Now we may get to some of the more detailed disagreements on some of the principles in the Bill. The Committee knows that the Government have always advocated the importance of an independent Legal Services Board—independent from the Government, the judiciary and the legal profession. That is why we have arranged the Bill so that appointments are made in accordance with the code of practice of the Commissioner for Public Appointments.
It may be useful for me to set out the principles of the code: ministerial responsibility, merit, independent scrutiny, equal opportunities, probity, openness and transparency, and proportionality. The code follows the principles established by the Nolan Committee, of which we have heard already, and provides a sound and established basis for making appointments to public bodies. It sets out clear and independent appointments procedures. It does not prevent consultation with appropriate people, and the Government consider that the Lord Chief Justice would be an appropriate person in this context. However, there are good reasons why concurrence is not set out in the measure. Concurrence would give a person other than the Minister—in this case, the Minister is the Lord Chancellor—a casting vote, and in effect, a veto over the appointment of the person selected. Setting out a named person to whom the Lord Chancellor must give concurrence would be absolutely contrary to the principle of ultimate ministerial responsibility for appointments. It would remove the formal role of the Commissioner for Public Appointments—who, by the way, is appointed by the Queen—in the oversight and regulation of public appointments, and it would weaken parliamentary scrutiny. It would not be in the interests of anyone.
It is important that, before the Lord Chancellor can remove board members, conditions, which are set out in the Bill, must be met, including consultation with the chairman on their removal. The conditions provide strong statutory safeguards to prevent the abuse of that power, and it is important that the board is independent of the Government and the profession. Although the present Lord Chief Justice is and previous Lords Chief Justices have been independent, consumer groups have nevertheless been adamant in their concerns about the perception of a person with historical connections to the legal profession. Irrespective of the clear integrity of that office and the office holder, I would not want to damage consumer confidence by setting out a statutory requirement for concurrence in the way that the other place agreed.
We must provide for an independent board, and I can see no benefit at all in requiring the Lord Chancellor to seek the concurrence of the Lord Chief Justice. I have said over and again in meetings with the legal profession and with Members that I cannot imagine the appointment of such a person being undertaken without the Lord Chancellor listening to the views of appropriate people, of whom one is clearly the Lord Chief Justice. However, it is not right to give the Lord Chief Justice, who consumers rightly or wrongly perceive to be part of the legal profession, a veto over such an appointment.
I hope to have the opportunity to advance my arguments later, but may I challenge the Minister on the idea that consumers think that the Lord Chief Justice is tied to the legal profession? I challenge her to produce any opinion poll that shows anything like the same problem with confidence in the judges as there is with confidence in the profession. Lawyers have a bad reputation, like estate agents and politicians, and people know that judges are traditionally drawn from the ranks of lawyers, but they do not regard judges as people in whom they cannot have confidence. The statement is just not true, and I honestly ask her to supply to the Committee any evidence of recent polling that suggests otherwise.
In all my discussions with the consumer organisations, they have all been absolutely clear that there is a perception that the Lord Chief Justice represents the legal profession. As the hon. Gentleman knows, perception is important in politics, and it is important here. We are setting up an organisation that is supposed to be giving consumers for the first time an independent organisation to look after their interests. If we undermine confidence at this stage, going through the Bill will be a waste of our time. It is important that the appointment is made in an open and transparent way, and is seen by those whom it is meant to protect as having been done properly, in an independent way.
The Minister has referred three times to the interests of consumer representatives. In its Second Reading briefing, Which? called for the Legal Services Board to be appointed by an independent commission and said that all appointments should be made at arm’s length from the Government. How can the hon. Lady explain the fact that the National Consumer Council’s support is different from what is set out in the briefing?
That is exactly the position. I do not know whether the hon. Gentleman was listening, but I made it absolutely clear that concurrence is the problem. It gives the Lord Chief Justice a veto. It breaks the principle of the Nolan rules—the code of practice—because such matters have to be done through ministerial responsibility. Such an argument is a dangerous road to go down because it takes away the role of Parliament to scrutinise the appointments.
Are we at least agreed that, while the consumer organisations—or at least Which?—agree with our view and do not support the Bill as it is drafted, they do not support the Government’s view either? Is that a fair comment?
No, that is not fair. Consumer groups support the Government’s view, which is that, when making the appointment, the Lord Chancellor will listen to appropriate people, which will clearly include the Lord Chief Justice. That is entirely at one with the view of the Government as well as that of the consumer.
My hon. Friend is right. I was about to finish my remarks before we experienced that little flurry of interventions but I shall make one more point. If we consider the number of public appointments that are made under standard practice by Ministers, none of them includes the need for concurrence with another person. It is expected that Ministers will make such appointments properly and within the guidelines and code of practice of the Commissioner for Public Appointments. If they do not, they will be accountable to Parliament. That is key and for that reason, I commend the amendment to the Committee.
