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Mr. Heath: Had the hon. Gentleman held his fire for a second, I would have implicated Lord Halsbury in the Bill's preparation. It was introduced by a Liberal Government, but on an all-party basis. The Conservative Opposition, who supported it, had indeed been working on a Bill when they were in government, but had not managed to find time for it. The Act, which has stood the test of time since 1906, addressed a social ill.

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Let us turn away from history and consider the Bill before us. We welcome the findings of the quinquennial review and the actions that have been taken since: the creation of the Public Guardianship Office to deal with enduring powers of attorney, the move of the court funds office to the Court Service, and this Bill dealing with Public Trustee work, which has been moved to the Official Solicitor's Office.

I am grateful to the hon. Member for Stone (Mr. Cash) for mentioning our discussions last week on the fee structure, introduced by the Lord Chancellor's Department, for work on enduring powers of attorney in the Public Guardianship Office. There are parallels between the two matters of which we need at least to be aware. The fees for registering enduring powers of attorney and for first-year case set-up in receivership have massively increased, and it is legitimate to ask whether an analogous situation will occur with this Bill.

In Committee last week I voiced strong suspicions that there is continuing cross-subsidy of the investment now being made in the service. For years, investment was sadly lacking, which may be one reason for the standard of service to which the hon. Member for Hornchurch referred. The extra investment, particularly in IT, is being paid from the fees charged under the new structure, and that is a real concern.

Mr. Cash: Does the hon. Gentleman recall that both Opposition parties divided the Committee on the question of the way in which the fees are being levied, not because of any grave objection to the principle of trying to ensure that we balance the fee structure, but because we wanted to ensure that, when the new structure begins to operate, we do not see threefold increases in fees?

Mr. Heath: The hon. Gentleman is absolutely right, but the Government would respond by saying that this Bill is an attempt to remedy precisely that evil. As we know, under the 1906 Act, the present fee structure has to

"produce an annual amount sufficient to discharge the salaries and other expenses incidental to the working of the Act and no more."

It is hard to discern the intention of the Attorney-General, Sir John Walton, almost 100 years ago, but I suspect that it was to limit the fees so that they did not become excessive. The words "and no more" are the key. What has resulted, however, is a restriction on the Lord Chancellor's Department which is unsustainable in the present circumstances, particularly in the light of the new role of the office.

I welcome the power to mitigate the fees. The Parliamentary Secretary has set out how essential it is to provide protection for the vulnerable people who are the recipients of this service, so that we do not allow their capital to be eroded, particularly in the direction of the Exchequer.

According to the explanatory notes, the Government intend to reduce the current working deficit of £1.9 million and achieve recovery, less remissions, in three years. I find it a little difficult to reconcile that intention with the Bill's adduced purpose of protecting the recipient of such activities from excessive fee increases, but perhaps the Minister will offer an explanation. The suggestion is that a new cross-subsidy will be introduced, and that—excluding those who are unable to pay—people

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will have to pay for the reduction in the subsidy. In other words, they will pay more than they would otherwise have paid.

It would help if the Minister could confirm that the fee structure will be devised by order, and that the matter will be debated in the House. Will the total fee structure of the Public Trust Office form part of the departmental annual report to the House, or will it be reported in some other way? A key point—I hope that it is not spurious—is that the Bill's impact is not retrospective. It appears that the Government are currently acting illegally, outwith the 1906 legislation. What would happen if a legal challenge were mounted against the actions of the Lord Chancellor's Department, up to the point at which the Bill becomes law? That is not entirely impossible.

When I spoke on matters agricultural, the analogous situation of the White Fish Authority was mentioned. In that case, such a challenge was mounted, and the fee structure was deemed unlawful and outwith existing legislation. Retrospective charges had to be applied unless new primary legislation were enacted to correct the problem. What would happen if such a challenge were made in this case? Would the current shortfall have to be made up between its first coming to light and its correction by means of the Bill, and a retrospective charge imposed on recipients of the Public Trust Office's services?

