Defamation Bill

Baroness Hayter of Kentish Town Excerpts

Wednesday 19th December 2012 Grand Committee

[Lord Browne of Ladyton]

I am very pleased to have given the noble Lord an opportunity to make a very good and common-sense suggestion that I am sure the Government will take on board. They have taken on board quite a lot of what he has suggested in relation to this particular area of the law. In general, I agree that Explanatory Notes should not be set in stone at the point of publication of a Bill and not revisited, because Bills are often changed substantially during their passage through Parliament. It would be helpful to have revised Explanatory Notes. I agree with the noble Lord that sometimes the Explanatory Notes do not take one very much further forward than the Bill itself. This Bill has been significantly changed and the notes could do with some revision.

I will just point out that as a Scottish lawyer there is no conceit on my part about the state of Scots law. Clauses 6, 7, 15, 16 and 17 of the Bill extend to Scotland. When we reach a discussion of something that is directly relevant to Scotland, I will express my regret that there does not seem to be any parallel movement on the part of the Scottish Government to find time in their Parliament to bring the law up to the improved state that it will be in down here when the Bill becomes law.

[Baroness Hayter of Kentish Town]

It affects Wales, too.

[Lord Browne of Ladyton]

Of course it does. I am sorry.

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Moved by

[Baroness Hayter of Kentish Town]

23A: Clause 5, page 3, line 21, leave out “a website” and insert “an electronic platform”

[Baroness Hayter of Kentish Town]

My Lords, I have lost my support team. The amendment is in the name of my noble friend Lord Browne and myself, and I shall speak to the other amendments in the group. The amendment, as my noble friend suggested earlier, is by way of a probe. It would replace the word “website” with “electronic platform”. It is seeking clarification from the Government about what they mean by website and to ensure it is sufficient to make the Bill future proof. We might also consider whether the common definition of, for example, “journal” includes electronic peer-reviewed offerings, which might deal with some of the later amendments.

As the Minister indicated earlier, we can probably assume that “website” covers Facebook, blogs and Twitter, but we need some clarification on that. I did not have a chance this morning to study the DPP’s guidelines released earlier about when legal action would be taken on harassment and similar issues on electronic platforms. Perhaps the Minister can reassure us that these two initiatives, albeit one on criminal prosecutions and one about defamation, are moving in harmony. Amendment 23B specifies that the defence applies only in relation to damages and not, for example, in an application for an injunction. This was probably addressed in Clause 13, but it would again be helpful for it to be part of this clause. Amendment 26A simply replaces “was” with “is” for clarification. “Was” implies that a post used to be on the website and has been taken down. That amendment would clarify that no action would be needed if it had been removed.

I turn now to our main amendments in this group, Amendments 25A and 25B. I shall first refer to a letter from the then Parliamentary Under-Secretary for Justice, Jonathan Djanogly, on 13 June, which included a helpful attachment indicating the department’s thinking about the procedure to be followed under Clause 5. There was a subsequent letter on 10 December from the noble Lord, Lord McNally, with that attachment. It states that:

“Website operators will be encouraged to set up and publicise a designated email address”—

that is, for complaints—

“as a matter of good practice”.

Is it not time to make a real difference to the whole business of reputation and innuendo by establishing a need, not just a request, that if website operators want to take advantage of the defences to defamation then, through them, the authors must be easily contactable by anyone with a potential claim? Neither authors nor website operators should be able to hide behind some electronic wall to avoid receiving a writ.

We seek the easiest possible route between the defamed and the author of the offending words by, we hope, virtually bypassing the website operators. We do not want the defamed, as in the Government’s suggested outline, to have to go round the houses, waiting here for 72 hours, waiting there for seven days and possibly applying to a court before even finding out who has written the alleged libel or where that person can be contacted. We therefore want it to be obligatory for a well publicised e-mail address to be on the website, for use where the author is not already identifiable and contactable. It is slightly strange that in the Government’s appendix to those letters, they seem to ask that the complainants should identify themselves and give their address and everything to the poster, with no such reverse obligation on the author.

It is not good enough for authors to hide behind anonymity. This has not been allowed to the defamed person and it is hard to see why it should be available to the alleged slanderer. I shall leave whistleblowers to one side at the moment. I shall come back to them, but we should not allow that tiny number of people who can be safeguarded by other means to act as a cover for the anonymity of the millions who trounce other people’s reputations. It is hard to understand the Government’s proposal to allow the author to refuse to reveal his or her identity, with no excuse having to be given. This would therefore make the complainant seek a court order to locate the author.

If the provision were to be enacted, no author would ever have any reason to give out their name, knowing that no action could even be started against them without a court order. We have to change this around. Either the author puts up his or her hands and says, “It was me who wrote it and it is not defamatory”, or the website operator must take the hit and stand in the shoes of the secret writer. I leave whistleblowers to one side for the moment.

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[Lord Ahmad of Wimbledon]

My Lords, I am sure that the Committee will agree that, in light of the other contributions that remain to be made and of the time, further debate on Amendment 23A should be adjourned. Perhaps it would be a convenient moment to suggest that we adjourn this debate until Tuesday 15 January at 3.30 pm.

