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Local Government Finance

3.30 pm

The Secretary of State for the Environment (Mr. Nicholas Ridley) : With permission, Mr. Speaker, I should like to make a statement about the local authority grant settlement for 1990-91 for England. As the House will know, next April sees the introduction of the new local government finance system. The community charge will replace domestic rates, there will be a uniform national business rate, and there will be a new grant system. Those reforms bring greater accountability to authorities' spending decisions. To give local authorities the maximum time to plan their budgets, I am today announcing the Government's proposals for aggregate external finance--that is, the amount of support that will be available to local authorities in England from Government grants and business rates. I am also announcing my assessment of total standard spending and the community charge for standard spending.

In the current year, 1989-90, English local authorities have budgeted for spending of about £30.3 billion. That is £1.2 billion more than the Government had provided for in the last RSG settlement. It is £1.9 billion more than the total of grant-related expenditure assessments, the Government's assessment of the amount which authorities needed to spend. Local authorities have budgeted to increase spending by 9 per cent. compared with 1988-89, which is more than the rate of inflation. Over the last four years local authority expenditure will have increased by 13 per cent. in real terms. This is excessive.

In assessing the amount of revenue spending that is appropriate for 1990-91 --known as total standard spending--I have taken account of what can reasonably be afforded. I have also taken into account the amount that authorities are spending now, and the local authority associations' views about the pressures for increased spending next year. My right hon. Friend the Minister and I discussed that with them in the Consultative Council on Local Government Finance on 12 July. I have had regard to the continued scope for local authorities to make substantial savings through controlling their payroll costs, increased efficiency, competitive tendering and, in some cases, by eliminating wasteful and unnecessary activities. I understand that the value-for-money improvements now identified by the Audit Commission could be worth more than £900 million annually, and only £350 million of them have been achieved.

Under the new system, total standard spending is my assessment of the amount appropriate for authorities to spend in providing services. I propose that this total should be £32.8 billion. On a comparable basis, allowing for technical changes such as the ring-fencing of the housing revenue account and others, that is £1.2 billion more than authorities have budgeted to spend this year. It is a significant real increase on the amount that the Government assessed authorities needed to spend this year.

I propose that the aggregate amount of support that will be available from Government grants and business rates will be £22.9 billion. In addition, I intend to provide a further £200 million of support for two specific purposes, which I shall describe shortly. That makes a total for aggregate external finance of £23.1 billion in support of revenue spending--£1.8 billion more than in the current

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year, an increase of 8.5 per cent. I shall announce in the autumn how the £23.1 billion is to be divided between standard spending grant, the various specific grants, and the amount likely to be raised from business rates. This implies that if local authorities budget to spend in line with our assessment, just under £10 billion will fall to be raised from community charges. That corresponds to a community charge for standard spending of about £275, broadly the same as the existing average rate bill per adult ; £275 is the level of charge which, apart from the safety net, each charging authority could set if spending is in line with the Government's standard spending assessment.

The actual charge in each area in the first year will, however, depend on the transitional arrangements, and the level at which local authorities choose to spend.

As the House will know, we have proposed that there should be a four-year transitional safety net in order to phase in the impact of the new system. The objective is that people living in areas which traditionally have had low rate bills will have a period in which to adjust to the greater demands on them. I believe it is right that those people should have some protection. But, as originally proposed, that protection had to be paid for by the gainers postponing receipt of virtually all their gains.

I have therefore looked again at the safety net arrangements in the light of responses to our earlier proposals, with a view to achieving a better balance between the interests of gainers and losers. It is wrong that areas which have suffered under the present unfair system of resource equalisation should have to wait a further year before seeing any relief. Equally, I think it fair that areas which stand ultimately to have higher average bills under the new system should be expected to make some adjustment from the first year.

