|Previous Section||Back to Table of Contents||Lords Hansard Home Page|
Noble Lords will also want to know the detail of the adjustments that have been made. It may be helpful if I set out the position in writing as well as producing a revised RIA. I indicated previously that I would write, but noble Lords will know from our discussions on 16 April that I did not want to do so until I was convinced that the figures were robust. Indeed, I am grateful to our officials who have worked tirelessly during the past two weeks in order to drill down and make sure that the figures are right. Before Third Reading I shall write to noble Lords setting out the position in full, and that will include responses to questions raised by the professions about the position of VAT and double counting. We have been in contact with Her Majestys Revenue & Customs and received the best advice on the VAT position. I shall set all this out in detail, which I hope will be useful. I am grateful to noble Lords for their patience in allowing me to get to this point, one where the figures are now more robust. Noble Lords will see that the estimate is a decrease from the figure I was talking about for the professions, and I hope that that is welcome. However, I appreciate that they will want to see the detail before agreeing that the figures are indeed robust. Finally, noble Lords should feel free to put any questions to me before we return to these issues at Third Reading.
I turn now to the principle underlying the debates. The noble Lord, Lord Maclennan, put very well the concerns that have been raised on the issue of funding, but we remain convinced that it is entirely appropriate for the legal service providers to bear the costs of these reforms. Here I want to reiterate the basis of that conviction. I am glad to say that we have a thriving legal market with a turnover in 2005 of £22 billion. The legal professions have a privileged position as the providers of reserved legal services. I believe that confidence in the system will increase as a result of the demonstrably independent regulation and complaints handling procedures, and I believe that the legal professions will benefit from that. I also think that the opportunity created in the Bill for alternative business structures will be to their benefit. They will be significant beneficiaries, and on that basis the Government think it entirely right for the significant beneficiaries to pay for the reforms.
I acknowledge that the Government will make some savings as a result of these reforms, but the job of government is to consider where to invest and what are the priorities. We believe that investment is most needed in other priority areas, particularly those where other sources of funding are not available.
8 May 2007 : Column 1327
In Committee, the noble Lord, Lord Kingsland, and others discussed a number of comparisons, including the role of the Financial Reporting Council. I undertook to look at the funding arrangements for that organisation in more detail. The Financial Reporting Councils accounting, auditing and corporate governance activities are funded by a tripartite arrangement, funding received in equal proportions from the accountancy professions, the business community and the Government. Other costs, audit inspection, investigation and disciplining of accounts are funded entirely by the accountancy professions. However, the Government provide no funding in relation to actuaries. The FRCs funding arrangements in relation to its responsibilities for actuarial standards and regulation are as follows: 10 per cent from the profession, 45 per cent from the insurance companies and 45 per cent from the pension funds. As noble Lords would expect, I have also looked at the funding arrangements of a number of other regulatory bodies: the Financial Services Authority, the financial services ombudsman, the Council for Healthcare Regulatory Excellence, the pensions regulator, the office of communication and the claims management regulator.
That analysis highlights that there is no rigid approach in terms of government funding. There are cases where the Government fund establishment or running costs and cases where they do not. The decision in effect is taken on a case-by-case basis, but the Governments starting principle is that there should be no increase in public expenditure unless there is a compelling case for public funding. In this instance we do not believe that there is any such compelling argument. It is not inconsistent in terms of government policy to require the professions to pay. I know that the legal professions have argued that if the Government were making a contribution they would be incentivised to reduce costs. We are committed to ensuring value for money in these reforms and that is why we have built in the safeguards to ensure that. The levy rules are subject to the extensive consultation requirements, to the consent of the Lord Chancellor and to parliamentary scrutiny through the negative resolution procedure. Together these measures will ensure that the spending of the new bodies is properly contained.
