Justice Committee Contents

Examination of Witnesses (Questions 1-19)


25 FEBURARY 2009

  Chairman: Welcome. Thank you for being here early so that we are able to start early; Wednesday is always a busy day for Members! We welcome you to your new responsibilities, some of which will not kick in effectively until 2010, so if I can tease you with a question, which does not imply that any of this is your fault, here you are running an organisation whose name suggests it is in charge of all sorts of things that it is not in charge of and is easily confused with the Legal Services Board—the Legal Services Commission—

Alun Michael: Exactly!

  Q1  Chairman: I make my point! You are sitting on top of an apparatus of regulation: how on earth are you going to make any public coherent sense of this?

  David Edmonds: The easy answer is with a degree of difficulty because the Legal Services Board, the Legal Services Commission—the nomenclatures of the numbers of organisations that are active in this area—does give rise to potential public confusion. I think a more complex answer to your question, the real answer to your question, is that, as you know, Chairman, I have spent a lot of time in the last six months building a board and starting to build an organisation; so much of my individual focus has been on putting together a high-quality board and recruiting some high-quality staff. What we now need to do is move into the second phase of our life, because it is only since 1 January that we have had a degree of independence in how we run ourselves; until that time we had been working in effect at the Ministry of Justice. We now need to set out very clearly what we propose to do. I think that the document that many of you have seen, which is our first draft business plan, gives you a clear idea of the detailed work that we propose to focus on. For the first three, four or five months, we need to produce a consultation document on independence of regulation as against representation within the regulatory authorities. We need to produce material on alternative business structures and how we begin to broaden the whole question of access to justice. We need to start giving some clear ideas on how we will raise the levy to fund what we do. We have a coherent business plan with a lot of actual work that we are going to do. I totally accept that, until the second tranche of powers comes our way, on, hopefully, 1 January 2010, there will be a degree of sucking and seeing—putting stuff out and waiting for reactions to come. However, we do have some powers—we have some rule-making powers, and we have produced, I hope, good, intelligent consultation, and we can talk in a very wide and comprehensive way to the stakeholders.

  Q2  Chairman: How are you getting on with the professions which have up until now conducted regulation while also serving as, if you like, trade unions and having this mixed role, and view you with some apprehension?

  David Edmonds: They have not shown apprehension. That is not meant to be a flippant reply. In my first six to eight weeks as Chair, I talked individually to the chairmen, the presidents, the secretaries, the directors-general of all of the regulatory bodies, the smaller ones as well as the larger ones, who fall within the compass of the Legal Services Board. Basically, I have established a personal relationship with many of the key players already, as indeed I have with many of the key players on the consumer organisations that I also went to see. We have conducted a series of discussions and meetings. We had an extremely interesting and productive workshop only a week ago on the question of alternative business structures with the Solicitors' Regulatory Authority. We agreed to put together a project team to look at how we might drive that work forward. What we have tried to do—Chris, my team, myself and my Board, is to talk to the approved regulators, both at principle level, and increasingly in a more detailed way, about how we might work together. As I know, because I have spent seven years of my life as a regulator, there is an interesting interface between the regulator and the regulated bodies. It is much more effective if one can work together and plan a route through, always with the interests of the consumer at the heart of what we do, than if you get into a confrontation and conflict zone. So far, so good; but regulators and regulatees always fall out!

  Chairman: An interesting doctrine!

  Q3  Alun Michael: I am sorry, all these changes of organisations are quite confusing, but your experience in regulation was pre-convergence of Ofcom, was it not?

  David Edmonds: Yes. For five years I was the single regulator for telecommunications. I then worked with my colleagues to set up Ofcom, and I spent two years on the board of Ofcom, so I spanned telecoms and the whole communications sector, yes.

  Q4  Alun Michael: For the outside members of the general public and the innocent Member of Parliament, there are two things that it is almost impossible to get inside: one is the legal profession in its diversity and capacity for self-protection; and the other is the generality of the criminal justice system. Can you say in one sentence what you are for?

  David Edmonds: What I am here for and my board is here for—the only difference between being a single regulator and having a board is just that—what we are here for—can I tell you in two sentences?

  Q5  Alun Michael: Just, if they are both short!

  David Edmonds: Okay, I will work my way through it. What I am here for is to provide for the consumers in England and Wales an assurance that the regulatory regimes by which the legal profession conducts regulation are conducted in a way that gives proper protection to the consumer and are conducted in a way that means there is real independence in the regulatory arms as distinct from the representative function within the approved regulator.

  Q6  Alun Michael: I think part of the problem—I do not know if I can speak for my colleagues, but it is certainly my experience that everything that looks as if it is going to do proper regulation of the legal profession ends up being internalised.

