Legal Services Bill [Lords]

This has been an interesting, albeit sometimes technical, debate on a matter that is certainly of constitutional importance. All hon. Members have made thoughtful contributions and, although there are significant differences in detail, the Bill has generally been welcomed by everyone who has spoken. The report that Sir David Clementi produced on legal services was a visionary one, and we recognise, as do many hon. Members, that the Bill has come a long way since it was first introduced. I pay tribute both to the Joint Committee’s work and its comprehensive review, and not least to its Chairman, Lord Hunt, as well as to the input of my hon. Friend the Member for Enfield, Southgate (Mr. Burrowes), who made a significant contribution to today’s debate. In many ways, they moved the Bill back to the original Clementi vision. That was even before it went to the other place, where it was substantially improved by Conservative, Liberal Democrat and Cross-Bencher Lords, led frequently by my noble Friend Lord Kingsland. We believe that the Bill is now pretty much there, and are not pleased, therefore, to hear from the Under-Secretary of State for Justice, the hon. Member for Lewisham, East (Bridget Prentice) how most of the improvements are to be reversed by the Government in Committee. The Minister and the hon. Members for Stafford (Mr. Kidney), for Bassetlaw (John Mann) and for North Durham (Mr. Jones) described the changing mechanical, technical and cultural issues that led to the need for the Bill. There is certainly no complacency among the Opposition about the need to improve legal services, not least given the polls saying that no more than 44 per cent. of consumers have a favourable opinion of lawyers, the evidence on miners’ compensation given by the hon. Member for Bassetlaw and the current regulatory framework, which includes some 22 different regulators. The Lord Chancellor identified the lack of consumer confidence in the way in which lawyers are regulated, and highlighted the potentially restrictive way in which the legal profession operates and how to enhance competition in the profession. He then spoke of the regulatory maze that baffles consumers and thwarts effective oversight and which even Sir David Clementi’s report agreed was flawed. I shall examine each of those issues in the context of our debate, keeping in mind the fact that lawyers play an extremely important role as a thriving, independent profession in the life and economy of our nation, and we need an appropriate and modern regulator system that reflects that. The Clementi report concluded that there was considerable concern about how consumer complaints were dealt with. There is no argument about the fact that solicitors in particular recognise the need for reform of the complaints-handling system. There are now no fewer than 118,000 solicitors practising which is itself a testament to the success of the profession—having grown from only 31,000 in 1976—and has enabled Britain to become a worldwide centre for legal excellence. By the way, all of that occurred despite the Government’s attempt to wreck the infrastructure of our legal system by their swingeing cuts to the Court Service while squandering millions on a new so-called supreme courthouse, their attack on criminal and civil legal aid and their ham-fisted blundering into the new Ministry of Justice. We share the concern of many, including the Bar Council, the Institute of Legal Executives, the Institute of Chartered Accountants, Which? and the Law Society to ensure that the legal services board operates with the light touch recommended by Clementi and in an appropriate way, rather than micro-managing the approved regulators. As my noble Friend, Lord Hunt of Wirral put it, before the amendments were made in the other place:"““There is nothing in the Bill to indicate that the Legal Services Board is intended to act as a supervisory regulator, which would leave day-to-day responsibility with the approved regulators and exercising its powers only when they are clearly failing.””—[Official Report, House of Lords, 23 January 2007; Vol. 688, c. 1040.]" We hope that the Government will change their mind about removing the amendments that regulate the role of the board. Such moves will not in themselves help consumers—despite the Minister saying that they would—or keep costs down. We are all keen that the measure should not become an expensive rebadging exercise of the legal services ombudsman. As my hon. Friend the Member for North-East Hertfordshire (Mr. Heald) said, the value of the new complaints arrangements for barristers is not as clear cut; the Bar Council has not come in for the same level of criticism and according to most commentators, including the ombudsman, is generally recognised for its responsive handling of complaints. The Minister said that the Bar Council is the only body that wants different treatment, but she did not mention the fact that the Law Society has accepted the Bar Council’s position—for the Bar, albeit not for the Law Society itself. Even if a third of complaints currently dealt with by the Bar are referred back to the legal services ombudsman for reconsideration, two thirds are not, so the proposed changes might not improve consumer satisfaction in relation to such complaints. There are only 9,000 barristers, and their complaints are dealt with by a body made up of unpaid professionals and lay persons who operate the complaints board reasonably satisfactorily and certainly cheaply. Nevertheless, the Bar Council is also generally supportive of the Bill, as long as the amendments made by the Lords are not removed, especially those in respect of complaints delegation back to the approved regulators. However, most of the current regulators are understandably concerned that without delegation back, the approach will be to bring everyone down to the lowest common denominator. After all, the Joint Committee considered that the cost of the new regulatory system was ““speculative at best”” and it is conceivable that the costs of reforming the system will spiral out of control with no corresponding improvement in quality. The Minister said that the costs would be £32 million, but is that because she separated start-up and first year running costs? We heard that start-up and first year running costs are estimated at about £57 million. Will she clarify what the costs will actually be by the time the Bill is passed? As my hon. Friend the Member for North-East Hertfordshire said, we hope that the Government will change their mind and move back to the polluter pays principle. As my noble Friend Lord Kingsland said in the other place:"““Those exonerated following investigation or litigation should not be penalised for being found blameless.””—[Official Report, House of Lords, 8 May 2007; Vol. 691, c. 1277.]" We do not want an unjust system, which would have the effect of deterring practitioners from acting in certain fields of law, such as criminal or family law where unjustified complaints are disproportionately likely. The whole exercise will be costly for smaller regulators, for whom it is very doubtful that it will increase consumer confidence. The Chartered Institute of Patent Attorneys typically receives fewer than 10 complaints a year, while the Institute of Trade Mark Attorneys has received only three complaints since 2001. The Institute of Legal Executives, which has a membership of 22,000, received only 19 complaints against its members in 2004-05. All those practitioners considered it extremely rare for their claims not to be settled amicably through conciliation.