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Session 2006 - 07
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General Committee Debates
Legal Services

Legal Services Bill [Lords]

The Committee consisted of the following Members:

Chairmen: Sir Nicholas Winterton, † Frank Cook
Bailey, Mr. Adrian (West Bromwich, West) (Lab/Co-op)
Bellingham, Mr. Henry (North-West Norfolk) (Con)
Burrowes, Mr. David (Enfield, Southgate) (Con)
Djanogly, Mr. Jonathan (Huntingdon) (Con)
Ellwood, Mr. Tobias (Bournemouth, East) (Con)
Flello, Mr. Robert (Stoke-on-Trent, South) (Lab)
Foster, Mr. Michael (Worcester) (Lab)
Goodman, Helen (Bishop Auckland) (Lab)
Hemming, John (Birmingham, Yardley) (LD)
Hesford, Stephen (Wirral, West) (Lab)
Hughes, Simon (North Southwark and Bermondsey) (LD)
Jones, Mr. Kevan (North Durham) (Lab)
Kidney, Mr. David (Stafford) (Lab)
McCarthy, Kerry (Bristol, East) (Lab)
Mann, John (Bassetlaw) (Lab)
Neill, Robert (Bromley and Chislehurst) (Con)
Prentice, Bridget (Parliamentary Under-Secretary of State for Justice)
Hannah Weston, John Benger, Committee Clerks
† attended the Committee

Public Bill Committee

Tuesday 19 June 2007


[Frank Cook in the Chair]

Legal Services Bill [Lords]

10.30 am
The Chairman: I shall try to recapture the scene from Thursday afternoon. An hon. Member was in the process of thinking that he was permitting an intervention, but then changed his mind and decided that he had shut up for good. That allowed the Whip to move the motion for Adjournment. I appeal to Members to bear in mind that, when they are permitting an intervention, they must make it plain that they intend to come back and that they are not relinquishing the floor.

Clause 15

Carrying on of a reserved legal activity: employers and employees etc
Amendment proposed [14 June]: No. 108, in clause 15, page 7, line 15, at end insert—
‘( ) Where P is an independent trade union, persons provided with relevant services by virtue of—
(a) their membership or former membership of P, or
(b) another person’s membership or former membership of P,
do not constitute the public or a section of the public.’.—[Bridget Prentice.]
Question again proposed, That the amendment be made.
The Chairman: I remind the Committee that with this we are taking Government amendment Nos. 109, 110, 138, 115 to 117, 126 to 128, 202 and 205.
Mr. Jonathan Djanogly (Huntingdon) (Con): Reading through the Hansard reports of the debate on the amendments, I felt that the debate has raised more questions than it has answered. That is not surprising considering the lateness with which the amendments were tabled and the way in which the Government have done a U-turn at the behest of their union puppet masters. The White Paper stated:
“The Not for Profit (NFP) sector will be brought within the regulatory scope of the LSB and the ABS licensing scheme. This will ensure the same level of protection for consumers no matter where they obtain their legal services.”
The Government response to the Joint Committee on the Draft Legal Services Bill showed a slight shift in that position. It stated:
“We are currently working with the TUC to ensure that exemptions under the Legal Services Bill take account of the position reached with respect to trades union exemptions under the Compensation Act, and considering whether any further provision is needed in relation to the Bill regime.”
The Compensation Act 2006 is different from the Bill in that it introduced regulation to a formerly unregulated sector, whereas the Bill will reform an existing regulatory regime. The key feature of the former approach is that the trade union exemption is not enshrined in statute; it is a matter for subsequent statutory instruments.
The Conservatives’ basic position is that we oppose these unfair, illogical and rushed amendments, and I shall ask my hon. Friends to vote against them. However, if the Government wish to continue on such a course, they should make it clear that the Solicitors Regulation Authority may, if the Legal Services Board approves the necessary rules, require that lawyers provide services for trade union members only through a regulated entity. The Minister has a lot of thinking and explaining to do on what are, frankly, shabby proposals before Report, and certainly before they are dissected in the other place.
I would be grateful if the Minister came back on that point. It should be made clear that the SRA and other regulators may require that lawyers provide services for trade union members only through a regulated entity.
John Hemming (Birmingham, Yardley) (LD): In a sense, the interruption of the intervention was quite helpful because it allowed someone to explain to me the reasons why the trade unions might be concerned about regulation. The vast majority of trade union activity, such as advising people and so on, will not be affected by the Bill. However, if a trade union became an alternative business structure, the legal advice activities of a trade union would be regulated. We could end up with a situation in which a whole organisation has a problem because a part of it is regulated. Obviously, we are not looking for that. The logical solution is to have a subsidiary ABS of some form or other rather than have the whole organisation as an ABS.
We take an agnostic approach to the amendments. We accept the objective. We do not want a situation in which a trade union convenor who is offering advice to union members on employment law ends up being regulated to the same extent as someone who sets themselves up in business to offer legal services in the widest sense, who carries out regulated legal services and who, as part of that, does unregulated legal services, which are caught in the same process of regulation.
Whether the amendments are drafted in the best possible way is an interesting question. There is probably a better way to draft them. However, we are relatively agnostic on the amendments themselves.
Simon Hughes (North Southwark and Bermondsey) (LD): I want to make a different set of points and will not refer only to the trade union position. Will the Minister explain why she has not considered other organisations that have a similar relationship with their members? I represent the Hospital Saturday Fund, into which people pay money in order to help them at the time of their prospective medical or caring needs. It is a mutual organisation.
Mr. Henry Bellingham (North-West Norfolk) (Con): On a Saturday.
