| Previous Section | Index | Home Page |
Mr. Burnett: Salaried members.
Dr. Howells: Salaried members, I am sorry. Anyone who wishes to become a member of an llp must be registered as such at Companies House and clause 6 will make that person an agent of the llp. As such, the llp will be liable for his actions. If a client can prove that a member owed him a duty of care and was liable for it, the member would be liable.
Mr. Burnett: What about an employee?
Dr. Howells: The partner would be liable: the employee would not be liable.
I shall move on, as the hon. Gentleman asked many questions, some of which I shall try to answer. He asked about clause 7 and queried the need to reconsider the
position of a former member. The Law Society raised concerns about the Bill's drafting and we are considering whether we agree that there is a potential problem. I assure the hon. Gentleman that that is receiving due attention.The hon. Gentleman and other hon. Members asked wide, but vital, questions about accounting requirements. As I said, in UK legislation, the quid pro quo for limited liability has traditionally been seen to be financial disclosure. The hon. Gentleman and my hon. Friend the Member for Great Grimsby asked whether accounting requirements on llps will be different from what is currently in place for companies. Broadly speaking, the answer is no. The accounting requirements on llps will be comparable to those for companies. The detail to be provided in llps' accounts will be comparable to that provided by companies, but the information given will reflect their different structure. For example, llps will not have share capital and will not pay dividends.
It is intended that all llps will provide information in the notes to the accounts about the aggregate amounts withdrawn or applied on behalf of members during the financial year. That, along with the requirement to disclose the earnings of the highest-paid member in cases in which profit exceeds £200,000, will help creditors to make an informed decision about whether it is in their interest to trade with a particular llp.
I believe that the hon. Member for Eddisbury (Mr. O'Brien) asked whether the Bill should clarify the role of a designated member by including a specific definition of a designated member; or at least he reflected concerns that were voiced in another place about the matter. We do not believe that a definition would make the role of a designated member any clearer than current provisions in the Bill and regulations. We followed the format adopted in the Companies Act, which imposes duties and powers on an officer of the company. There is no single definition of an officer's role in that Act. As an llp would be a legal entity separate from a limited company, it was felt that it would be more appropriate to have a different title to avoid confusion.
Several powers placed on a company secretary under the Companies Act, such as the signing of the annual return, will be transferred to a designated member. However, the designated member's responsibilities, such as appointing auditors, will go beyond those of a company secretary.
The hon. Gentleman asked about designated members and offshore members. An llp must have two designated members and a registered office in England, Wales or Scotland. We do not believe, therefore, that we need to prevent an offshore member being a designated member. Indeed, an officer of a company can be based offshore. If
there is a breach, the llp can be pursued, regardless of whether the designated member is based overseas or in this country.I hope that I have attempted to answer all the questions that were raised and I am pleased to commend the Bill to the House.
Bill accordingly read a Second time, and committed to a Standing Committee, pursuant to Standing Order No. 63 (Committal of Bills).
LIMITED LIABILITY PARTNERSHIPS BILL [LORDS] [WAYS AND MEANS]
Motion made, and Question put forthwith, pursuant to Standing Order No. 52(1)(a) (Money resolutions and ways and means resolutions in connection with Bills),
- That, for the purposes of any Act resulting from the Limited Liability Partnerships Bill [Lords], it is expedient to authorise--
(a) the making of provision about the taxation of limited liability partnerships and their members, and
(b) the imposition by regulations under the Act of fees payable into the Consolidated Fund.--[Mr. Pope.]
DELEGATED LEGISLATION
Mr. Deputy Speaker (Mr. Michael Lord): With permission, I shall put together the motions relating to delegated legislation.
Motion made, and Question put forthwith, pursuant to Standing Order No. 118(6) (Standing Committees on Delegated Legislation),
Defence
- That the draft Army, Air Force and Navy Discipline Acts (Continuation) Order 2000, which was laid before this House on 4th May, be approved.
Terms and Conditions of Employment
- That the draft National Minimum Wage (Increase in Development Rate for Young Workers) Regulations 2000, which were laid before this House on 4th May, be approved.--[Mr. Pope.]
Motion made, and Question put forthwith, pursuant to Standing Order No. 118(6) (Standing Committees on Delegated Legislation) and Order of 11 May,
Trade Union and Labour Relations
- That the draft Code of Practice: Access to Workers During Recognition and Derecognition Ballots, which was laid before this House on 8th May, be approved.--[Mr. Pope.]
Insurance for Members
6.54 pm
The Parliamentary Secretary, Privy Council Office (Mr. Paddy Tipping): I beg to move,
- That, in the opinion of this House,--
(1) provision should be made for the insurance of Members of this House in relation to the performance of their duties as Members under arrangements (including financial limits to the cover provided) made from time to time with the approval of the Leader of this House and the Speaker;
(2) subject to the terms and conditions of any policy effected under the approved arrangements, the insurance for which provision is made under paragraph (1) of this Resolution may cover the following--
(a) travel;
(b) personal accident;
(c) personal accident in respect of employees of Members;
(d) employers' liability and public liability;
(e) the cost of defending a civil claim for defamation and of payment in respect of any award made by a court in such a claim, where the act complained of was not covered by parliamentary privilege but arose from a Member's duty as a Member; and
(3) arrangements made for insurance of the type mentioned under paragraph (2)(a) and (b) above may provide for the spouses of Members to be covered as well as Members themselves.
