UphollandLabour
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- I am not disputing that I will see whether that is reflected. I was, however, making a particular point to the noble Lord, Lord Hunt of Wirral. He was concerned that the Legal Services Board would discover the detail of its role through my words in these debates. I would not expect that. However, I do not rule out other mechanisms whereby the Government explain precisely what we are looking for in bodies being established. Many statements have been made by the Government in the course of the Joint Committee’s work on what we seek to achieve. I was making a particular point about my words in this context. The noble Lord, Lord Kingsland, is perfectly at liberty to interpret that as suggesting to the Opposition that there needs to be more in the Bill. I have already undertaken to see whether that is reflected in the Bill, but that is not the only mechanism whereby we have set out, in many circumstances, how we expect particular operations to be conducted by bodies set up by the Government.
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- Lord Hunt of WirralConservative
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- My recollection is that I had made the point that when the Legal Services Board is established it will look neither to the Minister’s words nor to the Government’s response to the Joint Committee report: it will look to the statute. I totally agree with my noble friend about how crucial and critical it is to ensure that we get the words of the statute absolutely right.
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- Baroness Ashton of UphollandLabour
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- The noble Lord quite reasonably says that my words become irrelevant in the context of the setting up of the board. My point is that it is not the only way in which the Government are able to talk about what is expected. I was simply saying that the statute must set out the framework, but Governments have on many occasions issued statements, had discussions with bodies and so on. I was trying not to rule any of that out. I have explained my position on the principle behind what your Lordships seek and set out what I believe is covered in the proposed legislation. Noble Lords have queried whether what I say, with which they concur, is adequately reflected within the statute. I have undertaken to see whether that needs to be looked at again, and I will.
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- Lord Maclennan of RogartLiberal Democrat
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- I take this opportunity to acknowledge with gratitude the reply to the earlier amendment dealing with some points which might have been better raised in this debate. The obligation on the board to prepare and issue statements of policy with respect to the exercise of its functions under Sections 30, 31, 34, 36, 40, 45 and 75 does not suggest a light touch. Furthermore, it is exceedingly difficult to engage with what must be included in some of these policy statements—such as, in subsection (3)(a), the extent to which a penalty is being imposed with regard to the deliberation or recklessness of the action of the front-line regulator—in the hypothetical circumstances which might arise. This clause militates against the Government’s argument that it is intended that the role be exercised with a light touch. The board is being given almost legislative functions. They are described as policy statements, but they are clearly intended to guide and be relied on by others in the front line. I cannot see this being accomplished without a massive bureaucracy in support. What goes into and is left out of those statements will require very careful consideration. What goes in will be more than an indication; it will be taken as a rule. What is left out will be regarded as secondary. If there is an issue between the two bodies—the front-line regulator and the Legal Services Board—the absence of a reference to it in the policy statement will militate in favour of it being regarded as something that was not of such importance. That may therefore diminish the effectiveness of the Legal Services Board. The clause is quite troubling. I hope that, in reviewing the matters raised under the previous amendment, the Minister will give some thought to perhaps articulating how these statements of policy are to be prepared and what their role might be and what they are anticipated to encompass.
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- Baroness Ashton of UphollandLabour
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- I see the noble Lord, Lord Kingsland, nodding in support; I save him getting up to do so. The purpose of setting that out is no more than to ensure that we enhance the transparency of what the board must do. It is meant to reflect that fact that, if the board is given powers, it is reasonable for those over whom it could exercise those powers to know what its policies are. It is not meant to be bureaucratic or heavy touch. It is simply meant to ensure that they get the right information. There is always a balance in legislation. I suspect that had I not put this in, it would have appeared as an amendment—not from the noble Lord, Lord Maclennan, of course. People, especially those who will be regulated, are reasonably concerned to know what the board is up to. I take the point that the noble Lord thinks that one might end up with something quite heavy. If I may, I shall take this to my honourable friend Bridget Prentice and ask her to write to the noble Lord—copying her letter to other noble Lords—about what she has in mind, what it might look like and what it might encompass in order to allay the noble Lord’s fears, or at least give him the opportunity to come back.
