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Baroness Ashton of Upholland: My Lords, of course it would. I wrote on 22 March and I have a copy of the letter here. I apologise to the noble Lord if he has not seen it and I shall investigate why that is so.

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As a result, he cannot possibly anticipate what I am going to say. I will make sure that the noble Lord sees the letter by tomorrow. I remember signing the letter, so it certainly left me, even if it did not arrive with the noble Lord.

Our legal advice is that the difficulty with removing the “reasonably practicable” qualification is that the first limb, paragraph (a), would impose an absolute requirement on the board to act in a way that is compatible with all the regulatory objectives in respect of every regulatory decision that it took. The second limb, paragraph (b), would impose an absolute requirement on the board to act in a way that it considered was most appropriate for meeting all those objectives in respect of all of its decisions. From noble Lords’ comments on the purpose of the amendment, I do not believe that that is what they seek; however, parliamentary counsel tells me that that would be the effect of the amendment.

I think that we are all agreed on the ability of the board to look at the objectives, to weigh them up and to use the “reasonably practicable” qualification in that context. The clause is not saying what I think the noble Lord, Lord Kingsland, fears it says—that if you cannot make the regulative objectives work in this context you can do something else; in other words, if they are not reasonably practicable you can behave in a manner outside their scope. I am reliably informed that the clause as constructed would not enable that.

The clause says that you have to operate within regulatory objectives but you can weigh up what you are doing; you have to look at the context of the objectives and consider what the board does to ensure that they are met. As we have discussed in the context of Clause 1, that will mean that you can balance the objectives depending on the decision you are making and act accordingly. That was, in a sense, the alternative proposal to creating a hierarchy by attaching a different weight to different objectives when making particular decisions.

That was the advice that I received. I had sought it at length, because I made a commitment to do so. It suggests that the noble Lord need not worry about enabling the board to operate outside the objectives. Those fears are unfounded; it cannot do that. The board, while operating within the objectives, must balance those objectives appropriately, as noble Lords seek.

I reject the amendment because it does not work in practice; it prevents the board from balancing the objectives effectively. We all agree that we want the board to be able to balance the objectives on a case-by-case basis, depending on the decision. According to parliamentary counsel and the legal advice I have received, the clause does not achieve what the noble Lord fears—enabling the Legal Services Board to operate outside the objectives.

Lord Kingsland: My Lords, I am most grateful to the noble Baroness. I look forward to reading her letter. Until I do, I cannot respond to the arguments of parliamentary counsel; but I can still say that the words of Clause 3(2) seem to say to me, quite clearly, as they do to the noble Lord, Lord Maclennan, that if,

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in the subjective judgment of the Legal Services Board, it considers that it is not “reasonably practicable” to act in a way that is compatible with the regulatory objectives, then it can act in a way that is not. Without having received the learned opinion of parliamentary council, that seems to me the position. If it is, I am sure that the noble Baroness would be very unhappy about it.

Baroness Ashton of Upholland: My Lords, I have handed over a copy of the letter, and I apologise to the noble Lord; we will get the right version to him. If that was what the clause did, I would change it, but it does not do that and therefore I do not change it.

Lord Lyell of Markyate: My Lords, perhaps I may ask the noble Baroness one question. Would she be prepared, with the assistance of her advisers, to give us one or two examples of where this would be impossible? I suspect that it would be perfectly possible and that the words that my noble friend is seeking to remove are otiose.

Baroness Ashton of Upholland: My Lords, in the light of the fact that the noble Lord, Lord Kingsland, has not had my letter, I am concerned that other letters may not have been received, despite the fact that I signed them before I went away. Therefore, I shall seek to write again to noble Lords setting out this matter clearly.

There is nothing between us on this. The clause is intended to enable balancing of the objectives but it is not intended to enable the Legal Services Board to operate outside the objectives. I take very seriously the fact that noble Lords with great legal experience have looked at this issue, but I have gone as far as I can in seeking legal advice to ensure that the clause does not enable the board to operate in that way. Perhaps it would be better if I set out again why we are clear about this, and noble Lords can come back at Third Reading if they think that I have not achieved that.

Lord Kingsland: My Lords, I am most grateful for the noble Baroness’s response. In those circumstances, I think that we can only wait for her letter and consider the matter again. If we remain as unconvinced as we are at the moment, no doubt we can come back to it at Third Reading. Meanwhile, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Baroness Ashton of Upholland moved Amendments Nos. 31 and 32:

On Question, amendments agreed to.

[Amendment No. 33 not moved.]

Lord Kingsland moved Amendment No. 34:



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(a) the regulator’s resources (including voluntary resources); (b) the effect on regulatory fees; (c) the extent to which the Board’s acts might discourage entry to or retention in the regulated sector; (d) the extent to which the number of persons regulated by a regulator might be reduced in consequence of the Board’s acts; (e) the extent to which the regulator might be disadvantaged and another regulator might derive an advantage, in particular through the movement between regulators of regulated persons as a consequence of the Board’s acts.”

