| Previous Section | Index | Home Page |
“I do not think that similar problems can be tackled by restricting the categories of ‘member’ to whom clause 15 should apply. If we were explicitly to exclude associated members, unions might instead create other classes of member, or simply give people bogus ‘membership’. And even if we did restrict the clause 15 exception, there would still be the deeper problem of the unions not providing a good enough service. The solution to that is regulation: through the authorised persons providing the service and, for claims management, through the framework and code of conduct that we have established”.
I find it almost unbelievable that, on one hand, the Minister fully admits that the unions could become involved in dodgy practices such as giving people bogus membership so that they can give them advice while remaining outside the licensing requirements of part 5, and that, on the other, she says that the issue of who is classed as a member is completely up to the unions. That highlights the fact that the exemption is not only unacceptable in principle but simply far too wide-ranging in practice.
The Minister states that the deep problem is with the unions not providing a good enough service, and that the solution to it is the regulation of authorised
persons by existing regulators such as the Law Society. Why are we bothering to pass the Bill if sub-standard service on the part of the legal profession can be sorted out by existing regulators under the existing regime? I fully understand that if trade unions were to become fully licensable under the alternative business structure regime, advice on potential employment disputes given by lay shop stewards could fall within the ambit of the regulations. I understand that it might be undesirable, from the unions’ viewpoint, for such advice to come within the ambit of legal services regulation, although I think that that should be debated further. What I cannot understand, however, is providing such a wide exemption.
In a letter of 10 September to Lord Kingsland, the Law Society stated that
“Under the current formulation, trade unions will be able to provide reserved legal services of any sort to members, without requiring to be regulated under the Act as all law firms (and not for profit organisations) will be. Trade unions could, for example, provide conveyancing services or representation in divorce proceedings, as well as advice in relation to employment disputes. Indeed, because the question of membership of a trade union is simply a matter for the trade union’s own rules, there would be nothing to stop a trade union from offering membership to the public at large and then providing reserved legal services to those newly recruited members. I should say that there is no reason to suppose that any trade union currently has plans to develop its services in that way. But that hardly seems a justification for creating such a wide potential regulatory gap".
The Law Society stated that it thinks that the problem could be easily solved if the exemption for trade unions applied only to services that are ancillary to the trade unions’ main function of representing employees in relation to their employer. That would mean that a trade union would be exempt from regulation under the Legal Services Act if it was providing representation in relation to, say, a contractual dispute with the employer, or an accident at work, but not when it provided legal services on an unrelated matter. If trade unions wish to provide reserved legal services unrelated to main functions, they should be able to do so only by obtaining an alternative business structure licence under part 5. The inherent weakness of the decision to exempt trade unions is highlighted by the Minister’s letter to me of 21 June:
“If a union extends services to anyone other than members, it has to be regulated as an entity and licensed as an ABS body. But the key to members’ protection is, as I took pains to explain at Committee, that reserved activities still have to be carried out by authorised lawyers, who still have to be regulated by approved regulators. If a regulator concludes that the public interest requires that lawyers in these situations work in a regulated environment it will be able to make appropriate rules. This will of course be subject to the Legal Services Board being satisfied that those rules are proportionate to the problem and consistent with the regulatory objectives. I made this clear in the debate and I am happy to confirm it now. If the circumstances warrant it, a regulator such as the Law Society will be able to introduce a rule that allows a solicitor employed by a union to practise only through a regulated entity. Alternatively, it will be able to limit the services that lawyers are allowed to provide while working within a union.”
Mr. Djanogly: May I just finish this point, as it gets more interesting?