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- Lord Maclennan of RogartLiberal Democrat
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- I am most grateful for that offer from the Minister. Clause 48 agreed to. Clause 49 agreed to. Clause 50 [Control of practising fees charged by approved regulators]:
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- Baroness Ashton of UphollandLabour
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- The noble Lord was succinct in speaking to Amendment No. 106. I understand that setting out a financial separation could, among other things, help with the perception of a separation of regulatory and representative functions. However, I hope that he will agree that the precise nature of how that separation happens and the accompanying financial arrangements that might apply are likely to vary between different approved regulators. It should be for the board to determine how the arrangements apply in each case, and, in accordance with its duties under the Bill, to act in accordance with best regulatory practice, including proportionality. I believe that that is best worked out between the supervisory regulator and the regulators themselves. The board is already under a duty to make detailed rules on a number of matters, including the purposes for which practising fees may be raised. It must also set out internal governance rules under Clause 29 to ensure that the representative and regulatory functions are properly separated. However, it may not always be appropriate to set out a separate requirement that practising fees are separated from other assets in every case. It is important to recognise that although practising fees are raised mainly for purely regulatory purposes, some functions are more of a public interest nature than a purely regulatory nature where it might be appropriate for both the regulatory and the representative arms to be involved. Functions could include the promotion of relations between the approved regulator and other national—or even international—bodies, Governments or the legal professions of other jurisdictions; or participation in law reform. It would not be appropriate to set out a requirement that could restrict or prevent an appropriate and efficient distribution of resources. I am sure that that is not what the noble Lord had in mind. There may be smaller approved regulators that carry out only a regulatory function for which a financial separation on the lines of this amendment would not be appropriate. We consider that maximum financial flexibility is needed to ensure that the different types and sizes of regulators can operate effectively and efficiently and to recognise the different roles they play—an example of which I hope I have given the noble Lord, on which he can reflect. On Amendment No. 148, although I would expect money owed on the levy to be paid from practising fee income, and Clause 50(4)(b) already provides that the levy is one of the purposes for which practising fees may be charged, I do not want to set that out in the Bill. We do not want to set out a statutory requirement that restricts the flexibility of the approved regulators to meet a debt in the way best suited to their financial arrangements—and it would be a debt. The requirement might also mean that an approved regulator could be forced to divert funds raised from practising fees away from essential regulatory functions when other assets or sources of income would be the least damaging way to meet the costs of regulation. It is unusual for legislation to restrict the way in which moneys owed may be recovered, and we do not think that we should make an exception in this case. I start again from the principle that we hope that these powers are not used; but if they are, we would perhaps be failing the regulators if we restricted the ways in which they could use their assets to those in the amendments. I ask the noble Lord to reflect on that reason and withdraw the amendment.
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- Baroness Ashton of UphollandLabour
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- The noble Lord has raised an interesting point. The difficulty with the amendments is that, in a sense, they are another way up from the point the noble Lord is making; they would prevent the regulators being fined using their assets as they think best. They may have assets in another part of their operation that could more easily be brought forward and used to pay a fine. The noble Lord’s point goes back to the relationship between those who are regulated by the supervisory regulator and those by the Legal Services Board. Two matters strike me as important. First, the partnership approach to which the noble Lord, Lord Hunt of Wirral, referred, should be looked at properly. Secondly, proportionality has a role to play as well. When looking at these matters, the Legal Services Board should be expected to behave proportionately. It should not look at all the assets and think, “Those can be taken”, for precisely the reasons that the noble Lord gave. So the matter revolves around the relationship between the Legal Services Board, the regulator and the regulated, and the requirement on the Legal Services Board to behave in a proportionate way.
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- Baroness Ashton of UphollandLabour
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- Under Clause 53 we have provisions to ensure that approved regulators can take steps to prevent conflicts of this type, to avoid duplication of rules and to resolve any problems that may arise. The amendments proposed by the noble Lord are in keeping with the spirit of these existing duties. He is seeking, as we are, to ensure that legal and non-legal regulators are encouraged to co-operate and to work together towards better regulation. The amendments seek to take this duty a stage further in that they require approved regulators not only to take steps at a general level to pre-empt conflicts, but also to consider, on a case-by-case basis, any specific problems that external regulators might bring to their attention. The changes would also highlight further the fact that the board can play a role in resolving external conflicts where all parties consent to this arrangement and it is within their power to do so. The principle behind the amendments is absolutely sound. It creates the potential for professional services to become more integrated. If the benefits of this integration are to be realised, regulators have to be able to co-operate with one another. Indeed, the Joint Committee recognised the importance of guarding against regulatory conflict, particularly in ABS firms, and this is what we have sought to achieve in this part of the Bill. I am perfectly happy to take the matter away and consider whether the provisions can be made clearer. I shall consider what formulation might be appropriate, particularly in relation to the functions of the board. I am happy to consider the principle behind the noble Lord’s amendments and return to these clauses on Report.