Amendment No. 37 is uncontentious and addresses a drafting error. As for the other amendments, we oppose them.
The Bill, as originally presented by the Government in the House of Lords, provided that the new oversight regulator of the legal profession, the Legal Services Board, should be appointed by the Lord Chancellor. That was amended subsequently in the other place and passed by a majority of 50 so that the Legal Services Board should be appointed instead by the Lord Chancellor with the concurrence of the Lord Chief Justice. The purpose of that and similar amendments was to ensure that the regulation of the legal profession is transparently independent of the Government’s control and is seen as such by the widest possible audience.
I am afraid that the debate over this group of amendments is something of a set piece. Notwithstanding that, there is growing concern at the Government’s intransigence on the issue, which we believe deserves a thorough review. The Minister knows that I normally aim for brevity, but that will not be possible in this instance.
Government amendments Nos. 30 to 36 and 38 to 39 will reverse amendments made in the other place. The amendments will mean that only the Lord Chancellor will be able to appoint the chairman, as well as to appoint and to remove other members of the Legal Services Board. It is imperative that that is resisted. The Lord Chief Justice should be able to act to rein in the power of the Lord Chancellor, so that the latter does not have the potential to overreach himself. There must be checks and balances to guard against any form, real or perceived, of political patronage. We need to appreciate that the political pressures on a Lord Chancellor in the Commons could be greater than in the House of Lords.
The issue goes to the heart of the Bill. The Legal Services Board will be the independent oversight regulator and will sit at the head of the new regulatory framework. The board will oversee the new approved regulators, and will seek to ensure that they carry out their regulatory functions to the required standards. It is therefore important that the Lord Chancellor’s decisions on appointments to and dismissals from the board be made with the concurrence of the Lord Chief Justice.
My hon. Friend has touched on an important point. With all the changes that are taking place in Whitehall, we might well have a Secretary of State for Justice and Lord Chancellor, as it were, sitting in the lower House, where he would come under far more political pressure. That is why this discussion is so important.
My hon. Friend has reiterated a point that I made and it is important. I do not think that many hon. Members have thought about the issue in terms of what might happen on a day-to-day basis.
My noble Friend Lord Kingsland stated:
“The issue is simply that the Bill as it stands puts too much power in the hands of a Minister both in relation to the appointment and the removal of the chairman and members of the Legal Services Board.”—[Official Report, House of Lords, 9 January 2007; Vol. 688, c. 148.]
In a misguided attempt to enhance consumer rights, the Government continue to table wrecking amendments, even though such measures are at odds with the recommendations of the review conducted by Sir David Clementi, the Joint Committee on the Draft Legal Services Bill, and the House of Lords. The proposals have also roused complaints from some of the top lawyers in the country, all of the larger firms of solicitors, and foreign jurisdictions. I also argue that they differ from the Government’s position and rationale as seen in other recent legislation. The Government are out on their own on the issue and they will need to come to terms with that at some point.
In the final report of his review, Sir David concluded that the appointments should be made by the Secretary of State in consultation with a senior member of the judiciary.
No, one cannot really say that. People have commented in different ways. The point is that all of them have suggested that there needs to be a balance to the power of Ministers, but that will not appear in the Bill as the Government wish to amend it.
If the Minister had come to the Committee with an alternative to the wrecking amendment that she is now proposing, we might have discussed what was on offer. That is not what is being proposed; what is being proposed is an absolute rebuttal of what was proposed and passed in the Lords. I shall go into all that in quite a lot more detail and I am sure that the hon. Gentleman might wish to intervene later.
It is quite clear from considering the evidence that was given to the Joint Committee in written form and orally that a number of witnesses were extremely concerned about the proposed manner of appointment to the board. Those concerns were reflected in the Committee’s final report, which said:
“We recommend that the draft Bill be amended to provide that the Secretary of State may remove the chairman of the Board only after full consultation with the Lord Chief Justice. Responsibility for the removal of other members—in line with the criteria set out in the draft Bill—should lie with the nominations committee of the Board.”
“We share some of the concerns that have been expressed about the scope of the ongoing powers of the Secretary of State that are proposed in the draft Bill which appear to go significantly beyond the recommendations of Sir David Clementi. We therefore recommend that the Government reconsiders whether each of the powers proposed for the Secretary of State in the draft Bill is necessary, identifying those powers that could be removed or transferred. It would be wrong to create a perception that the Government is seeking in any way to exert long-term day-to-day control over the legal profession, or in any sense annex it.”
