Legal Services Bill [Lords]

Public Bill Committee, 21 June 2007.

Written evidence to be reported to the House

Nicholas Winterton (Conservative, Macclesfield)

I welcome those Members who have arrived so far. It is a lovely day, although coming around Parliament square took rather longer than normal this morning. Whether that was because the lights were out of sync or because of the volume of traffic I am not sure.

Henry Bellingham (Conservative, North West Norfolk)

Were you on your bicycle?

Nicholas Winterton (Conservative, Macclesfield)

No.

Clause 83

Bridget Prentice (Labour, Lewisham East)

I beg to move Government amendment No. 7, in clause 83, page 48, line 24, leave out paragraph (e).

I hope that we can deal with the amendment reasonably swiftly. It will reverse an amendment that was made in the Lords, which would require licensing authorities to pay particular attention to access to justice when considering alternative business structure licences. I have no quarrel with the spirit of that amendment; we take seriously access to justice, as Baroness Ashton explained in the other place. It has been one of the regulatory objectives since the Bill was drafted.

Clause 82 requires the authority to issue policy statements on how it will consider the regulatory objectives, including access to justice, when carrying out its licensing functions. That will include the consideration of applications for ABS licences. We do not want the reforms in the Bill to make access to justice more difficult. Indeed, I would not have introduced such measures if that were their effect. I am confident that the forms of service provision enabled through part 5 will actually improve access and encourage new methods of service delivery. Providers will have to try harder to reach consumers and to provide for their needs.

The measure will deliver more joined-up provision, because different kinds of professionals will be able to work together on integrated services in a one stop shop setting. It will also stimulate competition, which consumers will welcome, as it should bring prices down. I am confident that licensing authorities will be mindful of the need to improve access to justice and will do whatever is necessary to avoid harmful effects. They will be able to refuse licences if they think that the effect of granting a licence would be damaging, and they will be able to impose conditions on licences. I differ from the Bill as amended on whether access to justice needs to be singled out to ensure that licensing authorities take it into account. I am confident that it does not; clause 28 already ensures that they will take account of the regulatory objectives, which include access to justice.

I acknowledge that alternative business structures are new and therefore carry new risks. There was argument in the other place over whether the firms that might be likely to go into legal services under part 5 would cherry-pick profitable services and leave solicitors to survive on the less profitable work. The purpose of the amendment that was made in the other place was to require licensing authorities to give sufficient weight to access to justice when considering licensing.

The problem with that provision is that it inevitably puts access to justice ahead of all the other objectives. It does not mention the other objectives, nor does it require licensing authorities to balance access against them, which naturally means that access would be interpreted as carrying greater weight than the other objectives. The licensing authorities would therefore inevitably treat access as more important, if only to protect themselves from legal challenges for not having taken it properly into account. That might not sound too bad, but the problem is that it risks putting the other objectives second.

It may be that an ABS licence will benefit the consumer because of the other objectives. For example, the objective of increasing competition might promote consumers’ interests. Those considerations make it acceptable to make a small reduction in the extent to which access to justice is a nose ahead of everything else. Effectively, the Bill could turn a condition that no decision could ever adversely affect access to justice in any way, no matter how beneficial that might be, into the reality. I do not think that that is what we want.

Another issue that has been brought to my attention is that the measure may be an attempt by some in the legal world to protect their own interests, rather than a consideration of consumers’ interests as paramount.

Simon Hughes (Liberal Democrat, North Southwark and Bermondsey)

How on earth could that be the case? How can the extra requirement for access to justice in the licensing regime be considered as a measure that gives a defence to lawyers but does not give advantage to consumers?

Bridget Prentice (Labour, Lewisham East)

Inefficient and poor-quality solicitors firms in, say, Lewisham high street, may be protected by the fact that they put access to justice above the other objectives, rather than upping their game to consider all the objectives. Consumer groups have told me that that is one of their fears, and it is why we tabled the amendment. It is important to consumer organisations that access to justice is one of the regulatory objectives, but they feel that it should not be put above the others.

Simon Hughes (Liberal Democrat, North Southwark and Bermondsey)

The Minister has not answered the question. If the solicitors firm in Lewisham high street provides a good service and good access to justice, paragraph (e) of subsection (5) would not defend its interests any more than it would defend consumers’ interests. A bad firm would not, by definition, provide access to justice because it would not provide a just service for finding just solutions. Please will the Minister think again? Her argument does not stack up. It may have been put to her, but that does not mean that she must buy it.

Bridget Prentice (Labour, Lewisham East)

The hon. Gentleman is right in respect of the discussion on access to justice. Many of us are aware—some of my hon. Friends could no doubt give examples—of situations in which an individual goes to a solicitors firm and thinks that they are getting access to justice because the solicitor takes their case, but they subsequently find that, frankly, the standard of work is pretty appalling. That is not access to justice. The consumer groups say that if we put access to justice in the Bill as in paragraph (e) and therefore give it more weight than the other regulatory objectives, such as competition, we could be allowing firms to continue as they are when they ought to be thinking hard about improving their standards and working with others to learn from best practice.

Finally, I am not in any way condemning any solicitors firm in Lewisham high street. I used that location as a general example of a place where consumers might have a problem unless the amendment, which I commend to the Committee, is made.

Jonathan Djanogly (Conservative, Huntingdon)

We are now discussing clause 83, which concerns the ABS licensing rules for the licensing authority. I am afraid that this will be another set-piece debate from the other place, but it will deal with the important issue of the proposed reversal of amendments made in the other place by my noble Friends, the Liberal Democrats and Cross-Bench peers to ensure that licensing rules contain provisions requiring the consideration of the impact on access to justice.

I shall start by noting the words on Third Reading in the other place of my noble Friend Lord Kingsland. Outlining the importance of his amendment, which the Government are now seeking to reverse, he said:

“First, all the amendment obliges the licensing authority to do is to conduct a thorough investigation into the access to justice implications of the proposal. The obligation is for the licensor to put itself in the picture as thoroughly as possible before testing the proposal against all eight objectives. Within the scope of the amendment, the licensor is perfectly entitled to investigate in as much detail as it thinks appropriate any of the other seven objectives. Secondly...there is, in my submission, nothing wrong or unprecedented in Governments requiring decision-makers to give particular or significant weight to a relevant consideration, and, in this case, there is a powerful...reason for doing so.”—[Official Report, House of Lords, 15 May 2007; Vol. 692, c. 136.]

As the Minister indicated, on Report in the Lords, a Government amendment was accepted requiring licensing authorities for alternative business structures to issue policy statements with the approval of the board, setting out how they would comply with the duty to promote the regulatory objectives when exercising their functions. Baroness Ashton said that rather than impose a duty specific to access to justice the Government had sought to consider the interaction between access to justice and the other regulatory objectives. However, we do not agree that the Lords Government amendment deals with the issue, as it fails to direct licensing authorities’ attention to the particular risks posed to access to justice by alternative business structures.

Let us consider the view of others who have reviewed the Bill. Lord Woolf expressed his concern in a report earlier this year, stating:

“There is no doubt that large businesses could provide legal services in a novel and interesting way. But that could—unintentionally, perhaps—have a devastating effect on those who have traditionally provided services in rural areas in particular. Great care has to be exercised to see that damage does not occur.”

The Master of the Rolls said that it was

“very difficult to see how this suggestion is going to improve access to justice for those who cannot really afford it because...anybody who is going to invest money into it is going to be looking for a return, quite unsurprisingly.”

The Minister referred to so-called cherry picking and implied that the Bill will deal with it adequately without the Lords amendment that she wishes to reverse. The Law Society was worried about that, stating:

“New entrants into the market may bring about some benefits. However, there is a risk that there may be long-term structural effects that destroy service provision and the fabric of small communities. Put bluntly, new entrants might cherry pick more profitable and less complex areas of work, driving down the profitability of established local firms who offer a full range of services at the heart of their communities. If that happened, where would consumers go for advice on complex matters?

The Law Society's conclusion is that whilst the regulatory issues concerning new service providers can be dealt with...there are very serious risks to access to justice from the uncontrolled admission of new entrants. Existing practitioners report that in many areas, a number of existing firms serving small localities would be in jeopardy if large institutions entered the market for legal services.”

Richard Miller, the director of the Legal Aid Practitioners Group, said:

“As a representative body for legal aid firms and agencies, we are particularly concerned about the likely impact on the current range of services provided by high street solicitors. Commercial providers will be attracted by the areas that can be commoditised, computerised and provide a reliable margin of profit. These services often subsidise legal aid work, and without them high street firms may not be financially viable. ABSs will cherry-pick only the profitable work, such as conveyancing, wills and telephone helplines.”

The Joint Committee on the Draft Legal Services Bill under the chairmanship of Lord Hunt also highlighted the issue, stating that it was

“persuaded by some of the evidence suggesting that the reforms may reduce geographical availability. We consider that ABSs may reduce the number of access points for legal services and we see this as a potential problem. There is clearly an issue here and the only conclusion we are able to draw is that no-one can be sure how it will work out. We recognise that there may be a trade-off between the quality and accessibility of advice—for example a small, high-street solicitor in a rural area may not be able to provide the specialist advice a client requires. We recommend that the Government amends the draft Bill to ensure that the impact of ABSs on access to justice, particularly in rural areas, informs the decision-making process for licensing an ABS firm.”

The Joint Committee recommended that the Government should amend the draft Bill to ensure that the impact of ABSs on access to justice, particularly in rural areas, would inform the decision-making process for licensing an ABS firm. Accordingly, it is now provided in the Bill that licensing authorities would be required to consider the likely impact of a proposed application on access to justice when considering an application. A licensing authority would be either an approved regulator, which is designated as such, or the Legal Services Board.

The Conservative party strongly supports retaining this provision, not least because there are important considerations in terms of geographic and sectoral legal work which we will need to think about carefully. Lord Kingsland explained the danger that might arise on Second Reading:

“You might get a very powerful ABS deciding to try to drive a legal firm out of a particular market by predatory pricing; by subsidising from profitable legal activities in the other part of a firm a particular section of a firm that would sell its legal services below cost to gain a competitive advantage and probably drive several of its competitors out of the market.”—[Official Report, House of Lords, 6 December 2006; Vol. 687, c. 1206.]

The Government need to rethink. The problems mentioned will need very careful handling by the LSB if we are not to have a range of competition problems, which so far seem to have been unforeseen. We are seriously concerned that without the access to justice requirement, the Government may have made a serious misjudgment. I remind the Minister that this would not create access to justice as the overarching objective, which was the fear expressed by the Minister in her earlier remarks and by Baroness Ashton in the other place.

Adrian Bailey (Labour, West Bromwich West)

I am listening to the hon. Gentleman’s argument. Is it not the case that if an alternative business structure deliberately tried to undercut an alternative legal service provider, such activities would be governed by Office of Fair Trading regulations, so it would be prevented from doing so?

Jonathan Djanogly (Conservative, Huntingdon)

The Minister was arguing that the Bill, without the provision, would be adequate. We argue that it is such an important point that it needs to be put in the Bill itself.

Adrian Bailey (Labour, West Bromwich West)

With the greatest respect, the hon. Gentleman has not replied to my question. There is a regulatory framework that prevents the activity that he says would take place and so needs to be regulated by the Bill.

Jonathan Djanogly (Conservative, Huntingdon)

The direct answer to the question is to look at what has happened. The OFT produced a report on competition in the legal market in 2001. Here we are, half way through 2007, debating its conclusions. We want a system that is rather more adaptable than that. Indeed, the Bill essentially provides that, but access to justice should be included in the Bill as an important point for consideration.

The Minister mentioned the view of the consumer organisations but we believe that it is a short-term point of view. With no effective control on cherry-picking, competition and choice could be reduced by the growth of so-called advice deserts across the country. The provision is intended to ensure that the licensing authorities consider the possible effect on access to justice and give the issue full weight when determining applications. On that basis, I shall recommend that my hon. Friends vote against the amendment.

John Mann (Labour, Bassetlaw)

We have heard quite a bit about access to justice in rural areas. Conveniently, of all the members of the Committee I probably represent the largest rural area with 550 square miles. My experience of access to justice in a highly rural area is of some relevance. My question is: where is the factual basis? We hear many assertions. I have carried out my own quantified survey—I have a small sample of it with me— asking people in a rural area about access to justice. My finding is that they are not very happy with the current situation; they feel that they do not have proper access to justice. However, they are looking at matters from a different angle. They mean that they are not happy with the service provided by existing solicitors. It seems, therefore, that access to justice needs to be properly defined. I am not against small businesses—quite the contrary; I once owned a family business—and I would support the small business against the big enterprise any day. However, access to justice needs to be defined in the context of how people get to the service and what is provided.

The problem with this debate and with the background to debates in another place and on the Joint Committee is that people are looking at the wrong paradigm. They are looking at the people who currently use such services, rather than those in the expanded market that should exist. I offer any decent firm of solicitors, small or large, that wishes to get into new areas a plethora of possibilities for work with people who have not accessed justice before. There are many paths—let me give some examples.

Hundreds of people might well be inspired to take action in relation to the recent health and safety abuses of graveyards and memorials in my area and others, at a cost to them of some £350 a head. They clearly have a legal case. Tens of thousands of people have never challenged the abuse of the car parking system by major operators. They, too, clearly have a legal basis for a challenge, but have never found anybody willing to take on the work, not least because those separate individuals have not considered going to the legal profession for advice in support of their consumer rights.

In their brave attempts to expand the concept of justice, the Opposition are considering the old paradigm—the system as it was—and missing the key point that the market should expand. A lot of demand is not being properly met, and that is what an expanded legal profession should be looking at. It should root out those who have never dared to presume that they can use the services of the legal profession. As my survey proves, that means the vast majority of people in a big rural area like mine.

Simon Hughes (Liberal Democrat, North Southwark and Bermondsey)

It is true that my constituency does not cover 550 square miles. In fact, it is about one hundredth of that size—perhaps a bit more. However, the hon. Gentleman makes a point about the need for access to justice that does not contradict those who support the amendment that the Minister is now trying to undo. Let me start where he ended. Of course, in communities such as his, as in all rural areas in Britain, there is a need to ensure that there is proper access to services that have the confidence of the community. That might not be provided in his area—he knows his towns, small towns and large villages better than anybody else in the room—but that is not an argument against retaining the provision in the Bill.

The Minister started by referring to the fact that the Government made some concessions on Report about the duties of licensing authorities. Indeed they did. The matter was carefully considered by colleagues in the House of Lords, and when they returned to it on Third Reading, and there was a significant majority in favour of amending the Bill to read as it does now. The vote was 213 to 145, and the majority comprised a coalition, as the hon. Member for Huntingdon said. All of them thought that it was important that we include a reminder of the importance of access to justice not in the statute that governs the LSB, but in the documents that govern each of the authorities addressing such issues.

It could be argued—I thought that the Minister might argue this—that if the Lords were going to move in that direction, they should have gone further in clause 83(5)(e), which the Minister is trying to remove. Logically, they should have included objective 1, which relates to protecting and promoting the public interest, as well as objective 3, which relates to “access to justice”. I could understand that argument because the public interest must be uppermost.

Let me turn, however, to the argument that the hon. Member for Huntingdon and I are making, which was strongly made outside and which is absolutely not in the interests of existing lawyers who do the existing work—that is, the status quo. The clause is about the licensing rules that will be written by the licensing authorities that the Bill sets up. Those rules will set out the qualifications that people will need to be able to practise, which is of course appropriate. Subsection (5)(b) sets out

“arrangements...conduct rules, discipline rules and practice rules”

and what happens where there is an internal difficulty. There are also provisions dealing with indemnification, so that people have a chance to get compensation if things go wrong.