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The Duke of MontroseConservative- Quote
- I realise that this section of the Bill does not apply to Scotland, but what would happen if a Scottish regulator asked for some attention to be paid to how it was affecting them?
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- Baroness Ashton of UphollandLabour
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- I do not know off the top of my head. Perhaps I may write to the noble Duke and explain it. Because I expect the noble Baroness, Lady Carnegy of Lour, to appear at any moment, I usually have a section in my briefing called “Scotland”. However, as the noble Baroness is not here this week, I failed to do what I should have done. I hasten to add that we have looked at the matter, but I do not have that particular briefing with me. I shall write to the noble Duke and place a copy in the Library.
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- Baroness Ashton of UphollandLabour
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- The noble Lord will not be surprised that I do not seek to disagree with the principle here at all. We want the board to remain an oversight regulator, except in those really exceptional cases where it has no choice other than to regulate itself. I agree with him that, before seeking designation, the board should be expected to explore any viable alternatives. We have always anticipated that where an alternative approved regulator exists, that should be the board’s primary and preferred course of action. We think the Bill takes account of that. Any order under Clause 61 would have to be approved by your Lordships’ House and the other place as an extra stopgap. It does not say so in my notes, but if there is a strength of feeling that this ought to be effective, I am happy to take it away and think again. I agree with the principle. We think we have captured it, and that the order-making power guarantees that Parliament would have a say in that process. Because I agree with it, if the noble Lord feels strongly about it, I will ask if we can put it in the Bill.
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- Lord Hunt of WirralConservative
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- The Minister will not be surprised to hear me speak on Clause 68. I pointed out at Second Reading that I was a little concerned about the provisions of this clause. Subsection (1) gives a power to the Secretary of State—and I am never quite sure whether we should be referring to the Lord Chancellor, but no doubt that is another issue—to, “by order modify, or make other provision relating to, the functions of an approved regulator”, and then includes the words, “or any other body”. The title of the clause is, “Modification of the functions of approved regulators etc”, and I am not sure what that “etc” refers to. What other bodies are contemplated? Subsection (6) contains provision for an order under the section to, “modify provisions made by or under any enactment (including this Act or any Act passed after this Act), prerogative instrument or other instrument or document”. When I raised this question at Second Reading, the noble and learned Lord the Lord Chancellor said, “Ah, please be reassured that subsection (6) is governed by subsection (1), and therefore we can only amend Acts of Parliament by order if they relate to the functions of an approved regulator”. That may or may not be right, although I do not like the idea of this Chamber passing a clause that allows the Government by order to amend any Act of Parliament. My concern is increased by the words, “or any other body”. It may well be that the Minister could assist me in understanding what that means. It is accompanied by the words, “other than the Board”, but what is “any other body”?
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- Baroness Ashton of UphollandLabour
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- I am happy to try to address those two points. It is always a joy to respond to the noble Lord. I sometimes wish he would tell me he was going to make a clause stand part intervention—then I could make sure I had everything ready for him. That would assist me enormously. I just make that small plea. I will do my very best. As the noble Lord says, Clause 68 allows the Secretary of State to modify any of the functions of an approved regulator or, in that great phrase, “any other body (other than the Board)”. The purpose of empowering the Secretary of State, the Lord Chancellor, in that way is to ensure that approved regulators, including those who are “creatures of statute”, as the term has it, can easily adapt to the changing legal sector, and that their regulatory powers are efficient and effective. Indeed, the noble Lord addressed the scope of that at Second Reading. The Delegated Powers and Regulatory Reform Committee has reviewed this, as you would expect it to do, in the light of the supplementary memorandum we sent on 7 December. The noble Lord should have a copy of that, but if he does not, I will ensure that he does; it may cast more light on this clause. The committee’s report found the delegation’s prospective power to the Secretary of State and the power to amend prerogative instruments to be appropriate. The finding was reached because the committee was persuaded that we need this to create a level playing field for all approved regulators, allowing the functions of a statutory body such as the Law Society to be altered as easily as the functions of a non-statutory body. “Any other body” applies to bodies that are applying to be approved regulators but are not yet, and which need statutory changes to allow them to become approved regulators, or indeed licensing authorities, under the Bill. That is the purpose. If that is not a complete answer, I will supplement it in any way the noble Lord likes.