My hon. Friend the Member for Enfield, Southgate served on the Joint Committee, and we are lucky that he joins us on this Committee with his knowledge and his experience of practice. I am sure that, for our benefit, he will wish to analyse the evidence that was seen by the Joint Committee.
The Joint Committee recommended that appointments to the board should be made only after full consultation with the Lord Chief Justice. The Lords passed amendments whereby appointments to the Legal Services Board and terminations be made
“with the concurrence of the Lord Chief Justice”.
Again, is not the hon. Gentleman shooting himself in the foot? He appears to be shooting his own arguments down in flames. Consultation is very different from what was suggested by the Lords. The Lords proposed a veto over appointments, whereas David Clementi and the Joint Committee are saying that the Lord Chief Justice should be consulted. Is not that what the Minister said on Second Reading? The hon. Gentleman’s proposals are different from what is being proposed on the basis of the evidence that has been referred to.
Perhaps the hon. Gentleman heard the Minister differently from me. I did not hear her make any suggestion of the type that he suggests.
The appointments and terminations that the Lords said should be made
“with the concurrence of the Lord Chief Justice” are those of the chairman and the board members, who are up to 10 in number, but exclude the chief executive, who is appointed by the board. The Lord Chancellor should not be permitted to act purely on the basis of his own decision. It is important that the power does not become a party political tool or a stick with which to beat the profession when the Government deem the profession to be misbehaving or not toeing the line. In order to prevent such an occurrence, it is crucial that the Lord Chancellor be required to obtain the concurrence of the Lord Chief Justice on such points.
Indeed, the Opposition’s view is that the requirement for concurrence is essential to bolster the independence of the legal profession from the Government. An independent legal profession provides the ultimate safeguard for the rights of the individual against state abuse of power. If it were the Government alone who made all the appointments and terminations, would the Legal Services Board not be seen as subservient to the Government of the day? As my noble Friend Lord Hunt commented:
“How else will it be seen to be independent and not merely a creature of the Government or the legal profession?—[Official Report, House of Lords, 6 December 2006; Vol. 687, c. 1181.]
The former Lord Chief Justice, Lord Woolf, has wisely pointed out that
“the independence of our judiciary is dependent on the independence of our legal profession.”
The Opposition believe that that can only be assured by creating an effective check on the decisions of the Lord Chancellor. Accordingly, the Lord Chief Justice should be consulted about, and concur with, such important decisions.
The need for a check on that power is highlighted by the situation that might arise on removal of the chairman. What would happen if the Legal Services Board criticised the Government, and the Government retaliated through the Lord Chancellor by simply removing the board members from office and appointing puppets to do the Government’s bidding? It might be a Nolan-compliant board of puppets—assuming that the Government of the day accepted Nolan principles. Nevertheless, it could make a mockery of the idea that this is a democratic country.
Why are the Government so opposed to such a constitutional check? The Lord Chancellor has set out his stall against it, possibly because he does not like his decisions to be challenged by the judiciary, yet, not least with the imminent arrival of the clanking fist, he is unlikely to be here for much longer—unlike the Bill.
What would happen if a Lord Chancellor were to be appointed who had little or no regard for the purpose of and ideals behind the Legal Services Board? On the other hand, Lord Chief Justices have shown themselves to be both non-partisan and even-handed in their actions. On Second Reading of the Bill in the Lords, the Lord Chancellor argued:
“I have to say it gives little comfort to consumers, who rightly see the Lord Chief Justice, although he is a man beyond reproach, as another lawyer in the process.”—[Official Report, House of Lords, 6 December 2006; Vol. 687, c. 1164.]
But is not the Lord Chancellor himself a lawyer? The Lord Chancellor’s remarks are simply bizarre in that context. The idea that having lawyers in the process somehow wrecks the system is patently absurd. Is the Prime Minister not a lawyer; is the Leader of the House not a lawyer? It is clear that lawyers can help to supervise such processes even if it involves regulating their own kind. The Lord Chief Justice is a lawyer and he also heads the judiciary, but his position has historically shown that an unbiased operator can assist the Lord Chancellor in selecting the best person for the job, or urging restraint before the removal of, for example, the chairman.
I thank the hon. Gentleman for giving way on his eulogy to lawyers. When section 1 of the Courts and Legal Services Act 1990 was passed, what did that specific section say about the appointment of the legal services ombudsman? What was the vote in the House on that section and who was in power at that time?
I have no idea. Would the hon. Gentleman care to enlighten the Committee?
It is extraordinary that the hon. Gentleman has no idea because that was the precise measure under which the legal services ombudsman was appointed by the Lord Chancellor, under the Courts and Legal Services Act 1990. What has changed between the date of the passing of that Bill in 1990 and now in terms of the principles?