Mr. Djanogly: The hon. Gentleman makes an important point and, if we push it a little further, we come to not-for-profit organisations such as the citizens advice bureaux.
Simon Hughes: There are other organisations, but they are slightly different.
We are debating who we are regulating, who will be governed by the umbrella of new arrangements and the dividing line. The Government have picked the one group of people with whom they have an affinity. Given the history of the Labour party, I absolutely understand that. I am not making a criticism. However, they are not applying the same principles across the board.
Stephen Hesford (Wirral, West) (Lab): Will the hon. Gentleman give way?
Mr. David Burrowes (Enfield, Southgate) (Con): Will the hon. Gentleman give way?
Simon Hughes: I shall give way to the hon. Member for Enfield, Southgate first because I saw him first.
Mr. Burrowes: I am glad to hear the hon. Gentleman make those remarks. Does not his concern about the matter raise suspicion that a special case has been made because there is interest in and influence with trade unions, given that the Labour party apparently receives donations of more than £12 million from the unions? That has inevitably led to the accusation that that is one of the primary reasons why the Government are particularly supportive of the amendment.
Simon Hughes: It is the case that the Labour party was formed out of the trade union movement. It is still very much linked to the trade union movement, and it receives a lot of its funding from it. Debates may even be continuing today about party funding and the link. The Labour party is entitled to argue its case, but even a Labour Government have a duty to rise above it and to treat people fairly. I am not arguing that there may not be a perfectly reasonable set of circumstances, as my hon. Friend the Member for Birmingham, Yardley described, in which we can have an arrangement whereby the in-house people, giving the service that is expected, are exempt, while others are not exempt. However, I do not find it justifiable that provision is made for one set of organisations—those with which the Government party has a particular affinity—but not other organisations.
Stephen Hesford: Will the hon. Gentleman give way?
Simon Hughes: I will give way in a second. It is too early in the day to be excitable.
Will the Minister tell us what consideration she has given to other organisations; what advice she has sought; what advice she has been given publicly; whether the matter has been considered by external advisers; whether she has been advised by Committees of either House and what the Government’s conclusions have been across the board? If she does not, it will look like she is pulling the one favoured friend off the shelf and not giving other people in a similar position the same sort of status.
Stephen Hesford: The hon. Gentleman has been listening to the Tories on the Front Bench, who recognise U-turns as well as anybody; their leader has made three in as many weeks. Leaving that aside, if there are millions of reasons why the Government have tabled these amendments, it is because there are about eight million people in trade unions, and this is important legislation to secure their rights and to improve the representation on their behalf. However, the Hospital Saturday Fund that the hon. Gentleman talked about could have made a representation to the Minister on any day of the week, in the same way that the trade unions did. That may be why there has not been a different consideration.
Simon Hughes: I will ignore the general political knock-about at the beginning and turn to the substantive point. I am not aware whether the Hospital Saturday Fund or other such mutual organisations—I do not have in my head the list of respondents—considered the matter. If the amendments were tabled the week before last, by definition, people would not have had notice that the issue was on the agenda. That is my question: who have the Government talked to?
Stephen Hesford: Will the hon. Gentleman give way?
Simon Hughes: I will in a second. I understand that the trade unions have an interest and that they may well have made representations about the issue. We went around such a course not many weeks ago in the debate on the Compensation Bill. We debated how much the trade unions should be regulated, how to structure the Compensation Bill and how, once we had general legal regulations, to bring that into the structure of this Bill. I anticipated that. However, it is not an answer to say, “We are only legislating for this group to have a particular status because we have been lobbied a lot by it.” That is a very bad answer. The job of legislation is to treat fairly people in similar circumstances. People join other organisations in the same way that they join trade unions—for mutual aid and assistance and support when they need it.
Stephen Hesford: If the hon. Gentleman does not mind me saying, the bad point is his. Many months ago, I sat on the Joint Committee, in which the matter was raised on behalf of the trade unions. It is not a new point at all. All those other organisations that might have been affected were on notice many months ago.
Simon Hughes: I am aware that it is not a new point and I have conceded that. I said that the matter was debated not just in the pre-legislative scrutiny Committee, on which my hon. Friend and others sat, but in the context of another Bill brought forward not many months ago by the same Department—the Department for Constitutional Affairs. What was debated then was that, when the Legal Services Bill became law, the regulatory system would be expected to cover other organisations dealing with compensation. Therefore, the matter has been debated before. That is not an argument for having different treatment for organisations which effectively do the same job though under different names. There are many organisations that are not as big or take in as many people as the trade union movement, but that is no reason for them not to be considered. That is why I am asking the Minister to tell us what discussions there have been and why, if the organisations are different, they are sufficiently different not to be considered here.
I should be grateful if the Minister elaborated on where exactly the line is drawn in her mind and her proposals between the sorts of activity that will be outside and inside regulation. As she knows, traditionally, trade unions have sometimes used in-house advisers, sometimes well-known trade union solicitors—I have put on record that I have been instructed by them, so clearly they act—and sometimes a combination of the two. There is no clear difference between the jobs done by one sort and by the other. In her winding-up speech, she needs to make it clear where she sees that line when it comes to trade unions.
10.45 am
To return to my main point, I am keen that the Minister should speak about other organisations that are similar, effectively. If people pay for a service, those organisations should have the same dispensation—if there is to be one—as trade unions and be included.
The Chairman: Order. I address the following remarks to the whole Committee rather than to any individual. The common means of catching the Chair’s eye is to stand. The Chair has no means of realising that a speech is imminent if the hon. Member, or right hon. Member for that matter, does not stand. I simply remind the Committee of that, adding that comments to the Committee should be addressed through the Chair.