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- Lord Hunt of WirralConservative
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- I am very grateful to the Minister. I apologise for failing to give her specific notice. I thought that the warning at Second Reading that I was going to raise this issue was enough, but it was not. I apologise wholeheartedly. I am still worried, though, about what she calls the statutory creature. If indeed the clause is limited in the way she has described, the wording should read, “or any other body that has applied to become an approved regulator”. The phrase “or any other body” is very wide and open. I have read that the Government have persuaded the committee, which I am slightly surprised about, given the phraseology. But the Minister has answered my point and promised to reflect on the questions I have asked. In that spirit, I accept what she has said and look forward to hearing further from her. Clause 68 agreed to. Clause 69 agreed to. Clause 70 [Carrying on of activities by licensed bodies]:
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- Lord Maclennan of RogartLiberal Democrat
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- At Second Reading, my noble friend Lord Thomas of Gresford indicated the deep concerns which we on the these Benches have about the proposals to establish alternative business structures. We have indicated our view that if the Government insist on proceeding with this, they should do so on the basis of the evidence as to the impact. We would associate ourselves with the reasoning of the noble Lord, Lord Kingsland, in advancing this amendment. My noble friend will no doubt expatiate on these arguments in the clause-stand-part debate.
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Lord WoolfCrossbench- Quote
- I have listened with fascination to the Committee’s deliberations today. I thought that I knew everything about the difference between an appeal and an application for judicial review, but I have realised that I do not and that there is more to this than academics appreciate. I believe that Part 5 of the Bill raises issues of a different order; it could have a very significant effect on access to justice. As I understand the purpose of the Bill, it is intended to increase access to justice and to improve the position of the consumer of legal services. In so far as that is the Bill’s intention, I am sure that no noble Lord would want to do other than support it. For the reasons given by the noble Lord, Lord Kingsland, which were indicated by the Joint Committee, this is an untried situation. Anyone who has in recent years had the responsibility of travelling around the country in the interests of the administration of justice and access to justice knows that there are real problems with the availability of legal services in the country as a whole. That is particularly true in parts of Wales, where I have heard much from high-street solicitors. There is no doubt that large businesses could provide legal services in a novel and interesting way. But that could—unintentionally, perhaps—have a devastating effect on those who have traditionally provided services in rural areas in particular. Great care has to be exercised to see that damage does not occur. In his amendment, the noble Lord, Lord Kingsland, indicated one way of providing some protection—one way in which to square the circle. But I urge the Minister to accept that that is not the only way of achieving that objective. The licensing authority could be given guidance and direction in the Bill requiring it to pay appropriate respect to the importance of the issue the noble Lord, Lord Kingsland, raised and which I seek to underline. I hope that the Minister will feel that she can take the clause away with a view to giving further consideration to this issue, particularly taking into account the concerns that have been expressed today as well as those of the Joint Committee.
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- Lord Hunt of WirralConservative
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- The noble and learned Lord, Lord Woolf, has made such an important contribution to this debate. He has been sitting through these proceedings, listening carefully to every word. We, too, have listened very carefully to what he has just said. His description of what may happen to access to justice was one of the issues that deeply troubled the Joint Committee. Indeed, my noble friend Lord Kingsland read out paragraph 324, which encapsulates much of our concern. We were told by the Government that they, too, were concerned, but no amendment to signify any breakthrough in persuading the Government that the Bill as drafted could result in these dangers has yet been proposed. It is important to remind the Minister that in his report, Sir David Clementi was much more cautious about the right way forward. I thank my noble friend for tabling a wide amendment that has allowed us to have a very important debate about alternative business structures. It gives us a chance to reflect on whether we are proceeding in the right direction. In his 2004 report, Sir David Clementi recommended the facilitation of what he described as “legal disciplinary practices”, known as LDPs, allowing different kinds of lawyers to work together, with or without external ownership or management. He drew a clear distinction between LDPs and MDPs—multi-disciplinary practices—which bring together lawyers and other professionals to provide legal and other services to third parties. He concluded that the creation of LDPs would represent a major step towards MDPs if, at a subsequent juncture, the regulatory authorities considered that sufficient safeguards could be put in place. Those are such important words. I think I speak for most noble Lords when I say that we are not yet persuaded that sufficient safeguards have been put in place. In another paragraph, the Joint Committee was unanimous in saying: “Given the level of uncertainty about the impact of ABS provisions we urge the Government to use ‘less haste and more care’ and follow the Clementi Report in their approach. We recommend that the draft Bill be amended to ensure that the LSB takes a ‘step-by-step’ approach to licensing ABSs”. We set out four stages which could represent the right way forward, and continued: “If necessary, this gradual approach could be adopted by bringing the necessary provisions into force by order at different times”. I hope that the Minister will respond positively to the points made by my noble friend, the noble Lord, Lord Maclennan of Rogart, and the noble and learned Lord, Lord Woolf. It is so important that we get this right. In moving Amendment No. 108, my noble friend has given the noble Baroness an opportunity at this early stage, as we are debating alternative business structures, to put our fears at rest.