I am perfectly content that the Lord Chancellor's Department should set the fees, rather than the Treasury, inasmuch as a member of the judiciary, the Lord Chancellor, should set any such fees. It is entirely proper that the Parliamentary Secretary to the Lord Chancellor's Department should set those fees, but I am less content that a member of the judiciary should have that Government function.

In terms of abuse of the process, if liability were established and such sums were recovered from the budget of the Lord Chancellor's Department rather than from the Treasury's contingency funds, would they form part of the operating costs of the Public Trust Office, or of the Official Solicitor? In other words, will any costs be in effect recoverable from those who receive the service? Would such costs have to be recovered to meet Treasury rules? My suspicion is that they might, but I hope that they will not, and that contingency funds will be available from the Lord Chancellor's Department's overall vote. Perhaps the Parliamentary Secretary can confirm that point.

I conclude by pointing out that the Liberal Democrats have no intention of dividing the House, and we wish the Bill good progress.

5.9 pm

Mr. George Osborne (Tatton): It is a novel experience to be called to speak so early in the afternoon, although not so novel to be called at the end of our debate.

Like my hon. Friend the Member for Stone (Mr. Cash), I support the Bill, and wish to speak as a member of the Public Accounts Committee. Sadly, most other PAC members are in a hearing at the moment, although I notice that a new PAC member, the Financial Secretary to the Treasury, is in the Chamber. She may not be aware that my constituency is supposed to provide mutual aid to the

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Conservatives in her Bolton, West constituency, although that has proved spectacularly unsuccessful recently—witness the fact that she is here. Indeed, the Conservatives were providing that financial aid when they lost my constituency.

The Bill is needed to protect the vulnerable people mentioned by the Minister—the elderly, the mentally incapacitated, families with vaccine-damaged children and so on—who benefit from the work of the Public Trustee. Many would be unable to afford the increased fees which would be imposed if the existing law remained unamended. The Bill has all-party support, as has been demonstrated this evening. It has been dealt with quickly, and was dispensed with in just seven minutes in the House of Lords, as my hon. Friend the Member for Stone pointed out. However, with contributions from him and the hon. Member for Somerton and Frome (Mr. Heath), that was never going to be the case in the House of Commons.

Before the Bill is rubber-stamped and reaches the statute book, it is worth reflecting that chronic mismanagement of the Public Trust Office by the Lord Chancellor's Department under two successive Governments—so I am not making a party political point—led to its introduction. We should congratulate the PAC under the chairmanship of both Robert Sheldon, now Lord Sheldon, and my right hon. Friend the Member for Haltemprice and Howden (David Davis), whose work, along with that of the National Audit Office, has exposed many of the poor financial practices which plagued the Public Trust Office. The PAC produced various reports, one of which was mentioned by my hon. Friend the Member for Stone. The second report of the Session for 2001 to 2002 says:

"Public bodies that manage or regulate their clients' money, especially for people disadvantaged through mental incapacity, must meet the highest professional standards. The Public Trust Office fell below those standards."

It also says:

"Departments should have effective mechanisms for overseeing the work of Agencies for which they are responsible. The Lord Chancellor's Department acknowledged that its oversight of the Public Trust Office should have been better."

As a result of that mismanagement in an office which, as the Minister said, should have commanded the highest degree of public confidence, many fees were not collected on time and it became almost impossible to trace large unclaimed balances. Members of the public had to go through filing systems or read back issues of the London Gazette dating back to 1726 to see if they were eligible to claim certain moneys. No attempt was made to alert people to the fact that they were entitled to payment. Indeed, there was even a failure to reclaim about £125,000 in VAT, which the clients of the Public Trust Office paid for in increased fees. The staff were overstretched and unable to cope and eventually the office's chief executive was asked to leave early. However, she collected a hefty bonus, which the Department was unable to do anything about.

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