Mr. Bellingham: I apologise, Mr. Cook, for not standing quite as swiftly as I should have done, and welcome you to the Chair of this Committee. I endorse what my hon. Friend the Member for Huntingdon said in his speech during the previous sitting. He spent much of the weekend mulling over what he would say this morning; he was interrupted by the best part of 90 hours.
Why were the amendments tabled so late? I find it quite extraordinary that they were not tabled in another place. After all, there was quite a delay. Second Reading in the other place occurred on 6 December, the Bill’s first day in Committee occurred on 9 January and it finally completed its passage through the other place on Tuesday 15 May. The Bill had a long passage.
The Minister pointed out that Lord Falconer mentioned on Second Reading that the Government were minded to table amendments respecting trade unions. Indeed he did, although it took me a little while to find the reference in his speech—it was thanks only to the diligence of the Minister’s private office that I was referred to the right paragraph. That long delay seems quite extraordinary. I ask her to put our minds at rest, because we are naturally curious. Certain representations have been made behind the scenes and discussions have taken place.
I take on board the point made by the hon. Member for North Southwark and Bermondsey—there are many other mutual bodies. I should declare an interest. When I was at the Bar, I did some work for various mutual societies and other bodies. Many of them had in-house lawyers who dealt daily with routine matters, but when the need arose, they sought outside solicitors to instruct counsel. Sometimes the in-house solicitors would instruct counsel, but there was a good working relationship between the two different types of lawyers.
The hon. Member for Wirral, West says that trade unions are different, because they have so many members. That is not a convincing argument, particularly when we know that the trade union movement is close to the governing party. The Conservatives want to work with the trade unions. I met fairly recently with Derek Simpson, and I have met with Brendan Barber. My party, in its new, invigorated modernising mode, is trying to reach out to all types of groups. We want to work with trade unions. As it happens, I am campaigning on different issues with a number of trade unions in my constituency. We have great respect for them. However, what I want to hear from the Minister is her justification for the apparent lack of consistency and for the timing. If she can provide that justification, the Opposition would feel a great deal more comfortable about this issue. Otherwise, I support my hon. Friend the Member for Huntingdon’s suggestion that we should vote against the amendments.
John Hemming: I would like to go back to the point raised in our previous sitting by the hon. Member for Bassetlaw, which was about industrial relations. He said that, where he is negotiating arrangements for members of his trade union, that is industrial relations and not a legal service.
Regarding the amendments, there is a certain amount of unanimity here, inasmuch as everyone here believes that industrial relations should not be regulated; we are not saying that they should be regulated. I think that everyone here, including the Conservatives, agrees that industrial relations, where one is negotiating on behalf of one’s members, should not be a regulated legal service. By definition in the Bill, it is not a regulated legal service. If everything just continued and the Bill were passed without the amendments, industrial relations would not be a regulated legal service.
If matters reach a certain point, the hon. Member for Bassetlaw and his colleagues in the trade unions put a test case through the courts. They do that by bringing in a firm of solicitors, who then contract barristers. The regulation of those lawyers is through the SRA, the Bar Council, or whatever body it may be, and that is not, in itself, a problem.
A question then arises, and this is where the Minister should clarify the situation: what is the reasoning behind the trade unions’ concern that the whole of a union would become a regulated body? Those are the circumstances that the hon. Member for Bassetlaw would find a problem. If the whole of the trade union becomes a regulated body because it wants to be an ABS, the problem is that the Bill will bring all the negotiations and informal advice by a union convener, wherever it is given, under the remit of the Bill. That is because, although such negotiations or advice are not regulated legal services, the union becomes a regulated legal entity and therefore everything is trapped.
Of course, one solution to that problem is for the trade union to have a subsidiary ABS, if it needs an ABS, so that a clear line is drawn around the regulated entity. That seems to be a tidier solution than this measure, but again it comes down to the details of drafting. One would be concerned, if the union is conducting case handling, such as claims management or whatever it may be, that it be done properly. Obviously, it is possible in those circumstances for the conduct of litigation to be managed within an ABS.
John Mann (Bassetlaw) (Lab): The hon. Gentleman misses the fundamental point, which is that the consumer will lose out, because the decision made on advice is made by a lay representative. Is that not the case? That advice could be to go down the negotiating route, or it could be, at some stage, to bring in a solicitor. It is that advice that will be caught in a crossover, which would leave the consumer facing two directions simultaneously on the same piece of advice. It would be the consumer who loses out, whether these amendments or other amendments are made; we will hear from the Minister about whether other amendments will be tabled. That means that there is an absolute prima facie case for having one set of regulations and not two on behalf of the consumer.
John Hemming: I agree with the hon. Gentleman that there is a good case for having one set of regulations, with the certification officer regulating the activities of the trade unions, and industrial relations should not fall within the remit of the Bill. The question is this: what is the best way to achieve one set of regulations? Also, what is the best way of dealing with other mutual organisations? That was the point raised by my hon. Friend the Member for North Southwark and Bermondsey. We wait for the jewels of wisdom to come from the Minister on that matter. However, it is that clarity that is needed.
There is a reasonable chance, whatever happens today regarding these amendments, that future amendments from the Government may be necessary to clarify these issues. I would be interested to hear what the Minister has to say about that.
Robert Neill (Bromley and Chislehurst) (Con): I shall be brief. I support the concerns that have been raised, and I wish to make two points.