Apart from the fact that the ombudsman is not in a regulatory role, we have had an Office of Fair Trading report, two other reports, a White Paper and a Bill that has gone through the House of Lords. That is what is different. As Lord Hunt pointed out in the other place, the matter is all about balance. It would be quite wrong, or even indefensible, to establish an appointments process so evidently lacking in checks and balances. The Legal Services Board must not only be independent, but be seen to be independent. How else are to we to ensure that independence is not siphoned off by the Government?
The hon. Member for Bassetlaw may want to have the answer to his question. The fundamental thing that has changed since 1990 is that at that stage the Lord Chancellor was the senior judge, but that is no longer the case.
I thank the hon. Gentleman for his considered response.
Does my hon. Friend accept that the point made by the hon. Member for North Southwark and Bermondsey is reinforced now that we can havea Lord Chancellor in the House of Commons? Such a Lord Chancellor—it does not matter whether he is a lawyer or not—may be a manifest career politician with aspirations to even higher office; Lord Chancellors cannot have such aspirations when they are in the House of Lords. A Lord Chancellor in the Commons may have been a past Home Secretary and could find themselves appointing the body that regulates the profession, which might as part of its duty have to challenge on behalf of the citizen an act of a Home Secretary, past or present. Surely that is a hugely different situation to anything that has occurred before.
The hon. Gentleman is right to mention the idea that there is some politics in this matter, because it is all about politics and is nothing to do with consumer interest. It is a political point from Opposition Members, some of whom, after 10 years, cannot understand that they are no longer in office. There is a conflict between what he is proposing and what the Government are suggesting. In his formulation, there would be a confusion of parliamentary scrutiny and control because a Lord Chief Justice would not be subject to parliamentary scrutiny and control, whereas the Lord Chancellor is entirely, and he is subject to the will of Parliament.
That is not what I am suggesting at all. I am suggesting that there should be balance, not that it should all go to the Lord Chief Justice, and I simply did not understand the hon. Gentleman’s initial point. As a Conservative Government are likely in the near future, I do not know where he is coming from.
When we tabled these amendments in the Lords, many Lords disagreed with them. Lord Whitty argued:
“I do not think that this would be seen as anything but the lawyers attempting to pull back the regulation of their profession to their own...That is the public appearance. I am sorry, but legal services are, in that sense, no different from any other service to the public and to consumers.”—[Official Report, House of Lords, 16 April 2007; Vol. 691, c. 46.]
We believe that that approach is wrong for two reasons. First, we are talking about the Lord Chief Justice—the highest judge in the land—and, secondly, legal services are different from other services in so far as only the law, and by association its practitioners, can ultimately safeguard against the misdemeanours of Government.
As the Joint Committee pointed out:
“It would be wrong to create any perception of government seeking to exert day-to-day control over the legal profession”.
We recommend that the Government should be involved only when it is absolutely necessary.
“In no circumstances does it prevent the Lord Chancellor from talking to and consulting the Lord Chief Justice or, indeed, anybody else.”—[Official Report, House of Lords, 16 April 2007; Vol. 691, c. 55.]
Exactly the same remark was made by the Minister earlier today.
The Government must appreciate the importance of perception. Lord Lloyd addressed that issue in the upper House, saying that
“perception was a key feature in the argument which the Government used during the passing of the Constitutional Reform Act. It was said over and again that the Law Lords, for example, must be removed from this building to the Middlesex Guildhall because they were not perceived to be independent so long as they were sitting here. If perception is important from that point of view, surely it is equally, perhaps even more, important from the point of view of the establishment of this body. If the chairman of the Legal Services Board is appointed by a Minister, it will be perceived by people—perhaps not by people with as much knowledge of these things as we have, but by ordinary people—as making the profession less independent of the Government than it should be. If that is true of the appointment of the chairman and members of the LSB, it is surely even more true of their removal from office, which, again, can be done by the Secretary of State.”—[Official Report, House of Lords, 9 January 2007; Vol. 688, c. 151.]
This measure should be enshrined in statute, otherwise the precedent that it will set is that the Government will not have to put the independence of the judiciary at the forefront of their considerations when making appointments. It is all very well for the Government to say, as they did:
“There is no question of independence being relegated. Codes of practice have to be maintained.”—[Official Report, House of Lords, 16 April 2007; Vol. 691, c. 55.]
Practically speaking, it is what is in statute, not what is hidden away in codes of practice, that will dictate how this Government and future Governments behave. The point is one of principle and of law. It is about ensuring that the Lord Chancellor cannot act as freely as he might wish. We must protect the independence. Unbridled power will lead only to abuse.