At this stage in the process, however, there must also be a pause for reflection about whether what is being done increases rather than decreases people’s ability to access services. By that, I mean good services, not inadequate ones or ones that do not do the job that people want them to, as clearly happened to people in Nottinghamshire and elsewhere in the country. We all know about the issue of complaints, which we shall discuss later in the Bill, and there has been a history of unsatisfactory practice and remedies in many cases. That is why I intervened on the Minister.

I cannot understand the argument that says that considering the access to justice criterion at this stage in the process would not benefit the people walking up and down Lewisham high street, Macclesfield high street—I do not know whether that is what the main street in Macclesfield is called—or Borough high street in my constituency. It must be in the interests of such people for an assessment to be carried out when a big insurance company or a college of occupational therapists, for example, is given a licence to do a piece of work or offer a service. Such a college might see a potential benefit to having a legal service and might think it convenient to be able to offer legal advice to people who come in for back pain relief following an industrial injury. One could contemplate all sorts of organisations taking up the opportunity offered by the alternative business structure model if it were available. If they do, the question then is whether that will advance access to justice. I agree that the other relevant consideration would be protecting and promoting the public interest, which is one of the objectives, and that is the other side of access to justice.

I want to make two other points now, in addition to underlining the strong point made by the pre-legislative Committee in paragraph 3.24 of its report on the draft Bill, to which the hon. Member for Huntingdon referred. The Committee clearly recommended in the terms that the hon. Gentleman set out that the Bill should be amended. Elsewhere in its recommendations, it said that the Government or Parliament should think about things, but in this case it recommended

“that the Government amends the draft Bill to ensure that the impact of”

alternative business structures

“on access to justice...informs the decision-making process for licensing”.

It dealt specifically with rural issues and expressed concern about them.

The issue is important, and I put it to the Minister to keep it before us, because it is one of those on which there will be firmness on the Opposition Benches and elsewhere for a considerable time to come—it will not go away. As the Minister knows, the legal aid service is also being reorganised in her Department, as the hon. Gentleman mentioned. That is causing considerable anxiety and disquiet. That is exactly where the linkage is between those who might provide the service and the financial arrangements allowing people to gain access to the service. That, self-evidently, is because there are two parts to gaining access to justice. The first is to know where the front door is; the second is whether one has the resources to take the advised action, or, indeed, the action that one is entitled to take.

There is serious concern, particularly in rural areas but not only there. The hon. Member for North-West Norfolk knows—he and I have shared platforms—that many rational, non-militant people who do that sort of work in counties such as Norfolk and cities such as London are extremely exercised that the reforms will make it much more difficult for the poor, the disadvantaged, the mentally ill, those with learning difficulties, those who do not have English as a first language, and those who simply are not experienced in dealing with the law, to be able to gain access to the system.

Jonathan Djanogly (Conservative, Huntingdon)

The hon. Gentleman makes an important point. He will appreciate that, under the Carter proposals, the Government propose a significant reduction in the number of law firms. The extent of that reduction is the subject of debate, but no one is saying that it will not happen. Does the hon. Gentleman not agree that adding to that reduction the cherry-picking proposals for access to justice could create a crunch that no one has foreseen?

Simon Hughes (Liberal Democrat, North Southwark and Bermondsey)

That leads me conveniently on to the link with which I want to finish.

It is clear from the way in which the Carter review was set up, and from the Government’s response, that what is effectively being set up is a new franchising arrangement. I have attended meetings with the Under-Secretary of State for Justice, the hon. and learned Member for Redcar (Vera Baird), who leads on such matters, and I have heard her say directly, face to face, that she expects the closure of certain places so that other legal outlets can be enlarged, and that it is no good firms being able to carry on with the specialist character of their work, looking after certain types of cases, without taking on a raft of other services. She made that point absolutely clear.

The amendment would prevent consideration of that matter not in the generality but in the particular. Subsection (5) states:

“Licensing rules of a licensing authority must contain ...appropriate provision requiring the licensing authority to consider the likely impact of a proposed application on access to justice when determining the application”.

At the moment that the case comes before the court the licensing authority must consider access to justice.

It is rather like the questions that come up in all our constituencies when planning applications are decided. The clause makes a parallel provision, saying that when individual applications come up, those who decide them are duty bound to think about access to justice. Officers must advise them, as it were, that the authority must consider the issue and decide whether it passes the test. It is not sufficient to say that it is one of the regulatory objectives or, further away, that it is to be found in guidance or is the equivalent of the law of the land. It means that, on every individual application, the licensing authority has to ask the question. Depending on decisions made yesterday, last week or last month—depending on what has happened in Lewisham high street, Borough high street, or Macclesfield high street—the answer could be different.

I understand the arguments put by the Minister, and by Ministers in the other place, but none of them are at all persuasive. The Government lose nothing by keeping the Bill as it is. Whether or not the Minister concedes the point today, I hope that she will reflect on the matter so as to ensure that we do not have to have a long battle over the issue. She may concede nothing but still give some encouragement to legal aid practitioners by keeping the provision in the Bill. That would also give some encouragement to those who are worried about the Government’s undermining of services to the less advantaged. I hope, in the end, that she will understand that the Lords was very firm on the matter, and that Opposition Members, too, will be very firm.

Adrian Bailey (Labour, West Bromwich West)

I had not intended to speak on this matter, but having heard hon. Members’ remarks, I feel that I need to do so. First, however, I draw colleagues’ attention to the declaration that I made on Second Reading. I am a Labour and Co-operative Member of Parliament. The Co-op, Tesco and other retail organisations have been quoted at length in some debates as potential beneficiaries of the change. I am told that I do not have to declare that interest, but I feel it appropriate to do so.

I must make a philosophical point. I am astounded to hear Opposition Members, who belong to parties that historically are wedded to the philosophy of free market competition, defending one of the most long-standing and outrageous closed shops that can possibly be imagined, and praying in aid of that defence a number of assumptions that do not stand up to the test. The first assumption rests on the question of the nature of the barriers to access to justice. Implicit in the arguments presented by Opposition Members is the idea that law firms are a bit like legal supermarkets or community stores—they exist in all communities and are used regularly, if not daily, by a large proportion of the public, and anything done to undermine them will deal a devastating blow to services in the area. I do not think that that is the case. It is likely that law firms in sparsely populated rural areas, for example, already specialise in a particular aspect of law. The chances of finding a law firm covering a range of services effectively and expertly are, quite frankly, slim. What are the real barriers to people using law firms? Is geographical proximity a factor?

Bob Neill (Conservative, Bromley and Chislehurst)

I am listening to the hon. Gentleman with interest, but I urge him, if he has not done so, to read the evidence taken by the Constitutional Affairs Committee on Carter and access to justice. He will find that concerns about a possible dearth of access to justice and the risk of legal aid deserts were expressed not just by lawyers—not just by the closed shop, so to speak—but by the voluntary sector, citizens advice bureaux and a raft of other organisations. It is not a lawyers’ thing at all.

Adrian Bailey (Labour, West Bromwich West)

I have heard the argument about legal deserts for four or five years, and to a certain extent, from Opposition Members’ point of view, it is a self-defeating one. If the possibility exists as a result of the changes arising from the Carter proposals, it is important to create a new legal service provision that will operate at lower cost so that more companies can provide services profitably.

I was about to ask what the real barriers to access to justice are. Is it a geographical issue? When a person wants a particular legal service, I do not believe that the geographical proximity of the legal service provider is uppermost in their mind when they make their choice. The last time that I needed conveyancing on my house, I went on the internet. In fact, I never had a face-to-face meeting with the people who conducted it, and that is an increasing trend. If we polled people about the reasons why they do not use solicitors, geographical proximity would be low on their list of criteria. The main criterion would be perceived cost. There is a belief abroad that going to a solicitor is a very expensive process beyond the purse of an ordinary person, and that people are enmeshed in a process over which they have no control and that the ultimate cost can be formidable. There is a belief, too that if things go wrong, there are very few means of redress. There are provisions in the Bill to deal with that, so one could say that in totality it deals with the fundamental obstacles to access to justice.

In addition, arising from the perceived exclusivity of the legal profession, there is a profound psychological barrier for a great majority of people who want to use the existing structure of legal services. Alternative business structures, which in most cases will be far more firmly embedded in urban and rural communities than the current legal services, will provide a range of services to a far greater number of people without generating historical antipathy or concern. Such structures will be perceived as far more consumer friendly.

Finally, there is a regulatory regime designed to stop undercutting, and I am sure that if that practice took place, lawyers, being lawyers, would quite rightly be adept at exploiting that regime. The argument that alternative business providers will just cherry-pick the most profitable parts of legal services and neglect others is based on perception. The fact is that a range of alternative business providers might provide services that historically have not been well provided for by solicitors—that is one of the benefits of the Bill.

The Bill will lead to an opening of the market and, as always, adjustments will have to be made. I appreciate the fact that, for the legal profession, some adjustments might be quite difficult and painful, but if they benefit consumers, or change consumers’ perception of the legal services industry and make more people ready to use legal services, that will benefit not only alternative business providers but the traditional legal profession.

David Burrowes (Conservative, Enfield, Southgate)

I apologise for not being present at the beginning of the debate, Sir Nicholas. The debate is about access, and accessing Westminster from Southgate this morning was rather difficult due to local transport problems. That shows clearly that geographical location is relevant when considering access.

Henry Bellingham (Conservative, North West Norfolk)

On your bike?

David Burrowes (Conservative, Enfield, Southgate)

Sadly not. I use a bike only in my constituency; it is too dangerous in Westminster.

The hon. Member for Bassetlaw asked where the evidence was of potential problems of access to justice. As there are a number of lawyers present, I put myself forward as an exhibit. Indeed, I invite the hon. Gentleman and the hon. Member for West Bromwich, West to come and see the situation in Enfield, where there are legal aid advice deserts. I am a legal aid lawyer and therefore can talk only about experience of such work, not about conveyancing markets and the like.

Adrian Bailey (Labour, West Bromwich West)

The hon. Gentleman is making my case for me. If, as he says, there are legal aid deserts, that strengthens the argument for providing alternative business structures that might fill those deserts.

David Burrowes (Conservative, Enfield, Southgate)

If the hon. Gentleman is patient, he will hear the point that I am making. I hope that he will take up my invitation to visit Enfield. Rather than considering conveyancing, which is a world away from welfare law, we should consider education. If a problem arose as a result of a family member being excluded from school, or suffering bullying, harassment or discrimination, it would not be possible to find a lawyer to deal with education law. That would be a serious problem; despite searching high and low for the access to justice that we all want, people would not be able to find it. They would be told, if they found someone who could give them some direction, that they would have to go out of town to Essex, to find an advice centre where they could be given advice.

Such an education law desert exists now. It is possible to get advice out of town, away from any medium-sized firm that might want to develop in the relevant area. However, people would not do it. In Enfield many of my constituents with such concerns do not go anywhere for help; they do not receive justice. They often require the help to be in the right geographical location. That does not apply to everyone, but many people are concerned that advice should be available in the high street of their rural community. It cannot therefore be left just to the market to develop the provision or not, as suggested in evidence.

Evidence was given to the Joint Committee by Jonathan Lindley of the Legal Services Commission that for social justice advice it is not necessary for a solicitor to be provided all the time and that advice need not be given face to face. He envisaged that if a large supermarket were to come into the market, the Legal Services Commission would contract with it to provide the range of services for individuals that was necessary in any location. That might be the case in some circumstances, but it might not in others. The point of the clause that was quite properly introduced by the Lords was to make it possible to take account of issues of access to justice. The hon. Members who support the amendment want to exclude that provision from the Bill. That is a matter of great concern.

Adrian Bailey (Labour, West Bromwich West)

I am rather puzzled by the hon. Gentleman’s argument, because by his own admission there are effectively deserts, in relation to a range of legal services, in the areas that he is concerned about. It seems logical therefore to propose alternative business structures to provide legal services in those deserts. He does not seem to have a solution.

David Burrowes (Conservative, Enfield, Southgate)

The Minister told us in the Joint Committee that the jury is out; there is a risk. The not-very-convincing case for not including the provision in question was:

“I think there is possibly the chance that it is quite likely that they”—

that is, rural consumers—

“will have a better chance of getting more services in the rural area”.

There is a risk in relation to access to justice. The amendment does not take proper account of that, but it is necessary to do so. I invite the Minister to consider carefully the need to give consideration to access to justice.

Bob Neill (Conservative, Bromley and Chislehurst)

I do not want to prolong matters—I just want to make a very short point. Please do not let us think that issues of access to justice affect only rural areas. In a suburban part of London like my constituency, a single parent with a family law issue, living, for example, on the Mottingham estate, where there is significant deprivation, will have enormous trouble in getting access, as things are now, to a solicitor who will handle an application for an ouster injunction against a violent partner or former partner.

To make light of the impact of the current legal aid changes in relation to the present proposal is to miss the point and the compelling evidence given from all sides to the Constitutional Affairs Committee. I very much regret—and I feel strongly about this—that the Government are so dogmatic on the issue, and needlessly so, in the light of all the evidence, in particular from legal aid practitioners. It is wrong that the debate should always be structured on the basis that solicitors do conveyancing and get money for old rope. That is not the experience of my constituents, who often depend on legal aid. I should have thought that that would apply to Labour Members’ constituents as well.

Simon Hughes (Liberal Democrat, North Southwark and Bermondsey)

I just want to make two short points in response to points from the hon. Member for West Bromwich, West and the Minister. There are many legal firms in small towns that, despite principally dealing with one type of matter, either have another branch elsewhere that deals with other matters, and to which there is local access, or are in an arrangement with other firms doing other business. So the local access issues do not mean that people are limited to the service that is provided in that building by the people working there. Often, that building is the doorway to a much better service.

I would like to ask the Minister a question. She said that she had been lobbied by consumer organisations. I think I am right in saying that the National Consumer Council and the National Consumer Federation support the amendment that was made in the Lords. I would be grateful if she would just confirm that she also understands that to be the case.

Bridget Prentice (Labour, Lewisham East)

We have listened to the concerns that have been expressed about ABS licensing and the new risks that may exist alongside the potential benefits. That is why we tabled those two amendments in the other place. The first amendment was to clause 82, saying that all licensing authorities must issue policy statements about how they will comply with all the regulatory objectives, including access to justice. Those policy statements must be approved by the board, and the licensing authorities will be monitored to see how they adhere to them.

Secondly, in clause 110 there is now a requirement on the board itself, to report annually on the way that the activities of licensing authorities and licensing bodies have affected the regulatory objectives. That requirement will ensure that the development of ABS and its effects on legal service provision are kept under permanent review.

The advantage of our amendments is that they require all the regulatory objectives to be taken into account and to be monitored at all times. They do not single out any one objective for particular attention.

I would like to look at clause 82 briefly. Having to make policy statements will mean that the licensing authorities and licensing bodies must say how they will consider access to justice along with the other regulatory objectives when they make their licensing decisions. Those policy statements will have to deal with access to justice properly in order to gain the approval of the board, which will then inform the activity of the licensing authority through rules and individual decisions; that activity will, in turn, be overseen by the board, to ensure that it gives effect to the policy statements.

I was asked about cherry-picking and how we prevent large commercial operations from damaging access to justice. First, clause 28 says that the licensing authorities have a duty to promote the regulatory objectives, including access to justice, and clause 82 reinforces that by ensuring that the licensing authorities must take the extra step of formulating policies to fulfil that duty. Furthermore, the details of the policy statements that must be made might be shaped by the type of service that the authority intends to license, as well as the potential providers, the consumers and the geographical area that might be affected. So the licensing authority will be able to take into account the effects that that particular provider might cause.

That is why the cherry-picking argument does not hold up. Several hon. Members made that argument, in particular the hon. Member for Huntingdon. The argument assumes, for example, that some types of work are always profitable and must always cross-subsidise other types of work that are always unprofitable. There is no proof of that. On the contrary, the legal aid experience is that it is possible for a company to be profitable by specialising in certain types of work that are sometimes assumed to be unprofitable.

