 House of Commons |
Session 2006 - 07 Publications on the internet General Committee Debates Legal Services |
Legal Services Bill [Lords] |
The Committee consisted of the following Members:Hannah
Weston, John Benger, Committee
Clerks
†
attended the Committee
Public Bill CommitteeTuesday 19 June 2007(Morning)[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 15Carrying 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.
Simon
Hughes:
No. Such activity can take place on any day of the
week, in any week of the year. There are many mutual organisations into
which people pay. In
another context, the Minister referred to the Royal
Automobile Club and the Automobile Association. Many organisations have
in-house lawyers who give legal advice. They are not trade unions, but
potentially they have the same provision whereby two sorts of people
give legal advice. There are in-house people from whom the organisation
receives the service for which it signs up. They may commission a law
firm if the issue is difficult or not run of the mill. I do not
understand why the Government have come to the Committee—they
have been reasonably criticised for so doing late in the
day—with proposals that relate only to the trade unions, not to
other organisations that have a similar relationship with their
members.
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.
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.
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.
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?
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.
First, the
hon. Member for Wirral, West said that the trade unions are important,
and that they have some8 million members. I accept that. I
accept also that some difficulties may need to be considered. That
makes Conservative Members all the more suspicious about the timing of
the amendments. The fact that the trade unions represent such a
substantial constituency of interest and that they have links with the
Government makes it all the more likely that such issues would have
been flagged up very early in the gestation period of the Bill. Against
that background, it is all the more surprising that such significant
amendments should come so late in the day and at such short notice. It
is a rhetorical question, but what on earth has been going on between
then and
now?
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.
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.
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.
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
of...services 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.
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.
Robert
Neill:
Can the Minister help me with the point that I
raised earlier? How will an associate member be defined? If it is to be
left to the organisation
to decide, surely associate membership must be defined for the
regulatory framework to have any meaning. Concerns have been raised
that the concept could be abused in certain circumstances. If we are to
protect the consumer, there must be some protection by means of a
definition.
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.
John
Mann:
My battle is not with the Durham NUM, but the
UDM—a rather different entity. In that context, the
certification officer has stated expressly in
writing that he has no powers in relation to consumer complaints for
associate members because he does not regard them as full members. The
Minister is therefore in danger of creating inadvertently a category of
associate members who are beyond the
law.
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).
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
]
AYESNOES
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
]
AYESNOES
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
]
AYESNOES
Question
accordingly agreed to.
Clause 15,
as amended, ordered to stand part of the
Bill.
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