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Baroness Hayman: My Lords, I agree totally with the noble Baroness that we must ensure that the ethical considerations are fully taken account of in any government response to the report.

Lord Elton: My Lords, following on that reply, will the noble Baroness take note of the great concern in this House and outside with regard to the decision that the Government are reportedly to take in April and, since the usual channels are all represented in the Chamber at the moment, will she make certain that time is found for Members of this House to discuss the matter before the Government announce their view? It would be most unfortunate if the Government were to announce their view without first hearing the views of noble Lords.

Baroness Hayman: My Lords, I am grateful for the formulation used by the noble Lord. I shall certainly take account of that consideration. I know that these issues are of great concern in your Lordships' House, and I am sure that the usual channels will have heard what the noble Lord said.

Sterling and the Euro

3.00 p.m.

Lord Skidelsky asked Her Majesty's Government:

Lord McIntosh of Haringey: My Lords, the Government have no intention of shadowing the euro.

Lord Skidelsky: My Lords, in thanking the Minister for that reply, I have to say that, following yesterday's events, we should prefer the Government to shadow the Commission than the pound to shadow the euro. In the light of the Minister's reply, can he give the House an assurance that the Government will not try to influence the external value of sterling unless and until a referendum has declared in favour of Britain joining the single currency?

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Lord McIntosh of Haringey: My Lords, the external value of sterling is not a primary objective of economic policy; it is, rather, the outcome of sound economic policies. As the noble Lord will remember from the debates on the Bank of England Bill last year, the primary objective is price stability. It would be unwise to have, as another primary objective, an objective which could conflict with price stability.

Lord Shore of Stepney: My Lords, do not the convergence criteria demand not formal membership of ERM II but a stable exchange rate for a period of roughly two years before we join the euro? If that convergence criterion is in operation, how can we achieve that stability without shadowing the euro?

Lord McIntosh of Haringey: My Lords, the convergence criteria which applied before the 11 countries signed up to the euro in May of last year were not interpreted mechanistically, even at that time. Finland and Italy qualified, despite not meeting the criteria; Sweden did not qualify but that was for other reasons, as well. As for the present time, no, there is no requirement that we should join ERM II and there is certainly nothing magical about a two-year period.

Viscount Cranborne: My Lords, can the Minister tell the House whether he thinks that the economies within the euro zone at present are converging or diverging?

Lord McIntosh of Haringey: My Lords, I think it is too early to say. The euro has been in existence for less than three months. What is significant about our relations with the European economies is that inflation and interest rates are converging with those in euroland as a whole, and the Government find that encouraging.

Lord Barnett: My Lords, does my noble friend accept that the Chancellor's own five tests before joining the euro included sustainable convergence? Does he accept that it is not possible to have that at the present level? What action does he propose to deal with that?

Lord McIntosh of Haringey: My Lords, sustainable convergence is indeed one of the five economic tests which the Chancellor set. But, of course, exchange rate convergence is not the only criterion; it is only one of the four convergence criteria, the others being price stability, sustainable public finances and convergent long-term interest rates.

Lord Howell of Guildford: My Lords, given the extreme volatility of the euro at present, I am sure that the Government's stated position on this matter is a wise one. Given that this country's earnings from dollar-denominated trade are growing as a total proportion of our trade, and growing considerably faster than our euro-denominated trade, does it not make sense

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that, if there is any shadowing to be done--though personally I am against that--it should be of the dollar rather than the euro?

Lord McIntosh of Haringey: My Lords, there is no shadowing to be done and therefore the question does not arise.

Lord Bruce of Donington: My Lords, will my noble friend confirm that there is no necessity to converge with, follow or shadow any particular currency? The pound sterling is quite capable of holding its own. Would it not be better if we devoted some constructive effort to assisting the Commission in its present difficulties--largely self-inflicted--and to support the euro when it is appropriate to do so and when it ceases to have a mythical significance? Surely we can carry that on our backs as well.

Lord McIntosh of Haringey: My Lords, I sympathise with the desire of the noble Lord to anticipate the Statement which the Prime Minister is about to make, but he must not expect me to anticipate it.

Lord Ezra: My Lords, does the noble Lord not agree that in general it would be desirable for us to have a stable currency at competitive levels?

Lord McIntosh of Haringey: My Lords, I believe that I can broadly agree with such a broad proposition, yes.

Lord Davies of Oldham: My Lords, will my noble friend remind the House of the last Chancellor of the Exchequer to shadow a major European currency, from which party he came and with what results?

Lord McIntosh of Haringey: My Lords, it has been my consistent practice at this Dispatch Box not to intrude upon private grief.

