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The Lord Chancellor: The noble Lord, Lord Goodhart, drew attention to the fact that I have already shown and to a large degree accepted the concerns expressed about the wide nature of the Lord Chancellor's powers in Clause 4 to give directions to the commission. I am seeking to find a way of meeting those concerns that preserves the flexibility that is essential for the new scheme to work effectively while providing appropriate lines of accountability.

Let me first explain what was intended by Clause 4 before I turn to the amendment. This clause confers powers on the Lord Chancellor to give the legal services commission directions and guidance about the exercise of its functions. The commission will be required to follow any directions and to consider guidance.

The powers contained in this clause must be seen in the context of the wider structure of the new schemes for providing publicly funded legal services, and particularly the community legal service fund. We are proposing a flexible system which can use the available resources to deliver cost-effective help, targeted towards the areas where it can do most good. The current legal aid scheme cannot achieve that.

The legal services commission will be under a duty to establish the need for legal services and to deploy the available resources to best effect to help meet those needs. It will do that within a framework of national priorities set by the Government, and in a way that seeks to secure the best possible value for money.

It is important that it is empowered to do so in as flexible a way as possible. Necessarily however this means that the commission will have a wide discretion as to the way it works and delivers services. At the same time, the Government must have the power to ensure that the commission exercises its functions in a way that reflects its policy objectives and in particular its priorities for the community legal services fund. Some of those will take the form of directions in relation to the annual budget that the commission should set within the overall community legal service fund. Let me draw attention to Clause 6(4) which states:

We intend to set separate budgets for civil and family cases; but there may also be specific categories of service or case where it would be appropriate to indicate spending parameters. By way of illustration, in October of last year I directed the Legal Aid Board to allocate a minimum of £20 million for contracts with non-profit-making advice agencies.

A comparison can be drawn with the National Health Service. That too is a complex scheme providing a wide range of different services to people with needs of varying priority, from cosmetic surgery to life-saving procedures. And the National Health Service has

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considerable discretion, within a framework set by Ministers, to find the best ways to meet those needs and to adapt to changing demands. I have not heard it suggested that every decision about priorities and every detailed policy change affecting the National Health Service should be subject to secondary legislation.

Lord Phillips of Sudbury: Is it not the case nonetheless that many of the major functions of the NHS are protected by statute, such as closure of hospitals?

The Lord Chancellor: Of course. But I am making clear that it is not every policy decision, every detailed policy change and every decision about priorities over the field that can conceivably be dealt with legislatively.

The way in which this will work is that the details of the community legal service fund will be defined by a number of different mechanisms according to the nature of the issue in question. The details of the services to be provided, their price and the quality controls to providers will all be contained in contracts between the commission and individual providers. The criteria and procedures for granting help will be set out in the funding code, to which we will be turning later. The rules about contributions and costs, which directly affect the obligations of individual members of the public, will continue to be for regulations, subject to negative resolution. Finally, the power in this clause is concerned with directions and guidance to the commission itself--the responsible administrative body--as to how it should exercise its power and discharge its duties.

The direction-making power therefore is the means by which the Government can set their priorities and other policy objectives for the scheme--for example, objectives about geographic distribution of services and choice. In some respects the amendments before the Committee are too restrictive. They will require all instructions that I might give, whatever their nature or importance, to be brought before both Houses of Parliament for debate. However, some directions are likely to deal with the allocation of money voted by Parliament; others will deal with detailed operational matters. The accountability for those matters is already adequately provided through general ministerial accountability to Parliament and, in my view, that is not appropriate for secondary legislation.

On the other hand, the proposals that I expect to bring forward later will in some ways go further than the amendments which I intend to bring forward to meet the recommendations of the delegated powers committee. I intend in other clauses to introduce statements of purpose for both schemes in Part I of the Bill and to provide that the Lord Chancellor may only make directions that are consistent with those statements. I hope also to amend Clause 4 to define more closely the various types of direction in terms of their nature or subject matter that the Lord Chancellor may make, where appropriate, by orders subject to parliamentary approval. These amendments might also meet the concerns behind the amendments to Clause 4 standing

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in the names of the noble Lords, Lord Goodhart and Lord Phillips, to remove the direction-making powers entirely.

I shall wish to consider further the amendments suggested by the noble Lord, Lord Kingsland, and my noble friend Lord Clinton-Davis. I suspect that a duty to consult the professional bodies and others may not be appropriate having regard to the restrictive services in which I now envisage using the direction-making powers. But it may be a different matter--that is to say, in relation to consultation--in relation to any powers which are to be exercised by regulation or by order.

In common with my noble and learned friend Lord Mackay of Clashfern, I have grave reservations about the amendments in the name of my noble friend Lord Clinton-Davis and the noble Lord, Lord Kingsland--the amendment to Clause 4 which would leave out from page 3, line 14, the words "shall not" and insert "may". I share exactly the same reservations as my noble and learned predecessor in relation to weakening the protection in Clause 4(3) that those Members of the Committee seek. Clause 4(3) is intended to prevent interference by the Executive in the decisions of the commission in relation to specific cases. I agree with my noble and learned predecessor that it is supportive of the separation of powers and it is a safeguard that has always existed. As at present advised, I believe it is a necessary safeguard. Therefore, I would need considerable persuasion to dilute its effect, as sought, because if it were amended in the manner suggested, it would read,

    "Directions and guidance under this section may be given in relation to individual cases".
In fact, it is a prohibition that such directions and guidance "shall not be given" in respect of individual cases.

I thought it would be helpful to make those general observations in the context of the debate. In the light of what I have said, I invite--

Lord Clinton-Davis: Before my noble and learned friend sits down, perhaps I may make one point. I understand the fundamental point that both he and the noble and learned Lord, Lord Mackay, have made in relation to the separation of powers. Under the new system, how would such scandalous cases as the thalidomide and the asbestosis cases be dealt with if legal aid and charitable funding were not available? Would they just fall, or would some special provision be required on the part of the Lord Chancellor to deal with those situations?

The Lord Chancellor: In considering those matters the noble Lord may care to study Clause 7(7).

Lord Goodhart: I have listened with great interest and I am most grateful to the noble and learned Lord the Lord Chancellor for the detailed explanation of the thinking behind Clause 4. Obviously, I shall read what he has said with great interest. In deciding whether or

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not to table Amendment No. 25 again, I shall have regard to the terms of the amendment which he intends to table. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 26 and 27 not moved.]

Lord Simon of Glaisdale had given notice of his intention to move Amendment No. 28:

Page 3, line 10, after ("its") insert ("administrative").

The noble and learned Lord said: The constitutional background to this matter has been raised and argued cogently in the report of the Select Committee and was discussed on Amendment No. 1. My noble and learned friend the Lord Chancellor undertook to bring forward an amendment on Report which would go some way, if not the whole way, to satisfy your Lordships about the width of the legislative powers which the Executive has taken. The matter has been taken further by the speeches of the noble Lords, Lord Goodhart, Lord Phillips of Sudbury, and Lord Clinton-Davis.

Amendment No. 28 is an attempt to narrow the scope of Clause 4(1) by limiting the direction to the discharge of administrative function. In view of what I have said about the way that this will develop before Report, I see no advantage in moving Amendment No. 28, unless my noble and learned friend or any of your Lordships would like to say something specifically on it. Unless your Lordships indicate that you wish me not to do so, I do not propose to move it.

[Amendment No. 28 not moved.]

[Amendments Nos. 29 to 31 not moved.]

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