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As the originator of Clause 2, it is natural that I should allow myself to revel at least momentarily in its survival. It is highly consonant with the original intention of the Bill. I hope that it will serve to correct distorted perceptions, restore a modicum of much-needed civility to society, and, above all, give a strong impetus to the process of rehabilitation.
However, the second half of the Bill, to which the Minister referred, dealing with claims farmers, has always received a warm welcome on all sides of this House, and rightly so. Much of the important work in that area continues as the regulations and the trade union code of practice are scrutinised, and I hope to play my part in that process. I understand from the Minister that this might be a good opportunity for her to update the House on progress made towards getting the new regulatory system up and running. I therefore look forward to hearing from her about the latest steps.
I have always given this Bill a broad welcome and, despite the various changes made to it, I still do. I hope that it will serve to restore some civility, decency and—yes—some justice to this country of ours.
6 pm
Lord Goodhart: My Lords, I am entirely happy with these further amendments and I am very pleased indeed that they resulted from the Government accepting an amendment proposed by my honourable friend Simon Hughes. The fact that there are very few Commons amendments, other than those relating to mesothelioma, indicates that the Minister and her team of civil servants did a very successful job in greatly improving the Bill earlier when it was in your Lordships’ House. I congratulate her on that.
Baroness Ashton of Upholland: My Lords, I am very grateful for those comments. I shall take a moment to inform noble Lords about what we have been doing; the question of the noble Lord,
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We will come back to Parliament in the autumn to debate secondary legislation that will underpin the new regime. We have made good progress and have recently launched a formal consultation on the draft secondary legislation and conduct rules, which will include regional consultation workshops with claims intermediaries in Newcastle, Manchester and London. These set out in detail matters such as the authorisation criteria, the complaints handling requirements, indemnity insurance and situations in which it would be appropriate to cancel or suspend authorisation. In the next few weeks we are going to launch the remaining consultations on the exemption order, authorisation fee levels and the application form.
I informed noble Lords at Report that we expect the regulation to be integrated into the regulatory structure to be provided for by the Legal Services Bill. I also set out an interim solution for dealing with regulation. An announcement was made in the other place that in the interim the Secretary of State, my noble and learned friend the Lord Chancellor, will regulate, supported by existing officials, together with appropriate senior expertise, skills and experience that are brought in from outside the Civil Service.
I have referred before to the likelihood of a senior individual being recruited to help guide the successful implementation of the new regime. I am pleased to confirm today that, subject to finalising terms, Mark Boleat will be taking on this important role formally from the beginning of September.
A key part of the proposed mechanism will be an external monitoring and compliance unit, whichwill help to process applications for authorisation, maintain a register of authorised persons, monitor compliance with the rules, monitor advertising and marketing activity, identify persons who are evading authorisation and advise the DCA on disciplinary matters and formal regulatory decisions. This will be supplied under contract by a single trading standards team operating across England and Wales, making full use of the networks already in place. The DCA retains full authority and responsibility for regulation but working with the right trading standards operation should help to ensure the early delivery of benefits to consumers.
I have already visited Birmingham and the City of London trading standards units to learn more of the work they currently do. We have just concluded an expression of interest exercise and will be inviting shortlisted departments to prepare detailed proposals. I expect the unit to be operational by October.
We are also establishing a non-statutory regulatory consultancy group made up of representatives of the financial services and insurance industries, the legal profession, consumer groups and the claims management sector. It will help ensure that we continue to engage fully with all those who have an
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The timetable for regulation we are working tois as follows. The regulatory mechanisms will be established in October 2006; applications will be invited from November 2006; the deadline for applications is February 2007; the tribunal is to be established in February 2007; and offences and remaining provisions will go live in April 2007.
In earlier debates I stressed the speed with which we have brought forward measures to regulate the claims management sector. I hope that noble Lords are reassured by that brief but, I hope, detailed résumé of the amount of work that has been going on since the Bill left your Lordships’ House; it will continue through the summer months. I hope that I have given some comfort to those who are concerned that we need to be seen to get on with it.
On Question, Motion agreed to.
6: Clause 15, page 9, line 16, leave out “section 1” and insert “sections 1, 2 and (Mesothelioma: damages)”
Baroness Ashton of Upholland: My Lords, I beg to move that the House do agree with the Commons in their Amendment No. 6.
