Legal Services Bill [HL]

Yes, my Lords, I can give the noble Lord that assurance. Noble Lords will also want to know the detail of the adjustments that have been made. It may be helpful if I set out the position in writing as well as producing a revised RIA. I indicated previously that I would write, but noble Lords will know from our discussions on 16 April that I did not want to do so until I was convinced that the figures were robust. Indeed, I am grateful to our officials who have worked tirelessly during the past two weeks in order to drill down and make sure that the figures are right. Before Third Reading I shall write to noble Lords setting out the position in full, and that will include responses to questions raised by the professions about the position of VAT and double counting. We have been in contact with Her Majesty’s Revenue & Customs and received the best advice on the VAT position. I shall set all this out in detail, which I hope will be useful. I am grateful to noble Lords for their patience in allowing me to get to this point, one where the figures are now more robust. Noble Lords will see that the estimate is a decrease from the figure I was talking about for the professions, and I hope that that is welcome. However, I appreciate that they will want to see the detail before agreeing that the figures are indeed robust. Finally, noble Lords should feel free to put any questions to me before we return to these issues at Third Reading. I turn now to the principle underlying the debates. The noble Lord, Lord Maclennan, put very well the concerns that have been raised on the issue of funding, but we remain convinced that it is entirely appropriate for the legal service providers to bear the costs of these reforms. Here I want to reiterate the basis of that conviction. I am glad to say that we have a thriving legal market with a turnover in 2005 of £22 billion. The legal professions have a privileged position as the providers of reserved legal services. I believe that confidence in the system will increase as a result of the demonstrably independent regulation and complaints handling procedures, and I believe that the legal professions will benefit from that. I also think that the opportunity created in the Bill for alternative business structures will be to their benefit. They will be significant beneficiaries, and on that basis the Government think it entirely right for the significant beneficiaries to pay for the reforms. I acknowledge that the Government will make some savings as a result of these reforms, but the job of government is to consider where to invest and what are the priorities. We believe that investment is most needed in other priority areas, particularly those where other sources of funding are not available. While I agree with the noble Lords, Lord Maclennan and Lord Kingsland, that the Legal Services Board plays a public interest role, I do not accept that that provides an argument in favour of a government contribution to costs. At present the legal professional bodies raise fees from their members not solely to pay for the cost of regulation. They also fund important public interest activities performed by those bodies. I cite, for example, participation in human rights and law reform work. The same approach should apply to all the functions which will support the new framework provided for in the Bill. In Committee, the noble Lord, Lord Kingsland, and others discussed a number of comparisons, including the role of the Financial Reporting Council. I undertook to look at the funding arrangements for that organisation in more detail. The Financial Reporting Council’s accounting, auditing and corporate governance activities are funded by a tripartite arrangement, funding received in equal proportions from the accountancy professions, the business community and the Government. Other costs, audit inspection, investigation and disciplining of accounts are funded entirely by the accountancy professions. However, the Government provide no funding in relation to actuaries. The FRC’s funding arrangements in relation to its responsibilities for actuarial standards and regulation are as follows: 10 per cent from the profession, 45 per cent from the insurance companies and 45 per cent from the pension funds. As noble Lords would expect, I have also looked at the funding arrangements of a number of other regulatory bodies: the Financial Services Authority, the financial services ombudsman, the Council for Healthcare Regulatory Excellence, the pensions regulator, the office of communication and the claims management regulator. That analysis highlights that there is no rigid approach in terms of government funding. There are cases where the Government fund establishment or running costs and cases where they do not. The decision in effect is taken on a case-by-case basis, but the Government’s starting principle is that there should be no increase in public expenditure unless there is a compelling case for public funding. In this instance we do not believe that there is any such compelling argument. It is not inconsistent in terms of government policy to require the professions to pay. I know that the legal professions have argued that if the Government were making a contribution they would be incentivised to reduce costs. We are committed to ensuring value for money in these reforms and that is why we have built in the safeguards to ensure that. The levy rules are subject to the extensive consultation requirements, to the consent of the Lord Chancellor and to parliamentary scrutiny through the negative resolution procedure. Together these measures will ensure that the spending of the new bodies is properly contained. For the reasons that I have set out, I hope that the noble Lord, Lord Kingsland, will withdraw his amendment.