The noble Lord said: My Lords, this amendment deals with proportionality. Your Lordships will recall that this was a central theme in the Committee stage debate and, indeed, it is a constant thread running through the Bill.

In our submission—I believe that the Government concur with this view—regulation should be both risk-based and proportionate. I have heard the Minister emphasise that on more than one occasion. The question is how to ensure that the drafting of the Bill guarantees that the Legal Services Board acts proportionately.

As things stand, the Legal Services Board appears to be more or less free to make its own determination of what is or is not proportionate. I accept that proportionality depends on the circumstances of the case but we believe that the Bill would benefit from the inclusion of at least a non-exhaustive list of key factors that the Legal Services Board should take into account when exercising its regulatory function. In other words, our amendment does not define proportionality but it sets out particular factors which the board should have regard to when assessing what is proportionate in the regulation of approved regulators.

I know that the noble Baroness is well seized of the anxieties of the regulators that are responsible for the world of patent and trade marks. I believe she understands that these small approved regulators fear that, because the LSB is likely to spend a great deal more of its time dealing with the larger approved regulators, it may overlook their limited resources, their low-risk status and their strong track record for good conduct.

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There is a perceived risk—at least by them—that regulation may encourage practitioners to operate, as they can in those two areas, outside the regulated sector. That would have the knock-on effect of driving up costs for remaining members and potentially making the regulators’ position untenable.

I understand that in recent correspondence with the two institutes, the Minister stated that the Government were,

and that a proportionate approach should be taken by the Legal Services Board.

I understand that the Minister also stated in correspondence that,

Yet, there is no obligation in the Bill that the Legal Services Board must have regard to such vital issues as entry and retention of regulated persons, and the effect on fees, not to mention the resources of the regulator. We have been told that the Minister,

We hope that the Minister will accept this amendment as it stands. We would be reassured to some degree by an undertaking that there will be guidance and an indication in general terms of what that might cover. That at least would set out some of those key factors in assessing proportionality. I also suggest that a commitment to guidance on proportionality at this stage might address some of the plainly abundant fears and concerns regarding the levy—a subject to which, as the noble Baroness knows, we shall be arriving, at some stage in the next few weeks. I beg to move.

Lord Campbell of Alloway: My Lords, I support the amendment. As my noble friend says, there is no guarantee. Nothing in the Bill requires a proportionate decision, but in a sense there does not have to be because the decisions of any of the regulatory bodies, as I mentioned on Amendment No. 5, are subject to judicial review. As part of the discretionary judicial process today, judicial review includes proportionality. The amendment is helpful in indicating to what, in particular, regard should be had. I support it in principle on the basis that it would be subject to judicial review if it were disproportionate in any event.

Lord Maclennan of Rogart: My Lords, in the earlier debate in Committee, the Minister indicated that she thought that proportionality might best be dealt with in Clause 48, with a statement of principle on what was meant by “proportional”. She indicated that it was not possible to treat comprehensively within the legislation itself the circumstances in which the board would be required to act with proportionality. That has some attraction, in so far as it would no doubt spell out the circumstances, and could take particular account of some of the concerns expressed to us by, for example, the Chartered Institute of Patent Attorneys. It is not wholly reassuring, however, because such a statement of principle would not have the force of law. The Minister’s point that it would be neither appropriate nor possible to be comprehensive has been taken on board by the noble Lord, Lord Kingsland, in importing into the amendment the indication that the principle should have regard, inter alia, to particular circumstances. It is not intended to be comprehensive, but addresses some of the major concerns. It is therefore a worthwhile amendment.

The concerns of the small regulatory bodies which have approached us—that their work may be taken over by other bodies less equipped to deal with the regulation of the specialist services that they provide—seem fairly made. Indeed, the Minister indicated that she had not at that stage heard directly from them and that she hoped and expected to do so. Perhaps she has

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had time to reflect on the arguments made by those bodies whose interests this amendment particularly deals with.

Lord Lyell of Markyate: My Lords, briefly, I support the amendment. It deals with the important question of cost and how it might be possible that ill advised regulation drove those regulated away from one body and into the arms of another which might do a less good job. It would be comforting if the Minister could satisfy us that other parts of the Bill ensure that the board and regulators do not feel obliged to act in that way. My noble friend Lord Kingsland expressed this as a probing amendment to some extent. It is a sensible probe and I look forward to the Minister’s answer.

Baroness Ashton of Upholland: My Lords, I am grateful for this further discussion. I have met with the smaller regulators, and we had what I thought was a useful and helpful discussion—not least, perhaps, in exploding a few myths which they held about this legislation.

The critical aspect of proportionality is in Clause 3(3), which says that the board,

Proportionality is a critical theme of this legislation. It is essential to ensure that proportionality is a key factor in everything that the board does. We have made it perfectly clear to the smaller regulators, trade mark attorneys, patent attorneys and so on that this is essential. We would absolutely expect the board to behave appropriately and take into account the size of the body, the nature of its work and so on. That factor is captured within Clause 3(3).