Jonathan Djanogly (Conservative, Huntingdon)

Has the Minister received any evidence, or is she seriously suggesting, that, say, Tesco or another large provider would be likely to offer criminal legal services, matrimonial legal services, or mental health legal services?

Bridget Prentice (Labour, Lewisham East)

May I ask the hon. Gentleman to repeat that? I was handed a note during his question.

Jonathan Djanogly (Conservative, Huntingdon)

The Minister seemed to be making the point that it is not necessarily the case that firms will have loss leaders, and that an activity that is now seen to be unprofitable could, in the future, become profitable. I am putting it to her that there is no evidence to suggest that certain areas of law—I mentioned a few examples before—will be areas that any large provider would want to offer.

Bridget Prentice (Labour, Lewisham East)

I do not think that there is any evidence to the contrary; that is the point. There are people who are saying that certain areas of the law are profitable and that they are used to cross-subsidise those areas that are unprofitable, as if that is set in stone. I am not convinced of that, and I have seen no evidence to convince me that that is the case. On the contrary, with more opportunity to access commercial expertise on capital, it is more than likely that an ABS will act as a driver for new means of delivering services, either through the law firms themselves taking advantage of the reforms, or through new providers to the market. We should not assume that the way that traditional law firms provide services is the only way to do so or that consumers do not want different types of services from different types of providers.

My hon. Friend the Member for West Bromwich, West made a point about geography and where people access services, which made me think about the number of my constituents who come into the advice surgery with immigration cases. They use law firms from all over London, not just those based in Lewisham. Despite the problems that people may have commuting from Enfield, people do go across London to find the service that is appropriate for them.

The hon. Member for North Southwark and Bermondsey asked about the NCC and the National Consumer Federation. The NCC felt that the Lords amendment was appropriate, but on the other hand, the National Consumer Federation thought that the Bill provided safeguards to protect consumers and was happy with it as it stood. Which? advocates that the Lords amendment should be overturned.

It has been an interesting debate, but I have not been convinced by the Opposition’s arguments. We should not be in the business of protectionism; we should be in the business of access to justice and upholding the rule of law and all other regulatory objectives. With the amendments that we have made in the other place, the Bill gives us the right balance for that to happen. The risk of leaving clause 83 as it stands is too great. All regulatory objectives should be considered at all stages, and access to justice is integral to that. On that basis, I commend the amendment to the Committee.

Schedule 11

Jonathan Djanogly (Conservative, Huntingdon)

I beg to move amendment No. 211, in schedule 11, page 183, line 8, at end insert—

‘( ) Licensing rules may provide for fees to cover the whole cost to the licensing authority of dealing with the application, whether the application is granted or not.’.

The amendment was suggested by the Law Society. It is required to make it clear that licensing rules can put the whole cost of dealing with an application on the individual applicant, rather than leaving part to be borne by the licensing authority itself and thereby by other firms regulated by that authority.

It is an important general principle of the bill that the costs of regulation should, as far as possible, be borne by those whose activities give rise to the cost, rather than by the regulated sector as a whole. That is particularly important in respect of ABSs, where some applications could give rise to complex issues. It would be quite unsatisfactory for there to be a single flat fee applied to all applications, whether from a comparatively small applicant filling a gap in legal services or from a megastore supermarket seeking to set up the sort of service that might give rise to particular concerns about the possible impact on access to justice. We have just debated that.

If a single fee were set to meet all the costs of dealing with ABS applications, the result could be grossly unfair to the small applicant. However, a single fee at the level appropriate for the small applicant would involve an unacceptable cross-subsidy from the rest of the regulated sector—in this case, non-ABS firms—towards the cost of ABS regulation. The solution is to enable different fees to be fixed for different categories of applicants. That is dealt with to some extent in the provisions concerning not-for-profit bodies in clause 106, but it is also important to be able to vary fees, even among commercial applicants for ABS licences. There is no reason why an applicant whose application gives rise to no significant concerns about access to justice should pay the same fee as one that does.

If licensing authorities were unable to match the fee to the cost of dealing with the application, they might be inhibited from investigating applications as thoroughly as they should, particularly where access to justice considerations arise. The amendment is designed to stop that problem and ensure that the costs of dealing with applications can be placed on the applicants concerned.

Simon Hughes (Liberal Democrat, North Southwark and Bermondsey)

We have subscribed to the amendment, which is entirely reasonable, and if agreed to it would not mean a mandatory requirement. It does not say, “licensing rules must provide”, it says “may”. It does not oblige the outcome advanced by the hon. Member for Huntingdon but gives the clear indication that people should pay for the application that they are making, which must be the right process. If people are making a much bigger application, the processing and consideration will take longer, more time will be needed and the fees will be bigger. The amendment does all the things that one would expect. I hope that the consumerists on the other side of the room will join those on this side, thinking that this is a reasonable way forward.

Bridget Prentice (Labour, Lewisham East)

It is a very tempting thought that consumerists across the divide should get together. I do not know whether this is meant to be just a probing amendment, but I am rather surprised by it, because this matter was fully dealt with in the other place. I thought that the position was understood and that it had been accepted that the Bill—particularly schedule 11—gives the flexibility that the amendment is designed to achieve.

It is reasonable to expect a licensing authority to charge for the full cost of processing applications, whether or not the application is successful. As the hon. Member for North Southwark and Bermondsey said, some applications will generate a great deal more work than others, and that will depend on the nature of the body making the application. The megastore mentioned by the hon. Member for Huntingdon that wants to operate in various locations will clearly need more consideration than a single firm operating in one place.

The amendment also mentions the fee being payable whether or not the application succeeds. It is important that the fee is payable regardless of the success of the application, otherwise there may be a temptation on the authority to grant an application where it really ought not do so. Non-refundable application fees are pretty common in many walks of life and I see no reason why it should be any different here.

If the full costs were not charged in each case, one firm could end up subsidising another. That could create some problems. For example, it might make the authority unattractive to firms if their fees were disproportionately high, and in that event they might seek licences from another authority. There is nothing particularly wrong with that in principle—the reforms are in part about regulatory choice—but it might well have a knock-on effect on the authority itself if there were fewer applicants, each of whom would effectively be paying a discounted rate. The licensing authority could lose money as a result, and I am not sure that that is what we want.

The Bill already addresses the issues that the hon. Gentlemen have raised. It gives flexibility to the licensing authorities in how fees are set. The fee levels and their effects on legal services mark-up will obviously be monitored by the board. Fee levels form part of the licensing rules, which for example could set individual fees based on the amount of work that individual applications were estimated to need. All those would have to be acceptable to the board before it would put forward a regulator for designation as a licensing authority. If the board is concerned about the effects on smaller firms or on competition, it can require changes or decline to recommend designation.

Given that what he is seeking is already achieved by schedule 11 paragraph (1) and by a number of other safeguards and flexible provisions in the Bill, I ask the hon. Member for Huntingdon to withdraw the amendment.

Jonathan Djanogly (Conservative, Huntingdon)

The Minister seems to have created a new battle cry for international socialism: “Consumerists of the world, unite!” However, I appreciate her thoughtful response and I shall go away and think about it. On that basis, I beg to ask leave to withdraw the amendment.

Nicholas Winterton (Conservative, Macclesfield)

I ask Committee members to bear with me at this stage, because I have quite a lot of work to do in putting a number of matters to the Committee. With the Committee’s leave, I propose putting the questions on Government amendments Nos. 134 to 137 together.

Jonathan Djanogly (Conservative, Huntingdon)

So we are not including amendment No. 138.

Nicholas Winterton (Conservative, Macclesfield)

I was hoping that hon. Members on both sides would be listening carefully to what I said. I propose, with the Committee’s leave, to put the questions on Government amendments Nos. 134 to 137 together.

Schedule 12

Nicholas Winterton (Conservative, Macclesfield)

I propose to put the questions on Government amendments Nos. 138 to 143 together.

Jonathan Djanogly (Conservative, Huntingdon)

I request that amendment No. 138 be taken alone.

Clause 85

Schedule 13

Jonathan Djanogly (Conservative, Huntingdon)

I beg to move amendment No. 212, in schedule 13, page 197, line 11, at end insert

‘Licensing rules must provide that, in determining whether the requirements of sub-paragraph 1 are met, the burden of proof rests on the person who wishes to hold the restricted interest.’.

The amendment is designed to make it clear that the onus of demonstrating fitness to own rests on the applicant, rather than it being for the licensing authority to demonstrate that a person was not fit and proper before it could withhold approval. The effectiveness of fitness-to-own provisions is a crucial element of the public protections that need to be in place before external ownership of ABS firms can safely be permitted. It is essential to avoid the spectre of law firms being owned by criminal elements.

The Bill already allows licensing authorities specifically to consider whether or not those who hold more than a small interest in a prospective ABS firm are fit and proper persons. The intention appears to be that it should be for the applicant to demonstrate fitness to own, rather than the applicant being entitled to be approved unless the licensing authority can demonstrate that they are not fit to own. The intention of the provision in paragraph 14 under which licensing authorities may require non-authorised persons to provide it with such documents and information as it may require appears to be designed to achieve that.

However, it is important that there should be no doubt about the matter. Merely demonstrating an absence of criminal convictions might not be sufficient to entitle an applicant to become an approved person. For example, the possession of unexplained wealth could give rise to reasonable suspicions about the integrity of an applicant. It is important that the licensing authority should be able to refuse approval in those circumstances unless it received a convincing explanation of the source of the wealth. The onus should not be on the licensing authority to prove that the unexplained wealth was ill-gotten before it could refuse to approve the applicant. The amendment is intended to put beyond doubt the fact that the onus of proof should rest with the applicant.

Simon Hughes (Liberal Democrat, North Southwark and Bermondsey)

I strongly support the amendment, which is why I have put my name to it. I give as my reason an example from a slightly different context. When Labour came to office, the London borough of Southwark was still run by the Labour party. At that stage, the education service was not fit for purpose. The Labour Government intervened and directed the borough to contract out its education service. The borough contracted it out to an engineering firm called WS Atkins, although, to my knowledge, the firm had no previous experience of running anything to do with education. The Government said that that would be better for the borough. Arguably, the service could not have become any worse, but, in fact, it turned out to be no better, if not worse, because WS Atkins did not have the competence to run the service.

When my colleagues won a large number of seats on the council five years ago, they formed the first ever non-Labour administration. In four years the authority did so well on education that even the Government had to concede that it was fit to run the service again. The service was handed back to it and WS Atkins was shown the door. The services in the borough are now run by the borough, as they should be.

I hope that the parallel is obvious. An application was made to do a job, but no one assessed whether the applicant was fit for purpose. The amendment would require that someone who was seeking the ability to be licensed to own a business in the context of these business structures should have to give reasons why they were fit to do that job. It should not be sufficient for the authority to have to look around for reasons why a person was not fit. Such a person should argue why they have a credible reputation and financial probity and why they are suitable, and outline their experience of that part of the country and the likely issues that will come up.

It is absolutely right that the burden should shift. There would be a huge work load on the licensing authority if it had to go through the process of monitoring all the checks and balances and ensuring that it won the argument. The amendment is right for both practical reasons and reasons of principle. I hope that the Minister will be persuaded to encourage her colleagues to support it.

Bridget Prentice (Labour, Lewisham East)

In all respects, I agree absolutely with the principle behind the amendment. The hon. Gentlemen are absolutely right about the operation of the approval requirements for investors. A key touchstone of part 5 of the Bill is the principle that non-lawyers should be permitted to invest in law firms only if they can demonstrate that they meet the standards set by schedule 13 and licensing authorities. The alternative would be to require licensing authorities to assume that all prospective investors were fit and proper unless they found evidence to indicate otherwise. I do not think that that is satisfactory and I get the impression that members of the Committee agree with me because that is not a reliable enough safeguard. However, we differ about whether further provision is needed to achieve that. The proposal as drafted ensures that that is already in the Bill.

The test for approval means that when an investor wishes to acquire a restricted interest of whatever kind, the licensing authority must be satisfied that the proposed acquisition will not compromise the regulatory objectives or the ability of ABS firms and the individuals in them to comply with the regulatory arrangements. That is the first test.

In addition, the licensing authority must be satisfied that the individual or firm in question is fit and proper to hold that interest by having regard, among other things, to that person’s associates, his or her probity and financial position, and any record of previous disqualification from an ABS firm. All that must be taken into account. If those requirements are not fulfilled, the authority may refuse to approve the proposed interest, or attach conditions to it. If it is in any doubt about whether a person meets the approval requirements, it can require further information from that person.

It is for the applicant to prove to the licensing authority that all those standards are met. If the authority is not certain that that is the case, it is under no obligation whatever to approve the interest. Indeed, I would go so far as to say that the authority would not be fulfilling its statutory duty if it granted its approval in a case where a person’s fitness was in doubt.

David Burrowes (Conservative, Enfield, Southgate)

In response to the Joint Committee, the Minister indicated that the Government could deal with concerns about putting provisions on fitness to own in the Bill by way of secondary legislation, or by leaving it to the Legal Services Board. Is it possible that this could be addressed through secondary legislation?

Bridget Prentice (Labour, Lewisham East)

I am certainly happy to look at whether that should be an aspect of the secondary legislation. Paragraph 6 of the schedule probably covers everything that Opposition Members are rightly concerned about. On that basis, I ask the hon. Member for Huntingdon to withdraw the amendment, but I will take on board what hon. Members have said.

Simon Hughes (Liberal Democrat, North Southwark and Bermondsey)

The Minister said very assertively that it was absolutely clear that the burden was on the applicant. She cited in general terms paragraph 6 of the schedule. However, my copy of paragraph 6 of the schedule does not appear to be nearly as clear as the Minister implies. Seriously, can she point to the measure—either in the clauses or the schedule—that says what she is claiming? I have read the paragraph again, and I do not see that it makes clear the point that we are trying to clarify.

Bridget Prentice (Labour, Lewisham East)

Paragraph 6(3) of the schedule says:

“In determining whether it is satisfied of the matters mentioned in sub-paragraph (1)(a) to (c), the licensing authority must in particular have regard to”

the issues that have been raised. That makes it clear that those issues have to be taken into account and that licensing authorities would be breaking their statutory duty if they did not deal with the matter properly.

Simon Hughes (Liberal Democrat, North Southwark and Bermondsey)

I accept that, but the measure does not say who has the job of providing the information and making the case. I am sure that the Minister follows me. Paragraph 6(3) says simply that an authority has to look at those issues, but does not say that the burden is unequivocally on the applicant to satisfy the authority about those issues. That is my concern, which the hon. Member for Huntingdon might wish to pick up.

Bridget Prentice (Labour, Lewisham East)

I accept what the hon. Gentleman is saying. I will hang on to that issue and come back to him on it.

Jonathan Djanogly (Conservative, Huntingdon)

I am pleased that we have had this debate. We would certainly like to emphasise that the matter is important, as the Minister accepts. The position is that the existing Bill caters adequately—

Nicholas Winterton (Conservative, Macclesfield)

Before we adjourned, I understood that the hon. Member for Huntingdon was about to ask the permission of the Committee to withdraw his amendment but, sadly, as he cannot be here, I must put the question.

Simon Hughes (Liberal Democrat, North Southwark and Bermondsey)

I wish to ask a general question about the operation of the schedule, for which clause 89 is the trigger clause. The schedule sets out the possibility of non-authorised people holding interests in licensed bodies and it is about the activities of non-legal people and professionals in the new business structures.

My question is consumerist, so I hope that it will be attractive to the Minister. Putting aside the concerns about this part of the Bill, it is important that the public, as well as other interested people, know what is happening because of the Bill. When a person applies for a licence to enable them to work in a particular way, information on who is involved with or owns a company, and who has what percentage of the shares or interests and so on, is crucial. The people who grant licences will have plenty of opportunity to satisfy themselves about such information: they will ask for and receive it, they will check and approve it, and ask further questions about it, in the way that any regulatory or licensing body would.