Secondly, we have already asked the Minister for details of the discussions and the lobbying that took place that gave rise to the amendments. In answer to my hon. Friend the Member for North-East Hertfordshire (Mr. Heald), the Minister of State conceded in the House that there had been discussions with the trade unions. For exactly the reasons given by the hon. Member for North Southwark and Bermondsey and others, will the Minister tell us what other voluntary or mutual organisations made representations to the Department about potential difficulties? Why is it that the representations of one set of organisations seem to have been accepted, yet the representations of others have been ignored?
Simon Hughes: That is one question, but even if there were no representations from certain bodies or groups of organisations, a good Government and good officials should think about how the provision might apply across the board. I assume that the hon. Gentleman agrees that it is the Government’s duty to reflect upon the general interest and not to rely on lobbying to achieve exemptions.
Robert Neill: The hon. Gentleman is right. The two points are not mutually contradictory.
We would like to know the totality of lobbying or representations, so that we can work out why one group appears to have been favoured. For the reason that I advanced earlier—that a great number of people might be affected—it surely should have been anticipated at the beginning. Why was it not flagged up and brought forward much earlier? As yet, we have heard nothing convincing.
The Parliamentary Under-Secretary of State for Justice (Bridget Prentice): There we have it. One part of the Conservative party says that it wants to cuddle the unions, and another part says, “It is favouritism. They are all getting special favours.” There is no change in the Conservative party.
I remind the Committee of the reason for the provisions. The amendments are designed to maintain the status quo for trade unions. The idea is that the trade unions should continue to provide services to their members, through their staff and representatives, without having to be regulated as an entity. In addition, there is existing trade union legislation.
Mr. Djanogly: I intervene after the Minister’s first sentences because the point needs to be made that the status quo for many people is not good enough, particularly with regard to the miners compensation case. That is why change is being demanded.
Bridget Prentice: The hon. Gentleman is not right, but I understand why: as a member of the Conservative party, his knowledge and understanding of trade unions is obviously severely limited.
Mr. Burrowes: I concede that the Minister has far greater knowledge and understanding of the unions, and a direct interest in them. She doubtless had that knowledge almost a year ago, when the Joint Committee raised concerns about regulating the role of the unions. Why, at this late stage, has there been a change of heart—why the urgency to amend the Bill, as the Minister says, in order to maintain the status quo? Surely, the Minister’s information on unions cannot have suddenly and dramatically increased.
Bridget Prentice: I am pleased that the hon. Gentleman mentioned the Joint Committee. I refer Opposition Members to paragraph 232 of the Joint Committee on the Draft Legal Services Bill report, which states:
“Trade unions are distinctive from other organisations and governed by their own legislation”.
That might be one of the answers as to the difference between trade unions and other mutual organisations. The report continues:
“We are concerned that the Bill restricts the ability of trade unions to act in their members’ interests, especially by placing on a legal footing the means by which trade unions provide advice and representation...we recommend that the Government also takes note of concerns expressed during the Committee Stage debate on the Compensation Bill in the House of Commons about the provision of legal services by subsidiary companies wholly-owned by trade unions”,
which is a salient issue. The TUC also recommended that
“the Government gives further consideration to any necessary exemptions from the draft Bill for trade unions”.
The Joint Committee made a clear recommendation that we give further consideration to the matter, and we have done so.
11 am
Stephen Hesford: I encourage my hon. Friend to pursue that line. The hon. Member for Enfield, Southgate, who just intervened, was a member of that Committee. Its recommendations were agreed unanimously, so I am surprised by the interventions that he and his hon. Friends have made this morning.
Bridget Prentice: I am grateful to my hon. Friend for reminding me of that. Perhaps the hon. Member for Enfield, Southgate is part of the cuddly side of the Conservative party, which wants to embrace trade unions, so we should forgive him.
I will come on to other organisations in a moment, but I first want to go through some of the issues that were raised in Thursday’s debate. We never intended that trade unions should be caught by the full ABS framework—they fell within it because of their ownership structure—but the regulatory issues that they raise are different from those raised by commercial bodies offering services to the public. In that sense, there is a difference between trade unions and some of the other organisations that have been mentioned today.
We have been asked why we did not propose the amendments earlier. My right hon. and learned friend the Lord Chancellor set out our intentions on Second Reading in December. Although the provisions in the Bill at that time went some way towards achieving the intended result, the TUC did not think that we would achieve it and the Law Society had some reservations. We held discussions at length with both parties. Sadly, that took longer than we might have hoped. The time that it takes to get to where we want to get to is one of the most dispiriting things about Government. I apologise to hon. Members if they have not had as long to peruse the amendments as they might have liked.
Mr. Djanogly: Will the Minister give way?
Bridget Prentice: Let me finish the apology, then I shall give way. We were right to take the additional time to ensure that we got things right.
Mr. Djanogly: Let us accept that the Government needed additional time; why could not members of the Committee and, indeed, hon. Members generally have been advised of what was going on? Will the Minister also explain why she did not publish any details of the consultation to give us some idea of where the Government were coming from before the Committee started? Has she discussed the matter with consumer bodies?
Bridget Prentice: On reflection, perhaps it would not have been unreasonable to inform the Front Benchers of our position on some of the issues. I could not inform every member of the Committee, because I did not know who would serve on it. Brilliant as I might be, even I could not see whom the Committee of Selection was going to put on this Committee. There was not a lot of scope for me to move forward on that matter.
The hon. Members for Enfield, Southgate and for North Southwark and Bermondsey asked why the exception did not apply to other bodies. Other bodies might well be able to take advantage of a similar exception; it could happen, for example, in the case of the Police Federation that we discussed.