The difficulty with trying to define proportionality is that you come upon that magic word “list”. Noble Lords will know that I have a particular aversion to lists, which I acquired early in my ministerial life. The minute you put a list down, you lose out because you forget to put something in, or you define or constrain issues far too closely for the purposes of legislation. So I do not want to try to define “proportionality”. I spoke to legal advisers, parliamentary counsel and so on. It is clear that behaving in a proportionate manner is very well defined. It can be challenged in law. It is very clear what people are expected to do. It is essential for sworn regulators to feel confident about that.

It is absolutely appropriate that if the Legal Services Board wishes, it can issue guidance. Having read our debates—I am sure that those involved will do so—and having heard from Ministers and officials about the issues of concern, it will be very keen to make sure that it is demonstrating it is behaving in a proportionate way. The Government can issue guidance but they do not in any way prevent the board from ignoring it. I would rather the board looked at this issue in the context of Clause 3 and said: “We have to be proportionate. What does that mean? How does that affect the decision?”. Noble Lords will know that although it is a very obvious

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concept, it is different depending on the decision made, the circumstances and what was happening at the particular time. But it is challengeable, and that is the critical and important part of it.

Therefore, I resist the amendment because I think that we have the provision within the legislation. The body can indeed issue policy statements on it if it so wishes. I cannot define that for it. It would be wrong to try to do so because I am sure that any definition, however good it is, will fail to address the circumstances that may arise for the Legal Services Board. On that basis, I resist the amendment, but not because I disagree with the spirit behind it.

Lord Kingsland: My Lords, I thank the noble Baroness for her response. I know that she has been in correspondence with the smaller regulators. It struck me from that correspondence that she has given them some encouragement to believe that the Government are sympathetic to what they are asking for.

I accept that the noble Baroness is reluctant to put in the Bill examples or particular factors to which the board should have regard. At the end of my opening, I suggested an alternative approach. I suggested that the noble Baroness might like to consider guidance as to how the Legal Services Board might approach the question of proportionality. The Government must know what they mean when they insert the word “proportionality” in the Bill. If the Government are saying that they do not know how the concept should be applied, the concept should not be in the Bill at all. If the Government do know how it should be applied, aside from the fact that plainly nobody can anticipate exactly the specific circumstances, they must have an idea how they expect the Legal Services Board to approach the issue. For the Government to say that they know how it should be applied and then to say, “We are not going to tell you. Let us wait and see what the Legal Services Board is going to do”— if that is the Government’s position—is deeply irresponsible.

Baroness Ashton of Upholland: My Lords, I am not attempting to be at all irresponsible. We are setting up a professional Legal Services Board. It will be a body of the highest possible calibre, charged with the responsibilities that it must undertake. One of those responsibilities will be that it must behave in a proportionate manner. I would expect an institution of high calibre to be able to work out what that means in individual sets of circumstances. The Government can come up with a list of things. They can offer guidance and whatever if they so wish. The Legal Services Board can ignore that if it so wishes, too. It is an independent body; it has been charged with being proportionate in its activities.

I met the smaller regulators on 5 February to discuss these issues. The Legal Services Board will have to take into account in all it does that it must behave proportionately, consistently and so on. So I have greater faith in its ability to operate as an organisation in that way. That does not mean that there would be any distinction between the noble

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Lord, Lord Kingsland, and me if we were faced with decisions about how we would regard the concept of “proportionate”. I just think that it is a word that has very clear meaning in the way that we approach decisions, and one with which noble Lords will be very familiar in all their activities. The noble Lord himself always operates in a very proportionate way.

I do not believe that we can gain very much by doing more. I may consider guidance, but I am trying to be realistic and honest. If we are setting up a professional board and giving it clear ways in which it must operate, I am not sure that I would add much to that. That is my difficulty.

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Lord Kingsland: My Lords, I am most grateful to the noble Baroness. She said that if the Government issued guidance, they would have no control over whether the Legal Services Board responded to it. I am greatly surprised to hear her say that. Clearly she could issue guidance requiring the Legal Services Board to have regard to that guidance. There is no reason why she could not do that. Will she consider that approach?

Baroness Ashton of Upholland: My Lords, I would be delighted to consider that approach. The noble Lord knows that I am always reasonable. I was making the point that if we set up an independent body and give it, in legislation, the context in which it operates, the noble Lord must be able to think of instances in which he would not want the Government to come in to give guidance about what the body should do and how it should interpret aspects of legislation, because of the problem of independence that might arise for the organisation. That was the point that I was trying to make. We must be clear that if we set up a body to be independent, independent it must be. There is the fear that if the Government give it lots of guidance, independence is eroded.

I think that it will be very clear to a professional body what that means. If it does not act in that manner, it can be challenged, but of course I am prepared to consider guidance where there is any merit in doing so and I will do so.

Lord Kingsland: My Lords, I am most grateful to the noble Baroness. I beg leave to withdraw the amendment.


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