Legal Services Bill [HL]

I could not believe it at first. I would love it if the noble Baroness, Lady Ashton, who will make the winding-up speech, explained why the Secretary of State has to take these powers. There is a paradox here. If the Government are seeking to tighten up regulation of the sector, why are they pushing through what looks and smells like a measure which will increase the powers of the Secretary of State to an unparalleled degree? We are talking about not just a government quango but one which will be controlled more tightly by government than any other. I hope that the noble and learned Lord, when he gazes back over his opening speech in this debate, will recognise that the word ““quality”” did not appear often enough. We have the highest-quality legal service in this country and we should entrench it. The vital roles of the Law Society and the Inns of Court in education, training and competence must be maintained, because they have established these exceedingly high standards. Some reassurance on that point would be much appreciated. Furthermore, it is patently absurd to propose that the Secretary of State should enjoy the untrammelled and direct power of appointing the head of the new Legal Services Board while expecting the industry to fund it in its entirety. There are clear parallels with other bodies such as the Financial Reporting Council, whose running costs are one-third funded by the taxpayer. In paragraphs 35 and 36 of his report, Clementi agrees and reinforces the precedent that I have given by stating: "““There is an interesting precedent in the proposed funding of the Financial Reporting Council. Its funding is to be split, two thirds falling to the private sector and one third to Government””." I hope that the Government will think again on that. It would surely be more sensible, fairer and more balanced for the start-up costs of the Legal Services Board and a proportion of its ongoing costs to be borne by the taxpayer. How else will it be seen to be independent and not merely a creature of the Government or the legal profession? I am also very concerned about the powers of the Legal Services Board to intervene when the front-line regulator is deemed to have underperformed. Surely the LSB should be a regulator of last resort, no more and no less, and that should be made penny plain in the Bill. Such intervention should be the exception not the rule. I am especially concerned, as was the Select Committee, about the power to impose fines on the front-line regulator. Surely that should apply only when the approved regulator has ignored a direction by the LSB. I would welcome an assurance from the Minister on that point, on which I hope the Government will concede. Like the noble Lord, I should like the ““only the polluter pays”” principle to be enshrined within the reconstituted complaints system. The noble and learned Lord will be aware of the Select Committee’s concern about the headlong rush towards alternative business structures. Sir David Clementi made the very good point that there should be a step-by-step approach, and I detected an indication that the noble and learned Lord agreed. No doubt in Committee we shall be able to introduce provisions that would secure what he indicated earlier. There are widespread worries about conflicts of interest, which will—not may—be created if Ministers press ahead with the ABS reforms. Sir David drew attention to that concern in his report, as did the Joint Select Committee that I chaired, which was unanimous in its report. The provisions in the Bill are very weak and will have to be strengthened considerably, but that will be a matter for Committee stage. Like many others in this House and elsewhere, I sincerely hope to be able to support not only the principles behind the Bill but its detailed provisions, but I admit to having serious reservations. I will be greatly assisted by the initiative of the noble Lord, Lord Brennan, who led the formation earlier this week of the new UK All-Party Parliamentary Group for Legal and Constitutional Affairs. I warmly applaud his initiative and have the honour to be one of his qualifying members. I look forward to working with colleagues of all parties and none as we approach Committee stage.