Lord Clinton-Davis: My Lords, before my noble friend sits down, the Bar Council and the Law Society have made certain observations about start-up and
8 May 2007 : Column 1328
Baroness Ashton of Upholland: My Lords, I have never heard the argument that new entrants will be affected in that way. Perhaps my noble friend and I might discuss that issue separately. Certainly I have set out the issues to do with the costs and I will do so in greater detail.
Lord Kingsland: My Lords, the quality of the debate on the amendment has been high even by the standards of the debates we have had on previous amendments throughout the course of the Bill. I was particularly thankful to the noble Lord, Lord Maclennan of Rogart, who made an exceptionally fine and demandingfrom the Ministers point of viewintervention on behalf of our amendments. Although the noble Lord, Lord Borrie, sought to disagree with me he was at his most eloquent and my noble friend Lord Hunt has always found a certain amount of liquid in even the driest of water courses. I am most grateful to all of them.
The noble Lord, Lord Borrie, rightly said that we should look at the role of the Legal Services Board in a context wider than that of the regulation of complaints. We on these Benches accept the establishment of the Legal Services Board but at no stage in the Bills course have we sought to amend it so as to remove the board. We also accept that there are certain functions of the board in supervising the complaints system that should legitimately be financed by the professions. But the functions of the Legal Services Board go way beyond the complaints arena. My noble friend Lord Hunt dealt particularly vividly with the wider public interest. A number of other public regulatory organisations have both their start-up and their running costs supported by the Government. I can think of no public regulator of the sort that the Legal Services Board purports to be that is not in some form or other supported by the Government. Moreover, the authorised persons will have no control whatever over the number of additional functions that might be heaped on the board for which they will have to pay. There is nothing in the Bill that controls that process on their behalf.
Moreover, a range of existing functions currently financed by the taxpayer will now be transferred and become a financial burden on the authorised users. The Government are a net beneficiary of that process. The legal profession will carry burdens in future that were formerly carried by the taxpayer. Given the scale of the costs that the profession is about to meet, that is, in my respectful submission, entirely unacceptable. Despite the noble Baronesss attempt at calming words, I find the situation entirely unacceptable. At this late hour we would probably be imprudent on both sides of the House to vote, but nevertheless I will give the noble Baroness a week longer to consider the position. Meanwhile, I beg leave to withdraw the amendment.
The noble Lord said: My Lords, I can deal with this amendment telegraphically. The noble Baroness will recall that the two regulators concerned with patents and trademarks were especially concerned about the considerable financial burden of the levy and start-up costs. They believe that further safeguards should be put into the Bill and have proposed in the amendment the same wording that appeared in our previous Amendment No. 142A in Committee. I know that the noble Baroness has set her heart against a definition of proportionality in the Bill but nevertheless I hope that she will accept that the concerns expressed by the authorities, and the fears that flow from them, genuine. Even if she is not prepared to accept the amendment I hope that she will be prepared to provide powerful words of comfort instead.
Amendment No. 433 concerns the issue that debt may be recovered only from the practising fees held by a regulator. Those were particular concerns of the patent and trademark regulators and although I do not hold out a great deal of hope that the noble Baroness might find a way of putting the amendment in the Bill I hope nevertheless that she can give me some reassurance. I beg to move.
Lord Hunt of Wirral: My Lords, I agree with my noble friends comments, particularly on Amendment No. 417. Proportionality is an important principleit is an express principle in other parts of the Billand there are good reasons for applying it here. I hope the Minister will be able to give a positive response.
Lord Campbell of Alloway: My Lords, I support this. Proportionality, yes, but in what context and in what sense? This truly gives guidance with legal efficacy,
8 May 2007 : Column 1330
Baroness Ashton of Upholland: My Lords, I appreciate that the noble Lord, Lord Kingsland, has brought this issue back again. I have already indicated that we have talked to the smaller regulators, because I understand their concerns. I said as well that I would look at what else we might be able to do on this issue to give them clarity and comfort about the situation.