Moved accordingly, and, on Question, Motion agreed to.
7: Page 9, line 22, at end insert-
(a) a claim which is settled before 3rd May 2006 (whether or not legal proceedings in relation to the claim have been instituted), or(b) legal proceedings which are determined before that date.(5) Where a claim is settled on or after that date and before the date on which this Act is passed, a party to the settlement may apply to a relevant court to have the settlement varied; and-
(6) Where legal proceedings are determined on or after that date and before the date on which this Act is passed, a partyto the proceedings may apply to the court to vary the determination; and-
Baroness Ashton of Upholland: My Lords, I beg to move that the House do agree with the Commons in their Amendment No. 7.
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Moved, That the House do agree with the Commons in their Amendment No. 7.—(Baroness Ashton of Upholland.)
[Amendments Nos. 7A to 7C not moved.]
On Question, Motion agreed to.
8: Clause 16, page 9, line 24, at end insert-
(a) England and Wales,(b) Scotland, and(c) Northern Ireland.”Baroness Ashton of Upholland: My Lords, I beg to move that the House do agree with the Commons in their Amendment No. 8, to which I spoke with Amendment No. 1.
Moved accordingly, and, on Question, Motion agreed to.
9: Clause 17, page 9, line 27, leave out subsection (2)
Baroness Ashton of Upholland: My Lords, I beg to move that the House do agree with the Commons in their Amendment No. 9. This is the privilege amendment.
Moved accordingly, and, on Question, Motion agreed to.
10: In the Title, line 2, after “duty;”, insert “to make provision about damages for mesothelioma;”
Baroness Ashton of Upholland: My Lords, I beg to move that the House do agree with the Commons in their Amendment No. 10, to which I spoke with Amendment No. 1.
Moved accordingly, and, on Question, Motion agreed to.
Legislative and Regulatory Reform Bill
6.07 pm
Lord Bassam of Brighton: My Lords, I beg to move that the House do now again resolve itself into Committee on this Bill.
Moved accordingly, and, on Question, Motion agreed to.
House in Committee accordingly.
[The DEPUTY CHAIRMAN OF COMMITTEES (The Countess of Mar) in the Chair.]
Baroness Wilcox moved Amendment No. 47A:
An order under this Part may not abolish or modify the regulatory functions conferred on, or exercisable by, any of the following-
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The noble Baroness said: This amendment deals with a significant aspect of Part 1 of the Bill—the protection of the principal economic regulators. As I hope I made abundantly clear at Second Reading, the principal economic regulators have very significant powers over the essentials of our daily life and the operation of the economy. They deal with water, energy, communications and transport. These are networks and supplies that must be maintained and operated on sound and sustainable economic and public interest criteria. It is for that reason and the overwhelming need for private investment to be maintained and encouraged in these essential industries that Parliament has made the principal economic regulators independent of political control, with clear, objective, statutory duties that do not wave in the political wind. It is also why Parliament has given them jurisdiction to establish the demands on the systems that they regulate to determine the condition, capacity and capability of the networks in question and then to set prices that customers must pay. Those two things—independence and jurisdiction—are essential if we are to ensure that private investors will have sufficient confidence in the regulatory system to provide the working and investment capital that these industries will always need on fair and affordable terms.
As I said on Second Reading, this is no idle or academic point. I referred at some length to the Government’s behaviour towards the Rail Regulator over the winding up of Railtrack. The Rail Regulator at the time has since explained that it was the rigour and timescales of the legislative process that protected his jurisdiction and independence and caused the Government to back off, with their unconstitutional threat of legislation.
The Government admitted that they could not have got the neutralising Bill through in time; they might not have got it through at all. That is why the present chairman of the Office of Rail Regulation has written to the Chancellor of the Duchy of Lancaster protesting at the scope of Part 1 of the Bill. He has warned of the very same real hazards of which the former rail regulator warned: the jeopardy to private investor confidence which is created by a power of a Minister to interfere with the independence or jurisdiction of the principal economic regulators.
The Minister may say tonight, “Of course, the principal economic regulators must be independent. The Government have always accepted that it is important and we would never touch them”. He may say that but as the Committee knows that has not been the reality of hard experience as I have shown now and at Second Reading. Even if we accept that the Government are committed to the independence of the principal economic regulators, we must protect them from any possibility of the Bill being used against them.