That means that a regulator such as the Law Society could determine, if the public interest requires it, that a trade union should be subject to the ABS licensing regime in certain circumstances. The exceptionally wide-ranging nature of the trade unions’ exemption is highlighted by the fact that the Minister went on to say:
“I must clarify that this does not necessarily mean that rules could force any particular trade union to opt in to the ABS framework or to create a subsidiary that operates under the ABS framework. Under Part 5 a body is licensed to carry on reserved legal activities. But an independent trade union that carries out services as described in the new clause 15 provision would be considered not to be carrying out a reserved legal activity. Similarly, a subsidiary body of the union may find that it falls under clause 15(4), which would mean that it would not be carrying out reserved legal activities either. In those circumstances there would be neither an obligation to be licensed nor a possibility of a licence, because there is no reserved legal activity for which to provide a licence.
Mr. Jones: I am sorry that, even after lengthy discussion in Committee during which I explained to the hon. Gentleman the way in which legal services are provided by trade unions, we should return to this old chestnut. Can I clarify the position that he has just set out? If a trade union employs a solicitor directly and they are legally qualified, his opening statement that trade unions will not be regulated is not true. As a qualified solicitor, that individual would be regulated under the existing law and, under the proposals, as a member of the legal profession.
Mr. Djanogly: The problem with that argument is that in the rest of the Bill, it has been decided that entities should be regulated, so there is a carve-out from the very principles that the Government introduced in the Bill. Let us face it: the provision was not in the Bill when it was first introduced in Parliament—it was included after union lobbying. To give an example, if a trade union provides through its in-house legal team litigation and advocacy services relating to occupational disease cases, and evidence comes to light that a union employee has been acting improperly, it may not be clear whether the in-house lawyers providing the litigation and advocacy services were aware of, or complicit in, any improper action. If the SRA regulates only the in-house solicitor, and not the union, the SRA’s investigatory powers in seeking information from union officials and interviewing others to find out whether a solicitor was involved would be limited. Any investigation would be compromised, and it may not be possible for the SRA to determine appropriate responsibility and take the relevant disciplinary or regulatory action.
Mr. Jones: As someone who used to run a legal department for a trade union, may I tell the hon. Gentleman what happened on my watch when bad advice was given, not by a solicitor, but by a trade union official? The individual sued the trade union because they had been given bad legal advice, and it is still open to people to take any trade union to court for any advice that they are given. In that respect unions are more open than any other public body I know of.
6.45 pm
Mr. Djanogly:
The hon. Gentleman should be concerned that the union is not regulated. In previous debates on the Bill—and I am pleased that he did not repeat this—it was said that the lawyer should take the
hit. That is quite right. If a lawyer has provided bad advice, they should be regulated and take the rap from the SRA. If the union just gets rid of that solicitor and carries on doing the things that it should not be doing with the new solicitor, because it is not regulated, that is unacceptable.
Mr. Djanogly: I shall not give way, as we have covered the point pretty well.
I simply do not understand how the wide-ranging exemption for trade unions can be regarded as acceptable. It could lead to a situation whereby a union provides conveyancing services, for example, to its members and the Law Society believes that it requires further regulation. As the Minister pointed out, further regulation under the ABS regime to which other legal service providers are subject would not be a possibility. There is no justification for exempting trade unions completely from the ABS licensing regime when providing services to their members, particularly as “members” is such a loose term, the definition of which is completely at the discretion of the trade unions. Perhaps, as the Law Society suggested, a solution can be found by limiting the exemption to services that are ancillary to the unions’ main function of representing employees in relation to their employer, and therefore ensuring that lay advice on employment issues is not caught, but that would still drive a coach and horses through the principle of the Bill that applies to all other entities.
We can see that that principle applies to all entities from the concerns set out to me in a letter of 26 June from the Medical Protection Society. MPS is a mutual, not-for-profit organisation that has offered expert medico-legal support and advice, as well as discretionary indemnity for civil claims to doctors, dentists and other health care professionals on matters arising from their professional practice, for more than 100 years. It stated:
“The Legal Services Bill makes no special provisions for membership organisations such as MPS. Instead such organisations would be required to set up Alternative Business Structures. We believe that this approach is disproportionate to the level of risk presented by membership organisations...We believe that there is a clear case for MPS to be classed as one of the bodies eligible to apply for special licences in which the statutory requirements would be waived or otherwise modified.”
