Legal Services Bill [Lords]

I am not sure of the order of events relating to the Committee’s advice, but certainly in the other place a clear undertaking was given that the issue would be decided by affirmative resolution if necessary, and that matter will need to be progressed. I agree with the concern expressed by the Government in their response to the Joint Committee. They said:"““The Legal Services Board should exercise its powers only where approved regulators are clearly failing””." Unfortunately, that undertaking is not to be carried through, according to the Government’s latest indication. The impact provision needs a qualifying adjective: ““clearly failing”” were the Government’s words and that is what needs to go into the Bill. I urge the Government to review that aspect of it. Independence covers other areas, including costs in relation to the legal services board. In making these comments, I am not just squeaking on behalf of members of the profession, who will have to pay more. I want to look beyond that to the important issue of independence. Is it reasonable to have no contribution from the Government in terms of the supervisory role of the legal services board? Its functions, which I hope we would all agree with, relate to public assurance. When hon. Members have expressed concerns about some activities of the legal profession, is it right that the legal profession should be depended on to be able to fund the supervisory role of the legal services board? Surely it is important to have the independence that is marked by not depending on the purse strings of the legal profession. Inevitably, the high initial costs—we heard the latest figures today and they may well rise—will fall on practitioners, but not only on them. They will not simply take a cut in their salaries. The costs will also fall inevitably on consumers. Consumers have an interest in whether the initial costs should be borne, at least in part, by the Government. The Government say in response that those being regulated should bear the cost of regulation. Why, then, do they have a different approach to claims management and to the accountancy profession? It is important that while the legal profession recognises the full cost of the first tier of regulation, the supervisory tier has a distinct purpose. The supervisory tier of the legal services board guarantees for consumers as much as anyone else that there are ethically sound and competent lawyers who are independent of the state. Let me use not my own words, but those of Sir David Clementi, whose work has been widely approved:"““The issue arises as to how the LSB should be paid for. At present a substantial part of the oversight function is paid for by the State: judicial oversight falls to the taxpayer, as does the cost of the oversight function carried out by Government departments. The arguments in favour of the Government contributing to the cost of oversight functions, beyond the fact that it does already, are…that the LSB, in pursuit of its objectives…such as ‘access to justice’, has a wider role in the public interest than the oversight of practitioners in the legal sector; and””—" this is a crucial argument by Sir David—"““that an element of payment by other than the bodies being regulated confirms that the regulator is independent of the regulatee.””" Sir David went on to raise the interesting precedent in the proposed funding of the Financial Reporting Council. Its funding is to be split, with two thirds falling to the private sector and one third to the Government. How the split should be made between the private sector and the Government for the LSB would need to be covered in statute and no doubt subject to parliamentary scrutiny. Sir David points to that example of the Government meeting one third of the cost of the Financial Reporting Council. The Government also meet the full cost of the supervisory tier of health care regulation—the Council for Healthcare Regulatory Excellence. However, they have not provided an adequate explanation of why they consider it appropriate to meet part of the cost of the supervisory tier of regulation in the accountancy field, but not in respect of legal services. In the case of the CHRE, the Government say that it is appropriate for them to pay because it is important to demonstrate that the organisation is independent of the medical profession. Why can that argument apply to the CHRE but not to the legal profession? The legal services board should be demonstrably independent of the Government and the legal profession. Why is the argument good for the medical profession but not for the legal profession? Are the Government proposing a new constitutional settlement in which they value the independence of the medical profession but not that of the legal profession? It is important to ensure that the legal profession is not expected to finance the element of regulation that focuses primarily on the public interest. The legal services board will not only deal with the regulation of legal services but consider the interests of legal service providers and others entering the field. That has significant public policy implications. Is it right to expect the legal profession to finance public policy considerations, which the Government currently fund? The Government propose to transfer costs, which they currently fund, to the legal profession for the legal services ombudsman. They propose that the legal profession should pay the costs of the office for legal complaints, part of those of the Office of the Legal Services Complaints Commissioner, which the Bill abolishes, and those of the legal services consultative panel. The Government could continue with their current spending commitments, thus ensuring the preservation of the important principle of independence. A continuing contribution from the Government may act as an important brake on the legal services board expanding its activities unjustifiably. One would hope that there was no greater brake or check on that than the public purse. The board should not be able to increase its activities and simply pass on the costs to the legal profession unchecked. Many want the board to operate as a light-touch supervisory body, and costs need to be taken on board in that context and in that of the debate on independence. I cannot finish without mentioning access to justice, in which I have been involved as a solicitor for 12 years. The Government wish to reverse an amendment, and that means removing the guarantee that access to justice will be taken into account in decisions on licensing prospective alternative business structures. Concern was expressed in the Joint Committee and evidence was taken from the Legal Aid Practitioners Group, which stated:"““Such changes are seen as a potentially catastrophic threat to the networks of high street solicitors, with the damage to access to justice for ordinary people that that would cause.””" That may be overstating the case, and it is important that access to justice works both ways.