Consumers would be interested in commenting on a prospective application, as with a planning application. The Minister will know as well as any of us that when there is a controversial planning application, public interest might arise because people have been watching a particular site like hawks. Anyone with an interest knows as soon as a planning application is submitted to a council and they will be geared up to make their representations. Interest might also arise from a local authority-led consultation in which people participate, or simply because they hear a rumour—often, the interest arises because there is a rumour that something is about to happen.

Let me take an example given on Second Reading by the hon. Member for Banbury (Tony Baldry). He said that Banbury is a town with a couple of solicitors firms whose work is well regarded and respected. A licence application for an alternative business structure that could affect provisional legal services might be made. Let us imagine, for example, that one of the large insurance companies has an office in Oxford and decides to provide services around the country, but that it particularly wants to start in Oxfordshire. The head office could be in Oxford or elsewhere. I am thinking of a company such as Axa or another large claims company that does a great deal of work. Such a company would obviously be able to offer certain services at a low price because of the volume of work that it does. What is the process by which the public would come to know who was applying for a licence and about their other interests, and at what stage?

For my second example, I shall draw on the evidence given yesterday to the Treasury Committee about private equity companies, which was widely reported. Some of the new organisations are not well known by their private equity name, but are instead known if one discovers what businesses they run. I discovered yesterday that one such company runs the AA. Who owns those organisations is relevant to local consumers, citizens advice bureaux, consumer councils, consumers’ associations, town or parish councils and all sorts of other people who have an interest in knowing. If there was a share buy-out of such an organisation, how would people be brought up to date with the relevant information? My question is a general one about how the public and those with an interest would come to know who was really behind an application. There may be a name on a plate, but people might not know who is behind the organisation.

Stephen Hesford (Labour, Wirral West)

Has the hon. Gentleman been following the Bill, as we have? What does he imagine the consumer panel might be for and might want to involve itself in if it is not a public consultation on these issues? That might answer his question.

Simon Hughes (Liberal Democrat, North Southwark and Bermondsey)

Yes, but only as far as a national view of these things goes. It does not answer my question from an Oxfordshire or a Banbury perspective unless there is a guarantee that before any such licence was considered, let alone granted, the local community would be informed and consulted.

To take the controversial examples cited by the hon. Member for Bassetlaw, someone who had had a bad track record in a particular part of the country might emerge under a different guise with other partners. How will local people and local organisations know what is going on? How will they know who the applicant is and who controls the interest? How will they be able to make representations before any decision is made?

Bridget Prentice (Labour, Lewisham East)

I am not sure that I can directly answer the hon. Gentleman’s question. If sensitive personal information about private investors were available to individual members of the public, there would be a danger of breaches of confidentiality or property rights. As my hon. Friend the Member for Wirral, West mentioned, there is the consumer panel, which is an innovation. It would be representative of the public.

I am sure that it would be appropriate to go down the road, either in the Bill or elsewhere, of granting the public wide access to that kind of information. Some of this has to be based on normal legislative practice. We rely on the board and the licensing authorities to be very thorough in the way that they investigate potential applicants.

Finally, the hon. Gentleman prayed in aid the example used by my hon. Friend the Member for Bassetlaw. As we discussed earlier, the licensing authority would have the opportunity to investigate someone who tried to pop up under a different guise. It would not be possible in normal circumstances to provide that information to the public. On the other hand, it would be possible for the licensing authority, under its rules, to make some provision for that. No doubt when the licensing authorities read the Hansard of these debates they might want to take that into consideration.

Simon Hughes (Liberal Democrat, North Southwark and Bermondsey)

That is really unsatisfactory. I am going to go back to my example. It is not met by the consumer panel point made by the hon. Member for Wirral, West. In Oxfordshire, to take the vested interest group first, there is the Oxfordshire branch of the Law Society. There will then be other Oxfordshire organisations—the Oxfordshire citizens advice bureau and other bodies such as the women’s institute, the Townswomen’s Guild, the rotary club and all the local organisations that have an interest in business and commerce. There may be a chamber of commerce.

I see nothing in the Bill—perhaps the Minister can show me that I have missed something—to providethat where an application is made for a licence under clause 84, any consultation is necessary with anyone directly affected in the area.

There is an opportunity for consultation at national level. When a major application that would fundamentally change the nature of provision is made, the licensing authority may dutifully perform what is set out in the Bill, and decide what is to be done under the rules under clause 83, or examine policy documents. I should be grateful, however, if the Minister told me whether AXA, for example, made an application to provide the relevant services across Oxfordshire, any provision would guarantee that the people of Oxfordshire would know what had happened, or what might happen, before it went ahead. If that is not the case, the Bill is significantly defective.

Bridget Prentice (Labour, Lewisham East)

I am not sure that I shall be able to satisfy the hon. Gentleman on this matter. It is not common practice for such information to be readily available to the public. However, I draw his attention to clause 87, on registration, under which the register of licensed bodies must be available. It must contain

“the names and places of business of all bodies which hold or have held licences granted by the licensing authority.”

That does not, of course, include applicants. However, clause 87(3) states that

“information contained in the entries in its register”

must be

“available for inspection by any person during office hours and without payment.”

That does not go as far as the hon. Gentleman would like. However, regarding the example that he gave, in granting a licence the authority must take into account all the regulatory objectives that we have discussed at length, and I imagine that in so doing it would take into account the situation in particular communities. It would be for the licensing authority, if it so wished, to consult on and discuss some of those issues with those communities. The matter is not explicit in the Bill; I do not think that that would be appropriate. However, if the arrangement is to work properly, the licensing authority, which has duties under clause 87 on the granting of applications and adherence to regulatory objectives, will protect the consumer. I think that that is as far as I can go in helping the hon. Gentleman.

Simon Hughes (Liberal Democrat, North Southwark and Bermondsey)

I hear what the Minister says and I accept that clause 87 imposes a duty to maintain a register showing who is licensed and what they have done. That is clearly a different point, and the Bill is unsatisfactory in that respect.

The Minister has confirmed that there is a gap in the Bill in the matter of the consumers’ interest—that is her phrase. Consumers will be given a new system, without necessarily knowing that it is coming down the track, or knowing anything about the decision. I intend to table an appropriate amendment to make sure, in the case of any significant licensing application that would have an impact on the relevant community, that there is a duty to provide appropriate consultation with the community before any decision is made. Without that, and without an opportunity to respond, the system will not be consumer-led. It will be a market-led system; it will probably be led by the big boys and girls, rather than the little ones—by those with the financial clout to come into the market. It might be to the detriment of the consumer, rather than their benefit, and it would be brought about while they were kept in ignorance of what was happening. I am grateful for the Minister’s answers, which confirm my suspicions about the Bill. I shall certainly return to the matter on Report.

Clause 90

Clause 91

Simon Hughes (Liberal Democrat, North Southwark and Bermondsey)

The clause sets up one of two new posts in licensed bodies—head of legal practice—and sets out the duties of the post holder. Clause 92 sets up the other new post, head of finance and administration. Both posts are self-explanatory, and it is clearly important that those responsibilities are divided. I can see the argument for that.

Schedule 11 is the other side of the coin. Part 2 of the schedule sets out “structural requirements” for the management of the organisations, including requirements for general management and for the heads of legal practice and of finance and administration. The schedule gives criteria for who is a “fit and proper person” to be head of legal practice, and I should like to ask the Minister a question about that from a lay perspective.

Each organisation will have a head of legal practice, who must be a lawyer in one of the authorised activities, so they could not be a lay person. They will take responsibility for all legal activity. Is it envisaged—this is not clear in the Bill—that the decision on the appropriateness of the organisation will be taken on the basis of the organisation as a whole, without considering who is its head of legal practice, or will it be a bit like the application for a licence currently made to a local authority and traditionally to a magistrates court whereby it is the prospective licensee whose fitness and propriety are considered? It is not sufficient to say that the Whitbread brewery owns a pub; it must ensure that the pub’s tenant is fit and proper. Both are material considerations. To give an example, there are some rogue business people with an extremely bad reputation for ripping people off and not having the public interest at heart. A Mr. van Hoogstraten comes to mind in that category.

Henry Bellingham (Conservative, North West Norfolk)

He is a Lib Dem.

Simon Hughes (Liberal Democrat, North Southwark and Bermondsey)

He is certainly not. I sincerely hope for everyone’s sake that he is not a member of any party represented in this room. He has a terrible business reputation for being an exploitative landlord, but there is nothing to prevent him or one of his companies from applying to join a licensed body. The head of legal services might have worked for somebody like that for one, 10 or 20 years, passed their exams and qualified as a lawyer. I am keen to know what the test will be when the licensing authority decides whether to grant the licence.

Will there effectively be two tests—is the organisation considered legally and financially competent, and are the two people put up as heads of legal practice and finance and administration regarded as fit and proper? Finally, when the time comes and the procedures in the Bill are established for those tests, if the head of legal practice is replaced and someone else is nominated, is it expected that the licensing process should start in good time, so that, if someone else is nominated, there would be an opportunity for the licensing authority to say, “No, they are absolutely not satisfactory, and they are not a fit and proper person. We do not think that they have the experience, and we do not know enough about them, so unless and until you produce some different people, we will not continue to license you as an organisation”? It is in the consumer’s interest that both tests should be passed, and that both organisations and individuals are passed as being fit for purpose. I am keen to know that both tests should be passed in advance, before any green light is given by the licensing authority to the organisation, so that the licensing authority can do its job under the legislation.

Bridget Prentice (Labour, Lewisham East)

The hon. Gentleman is absolutely right about the importance of those two posts under the new structure. As he points out, the head of legal practice must, of course, be a lawyer, so one would assume that they would follow the rules and the code of conduct established by the Law Society.

As for the licence application, it must set out the ABS’s structural arrangements, including the services that it intends to supply. However, it must also set out and identify the nominated holders of both of posts—the head of legal practice and the head of finance and administration. The whole application would then be considered. However, the nominated individuals will remain under consideration and will also be looked at. There are two tests, but they will invariably be made at one sitting, so to speak. Finally, in answer to the hon. Gentleman’s final question, any change in the holder of either of those positions would also have to receive approval.

Simon Hughes (Liberal Democrat, North Southwark and Bermondsey)

May I ask a supplementary question? Is it envisaged that the licensing authority would regularly expect to see the people proposed for the posts of head of legal services and head of finance and administration, to satisfy itself, face to face as it were, that they were suitable? There is all the difference in the world between having a bit of paper that may or may not be true when it comes to people’s degrees or qualifications and seeing the people themselves. Furthermore, will there always be checks to ensure that claims that applicants make about qualifications, degrees and competence are accurate, so that we do not have the old story of the bogus degree, or the degree from the non-existent institution, or the qualification from an accountancy school that does not exist or that was closed down because it was fraudulent? Are we absolutely certain that those checks will be really rigorous and that people will not slip through the net on the basis of claims that are not true?

Bridget Prentice (Labour, Lewisham East)

That would be entirely a matter for the licensing authority, acting within its rules. I would expect it to be fairly rigorous in making those checks. Of course, as the authority works through its system of checks, there would be nothing at all to stop it from making inspections, or from rechecking organisations to which it had given a licence. Certainly, that is very much the theme of the Bill. However, regarding the specificity of the checks, any checks would have to come within the rules of each licensing authority.

Clause 95

Simon Hughes (Liberal Democrat, North Southwark and Bermondsey)

It would be helpful if I may make points that significantly and substantially belong here and, although they touch on the information provision that we dealt with, I did not want, as it were, to make overlapping points on two separate provisions.

The financial penalties provision is really important. It allows a licensing authority to

“impose on a licensed body, or a manager or employee of a licensed body, a penalty of such amount as it considers appropriate.”

It then, quite reasonably, says that there will be

“rules prescribing the maximum of a penalty which may be imposed under this section”,

and that those rules will need the consent of the relevant Minister, the Lord Chancellor. That is entirely proper, in so far as it is set out as a structure for action, and the money would go to the licensing authority. What nobody has yet said as far as I can see, and notes on clauses do not say it, is how much we are talking about in terms of the maximum penalties that are in the minds of Ministers. I appreciate that we must have further debate, but want to know that we are talking about a maximum that is pretty high, and that the fines, from the beginning, will be sufficiently stiff to be a real deterrent and threat to people who do not do their job properly and competently—whether as a firm or as an individual—and to ensure that they are going to bear a relationship to the turnover and profit of the company in question.

I represent in my constituency the headquarters of the Health and Safety Executive, which has been given powers in legislation by Parliament to police health and safety. If there are breaches of health and safety regulations——something with which the hon. Member for Beaconsfield (Mr. Grieve) is familiar because he has done much work in this area——there is a power to fine a company for breaching them. I am absolutely not somebody who argues for overly regulated businesses, but I am very clear that if we are regulating building in Canary Wharf or the City, or in my own borough around London bridge, we need very tough penalties for people who breach the health and safety regulations and put lives at risk. We know how dangerous those jobs can be, and how people are still killed and injured. There has been a long debate, but health and safety powers are not sufficient. We are debating corporate manslaughter elsewhere in this building. Why are we having that debate? Because there was not thought to be sufficient liability in respect of companies running cross-channel ferries or, potentially, boats on the Thames, when they were negligent, and insufficient penalty if they were in breach.

My question here is again a consumerist point. If the public are to be really protected, the people going into that market must know that they will only breach the regulations, or fail in that respect, at their peril. I want some clear indication of the top-level thoughts in the minds of Ministers for individuals and for companies. In relation to those issues, the one thing that most frequently comes up as an area where things can go wrong and people can fiddle the system, is in finances. There is always concern about the accounts of firms, and law firms, and many of the firms complained about, have been complained about because they put their money in the wrong account, and then moved money around to the wrong places in the solicitors’ firm.

Are the systems are intended to make life as easy and transparent for people, both the firms and the customer, as possible? For example, at the moment, a company would need to have an annual audit. Rather than having two different processes for providing the financial information to show that the company is behaving itself—which would be absolutely necessary if there were no threat of an investigation with a view to saying something that something improper had happened—is there a way of ensuring that one bit of work is done rather than two? In other words, the money would be collected for the audit and, at the same time, for the purpose of satisfying the licensing authority, so that the company had to produce only one set of figures every year, with one lot of people overseeing it and one occasion on when it was inspected. It would all be done in a way that gave a clean bill of health both in accountancy terms and in licensing terms.

It is no good having a licensing regime or a regulatory regime unless it has teeth, and the teeth are the financial penalties, which need to be large enough. As far as I know, the figures have not been made public, and I should therefore be grateful if the Minister would tell the Committee what the Government envisage will be their advice when the Legal Services Board is set up.

Bridget Prentice (Labour, Lewisham East)

There is no actual figure in my mind at present that would be appropriate. I agree with the hon. Gentleman that there must be appropriate fines. However, fining is only one of the available tools; punishments such as suspending, revoking the licence, referring people to other regulators and disqualification from holding specific positions are also available. It will be for the authority to consider which of those is most appropriate in the circumstances of the case.

As the hon. Gentleman said, some organisations are far bigger than others, so the fines need to be appropriate in that respect, too. It brings to mind that to fine premiership footballers £5,000 a week is a drop in the ocean for most of them and does not make a great deal of difference to their subsequent behaviour. I therefore have some sympathy with the hon. Gentleman’s view that the fine must reflect the ability to pay.

This part of the Bill will not come into force until 2011 and between now and then we will look at benchmarks elsewhere and consult stakeholders, who include consumers, so I will not give a figure at the moment. I simply say that the hon. Gentleman is right: from the consumer’s point of view, justice has to be seen to be done, as well as being done. The perception that a person is being fined appropriately is crucial to the consumer’s confidence.

Stephen Hesford (Labour, Wirral West)

Subsections (3) and (4) of clause 95 state that the board will make rules, which will be agreed by the Government. It will be appropriate at that time. That is the method by which this will all be worked out.