The Government have somewhat naively, we believe, suggested that the Lord Chancellor will be influenced by the seven principles of public life that were set out by the Nolan Committee. Ministerial responsibility, merit, independent scrutiny, equal opportunity, probity, openness, transparency and proportionality should play an important role in the public appointment process. However, how can the Government assure us that the present and future Lord Chancellors will at all times adhere to something that is not law but merely regarded as a guide for all those involved in public service?
Given the Minister’s reliance on the Nolan principles as support for her amendments, we need to consider Nolan in more detail. Under ordinary Nolan procedures, the appointment panel would be chaired by a senior Ministry of Justice civil servant. That will not command confidence so far as independence is concerned. Special arrangements would need to be made, as they were when the Judicial Appointments Commission was created, to guarantee independence of appointment. The panel would be chaired by a distinguished external independent person and not a senior civil servant.
It should be noted that, once the Nolan process was put into practice, the seven individual code principles that underpinned it began to interact and, in some cases, to conflict. That gave rise to three main sources of tension that continue to surround the appointments process: the nature of scrutiny, the definition of merit and whether it remains consistent with the principle of proportionality.
On the proportionality debate, it has become clear that the administrative test of bureaucracy is not simply the extent of the measures involved but how flexible they are. There are many examples to show that the process allows Departments flexibility wherever practicable—for instance, the measures designed to ensure consistent and equal treatment of candidates. There is a requirement to comply, but Departments are left to decide on the detail. Often Departments have the discretion to apply the measures in the way that they think appropriate—for example, when advertising posts and in the case of reappointments. The ultimate flexibility is the commissioner’s willingness to grant exemptions. In 2003-04 some 55 appointments were extended and 57 exemptions granted. That increased in 2004-05 to 85 and 79 respectively.
A further problem that arose from the Nolan principles was that individuals often felt it inappropriate to ask people of high standing with busy lives to compete for posts. The whole purpose of the Nolan recommendations was to dispense with patronage and the tap on the shoulder, and the requirement to compete is an essential feature of a process that is fair and open to all.
Those intrinsic defects of the Nolan principles have been further exacerbated by the fact that more than a decade has passed since the first Nolan Committee made its recommendations. Society has developed and moved on since then. Professor King, a member of that first Committee, touched on that point during evidence to the Committee in 1999. Asked about public perception of politicians subsequent to implementation of the Nolan recommendations, Professor King replied:
“I suppose the question that arises in my mind against the background that, on the whole, the Nolan experience has been a very good one is whether there are any issues still outstanding. Did the Nolan Committee make recommendations, the implementation of which has had unforeseen and undesired consequences? Have any new issues arisen that the Nolan Committee did not address four years ago for the good reason that they were not there to be addressed?”
His comments are particularly relevant in relation to the Nolan principle of merit.
The matter of merit versus balanced boards is one of the most widespread and well-known issues to evolve in the appointments process since its introduction in 1996. It appears that the Nolan Committee did not foresee the possible conflict between the traditional approach of appointment on merit and the balancing of boards. Nor could it have foreseen the nature and extent of the diversity debate that developed over time.
In its 2003 report, the Public Administration Committee stated:
“Diversity on public bodies must be increased...Greater diversity on public bodies is not simply a desirable goal. It is a significant component of the basic human right to equal regard and treatment, regardless of difference.”
That sentiment is a long way from Nolan’s original reasoning, which had been to prevent the same few privileged individuals from taking up multiple public appointments. The merit issue reflects not only the dynamics of the appointments process but the influence of the growing pressure in society generally for greater inclusion. That is today’s definition of the same principle, and the public appointments process has developed to meet it.
Overall, the public appointments process has extended in scope and scale far beyond the limits indicated in the first Nolan report. A wide variety of advisory and other public appointments have been added to the bodies that comprised the commissioner’s initial remit. Indeed, the idea of a legal services board, as presented in the Bill, had yet to be conceived.
The hon. Gentleman is going into great detail about what happened in the Nolan Committee 10 years ago. I appeared in front of it and gave detailed evidence on behalf of the trade unions, both verbally and in writing. Was not the point of the Nolan Committee’s deliberation that there should be transparency in such appointments, which involved documented details and minutes of what took place, precisely so that those making the appointments could be held accountable by people looking in to see how they were made? How would those principles apply if a separate individual was responsible, not accountable to Parliament or the general public and not required to produce any documentation to show the thought processes? How would that meet the principles of Nolan transparency?
I assume that the hon. Gentleman is talking about the Lord Chief Justice. The Nolan principles would apply in relation to his appointment. I am not saying that Nolan should be discounted in this case; I am saying that Nolan is not enough. All this analysis of Nolan presupposes that all Governments will comply with Nolan, which cannot be assumed in the worst-case scenario. The legislation should deal with that, but it does not.