That point highlights the unjustified special treatment of trade unions and the unsatisfactory nature of the legislation in relation to genuine not-for-profit organisations such as MPS. Perhaps the Minster can enlighten us as to why groups such as MPS will be forced to go through the full ABS licensing process while trade unions will not be regulated at all.
Amendment No. 152, which was tabled by the Liberal Democrats, addresses that anomaly by giving not-for-profit bodies the exemption enjoyed by unions. That may be fairer to not-for-profit bodies but, as the hon. Member for Birmingham, Yardley (John Hemming) said, it may be a hammer to crack a nut, and it would still be inconsistent with the basic thinking behind the Bill. It would certainly not improve the position for consumers. The Government’s position is as confused as it is unacceptable. The matter needs a thorough rethink, and our amendments provide an opportunity for that to happen. On that basis, we shall urge the
House to divide on amendment No. 35, which removes the exemption, and I hope that hon. Members will support it.
Mr. Kevan Jones: I oppose the amendment tabled by the hon. Member for Huntingdon (Mr. Djanogly) on trade unions.
I thought that the hon. Gentleman was a clever chap, and that he might have learned something from our debates in Committee. If he had at least listened to them he would understand how trade union legal services are provided. He made a statement in The Times this morning—and he repeated it in our debate—that the Bill will mean that trade unions will not be regulated at all. That is just not true, so I have to go through the educational process with him again and repeat what I said in Committee. Trade unions are a key institution in offering legal services to vast numbers of people. They have secured justice for mineworkers, as we have heard, and from my previous job, I know that without them many people would not have gained justice or cheap access to legal services.
Trade unions provide legal services in various ways. Most trade unions employ a panel of solicitors who are accessible to members. Those solicitors are legally qualified and fall within the ambit of the Bill, so anything that they do will be covered by the regulation that we are putting in place. It is not the case that trade union legal services offered in that way are not regulated. Another way in which trade unions provide legal services, which was mentioned by the hon. Member for Birmingham, Yardley (John Hemming), is by providing advice and guidance on a lay basis on, for example, employment issues in the workplace.
If the hon. Member for Huntingdon is suggesting that regulation should apply to any advice given by any shop steward on the shop floor, that would be unenforceable. The hon. Gentleman gives the impression that there is no recourse for people who are not satisfied with the advice that they get from a trade union lay member or a full-time official. Again, that is not the case. I shall cite a couple of examples. First, there is the trade union certification officer. I have some criticisms about the system’s lack of teeth, having dealt with such officers recently in connection with the Durham National Union of Mineworkers, but they are there to deal with members’ complaints.
If someone is given bad advice by a trade union lay official or full-time official—a situation that I encountered when I was a trade union legal officer—they can sue, as happened on at least three occasions on my watch.
Another aspect to consider is lay representation on industrial tribunals. People ask what recourse is available to someone who is given bad advice in that situation. Most cases are handled by solicitors, and the client can use the Legal Complaints Service procedure. On one occasion that I know about, when someone was given very bad advice, the individual took legal action against the trade union and was successful.
The hon. Member for Huntingdon does not understand how trade union legal services operate. The amendment seeks to extend regulation right down into the relationship between the shop steward and the member on the shop floor. First, that would not be practical. Secondly, it would not be good regulation.
On the other point that the hon. Gentleman makes, I feel a little guilty. I think I may have set off his train of thought with my examples about the NUM in Durham, which does not present a happy scenario. The Durham NUM employed Thompsons Solicitors to deal with miners’ compensation cases and charged a 7.5 per cent. levy, which was given to the Durham NUM. According to the hon. Member for Huntingdon, those people had no recourse by which to get the money back. Yes, they do. I have lost count of the number of individuals for whom we have got money back by making a complaint to the Legal Complaints Service about Thompsons. In the early days Thompsons resisted giving the money back, but is now doing so voluntarily. That is a case of the union employing a regulated solicitor.