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- Lord WhittyLabour
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- I will make clear later my strong support in principle for alternative business structures. Some of the concerns expressed by the noble Lord, Lord Kingsland, and others need to be addressed. I do not want to alarm the noble Lord, but I might actually support his Amendment No. 108C, which would require the licensing authority to look at some assessment of the impact of ABSs. I am particularly concerned about rural areas. Part of the procedure for approving alternative business structures might be to assess their impact more broadly. I do not particularly agree with the wording of the amendment because if matters have been validated through that procedure, there is no point in rationing the licences. But when individual applications are being considered, it is important that the wider impact is taken into account. This needs to be part of the Government’s thinking and, on principle, I strongly support the provisions on ABSs.
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- Baroness Ashton of UphollandLabour
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- An interesting debate has brought together noble Lords across the Committee. It is important that I address the issues as fully as I can. The principle behind the amendment, with which everyone who has spoken agrees, is that we need to take a very careful approach to alternative business structures. I do not think it is necessary to impose specific constraints in the Bill, but I want to explain why. That will enable Members of the Committee to think about what we are doing and how it will work in practice so that they can decide what they wish to do beyond this point in the Bill. The first thing to remember is that we will be licensing alternative business structures only when the rules are in place. These rules must be compatible with the regulatory objectives and must meet the safeguards in the Bill, but we do not want to rule out allowing them to go ahead if they are ready. If they are ready we can licence them safely—I use that word in the context of the regulatory objectives and safeguards in the Bill. I have talked to some Committee Members about whether this could be done slowly or incrementally, but there are real difficulties in how one might physically achieve that without being completely anti-competition, either by going for various sectors or by being unrealistic about constraining geographically the way in which firms, companies and organisations now work, not least because of the internet. It is difficult to see a gradual approach in the sense of trying to limit it geographically, numerically and so forth in that way. However, I agree that we need to do this step by step. The Legal Services Board and the licensing authorities are bound by the regulatory objectives and the firms are bound by the duties in Clauses 88 and 169. The duty is to comply with professional conduct obligations and ensure that non-lawyers do not cause breaches of them. The Legal Services Board must judge whether the licensing authority rules are appropriate for regulating the risks raised by firms it intends to license. Those alternative business structures will emerge only when the regulatory framework exists. We do not think that we can control it artificially, while recognising the points behind what the noble Lord, Lord Kingsland, seeks to achieve. The Bill was designed to improve access to justice. The noble Lord, Lord Kingsland, asked about overseas and I mentioned to the Committee before that I have had the privilege of having some meetings with Neelie Kroes who is the Competition Commissioner for the European Union. As I was listening to the Committee, I was reading two of her recent speeches about the importance that competition can play in ensuring access to justice. I will circulate to Members of the Committee her speech to the jury committee of the European Parliament in November because it is interesting in the context of Europe. She is very supportive of many of the ways in which we have sought in this country to develop our services, not just legal services but others as well. She has used us as a model for other countries throughout the European Union. She is an important person in the context of what happens in Europe. It will be a requirement on those looking for alternative business structures to think about the rules and regulations that apply in other countries— whether or not they are members of the European Union. We have already mentioned the German BRAK and the way in which we want to ensure that we are not being anti-competitive from the UK perspective. We recognise that businesses that are setting up and wishing to work internationally will find ways of developing their structures appropriately and will make their own decisions about whether to go down this route accordingly. We recognise that that approach will need to be thought about and the Competition Commissioner of the European Union will be keen to see us develop it. If there are issues to do with the European Union, I know that she will be glad for me to raise them with her next time we meet. On the specific points made by the noble and learned Lord, Lord Woolf, about access to justice, all of the regulatory objectives must be considered in the licensing of alternative business structure firms, including access to justice. It is possible for conditions to be placed on the alternative business structure firm to ensure that it meets those objectives, provided that that is consistent with those objectives. For example, there may be circumstances where in order to be able to create an alternative business structure a condition might be set that you must continue to do as you do now working in this particular field—legal aid in family cases or whatever. It is possible to do that. Therefore, by putting conditions, one is able to get access to justice. Part and parcel of the way in which the alternative business structures will be put together and allowed is that they must have access to justice as one of the principles under which they will be licensed. It is the regulatory objective full stop.