Mr. Tobias Ellwood (Bournemouth, East) (Con): The Minister has glossed over an important point. She rightly said that she was not aware of who would serve on the Committee, but she is certainly aware of who sits on the Opposition Front Bench. It would have been appropriate for her to share the information when she had it. In addition, will she say whether she spoke to consumer bodies as well as to the TUC once the recommendations had been made?
Bridget Prentice: I have just said that it might have been appropriate to discuss the recommendationswith the Opposition Front-Bench spokespeople. The Department is good at involving Front-Bench spokespeople from the main Opposition parties in its thinking, as far as possible. The hon. Gentleman might have a point when he says that we could have had more discussions; but, frankly, the Department is not bad at those things.
Mr. Djanogly: And consumer bodies?
Bridget Prentice: I should like to make my speech in my own way, if I may. I shall come to other consumer bodies. I have prepared a long speech about the issues that have been raised in the two sittings at which we have discussed the clause, and I shall come to consumer bodies in a moment.
Mr. Ellwood: I am grateful to the Minister for allowing me to intervene, and I apologise that we are interrupting her when she is trying to consolidate all the points that have been made. However, the very fact that she has a strong reputation of working so closely with the Opposition Front-Bench team has exposed the fact that the discussions with the TUC were not shared. The episode illustrates the good conduct with which the Minister normally carries out her duties and approaches such matters, but that has been absent this time.
Bridget Prentice: The hon. Gentleman can try to scratch at this to see whether he can draw blood; but, frankly, I do not think that he can. The Department had discussions with the TUC and the Law Society on the matter. In recent weeks, I had discussions with Opposition Front Benchers and talked through the measures proposed in the House of Lords that I wanted to change. My noble Friend Baroness Ashton also kept the Opposition up to date when she was taking the Bill through the House of Lords. We are where we are on such matters.
Other bodies will be able to take advantage of a similar exemption. If a body provides reserved legal activities only to its members, it will be exempt under clause 15. Clause 15(4) exempts bodies when the
“provision to the public”
is not part of their business.
To answer the point made by the hon. Member for North Southwark and Bermondsey, we had to make specific reference to trade unions to address the specific issues that relate to them. For example, the legislation must make it clear that only independent trade unions may benefit from the changes. Independent trade unions had to be mentioned because of their specific legislative position, but it is possible for other membership organisations to be exempted. On the other hand, bodies such as the Co-op are much more likely to want to make their services available to the general public, in which case they will must go through the full regulatory system. Subsection (4) makes it clear that as long as
“services to the public”
are not part of an organisation’s “business”, it will not have to be authorised.
I shall come shortly to the points made by my hon. Friends the Members for Bassetlaw and for North Durham.
Simon Hughes: I want to be as clear as the Minister about the matter. Is she saying that she believes that the Bill will introduce a strict rule for members’ organisations—mutuals, co-ops or any of that family of organisations—by which they will not need to be regulated if they supply services only to their members, but if the organisations cross the line to put their services in the public domain, they will be regulated? I just want to be clear, so that we can all understand. I think that I understand, but I should be grateful to know that that is the clear line.
Bridget Prentice: That is exactly the position, which is why I fear that people have made more of the issue than necessary, but I must also make it absolutely clear that the individual lawyers employed in any such organisation must be regulated by their regulatory authority. In such cases, the Law Society would almost certainly be involved, but there may be others.
I shall move in a moment to the points made by my hon. Friends the Members for Bassetlaw and for North Durham. Did we consult anyone else? Yes. As I have said, we consulted TUC and the Law Society. We also held discussions with consumer groups, which understand the need to ensure that trade unions can provide member services with proper protections. We held discussions with Which?, the National Consumer Council, the Federation of Small Businesses, Citizens Advice and the Office of Fair Trading.
Mr. Djanogly: Can the Minister make it clear whether those consultations were on the original Bill examined by the Committee, which had limited exemptions, or on the exemptions on which we will now be asked to vote?
Bridget Prentice: We discussed the principles behind the exemptions for trade unions—I have explained why trade unions are different from the other organisations mentioned—and the consumer panel, whose membership I have listed, was satisfied that they were appropriate. [ Interruption. ]
The Chairman: Order. I have tolerated this for far too long, and now I must interrupt. There has been a constant chuntering between the number two on the Opposition Bench and the Opposition Whip. It is very audible, very annoying and very disturbing, and while it is going on, interventions are taking place. If the exchange must continue, please do it out of this room and out of my hearing.
Bridget Prentice: Thank you, Mr. Cook.
My hon. Friends the Members for Bassetlaw and for North Durham and, indeed, the hon. Member for Bromley and Chislehurst asked about control over membership following the miners’ compensation debacle. That is not really a matter for the Bill, but the Government’s amendments will create an exemption for services provided by virtue of membership. It will be primarily up to the trade unions themselves to decide who is a member and to whom they will make those services available. If they want to include associate members, they can, based on the decision whether they can afford to offer to more people services funded from union dues.
Bridget Prentice: The definition will be in each trade union’s rulebook—it will be their definition of membership. I do not think that there will be a problem with associate members, because I do not think that trade unions will want to extend their union funds to cover a much wider group of people. Of course, they must also be careful not to put themselves into a position where they are seen to be offering services to the general public. Once they do that, they will lose exemption under clause 15.
Mr. Djanogly: The Minister seems to overlook the fact that such things have happened. Unions have created associate members; the hon. Member for North Durham secured an adjournment debate on that exact issue. The Minister is burying her head in the sand.
11.15 am
Bridget Prentice: Let me remind the hon. Gentleman that we are talking about the services provided by the union, not by associated firms, as in the Vendside model.