I am therefore now proposing new arrangements. In those areas in which charge payers can expect to see their bills falling, nearly half of the gain will come through immediately. To allow this, I propose that losses of grant support equivalent to up to £25 per adult should be allowed to feed through in the first year. This will allow those who gain from the reform of the finance system to see between 40 per cent. and 50 per cent. of their gain come through to them in the first year, although the precise figure will not be known until the autumn. In this way we can begin to move more quickly towards the position we shall have once the new arrangements are fully in force. As in my earlier proposal, the maximum amount of gain deferred will be £75 per adult, but whereas before this applied to a significant number of authorities, it will now only apply to a handful of the largest gainers. In most cases the gain deferred will be significantly less.

I turn to my two proposals for extra protection for certain areas. First, there are some authorities where, due to the historical accident of low rateable values, the adjustment to the full community charge is generally greater proportionately than in other areas. I therefore intend to provide extra protection of up to £25 per adult for charging authorities in England where the average domestic rateable value per hereditament is £130 or less and where the introduction of the new system results in a loss. This means that in these areas there will be no loss. Authorities with average domestic rateable values per hereditament between £130 and £150 will receive support

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on a tapering scale. This support will cost roughly £100 million. I will publish in the Official Report a list of authorities which may qualify under these criteria.

Dr. John Cunningham (Copeland) : Today?

Mr. Ridley : Yes, today.

Secondly, my right hon. Friend the Secretary of State for Education and Science has today announced that the Government will be making available a transitional grant to inner-London boroughs and to the City which will be taking over education responsibilities from ILEA on 1 April. The cost of this extra grant will be £100 million in 1990-91. It will take some time for the boroughs to eliminate wasteful expenditure inherited from ILEA. This grant will provide transitional protection for their charge payers while the savings are realised. Both these proposals will require minor legislative changes, which we will seek to enact in the Local Government and Housing Bill.

Compared to the original proposals for the safety net, these revised arrangements will enable much quicker progress towards the full introduction of the new local government finance system. A large percentage of the gains will come through to gaining areas immediately. In inner London, where community charges threaten to be highest, the proposed specific grant will help authorities to keep down charges. There will be special protection for areas with low rateable values and the maximum extra that local councils in any losing authority need impose on their local chargepayers works out at only 50p per week per adult.

In response to a parliamentary question, I am placing in the Library today illustrative charges showing how a safety net on this basis would have operated in 1989-90 had the new system been in force now. These illustrative charges reflect authorities' own 1989-90 spending decisions and show what the community charge might have been in each area. I have also exemplified the effect of a system of capital value rates and local income tax. Copies of these tables are also available in the Vote Office.

I shall be discussing these proposals with the local authority associations in September. I will bring forward full proposals for the settlement in the autumn, including details of the methodology which we propose to use to distribute standard spending grant between authorities.

Under these proposals, if local authorities control their spending and improve their efficiency, the average community charge need not be higher than about £275, and could be lower. We recognise the particular problems that some authorities face through the change to the new system, and we are providing extra help targeted on these areas. But it will be for local authorities to set their budgets, and for community charge payers to judge whether the amount they are asked to pay is justified.

Following is the list of areas potentially benefiting from extra protection :