[Baroness Hayter of Kentish Town]

Before we put that to the Committee, perhaps we may take this opportunity to thank the Deputy Chairman and all Members for what they have done so far and wish everybody a very happy Christmas.

[The Deputy Chairman of Committees]

In adjourning the debate until the day specified, I wish you all a very happy Christmas and new year. We will no doubt have more fun discussing this in January.

Defamation Bill

Baroness Hayter of Kentish Town Excerpts

Monday 17th December 2012 Grand Committee

[Lord Mawhinney]

As always, I am grateful to the noble Lord for his interjections. Let me cheer him up by assuring him that I was aware of that even before my noble friend said as much a little while ago. In fact, I remember being told that when we were holding our hearings. However, let me be plain about my difficulty here. This subject has been kicked into the long grass many times over the past 50 years, something my noble friend Lord Lester well knows because his was one of the balls that got kicked there. He is asking the Committee yet again to accept on faith a promise made by a Government Minister that there will be heaven tomorrow, but it falls just a little short. The truth is that while we will all await with interest what the judiciary decides would be an appropriate set of changes, if any, it is perfectly legitimate for Members of your Lordships’ House to ask the Government, “What changes do you think need to be made and what are you going to do about it?”. In essence, that is the question which lies behind the amendment, although it is in the framework for corporations.

While I am on my feet, perhaps I may say that so far as Amendment 8 is concerned, I thank the noble Lord, Lord Browne of Ladyton, and the noble Baroness, Lady Hayter of Kentish Town. It is extremely close to the wording used in our report, and in that I suspect that I am looking at the hand of the noble Baroness, Lady Hayter. I thank her for valuing it. I beg to move.

[Baroness Hayter of Kentish Town]

Before I speak to the amendment that has just been moved, and to Amendment 8 which is tabled in my name and that of my noble friend Lord Browne and the noble Lord, Lord Lester, perhaps I may also pay tribute to the noble Lord, Lord Mawhinney, for his work as chair of the Joint Committee. The Minister will recall, because he was at the Fabian Society even before I was, that we produced a book entitled The ABC of Chairmanship written by Walter Citrine. It was a brilliant book, but I have to say that I feel that a small codicil should have been added to it, having served under the chairmanship of the noble Lord, Lord Mawhinney, which is this: see how he does it because that is the best way to do it. I learnt a great deal from him.

As the noble Lord, Lord Mawhinney, has said, our recommendation comes from the Joint Committee and is broadly supported, including by Liberty, the Libel Reform Campaign, the Media Lawyers Association and Which?. As has been suggested, many of the cases which led to the pressure to reform of the law on defamation did not come from hurt individuals but from corporations, often using their deep pockets and access to lawyers to stifle public criticism of them or their products.

It was an American corporation that sued cardiologist Dr Peter Wilmshurst; the British Chiropractic Association sued Simon Singh; GE Healthcare sued Danish radiologist Professor Thomsen; Trafigura sued the BBC; manufacturers are forever threatening or trying to sue Which?; and McDonald’s infamously and, as it turned out, rather stupidly sued two individuals. Nature, the Lancet and the British Medical Journal—organisations that almost by definition exist for the public good—are no strangers to the threatening letters, mostly from corporations. Similarly, we heard in the Joint Committee from Mumsnet, which told us that it was very often the purveyors of baby foods and products, rather than individuals protecting their reputations as parents, which threaten to take action. It is often corporations which do not want negative reviews or sensitive information in the public domain that use this threat.

Yet the high cost of defending even a ludicrous claim brought by a corporation is an inequality of arms—or bullying, as the noble Lord, Lord Mawhinney, said. It is because a corporation can bring a claim where a defamatory statement is said to harm its trading or business reputation that a threat is all that is needed. The Joint Committee on Human Rights regretted the absence from the Bill of some reduction of the use of defamation proceedings by corporate claimants. Its view is that,

“businesses ought only to succeed where they can prove actual damage. The Bill should be amended so as to provide that non-natural persons are required to establish substantial financial loss in any claim”.

The report refers to the evidence of Professor Phillipson, who said that the failure to impose any restrictions on corporations’ ability to sue,

“renders the law on reputation inconsistent and incoherent. Defamation law and the protection afforded under Article 8 has developed on the basis that the protection of an individual’s reputation is a significant human rights issue. Corporate claimants have neither personal emotions nor dignity, and yet are treated as natural persons for the purposes of defamation”.

The report also quotes the Culture, Media and Sport Select Committee’s call for a new category of corporate defamation, by requiring a corporation to prove actual damage to its business before an action can be brought.

The Joint Human Rights Committee dismissed the MoJ’s refusal to countenance any change and concluded that,

“businesses ought only to succeed … where they can prove actual damage”.

Regrettably, as we know, the Government opposed a similar amendment to this in the Commons on the grounds that a corporation has a reputation, even where that does not affect its bottom line. We on this side accept that where damage to reputation affects the company's finances—for example, one can imagine an incorrect allegation that Perrier caused the current vomiting virus that is going around and that that affects the sales and the future of that company—redress should be possible in such cases.