Simon Hughes (Liberal Democrat, North Southwark and Bermondsey)

That was what I said.

Stephen Hesford (Labour, Wirral West)

I do not understand what it is that the hon. Gentleman does not understand.

Bridget Prentice (Labour, Lewisham East)

It is not for me to explain to my hon. Friend how the mind of the hon. Member for North Southwark and Bermondsey works. All I can say is that I do not have a figure in mind, for the very reason that my hon. Friend gave: the matter will be looked at over the next few years in consultation with stakeholders, which will, as I said, include consumers. We will consider the benchmarks set in other situations. The board will come to a conclusion, and, as my hon. Friend rightly points out, that will go through the Lord Chancellor. I cannot be more explicit than that.

It is sensible to check financial propriety but, again, there are detailed arrangements that the board and the licensing authorities will want to consider. The decision will be for them.

Simon Hughes (Liberal Democrat, North Southwark and Bermondsey)

If the hon. Member for Wirral, West had been listening earlier, he would know that I particularly cited the two subsections to which he referred. I am fully aware of the process, but it is none the less important to flag up the importance of the issue now to make the point, which the Minister picked up, about fines needing to be proportionate to ability to pay, in terms of turnover, capital and other financial considerations and to see whether the Government have addressed the issue. Ministers said that they had not done so yet, which is a half-reasonable answer. The sooner the Government start to share their thoughts on this issue, the sooner people will understand the real implications of the Bill and whether the legislation will have teeth.

I end where I began: these are important issues, and unless the fines can be made big enough, this sanction will not be the sanction that the Bill potentially allows it to be.

Clause 98

Simon Hughes (Liberal Democrat, North Southwark and Bermondsey)

This clause is the first of a set of linked clauses to which my comments are relevant, so I shall make my comments substantively on this clause, but they apply to clauses 99 to 102 and to schedule 14. That way, I need not trouble the Committee to debate each of those measures.

I want to make a straightforward, general point on behalf of the people whose professional careers might be affected as a result of an investigation and disciplinary sanction, such as the employees referred to in clause 98, the people who might be disqualified under clauses 99 and 100, and the people who might be affected by a suspension or revocation of their licence under clause 101 or by an intervention under clause 102 or schedule 14.

My experience of dealing with the regime for people in the legal profession, particularly solicitors, is that the most common type of complaint is from members of the public who feel that a grievance has not been dealt with adequately by the regulatory or complaints authorities. We shall discuss the complaints mechanisms in part 6. However, complaints from members of the profession have, periodically, been justified, such as that the process is very slow, which means that they have had a cloud hanging over them for a long time, and that the procedures are opaque, which has denied them natural justice in putting their side of the argument.

Whatever my view or the views of other hon. Members about alternative business structures, if we are to have some or all the systems, perhaps starting with a pilot or delayed scheme before they are all introduced, we need to ensure not only that the people who work within them can be dealt with toughly and without any nonsense if they behave improperly, but that the systems are reasonable.

The structures set out in the clauses are fine. It is perfectly proper to have a referral process about an individual employee and to have disqualification, and it is important to publish lists of people who have been disqualified, so that people do not find that they are dealing with someone who is no longer eligible. It is also perfectly proper for licences to be suspended or revoked and for there to be interventions. None the less, there must be fairness on both sides. Will the Minister assure us that the Government intend that the rules, as they are set up by the Legal Services Board and as they apply down the pyramid, will ensure that the new systems are better, fairer, more transparent and more user-friendly both for the people who work in the relevant businesses and for the consumers who buy the services?

It has not been a happy story. I can cite chapter and verse when it comes to perfectly reasonable complaints from aggrieved practitioners who feel that the system has not been fair to them. The greatest complaint on both sides is delay. Customers say, “This is a ridiculously long investigation,” and solicitors say, “It has taken ridiculously long for you to tell me whether I did anything wrong.” It will be helpful if the Minister can assure me that she understands the need for a system that is just on both sides and better than the previous one.

Nicholas Winterton (Conservative, Macclesfield)

Order. Before I invite the Minister to reply, may I suggest that the hon. Member for Stafford take the place of the Parliamentary Private Secretary so that if the Minister needs information from her civil servants, they can legitimately pass it to her via the Parliamentary Private Secretary, rather than directly?

Bridget Prentice (Labour, Lewisham East)

Thank you, Sir Nicholas, for that clear explanation of the quaint but important rules of Committee. It means promotion for my hon. Friend the Member for Stafford, and rightly so—[Hon. Members: “Hear hear.”]— a week early, in this case.

I need not delay the Committee. The hon. Member for North Southwark and Bermondsey is right. Fairness on both sides is crucial. The board and the approved regulators must act fairly and proportionately, and that applies to employees within the system as well as to consumers. Those working within the system are consumers, too, but in a slightly different sense. I can give him the assurance that the regulatory objectives and the duties under clauses 3 and 28 should ensure that the board and the authorities behave fairly towards everybody with whom they interact.

Schedule 14

Bridget Prentice (Labour, Lewisham East)

I beg to move amendment No. 184, in schedule 14, page 214, line 35, leave out paragraph (b).

I shall be brief. This is a technical amendment to delete wording that is superfluous because its effect is achieved elsewhere in the schedule. In order to make the provision outlined in paragraph 1 consistent with the same provisions in schedules 16 and 17—in relation to the intervention powers of both the Law Society and the Council for Licensed Conveyancers—I have deleted paragraph 1(2)(b), because that is covered by paragraph 1(2)(c), which relates to insolvency. It is unnecessary to have both of them.

David Burrowes (Conservative, Enfield, Southgate)

I appreciate that this is a technical matter. However, whether it is technical or substantive, it has to be right. I am concerned as to whether sub-paragraph (2)(b) is indeed superfluous. The reason for my concern stems from the definition of an insolvency event. For the purposes of sub-paragraph (2), paragraph 1(3)(c) states:

“an administrative receiver within the meaning of section 251 of that Act is appointed.”

I am concerned about the mention of an administrative receiver. Such a receiver is used for a different type of insolvency event from what the normal receiver would deal with, as mentioned in sub-paragraph (2)(b). Is the Minister confident that sub-paragraph (2)(b) is superfluous given that there is a distinction as set out in paragraph (3)?

Bridget Prentice (Labour, Lewisham East)

I hope that I can reassure the hon. Gentleman. The phrase “a relevant insolvency event” covers the wider aspect to which he is referring. The important thing about this technical amendment is that it brings things into line with the Law Society’s powers that are set out in relation to recognised bodies as they are amended in paragraph 113 of schedule 16; I do not want to be absolutely quoted on that. The measures under that schedule make schedule 14 consistent with Law Society powers. I hope that that gives the hon. Gentleman some reassurance.

Clause 104

Bob Neill (Conservative, Bromley and Chislehurst)

I beg to move amendment No. 296, in clause 104, page 56, line 30, after ‘body’, insert

‘which is not licensed by the Law Society’.

Nicholas Winterton (Conservative, Macclesfield)

With this it will be convenient to discuss amendment No. 297, in clause 104, page 56, line 33, after ‘body’, insert

‘which is not licensed by the Council for Licensed Conveyancers’.

Bob Neill (Conservative, Bromley and Chislehurst)

Thank you, Sir Nicholas. It is a pleasure to serve under your chairmanship again.

The amendments are intended to avoid ambiguity. They will give better and proper effect to the intention behind the section, which is to prevent the regulatory conflicts that can occur in relation to accounts. We think that the regulatory system can be simplified without compromising public protection, which is the principle behind the Bill.

The intention of the provisions relating to alternative business structures is that the rules of the licensing authority are for the business rather than for any individuals who work in the ABS, and they should apply to all the activities. That seems sensible. We do not have any quibble with that. Clause 104 is intended to reinforce that by ensuring that the accounts rules of the licensing authority apply rather than those of any professional body to which particular members of the ABS may belong. For example, a solicitor working in an ABS authorised by the Council for Licensed Conveyancers would be subject to the accounts rules of the CLC rather than the Law Society. We do not have any problem with that.

The problem is with the current wording. It seems to go too far, preventing either the Solicitors Regulation Authority under its status as the Law Society’s approved regulator or the CLC from adopting the most sensible and pragmatic approach to regulation of alternative business structures. The SRA, as a licensing authority, would wish to ensure so far as possible that the same rules apply to all the legal services businesses that it regulated, whether they were traditional solicitors firms, legal disciplinary practices or ABSs. We accept that additional regulation will be required for ABSs, but the core regulations should be the same. That is the thrust of their concern, which is why they and the Council for Licensed Conveyancers suggested the amendment. We believe that it is sensible.

Under the Bill, a firm of solicitors would become an ABS by, for example, making a finance director who was an accountant a partner of the firm. However, the finance director might quite properly decide to move on, perhaps having got a better offer elsewhere. The firm might replace him with a lawyer rather than an another non-lawyer—but still someone with the relevant expertise. At that point, it seems to us that the firm would cease to be an ABS; it would resort to being a “traditional” solicitors firm, although it could recruit a third person, a finance director who was an accountant, and become an ABS again. To have different sets of accounts rules applying to such a firm does not seem sensible. It is a needless bureaucratic burden, and it could cause extra cost and confusion—for the consumer as well as for the firm.

The SRA is concerned that clause 104 will notpermit the Law Society to make identical rules under paragraph 20 of schedule 11 and sections 32 and 34 of the Solicitors Act 1974; yet that is what they would wish to do, as it would overcome some of those difficulties. That is exactly what concerns the Council for Licensed Conveyancers. If they were able to do that, the problem would be resolved. We therefore hope that the amendment commends itself to the Government, as it is intended to make the Bill work better.

I hope, Sir Nicholas, that I may make one more point on an important matter of principle. It is convenient to make it now, and I hope that the Minister can reply to all my questions in one go. The Bill provides for a distinct regulatory regime for ABSs. That is sensible, as it allows for the creation of new licensing authorities; and the Legal Services Board can become a licensing authority if necessary and appropriate. Should an existing approved regulator such as the SRA apply to become a licensing authority, we anticipate that the application would be made on the basis of the SRA using largely the same set of statutory powers that it uses to regulate traditional solicitors firms and legal disciplinary partnerships. That is sensible, as it would maintain a proportional approach and avoid confusion. It would also avoid having gaps in the regulatory framework—a risk that we all want to avoid.

It would be for the Legal Services Board to decide whether to accept that approach, but we understand that the discussions between the SRA and the Ministry of Justice were on the basis that the Bill would allow the SRA to make application in that way. It seems that the transitional provisions set out in schedule 22 anticipate, at least in part, that existing regulators might need to amend their statutory powers as part of their application to become an ABS. I should be grateful if the Minister confirmed that our understanding, and that of the various professional bodies, is correct. Such clarity would help everyone. For the reasons that I have advanced, I hope also that the amendments commend themselves to the Minister.

Bridget Prentice (Labour, Lewisham East)

I hope that I can reassure the hon. Gentleman that the SRA’s position is as he outlined his understanding of it, thereby giving both him and the SRA some reassurance. The amendments are intended to clarify whether the trumping effect of the rules made under part 5, over existing rules applicable to solicitors and licensed conveyancers, will operate only where those professionals are working in bodies regulated by authorities other than the Law Society and the Council for Licensed Conveyancers, and to determine whether those rules do not attempt to alter the position of solicitors and licensed conveyancers working in firms regulated by other authorities.

I understand the underlying objective, which is, as the hon. Gentleman said, to avoid duplication through applying two different sets of accounts rules to ABS and existing practices. I appreciate the rationale behind that. Like the hon. Gentleman, I want to facilitate efficiency where possible, and clause 104 is consistent with that; it is intended to operate only to resolve situations where rules conflict, putting a solicitor or licensed conveyancer in a difficult position. I presume that, where the Law Society is the licensing authority for a body, its rules would not create a conflict for a solicitor within that body, and that the same would be true for the CLC and licensed conveyancers. I am happy to consider whether we need to make any further provision, just to reinforce that conflict-resolution point.

I assure the Committee that both the Law Society and the CLC will be able to apply for orders under schedule 22 or to seek board recommendations under clause 69 for amendments to their existing powers, so long as that does not conflict with the requirements of part 5. I cannot go any further than that at the moment and speculate about what the board might take into account in its recommendations or what the Lord Chancellor might decide. However, I hope that my remarks go some way towards reassuring the hon. Gentleman, the Law Society and the CLC that I understand their position.

Bob Neill (Conservative, Bromley and Chislehurst)

I am grateful to the Minister for replying to both points that I made and for dealing constructively and helpfully with the issue that we raised. It is clear that she, and those who advise her, are well seized of those legitimate points, so on the basis of her undertakings, I beg to ask leave to withdraw the amendment.

Clause 105

Clause 106

Clause 108

David Kidney (Labour, Stafford)

I beg to move amendment No. 271, in clause 108, page 59, line 4, leave out subsection (2) and insert—

‘(2) The management condition is that—

(a) the number of managers of the body who are non-authorised persons is less than 10% of the total number of managers; or

(b) the managers who are non-authorised persons who provide services directly or indirectly to clients within their own professional training, are members of one or more recognised professional bodies.’.

Nicholas Winterton (Conservative, Macclesfield)

With this it will be convenient to discuss the following amendments: No. 272, in clause 108, page 59, line 6, leave out subsection (3) and insert—

‘(3) The ownership condition for B satisfying the management condition set out in subsection (2) is that—

(a) the proportion of shares in B in which non-authorised non managers have an interest is less than 10%, and

(b) the proportion of the voting power in B which non-authorised non managers are entitled to exercise, or control the exercise of, is less than 10%, and

(c) if B has a parent undertaking (“P”)—

(i) the proportion of shares in P in which non-authorised non-managers have an interest is less than 10%, and

(ii) the proportion of the voting power in P which non-authorised non-managers are entitled to exercise, or control the exercise of, is less than 10%.

No. 273, in clause 108, page 59, line 16, at end insert—

‘(3A) The ownership condition for B satisfying the management condition set out in paragraph 2(b) is that shares and voting power in B are only held by authorised persons or members of recognised professional bodies.’.

No. 274, in clause 108, page 59, line 19, at end insert—

‘“recognised professional body” means a body (other than an approved regulator), incorporated by Royal Charter, which makes provision for—

(a) testing the competence of those seeking admission to membership of the body as a condition for such admission; and

(b) imposing and maintaining professional and ethical standards for its members, as well as imposing sanctions for non-compliance with those standards.’.

No. 275, in clause 108, page 59, line 23, at end add—

‘(5) For the purposes of subsection (4)—

“member” means a member or member firm as defined by the appropriate rules of such a body.’.

New clause 15—Low risk and professional bodies—

‘(1) A licensing authority may apply to the Board to determine the status of a recognised professional body if it is in any doubt as to whether that professional body meets the criteria set down in this Act.

(2) A licensing authority may apply to the Board to determine whether a body “B”, which is “low risk” under section 108(2)(b) should not be treated as low risk if it considers the services to be offered by B are inconsistent with the “professional principles” set out in section 1(3).’.

David Kidney (Labour, Stafford)

Sir Nicholas, it is fortunate for Committee members that you have returned safely from the Falkland Islands and that consequently we are able to benefit from your firm and fair guidance as Chairman of our proceedings. I remind hon. Members of my registered interest as a non-practising solicitor. I am indebted to the Institute of Chartered Accounts in England and Wales, which from now on I shall refer to as the institute, for its assistance in drafting the amendments in the group and the new clause.

The clause defines a low-risk body. Under clause 106, which we approved a moment ago, the licensing authorities may in relation to low-risk bodies disapply some of their rules and disapply schedule 13, in whole or in part. That clause therefore recognises that the full panoply of regulation is unnecessary for some alternative business structures. Taken together, the amendments in the group would define as low-risk those multi-professional practices that consist of already highly regulated and trained professionals. The new clause would incorporate a get-out clause for the licensing authorities in some circumstances. Further, one of the amendments in the group would tighten the “10 per cent.” category of low-risk bodies in the clause, such that it would apply only to internal owners and with the full oversight of the regulator.

