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“encouraging an independent, strong, diverse and effective legal profession”.
Moreover, the Lord Chancellor’s appointments procedure will be subject to supervision by the Commissioner for Public Appointments. A joint appointment would not be dealt with in that way, and could therefore undermine the independence that the commissioner would ensure.
Simon Hughes: As the Minister will have realised, this is controversial territory, to which the House of Lords devoted a great deal of time. I understood her to say that she did not want the professions to decide membership of the legal services board. The Lord Chief Justice, however, is not regarded as a defender of the professions, and the Lord Chief Justice—any Lord Chief Justice—is held in high regard by the public. Does the Minister not think it would be better to bolster the confidence that the public may or may not have in a Government Minister with their confidence in someone who is clearly independent and above the fray?
Bridget Prentice: That is not the view of the consumers with whom we have discussed the issue. They strongly believe that if a lawyer—even one as important and well-respected as this Lord Chief Justice, or any in the past—is seen to be party to the appointments, their confidence in the board will be undermined.
Mr. Kevan Jones: Does the Minister agree that what is paramount is for the legal services board to be seen to be independent, not only from Government but from the profession? Having read the reports of debates in the House of Lords and having heard what was said a moment ago by the hon. Member for North Southwark and Bermondsey (Simon Hughes), I have the impression that the legal profession is confusing the public interest with its own self-interest.
Mr. David Kidney (Stafford) (Lab) rose—
Bridget Prentice: I think my hon. Friend and I are at one on this issue, but I fear that one of my lawyer friends may take a different view.
Mr. Kidney: After giving evidence to the Select Committee, Sir David Clementi wrote to the Chairman, Lord Hunt of Wirral, to confirm the recommendation in his report that the judiciary should have a say in the appointment. He wrote:
“In practice this is likely to mean that the senior judiciary would have representation on the Nolan type committee selection process.”
That is much less than is provided by the amendment passed in the House of Lords. Can my hon. Friend assure us that that practice will be followed as Sir David Clementi would wish?
Bridget Prentice: One of the benefits of allowing the Lord Chancellor to make the appointments is that, as well as their being made independently of Government, there will be clear lines of accountability to Parliament. That is one of the reasons why we enshrined the functions in the Lord Chancellor rather than the Secretary of State. The fact that public appointments made by Ministers are subject to supervision by the Commissioner for Public Appointments, and to the commissioner’s code of conduct, will help to ensure the board’s independence. Another point that may give succour to my hon. Friend is that no Lord Chancellor would make such an appointment without paying attention to the views of others, including the Lord Chief Justice, consumer councils and others. Therefore, I am not minded to leave the clause in as it presently stands, but I will be happy to hear further representations about whether there is a more appropriate way for the Lord Chancellor to go about making appointments.
Bridget Prentice: I want to move on but I promised my hon. Friend the Member for Wolverhampton, South-West (Rob Marris) that I would give way to him.
Rob Marris (Wolverhampton, South-West) (Lab): My hon. Friend is being as generous as ever. I am a non-practising solicitor. She has given helpful reassurances. In response to the intervention by the hon. Member for North Southwark and Bermondsey (Simon Hughes), she mentioned consulting consumer groups for their views. Has she heard the views of what might be called consumer groups abroad? London is a major earner of foreign currency through legal services, particularly in the shipping sector, but also in the commercial sector. What do foreign users think about the independence of our judiciary and what would be their view were the Lords amendment to be reversed?
Bridget Prentice:
I am interested in consumer views abroad. I know that there are those who suggest that the legal professions in other countries think that that system might not be the way forward, but they have their own internal reasons for thinking that, so I am not over-impressed by that particular argument. The work that the legal professions bring to the country and the boost that they give the economy through their
work abroad is exceedingly important. We would not want to undermine that, but I do not believe that that system to appoint the legal services board, with the oversight of the Office of the Commissioner for Public Appointments, would in any way undermine that part of the economy.