Our amendment is modest. It does not seek to take away all rights for companies to sue, but would merely require them to show substantial financial loss before they were able to start an action.

[Lord Triesman]

My Lords, I have broad sympathy with this amendment and with Amendment 8, and I want to share a small amount of experience with the Grand Committee. I declare an interest as a former general secretary of the Association of University Teachers. One of the things that consistently caused difficulty, probably more in the scientific community than elsewhere but across a number of disciplines, was when people producing research documents and reports found themselves threatened to a point where they decided that they would not publish or where the journal to which they had submitted their article would not publish. In many cases, it had a direct impact on them, not just because the research was suppressed but because publishing in journals overseen by eminent academics is usually the way in which much of the opportunity for promotion and career advancement takes place. Refereed journals are one of the most fundamental routes to promotion to the most senior positions in academic life, so there was the loss of research credibility, the loss of often many years of painstaking research and a very significant barrier to career advancement.

It was one of the inspirations that led some of us to help in the drafting of the 1997 UNESCO normative instrument on academic freedom; I had the great privilege of taking part in this. It was intended to create for academics—although I understand why it should have a wider impact than just academics, that was who we were considering at the time—the entitlement to publish things that were accurate, truthful, based on solid research and, on occasion, unpopular or unfashionable as well. We none the less intended to make sure that all that could happen in the way that all of us would want because a world where people cannot publish or feel afraid of publishing serious academic research is a much impoverished world.

The reason I have such strong sympathy with what the noble Lord, Lord Mawhinney, said is because it is incredibly difficult. With whatever assurances are being given about separating out costs from matters of substance, it is difficult to see how any rational line of defence is available to people. I say with at least a modicum of respect for the lawyers here—and they will understand that I am merely a mathematician and do not have their formidable skills—that the issue that is of concern to many people who are not lawyers is that we have a legitimate view on these matters that is entitled to be heard. In this case, it becomes very important to see all the things clustered together in order to get the right result.

I shall conclude by making a point that I have made before in your Lordships’ House. The amendments deal with corporations. When corporations, particularly wealthy corporations, decide to become claimants, defendants cannot match their power with any equality of arms. It is also not at all infrequent that the claimant finds that they have no equality of arms with the defendant. If you find yourself contesting one of the major newspaper groups, it will tell you in pretty brusque terms that if you really want to bankrupt yourself, to see yourself and your family in penury for very many years, to lose your house or so on, just come on if you feel strong enough. The reverse of this is also true. I make that point because I would not want it lost.

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[Baroness Hayter of Kentish Town]

My Lords, although I am sure Lord Mawhinney will respond, as he moved this group, I shall make one point on the amendment standing in my name and that of my noble friend Lord Browne. If a company was attacked on its ethical role, that would also show in its share price—those of my generation might remember Barclays selling arms to South Africa. This would not necessarily affect sales, but it could still substantially affect a company’s financial position because its share price would be affected. There are other ways of measuring financial loss, and this is similarly the case with very small companies. If a very small shop of the kind found in Kentish Town was accused of having rats in the cellar, that would immediately lead to a drop-off in the number of people shopping there, and therefore I think that would count as substantial loss. Concerning the specific drafting, once the Minister has accepted that he will move his own amendment on the arguments we have given, I am sure his officials will make sure that the drafting is perfect.

[Lord McNally]

I have known the noble Baroness so long that I know when she is tempting me into sin. However, this has again been a very useful, very helpful debate. I confess that when I started out on this one of the things I wanted to do was to address the problems that have been faced by academics and others in making legitimate criticism and legitimate comments. Having listened to a large number of individuals and interested parties, there is no doubt in my mind that this law can have a chilling effect, and it is used very ruthlessly to stifle debate. I hope that we can do something to address this as we progress this Bill.

The noble Baroness, Lady Hayter, has obviously been very kind to me, because she did not point out that when I gave evidence to her committee I said that in my opinion corporations should not be allowed to sue. The then Lord Chancellor, Ken Clarke, took me into a quiet room, sat me down and, with the persuasiveness for which he is renowned, convinced me that corporations do have reputations and what the noble Lord, Lord Phillips, described as an ethical identity. This is a serious point, which has come out in the debate. As we go through the Bill, we are continually trying to get the balance between defending reputation and defending free speech. They are continually in our mind.

Regarding costs, I again point out to the noble Lord, Lord Mawhinney, although he clearly has doubts about the way these things are done in government—I do not know whether that comes from personal experience—that we have tasked the Master of the Rolls with the job of looking at this matter within a specific timescale: by next March. Since then, we have had a clear statement by the Prime Minister that the Government accept the recommendation by Leveson that there should be a cost-transferring system in defamation. Any powers of influence I have will be used to try to ensure that this is not go into the long grass. I am quite sure that the Master of the Rolls, Lord Dyson, will understand the urgency and the expectation that comes from the work with which he has been tasked.

