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Mr. Gibb: That was a useful exchange of arguments that we first rehearsed in Committee. I cannot claim to have heard the four concessions from the Minister which the hon. Member for Great Grimsby (Mr. Mitchell) imaginatively construed from the Minister's first response. I had hoped that the Minister might, at the last moment, give small businesses some concessions, so he will not be surprised to hear that I am disappointed, although not surprised, at his response. On that note, I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Mr. Deputy Speaker: As the hon. Member for Great Grimsby (Mr. Mitchell) does not intend to move several of his amendments, we now proceed to amendment No. 7.
Clause 15
Mr. John Burnett (Torridge and West Devon): I beg to move amendment No. 7, in page 10, line 15, after "to", insert--
'bodies corporate recognised by the Law Society under section 9 of the Administration of Justice Act 1985,'.
Mr. Deputy Speaker: With this it will be convenient to discuss the following amendments: No. 8, in page 10, line 17, after "to", insert--
'bodies corporate recognised by the Law Society under section 9 of the Administration of Justice Act 1985,'.
No. 4, in page 10, line 22, at end insert--
'(2) For the purposes of this section any law relating to bodies corporate recognised by the Law Society under section 9 of the Administration of Justice Act 1985 shall be deemed to be a law relating to companies or other corporations'.
Mr. Burnett: We discussed in Committee a new clause that contained proposals fairly similar to those in amendments Nos. 7, 8 and 4. Unfortunately, due to a technical hitch, I am now told that solicitors might not be able to set up as LLPs--at least, not as soon as other professions. The Minister was helpful in Committee, and was anxious that solicitors were not discriminated against.
There is a large body of legislation that makes reference to solicitors which will need amending in the light of this Bill. The Law Society was led to believe that this could be achieved by making regulations under clause 15, and that is what I have sought to do. However, I understand that the Law Society has been told that the Minister's Department believes that it may lack the power to make these regulations.
This has led to some confusion, and the Government clearly still intend solicitors to take advantage of this new business entity. Indeed, the Minister assured me in Committee that solicitors would not be penalised or discriminated against in any way. I hope that the Minister can put my concerns at rest.
6.30 pm
However, there is still concern in the Law Society about how the Government will ensure that solicitors are not discriminated against. The Minister suggested in Committee that it might require primary legislation, but what chance is there of a dedicated solicitors Bill before this Bill comes into force in 2001? I understand that another option might be to use orders under the regulatory reform Bill, but that Bill is still in draft. When can we be certain that it will receive Royal Assent in any event? It may be that the necessary changes can be made by using existing powers within the body of legislation affecting solicitors and their practices, such as the Solicitors Act 1974 and the Administration of Justice Act 1985. However, the Law Society is doubtful whether that can be achieved, and I believe that the Department of Trade and Industry also has concerns.
It is surely the neatest solution to use clause 15 to make the necessary changes, in accordance with the three amendments that we are discussing. Even though the DTI recently voiced doubts, the Law Society still believes that the powers in the Bill are adequate, although I understand
that we are waiting for parliamentary counsel to confirm that. I hope that the Minister will let us have his views on that point. The amendment would simply make the power more explicit.I know that the Minister is extremely concerned about this problem. He assured me in Committee that no discrimination or prejudice would be suffered by the solicitors' profession as a result of the introduction of this legislation. In other words, all trades and professions should be treated equally and must equally be able to become LLPs in 2001. Many thousands of individuals who make a great contribution to the United Kingdom economy wait to hear from the Minister his response to the group of amendments.
Dr. Howells: I rise with appropriate gravity, knowing that thousands of solicitors out there are hanging on my every word. I restate my determination that solicitors will not be discriminated against when it comes to their ability to form LLPs. I am sure that the hon. Gentleman will be pleased to hear of the progress that we have made on this issue since we discussed it in Committee. I said then that my Department was working with the Law Society and the Lord Chancellor's Department to examine the detail of the legislation governing solicitors and consider whether primary legislation was unavoidable and, if so, to determine what specific changes needed to be made.
On the basis of the analysis carried out by the Law Society and the Lord Chancellor's Department to date, we believe that the vires contained in the Bill are wide enough to make the amendments that have been so far identified by regulation to ensure that solicitors may make use of LLPs. Assuming that no further amendments are considered necessary that differ in kind to those already identified, the amendments will be included in the regulations to be made under the Limited Liability Partnerships Bill when it receives Royal Assent. I see no advantage in the amendments tabled by the hon. Member for Torridge and West Devon (Mr. Burnett), and I invite him not to press them.
Mr. Burnett: I am much comforted by the Minister's words. I am grateful to him for the attention that he has given to this important matter. I note his comment that his Department, the Lord Chancellor's Department and the Law Society believe that the vires are wide enough in the Bill as drafted, and in the regulation provisions in clause 15. On that basis, I am happy to beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Mr. Gibb: I beg to move amendment No. 2, in page 10, line 22, at end insert--
'(2) Section 458 of the Companies Act 1985 (punishment for fraudulent trading) shall apply to limited liability partnerships.'.