Bridget Prentice: I will give way for the final time to the hon. Member for North-East Hertfordshire (Mr. Heald). I apologise to the hon. Member for North-West Cambridgeshire (Mr. Vara).
Mr. Heald: The hon. Lady is being very generous in giving way. I was pleased that she said that she would look at alternatives, but she will be aware that in Germany there is considerable concern and the thought is that solicitors firms from Britain that currently are allowed to practise there might not be in future if the issue is not resolved satisfactorily. Has she looked into that and what is her latest thinking on it?
Bridget Prentice: I have looked into that because the one example that is constantly cited to me is the German example, but the BRAK in Germany is the representative body there, so it is looking at its own vested interests, rather than those of the consumer. As I have said, however, I am happy to look at ensuring that people feel confident that the system of public appointments made through Ministers is robust and will be seen to be independent.
May I move on to part 2 and to the legal services board? The board will provide independent oversight of the regulatory bodies. Again, day-to-day regulation will, clearly, remain with the professions.
I move on to reserved legal activities. Part 3 sets out those legal activities that will come under the regulatory control of the board, such as the provision of advocacy and litigation services. It also provides for the offences of offering or providing those services when not entitled to do so. The Bill also provides for alterations to be made to the list of those activities by affirmative order. That is an important change because, at present, additional activities cannot be brought under regulatory control without primary legislation.
I will be tabling amendments to ensure that trade unions can continue to provide legal services to their members, although they will need to be licensed under part 5 if they want to provide services more widely or on a commercial basis.
Part 4 sets out the arrangements under which the board will regulate “approved regulators” such as the Law Society and the Bar Council, and defines their regulatory and representative functions. That part also provides the board with its powers. Those include to set targets and to monitor the performance of approved regulators; to exercise a power of direction over approved regulators; to censure publicly an approved regulator; to fine approved regulators; to take over a function or functions of an approved regulator; and, ultimately, to remove the designation of an approved regulator. There are grades within those powers, and the board will determine which of them is appropriate at the relevant time.
The powers ensure that the board can effectively and fully protect the consumer interest. There must be the widest possible mix of powers, and the greatest possible flexibility in deciding when to exercise them. That is why I intend to introduce amendments to reverse changes made in another place that limit the legal services board’s flexibility by adding the term “significant” to the adverse impact test that triggers the use of the powers and by adding a requirement that the impact must be on the regulatory objectives “taken as a whole”, rather than on any single objective. As the National Consumer Council has said:
“The Board should not have to wait until a significant or serious event before taking action to protect consumer interests.”
Amendments made in another place also sought to make explicit in the Bill the “oversight” nature of the board. Although I have some sympathy with that, in its current form the relevant amendment does not properly reflect Government policy. I therefore intend to bring forward amendments to refine the change. Finally, this part of the Bill also provides the important power—to be exercised by affirmative order, and only following a recommendation from the board—for the Lord Chancellor to modify the functions of approved regulators in order that they might effectively discharge their regulatory responsibilities.
Part 5 of the Bill provides a means of increasing competition and consumer choice. By becoming licensed bodies, firms will be permitted to have different types of lawyer and non-lawyer working together on an equal footing. They will also have access to external investment. The Bill provides a number of important safeguards, including requirements for there to be named heads of legal practice and of finance and administration, and a “fit and proper” test for external investors. I know that there are concerns about the impact these proposals might have on access to justice and I accept that that is a vital issue, but I believe that the Bill already protects—indeed, that it enhances—access to justice, particularly given changes that the Government introduced in the other place to require the board to carry out monitoring of the impact of alternative business structures and to report on that monitoring.
However, it is also important to listen to consumers. Earlier this year, the National Consumer Federation said:
“The increased competition promised in the Bill should be a public benefit encouraging providers to be more responsive to consumer need, stimulating innovation and lowering prices.”