Society has moved on during the past 13 years, so the extent of the changes in the appointments process may be an inescapable consequence of that wider social development. Conversely, the Lord Chief Justice is a person who lives in the modern and, more important, present world. He can keep abreast of social developments and trends. It seems illogical that the Government would prefer to rely on a sometimes outdated appointments process, rather than on a working partnership between two people who can ensure that neither abuses his or her position.
How can the Lord Chief Justice, who is not covered by the Nolan requirements and principles and not accountable in terms of any transparency, operate under the Nolan principles? How can the outside world see the basis on which he or she might make such decisions? That is unlike the transparency insisted on by Parliament in agreeing the Nolan principles, which allow the hon. Gentleman, me or anyone else to inspect and challenge what happens with any public appointment at the moment. Time moves on. Is the hon. Gentleman not trying to drag the principles back into the dark ages, pre-Nolan, of no transparency and no accountability?
No, the hon. Gentleman has clearly not listened to a word that I have said over the past few minutes. The point is that, to whatever extent Nolan will apply, it must be adapted and moved on, not taken back. I am certainly not saying that the Nolan principles should not be used for appointments. I am simply saying that we need to understand their limitations in the context of the wider issues that apply in this case.
We have covered that point before. We are considering a balance of power, not absolute power going to any one body.
The explanatory notes state on page 3 that the legal services board will be “independent from...Government”. However, that is contradicted by the Government’s proposed amendment to schedule 1, which provides for the chairman and members of the board to be appointed by the Lord Chancellor. That will have serious democratic implications, as a senior member of the Executive will ultimately be responsible for governing how the legal profession is regulated. Such a structure will undermine the principle of separation of powers—a principle that the Government themselves have previously and enthusiastically endorsed by proposing the separation of the judiciary from the UK legislative body via the creation of the supreme court.
May I pick up the point relating to the intervention by the hon. Member for North Durham before it gets lost? The Lord Chief Justice is not accountable to Parliament, and nor should he or she be. That is exactly the point. We want someone who is not politically accountable and who becomes independent.
I thank the hon. Gentleman for making that clear. I repeat that what we seek is a balance of different kinds of appointment that come together to provide a stronger whole.
As I was saying, the division between the judiciary on one side and the UK legislative body on the other should be maintained. In many cases, the state will be a defendant in a case, and its dual role of defendant and regulator creates a direct conflict of interest.
The concordat entrenched the idea that power should not be wielded by one person alone. As was observed in the other place:
“Of course recent Lord Chancellors have been unquestionably impartial in making their appointments, but in the future there is a real and increasing risk that the appointments process will be politicised if things are left as they are.”—[Official Report, House of Lords, 26 January 2004; Vol. 657, c. 20.]
On deployment, the Secretary of State, in consultation with the Lord Chief Justice, is responsible for the efficient and effective administration of the court, and the same type of arrangement between the Secretary of State and the Lord Chief Justice applies to appointments to committees, boards and similar bodies.
I have mentioned a couple of examples from the concordat, but there are many examples to illustrate why, as the Lord Chancellor himself said in 2004, it is not right
“that a political appointee...should be able to cut across” the
“system to appoint who he or she thinks right”— admittedly, that is in relation to the concordat. It is important to ensure that the system is as open and accountable as it can be and that it is independent of the Government.
Giving reasons is part of accountability, and if the hon. Member for Bassetlaw is concerned that the Lord Chief Justice would not have to give reasons for disagreeing with the Lord Chancellor, would it not be better to table an amendment saying, “and he should give reasons if there is a disagreement,” rather than trying to change this country’s constitution to control the judiciary?
The hon. Gentleman makes an interesting point. As I said at the start of my remarks, the Government have simply put in place a straight rebuttal. A Bill has come from the House of Lords that is well thought through and well argued, but the Government, having admittedly engaged with what the Lords had done and tried to move the Bill forward during its various stages in the other place, have now changed their viewpoint. We now have a straight rebuttal, and the hon. Gentleman’s remarks pick up on that. [ Interruption. ] The Minister says, “Absolutely,” but her approach is not helpful, and I hope that she will change it before the final stages of the Bill.
I was talking about the concordat, which is an agreement that safeguards the interest of the public. We agree with that approach, so why are the Government so reluctant to ensure the same thing in the Bill? The Minister needs to answer that question. In terms of overall turnover, the legal profession is estimated to contribute about £20 billion to the economy, of which £17 billion is accounted for by solicitors. This debate might be about a small part of a big Bill, but the subject goes to the heart of the English legal system, the running of the day-to-day legal industry and the image that outsiders have of both.