Authorities where the average domestic rateable value per               

hereditament on 1 April 1989 was less than £150                         

                        |Domestic rateable value                        

                        |per hereditament                               



Burnley                 |103                                            

Pendle                  |105                                            

Wear Valley             |113                                            

Hyndburn                |113                                            

Barrow in Furness       |115                                            

Teesdale                |116                                            

Calderdale              |116                                            

Easington               |117                                            

Kirklees                |119                                            

Barnsley                |120                                            

Copeland                |121                                            

Blackburn               |122                                            

Rossendale              |123                                            

Derwentside             |125                                            

Kingston upon Hull      |127                                            

Bradford                |128                                            

Torridge                |129                                            

Sedgefield              |129                                            

Allerdale               |130                                            

Eden                    |131                                            

Bolsover                |132                                            

Wansbeck                |133                                            

Rotherham               |135                                            

Wakefield               |135                                            

Boothferry              |136                                            

Berwick-upon-Tweed      |136                                            

York                    |136                                            

Gateshead               |136                                            

Sunderland              |137                                            

Ashfield                |138                                            

Sheffield               |138                                            

Carlisle                |140                                            

Doncaster               |140                                            

East Yorkshire          |141                                            

Craven                  |142                                            

Rochdale                |142                                            

Hartlepool              |143                                            

South Tyneside          |143                                            

Scarborough             |144                                            

North Devon             |146                                            

Penwith                 |147                                            

Tameside                |147                                            

Kerrier                 |148                                            

Oldham                  |148                                            

Leeds                   |148                                            

Lincoln                 |149                                            

Mansfield               |149                                            

Table file CD890719.001 not available

Dr. Cunningham : The most important aspect of the statement by the Secretary of State is what he has left out. He has made no decision about, for example, the implications of national business tax and he has kept the House and the business community in the dark about it--so much for his plea in Newcastle upon Tyne last week about having debates on the basis of the facts.

The Secretary of State has introduced a new terminology to describe what he is doing--a kind of Ridleyspeak--but everything that he has announced today can be undermined at a later date by his decisions on the needs assessment for every local authority in England. He has allowed himself the flexibility to adjust those assessments by very large amounts. For example, on one set of figures in front of the Secretary of State, Birmingham needs £627 million to provide a standard level of finance--that is, to the Government's standards--but another set of figures for the same city shows Birmingham needing £750 million to provide a standard level of provision. Such latitude exists for every local authority, deliberately to allow the Secretary of State to exercise the

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kind of political control that he wishes-- or, perhaps more accurately, his successor wishes--to exercise over local government finance.

Contrary to what the Secretary of State has said, is it not the case that today's statement announces a major cut in Government support for local services? On the new calculation basis, total standard spending this year is £31.6 billion. The Secretary of State used old figures and the old basis. With inflation at 8.5 per cent., that means that local government needs £34.1 billion for the coming financial year, just to maintain the existing real level of spending. However, the Secretary of State is providing only for £32.8 billion--a major shortfall of £1.3 billion, simply taking inflation into account, never mind wage increases and other increases. The Secretary of State misleads the House when he describes that as a significant real increase. It is a major shortfall in what is likely to be required. His statement today increases the total by only 3.8 per cent. in real terms, which is less than half the current rate of inflation. The Secretary of State says that local government expenditure increases are excessive, yet teachers' pay and police salaries are under the control of Ministers, not local government. Are salaries and wages to be funded in local government on the basis of a 3.8 per cent. increase, with inflation at 8.5 per cent.? Will the Secretary of State tell the House what the Government's intentions are in that regard? After 10 years of these policies, central Government expenditure has risen by 23.8 per cent. while local government expenditure has risen on the same basis by just 19 per cent. If any expenditure increases are excessive on that basis, it is central Government's not local government's.

If expenditure goes up simply by the amount the Secretary of State is talking about, where does he recommend that local authorities should make cuts? Should it be in employment, in the quality of services, or in the extension of services? How does he expect local authorities to make up a shortfall of over £1 billion with inflation running at its present rate? I am sure that the Secretary of State understands the reality, but I ask him whether he does. Inflation alone will add almost £40 per annum to each individual poll tax bill and it will be the Government, not local councils, who are responsible. How can the statement bring greater accountability to local government decision taking when over 70 per cent. of all funding is in the control of the Secretary of State? It is not in the control of local authorities and their committees. As he controls that level of expenditure, the major accountability for what is happening rests with him and his Department.

Why has the Secretary of State given no information on the likely level of the national business tax? Is it because of the already extensive fear and concern among small business people about the implications of that and the revaluation? How does he expect small business people to plan ahead without some clear idea about the burden of this new tax on their businesses?

It is all very well for the Secretary of State to talk about average poll tax, but in the real world thousands of families face massive increases in what they are likely to pay. It was, after all, the Secretary of State who asked candidly why a duke should pay more than a dustman. He

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is planning major increases for the majority of households. If one considers my own constituency as an example, the real likely poll tax in Copeland in the next financial year will be about £350 per person. The Secretary of State says that he is expecting people to pay only an additional 50p a week. In a four-adult family, that is £100 a year and in a five-adult family, it is £125 a year. How does he think that people on low incomes will cope even with those minimum levels of increase in their taxes? The Secretary of State is not living in the real world, and he knows it.