I have taken the wording for this amendment from the Government’s own drafting in Part 2. There the Government have seen fit to exclude the economic
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Lord Norton of Louth: I wish to speak to Amendment No. 47B in the same group. When I chaired the Constitution Committee of your Lordships’ House, the committee looked at the role of the independent regulators appointed by statute. In particular, we looked at the relationship between accountability and independence. Regulators have to be independent to do their jobs and that requires Ministers giving up some freedoms to protect the decision making of regulators. At the same time, regulators have a duty to explain, to be exposed to scrutiny and to be subject to the full rigours of the possibility of legal challenge. They have to fulfil their statutory duties.
The independence of regulators, as my noble friend has already said, is crucial. It is important that independence is seen to exist. Perhaps I may quote from paragraph 121 of the committee’s report:
“Our evidence suggests once again the broad range of support that underpins a regulatory framework that separates ministerial roles and responsibilities from those of independent regulators, and that this fact should be well communicated on a regular basis by Government. Water UK, for example, told us that ‘For Ministers and regulators frequently to reassert the independence of the regulator on economic decisions is helpful; and, after all, we had a survey of investors recently and 96 per cent of them said that they regarded the independence of the regulator as being very important, so just a frequent reassertion of it would be helpful’”.
It was also clear from our evidence that, on the whole, Ministers welcomed and supported that independence. They saw that the independence of regulators is a vital ingredient in maintaining consistency, for ensuring that regulatory decisions are taken by competent authorities—which, as we noted, accords well with current and prospective developments in the European Union—and for promoting confidence about regulation among those investing in regulated industries, as well as customers on whose behalf it is carried out. It is also extremely important for promoting confidence among those bodies that are regulated.
In evidence to the committee, the Department of Trade and Industry said that,
- “the independence of economic regulators from Government—insulating decisions from short term political factors—is a fundamental contributor to regulatory certainty and prerequisite for continuing to attract private finance to regulated sectors”.
The independence of economic regulators is thus recognised as crucial and as the report stressed, it is
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6.15 pm
That brings me to the provisions of the Bill. The amendment moved by my noble friend Lady Wilcox seeks to protect the functions of the economic regulators. My amendment is designed to probe the Government about what they intend to do to protect the independence as well as the jurisdiction of the economic regulators. As my noble friend has said, some of the economic regulators have concerns that the provisions of the Bill could be used to amend the statutes creating them and the framework within which they operate. Orders could be used to constrain their jurisdiction or to limit their independence. As my noble friend Lady Wilcox said, and as she argued at Second Reading, it is not a hypothetical possibility. She mentioned the clash between the Transport Secretary and the Rail Regulator in 2001 which showed that in exceptional circumstances a Minister may try to limit the independence of a regulator.
Thus, there is a need to protect the independenceof the economic regulators and—picking up onmy earlier point about reassertion of that independence—to be seen to be doing so. There needs to be a change to the Bill to reassure investors as well as the regulated bodies that that independence will be protected and that it will not be subject to the possibility, at any time, of a Minister deciding to use the order-making power to get round the decision of a regulator.
My amendment is designed to cover independence as well as jurisdiction in order to prevent a Minister transferring the functions of a regulator to another agent. The regulatory powers have to stay in the hands of the independent regulator. Like my noble friend Lady Wilcox, I have no doubt that the Minister will reiterate the Government’s commitment to the independence of the economic regulators and say that there is no intention to use powers in the Bill to affect their independence. The problem, as has been variously reiterated in our debates, is that the Minister's words cannot bind a future Government. The need for an amendment is especially crucial in this case to demonstrate that the Bill cannot be used for that purpose. This Bill brings into being the sword of Damocles. It needs to be removed.
Lord Lloyd of Berwick: I support both these amendments. The economic regulators clearly fulfil a very important role in our society today, especially the five economic regulators that are identified in the amendment tabled by the noble Baroness, to which the noble Lord, Lord Norton of Louth, has added a sixth. They also have great power. If they are to do their job properly it seems to me that they must be free of all government interference. They must not be lent on to reach any particular decision in any particular case. Their independence must be plain for all to see. I suspect that is agreed on all sides of the Committee.
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