  David Edmonds: Yes.

  Q7  Alun Michael: You have just spoken about building good relations with people. I know you have to work with them, but that sounds as if you are disappearing inside the protected environment again, does it not?

  David Edmonds: No. If it does, I would withdraw from that. I am absolutely clear that the first set of real discussions that we have with the approved regulators, particularly the Law Society and the Bar Council, will be to do with the issue of the independence of the regulatory function within those organisations. We will be producing within a relatively short space of time a consultation document—yes, we have to consult—which will be quite clear, with our views on independence. So there is no question of us disappearing or no question of regulatory capture; there is no question of us not being absolutely clear what we think is right. We have to make the rules by which the regulators apply the separation within their own organisations. What happened, though, Mr Michael, is this Act, which is 330 pages long: it is a very complex piece of legislation that Parliament has presented me with and I have to try and make it work. I think making it work needs a nice balance of working with and being quite clear that we do not fall into that hole that you have just described.

  Q8  Alun Michael: I think that is right. The reason that I ask you to say it in two sentences is that—I asked for one but you got fairly close—is that if people are coming to us about issues, we have about one sentence to say: "This is the person who will do X, Y and Z". I am concerned that having read all the stuff here about what you are going to do—I am not sure that I could replicate that. For instance, when you refer to the clarity of the draft business plan, I am sure that we would all agree that putting the consumer and public interest at the heart of the system would be a good idea. Widening access to the legal market—question mark! Improving service by resolving complaints properly: that would be a really good idea and a big step forward; developing excellence in legal services regulation—they are very, very high-level objectives. Then, when you say what you will do, you go straight into "subject to resources being available" in appointing the consumer panel. Personally the consumer panel may be a useful adjunct but it does not sound as though it is at the cutting edge of doing things. What difference are we going to see within a year or five years as a result of the activities of you and your board?

  David Edmonds: Can I make a quick remark about the consumer panel? I do not think the consumer panel is a useful adjunct; I think the consumer panel is absolutely central to what we do. The consumer panel is a vehicle by which you get focus inside on to the board about what you should be doing and total concentration by the panel on the interests of the consumer. You also get the research that the consumer panel will commission. I do not see it as an adjunct; I see it as a central part of what we do. You asked me what would be different in a year. I hope that within a year we will be able to see clarity in the separation of the regulatory and representative functions within the two principal regulatory authorities. Within a year you will see the starting up of the new complaints organisation—and you talked to Elizabeth France a few weeks ago, and we are responsible for building that with her. Within a year, I hope you will be seeing the first rule book, the first rules coming out on how alternative business structures might come in to the market place. To some extent this sets out our target—or to a large extent—but I hope you will see some improvement. The ordinary consumer, the person in the street, may not see a lot of difference in a year. Over five years we hope to see numbers of organisations coming in to the market place to provide legal services of decent quality and of reasonable cost. We hope to see a complaints machinery that will deal promptly and quickly with consumer complaints, offering redress. I hope you will see a freeing up generally of the market place and the ability of people to do things in different kinds of way. I hope you will see an expansion of access to justice. Again, I spent four years on the Legal Services Commission; I am very conscious that for that sector of the population who are not entitled to legal aid and do not have significant chunks of money, access to justice is often seriously constrained. There are obviously fine words in here, and I hope you would expect that because it is an aspirational document. I hope that within five years we will have made a difference.

  Q9  Alun Michael: I have a couple of specific questions because, like the Chairman, I am slightly puzzled about the potential confusion of the name. Will you regulate prosecutors, or oversee the regulation of prosecutors?

  David Edmonds: No. We regulate the regulators.

  Q10  Alun Michael: That is right; that is why I said, "regulate or oversee the regulation".

  David Edmonds: In so far as a prosecutor is a barrister or a solicitor and has a practising certificate which comes from the Bar Council or the Law Society, we will be regulating the Law Society and the Bar Council.[1]

  Q11 Alun Michael: Do you think it is clear enough what prosecutors ought to be doing? What do you think of the prosecutor's pledge, for instance; what do you think of the plethora of advice and guidance that is produced for the lawyers that work in that field by the Crown Prosecution Service?

  David Edmonds: Can I ask my Chief Executive?

  Chris Kenny: We do not, as the Chairman implied, have any formal role in monitoring or overseeing the CPS; effectively our role is constrained to looking at the approved regulators under the Legal Services Act rather than the CPS.

  Q12  Alun Michael: The reason I am asking the question is that for the ordinary members of the public, if you are overseeing legal services, one of the most important services is the lawyers who work within the Crown Prosecution Service or are commissioned by it, to deal with cases coming before the courts. Are you saying that is outside your ambit?