I said during the debate in Committee that the board must be satisfied that the apportionment of the levy would be in accordance with fair principles before making the rules, and I still firmly believe that that, rather than a list in the Bill of what would inevitably be a prescriptive list of factors, is the appropriate provision. Noble Lords will know that I have a general aversion to lists as they can never be exhaustive, and often they could preclude a factor that we do not think of at the time but could subsequently become importantperhaps more important than other factors. I do not wish to do that because it is important to enable the philosophy of proportionality to be interpreted with the factors at the time, depending on the circumstances.
I recognise that the list sets out what the board should consider inter alia, so other matters should be considered too, but any list puts pressure on the board to consider those matters before anything else for fear of being reviewed, and that would restrict the flexibility of the board, something the Institute of Trade Mark Attorneys and the Chartered Institute of Patent Attorneys have said they do not want. They do not want a one-size-fits-all approach. I agree, and we would argue that flexibility is exactly what is needed to prevent that. Reducing that flexibility through a predetermined list could ultimately be to their detriment, and none of us wishes to see that happen.
I do not want to set out the principles. In our thinking we have followed the approach in Section 2(3) of the Legislative and Regulatory Reform Act, which establishes that regulatory activities should be carried out in a way that is transparent, accountable, proportionate and consistent, and that regulatory activities should be targeted only at cases in which action is needed. We believe that the terminology set out in the Bill in respect of proportionality and fair principles has a natural meaning that is widely accepted and widely understood, but it gives the flexibility to provide for the smaller regulatory bodies, which I know are concerned about this. I hope, as we continue to discuss this with themwe will certainly do sothat they will feel increasingly reassured that there is no question that one-size-fits-all would be highly inappropriate in the context of ensuring the smaller regulatory bodies are well catered for. We are all in agreement on what we are seeking to do; our contention is that we have achieved it within the Bill.
On Amendment No. 433, we would generally expect money owed in respect of the levy to be paid from practising fee income, and Clause 50(4)(b) provides that it can be. I do not want to set out in the
8 May 2007 : Column 1331
Lord Campbell of Alloway: My Lords, before the Minister sits down, I understand her reply but, as there is some useful material in the amendment, could some form of undertaking be given that it could be used as guidance? It would be for a constructive purpose.
Baroness Ashton of Upholland: My Lords, I am not willing to commit to saying that we will make this into formal guidance. I am sure, however, that, in the discussions I have mentioned with the smaller regulatory bodies, their concerns, which are reflected in some of the issues raised by the noble Lord, Lord Kingsland, need to be properly dealt with. I am prepared to commit that we will continue the dialogue with them. It is our shared objective to ensure that they are treated properly and fairly. In legislative terms we have achieved that; in practical terms, it will be for the bodies concerned to make sure it happens.
Lord Kingsland: My Lords, I am most grateful to the Minister for her response. What she said about Amendment No. 417 will have gone some way to appeasing the concerns of the two small regulators who were really behind the promotion of the amendment. I recognise that she is against an amendment that specifies the component parts of proportionality; indeed, having heard the cogent way she has argued the point, I have some sympathy for her.
On Amendment No. 433, as the Minister will be aware, there is a specific difficulty for the patent and trademark regulators because of their relationship with their own members. There would be nothing to prevent the patent and trademark attorneys leaving their societies but, unlike the case of barristers and solicitors, continuing to practise as patent and trademark attorneys. That is likely to happen unless the terms of the amendment are what happens in practice. I accept entirely that the Minister hopes that the practice by the Legal Services Board will be as set out in Amendment No. 433. Nevertheless, there is no compulsion, and, were it to be the case that the board went beyond the stipulations she has laid down, that could have an
8 May 2007 : Column 1332
( ) But subsection (7)(a) does not include such proportion of the expenditure of the OLC incurred under or for the purposes of this Act as may reasonably be attributed to the exercise of its functions under sections (Power to establish voluntary scheme for resolving complaints), (Procedure for making orders under section (Power to establish voluntary scheme for resolving complaints)) and (Operation of voluntary scheme).
|Next Section||Back to Table of Contents||Lords Hansard Home Page|