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Moved by

[Baroness Hayter of Kentish Town]

9: After Clause 1, insert the following new Clause—
“Non-natural persons who perform a public or governmental function
Non-natural persons who perform a public or governmental function will not have an action in defamation, provided the statement complained of relates to that function.”

[Baroness Hayter of Kentish Town]

My Lords, there are good reasons for the amendment, which I think is probably one that the Minister, before he departs, is likely to agree to, even if he does not agree with our specific drafting.

The first reason draws on the Derbyshire case. While that matter concerned the propriety of certain investments made by the local authority from its superannuation fund, the House of Lords determined that a democratically elected body, including a local authority, and indeed any public authority or organ of central or local government, should be open to uninhibited public criticism and therefore should not have the right to take action for damages for defamation.

Thus, public authorities are barred from using libel by what is known as the Derbyshire principle—a precedent established in the case of Derbyshire County Council v Times Newspapers Ltd in1993, whereby a government authority cannot sue for libel. However, other authorities have sought to get out of that excuse, presumably because they were not elected. For example, the Olympic Delivery Authority appeared to be one such authority when it accused a citizen journalist of,

“serious, false and defamatory allegations”,

against it, perhaps because it was not elected.

However, elections apart, there are other good reasons why a public authority should not be able to sue. One, of course is that it is a body corporate and thus, under my earlier amendment should be debarred from such a course, unless it could show financial loss. However, that would not be possible for a public authority, given that all of us pay its levy, whether it is known as rates, the community charge or anything else. Another reason is the comparative resources of any government body compared with those of an individual—the “David and Goliath” situation that was referred to earlier. However, a third issue, which until recently was of central importance, given the number of services provided by local authorities, was that they were a monopoly—effectively for education, but actually for street cleaning, social care, parking, and a host of other services. Therefore, not only did any damaged reputation not dent their market, but publicity was really the only driver for improved care or access to redress because users could not take their custom elsewhere.

However, it will not have escaped the Committee’s notice that the world has changed. Not only do we have free schools in competition with those run by local authorities, but the voluntary sector runs many services on behalf of, and paid by, public funds. Increasingly, the private sector, driven by a profit motive, is also a big player in public service provision. Therefore, first, users need to be able to comment on those services without fear of action. Secondly, ratepayers and taxpayers must similarly be able to comment without fear of action. Thirdly, given that most such services are now won through competitive tendering, it seems extraordinary that, in compiling their bids, private or voluntary sector bidders can say anything about those against whom they might be bidding—in other words, the local authority—but are in a position to take action if the local authority, or indeed any of its service users, says a word about them that they do not like. If a local authority school, for example, is competing with a free school, the free school could say more or less anything it liked about the local authority school, and the local authority school could have an action taken against it.

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[Lord Ahmad of Wimbledon]

My Lords, listening to our debate with great attention means that one defines it almost along the line of whether or not you are a lawyer. I am also conscious that we have heard an array of accents, including both Scottish and Northern Irish. I will do my best to explain the Government’s position in whatever accent noble Lords believe mine to be.

As has already been said, and as I am sure noble Lords appreciate, this is an area where the law is still developing. In Derbyshire County Council v Times Newspapers, the House of Lords held that local authorities and government bodies are already prevented from bringing actions for defamation. My noble friend Lord Lester of Herne Hill said that he was involved in that case. Therefore, I speak with a degree of trepidation. However, I heard him express support for the position that I am going to outline. My noble friend referred to the Government’s consultation paper in which we sought views on the suggestion that this principle should be put in statute and on whether it should be extended to a wider range of bodies exercising public functions. A clear majority of the responses considered that wider statutory extension of the Derbyshire principle would not be appropriate and took the view that this would represent a significant restriction on the right of a wide range of organisations to defend their reputation. Indeed, my noble friend Lord Lucas expressed that view. We share that concern. We also consider that a statutory provision would be too rigid and could also lead to litigation and uncertainty over whether particular bodies and functions fell within its scope.

As I have said, the law in this area is still developing and legislation could remove the flexibility that exists under the common law for the courts to develop the Derbyshire principle as they consider appropriate in the light of individual cases. We believe that it is better to allow the courts to do this rather than introduce a rigid and restrictive statutory provision. On that basis, I hope that the noble Baroness, Lady Hayter, will agree to withdraw the amendment.

[Baroness Hayter of Kentish Town]

My Lords, I thank the noble Lord for that response. I also thank the noble Lords, Lord Lucas and Lord Lester, for their contributions. Like the noble Lord, Lord Ahmad, I quake when I hear the noble Lord speak who was the barrister in the case we are discussing. However, I am disappointed by the Minister’s response. To say that this matter is for the courts to decide seems to run counter to everything we are trying to do in this Bill, which is to provide people with a document that will inform them about these issues. Therefore, the noble Lord’s response is very regrettable. I also think it is out of time in that the increasing competition between providers puts one lot of people at a disadvantage compared with another because if a local authority is competing with someone else for the provision of a service, and one side can be sued for libel but not the other, that is a great inequality and it is not a level playing field. I dare say that cases will be brought on that basis. We shall need to return to this issue because there is inequality between different providers of services. However, for this evening, I beg leave to withdraw the amendment.