Mr. Deputy Speaker (Mr. Michael Lord): I understand that with this, it will be convenient to discuss the following motion:
- That, in the opinion of this House, provision should be made to reimburse Mr. Peter Luff, honourable Member for Mid-Worcestershire, for legal costs incurred in respect of his duties as a Member of this House in defence of an action for libel in the High Court of Justice (Queen's Bench Division) which was dismissed and the Plaintiff's statement of claim struck out by Order dated 16th April 1999.
The motions arise from the need to protect hon. Members in an increasingly litigious age and are complex because we have taken the opportunity to do some administrative tidying, as I shall explain later.
Unfortunately, as society becomes more litigious, Members are increasingly faced with the threat of legal action. Parliamentary privilege provides absolute protection against legal action in respect of things said in the course of proceedings in Parliament. However, in an age of modern communication, Members do not carry out their function as Members only in the course of parliamentary proceedings. We all carry out a public role outside the House where, quite rightly, there is no legal protection.
As public figures, Members are open to the threat of defamation actions. They are not unique in that, but the lack of support available to them is unusual. Public officials, for example, are given public assistance to defend such actions and, in extreme cases, may also be given assistance to bring them. If Ministers are accused of defamation as a consequence of their ministerial duties, they will have their ministerial and legal costs met. However, Back-Bench Members of Parliament are not so protected.
The experience of the hon. Member for Mid- Worcestershire provides an illustration of the difficulties that Members of Parliament can face. A prisoner at Long Lartin had taken action against the local postmistress for failing to deliver his Financial Times. The hon. Gentleman was reported as saying that the action was ridiculous, and he was sued for defamation, together with the newspapers concerned. The action was eventually struck out, and the prisoner was declared a vexatious litigant. However, the hon. Gentleman was left with a personal liability for legal expenses of more than £2,000 which would have been far higher if The Sun newspaper had not joined in the action.
It could be argued that the hon. Gentleman's remarks were not strictly related to his business as an Member of Parliament. I reject that assertion, as we value the link to our constituents. Fair, not defamatory, comment on issues of concern or interest to them is crucial in maintaining that link. It would be a strange world indeed if the only person unable to comment on pressing issues was the local Member of Parliament, silenced through fear of aggressive or unfounded actions for defamation. I hope that the House agrees that the hon. Gentleman's action in responding to press queries falls within the wider definition of the duties of a Member of Parliament, and will reimburse him.
In principle, this case could be taken as a precedent. The House could be asked to judge any later cases on their merits, which would be profoundly unsatisfactory. Leaving aside the parliamentary time that might be taken on such business, we would have to judge the actions of our colleagues, and we are aware of the difficulties in doing that. Moreover, not all cases would be as clear-cut as the hon. Gentleman's and, if proceedings for defamation were brought against any one of us, we would have to incur costs without knowing how much financial support would be available or, indeed, whether financial support would be given at all.
We considered whether help could be given through the Treasury solicitors, but rejected that. If they were used, the House authorities would have had to refer cases to them and they would be in the invidious position of having to screen Members' requests for assistance. In addition, a Treasury solicitor might well be unable to provide support if a case came to court.
A legal insurance scheme, on the other hand, covers all those who might come forward. Premiums can be adjusted if demand is higher or lower than expected, and the level of cover can be adjusted in the light of experience, to ensure that it is realistic without being over-generous. The insurer, not the House authorities, will be responsible for deciding the admissibility of cases and an unsatisfactory insurer could be changed. We consider that the most practicable route to provide Members with some limited protection.
The first motion invites the House to give authority for expenditure on an insurance scheme for Members to meet limited legal expenses that may arise from defending defamation actions. If cover is fixed at, say, £10,000 per Member, the cost to cover all hon. Members is estimated to be around £18,000 a year. That can be met from the amount currently voted to the House.
I now come to the administrative tidying that I mentioned earlier. There is already a range of insurance policies in force on behalf of Members, as the motion
shows. These were originally borne on the Administration vote, and authority for them was properly given by the Commission. They have now been transferred to the Members' vote, which is not the Commission's responsibility.The insurance for legal expenses will also fall to that vote, which is why the House as a whole, rather than the Commission, is being invited to approve it. It would be administratively odd to have two separate sources of authority for different sub-divisions of the same expenditure borne on the same vote, so the motion invites the House to put all sorts of expenditure on insurance on the same footing.
Finally, let us be clear about the legal expenses insurance that we propose. It is extremely limited. It is only to assist hon. Members defending themselves against defamation suits. It will not help them to bring defamation proceedings. In effect, it is a shield, not a sword. It will not be over-generous. It simply provides a minimal protection against misguided or vexatious litigants. It is a small but significant measure, but I hope that it will enable us to continue to do our jobs properly and confidently. I commend the motions to the House.
| Next Section
| Index | Home Page |