The hon. Gentleman mentioned a problem related to associate membership, which may also stem from the Durham NUM case. People were asked to join the NUM as associate members. They did not have full legal rights as NUM members, but they were accessing legal services to take forward their cases in the mineworkers’ compensation scheme. That was a unique case. The complaints of those individuals were dealt with—very well, in my opinion—by the Legal Complaints Service. It made no difference whether they were full members of a trade union or associate members.
To suggest that trade unions will start offering legal services such as conveyancing, which they do now, by giving lay advice, is nonsense. Most trade unions offer legal services such as conveyancing and will-writing via the panel of solicitors which they retain or to which they pass work. The hon. Gentleman says that the Bill will ensure that trade union legal services are not regulated in any way—far from it. They are covered by existing legislation applying to trade unions and fall within the ambit of the Bill.
Mr. Djanogly: Does the hon. Gentleman think that unions will be adequately regulated?
Mr. Jones: If the hon. Gentleman is referring to the broader issue concerning the trade union movement—
Mr. Jones: There is not a yes or no answer. If the hon. Gentleman took the time to understand the subject that he talks about, it might help. I thought that we covered much of the argument in Committee. I am confident that the legal services are properly regulated within the terms of the Bill. Beefing up the powers of the certification officer is a different matter. I would not try to do that by seeking to destroy trade unions, like the hon. Gentleman. I would try to ensure that individual trade union members are protected in their relationships with the trade union. That is the fundamental difference.
It has been stated that trade union legal services are not regulated. That is not the case. I urge the House to resist the amendment.
Mr. Heath: I begin by congratulating my hon. Friend the Member for Birmingham, Yardley (John Hemming) on his amendment, which is the lead amendment in the group. He recognises that in the exemption set out by the Government, there is an issue that needs to be addressed. He has already said that his drafting does not necessarily cover all the points that we wish to raise. He is right, but that does not reduce the effectiveness of his arguments. This is an appropriate time to say how much I appreciate the work that he and my hon. Friend the Member for North Southwark and Bermondsey (Simon Hughes) did in Committee and on previous stages of the Bill.
There is a serious argument to be had about the very wide exemption proposed by the Government for trade unions, and only trade unions, among not-for-profit entities. My hon. Friend the Member for Birmingham, Yardley spoke about mutuals and others. The argument does not revolve around the specific topics identified by the hon. Member for North Durham (Mr. Jones).
The hon. Gentleman is right to say that it is not true that in the provision of legal services trade unions will be unregulated. That is transparently not the case. In support of his contention that they are regulated, he argues, first, that the individual practitioners are regulated by their professional bodies. Yes, that is correct. The hon. Gentleman argues, secondly, that trade unions are subject to litigation instigated by those to whom they owe a duty of care in the provision of those services. Yes, again, that is true, but both arguments are true of any other body regulated by the Bill.
If it is argued that bodies—alternative business structures or others—require additional regulation beyond— [Interruption.] The hon. Gentleman says they do not. It is a rather worrying development for the Minister if the view from the Back Benches is that alternative business structures need no regulation beyond the professional regulation of individual practitioners and the threat of litigation in the case of a failure of duty to care. I do not believe that that is what Ministers are suggesting in the context of the Bill.
Mr. Kidney: My hon. Friend the Member for North Durham (Mr. Jones) gave one other reason why trade unions are different, and the hon. Gentleman has missed it out. Trade unions are regulated as trade unions. The relations between a union and its members are regulated; my hon. Friend mentioned the certification officer.
Does the hon. Gentleman recognise that the Joint Committee had concerns about regulating the trade unions as entities under the regime that we are discussing because of the existing regulations to which the unions are already subject?
7 pm
Mr. Heath: Yes; the hon. Gentleman has pre-empted my third point. The hon. Member for North Durham is absolutely correct about there being a separate area of regulation for trade unions via certification. He argued that that is sometimes insufficiently strong and robust to do its job. Nevertheless, it marks trade unions out as different from a commercial structure doing the same thing.
| Next Section | Index | Home Page |