I therefore intend to introduce amendments to reverse the amendment made in the other place that could have the effect of ranking the regulatory objectives by requiring special consideration to be given to access to justice when granting ABS—alternative business structures—licences. I also intend to bring forward amendments to reverse those made in another place which require further study and a “sunrise clause” before part 5 can come into effect. That would only serve to delay innovation and consumer choice.
John Mann (Bassetlaw) (Lab):
Far be it for me to be seen as a defender of the legal profession, but will the Minister take into consideration the Government’s
self-inflicted scandal in relation to miners’ claims, particularly hearing loss claims? A claims handler called Vendside Ltd—non-solicitors—was allowed to bring forward claims on behalf of consumers, but the consumers then found that there were no regulatory powers in relation to any redress, other than using the civil courts.
Bridget Prentice: My hon. Friend has been robust in his pursuit of Vendside and others over the appalling way in which they have handled matters with regard to his constituents. He, and others among our hon. Friends, welcomed the Compensation Act 2006. That Act means that there is now regulation of the claims handling market, and when the Bill is enacted, it will make that even more robust. My Department and the Department of Trade and Industry have, of course, been working very hard recently to ensure that claims made on behalf of miners are being properly dealt with.
Mr. Heald: Given the appalling record that the Minister has just alluded to with two trade unions, does she really think that there is any justification for excluding unions from the proper regulation that the Bill provides? Is that not asking for the sort of problems with legal advice that we have already experienced with claims handling?
Bridget Prentice: The answer to that question is quite straightforward. If a trade union wishes to give other advice or to spread its wings more widely, it will have to be licensed. If the shop steward on the shop floor is giving advice to that union’s members, I do not think it appropriate for it to have to be licensed. If it wants to go beyond that, it certainly would have to be licensed.
Mr. Mike Weir (Angus) (SNP): I should perhaps declare an interest, in that I am a non-practising solicitor, although as a Scottish solicitor I would not be directly affected by this provision. On the sunset clause—or sunrise clause, as the Minister called it—for the ABS, concern has been expressed by the Law Society of Scotland, and, I think, others, about the extraterritoriality of some of the larger firms. The hon. Member for Wolverhampton, South-West (Rob Marris) mentioned large English firms working abroad. As part of our investigations, the Trade and Industry Select Committee came across such a firm in India and in Brazil. Has the Minister considered how the legal services board will deal with businesses that chose to go into an ABS structure but operate in more than one jurisdiction, given that the rules may well be different in other jurisdictions?
Bridget Prentice: The Bill does touch on Scotland, in the sense that we will give effect to the Legal Profession and Legal Aid (Scotland) Act 2007 through it; that to some extent answers the hon. Gentleman’s question. However, it will be for the legal services board to look at how different firms operate, and to decide through the various structures that will be set up whether a particular firm is an appropriate one to act in that way. It will then license or not license that firm, accordingly.
Let me clear up the question of whether the clause relating to part 5 of the Bill should be called a sunrise or a sunset clause. It is called a sunrise clause because
the idea is that nothing will happen until the relevant research is done, as opposed to allowing something to happen and reflecting on it afterwards. However, I am sure that Hansard will make the appropriate amendments for me regarding the use of the word “sunset” or “sunrise”.
Through part 6 of the Bill, we intend to establish a new and independent office for legal complaints, which will provide quick and fair redress of up to £20,000 for the consumer, although the Bill does provide for that figure to be increased.
John Bercow (Buckingham) (Con) rose—
Bridget Prentice: I shall give way first to the hon. Member for Buckingham (John Bercow) as he has yet to intervene.