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- Lord Thomas of GresfordLiberal Democrat
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- What are the regulatory objectives?
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- Baroness Ashton of UphollandLabour
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- The regulatory objectives are set out in the Bill. We have discussed them before.
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- Lord Thomas of GresfordLiberal Democrat
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- At the beginning?
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- Baroness Ashton of UphollandLabour
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- Yes.
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- Lord Hunt of WirralConservative
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- The noble Lord, Lord Thomas of Gresford, is quite right to ask again about the regulatory objectives. In previous debates, we have had advice from the Minister that the regulatory objectives under Clause 1 are very much for the board itself to determine. It is perfectly possible for the board to determine that regulatory objective (d) in Clause 1(1), “promoting competition in the provision of services”, should in particular circumstances override regulatory objective (b) “improving access to justice”. It is a very good question when the Minister refers to the regulatory objectives, accepting that she has already said that the Government have no intention of putting access to justice as number one—or indeed number two or three—but will leave the priority to the board to decide. There is a concern that access to justice may come lower down the scale compared with one of two of the other objectives. That would undermine the whole question of the alternative business structures. The noble and learned Lord, Lord Woolf, is able to speak for himself, but I think that that is what led him to say a few moments ago that there could be a devastating effect on access to justice, despite the fact that it is one of the regulatory objectives.
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- Baroness Ashton of UphollandLabour
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- There would not be a devastating effect on access to justice. That is the point. I will use my words rather than the noble Lord’s. I said that when looking at the objectives in the round, the board would determine the weight to be given. I will try to think of an example, although it is always dangerous because I get run over immediately I try to do that. If an alternative business structure planned to offer high-quality accessible legal services in a particular area, but the firm with which it was working already had one lawyer doing a particular piece of work and the new alternative business structure was not sure whether it wished to incorporate it, the board could do two things. It could say, “No, we will direct you to continue doing that work”, or it could say, “Well, two miles down the road someone else of good quality is doing that work, so we won't direct you”, because the access to justice has not been adversely affected overall. If you look at it purely from a hierarchical point of view you could argue that you could never allow that one lawyer to cease that work because, in theory, the access to justice from that firm would have been altered. I deliberately chose a hypothetical situation because I wanted to try to explore it. But the idea that there could be any kind of devastating effect would completely run against everything that we have said about the Bill and that we are seeking to achieve. It is really important that the board is able to look at business structures and regulatory objectives in the round, for exactly the reasons that I have given. When I send noble Lords Neelie Kroes’s speeches they will see that she consistently makes the point that improving competition and access to justice can have a really positive effect. Those objectives can be interrelated in many circumstances—and that is very important, too. It is right and proper for noble Lords to be concerned that when alternative business structures are set up something does not get lost. For the noble and learned Lord, the idea that people would lose out in getting justice is horrendous. I agree with him completely; that would be absolutely detrimental. But in the example I have just given, you would have to look at it in the context of what is happening in that area and where else people would be able to get those services. If for 99.9 per cent of the population in a particular area there were better and broader services, of higher quality and with better investment, and it could be demonstrated that for the 0.1 per cent an alternative way had been found—either by direction or in another way—everyone would be perfectly comfortable with that. Noble Lords are absolutely right to say that in designing the rules, building up to the licensing authorities and enabling people to be licensed, we must ensure that these objectives operate properly and are not overridden completely in a way that noble Lords are worried about. I am treating this debate as my chance to explore these issues, as noble Lords would expect, and to ensure that we have got this completely right. I am beginning to think, too, that we must make sure that we see what happens and how the board does what it does, and I shall be giving feedback to my honourable friend Bridget Prentice and my noble and learned friend the Lord Chancellor in that regard. These are not necessarily issues to put in the Bill, but they are ones to explore properly and make sure that we get right. The principle is to ensure that people do not just cherry pick and that if services start to deteriorate or become non-existent in particular areas either there can be direction or it will be agreed not to give the alternative business structure approval. We want to ensure that firms are operating in the right and appropriate way to meet all the objectives while recognising that they are to be taken in the round and weighed for their advantages and disadvantages before making a decision. We need to be crystal clear that there could not be circumstances in which there was a devastating effect on access to justice.