Amendment 9 withdrawn.

Defamation Bill

Baroness Hayter of Kentish Town Excerpts

Tuesday 9th October 2012 Lords Chamber

[Baroness Hayter of Kentish Town]

My Lords, it is gratifying to reach this point in the debate—a debate referred to as one of “awe and wonder” by the noble Lord, Lord Black. I should certainly like to add my congratulations to the noble Lord, Lord Lester, on whose Bill I had the fortune to make my maiden speech back in July 2010.

I was also a member of the Joint Committee, chaired by the noble Lord, Lord Mawhinney, with the flair and understanding that we have witnessed today and indeed on occasion with humour and forbearance of my little misdemeanours. One of his major contributions was to the readability of that report. He was determined that it should be understandable to all because, as he said, defamation can affect everyone—the teacher, the social worker, the victim, the innocent and, particularly for the noble Lord, Lord Mawhinney, his beloved former constituents in Peterborough. He wanted all the people without recourse to a lawyer to be able to read and understand our report.

Of course, that is also one of the aims of the Bill: to bring together in one statute, without recourse to case law, the meaning and the limits of our law on defamation. That is a major aim that we should keep in mind as we consider the Bill. Does it truly consolidate, with clarity, the law on libel such that journalists know what they can write and the named can know whether they have a case against the writer or publication? More than that, we need a Bill which ends speculative cases aimed not at righting an injustice but at silencing the curious and those who criticise the rich and powerful, denying free speech. The chill factor hangs over campaigners as well as over journalists. We also want a Bill that reduces the costs of settling disputes.

As we have heard, there is consensus about the importance of this Bill, as expressed by the expert contributions of noble Lords today. That consensus has also been expressed over many years, especially by the noble Lord, Lord Lester of Herne Hill, and by my fellow Joint Committee members: the noble Lords, Lord Marks of Henley-on-Thames, Lord Bew, Lord Black, Lord Phillips, the noble and learned Lords, Lord Morris of Aberavon and Lord Lloyd of Berwick, the noble Baroness, Lady O'Neill of Bengarve, and my noble friends Lord Sugar, Lady Bakewell, Lord Hunt of Chesterton and Lord Triesman, to say nothing of my noble friend Lord Browne of Ladyton. That is a true roll call of experience and expertise.

As has been said today, part of our intrinsic democratic schema is to balance the safeguarding of our very precious freedom of speech while protecting against its misuse to denigrate others falsely, and ensuring that the law is not misused to stifle disclosure or criticism. We must permit truth to speak to power, even as we protect individuals from being trounced in the popular press or anonymously on the web.

Concern on this matter is not new. The Royal Commission on the Press, set up in 1947, acknowledged the central dilemma that a free press is essential to a democracy, but that a press driven by commercial interests is not really free. More recently, Stephen Sedley has written that:

“When the European Convention on Human Rights was … adopted in the early 1950s, few doubted that the chief threat to private life was the state—the informer, the watcher, the secret policeman. Today there is widespread agreement that segments of the press … pose a different but still real threat to private life”,

and that,

“the tabloids’ self-justification … mirrors that of the authoritarian state”.

I think that is what the noble Lord, Lord Sugar, said earlier in the debate. We need a Bill that enables serious and responsible journalists to expose misbehaviours, whether of the state, corporations, individuals or even your Lordships' House, but which protects the less powerful from an all powerful, well resourced tabloid press or scurrilous anonymous websites. They should not be given a licence to libel. As the noble Viscount, Lord Colville, has made clear, this issue of balance is key. In future we will work on this Bill to get that right.

The Opposition wants a new Bill on defamation enacted and, as many others have, we congratulate the noble Lord, Lord McNally, on ensuring a speedy and careful process, taking the Lester Bill through to a draft Bill, through the consultation, through the Commons and presenting it here today. We welcome key parts of the Bill, such as the removal of the presumption in favour of jury trials, which provides a major potential reduction in costs and allows earlier decisions and, we hope, earlier resolutions. There is the new defence for peer-reviewed material in academic—properly academic, in the words of the noble Lord, Lord Bew—journals, which was a key recommendation of the Joint Committee. That point particularly pleases my husband, who is a professor of physics and a frequent contributor to Nature and similar journals. I have now declared all my interests.

However, it could yet be a better Bill, as we have heard in this well informed debate. As the noble Lord, Lord Marks of Henley-on-Thames, has noted, the Bill fails to deal with the Joint Committee's recommendation to reduce substantially—others would say to abolish—the ability of corporations to threaten to take, or to take, individuals to court, often to intimidate them into silence. Why has that not appeared in the Bill? Is it because of pressure from business? I agree that, on the whole, this is not a party-political Bill but I sense the heavy hand of business behind that regrettable absence from the Bill. We know that companies use the threat of libel action to manage their brands and to close down criticisms of their products and behaviour. That is bullying and the Bill should prevent the misuse of the important law on libel.