I believe that there is a growing willingness across the political parties, and certainly in the professions, that part 5 should facilitate alternative business structures but ensure that the right protections are in place to deal with risk to consumers. That is certainly the thrust of the Clementi report, and I know that a lot of people in business and the professions are keen for the Government to do what they say by accepting the Hampton principles of risk-based regulation. Although there will be opportunities for significant benefit for consumers and the economy, we need to ensure that in cases where there is a low risk the process can be enabled as easily as possible. The flexibility of a low-risk category is appropriate, but clause 108 defines low-risk bodies as those with up to 10 per cent. non-lawyer ownership and up to 10 per cent. non-lawyer management, irrespective of the training, professional standards and ethics of those owners and managers and whether they are external or internal owners. Licensing authorities can vary licensing conditions for those low-risk bodies.

The vast majority of likely combinations of well-regulated professionals and lawyers could conceivably be regarded as offering positive benefits for consumers but low risk to consumers. For example, there would need to be 10 lawyer partners to allow one equal partner to come on board for a body to be defined as low risk. That deprives smaller high street or rural practices of the opportunity to come together as low-risk bodies, and inhibits the benefit to consumers of such alternative business structures. Such multi-professional practices have the potential to support access to justice on the high street and in rural areas.

As my hon. Friend the Member for West Bromwich, West said this morning, it is wrong to think that allowing alternative business structures will impact only negatively on access to justice. By offering extra commercial opportunities to small legal practices, and a reduction of back-office and marketing costs, they might aid the survival of such firms in an increasingly competitive market. When different professions combine across different towns, access to justice could be increased.

The current approach of part 5 plunges that combination of small professional practices into the panoply of licensing conditions for alternative business structures of a much higher risk. In effect, it favours those alternative business structures developed by larger law firms and puts extra restrictions and costs on smaller law firms and firms of other professionals that would like to be ABS. Allowing multi-professional practices also offers sizeable benefits to business and consumers. Small enterprises have to go separately to both lawyers and accountants for general business advice. One-stop shops would increase competition, reduce costs and reduce the time taken to develop understanding of a business and its needs. The benefits for our enterprise economy could be significant, and allowing their lawyers and surveyors to come together could cut time and complexity for home buyers.

What is proposed is a recognition that for the vast majority of professionals, coming together with lawyers when they are both owners and managers of the practice will be low-risk. That will help to ensure opportunities for all sizes of legal practice while enhancing fair competition. The classification of recognised professionals uses a definition used in recent Home Office legislation on money laundering reporting obligations, but makes it tougher by referring to the chartered status of each institute. Furthermore, the additional safeguards that have been proposed would enable the authorised licensing body to challenge the presumption of low-risk and appropriate cases.

Approved regulators in the board can act in cases where it might be argued that certain professional organisations have regulatory systems that are unacceptable or where certain combinations of services require greater regulatory oversight. I want to pause for a moment to talk about that point. I have seen a lot of support for the institute’s position, most recently from the Federation of Small Businesses. It wrote to the Minister this week—I do not know whether she has seen this yet—to say that it supports the position. It said:

“Lawyers and accountants are the most common sources of small business advice and they can play a vital role in assisting entrepreneurs.

It went on:

“This is why the enablement of multi-professional practices, and greater competition and innovation in the professions, has so much potential for UK enterprise and the wider public interest.”

I note, too, that the institute’s position is supported by a number of other chartered institutes—the Chartered Institute of Patent Agents, the Institute of Trademark Attorneys and the Royal Institution of Chartered Surveyors. If I have one hesitation about the matter, it is that in much of what I have said about access to justice provided through such alternative business structures, I have referred to quite small businesses. However, there is nothing in the amendments to stop an extremely large law practice—or a large practice of chartered accountants, for that matter—from forming and claiming that it is a low-risk body.

That is why new clause 15 is important. It could be said that although the same principle still applies—they should all be highly regulated, well-motivated and honest professionals doing their jobs within their competencies—the very fact that large groups of people doing many different kinds of work come together adds a layer of complexity that would not be present in a much smaller firm. That is why the new clause would allow the licensing authority to say in some circumstances that they will not accept designation as a low-risk body or disapply any of the rules.

Amendment No. 271 is a means of introducing an alternative class of low-risk body related to professionals coming together who are all subject to supervision through a chartered institute. Of the grouped amendments, No. 272 introduces the tie that I mentioned between ownership and management, No. 273 is effectively a consequential amendment concerning professionals as owners, Nos. 274 and 275 are the definitions and, as I have explained, new clause 15 provides a get-out clause for the licensed authorities if it is seen that a particular combination ought not to be regarded as a low-risk body.

David Burrowes (Conservative, Enfield, Southgate)

It is a pleasure to follow the hon. Member for Stafford, who served with me on the Joint Committee and was a vocal member. I have been awaiting his voice expectantly, and it has been worth the wait. I support the amendments. I shall try to allay concerns—I can think of one particular hon. Member who may have some—that there might be just some love-in going on among lawyers, accountants and members of established professional bodies. That is certainly not what is going on. In many ways, this is a love-in with consumers.

We must not forget that small businesses are also consumers of legal and professional services. The hon. Member for Stafford referred to the support of the Federation of Small Businesses, whose 2006 report “Lifting the Barriers to Growth in UK Small Businesses” stated that accountants are the main source of business advice, being consulted at a rate of 54 per cent., followed by solicitors at a rate of 28 per cent. One-stop advice shops could reduce costs to business consumers and increase competition and innovation. The voice of a consumer body is also worth referring to. The National Consumer Federation believes that one-stop shops promise greater convenience and more choice for consumers. It is good that an alliance of consumers, businesses and professionals alike should endorse the amendments.

The high benefits and low risk of multi-professional practices are of prime importance. When well-regulated professions come together in alternative business structures, such businesses will be subject to regulatory regimes. In many cases, all employees will be subject to two regimes—the Bill deals with those regulatory conflicts—but if different skills and backgrounds are brought together, even if professionals remain within the sphere of their expertise, the quality of service is likely to increase.

The Government have set the risk bar at 10 per cent. ownership, but that pays no attention to the individuals’ background or what they will be doing in the practice. Well regulated, multi-professional practices clearly fall below the low risk bar that the Government have set in the Bill, yet they will not be able to take advantage of that low-risk definition.

In essence, the amendments establish that low risk stems from the nature and type of ownership, not necessarily from a percentage interest. I support this balanced group of amendments because the approach has a degree of caution, which the hon. Member for Bassetlaw might welcome. It is right to be cautious; although someone might believe themselves to be professional, they might not yet have reached that stage, so proper regulatory systems need to be in place. There needs to be a check on a combination of services and systems that might threaten the principles of the legal profession. New clause 15 would deal with that by allowing the rebuttal of the presumption of low risk. The board would be at the centre of that decision and it would be allowed to set standards of appropriate professionalism and encourage the professions to take the new opportunities.

The amendments would address my concerns about the impact of this part of the Bill on small businesses. For example, a small legal practice of two persons that comes together with a non-legal professional will be classified as having a higher risk than a practice of 100 partners that takes on 10 non-legal professionals. Given that the non-lawyers would remain in their own area of professional expertise, how would the risk be established consistently? I wonder whether the 10 per cent. rule is appropriate in such a situation, and whether the Government appreciate what its impact will be on the ability of small businesses—and larger ones, to which the hon. Member for Stafford referred—to enter the market and provide a good service to consumers.

The amendments would benefit consumers as well as businesses of various sizes. They would improve our competitive standing, not least in the City. The difficulties of international regimes and conflicts of interest will, in the main, deter the mergers of larger firms. Those offering services such as forensic investigation and due diligence could benefit especially from specialist, multi-disciplinary practices. If people dealing with business turnaround and insolvency were brought together with those offering legal and other professional advice, it could only help business survival. The one-stop services extolled by the National Consumer Federation, which we wish to support and encourage, would help to reduce costs. That would result in more money for business survival, which would be of assistance to employees.

One might rebut the arguments behind the amendments by asking whether we are not just creating the spectre of Enron. However, we should take comfort from, rather than be concerned about, the interaction between regulatory regimes. The Financial Reporting Council is a good example because it has regulations to prevent the combination of audit and legal services, which has a material impact on the independence of audit. Indeed, such auditing is taking place in only 10 companies of the larger ilk. The FRC no doubt has the concerns of the public in its sights. However, we should not deny opportunities to the vast majority of businesses.

The Institute of Chartered Accountants, which was referred to, has a membership of 12,000 registered accountancy firms. If one does not take the word of the bodies that have been mentioned, one might take note of the approach of Sir David Clementi, whom Members on both sides of the House have sought to pray in aid. We might do so particularly with regard to his intention to ensure that alternative business structures are allowed to develop in a controlled manner.

The Joint Committee recommended a step-by-step approach. The amendments would create the right structure and utilise the expertise of the licensing authorities and the board to set detailed conditions. They would ensure that barriers to ABS were proportionate to risk, which is one of the Bill’s intentions, and would allow low-risk ABS to be set up more easily. That would provide a better risk-based approach than part 5 of the Bill that would be of benefit to the consumer and would help to mitigate concerns about threats to access to justice. Regulatory scrutiny would be focused on ABS that posed high risk and greater potential for conflicts in respect of access to justice.

As we have heard, the Institute of Chartered Accountants supports the amendments. It should be commended for saying:

“A better risk based approach to facilitation of differing forms of ABS should be adopted. This should utilise existing systems of regulation to concentrate resources on the greatest risks to consumers.”

That would provide appropriate transitional arrangements for existing ABS that should

“ensure minimal disincentives to their continuation.”

The institute says:

“Through such an enhanced risk based approach, costs to the consumer and barriers to innovation can be minimised.”

It is for those reasons that I commend the amendments to the Committee.

Bridget Prentice (Labour, Lewisham East)

I absolutely agree with my hon. Friend the Member for Stafford and the hon. Member for Enfield, Southgate about following the Hampton principles in respect of the risk-based approach. We very much want to do that. The proposed bodies would not have a maximum percentage threshold for non-lawyer management or control. Instead, any number of non-lawyers could be managers and owners—if I understand amendment No. 273 correctly—provided that they were all members of recognised professional bodies.

New clause 15 would provide the board with the power to restrict the professional bodies that would be acceptable in that context for the purpose of determining whether certain professionals could qualify for low-risk status. I can tell that a great deal of thought has gone into the amendments and I commend my hon. Friend for the way in which they have been drafted. Various attempts have been made to add the necessary safeguards, but that may still provide for a wide range of practices to emerge without the requirement of full ABS regulation. I would be reluctant to allow that to happen because I do not believe that they would necessarily all be low risk.

For example, there is no requirement that the non-lawyer owners and managers must be the same or, indeed, that they must be individuals. As a result, a body could be at least partly owned—for example, up to 95 per cent.—by an audit firm and, under the amendments, still be classed as low risk. That is not a desirable outcome and nor is it the outcome that my hon. Friend would want.

More importantly, the amendment would class some forms of multidisciplinary practices as low risk. Even if the non-lawyer professionals were effectively regulated, things would need to be faced when combining different codes and rules, and different services. That is why part 5 is so important because it creates such safeguards to address exactly that situation. I recognise that multidisciplinary practices might bring many benefits, but they must be carefully regulated, as both Sir David Clementi and the Joint Committee recognised. I am therefore still reluctant to waive part 5 safeguards for bodies of that type.

My hon. Friend put his argument succinctly. A young friend who owns an outstandingly successful IT business wrote to me before Second Reading about the one-stop shop that is necessary when people are starting up a small business because of the variety of professionals they have to get in touch with, such as lawyers, conveyancers and bankers. The whole gamut of people who are needed can lead to quite an expense at the early stage of setting up a business. I understand the problem and have a lot of sympathy with small businesses, especially for that reason. I take on board what the Federation of Small Businesses says, and my friend Leigh Caldwell made clear the importance of the one-stop shop.

My concern is whether it is appropriate to ditch the safeguards in part 5, so I say to my hon. Friend and the hon. Member for Enfield, Southgate, who has been supporting him, that although I shall resist the amendment, I have heard the concerns of hon. Members and small businesses about legal disciplinary practices and the need to ensure that we take a genuinely risk-based approach, as I have said in previous debates. I am exploring whether we can bring forward a viable alternative to cover that until part 5 is up and running. If that is possible, I shall do so on Report. On that basis, I ask my hon. Friend to withdraw the amendment.

David Kidney (Labour, Stafford)

We have had a useful, albeit short, debate. My hon. Friend the Minister’s response was extremely constructive, and it was pleasing to hear her say that she would give further consideration to the matter and perhaps say something more positive on Report. Will she give us an assurance that she will continue the dialogue with the various chartered institutes and legal bodies that have an interest, such as the Law Society? Perhaps she will keep Members with an interest in the subject informed of how those negotiations are progressing.

Bridget Prentice (Labour, Lewisham East)

I am more than happy to give my hon. Friend that reassurance. I shall certainly keep him and other members of the Committee abreast of how successful we are in dealing with the matter. I hope that, in turn, he and others will encourage those professional bodies to work closely and positively with us to see whether there is a solution that would be satisfactory all round.

David Kidney (Labour, Stafford)

That is very helpful. I beg to ask leave to withdraw the amendment.

Clause 109

Simon Hughes (Liberal Democrat, North Southwark and Bermondsey)

Does the Minister anticipate that, under the clause, it is inevitable and obvious that the Government are likely to advance some provisions in relation to links between England and Wales, Scotland and Northern Ireland and Ireland? Clearly, the clause will deal with any foreign jurisdiction. However, although we have separate legal systems within the United Kingdom, there are common interests and practices in the three different legal jurisdictions in terms of professional background, and so on—and in relation to Ireland as well. Perhaps the Minister could shed some light on the implications of the clause, which is reasonable and proper but hints at more than it tells us.

Bridget Prentice (Labour, Lewisham East)

In so far as Scotland and Northern Ireland are foreign areas, they would fall under this part of the Bill and the relevant provisions would apply, if necessary, to the different jurisdictions—let us not call them foreign areas—in terms of the legal profession.

Simon Hughes (Liberal Democrat, North Southwark and Bermondsey)

I should like to probe a little bit further. I do not know whether there is current provision along the lines of part 5 in Scottish law or the law relating to Northern Ireland, so I do not know whether there is any arrangement in either of those two places that would make it obvious whether, for example, a company carrying on such business north of the border in the Six Counties would be likely to want to act here.

The other side of the coin is that, presumably, organisations that are mixed in terms of professional background and expertise might be up and running in other countries. Again, I do not know. Can the Minister share anything with us about whether, as of today, ABS-type organisation is possible in the Republic of Ireland, for example? Is that already legitimate and something that happens? Across the water, on the mainland of Europe, the whole system is different, with the exception of the two common-law countries of Cyprus and Malta, so we are not talking as easily and readily about other European Union countries. Are we expecting companies or business structures to practise and offer services in England and Wales and Northern Ireland or Scotland, or the whole of the British Isles? Lots of the companies that have been mentioned do so. The services offered by Tesco and the AA do not stop at Offa’s dyke, Hadrian’s wall or the Irish sea. Will other organisations act across the jurisdictional boundaries?

Bridget Prentice (Labour, Lewisham East)

I cannot speak for mainland Europe. There is a different system there, and I am not aware, as yet, of any country that will have something similar to this measure, although a number are keen to see how it works and are looking to us to lead the way.

I mentioned on Second Reading that there were aspects of the provision that would allow changes to be made in the Scottish system, as the Scottish Executive had asked us to provide. I am not aware that the Republic of Ireland has such a system, although it is also interested in seeing how it works. However, there are facilities across the English-Scottish border for organisations to work in both places.

