Clause
2
The
Legal Services
Board
Question
proposed, That the clause stand part of the
Bill.
Simon
Hughes:
This clause is very good. It is simple and short,
and it ought to be clause
1.
Question put and
agreed
to.
Clause 2
ordered to stand part of the
Bill.
Schedule
1
The
Legal Services
Board
Bridget
Prentice:
I beg to move amendment No. 30, in
schedule 1, page 121, line 6, leave
out ‘with the concurrence of the Lord Chief
Justice’.
The
Chairman:
With this it will be convenient to discuss
Government amendments Nos. 31 to
39.
Bridget
Prentice:
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.
Simon
Hughes:
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.
Bridget
Prentice:
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.
Mr.
Djanogly:
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?
Bridget
Prentice:
The National Consumer Council, our consumer
panel and, indeed, Which? were all of one view in our discussions,
which was that the appointment should not be made with the concurrence
of the Lord Chief
Justice.
Bridget
Prentice:
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.
Mr.
Djanogly:
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?
Bridget
Prentice:
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.
Mr.
Jones:
Does my hon. Friend agree that such a measure would
extend the role of the Lord Chief Justice to an area that does not
exist at present? For example, the appointment of a legal services
ombudsman is the Lord Chancellor’s responsibility. The Lord
Chief Justice has no role in that
appointment.
Bridget
Prentice:
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.
Mr.
Djanogly:
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.
12.15
pm
Mr.
Henry Bellingham (North-West Norfolk) (Con): 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.
Mr.
Djanogly:
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.
Mr.
Jones:
Did Clementi not say that the Lord Chief Justice
would be consulted, rather than hold a veto? That is different from
what the Bill currently says.
Mr.
Djanogly:
That is indeed true. As I said in an
intervention on the Minister, Which? made a different
suggestion.
Mr.
Jones:
Therefore, the Government are not on their
own—they are acting in line with Sir David Clementi’s
recommendations.
Mr.
Djanogly:
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.
Mr.
Jones:
May I emphasise that Sir David Clementi does not
support what is put forward in the Bill as amended in the Lords? He
said that their lordships should be consulted. Did the Minister not say
that on Second
Reading?
Mr.
Djanogly:
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.” It
continued:
“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”.
Mr.
Jones:
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.
Mr.
Djanogly:
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.
John
Mann:
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?
Mr.
Djanogly:
I have no idea. Would the hon. Gentleman care to
enlighten the
Committee?
John
Mann:
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?
Mr.
Djanogly:
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?
Simon
Hughes:
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.
Mr.
Djanogly:
I thank the hon. Gentleman for his considered
response.
Robert
Neill:
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.
Mr.
Djanogly:
I thank my hon. Friend for his very personal
intervention. He has highlighted something else: there seems to be a
misunderstanding on the Government Benches about the political nature
ofthe new Lord Chancellor—for a Lord Chancellor in the
Commons, that is even more so.
Stephen
Hesford:
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.
Mr.
Djanogly:
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.
The Government resisted the
amendment, stating that the procedure for appointments envisaged in the
Bill was already independent. The Minister in the other place said at
the time:
“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.
12.30
pm
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.
John
Mann:
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?
Mr.
Djanogly:
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.
John
Mann:
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?
Mr.
Djanogly:
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.
Mr.
Jones:
Following up the point made by myhon.
Friend the Member for Bassetlaw, how could Parliament scrutinise or
disagree with the Lord Chief Justice’s decision if he came into
conflict with the Lord
Chancellor?
Mr.
Djanogly:
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.
Simon
Hughes:
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.
Mr.
Djanogly:
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.]
That is why the concordat
between the Lord Chancellor and the Lord Chief Justice contains
numerous provisions to guard against such a danger.
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.
John
Hemming:
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?
Mr.
Djanogly:
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.
12.45
pm
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.
Mr.
Jones:
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?
Mr.
Djanogly:
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.
Robert
Neill:
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.
Mr.
Djanogly:
My hon. Friend makes an important point, and I
thank him for that
clarification.
John
Hemming:
Has not the hon. Member for North Durham missed
the point, too, that the Legal Services Board has direct powers of
intervention against individual
participants?
Mr.
Djanogly:
I thank the hon. Gentleman for that further
helpful
intervention.
Mr.
Jones:
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..
Mr.
Djanogly:
We are going round in circles a little, but the
hon. Member for Birmingham, Yardley is dying to get
in.
John
Hemming:
Does the hon. Gentleman accept that that does not
include the power to stop someone
practising?
Mr.
Djanogly:
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.”
Mr.
Adrian Bailey (West Bromwich, West) (Lab/Co-op): 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?
Mr.
Djanogly:
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.
It being
One o’clock,
The Chairman
adjourned the Committee without Question put, pursuant to the
Standing
Order.
Adjourned
till this day at Four
o’clock.
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