John Mann: The Minister is digging a big hole for herself and the Government. The cases brought by Vendside were equally brought by the Union of Democratic Mineworkers in its own name. Is the Minister suggesting that the UDM will be able to have an exemption from regulation, using itself as the entity through which to do so? If she is, that will cause grave concern in all parts of the House.
Bridget Prentice: No. My hon. Friend makes an important point, and I am pleased to have the opportunity to clarify. No, the UDM will not be able to do that as an entity. The point about the exemptions is that the trade unions are not to be dealt with as entities, but are to be dealt with purely in the way that they deal with their own members. It is important to make that distinction.
I should also make it clear that if the Legal Services Board thinks that a union is abusing its exemption by making somebody a member—it can look at the definition of associate member in that respect—it will be able to take action. It will be able to work with the certification officer to find out who is on the union register, and if it thinks that the client is greater than that, it will be able to say that the union is working outside its exemption and will require it to be authorised. The way in which we have developed the measure should take care of my hon. Friend’s concerns.
Mr. Djanogly: Is it fair to say that after thousands of associate members of unions have been ripped off, and after parliamentary debates and representations froma variety of groups and people on the matter, the Government are going to maintain that we should keep the status quo and that there should be no reaction whatever to the events that have taken place, let alone a move to our position?
Bridget Prentice: The hon. Gentleman is pushing his luck if he thinks that the Government do not take the same view as my hon. Friend the Member for Bassetlaw about the behaviour of one or two trade unions, which have behaved appallingly, as have some of the solicitors who have worked with them. We have always taken the view that my hon. Friend has expressed and we do not need to take lessons from the hon. Gentleman on the matter.
John Mann: I am afraid the Minister has been badly let down by her civil servants, who have given her the most appalling briefing. What she has said is not what the amendments say. The amendments do not categorise associate membership, so that is not what we are discussing. I invite her to reconsider her comments on associate membership, because the situation of both the Durham miners and the UDM is crystal clear. According to the Minister’s statement, the UDM would be allowed to have a category of associate member that would not be covered by the certification officer or by the Bill. That would be an appalling state of affairs. It is not the amendments that are the problem; it is the briefing that civil servants have written for the Minister.
The Chairman: Order. It is not in order to make any reference to the civil servants attending the Minister in Public Bill Committee. It might therefore be desirable for the hon. Member to adjust his terms of reference in that regard.
John Mann: Thank you, Mr. Cook. I hold the Minister entirely and personally accountable and responsible. I offer her the opportunity to reflect on whether she should reconsider the issue of associate membership.
Bridget Prentice: I take full and absolute responsibility for what I say, which was that, if the Legal Services Board thought that a union was using the exemption by making people members who should not be members of that union, it could take action. It is up to the certification officer to decide whether to include associate members in a trade union, and the board would work closely with the certification officer on that.
I will reflect on what my hon. Friend says in specific examples. I know of his campaign in his constituency to deal with the Durham National Union of Mineworkers, and I shall consider whether the provisions need to be tightened up further. At the moment, the amendments would give the board the authority to work in conjunction with the certification officer who regulates the trade unions, which is partly why the exemptions were in the Bill in the first place.
Bridget Prentice: In that case, if the certification officer says that he has no way in which to define associate members in that context, I shall certainly look again at the issue.
I want to be clear. The vast majority of trade unions work properly and do an excellent job for their members. The exemption would give them the opportunity to continue to do that. In the case of rogues, we need to be able to deal with them. If we need to add a further measure to ensure that that is the case, I will be more than happy to do so. Like my hon. Friend, I do not believe that it is in our interests as the Government acting on behalf of the consumers, whether trade union members or others, to give leeway to anyone who will undermine the consumer interest in the Bill.
The hon. Member for Birmingham, Yardley asked the reasonable question whether we were dealing with a problem that does not exist. He was asking about the provision of legal services by trade unions. Generally speaking, that is a rare occurrence within union membership, but it happens from time to time. My hon. Friend the Member for North Durham cited the example of industrial injury cases. Work on those is reserved if they go to court.
John Hemming: I thank the Minister for answering the question in one respect, but what reserved legal services are provided under the status quo by trade unions? The example given by the hon. Member for Bassetlaw did not involve trade unions providing reserved legal services.
Bridget Prentice: Industrial injury cases are one example. Another might be the Musicians Union acting on issues such as copyright. Such services need to be carried out by a lawyer. It is in those instances that they are reserved legal services.
John Hemming: The Minister knows better than me which clause identifies all the reserved legal services. I accept that the conduct of litigation is a reserved legal service, but the offering of legal advice, and even the preparation of contracts, is not a reserved legal service.
Bridget Prentice: I have already given a couple of examples to the hon. Gentleman. I do not know how to make it any clearer what reserved legal services are. The point is that if a trade union attempts to provide a reserved legal service, the person doing that must be a lawyer who is regulated.
John Hemming: Where the Minister could make it clearer to me is by reference to clause 12(1). Under which letter from (a) to (f) do the unions offer reserved legal services?
Bridget Prentice: I have given a couple of examples, including the conduct of litigation, which are under 12(1) paragraphs (a) to (f). That ought to be sufficient for the moment.
I want to move on to the point raised by my hon. Friend the Member for North Durham, who mentioned that many union lawyers do representation work at employment tribunals. Let me make it clear that that is not reserved legal work. Employment tribunals are not under the classification of a reserved activity. Also, it might be worth reminding the Committee that claims management is not going to be a reserved service, even though it has been regulated under the Compensation Act 2006.