The Government have failed to appreciate, or perhaps even to consider, the consequential effects of allowing the Lord Chancellor alone to appoint, and terminate the appointments of, members of the Legal Services Board. Our legal profession has always been competitive overseas, and it is responsible for significant invisible legal services exports, which are estimated at £2 billion a year. Overseas legal professions and commercial consumers of legal services have expressed concern that the Government’s proposed legislation would act against the profession’s independence and prevent it from competing effectively for the provision of legal services overseas. How do the Government propose to deal with that? Will the Minister outline what discussions she has had onclause 1 and schedule 1 with law firms in this country, foreign Governments and legal regulatory bodies, and what further discussions she will hold?
I should now like to read out parts of a letter from the chairman of the Bar Council and the country’s five largest law firms, which operate all over the world—the so-called magic circle firms. The letter was sent to the Economic Secretary on 1 June by senior partners at Linklaters, Slaughter and May, Freshfields Bruckhaus Deringer, Allen and Overy, and Clifford Chance, as well as by Geoffrey Vos, QC, the chairman of the Bar Council—a pretty serious and representative bunch of people from the profession—who say:
“We are writing to express concern about an aspect of the Legal Services Bill, which will receive its second reading in the Commons on Monday 4th June 2007.
We should say at the outset that both the Bar Council and the Law Society have broadly supported the regime proposed by the Bill, and have to date suggested fine-tuning amendments, intended to confirm and strengthen the international competitiveness of our legal profession, and to further the interests of the public and of consumers of legal services. We know that you are aware of these concerns.
The Bill, as originally amended by the Government in the House of Lords, provided that the new oversight regulator of the legal profession, the Legal Services Board...should be appointed by the Lord Chancellor.
We supported an amendment in the House of Lords, which meant that the LSB should instead be appointed by the Lord Chancellor ‘with the concurrence of the Lord Chief Justice’. The purpose of this amendment (which was passed with a majority of 50) was to ensure that the regulation of the legal profession is transparently independent of Government control, and is seen as such by the widest possible audience.
There are broadly three reasons why regulation of lawyers must be and be seen to be independent of Government control.
First, an independent legal profession provides the ultimate safeguard for the rights of the individual against abuse of power by the State.
Secondly, our legal profession has always been very competitive overseas, and has been responsible for very significant invisible exports of legal services, now amounting to over £2 billion per annum. Overseas legal professions and commercial consumers of legal services have expressed concern that the Government's proposed legislation would vitiate the profession's independence, and prevent it competing effectively for the provision of legal services overseas.
Thirdly, the Government (through the Legal Services Commission and the Government Legal Service) is the single largest purchaser of legal services, and therefore has a clear conflict of interest between its own interests as purchaser and its interests as the appointer of the ultimate legal services regulator.
It is the second of these reasons that we would expect to be of most concern to you. By way of example, the German legal profession has written a formal letter expressing concern about the independence of the legal profession from Government under the proposed regime. Many of us have personally defended the Government's reforms at international legal conferences and events in the course of this year.
However, we believe that the competitiveness of the legal profession could be seriously adversely affected by the Government's proposal. We feel you would wish to be made aware of this given your reported remarks after the Chancellor chaired the Second High Level Group on Financial Services on9 May 2007: ‘I believe that, with the measures we have taken, together with the FSA’s move towards more principles-based regulation. London and the UK-based financial sector will continue to attract the best global talent and to be a world leader for innovation, asset management, [and] global regulation.’ One of the measures referred to was the announcement of plans for a new commercial court building in the City, providing world-class facilities for handling business cases from around the world.
As we understand the position, the Government intends to try to reverse the Lords’ amendment on this issue in the Commons. We believe that this would be short-sighted and damaging to the international competitiveness of the whole profession.
The only argument we have heard in favour of allowing the Lord Chancellor to appoint the LSB alone is that he would, in some way, be better able to protect consumers. We believe that the Lord Chief Justice must concur in the appointment of the LSB, because he is the head of the justice system, and, as such, has the greatest interest in safeguarding the independence of the profession which exists to serve the justice system he is in charge of. The Lord Chief Justice is no less able than the Lord Chancellor to give effect to the intended statutory regulatory objective to protect the interests of consumers.”
The letter goes on to state:
“We would be happy to attend a meeting to explain our concerns in more detail.”
That is a very telling exhibit. The core of the commercial legal profession in this country is telling the Government that it disagrees with their proposals because they will materially disadvantage Britain’s commercial interests across the world. The Government should listen to what it has to say.
I am just about to get the Kleenex out and start crying about the stress that this will cause to international lawyers and their clients. Is it not a fact that the legal services ombudsman, who has extensive powers to regulate the legal profession, including the ability to fine people, is appointed by the Lord Chancellor alone? That has not halted or wrecked international trade, so why do the hon. Gentleman and his friends in the City insist on changing what has worked quite well since 1990?