Mr. Deputy Speaker (Mr. Michael J. Martin): With this it will be convenient to discuss the following amendments: No. 3, in page 10, line 22, at end insert--
'(2) No regulations made under subsection (1) above shall enable indictable criminal offences punishable by imprisonment to be made applicable to limited liability partnerships, other than those which are contained in the Companies Act 1985 and Insolvency Act 1986 as at 1st June 2000.'.
No. 11, in clause 17, page 10, leave out lines 31 and 32.
No. 6, in schedule, page 15, line 15, leave out--
'incorporated as a limited liability partnership with that name,'
'a limited liability partnership or oversea limited liability partnership,'.
Mr. Gibb: During a debate earlier this afternoon, we heard from the hon. Members for Great Grimsby (Mr. Mitchell) and for Newcastle upon Tyne, Central (Mr. Cousins) about the vast salaries that some lawyers and accountants are able to command, but I should tell them that they are responsible for those high salaries. The growing body of rules and regulations emanating from this place that have to be obeyed by people in the real world is the cause of those high salaries. The left-wing interventionist philosophy of the hon. Gentlemen and their party creates the pressure for the vast majority of regulations.
When I started work as a tax adviser in 1986 at KPMG, or Peat Marwick Mitchell and Co., as it was then, the tax legislation was contained in one volume of "Butterworths", and it was not a particularly thick volume. Now there are three volumes, each bigger than the 1986 one and printed on thinner paper. The tax practice grew hugely during that period as the volume of tax legislation increased, and the same has happened to company law and no doubt a whole host of other areas of law. I know that most of the increase took place under the Conservative Government, but the pressure for regulation tended to come from the left-wing philosophy in our political regime, although much of the tax legislation was introduced in order to close loopholes.
The consequence is that the demand for people who have read, learned, remembered and understood our legislation is increasing. Although the supply of people prepared to do that kind of work has increased to a degree, the work is painstaking and not terribly exciting. So demand has outstripped supply and the people with experience and ability are now commanding high salaries. The responsibility lies not with the City firms--with KPMG or PricewaterhouseCoopers, which the hon. Member for Great Grimsby kept going on about--but with us in this place.
We pushed through vast volumes of new rules and tried to make it even easier for ourselves by pushing large chunks into secondary legislation, which often are not debated. When they are debated, it is done upstairs in Committee without the possibility of tabling amendments. We are becoming a conveyor belt, mass-producing legislation that we expect people to obey. We deem them to have knowledge of all the laws that we pass. Then some Members of Parliament have the audacity to complain that society is devoting too many resources to reading and applying that legislation.
The Bill is a classic example of how a simple 19-clause Bill can spawn a volume of regulations. Four clauses of the Bill simply empower the Government to create new swathes of regulations contained in a volume the size of the copy that I have here. Clause 16 is a classic Henry VIII clause, and it even provides power to make regulations that themselves can amend primary legislation. There will be no First or Second reading, no tedious Committee stage, Report or Third Reading. The primary legislation will simply be amended by a statutory instrument rubber-stamped by a Committee upstairs.
Throughout the Committee proceedings, when the Opposition have raised concerns--the hon. Member for Torridge and West Devon (Mr. Burnett) shares our concern--about the quantity of secondary legislation, the answer from the Minister was that it was better to use secondary legislation because it was easier to amend. That is the point. We must make it harder, not easier to amend and create new regulations. Some £10 billion of additional regulatory burdens have been piled on to industry in just the past three years. Small business in particular is drowning under the deluge of paperwork. We are becoming a nation of inspectors and regulators instead of shopkeepers and entrepreneurs.
The House of Lords Select Committee on Delegated Powers and Deregulation carried out its duties well when it examined the Bill. It alerted Parliament to the fact that clause 16 is a Henry VIII provision, and we ought to take notice of that, not simply ignore it, as the Government did in Committee. The Select Committee was set up to highlight Henry VIII provisions.
The report also highlighted the Committee's concerns about the use of secondary legislation to create new serious criminal offences. In paragraph 8, the Committee says:
- The draft regulations create offences punishable on summary conviction by a fine but the power is wide enough to allow the regulations to provide for imprisonment or for trial on indictment. If, as seems likely, the intention is to provide only for summary trial and a fine, the Committee is of the opinion that it would be better for this limitation to appear in the Bill.
The Government refused to do so, however. They insisted on the need to incorporate all the existing criminal penalties under the Companies Acts and under insolvency legislation in the LLP regime. That may be fair enough, but it should be done through primary legislation, not by statutory instrument. The amendments would do precisely that; they would incorporate in primary legislation the serious criminal provisions that the Government want to include.
In Committee, something more sinister was revealed: clause 17 is not merely about incorporating in the LLP legislation the criminal provisions under existing company and insolvency law; it is also about enabling new criminal offences to be created by secondary legislation. The Minister said that
- it is important to preserve the flexibility to create offences in future and to decide how they should be punished . . . There may be new crimes for which we shall have to formulate new punishments.--[Official Report, Standing Committee F, 15 June 2000; c. 63.]
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