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- The Duke of MontroseConservative
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- After what the Minister has just told the Committee, would she expect that every person applying for an alternative business structure should produce some sort of impact assessment to show what might happen in the area in which they are operating—or would she expect the LSB to have to keep track of every practising lawyer, including not only his name but his geographical locality? It would be quite difficult for someone sitting in an office in London to say what the impact would be in a particular rural area.
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- Baroness Ashton of UphollandLabour
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- If we look at how the Bill is constructed, we can see how the Law Society, for example, would become a licensing authority and work with the possibility of an alternative business structure with company X. I should just say that although people have used Tesco as an example it is my understanding that Tesco has no desire to be involved in this, so we will not pick on it any more—and I apologise to Tesco, through this Committee. Let us say that company X was involved in the provision of lots of different services relevant to the retail sector and wished to invest in and join up with a local legal firm to develop its business, creating an alternative business structure—something new. In so doing, the company would apply to the licensing authority to be allowed to do so, and the authority would look at what was being proposed, the services that were currently offered and about to be offered and the way in which it would affect the locality. I agree with my noble friend Lord Whitty and others that it is of crucial importance in rural communities to ensure that this works effectively and well. The authority would ensure that the principles of the regulatory objectives were adhered to and then would or would not grant the licence with or without conditions on top of it. In so doing, it would be mindful, too, of what else was available in that locality. That is how I see the process working—and that is an appropriate relationship between the two parties. Not everyone will be offered the opportunity but, when they are, because it is clearly going to be a good opportunity for everyone, they should be allowed to go ahead.
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- Lord WoolfCrossbench
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- I hope the Minister will forgive me if I press her on one additional aspect that I am not sure has been dealt with in her extended and helpful remarks. I refer to the impact on those who provide the service in a locality prior to the arrival of the new entity. Some of those are struggling to survive at present and, unless they are protected, they will disappear—and if they disappear they will not reappear.
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- Baroness Ashton of UphollandLabour
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- We have to be careful about the word “protected”. One critical and important aspect of this measure is to ensure that we have a good provision of services and that we take on board how those services are provided. The noble and learned Lord said earlier today—and I hope that he will not mind my reminding him—that the personal touch can be an important aspect in the provision of services and that perhaps, if one were able to get legal services from a bigger organisation, that might be lost. That is a fair point. It is important to consider what would happen as a consequence of an alternative business structure, taking on board the impact on the locality, rural community or high street. But that does not mean that one always protects what is there, in all circumstances—although I know that that is not what the noble and learned Lord meant at all—because it may be appropriate for things to move on and for new structures to provide better, high-quality services across the board. So it is again a case of weighing up and making sure that in the context of regulatory objectives the alternative business structures will be able to fulfil what is required.
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- Lord Thomas of GresfordLiberal Democrat
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- Why does the Minister have to go to Europe, where there is a different legal system and profession and they are organised differently, for support for her proposals here? She referred to somebody in Europe who was pushing these reforms.
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- Baroness Ashton of UphollandLabour
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- Somebody in Europe! I am surprised at the noble Lord, considering the position that the Liberal Democrats take on the European Union. I made the point because the point has been made to me twice in the course of this Bill so far about the German BRAK and the concerns that noble Lords had about the relationship between companies operating in the UK and their ability to operate internationally, including in the European Union. The person that I referred to is Neelie Kroes, the European Commissioner for Competition—she is from the Netherlands. I referred to her, as noble Lords would expect, only because I sit on the Council of Ministers for Justice and Home Affairs. I have endeavoured to talk to her about some of the things that we are doing. Indeed, she invited me to give a speech in Brussels about the reforms in the UK, because she finds them extremely exciting and very interesting.