The hon. Gentleman sat through the discussion on Second Reading and he had quite a lot to say. He heard what I and my hon. Friend the Member for North-East Hertfordshire (Mr. Heald) said. We both made it clear that we regard the Bill as a once-in-a-generation chance to change for the better the regulatory and business structure of legal services and the way in which they deal with complaints. That is still our position. I think that that basically answers his point.
Does not the hon. Member for North Durham miss the important point that while the ombudsman has significant powers in relation to the legal profession, they are not responsible for its regulation? They do not draw up and oversee the framework under which the profession operates, and that is an important difference.
My hon. Friend makes an important point, and I thank him for that clarification.
I thank the hon. Gentleman for that further helpful intervention.
The ombudsman has
“the power to recommend that the professional body reconsider the complaint. S/he may also recommend that the professional body and/or the lawyer complained about pay compensation for loss, distress or inconvenience. The Ombudsman has a further power to make binding orders for the payment of compensation.”
Those are strong powers, not the weak powers that have been mentioned..
John Hemming rose—
We are going round in circles a little, but the hon. Member for Birmingham, Yardley is dying to get in.
The hon. Gentleman makes an important point. The Legal Services Board will have different powers from those that have been mentioned.
In that context, it seems weak for the Lord Chancellor to argue that he can be relied on to appoint the best candidates regardless of their political beliefs. The independence of the legal profession is a key selling point in its ability to win work from overseas clients. The Government must accept that legal independence needs to be protected. Allowing political appointees to be protected by being checked by the Lord Chief Justice will allow that aim to be achieved. Aside from the constitutional significance of the issue, the perceived independence of the Legal Services Board will strengthen the legal profession in overseas markets. It will help to safeguard the £2 billion annual contribution that legal services make to UK service exports, a figure that has quadrupled in the past decade. That includes not only English solicitors being asked to document contracts in far-flung places, but non-English parties signing contracts that have nothing to do with England but which have English jurisdiction and court clauses, because our legal system and its courts are regarded as impartial, non-political and fair.
We should be careful not to put that at risk, but that is what the Government propose. In an e-mail to my hon. Friend the Member for North-East Hertfordshire, Geoffrey Vos, the chairman of the Bar Council, said:
“I said I would write to you to explain the concerns of the German legal profession as they have been expressed to me in various discussions with them. I have spoken on several occasions with members of the BRAK, the German regulator of the legal profession (not the representative organisation, as Bridget Prentice is reported as saying on second reading), including Dr Dombek amongst others. I have been invited to Berlin on Tuesday 26th June to meet with Dr Dombek and other BRAK officers specifically to take these discussions further.
I also visited Berlin a few weeks ago specifically to discuss these issues with the officers of the DAV. The DAV has about 65,000 members and is the largest representative organisation of German lawyers. There are about 120,000 lawyers in total in Germany.
Furthermore, similar concerns to the ones I describe below have been expressed to me at international conferences this year (primarily Vienna in February, and Zagreb in May) by Bar Leaders from other countries including Portugal and France.”
I listened with interest to the hon. Gentleman’s litany of German and continental opinions of the legislation. Given his party’s aversion to European interference in the British legal system, why should we take his comments now any more seriously than before?
I am not sure on what level to take that remark. Let me just say that I do not think we are on the same wavelength.
Geoffrey Vos went on to say that foreign regulators
“are concerned that the Legal Services Board would be a Government offshoot. If it were, they would be worried that it would regulate the legal profession for the benefit of Government, and in such a way that prevented the profession actually being, and being seen to be, wholly independent of Government. I have tried to persuade them that this concern is unlikely to be real, because there are many safeguards in place in relation to public appointments which will prevent the Government improperly manipulating the appointments process. This does not wholly assuage their concerns. But I have not been keen to stir the concerns up. I have tried to persuade them that they need not be too worried, and that the addition of the LCJ’s concurrence would resolve the issue completely...BRAK representatives are, however, so interested in this Bill generally and the independence issue in particular, that they seem to attend many seminars on the subject held in London.
I hope this is some help.”
I believe that I have given a clear series of examples showing how the issue has not just national, but international, ramifications. The Government have simply not taken that on board, and I hope that the Minister will now address those international issues. We should not fall into the trap of simply looking at British consumers, because the issues go much further. Overseas investment is not the only matter that the Government seem to have overlooked. They have failed, too, to note that, through the Legal Services Commission and the Government Legal Service, they are the single largest purchaser of legal services, so there is a conflict between their interests as a purchaser and their interests as the appointer of the ultimate legal services regulator.