Clause 110

Simon Hughes (Liberal Democrat, North Southwark and Bermondsey)

Elsewhere, there will be registers that people can look at to see who is disqualified and who has a licence. It is implied but not yet expressed that the annual report, which is an important part of the accountability process, would be listed and could be found immediately on publication, first, in the place where one looks for the other information that has been referred to in part 5, and secondly, automatically on a website on the day of publication, so that as soon as an ASB published its annual report, it would go up on the site, people would have up-to-date information and its production would ensure maximum transparency.

Bridget Prentice (Labour, Lewisham East)

I think that I can guarantee that.

Clause 111

Clause 113

John Mann (Labour, Bassetlaw)

I beg to move amendment No. 283, in clause 113, page 61, line 35, at end add—

‘(6) Nothing in this Part is intended to prevent an application to the Solicitors’ Compensation Fund for redress in respect of a determination by an ombudsman with which a solicitor respondent is unable or unwilling to comply.’.

As the lawyer’s friend, may I immediately correct the official record of the statements that the Opposition made? I have nothing but the highest regard for the profession, and all my intentions are deliberate ones to ensure that business goes to those of the highest regard and repute, rather than the minority who bring the profession into such great disrepute. It has been my pleasure in the past 12 months to work with some of the finest people. Mishcon de Reya, Bindman and Partners, Russell, Jones and Walker and Clifford Chance are all excellent proponents of the profession.

It is important that the record is put straight, following those previous comments, because again the vested interests are trying to categorise their attempts to hold down the regulation of their profession and somehow to counterpose those people outwith the profession as opposed to those within it. Quite the opposite: the whole point of self-regulation is that it is made to work effectively, so I propose this modest little amendment to allow the Minister the opportunity to strengthen further the Bill. She may or may not say that it is required, or she may say that it could be covered in other ways, and I wait with eager anticipation.

However, there are situations in which the course of regulation goes in one direction, but there are circumstances in which such power would be important in making the consumer, who has been done over financially, certain of redress, if redress were felt appropriate. I could cite cases to which the amendment would be relevant, but I do not want to detail them, not because of time, but because the cases are ongoing and I should not want to prejudice them. So I offer this modest little improvement to the Minister for her delectation.

Bridget Prentice (Labour, Lewisham East)

My hon. Friend always looks to the centre of the issue. One of our main objectives is to ensure that the consumer gets the proper redress and gets it quickly. I commend my hon. Friend’s assiduous way of going about this—he will sense that there is a “but” coming—but the amendments are not necessarily the right approach. They are ineffective in the sense that there is nothing in the Bill to prevent application for payment under the compensation fund.

Clause 141 is designed to deal with instances where the solicitor, the barrister, or whoever the authorised person might be fails to pay redress awarded against him to a complainant. Under that clause either the complainant or the ombudsman can go to court to have that determination enforced. It is right that the determination should be enforced by court. A lawyer who has done something wrong should pay redress. If the complainant has to make an application to the compensation fund, that might send the wrong message that it is all right for a solicitor to refuse to comply with an ombudsman’s determination because everyone else will have to cough up on his behalf. That cannot be right.

The compensation fund is a discretionary fund. Only the Law Society and the CLC have compensation funds. It is a fund of last resort, operated by the SRA, where no other avenues are available. If a complainant were awarded £5,000 by the ombudsman as redress and the solicitor refused to pay, clause 141 would allow either the complainant themselves, or the OLC if necessary, to have that enforced through the courts.

If a situation arose where the solicitor genuinely could not pay, it might be possible to make the application for payment from the compensation fund. There is no absolute guarantee of success, but nothing in the Bill prevents that from happening. To that extent the amendment is unnecessary. My other concern is that it applies only if the solicitor is unwilling or unable to pay. What happens if a barrister, legal executive, notary or someone else who is an authorised person does not pay under the Bill? I gently suggest to my hon. Friend that singling out one group—solicitors or complaints about solicitors—goes against this part of the Bill. I do not want to see different systems for different complainants.

The idea is that the OLC is the single portal for complaints and I think it should also be the single portal for ensuring that those complaints are dealt with and treated consistently and transparently right across the board. That is why I prefer what we have said in clause 141 to these amendments. My hon. Friend is right to say that complainants do not like having to go to court. It can be a daunting and frightening prospect. That is why we tabled amendments in the other place that allow the OLC to bring those court proceedings on behalf of the complainant. If the lawyer does not comply with that determination and the complainant is intimidated, the ombudsman is there as a form of protection and can go to court on the complainant’s behalf.

I hope that my hon. Friend will know that there are no circumstances in which I would want to see any type of lawyer thinking that they might get away with refusing to pay or to comply with an ombudsman’s determination. If redress is awarded against them, they will have to pay it; either immediately or because they will be taken to court to ensure that they pay.

I hope that I have given a sufficiently strong response on behalf of the consumers whom I know my hon. Friend wants to see getting the best out of the Bill, and that he will feel able to withdraw the amendment.

John Mann (Labour, Bassetlaw)

I thank the Minister for her response and I note her suggestion that this amendment is not strong enough; I certainly would not wish to have barristers excluded from any provisions in the Bill that they should not be excluded from.

So, I hear what the Minister is saying in relation to the amendment. However, I shall leave it to her to contemplate that there is potentially a loophole here. Although the Minister says that there is nothing that prevents this situation from happening, there is nothing that would make it automatic. A solicitor may go bankrupt—possibly by choice—or do a runner, perhaps because the volume of potential new complaints, which are comparable to the first one heard, can be added up and counted. That is certainly a possibility, and not just a theoretical one but a real one. If the rest of the country were to follow the example of my constituents, large numbers of people might choose to come forward—for example, miners and textile workers. That would create an interesting paradox. This question of positive powers needs some further reflection.

I hear what the Minister says, that the wording of the amendment may not be strong enough to deal with that situation. On that basis, I beg to ask leave to withdraw the amendment.

Clause 114

Simon Hughes (Liberal Democrat, North Southwark and Bermondsey)

We have slipped, without any but the most observant of us realising, into part 6 of the Bill, which I hope even the Whips will think is relatively good progress. [Interruption.] I said, “Relatively good progress”; the Whips are never entirely happy, but they may be relatively happy at such progress.

We are now dealing with the first clause that establishes the Office for Legal Complaints. I would just like to make the point here, because it is obviously the right place to do so, that this is a welcome initiative. It is a proposal to ensure that there is, as it were, a one-stop shop for legal complaints, so that the public can be pointed in one direction and go through one door, and that any legal problems that may have arisen—a problem with a solicitor’s firm, or with a member of the Bar, or with both, or a problem anywhere else along the legal representation route—can all be examined together. That is a step in the right direction.

Historically, there are different professions, but the boundaries of their activities have been reduced over the years. Rights of audience, for example, in the courts have been widened; in many ways, that has clearly been a good and successful thing. Again, taking the starting point of the Minister in this respect, for the user of the services it seems to me that when there is a complaints system—such a system is necessary in a professional organisation, particularly those paid for with public money—it is better that we have a system that brings together professions that have so far been apart. Some professions have been much better than others in the past; some have been really quite good at dealing with their own discipline and the complaints that they have faced, and some have been far less good. It seems to me that we need to adopt the standard of the best, to ensure that the system is neither overly bureaucratic nor overly delaying but instead is good, efficient and accountable. The clause opens the door to that and puts forward a proposition that I am sure members of the Committee will support, and that members of the public will welcome.

Schedule 15

Henry Bellingham (Conservative, North West Norfolk)

I beg to move amendment No. 300, in schedule 15, page 222, line 35, leave out sub-paragraph (2).

Schedule 15 details the arrangements for setting up the Office for Legal Complaints, and deals first with membership. It states:

“The OLC is to consist of the following members...a chairman appointed by the Board with the approval of the Lord Chancellor, and...at least 6, but not more than 8, other persons appointed by the Board after consultation with the chairman.”

Paragraph 1(2) states:

“The Lord Chancellor may by order amend sub-paragraph (1) by substituting, for the limit on the maximum number of persons for the time being specified in paragraph (b) of that sub-paragraph, a different limit.”

The amendment would remove the provision that enables the Secretary of State to alter the number of members of the OLC. Why should the Secretary of State have any role in fixing that number? Such a provision might have made sense as an emergency power over the LSB but, plainly, it is totally unnecessary here. The LSB is in charge of the OLC; the OLC is responsible to it. It does not make any sense to have the Secretary of State in the chain of command. The amendment would simply delete paragraph 1(2).

Bridget Prentice (Labour, Lewisham East)

The amendment is similar to one that was tabled twice in the other place. It would completely remove the power to change the maximum size of the OLC by order. There seems to be a fear that the Lord Chancellor would have undue influence over the OLC by setting the size of the membership. I do not believe that to be the case, or that the amendment is necessary.

The OLC is a non-departmental public body and as such is ultimately accountable to Parliament. It must therefore be right for the Lord Chancellor to have a minimum involvement—I deliberately used the words “minimum involvement”—in how the body is constituted. The Lord Chancellor does not have a role in approving the OLC’s rules, such as those about how claims will be handled, apart from the rule on case handling fees. He will also not have a role in handling individual complaints. I do not see that the fears about the Lord Chancellor having undue influence are substantiated.

I hope that hon. Members will appreciate, even if the amendment does not, that there is a need for a mechanism by which to change the size of the OLC membership. Such a mechanism is important because it will allow the OLC to adapt to changing demands, for example, by increasing its expertise and knowledge. It was suggested in the other place that such action could be taken if the matter was left to the LSB; I do not agree.

The OLC is a non-departmental public body—I shall not call it an NDPB because I am worried about the number of abbreviations that I am using, and concerned that I might be beginning to speak a different language altogether. A non-departmental public body is described in “Public Bodies: A Guide for Departments” as a

“body which has a role in the processes of national government, but is not a government department, or part of one, and which accordingly operates to a greater or lesser extent at arm’s length from ministers...The distance of NDPBs from government means that the day-to-day decisions they make are independent as they are removed from ministers and Civil Servants. Ministers are however ultimately responsible to Parliament for a NDPB’s independence, its effectiveness and efficiency”.

As the Lord Chancellor will ultimately be responsible to Parliament for the Office for Legal Complaints, he, not the board, should have a role in changing its size. In practice, he will not make that decision without the board giving its views; that is obvious because the board will have to make the appointments.

Even if the Lord Chancellor wanted to be mischievous and to create a board twice the size of the one that is presently constituted without telling the Legal Services Board, he could not do it, because the board is under no obligation to make those additional appointments. For those reasons, it cannot just be left to the Legal Services Board. The hon. Gentleman and his noble Friends should have more faith in the Lord Chancellor and how he exercises his role. On that understanding, I ask the hon. Gentleman to withdraw the amendment.

Henry Bellingham (Conservative, North West Norfolk)

We do not have a great deal of faith in this Lord Chancellor and I suspect that he will not be around for much longer as things stand. But it isnot for us to speculate on that matter in this Committee.

Conservative Members, especially under our new leadership, believe in smaller Government, and we do not believe in Ministers having so much power. On the other hand, our leader has told us not to be confrontational, so I will be Cameron-compliant on both counts. I beg to ask leave to withdraw the amendment.

Simon Hughes (Liberal Democrat, North Southwark and Bermondsey)

I beg to move amendment No. 227, in schedule 15, page 226, line 15, leave out paragraphs 21 and 22.

This is another straightforward amendment to delete a two-part restriction on the powers of the Office for Legal Complaints, which effectively says that it cannot have any dealings with land in that respect. Life should be simple whenever possible, and I see no justification for the proposal. It is entirely reasonable that if a body is being set up it should be given the power to do what it needs to do; even though one cannot envisage the circumstances, such a power might be needed in the future. I am intrigued to know why the Minister thinks we need to tie the hands of the new body so that it cannot do something for five years. It is likely that three and a half years down the track, it will discover that it needs to do something and amending legislation will be necessary to put that right. Would it not be better to take out the appropriate paragraphs, as the amendment suggests?

Bridget Prentice (Labour, Lewisham East)

The amendment would remove the requirement on the OLC to obtain the Lord Chancellor’s consent in the acquisition or disposal of any interest in land during the first five years and the provision that it cannot borrow money except with the general authorisation of the board and the consent of the Lord Chancellor.

I am resisting the amendment because the location of the OLC is important; it has implications for the successful establishment of the ombudsman scheme and for the staff working within the present framework. In recognition of that, on 26 June last year, I made a written ministerial statement to the House explaining that the Government’s preferred location for the OLC is the west midlands.

That statement also made it clear that Leamington Spa would not be considered. That was to ensure that the OLC will be seen to be a new organisation, independent of the existing framework, and that it will be able to take advantage of a larger local labour market and the benefits associated with moving to a new site. The business case for the west midlands was extraordinarily strong—far stronger than that for any of the other four locations that we considered. It was built on the availability of suitable skills and experience, value for money, commitment to the principles of the Transfer of Undertakings (Protection of Employment) Regulations 1981, and the enforced presumption against locations in London and the south-east following the Lyons review.

Schedule 15(21) deals with the acquisition and disposal of land, and its intention is to ensure, in legislation, that the OLC is bound by the Government’s announcement. In light of the strong business case on which that announcement was based, it is appropriate and necessary. However, I recognise what the hon. Gentleman says about changing circumstances and the requirement on the OLC to seek authorisation from the Lord Chancellor that is imposed by paragraph 21, which is a sunset clause.

On the conditions placed on the borrowing powers of the OLC, paragraph 22 provides that any borrowing must be subject to safeguards. It must have the consent or general authorisation of the board, and the board must have the consent of the Lord Chancellor. Amendment No. 227 would remove that requirement. Removing those appropriate precautions would mean that, should the OLC face exceptional circumstances that require it to borrow money, it would be able to do so without first requiring the express consent of the board and the Lord Chancellor. We expect the levy to be the OLC’s principal source of funding. Consequently, we do not expect the OLC to exercise its borrowing powers often if at all. However, unforeseen circumstances could arise in which borrowing is the most appropriate way to deal with an issue. It is entirely sensible, therefore, to provide for the OLC to borrow money. It is equally sensible and necessary to comply with Government accounting regulations dealing with borrowing by public bodies to ensure that any borrowing that is done is subject to the appropriate safeguards. In the case of the OLC, it is clear that that should be provided through the oversight and control of both the board and the Lord Chancellor. For those reasons, I ask the hon. Gentleman to withdraw the amendment.

Simon Hughes (Liberal Democrat, North Southwark and Bermondsey)

I am grateful for the Minister’s reply and I understand it. I shall not seek to divide the Committee. However, I shall be grateful for just one more bit of information along the lines of those that the Minister has volunteered.

All Committee members know that there was a debate about where the new office for dealing with legal complaints would be. I accept that there was a proper assessment and that the best business case was that for the west midlands. However, the Minister knows what the political issue is. It is that part of the complaints system for solicitors has for some while been in Leamington Spa. It has changed its name, title and organisation, but effectively it is still the same sort of organisation in the same place. There is a concern about whether this is a fresh start or a continuation of the old system and not just a rebranding or a repackaging that comes afresh.

Do I assume, as I have always assumed from what the Minister says, that the TUPE rules will apply, and that all the people currently working at Leamington Spa will be subject to the obligations of the new organisation to seek to employ them, and transfer them? If that is the case, can the Minister remind us how many people currently work for the organisation in Leamington Spa dealing with solicitors’ complaints and how the Minister and the Government hope that there can be a fresh start? It is going to be in the same region, although not in the same town—a matter of 20 or 30 miles away—but will be perceived as being a continuation of the same organisation, just around the corner, up the road. I would be grateful for facts and numbers, confirmation about TUPE, and the Minister’s intention for a new start from what is a continuation, as a result of us passing the Bill later this year.

