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Lord Archer of Sandwell: My Lords, I was going to offer my noble and learned friend a deal. I would welcome his amendments and he would accept mine. But he has indicated that it is hoped we shall get our information even though it is not in the Bill. My fly did not attract a salmon but I shall settle for a sea trout. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Carter: My Lords, before we move to the next amendment, it may be for the convenience of the House if I say that at a convenient moment after 7 p.m., my noble friend Lord Gilbert will, with the leave of the House, repeat a Statement that is being made in another place on Kosovo.

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The Lord Chancellor moved Amendment No. 16:

Page 53, line 14, at end insert ("and the Commission shall publish a report once it has been so laid.").

On Question, amendment agreed to.

[Amendment No. 17 not moved.]

The Lord Chancellor moved Amendments Nos. 18 to 22:

Page 53, line 25, at end insert--
("( ) The Lord Chancellor may by direction require the Commission to deal with the matters specified in the direction in plans, or a particular plan, under sub-paragraph (1).").
Page 53, line 28, leave out from ("shall") to end of line 29 and insert ("lay a copy before each House of Parliament and the Commission shall publish the plan once it has been so laid.").
Page 53, line 30, leave out from ("shall") to ("it") in line 31 and insert ("by direction require the Commission to revise it in accordance with the direction; and the direction shall include the Lord Chancellor's reasons for not approving the plan.
( ) When the Commission has revised the plan").
Page 53, line 33, at end insert ("and the Commission shall publish the revised plan once it has been so laid.").
Page 53, line 38, leave out ("direct") and insert ("specify by direction given to the Commission").

On Question, amendments agreed to.

Clause 3 [Powers of Commission]:

Lord Simon of Glaisdale moved Amendment No. 23:

Page 2, line 37, at end insert ("in such manner as is available to a trustee").

The noble and learned Lord said: My Lords, this pursues a matter I raised in Committee. This is partly a probing amendment. Clause 3 deals with the powers of the commission and subsection (1), putting it broadly, says that it can do anything. Subsection (2) says that in particular it shall have power in paragraph (d) "to invest money" and subsection (3) says that that does not extend to a,

    "power to borrow money or to acquire or hold shares in bodies corporate".
Amendment No. 23 seeks to add to the words "to invest money" the words,

    "in such manner as is available to a trustee".
Amendment No. 25, which is grouped with this amendment, seeks to excise the words,

    "or to acquire or hold shares in bodies corporate".

Practically the only thing which is certain is that the Bill as it stands is wrong. It gives the commission power to invest in everything without exception except shares in bodies corporate, including blue chip shares. Apparently, it can invest in futures in Singapore or property during a property boom which brought another merchant bank almost to its knees. Although it can invest in, for example, metals on the Metal Exchange, on the face of it it cannot invest in blue chips.

My noble and learned friend Lord Brightman tells me that as regards trustees the governing authority is still the 1961 Act for which I was parliamentarily responsible. I have had plenty of time to forget whatever I knew then. Until then a trustee could only invest in gilt-edged shares. That was very much to the detriment of the remainder man, although it was safe for the life

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tenant. So roughly what the 1961 Act did was to allow a trustee to invest half in gilt-edged and half in trustee securities, including, for example, blue chip shares. That is what is suggested here.

My noble and learned friend the Lord Chancellor very helpfully wrote to me on the matter. I received the letter only just before this stage. He seems to suggest that although my description is right and the commission can invest in virtually anything other than shares, nevertheless it was safe because the accounting officer of the commission is bound by a Treasury directive not to speculate.

If that is the only sanction, that simply will not do. It means that what we are doing on the face of the statute is to confer unlimited powers and then to rely on an official, subject to a Treasury direction, not to exploit the powers given. We are legislators and as a Parliament we are bound to get it right on the face of the statute. I beg to move.

Lord Brightman: My Lords, I support this amendment. I find Clause 3 most peculiar. I object to it as a matter of drafting. It says that the commission may invest money except in the shares of companies. As a matter of judicial interpretation, it is clear that to invest money means to apply money in the acquisition of any asset, an asset of any description, with a view to income or capital appreciation. It follows, as my noble and learned friend said, that the commission is given power, for example, to invest in the units of an emerging markets unit trust; for example, a unit trust specialising in Russia or Indonesia. Such trusts would qualify for the commission's spare money. But the commission would have no power to invest in the shares of ICI. The commission would have power to invest in soya bean futures but not in the shares of British Gas.

I do not suggest for a moment that the commission would be so dotty as to invest in soya bean futures. I am merely saying that as a matter of drafting, Clause 3 is very peculiar. What is the point of forbidding equities if you authorise unit trusts? What is the logic behind the power so drawn? Would it not be better to give the commission a power of investment equivalent to the statutory power of investment available to trustees, as suggested by my noble and learned friend.

I am not sure what power of investment is needed. I should have thought it would be sufficient for the commission's spare money to be put on deposit at the bank so that it is available when needed. But I suggest that we do not want to send Clause 3 to the other place saying, "We think this is right; this is the best we can do". I ask the noble and learned Lord the Lord Chancellor to consider referring this matter back to his drafting team.

6 p.m.

Lord Falconer of Thoroton: My Lords, these amendments relate to the powers of the legal services commission to invest money. Amendment No. 23 would limit the commission's power to invest money so that it could do so only in such manner as is available to a trustee. Amendment No. 25 would remove from the Bill

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the restriction which would specifically prevent the commission acquiring or holding shares in bodies corporate.

In Committee, the noble and learned Lord, Lord Simon of Glaisdale, questioned the reason for preventing the commission investing in equities. He suggested that the commission should have powers to invest similar to those of a trustee. He also suggested that, given that the Bill does not prevent the commission investing in property, it would be odd if it prevented it investing in shares in bodies corporate. The noble and learned Lord the Lord Chancellor considered carefully the points made about the commission's powers to invest, and wrote to the noble and learned Lord, Lord Simon, setting out his views.

It is true that there is no specific provision in the Bill which prevents the commission investing in property. But, under Clause 3(1), the commission's powers, including its power to invest money, exist only in the context of the discharge of its functions. Under the principles of government accounting, the commission's accounting officer would be responsible for ensuring that the funds for which he or she is responsible are applied only to the extent and for the purposes authorised by Parliament. I can foresee no circumstances in which speculative investment of any kind, whether in equities, in property or otherwise, could be shown to assist the commission in discharging its functions, and therefore to be for a purpose authorised by Parliament. Indeed, it is a matter of general principle that non-departmental public bodies, such as the commission will be, should not put Exchequer funds into speculative investments; this would not be consistent with the general requirement on NDPB accounting officers for "prudent" administration, set out in Treasury guidance. Any form of speculative investment by the commission would therefore be quite improper.

Lord Simon of Glaisdale: My Lords, it would be improper but it would be legal on the face of the statute, would it not?

Lord Falconer of Thoroton: My Lords, it would be subject to judicial review if the commission began to invest speculatively. To that extent I would say, tentatively, that it would not be legal.

I cannot accept the noble and learned Lord's amendment to give the power of a trustee. That would specifically envisage investments, albeit safe, by a trustee of a speculative nature and that is plainly not what is being considered. The noble and learned Lords exchange knowing glances.

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