Lord Pearson of Rannoch: My Lords, following on the answer which the Minister gave to the noble Lord, Lord Shore of Stepney, is he aware that there are six clauses left in the Treaty of Rome not included in Protocol 25 at Maastricht which commit us to running our economy on communautaire lines in precisely the same way as the convergence criteria did at the time? In those circumstances, can the noble Lord tell the House whether the Government intend to obey those clauses or to ignore them?

Lord McIntosh of Haringey: My Lords, the noble Lord is right in saying that in many ways we are required to run our economy on what he describes as communautaire lines. From the answers I have already given about the way in which the convergence criteria have in fact been interpreted, he will understand that that is not a very precise commitment.

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Lord Carter: My Lords, at a convenient moment after 3.30 p.m., my noble friend the Leader of the House will, with the leave of the House, repeat a Statement that is being made in another place on the European Commission. Following that, my noble friend Lord Hoyle will, again with the leave of the House, repeat a Statement on crime reduction.

Access to Justice Bill [H.L.]

3.8 p.m.

The Lord Chancellor (Lord Irvine of Lairg): My Lords, I have it in command from Her Majesty the Queen to acquaint the House that Her Majesty, having been informed of the purport of the Access to Justice Bill, has consented to place Her prerogative and interest, so far as they are affected by the Bill, at the disposal of Parliament for the purposes of the Bill.

Bill read a third time.

Clause 1 [Principles applicable to Part I]:

Lord Goodhart moved Amendment No. 1:

Page 2, line 12, at end insert--
("(2A) The Lord Chancellor shall before the commencement of each financial year inform the Commission--
(a) of the sums which he intends to pay to the Commission during that year for the funding of services by the Commission as part of the Community Legal Service, and
(b) of the sums which he expects to pay to the Commission during that year to meet the costs of any advice, assistance and representation funded by the Commission as part of the Criminal Defence Service.
(2B) The Lord Chancellor shall inform the Commission of any subsequent change in his intention referred to in subsection (2A)(a) or in his expectation referred to in subsection (2A)(b), and of his reasons for making any such change.
(2C) The Lord Chancellor shall not make any change involving a reduction of the sums referred to in subsection (2A)(a) unless the Commission has advised him that such reduction can be made without detriment to the services which are to be funded from the Community Legal Service for that year pursuant to the plan published under paragraph 15 of Schedule 1.
(2D) The Lord Chancellor shall lay before each House of Parliament a statement of the information given by him to the Commission under subsections (2A) or (2B).").

The noble Lord said: My Lords, the main purpose of this extremely important amendment is to prevent money allocated to the community legal service being transferred to make good an overspend on the criminal defence service arising during the course of a financial year. To go briefly into the background, up until now spending on both civil and criminal legal aid has been uncapped. If the applicant satisfies the criteria he gets it. The cost of both civil and criminal legal aid over the years has, regrettably, increased substantially faster than the rate of inflation. In an effort to control the cost of civil legal aid the financial limits of eligibility for legal aid have been squeezed until almost no one is eligible for civil legal aid unless he is living on benefits. We have undoubtedly gone as far as we can down that route. Reluctantly but nevertheless plainly, we accept the need for the capping of the civil legal aid budget.

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Civil legal aid is technically now to be replaced by the community legal service and criminal legal aid will be replaced by the criminal defence service, both being administered by the legal services commission. The criminal defence service, like criminal legal aid, will not be cash-limited. Clearly, that is right. One cannot refuse to pay for the defence of an accused person who faces a long prison sentence because the CDS budget has run out. Indeed, Article 6 of the European Convention on Human Rights entitles an accused,

    "if he has not sufficient means to pay for legal assistance, to be given it free when the interests of justice so require".

The community legal service, on the other hand, will be cash-limited. Clause 6(2) provides that the Lord Chancellor,

    "shall pay to the [Legal Services Commission] the sums which he determines are appropriate for the funding of services by the Commission as part of the Community Legal Service".
That is the money that the community legal service will get for the year and will be entitled to spend.

The commission is also required under paragraph 15 of Schedule 1 to prepare a plan before the beginning of each financial year setting out how it intends in that year to fund services from the community legal service fund. That plan must be approved by the Lord Chancellor. If he does not approve it he can direct the commission to revise it in accordance with his direction. The funding of the community legal service which the Lord Chancellor considers appropriate must therefore, I assume, be the funding which is required to implement the plan that he himself has approved.