The real explanation for the statement and its deliberate obfuscation is simple. The Secretary of State knows that his Back Benchers, the overwhelming majority of whom voted for the legislation in the first place, are now panicking at its likely impact in their constituencies. They are enmeshed in their own ramshackle safety net arrangements. On the one hand, there is not enough in the way of safety net protection--in the north-west in particular--and, on the other, some Conservative Members are complaining about the likely bills that their constituents will face to fund the safety netting in the first place. It would be far better for everyone--although perhaps too late to save the Secretary of State--if he took the legislation away altogether instead of announcing further tinkering with it.

Sir Bernard Braine (Castle Point) : On a point of order, Mr. Speaker. I wish to raise a point of order of some substance. We have before us a statement-- [Hon. Members :-- "We have not."] We have listened to a statement which touches upon every constituency in the land. The document from the Department of the Environment giving the illustrative charges has been available to a handful of hon. Members, but it is not available to the rest of us, and apologies have already been given in the Vote Office. It may be too late to do anything about it now, on this important occasion, but I should like to protest on behalf of hon. Members on both sides of the House. Perhaps a lesson can be learned from this experience. Each of us wants to know how our constituencies are affected by the statement and by the criticism made of it. Can we be taken into Minister's confidence?

Mr. Speaker : As far as I am aware, the document is available in the Vote Office-- [Hon. Members :-- "No."] Order. I shall have the matter looked into.

Mr. D. N. Campbell-Savours (Workington) : Further to the point of order, Mr. Speaker. Should not the sitting be suspended so that every hon. Member may have access to the document? When I went to the Vote Office, I was told that some hon. Members had taken a number of copies away and handed them out on the Conservative Benches, although it seems that many Conservative Members do not have copies nevertheless. Will you, Sir, suspend the sitting so that we may all look at the document? Then we can reasonably debate this matter. The present state of affairs is most unreasonable.

Mr. Tim Devlin (Stockton, South) : Further to the point of order, Mr. Speaker. The statement of the hon. Member for Workington (Mr. Campbell- Savours) was not accurate. A number of Conservative Members went to the Vote Office to get copies. The Vote Office will not give hon. Members more than one copy each and it has-- [Interruption.]

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Mr. Speaker : Order. What is the hon. Gentleman's point of order?

Mr. Devlin : My point of order is that the Vote Office will hand out only one copy to each Member. A number of hon. Members are sharing, and no more copies are available.

Mr. John Battle (Leeds, West) : When I asked the Vote Office for a copy of the document I was told that I was being given the last copy. There were no other copies available in the Vote Office and it seemed that there were not enough for every hon. Member to have a copy. It should also be placed on record that some of the figures to which the Secretary of State referred are in the Library but we cannot check the illustrative figures in the Library against the figures in the document.

Mr Speaker : Perhaps the Secretary of State can help us by explaining why copies are not available for all hon. Members.

Mr. Ridley : I apologise to the House. I thought that I had made arrangements for adequate copies of the document to be placed in the Vote Office. I now understand that the original supply was insufficient, and that reinforcements are coming hotfoot to the Vote Office. I apologise for the fact that there seems to have been a defect in the administrative arrangements.

Mr. Merlyn Rees (Morley and Leeds, South) : On a point of order, Mr. Speaker. Given that arrangements have broken down on a most important issue that affects all the people of England and Wales, and given that we cannot discuss the matter properly, may I ask you to suspend the sitting for half an hour?

Mr. Speaker : Clearly the House is in difficulty about this. We have another statement to follow. I believe that is would be sensible to take that statement first and then return to this one when, I hope, copies of the document will be available.

Several Hon. Members rose--

Mr. Speaker : Order. I suggest we get on with the other statement.

Mr. Bob Cryer (Bradford, South) : On a point of order, Mr. Speaker. As we are taking, unusually, the second statement now, may we have copies of the statement made by the Secretary of State of the Environment distributed to hon. Members because, as usual, while the Secretary of State was speaking, copies of his statement, which were not available to hon. Members, were being distributed in the Press Gallery. I object to different treatment being given to members of the Press Gallery. We should have copies of the statement on the Floor of the House.