  Chris Kenny: I am saying that we would catch it only indirectly, in so far as, if they fail in their performance and their own professional regulator is in some way remiss in picking up any problems there, we would then deal with the professional regulator.

  Q13  Alun Michael: So they have to individually prove to be pretty bad before it gets anywhere near your ambit of responsibility!

  Chris Kenny: Yes.

  Q14  Alun Michael: You said in the submission that you expect to employ 35 high-quality full-time staff, and you have referred to this and I am sure we are delighted that high quality is being underlined in that way; but it is still a very small number compared with 120,000 lawyers practising in England and Wales. How did you arrive at that number?

  David Edmonds: I arrived at it on the basis of a lot of work that had been done by the Ministry of Justice before, while the legislation was going through Parliament; they hired teams of consultants. The organisational design I have come up with with the Chief Executive is quite different from what was envisaged as the bill went through Parliament. I came up with it because there was a budget envelope within which I had to work. I also came up with it because of my experience of working in other regulatory agencies where I knew the quality of the top team was the key. I am dealing with the Bar Council and the Law Society: these are extremely—

  Q15  Alun Michael: Quite good at looking after their own interests!

  David Edmonds: I would not say that. I know they are very bright people who know the law backwards, and I need quality people who can relate at that kind of level. It was a mixture of working within a resource envelope, and a mixture of trying to put together a team that has sufficient expertise—it will have sufficient expertise in the law, in economics, in competition theory and in consumer; and then working in project teams. I am trying to build something that is very much like a high-class consultancy services' organisation. I want to put teams together. I have a great board and we have used it in a very different way from how regulatory boards are normally used. I have no idea in real life whether what I am pitching for—I know what I am building in the first year—will be enough, too few, in the longer run; but I have to work within a resource envelope, and that is what I have done.

  Q16  Alun Michael: Talking about the resource envelope, you have an implementation budget which has increased by £800,000 from £4.1 million to £4.9 million. How did that come about? How will the money be raised? How will you ensure that it does not fall back on the consumer at the end of the day?

  David Edmonds: I am consulting at the moment. This is a consultation on moving from that number to the higher number. At the moment the whole organisation is posited on the number that is given to Parliament, which is the £4.1 million. What I have said is that I would like the resource to go up to that higher level. It increased for a variety of reasons to do with the timing of when we took on accommodation and new space; a different mix of people; and, above all, because the original estimates did not include what I believe are the adequate resource for building a consumer panel and doing research. When you add all of those up, there is a difference. However—and this is the point I really would like to emphasise—the overall envelope, which includes the creation of the new complaints machinery of £19.9 million, Elizabeth France and I have talked about, and we are quite clear that were the consultation to come back with a view that our budget should move by about £600/700/800,000 it would be constrained within the overall envelope. Who pays? At the end of the day the approved regulators pay because the set-up costs—again ministers and Parliament decided—should be clawed back from the sector by means of a levy. In due course, the consumer pays the fees for people who pay the levy; so I suppose at the end of the day the answer to your question is that some, if not all, of this will flow back into the charges that are made into the community. The alternative is public expenditure and taxation, and Parliament has decided it is a levy.

  Q17  Alun Michael: Can I be clear about those figures? You are saying that effectively there is agreement to increase your budget by £800,000, and that would come out of—so the sum would be reduced in terms of the resources available for the Office for Legal Complaints.

  David Edmonds: In effect, yes.

  Q18  Alun Michael: Will that constrain the work of what effectively is the doing bit?

  David Edmonds: I think I would say that we are a doing bit as well. My expectation is that it is not. I have to say that I do not have a set of numbers that I can go through with you and say we do 4.9m and the complaints machinery does whatever the balancing factor is, and that is how it will be made up. We are not far enough in the construction of the new organisation. Elizabeth France, though, as you are aware, has previous experience of setting up a complaints and ombudsman machinery, and between the two of us we think we can do it, there is, I have to say, a little bit of putting your finger in the air and hoping that it comes out right.

  Q19  Alun Michael: That is very honest, and we will watch how your finger develops! Can I ask about the clarity for people who need the benefits of regulation, whether it is by complaint or by confidence? What requirement is there for the approved regulators to make consumers in the wider sense aware of the existence of functions of the Legal Services Board, and perhaps even more directly important the Office for Legal Complaints?

  Chris Kenny: I think you have highlighted exactly the right area. Signposting to the Office for Legal Complaints is far more important than to the Board, and I hope that at the end of the day consumers will see the benefits of what the Board has achieved. I do not think there is any particular benefit in consumers knowing precisely what we do, and our precise constitution. In relation to the OLC—

1   Note by witness: All CPS Associate Prosecutors will need to be regulated by an approved regulator, in many cases the Institute of Legal Executives, by 2011. Back

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