My hon. Friend also asked me to confirm whether the lawyers and trade unions would be exempt under the amendments. Let me make it absolutely clear that they will not. Clause 15 covers the carrying out of reserved activities which always, in every instance, have to be carried out by entitled persons—that is, lawyers or people who are exempt as set out under schedule 3. Any lawyer providing services under this exemption will still need to be authorised and regulated by one of the approved regulators. The exception that we are discussing only takes the unions themselves as an entity out of the need to be authorised. That means that complaints about reserved services can be taken to the Office for Legal Complaints. To complete the point, if a union sends its members to outside firms, those firms and their lawyers will be regulated.
There may have been some confusion about what an “employed lawyer” is. In clause 15 it means someone who is an employee of the union. If the union has an arrangement with an outside firm, which most of them tend to do, it may be said to be employing the firm’s services. However, that is not a contract of employment, as the hon. Member for Birmingham, Yardley pointed out. The firm’s client is the member, not the union. Perhaps it would be better to describe the firm as being engaged rather than employed.
The hon. Member for Huntingdon made a number of points. He suggested that there were alternatives to the amendments. One was the creation by a union of a separate body to provide legal services with only lawyers working in it. That is perfectly possible. I wonder, however, whether it is really practicable. If we insisted on that, I suspect that some unions, particularly the smaller ones, might not be able to provide services and that would reduce their availability and the choice available to members.
Mr. Djanogly: At the start of Second Reading and consistently throughout the Bill, the Minister has maintained that her primary objective is to act in the interests of consumers. Will she explain how her position in this regard is in the best interests of consumers?
Bridget Prentice: I said that although the hon. Gentleman’s suggestion may be possible, it is not practicable, partly because it may well reduce the choice available to consumers who happen to be trade union members if their union is not able to provide that separate service.
The hon. Gentleman’s alternative idea was to create an exemption for officials within unions. To be fair to him, we examined that possibility and originally we thought that that might be the solution. However, we concluded that it would not work, because the union would still need to be regulated as an entity. To exempt the union from having to comply with the applicable rules through the use of non-lawyers would probably open up loopholes and make regulation of the unions less effective. So the idea of an exemption was one that was worth looking at, but we decided that, on balance, it was not the best way forward.
11.30 am
John Hemming: The Minister cites the difficulty for smaller trade unions in setting up an ABS subsidiary. She believes that trade unions conduct litigation—that is, they sign documents on behalf of their clients—but the hon. Member for Bassetlaw has only cited examples where, even for the larger unions, the litigation is conducted by firms of solicitors. I would be quite surprised if the smaller unions conduct litigation in the strict sense of the word. I would be interested in hearing some examples of where smaller unions conduct litigation; not examples of where they pay for it to be done by lawyers, but examples of where they conduct litigation themselves by signing the court documents themselves.
Bridget Prentice: I cannot give the hon. Gentleman an example off the top of my head, but I will write to him, if that is acceptable.
I would like to return to the suggestions made by the hon. Member for Huntingdon. I think that his next point was that the certification officer was not a proper substitute for regulation through an approved regulator. I agree with him on that point; that is true. We have never pretended that a certification officer was a substitute for an approved regulator.
The certification office has a limited role. It cannot always take action in the way that an approved regulator could. None the less, if problems over the provision of services amount to a breach of the union’s rule book, that breach can be dealt with and taken to the certification office if necessary. Also, as hon. Members on both sides of the Committee have pointed out, union members obviously retain the option to go to court themselves.
John Mann: It would be helpful if the Minister could clarify and put on the record whether it is her expectation and that of the Government that the certification officer, in dealing with such issues, will act as robustly as she presumes that the regulatory bodies of the legal profession will act.
Bridget Prentice: I cannot speak for the certification officer; I would hope that they would deal with these issues robustly. I think that that is a debate that my hon. Friend needs to have with others, to determine whether the certification officer will act as robustly as he would like.
I would like to return to the suggestions made by the hon. Member for Huntingdon. He gave us a hypothetical example of a union that behaves unscrupulously in providing litigation services to its members. It is true, in the hypothetical example that he gave, that the lawyers’ regulatory body would be able to take direct action only against the lawyers themselves, assuming that the lawyers had done something wrong. However, that regulatory body could also have an influence on the union. It could change its rules, so that lawyers are in effect prevented from working in that union, or it could even go so far as preventing them from working in unions in general. However, I must add a rider to that observation, which is that those new rules would have to be acceptable to the Legal Services Board.
Mr. Ellwood: Forgive me, Mr. Cook, but I am just coming to terms with this rather complex issue and I have a very simple question that I would like the Minister to answer on the record. Why is it that the unions have requested to be exempt from this Bill?
Bridget Prentice: I got up rather slowly to answer that question, because I thought that the whole thrust of the debate this morning was about why the unions needed to be exempt from this Bill. Fairly early on in my remarks, I said in response to the hon. Member for North Southwark and Bermondsey that we needed to address the issues that related specifically to trade unions. I also said that we needed to specify that the provisions apply only to independent trade unions. Hon. Members and trade unions themselves are concerned about trade unions that are not independent. That is why this part of the Bill has to legislate specifically for trade unions that have their own regulatory system. Other bodies that could equally apply for the exemption are covered under clause 15(4).
Mr. Ellwood: Why?
Bridget Prentice: I have just answered that. Trade unions need that exemption. We need to address the specific issues that apply to them. They are legislated for and regulated in another way, so we need to make it clear that we are referring specifically to independent trade unions in this part of the Bill. I do not think that I can make it much clearer than that.
Simon Hughes: Am I right in thinking that the only effect of the amendments tabled by the Minister willbe to change every reference to “trade union” to “independent trade union”? Will there be just that one category, as defined elsewhere?