Mr. Speaker : That is not possible, but when we return to the matter I hope that the document that some Members have, but other Members do not have, will be available.

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Legal Profession

3.56 pm

The Attorney-General (Sir Patrick Mayhew) : With the leave of the House, I shall now repeat a statement made today in another place by my right hon. and learned Friend the Lord Chancellor, which is as follows.

When I published the Government's Green Papers on the legal profession, which were designed to remove any unnecessary restrictions in the provision of legal services, I undertook to make a statement to the House before the summer recess. I have received over 2,000 responses to the Green Paper, and held discussions with many of those directly involved. I would like to take this opportunity to thank all those who helped in that process. All the points which were put to me in writing or orally have been carefully considered. The Government are today publishing a White Paper containing their own proposals for legislation.

The Government propose to introduce legislation which will set out broad objectives designed to further the interests of the administration of justice, to increase access to justice and to extend the range of those possessing rights of audience before the courts. All those involved in granting rights of audience will be required by the statute to have regard to these objectives. An independent statutory advisory committee on education and conduct will give advice on the achievement of these objectives. Again there will be a statutory requirement for all those involved in granting rights of audience to have regard to this advice. The advisory committee will have a membership broadly as set out in the Green Paper, but, in order to emphasise its independence from the Government, it will have the power to appoint its own staff. The Government propose that both the Bar and the Law Society should have a statutory entitlement to grant rights of audience to their members in all courts. All those called to the Bar should receive rights of audience in all courts. On qualification, solicitors will continue to receive rights of audience equivalent to those they now possess. Solicitors will, however, also be eligible to progress to rights of audience in some or all of the higher courts, if they have achieved the necessary standards of competence and conform to appropriate rules of conduct.

All rules relating to the competence and conduct of advocates will continue to be made by the professional bodies, but, building on the current arrangements for the Law Society's rules, all changes in such rules will in the future require the concurrence of the Lord Chancellor and each of the four heads of division, the Lord Chief Justice, the Master of the Rolls, the President of the Family Division and the Vice-Chancellor. All these will be required to have regard to the statutory objectives and the advisory committee's advice. Other professional bodies might subsequently be empowered by Order in Council, approved in draft by both Houses of Parliament, to grant rights of audience in particular classes of business in particular courts, provided their competence and conduct requirements satisfied the Lord Chancellor and the four heads of division. Similar arrangements will apply for the future to any professional body which might want to have the right to

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issue legal process or to take steps in proceedings on behalf of others. These rights are at present reserved by statute to solicitors.

The importance of ensuring that both a wide range of barristers generally and an adequate choice of specialist barristers are available to take cases in court requires that the Bar should continue to be able to make its own rules about partnerships and multidisciplinary practices. Considerable concern was expressed in the responses to the consultation that removing such rules might threaten the future viability of the Bar. The Government attach great importance to the continued existence of a vigorous independent Bar. Solicitors, who are also frequently involved in litigation, ought to be treated on an equal basis to barristers. The Government therefore propose to remove the existing statutory restrictions which prevent solicitors from forming multidisciplinary partnerships, but to provide that the Law Society will henceforth be allowed to make its own rules about partnerships and multidisciplinary practices. Except in so far as such rules are related to advocacy and the conduct of litigation and are approved as necessary in the interests of justice by the Lord Chancellor and the heads of division, they will be subject to review under the new restrictive trade practices legislation proposed in the Department of Trade and Industry White Paper "Opening Markets : New Policy On Restrictive Trade Practices". The links between the two sets of proposals, including an extended role for the Director General of Fair Trading, are set out in the two White Papers.

The Government propose also to remove the present statutory obstacles to multi-national practices and to ensure that lawyers from Scotland and Northern Ireland will have the same rights in England and Wales, and vice versa, as lawyers from other European jurisdictions will have under Community directives.