In my maiden speech, I spoke about the extraordinary pressure on organisations, such as Which?, when they want to assess, on behalf of the public, the safety, value for money, effectiveness and reliability of goods or services. I ask the Minister: what in this Bill would enable Which? to expose poor-quality financial products, dangerous electrical goods, shoddy repair firms or lousy restaurants if it risks the threat of defamation and the thousands that it costs to defend such an action, no matter how weak the case?

More recently, I have been involved with Citizens Advice on the issue of civil recovery. That is a rather pernicious little device used by a number of high street retailers, such as Boots, Debenhams and Tesco, to extort money out of those accused—but not necessarily guilty—of shoplifting, via empty threats of civil court action. Citizens Advice has been hampered in exposing this racket by threats of defamation action. The organisation knows that they will never come to anything because it researches what it writes extremely carefully and makes sure that it is true. But even to answer such threats involves expensive legal time. Many of the cases quoted today, whether chiropractitioners or the magazine threatened by Nature, would have been stopped in their tracks had this hurdle against corporations being able to sue been in place.

I turn to costs, which has been raised by almost every speaker. Costs are the real killer. It is odd that one can settle party-wall issues, small claims, insolvency, even criminal cases locally at the magistrates’ court, or in the small claims court, or even in the bankruptcy court, but when it comes to libel, there are expensive lawyers—some of whom are threatening and probably in breach of their own code of conduct—vast bills, long delays and threats of costs. Those are the major determinants of whether one can pursue or defend a defamation claim. As the noble Lord, Lord Marks of Henley-on-Thames, has suggested, why are we not considering whether county courts might be suitable to deal with this?

The question of costs must be settled, or access to justice will be limited only to the most wealthy. Crucially, we must raise the bar against frivolous cases where no serious harm has taken place even if an untruth has been written. The Joint Committee recommended “serious and substantial” harm, as the noble Lord, Lord Mawhinney, has reminded us. It may be that those two words are not necessary, although I think they are different, but they would send a signal that the law should be used only in significant cases.

We also need some clarity on definitions so as to avoid more case law. We need greater certainty so that people can easily judge whether there has been defamation. Similarly, as recommended by the Joint Committee, we need clear authority for judges to strike out unnecessary actions at an early stage before costs mount up as a disease within the body, and there needs to be clear guidance for judges to exercise that authority. The consultation that preceded the Bill included an early resolution procedure which would help to lower costs by providing earlier determination of key issues, such as triviality, meaning, and questions of fact and opinion. Regrettably, the Bill contains no provisions to implement such a system, but surely it is a key requirement.

As my noble friend Lord Browne has made clear, we support the thrust of this Bill, but it could be a better Bill. In Committee, we will work with colleagues across the House to ensure that this welcome Bill is also a better one.

Legal Aid, Sentencing and Punishment of Offenders Bill

Baroness Hayter of Kentish Town Excerpts

Tuesday 20th March 2012 Lords Chamber

[Baroness Hayter of Kentish Town]

My Lords, I thank the noble Lord, Lord Ramsbotham, for continuing to bring this issue forward. It is a vital area and we should work to ensure that when people leave custody, they will have swift access to the benefits to which they are entitled.

As I mentioned in an earlier debate, we think of coming out of prison as something positive. However, it can be traumatic for people who rely on benefits in a system which they see as complicated, slow and sometimes unhelpful. One report has made the point that people who leave prison with no financial contingency and are highly reliant on the benefit system might, if not helped, return to crime, which has been a proven source of income for them in the past. We know that there have been delays and problems with pre-custodial claims which need to be resolved before a new claim can be made. There can be delays because a person has no fixed abode, and there are sometimes queries over the dates of prison admission and release dates. We know that eight in 10 prisoners are reliant on benefits and that one-third do not have access to a bank account, which makes any down payment for a new home particularly difficult.

Prisoners released over the next few years will come out to a whole new welfare system. The Welfare Reform Act will have changed things enormously, and even those claiming benefits before they went in will have to negotiate a whole new system of rules. There will also be the benefit cap, the bedroom tax and different units to which the payments are made. As the noble Lord, Lord Ramsbotham, said, although we welcome the advice given on the jobs programme, released prisoners will also need help with benefits if they are to survive when they come out.

This amendment, which I trust the Government will accept, will be good for prisoners. It will also be good for society and the state if it reduces the chances of reoffending and helps ex-prisoners to re-establish themselves in society.

[Baroness Northover]

My Lords, I, too, thank the noble Lord, Lord Ramsbotham, for continuing to examine the practical difficulties that some ex-prisoners face. We appreciate the difficulties that they may face when trying to resettle in the community and we have taken a number of steps to address these problems.

When the noble Lord, Lord Ramsbotham, withdrew his amendment in Committee, he expressed the hope that the Ministry of Justice and the Department for Work and Pensions would communicate more effectively on this issue. My noble friend Lord McNally wrote to my noble friend Lord Freud and I can give the noble Lord an absolute reassurance that our departments are working very closely to address the gap between release and receipt of benefits.