Bridget Prentice: The Bill will refer to independent trade unions as defined in the trade union legislation.
Mr. Ellwood: I am testing the Minister’s patience. If I were to cut and paste her answer and show someone her reasons for the union exemption, which is the reason why individual union members are not able to receive the same protection from the operation of their union or with regard to legal support, they would find it highly questionable. We have not had a proper answer to why the unions are exempt from the clause.
I shall probe further and say that the vague area of associate membership has been highlighted by the hon. Member for Bassetlaw, a Labour Member. How do associate members receive the legal support that we are trying to provide in the Bill? They seem to be omitted from it; they do not receive the same protection. I am astonished that the Government, who are supposed to look after the interests of the unions, are bowing to the might of the union barons.
Bridget Prentice: If the hon. Gentleman were to cut and paste anything that suggested for one moment that trade union members will get a lesser service than other consumers under the Bill, he would be very wrong indeed. As the hon. Member for Huntingdon constantly reminds me, because I constantly say it, the Bill is about putting the consumer at the heart of the legal system. That applies to trade union members as much as to consumers in any other forums.
I am talking about trade unions as an entity. Their members will be protected as much as anyone else. Lawyers working within trade unions will be as regulated as any others. I assure the hon. Member for Bournemouth, East that trade union members will get a standard of service that is as good as the standard that I want for every consumer. The TUC has made it clear that it wants to ensure that the services that it provides for its members are of the highest standard. We will ensure that that is the case, and he need not cut and paste anything other than that.
Mr. Bellingham: The Minister says that the trade union movement is keen for members to get the best possible protection. Furthermore, it is obviously anxious to be seen to offer the highest possible standards. Why, then, did the trade unions not lobby to keep the Bill as it is rather than pushing for exemption?
Bridget Prentice: For the umpteenth time, we need to make a clear exemption for trade unions because of the specific issues that apply to them. In all other respects, the exemption under subsection (4) will be the same, but because of the particular position of trade unions, and because we need to define their independence, we need to make an exemption.
The hon. Member for Huntingdon said that, if the rules were changed, it should be proportionate and consistent. The regulator could complain to the certification office, which, as my hon. Friend the Member for Bassetlaw said, could take limited action. A related question was whether the Office for Legal Complaints would be able to get information out of the trade union in order to deal with a complaint. Formally, the OLC will have powers of compulsion only over the parties to the complaint; in the example given by the hon. Gentleman it would be the member and the lawyer.
The lawyer might claim that the information was in the union’s hands, but if the OLC considered it to be a ploy to get out of providing the information it could take action against the lawyer. However, if the claim were genuine, the OLC would have to ask the union to co-operate. If the union refused to co-operate, the OLC would not be able to enforce its request, but it would be able to tell the relevant approved regulator, which could decide to make the rule change that I have described.
I hope that the hon. Gentleman accepts that I agree with the Solicitors Regulation Authority. If the regulators conclude that union lawyers should work only through regulated entities, and if the board agrees that that is proportionate, that is what will happen. The unions will then be able to use the provisions of part 5. I hope that it will not be necessary, but the provisions are in the Bill should they be required.
On the question of coal health claims, it was clearly a disgraceful episode for the trade union movement. However, it does not mean that all unions are not to be trusted in all circumstances. The Government must ensure a good balance, dealing with those that behave badly but without condemning the majority in the process. The amendments allow the majority of decent unions to continue to work in the interests of their members, but retain the protection of being able to take action if problems arise.
After a full debate on the amendments, I hope that the Committee will agree to them.
Question put, That the amendment be made:—
The Committee divided: Ayes 11, Noes 5.
Division No. 11 ]
Bailey, Mr. Adrian
Flello, Mr. Robert
Foster, Mr. Michael (Worcester)
Goodman, Helen
Hemming, John
Hesford, Stephen
Hughes, Simon
Kidney, Mr. David
McCarthy, Kerry
Mann, John
Prentice, Bridget
Bellingham, Mr. Henry
Burrowes, Mr. David
Djanogly, Mr. Jonathan
Ellwood, Mr. Tobias
Neill, Robert
Question accordingly agreed to.
Amendment proposed: No. 109, in clause 15, page 7, line 16, after ‘(6)’, insert ‘Subject to that,’.—[Bridget Prentice.]
Question put, That the amendment be made:—
The Committee divided: Ayes 11, Noes 5.
Division No. 12 ]
Bailey, Mr. Adrian
Flello, Mr. Robert
Foster, Mr. Michael (Worcester)
Goodman, Helen
Hemming, John
Hesford, Stephen
Hughes, Simon
Kidney, Mr. David
McCarthy, Kerry
Mann, John
Prentice, Bridget
Bellingham, Mr. Henry
Burrowes, Mr. David
Djanogly, Mr. Jonathan
Ellwood, Mr. Tobias
Neill, Robert
Question accordingly agreed to.
Motion made, and Question p ut , That the clause, as amended, stand part of the Bill:—
The Committee divided: Ayes 11, Noes 5.
Division No. 13 ]
Bailey, Mr. Adrian
Flello, Mr. Robert
Foster, Mr. Michael (Worcester)
Goodman, Helen
Hemming, John
Hesford, Stephen
Hughes, Simon
Kidney, Mr. David
McCarthy, Kerry
Mann, John
Prentice, Bridget
Bellingham, Mr. Henry
Burrowes, Mr. David
Djanogly, Mr. Jonathan
Ellwood, Mr. Tobias
Neill, Robert
Question accordingly agreed to.
Clause 15, as amended, ordered to stand part of the Bill.
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