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- Lord Thomas of GresfordLiberal Democrat
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- Apart from listening to the Minister, has this Commissioner the slightest knowledge of the provision of legal services throughout the rural areas of this country?
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- Baroness Ashton of UphollandLabour
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- I suspect not, and I was not trying to suggest that she had. I was referring to the issue that the noble Lord, Lord Kingsland, raised about the implications for business operating in the European Union and whether alternative business structures would provide an opportunity for other countries—and the German BRAK has been raised a number of times—to prevent the good and appropriate way in which British firms are competing in the European Union. One interested party—though only one—would be the Commissioner for Competition, because she is looking right across the European Union and talking about the need for reform to take place. I referred to her speeches because—as the noble Lord will see when I send him copies; and I am sure that it fits entirely with Liberal Democrat policy—she has reminded member states of the importance of being able to think about competition appropriately and the benefits to the consumer in the way that it operates. I wanted to make a small interjection which was not meant to be a huge part of what I was saying. But I did not want the noble Lord, Lord Kingsland, to think that I had not thought about or started to discuss the issues which have reasonably been raised about whether, by going down this route, we would somehow prevent British business competing effectively across the European Union.
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- 19:15
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- Speaker
- Baroness Ashton of UphollandLabour
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- I am nervous about the description of the incremental approach that the noble Lord has just given. I agree that the process should be cautious in moving towards the development of alternative business structures by making sure that the rules are applied properly, the licensing authorities are properly set up, and they are clear about the regulatory objectives and what that means for how they do their work and so on. However, I need to go away and think about the idea that this can be done gradually. One would end up saying that we will take, for example, the first five or 20 and then stop. Which will be the lucky ones able to develop their businesses and compete in the open market using a different structure from that used by others which might want to compete? I am not sure that it is a realistic proposition. Getting this right is about getting it right from the beginning and deciding how to ensure the right processes are in place and the bodies are set up properly. I need to go away and think about how we will know what is happening.
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- 19:30
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- Baroness Ashton of UphollandLabour
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- My problem is that we cannot stipulate that there will be five, 10 or whatever, not least because those that rush forward may do so because they think they ought to rather than because they have thought it through properly. I accept that finding out what has happened is important—not to slow the process down, but to ensure that it is considered. As I think I said in my opening remarks, I want to take all of this away for consideration. But I do not favour this use of the word “incremental”.
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- 19:30
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- Speaker
- Baroness Ashton of UphollandLabour
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- I am grateful to the noble Lord. Let me be clear about what I have committed myself to do—the crumbs of comfort from my cake. First, we are all agreed on the cautious approach, which I take to mean setting in train the opportunities for alternative business structures. I will go away and reflect on whether that cautious approach is suitably captured. Leaving the regulatory objectives aside for a moment, I will also go away and reflect on any further safeguards that may be provided and whether the clarity of what I have said about being able to direct and so on are there in the Bill. I turn to the regulatory objectives. For the reasons that I gave in my example, clearly quite badly, as usual—where you have created something that gives 99.9 per cent but not 0.1 per cent—I am not keen on the hierarchical objectives. We have discussed that before. However, we absolutely do not to move towards the idea that one could be ignored completely, particularly where access to justice is concerned. Finally, I will go away and reflect on the whole question of how we know what has happened. The noble Lord, Lord Kingsland, quite reasonably says there is no such provision in the Bill; there is not. I have no idea whether my noble and learned friend would wish to include such provision, but the point has been well made. It is clear in any event that, somewhere along the way, the Legal Services Board, in its overview, will need to know what is happening, whether it is in Birmingham or across the UK. I make those commitments, which the noble Lord knows I will honour, to go away and look at all those issues, and to come back before Report to discuss with noble Lords exactly how we think we can address them. I will either satisfy him or I will not, but we will at least have tackled those issues. I am grateful to all noble Lords who have enabled me to hear some of the issues, not least the noble and learned Lord, Lord Woolf.
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- 19:30
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- Speaker
Lord Davies of OldhamLabour- Quote
- I beg to move that the House do now resume. In moving the Motion, may I suggest that the Committee stage begin again not before 8.40 pm? Moved accordingly, and, on Question, Motion agreed to. House resumed.
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- 19:30
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