Prisoners’ needs are already often assessed on reception as part of the sentence plan. New prisoners are specifically asked about benefits by staff at induction and are referred to one of the 140 Jobcentre Plus employment and benefit advisers currently working in prisons. In addition, all prison leavers have their rehabilitation needs reviewed as part of the discharge process only weeks before release. It is this period close to release that is key to meeting resettlement needs, and that is where the Government have invested resources.

The Government are doing a great deal to overcome resettlement barriers and are currently implementing a strong package of measures. The key strategy to take this forward is the data-linking project which is being undertaken by the Ministry of Justice and the DWP. The project shows that more than half of offenders sentenced to custody are claiming benefits immediately prior to their incarceration, and two years after release from prison almost half are claiming out-of-work benefits. This is the scale of the task we face as we seek to make improvements to the process.

However, improvements are there. From 1 March, offenders leaving custody have their jobseeker’s allowance claims processed before they leave. We expect to reach some 30,000 prisoners a year. Jobcentre Plus advisers are rightly in the lead on providing advice and administering benefit claims, but they are working closely with prison staff to facilitate this process, including advice on financial support available prior to release. We believe that this is the right point at which to make assessments for eligibility.

We are also aiming to address the finance gap through our plans for universal credit payments. Under our proposals, an applicant, on leaving prison with a valid claim, can be paid his claim immediately through payment on account in the same way as any other benefit claimant. All of this is intended to help prison leavers get their benefits quickly and help increase their chances of finding work, which is also a key part of the Government’s agenda on reducing reoffending.

The noble Lord’s Amendment 156A would have prisons potentially duplicating the work of Jobcentre Plus. In addition, the process proposed by the amendment would require the Prison Service to conduct sometimes wasted work. A mandatory assessment of all offenders on entering into custody would either be premature—as the work done on entering prison is highly likely to need updating as the sentence continues—or not needed at all, if the personal circumstances of that person do not justify it.

The Government are fully committed to ensuring that ex-prisoners have the support they need to make a successful and productive return to society. The noble Lord, Lord Ramsbotham, is quite right in his aim in this respect. Our proposals on ex-prisoners’ access to welfare benefits are part of that commitment. I hope that what I have said today reassures the noble Lord and that he will withdraw his amendment.

Legal Aid, Sentencing and Punishment of Offenders Bill

Baroness Hayter of Kentish Town Excerpts

Monday 5th March 2012 Lords Chamber

Moved by

[Baroness Hayter of Kentish Town]

7B: After Clause 6, insert the following new Clause—
“Independent review: welfare reform and available legal advice
One year after the commencement of Part 1 of this Act, the Lord Chancellor must commission an independent review to assess how the changes made in this Act and the Welfare Reform Act 2012 have affected—(a) understanding by people who are entitled to benefits of—(i) which benefits they may be entitled to; and(ii) how to challenge (both review and any further rights of appeal) a decision made in respect of those benefits;(b) access to, and provision of, legal advice about entitlement to benefits;(c) the number and any increase in welfare benefit cases that are made or referred to—(i) parliamentary constituency offices;(ii) local authorities; and(iii) other prescribed agencies; and(d) the nature of the legal advice provided and resolution of such cases from the bodies listed in paragraph (c).”

[Baroness Hayter of Kentish Town]

My Lords, I trust that I have an equally wise amendment. For benefit recipients, their families, their advisers and the statutory services that support and assist such people—largely vulnerable people—the next 24 months will present challenges, difficulties and new hurdles. Rarely has there been such a mammoth change to the tax and benefit system, not to mention it happening with the parallel loss of professional advice to the people concerned if this Bill remains unamended. Of course, for the rich, as ever, there is no problem. I happened to read an advertisement in the current edition of Counsel, which for those of you who do not read it is the journal for barristers, which stated:

“Potentially up to £100,000 tax relief up for grabs: limited window … to get back some of the 50% tax … act before 5 April … New rules which received Royal Assent in July 2011 … created an opportunity to claim tax relief on pension contributions … made in the last few years … the twist is … these rules can be … retrospective … there are some hoops to jump through and therefore it is important that individuals … seek advice”.

Cheekily, the firm gives an e-mail address that starts, “barcouncil”, although it cannot have offended the Bar Council too much as it ran the advert. Clearly, if you are well paid and can afford professional advice, that could be worth £100,000 to you.

My interest is not with such folk but with those seeking to challenge inaccurate assessments by HMRC’s tax credit office or those for whom benefits may be their sole income—the difference between poverty and coping and the dividing line between surviving and drowning.

--- Later in debate ---

The Ministry of Justice is working hard to improve its evidence-base of legal aid clients and providers in order to get maximum benefit from the review process. Such a review is likely to consider the sorts of issues raised in this amendment. But we are not persuaded that the face of the Bill is an appropriate place in which to place such responsibility. I would therefore urge the noble Baroness to withdraw her amendment.