The Government propose to legislate, as the Green Paper suggested, to replace the provisions in the Building Societies Act 1986 with a power to allow the Lord Chancellor to recognise professional bodies as competent to authorise their members as authorised practitioners to undertake conveyancing for their borrowers. Conveyancing by such practitioners will be subject to the existing requirement that it is supervised by a solicitor or licensed conveyancer ; and every such authorised practitioner will be required to offer its clients a personal interview with the solicitor or licensed conveyancer having conduct of the transaction. Throughout the transaction, that solicitor or licensed conveyancer will have a paramount duty towards the borrower.

There will be a detailed code of conduct laid down by statutory instrument by which authorised practitioners will have to abide. Moreover, authorised practitioners will be prohibited from providing conveyancing services to both seller and buyer in the same transaction, except in very limited circumstances and from providing estate agency services to the seller and conveyancing services to the buyer in the same transaction. Making the provision of one service conditional upon taking another, so-called "tying- in", in connection with house purchase will be

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prohibited. Authorised practitioners will be required to charge for their conveyancing services on a basis that is not less than the true cost of providing them.

The arrangements are designed to provide adequate protection for individual clients and also to ensure that all those who want to provide conveyancing services, whether small firms of solicitors or large financial institutions, can compete on fair terms.

Litigation will be permitted to be undertaken on the speculative basis now allowed in Scotland. It will also become possible in such cases for there to be a moderate percentage uplift on the ordinary taxed costs otherwise payable, within a maximum to be prescribed by statutory instrument. There should, however, be no introduction of any kind of contingency fee linked to a proportion of the damages received.

I have dealt with these issues in particular because they are those about which there has been most public comment. These proposals, and others, are presented in more detail in the White Paper. Taken together, these proposals, which are an integral part of the Government's wider programme of improving access to justice, represent an appropriate balance between the encouragement of competition and the maintenance of standards in the administration of justice and the provision of legal services. I believe that those proposals provide a satisfactory framework for the future.

Mr. John Morris (Aberavon) : It would be churlish of me not to welcome some of the results of more mature consideration by the Lord Chancellor of his original proposals which bore the mark of excessive haste and of being dragooned by the Department of Trade and Industry.

My first criticism is about the failure of the Government to provide time in the House to debate the proposals. Let the Government never forget that it is this House that has the right to be heard before the granting of Supply. Will the Leader of the House provide time for such a debate in the overspill, and obviously before a Bill is published, since otherwise everyone will have been consulted except the House?

I welcome the distancing of the Lord Chancellor from being involved, even indirectly, in the licensing of advocates. The independence of the staff of the advisory committee is a step forward, but will the members of the committee still not be the nominees of a political Minister? I take it that the advisory committee will have a power only of recommendation.

In the interests of freedom of choice, I welcome the Lord Chancellor's retreat from the concept of multi-disciplinary practices to include barristers. Has he done that because of the recognition of the fears of thousands of solicitors that they would be at the mercy of the City mega- firms which would have barrister partners? Would that have meant less and not more choice for the consumer? What does the White Paper mean when it says :

"With exceptions"--

important ones, I hope--

"the new restrictive trade practices legislation may lead the Bar and the Law Society to implement a number of the changes canvassed in the Green Papers."

Will the Attorney-General please be specific : is this a back-door means of imposing parts of the Green Papers?

On conveyancing, if solicitors and licensed conveyancers are subject to discipline, which could mean

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striking off, will the supervision of other conveyancers be undertaken in a similar situation with the same degree of force and necessary discipline? The White Paper uses a pretty phrase when it says that the Government's aim

"is to make justice more available to all."

They disingenuously claim in the Green Paper that contingency fees would be one of the means of providing an additional avenue to the courts. The gravest indictment of both papers is the failure of the Government to grapple with the problems of legal aid. The system is crumbling, and is becoming less available to the many and, strangely, legal aid practitioners are paid less than the market rate. Is the Attorney-General aware of any hon. Member who has not had the experience of constituents at his surgery with cases due to be heard at tribunals and no representation? Such cases involve mobility allowance, constant attendance allowance and unemployment and industrial benefit. Thousands of pounds are involved, and if the cases are successful they could change the whole quality of life of hundreds, if not thousands, of our constituents.