John Bercow: I am grateful to the hon. Lady for giving way. She rightly says that part 6, through clause 114, provides for the establishment of the office for legal complaints. I am a little concerned about this. In terms of the Bill’s chronological sequence, we are referred for further and better particulars to schedule 15. That is not entirely unhelpful, but I am a little disconcerted to discover only in the explanatory notes the observation that the office will be responsible for determining the details of the ombudsman scheme. Although I understand why the Government are proceeding as they are, if the devil is in the detail, it is a matter of some concern that Members will see that detail only after we have decided whether to approve the Bill. The public are very concerned about the detail of a scheme that will determine whether or not they benefit, and if so to what tune. Does the Minister have some sense of the legitimate concern that people will feel about the fact that they will see the detail only at a much later stage?
Bridget Prentice: The hon. Gentleman makes a reasonable point, and as always, he is accurate about the detail and the parts of the Bill to which he refers. There will be a long run-in time before the structure is set up. I mentioned that we started in 2001 with the report by the Office of Fair Trading, and we are now in 2007. Alternative business structures, the office for legal complaints and so on will not be up and running until 2010-11. In the period before the legal services board and the OLC are set up, the details will be considered, and there will be an opportunity for everyone to see them. As I have said from the beginning, the Bill is about consumers, and about putting them at the heart of the legal system. I expect that the OLC would take account of consumer interest when developing an appropriate scheme.
Mr. Kevan Jones: I do not think that £20,000 is a high enough limit. May I give the Minister an example? Mrs. X, from Stanley in my constituency, recently complained to me about a firm of solicitors called Mark Gilbert Morse, which handled a miners’ compensation case on her behalf and rejected an offer of £42,000 from the DTI without even consulting her. Subsequently the offer was reduced, and it was only through the legal services complaints service that we shamed the company into paying her the original figure of £42,000. If it had been pinned down at £20,000, my constituent would have lost in excess of £22,000.
Bridget Prentice: I understand my hon. Friend’s point, which is why the Bill allows for the amount to be increased. We set it at £20,000, which is still above the Law Society’s present level of £15,000, which was increased only recently. It will be not for me but for the OLC to determine whether to recommend that the amount be increased.
John Mann: No doubt the matter will be gone into in more detail in Committee. However, is the Minister aware of the significant number of services awards for miners’ compensation claims which solicitors appear not to have put in for, and which, on the balance of probabilities, are all liable to be higher than £20,000? They include the case of one of my constituents, in which the solicitors concerned had to pay back £23,000. Many such detailed potential claims will go forward as complaints against solicitors, and all are liable to be in excess of £20,000. Should not that figure be reconsidered at this stage, to avoid the absurdity of having to change it within days of the Bill becoming an Act?
Bridget Prentice: My hon. Friend makes a very good case for tabling an amendment in Committee—should he be on the Committee. We can have a full and detailed debate about it then.
Mr. Jonathan Djanogly (Huntingdon) (Con): I state my interest as a solicitor and as a member of the Law Society. The Minister says that she will exempt trade unions from part 3 of the Bill. Does she intend to exempt them from all the reserved legal activities set out in clause 12(1)?
Bridget Prentice: Yes. As I said, under part 3 we will exempt the trade unions when they provide services to their members. However, when lawyers—perhaps in-house lawyers—employed by trade unions provide reserved activities, they will be regulated in exactly the same fashion as any other lawyer. I was talking about lay members of trade unions who give advice in their workplace. Lawyers who are employed by trade unions will be regulated in the same manner as any lawyer working in any other firm.
Mr. Heald: The Minister will understand the concern caused by the idea that if a shop steward represented a union member at an employment tribunal and made a hash of it there would be no redress, whereas if that person were represented by someone from a citizens advice bureau, there would be redress. Is that what she is saying?
Bridget Prentice: No, that is not what I am saying. Perhaps the hon. Gentleman’s lack of knowledge of the trade union movement is rising to the surface. The work that lay officials of trade unions do on behalf of their members, whether in employment tribunals or elsewhere, is generally of a very high quality. I do not want trade union members to be any less well-off than anyone else, and I want to ensure that they are not. We have been working with the TUC and the Law Society to deal with that matter, and I think that we have agreed an appropriate way forward.
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