Paragraph 6.10 of the White Paper Modernising Justice published at the same time as the Bill stated:

    "The CDS will be a separate scheme from the Community Legal Service ... and its budget will not form part of the Community Legal Service Fund. Separating the two schemes in this way reflects the fact that they are responsible for providing different types of service in very different types of case; and that each scheme has its own distinct objectives and priorities".
I concur completely with that statement in the White Paper. I had therefore assumed, as I believe did most other people who had studied the subject, that the CDS and the CLS would have completely independent budgets. Nothing in the Bill or the Explanatory Notes suggested otherwise. We did not become aware that that assumption was misplaced until the second day of the Committee stage when the noble and learned Lord the Lord Chancellor said:

    "what is available for civil legal aid is what is left over from the budget after the prior claims of criminal legal aid have been met".--[Official Report, 21/1/99; col. 738.]
The noble and learned Lord said something very similar on 26th January at col. 918.

The implications of that statement are truly alarming. We hope that the Lord Chancellor will be able to control spending on the criminal defence service so far as the interests of justice permit him to do so. But if he fails to do so, or if circumstances arise which are outside his control, there will be a clear and immediate danger to the funding of the community legal service.

The noble and learned Lord the Lord Chancellor explained in subsequent correspondence that there was no absolute requirement to meet an overspend on the

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criminal defence service from the community legal service budget. But he also explained that, save in exceptional circumstances, he would expect to meet an overspend on the criminal defence service from the other elements of his departmental budget, which in practice means the community legal service.

The diversion of funds from the community legal service to the criminal defence service is no theoretical risk. The commencement of the main provisions of the Human Rights Act is likely to lead to a temporary, but quite possibly substantial, increase in the cost of the criminal defence service as the criminal procedures are tested against convention rights under the Act. In some Australian states civil legal aid has been suspended altogether in times of budget crisis. In Ontario the capping of the legal aid budget led to an 80 per cent. decrease in civil legal aid certificates for a period of three years.

At Report stage the noble Lord, Lord Clinton-Davis, moved an amendment that would have required the Lord Chancellor in deciding what amount was appropriate for funding the community legal service to disregard expected spending on the criminal defence service. I forced that amendment to the Vote, which was lost. I cannot therefore bring back that amendment in the same form. Indeed, I accept that that amendment goes somewhat too far. In deciding the annual budget for the community legal service, spending on the CDS must be one of the factors that can be taken into account along with all other items of government spending. We shall have to rely on public opinion and pressure from voluntary organisations active in the field to prevent or limit cuts in spending on the community legal service year on year.

The main aim of this amendment is to restrict transfers during the course of the financial year from the community legal service to the criminal defence service. To use technical jargon, it restricts virement. According to this amendment, transfers can be made only if the commission is satisfied that they will not prejudice the services to be provided by the community legal service under the plan that has been approved for that year. The amendment also requires transparency about the transfer and requires Parliament to be informed. It does not require parliamentary consent to that transfer. If this amendment were accepted and became part of the Act any overspend on the criminal defence service for the year would, presumably, come out of the contingency reserve, which is where I believe it belongs.

This is therefore a modest amendment. It does not restrict the Government's powers over annual expenditure on legal services, either criminal or civil. The amendment merely restricts the power to cut spending on the community legal service during the course of the current year with all the consequences that such cuts would have for access to justice. One cannot sensibly plan the community legal service on the basis that one may be told half-way through the year that the budget for the year is to be cut by 20 per cent. or whatever other figure is appropriate or necessary. Strategic planning will be impossible. How can firms

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be expected to provide good quality service under their contracts if those contracts can disappear altogether when community legal service spending is cut back?

This amendment is supported by all the members of the Legal Aid Forum: the Law Society; the Bar Council; the National Consumer Council; the Consumers' Association; the Legal Action Group; and the Public Law Project. The fact that consumer bodies as well as legal professional organisations have come together to support the amendment makes it clear that this is not a proposal for the protection of the legal profession.

In the debate on the amendment moved by the noble Lord, Lord Clinton-Davis, at Report stage on the 11th February the noble and learned Lord the Lord Chancellor produced the usual mantra about schools and hospitals coming first. We accept that they are priorities for any increase in public spending, but we do not ask for an increase in spending on civil legal services but for protection of the funding of CSL which now exists for access to civil justice. What does access to justice mean? It means the right of homeless families who have been wrongly refused rehousing by their local authority to challenge that refusal in court. It means the right of a child who has been brain damaged at birth to claim damages for clinical negligence.

Cutting spending on the community legal service means denying those people the rights that they now enjoy. Even now I ask the Government to think again. If they do not do so, I fear that the Bill will become not the Access to Justice Bill but the End of Access to Justice Bill. I beg to move.

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