The Government have given fortunes to their supporters. If the Government's broad objective to provide access to justice means anything, why should legal aid, tribunals and law centres be ignored?

The Attorney-General : I am grateful to the right hon. and learned Gentleman for his refusal to be churlish about the many things that he welcomed in the White Paper. He welcomed the insistence and emphasis upon the independence of the advisory committee. He asked whether the nominees would be the nominees of a political Minister. The advisory committee is independent. Its staff will be appointed by the committee in order to meet the anxieties expressed in the consultation lest the advisory committee should be the creature of the Lord Chancellor. The members will be nominated by the Lord Chancellor, but after very wide consultations and with the intention of securing a wide spread.

The right hon. and learned Gentleman welcomed the provisions relating to multidisciplinary partnerships between barristers and solicitors. Much anxiety was expressed about this during consultations. The fear was expressed that it would lead to the loss of independence of the Bar and to the erosion of the Bar. As the House has already heard, the Government attach great importance to the maintenance of a vigorous, independent Bar. Therefore the Government felt, having listened to the consultation, that it was right that they should leave it to the professional bodies concerned to decide whether there ought to be, or whether it is proper for there to be, multidisciplinary partnerships. I believe that the House will welcome this reliance on the professional bodies.

The right hon. and learned Gentleman mentioned restrictive trade practices legislation. Perhaps he and other hon. Members will wish to look at chapter 11 of the White Paper when they have more time than is at present available. The Bar's and the Law Society's current rules and codes will remain in force when the legislation proposed in the White Paper is implemented until either the professional bodies choose to amend them or to take some other step.

The remainder of both professions' regulatory frameworks will therefore be subject to the restrictive trade practices prohibition in the normal way. It will be up to the

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professional body concerned to amend those rules which restrict or distort competition, or to apply for exemptions in the transitional period which the legislation will contain.

The right hon. and learned Gentleman ended with a reference to legal aid. I think that it is right to remind the House that the Government have already brought forward proposals for legal aid. They are committed to an effective system of legal aid for those of poor or modest means. This matter was discussed extensively during debates last Session on what became the Legal Aid Act 1988 which set up the Legal Aid Board and a new statutory framework. These proposals deal with the separate question of the structure of the profession which will deliver legal services, including those services which are delivered on legal aid.

I welcome the right hon. and learned Gentleman's general welcome of the White Paper and the evidence it gives of heeding the results of the consultation.

Mr. Ivan Lawrence (Burton) : Of course we want time to consider the proposals which appear in very small print, but I thank my right hon. and learned Friend and the Lord Chancellor for having had the further considerations which at first we were not promised, because the Green Papers were going to be a White Paper. I thank them for taking on board a number of representations.

Will my right hon. and learned Friend assure the House that the extension of the right of audience to solicitors, which is now made possible by the White Paper, will not eventually result in the fusion of the legal profession and the driving up of legal costs that we all want to avoid? Will he also assure the House that the removal of the near-monopoly on conveyancing by village solicitors will not further dry up the availability of legal services in rural areas, which is something all of us are concerned about?

Will my right hon. and learned Friend assure us that judges will not be enticed into the contentious situation where they have to decide whether solicitors should have the right of audience, in an atmosphere where the wrong kind of attitude will prevail with regard to our judicial leaders?

Finally, will my right hon. and learned Friend assure the House that contingency fees, as proposed in the White Paper, will not lead us rapidly down the slippery slope, where legal fees escalate through the roof as in the case in the United States of America, and where people cannot be sure that they will always get fair and high-quality justice?

The Attorney-General : I omitted to answer one of the questions of the right hon. and learned Member for Aberavon (Mr. Morris). My right hon. Friend the Leader of the House has heard what has been said, which is all the answer that the right hon. and learned Gentleman can expect.