Bridget Prentice (Labour, Lewisham East)

I shall take those three things in reverse order. First, although I have said it before in a written ministerial statement to all stakeholders, I make it absolutely clear that, under no circumstances, is this exercise to be a rebadging of Leamington Spa. If that were to be the case, it would greatly undermine some of the thrusts of the Bill. I want to make that absolutely clear.

Secondly, the hon. Gentleman, who, like me, represents a London constituency, may not have the best knowledge of the transport links in the west midlands. I am told by some of my colleagues that although the new site might not seem that far away from Leamington Spa, it is not necessarily the most straightforward area, geographically, in which to get from one place to another. I shall have to leave it to others to be more precise about that.

I hope that the hon. Gentleman will agree that it is only right that we use TUPE. It is good employer practice and, although we are not the employers, we want the future employers to uphold good employment practice. That is why I said earlier that despite the fact that we are not obliged to do so, we would use TUPE to deal with the matter.

Thirdly, I should say that the OLC will be different in that it will have its own chief executive and a new board. That will make a big difference, so there is no way that there will be just a straight transfer of staff. In terms of numbers, my understanding is that in Leamington, there are about 300 members of staff. We envisage, according to the last figures that I have received, that up to 80 per cent. of staff will transfer. Some will take early retirement, some will do other jobs and some will decide that they have had enough of dealing with complaints about solicitors. Those are decisions that individuals and their families will have to make. I want to ensure that in the transitional period, we deal sensitively with all the people involved, because it is a time, or for some an opportunity, to think about what they want to do in terms of their careers. We must be responsible about giving them the support to do that properly, and we must be sensitive about people’s needs in that area. That is why we are trying to do this in this fashion, and I hope that that satisfies the hon. Gentleman.

Simon Hughes (Liberal Democrat, North Southwark and Bermondsey)

I am grateful for the Minister’s confirmation about the answers. I entirely understand and agree with her points about the need to ensure that both the attitude of Government Ministers and parliamentarians is sensitive to the individual circumstances of all those who work there. They obviously argued that they should be allowed to continue, but that was rejected. I have argued a similar view

We need to have an end and a new start. It would help to have confirmation that, although it is not obligatory, two people should apply. It seems sensible. A move of location is clearly one way to indicate a new start. Things need to be done differently, even if with some of the same staff. Although I am not an expert, my recollection of the old geography—in old money, as it were—is that Leamington Spa and Coventry were both in Warwickshire. So far as I know, they still are. The minds of the people therefore cannot be far away, although I remember from bitter experience that, as we all know, traffic jams happen just as much in that part of the world as elsewhere. I beg to ask leave to withdraw the amendment.

Clause 121

John Mann (Labour, Bassetlaw)

I beg to move amendment No. 285, in clause 121, page 63, line 11, at end insert—

‘(za) investigate the handling of complaints by the Office for Legal Complaints (complaints under this subsection include those handled on behalf of the Office for Legal Complaints and those referred to Approved Regulators by the Office for Legal Complaints).’.

Nicholas Winterton (Conservative, Macclesfield)

With this it will be convenient to discuss the following:

Amendment No. 286, in clause 121, page 63, line 24, at end add—

‘(6) The Board may take any steps it considers reasonably necessary to ensure the OLC’s compliance with any obligations set under section 118(2)(a), (b) and (c).’.

New clause 7—Intervention directions—

‘(1) The Board may give the OLC an intervention direction in relation to any of its functions if the Board is satisfied—

(a) that despite notice it has failed to handle complaints about authorised persons effectively and efficiently, and

(b) that, in the circumstance of the case, it is appropriate to give the intervention direction.

(2) An intervention direction, in relation to the function of the OLC, is a direction that—

(a) the function is to be exercised by the Board or a person nominated by it, and

(b) the OLC must comply with any instrument of the Board or its nominees in relation to the exercise of the function.

(3) The Board may not determine that it is appropriate to given an intervention direction unless it is satisfied that the matter cannot be adequately addressed by the Board exercising the powers available to it under section (Board’s functions in relation to complaints).

(4) The Board must make rules as to persons it may nominate for the purpose of subsection (2)(a).’.

New clause 8—Board’s function in relation to complaints—

‘(1) If it appears to the Board that complaints about any authorised person are not being handled effectively and efficiently by the OLC, the Board may exercise in relation to the OLC such of the powers in subsection (2) as it considers necessary.

(2) Those powers are—

(a) to investigate the handling of complaints about authorised persons;

(b) to make recommendations in relation to the handling of complaints about authorised persons; and

(c) to require the OLC to submit to the Board a plan for the handling of complaints about authorised persons.

(3) Where the Board requires the OLC to submit to it a plan for the handling of complaints about authorised persons but the OLC—

(a) fails to submit to the Board a plan which it considers adequate for securing that such complaints are handled effectively and efficiently, or

(b) submits to the Board such a plan but fails to handle complaints in accordance with it

the Board may give directions to the OLC.’.

New clause 9—Directions—

‘(1) This section applies if the Board is satisfied—

(a) that the OLC has failed to meet the requirement of section (Board’s functions in relation to complaints) (3)(a) or (b), or

(b) that the OLC has failed to comply with any requirement imposed on it by or under this Act (including this section) or any other enactment.

(2) If, in all the circumstances of the case, the Board is satisfied that it is appropriate to do so, it may direct the OLC to take in a case within subsection (1)(a) or (b) such steps as the Board considers will remedy the failure, mitigate its effect or prevent its recurrence.

(3) A direction under subsection (2) may only require the OLC to take steps which it has the power to take.

(4) For the purpose of this section, a direction to take steps includes a direction which requires the OLC to refrain from taking a particular course of action.

(5) The power to give a direction under this section is subject to any provision made by or under any other enactment.

(6) The Board may take steps as it regards as appropriate to monitor and investigate the extent to which a direction under this section is being, or has been, complied with.

(7) Where the Board revokes a direction under this section, it must—

(a) give the OLC notice of the revocation, and

(b) publish that notice.’.

John Mann (Labour, Bassetlaw)

In clause 121, we are dealing with a major principle that needs to be reinforced in one way or another. However, hon. Members will be relieved to know that it can be argued succinctly. It is very straightforward, and I shall illustrate it with a simple example to demonstrate the importance of being able to presume that an investigation is made of the way in which complaints are handled.

In a survey of my constituents, I asked the following questions: “Did you meet with your solicitor in person?” and, “How did you rate the service you received?” The questions were two of several that I asked of everyone who had made claims for industrial deafness. The results were staggering. Two taken at random were, “No, I never met the solicitor in person,” and, “I do not rate the service at all.” I have received thousands of responses, including, “No, I did not meet my solicitor in person,” “No, only on the phone,” “No, I did not meet with solicitors,” “No, I never met anyone. The service was poor,” “I did not meet anybody in person,” “I never met with my solicitor in person,” “No, I found it strange at the time,” and, “I felt forgotten.”

I could go on and on. So far, I have found one who met his solicitor. In that case, I had arranged for a second solicitor to take over a case in order to sue the previous solicitor; the client had not met the first solicitor, but he met the new solicitor that I arranged for him. None of the others had met their solicitor. I am not saying that I will not come across more, but there have been none so far. Some were quite happy with the service, probably because they received good compensation. Others were not. It is probably related in part to the end result. When one delves deeper, the fundamental issue is that none of my constituents with industrial deafness had met their solicitors, yet the solicitors had made vital decisions about those cases and about the funding of the claims over the telephone.

I, on their behalf and at their explicit written request, made a complaint to the Law Society. Over time, the Law Society handled those complaints well, but what happened at the beginning illustrates the importance of being able to investigate the way claims are handled. At the beginning, the Law Society attempted to mediate. That was the tradition, and there is nothing wrong with that. However, during that process of mediation, a new practice started. In this instance, the Law Society rang my constituents to see whether the offer from the solicitor was good enough—thankfully, such practice no longer takes place, certainly not in any case that I put forward. I met my constituents to find out their real wishes. In 80 per cent. of the cases, they thought that the solicitor had rung them. They had never seen the solicitor; most of them had never met a solicitor. They would not know the difference between the Law Society’s claims handling unit, the solicitor or any other body. I have no idea whether those cases are representative of the entire country.

I now have large numbers of textile workers—mainly women—coming forward with similar issues. Therefore, we need to build into the working practices of regulation an ability to investigate how complaints are handled. I suggest that that is in the interests of the regulatory bodies and the good name of the profession. On that basis, I make those suggestions to the Minister as a way of building that more explicitly into the Bill.

Simon Hughes (Liberal Democrat, North Southwark and Bermondsey)

The three new clauses stand in my name and that of my hon. Friend the Member for Birmingham, Yardley. They are fairly self-explanatory. They pick up the fact that the LSB will have no powers to investigate the OLC. The Bill and the proposed arrangements do not include a provision for the board to intervene if the OLC is deemed not to be handling complaints properly. These are probing new clauses to ask the Minister to reflect on whether there ought to be a measure that provides that oversight and therefore transfers to the board the powers of the legal services commissioner, who oversees complaints under the present system. New clauses 8 and 9 cover the occasions in which that might happen and suggest how appropriate action can be taken.

I think that it is convenient to discuss the wider points in clause 121 now, because the clauses that we have just dealt with and this one fall under a section of the Bill called, “The Office for Legal Complaints”. Will the Minister tell us how the Government envisage separating the handling of complaints about service, as referred to by the hon. Member for Bassetlaw, and complaints about conduct. Complaints about conduct are obviously described as “different” traditionally, although I appreciate that they can overlap.

Finally, there has been reference in the Bill—as there is everywhere else—to the fact that

“the OLC must have regard to such generally accepted principles of corporate governance as it is reasonable to regard as applicable to it.”

Corporate governance has become a buzz phrase. I notice that it appears pretty regularly in legislation. It is never defined very accurately, if at all. I should be grateful to know what is meant by it; we all know in general terms. We are all involved in organisations that are told that they must have good corporate governance according to principles, but does that mean with reference to some code that the Government follow or one that non-departmental Government bodies follow? Is there a starting point, or are organisations, such as the one that we are setting up, expected to go off and find their own best practice? There is a competitive market for best practice in corporate governance. It does not appear to be the holy grail, so having just a trite and bland statement might not be quite enough if the Government want certain principles to be applied.

Bridget Prentice (Labour, Lewisham East)

The OLC will report to and be accountable to the LSB. It will be responsible to the board for its operation of the new ombudsman scheme. The board’s statutory powers relating to the OLC must reflect that relationship, so that the board has effective oversight and can act if the new body is seriously failing to deliver but cannot closely supervise or micro-manage the OLC. It is not for the LSB to deal with the day-to-day handling of complaints. That is why we have set the board’s controls in that way.

I shall explain how the controls work. The first control lies in how part 6 is arranged. The OLC will work through a set of rules that must receive the board’s consent before taking effect, so the board will have complete oversight of how the OLC rules are framed and consequently of how it will operate. The board will also amend or modify any rules that it considers not to be working properly.

The second control is that the OLC will be accountable to the board through its annual report, which must deal with any matter that the board has directed. For example, it might have to show how it has improved the speed with which complaints are resolved—a similar position to that of some of the bodies that the ombudsman presently regulates. In addition, clause 120 will allow the board to require the OLC to prepare a report on any matter relating to the OLC’s functions at any time. That could include, for example, a strategic plan for remedying a failure to meet a performance target. That is the key power. It will allow the board to maintain effective oversight of the OLC. If it has any concerns about how the OLC is operating, it can require a plan, for example, describing how the OLC proposes to remedy the issue.

Clause 121 will give the board the power to set performance targets, impose conditions on how they should be met and monitor performance against them. It will allow the board to monitor systematically how complaints are handled. The board’s ultimate power relating to the OLC is in paragraph 8(1)(b) of schedule 15, which will allow it to remove members of the OLC. Clearly, that power will be used only when OLC members have failed significantly in the discharge of their duties, but it is nevertheless a hugely important power.

In addition to being subject to those statutory powers, the OLC, as an NDPB, will of course be accountable to Parliament for its efficient use of resources and discharge of its statutory responsibilities, in a way that current complaint-handling or regulatory bodies are not.

All those powers, taken together, will provide an appropriate and effective control over the OLC. That is why the amendments are unnecessary. They are also inappropriate. Amendment No. 285 would give the board the power to investigate the handling of complaints. Presumably that would allow the board to ask for documents, seize files and so on and to examine how the OLC has dealt with individual cases. That might compromise the independence of the new complaints body and call into question the ombudsman scheme’s compliance with article 6.1 of the European convention on human rights.

I come to amendment No. 286, tabled by my hon. Friend the Member for Bassetlaw. I say to him gently that it is inappropriate, because as far as I can see, clause 118(1)(a), (b) and (c) do not exist. He may have been thinking about a different clause. Perhaps he will reflect on that.

I understand what my hon. Friend is trying to do in seeking to give the board sweeping powers if the OLC strays away from the regulatory objectives, but that power is too broad and sweeping and would result in the board’s becoming too closely involved in the day-to-day running of the OLC, which, as a separate non-departmental public body, is accountable to Parliament in the normal way.

New clauses 7 to 9 would give the board powers over the OLC that are similar to its powers over approved regulators and similar, to some extent, to the legal services ombudsman’s and Legal Services Complaints Commission’s current powers over approved regulators. However, the new clauses do not recognise that the OLC performs a different function from that of the approved regulators and that its relationship with the board is quite different. It would be a mistake to equate the OLC with the approved regulators in that way. Similarly, the board’s relationship with the OLC is not the same as the one that the legal services ombudsman and the LSCC have with the approved regulators: they are different and that is reflected in different powers—for example, the power to remove the chairman of the OLC from office.

Those proposals would set a lower threshold for intervention by the board, without the procedural safeguards required in relation to approved regulators and would make the board, in relation to the OLC alone, a regulator with the heaviest of touches and risk undermining the OLC’s independence.

The Bill makes no distinction between service and conduct complaints, because there is none. Irrespective of whether the complaint is about poor service, improper conduct or, very often, a mixture of the two, it is important that the ombudsman must decide whether the lawyer behaved in a way that makes it fair and reasonable for the complainant to receive redress and that the ombudsman works out how much should be paid.

If the ombudsman suspects that the lawyer has breached his or her professional rules, the details will be passed to the approved regulator to conduct the investigation, which can take place at the same time as the ombudsman considers redress. I hope that, having explained that and my concerns about my hon. Friend’s amendment, he will ask leave to withdraw it.

John Mann (Labour, Bassetlaw)

I picked up my copy of the Bill from the top table and it contains clause 118(2)(a), (b) and (c). This matter ought to be contemplated in forthcoming days and, perhaps, reconsidered as the Bill progresses, because the question of investigative powers is important. I shall leave that with the Minister. Atthis stage, I beg to ask leave to withdraw the amendment.

Clause 122

John Mann (Labour, Bassetlaw)

I beg to move amendment No. 287, in clause 122, page 63, line 32, at end insert—

‘(2A) The majority of persons appointed under paragraph 1(b) must be lay persons.’.

I seek the Minister’s views on this appropriate amendment.

Bridget Prentice (Labour, Lewisham East)

I shall do my best to be brief, like my hon. Friend. I understand where he is coming from. I am equally of the view that neither the Bill, the OLC nor the LSB must become too lawyer focused. The amendment would be unduly restrictive. The OLC must be able to appoint the most qualified and able people as ombudsmen. Assistant ombudsmen will not be acting as a group and therefore according to the views or influence of the majority. Throughout the Bill, there are sufficient safeguards to ensure that the scheme is not, and does not appear to be, biased in favour of the legal profession.

John Mann (Labour, Bassetlaw)

The Minister has made it clear, pretty much explicitly and certainly implicitly, that capable people are outwith the legal profession as well as within it, and she nods in concurrence. The point has been made. It is an important principle that such things are seen to be objective. I am sure that the various bodies will take that on board. Therefore, I beg to ask leave to withdraw the amendment.