I am grateful to my hon. and learned Friend for his general welcome for the proposals of the White Paper. He asked whether the proposals would lead to fusion. I can assure him that they will not. I said that the Government attach great importance to the continuance of a vigorous and independent Bar. The White Paper creates a structure so that rights of audience which are conferred by the professional bodies shall be subject to rules affecting training, competence and conduct, which will require the concurrence of the Lord Chancellor and the senior judiciary who are both required by statute to take heed of the advice given by the independent advisory committee. Therefore, if the proposals lead to the end which my hon.

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and learned Friend fears, it will be only as a result of the operation of the structure which I have described, and will defeat the Government's declared intention that we should continue to have a vigorous and independent Bar.

My hon. and learned Friend also asked about the network of solicitors. There is great value in the maintenance of that network throughout the country. The changes which have been made to the Green Paper proposals, with the special safeguards written into the provision of conveyancing services, should go a long way to meeting the genuine fears that the financial institutions would present unfair competition.

My hon. and learned Friend suggested that judges might be enticed into acting in a way which was other than conscientious. I do not believe that that was more than a rhetorical flourish on his part. There can be no danger of what he feared from contingency fees when we take account of the fact that all that is proposed is conditional fees of the kind which have applied for a long time in Scotland.

Mr. Robert Maclennan (Caithness and Sutherland) : Does the Attorney- General accept that access to justice is not only the right of the citizen, but the Government have a duty to provide it? These measures do little to improve the scandalous position whereby between 10 million and 13 million people in this country are unable to enjoy rights of access because of the legal aid rules, and only those who are extremely poor or extremely wealthy are able to enjoy access to the courts.

Does he agree that the structural proposals will not reassure those who are concerned that the independent, expert specialist Bar will be available generally, on the cab rank principle, to those who may have need of those services in the future and who see the Government's move as a step towards the withering away of the Bar? Does the Attorney-General recognise that, although he introduced the Scottish role on contingency fees, it did not resolve the problem of access in Scotland and will not do so south of the border?

The Attorney-General : I dealt with the relevance of legal aid in answer to a question from the right hon. and learned Member for Aberavon (Mr. Morris). It bears repeating that the Government are committed to an effective system of legal aid to those of poor or modest means, and that the Legal Aid Act 1988 represents the Government's response to the needs of the moment. The Government do not intend that these proposals should lead to the withering away of the independent Bar and I think that when the hon. Gentleman has had the opportunity to read the White Paper in detail he will be reassured.

Sir Anthony Grant (Cambridgeshire, South-West) : Is my right hon. and learned Friend aware that this is a thoroughly sensible response to the sensible comments made on the Green Paper, particularly because it preserves the independence of the Bar and the judiciary, which is important, while at the same time ensuring that they have regard for the proper administration of justice? In particular, it is welcome that, as I understand it, my right hon. and learned Friend has entirely rejected the odious United States contingency fee racket. Will he bear this point in mind? If solicitors are encouraged by the changes to move into banks, building societies or, even more

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undesirably, estate agents' offices, there will be, particularly in rural areas, a diminution of the sort of general legal services that should be available to people in those parts.

The Attorney-General : I am grateful for what my hon. Friend said at the outset of his remarks. The key to this exercise has been the Government's desire to balance the need to encourage competition with the need to maintain standards in the administration of justice and the provision of legal services. This is not an easy balance to strike, but I believe that my right hon. and learned Friend the Lord Chancellor has got it right.

As to contingency fees, I am grateful for what my hon. Friend said about the change from the Green Papers, and I believe that there will be general approval--the consultation was strong on this--that we shall go not for contingency fees, as they are properly understood, but for the much more limited conditional fee applied in Scotland for many years.

I note what my hon. Friend has said about the possible effect of increased competition on solicitors, but solicitors have shown themselves to be versatile and capable of adapting to changing conditions of competition. I believe that they will bring those qualities to bear on the arrangements that the White Paper has described.

Mr. Peter Archer (Warley, West) : Is not the real problem in our legal services inadequate funding? Is it not the case, on any computation, that whereas in 1979, over 70 per cent. of households were eligible for legal aid, that figure has fallen to less than 60 per cent.? Will the House have an opportunity to debate how what the Green Paper calls keen competition operating from the discipline of the market makes any contribution to the need for wider choice, consumer protection or adequate resources?

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