[Baroness Hayter of Kentish Town]

In thanking my noble friends Lady Hollis and Lord Howarth for their support, perhaps I may reassure my noble friend Lord Howarth that there will be no problem for Members of Parliament. The new elected senators or Members of the House of Lords can take up all these problems because they will have nothing else to do. I love constituency work. How it will go will be interesting. Anyone who has been elected knows that people first go to their local authority and to their councillors and then to become an MP. When I was working with MEPs, I saw it also went on to there.

This is one of the cheapest amendments one will ever get. The estimate is that for every £1 spent on legal aid on benefits advice the state saves more than £8. We are trying to give the Government the opportunity to have the evidence to change their minds. Given that there will be a post-legislative review, I beg leave to withdraw the amendment.

Amendment 7B withdrawn.

Legal Aid, Sentencing and Punishment of Offenders Bill

Baroness Hayter of Kentish Town Excerpts

Thursday 9th February 2012 Lords Chamber

[Baroness Hayter of Kentish Town]

My Lords, as has been set out very clearly, the amendment seeks to ensure that anyone leaving custody gains swift access to the benefits to which they are entitled. We often think that coming out of prison is very positive, but it can be traumatic for people, particularly those with multiple needs. With no financial contingencies, these people usually rely on a benefits system that they experience as complicated, slow and unhelpful. In extremis, some return to crime, as the noble Lord said, because before they went into prison that was their proven source of income. Delays in accessing benefits can lead to financial hardship, stress and an increased risk of reoffending.

The Prison Reform Trust in its Time is Money report found that eight of 10 former prisoners claim benefits, so it is essential that we make sure the process of claiming is as simple and as hurdle-free as possible to give these post-custody people the best chance of staying away from crime.

One report on adults with multiple needs documented the problems that they faced on coming out of prison, including delays of up to four weeks before the first payment, with no explanation; problems with claims made before they went to prison that had to be resolved before any new claim could be made; claims delayed because of no fixed address, as has already been referred to, or other unstable living arrangements; disputes over prison admission and release dates; and problems caused by not closing down a claim on entry to prison, which results in a fraud investigation and the new claim being suspended.

We also know that a third of people in prison do not have a bank account. This makes the payment of a deposit for housing or early expenses even harder to organise on release. Help beforehand and immediate access to benefits are key if the person is not to feel the need to return to using other people's money just to survive.

The report also emphasises the need for help and advice while still in prison—even more so over the coming years as the benefit system will, for most prisoners, have changed phenomenally by the time they come out from what they saw and knew about when they went into prison. For all the advantages in the Welfare Reform Bill—and, despite the arguments that we will have on Tuesday about its disadvantages, there are undoubtedly some advantages in it—the system of social security facing prisoners on release will be very different from the one they knew before. That will affect their re-emergence into a household. The payment of the universal credit to only one partner in the couple and other complications will need to be sorted out in advance.

In addition, half of prisoners have debts awaiting clearing on release, according to one survey, and one in three owes money for housing, which also makes access to a new home even more difficult.

The Centre for Social Justice has also highlighted similar problems faced by people leaving custody. Its report, Locked Up Potential, recognised that delays in processing benefits mean that many people who are discharged have no source of income when they most urgently need it. The report concluded:

“To bridge the finance gap, with the objective of reducing the resulting crime which it can fuel, we recommend that all prison employment and benefit advisers be required by the … DWP and the MOJ to initiate core benefit applications at least three weeks prior to a prisoner’s nominated release date”.

Along with the noble Lord, we consider three weeks to be rather too short. Nevertheless, will the Minister let us know what discussions his department has had with the Department for Work and Pensions about responding to the recommendations in that report, thus ensuring that those leaving prison are not left with gaps and delays in accessing the financial support that may be essential to them for starting a new life?

I welcome the comments that the Minister made in response to the earlier amendment about access to the work programme. Undoubtedly, that is of great advantage to people coming out of prison. Access to advice on the whole new system of universal credit well before a prisoner’s release date, and preferably when they first go into prison, would be of great advantage to them and to the rest of us. We hope very much that the Minister will accept this amendment.

[Lord McNally]

My Lords, it is very nice to see the noble Baroness, Lady Hayter, at the other side of the Dispatch Box. I presume that she is on the night shift. The noble Lord, Lord Ramsbotham, is correct. We recognise a certain familiarity about the amendment from another Bill but it is none the worse for that. The reality is that the MoJ and the Department for Work and Pensions are in close contact on these issues and are trying to work through them.

I am reminded of a visit I made to a Turning Point project in Birmingham when I talked to a young man who was being helped and trained. He said, “You can’t imagine the cold feeling in the pit of your stomach on your day of release”. The noble Baroness, Lady Hayter, indicated that there is a broad consensus that one of the trigger points for reoffending is problems in resettling in the community on release. It is also true that some face problems in accessing benefits. In addition, we should do more to equip offenders to work, enabling more of them to be productive members of society on release and not a burden on the state, which was the subject of our earlier debate.

The National Offender Management Service is working to develop financial capability in custody by increasing access to money advice services. A number of prisons also commission financial advice from local CABs and through contracted housing advice services. We also encourage rent arrear repayment schemes. NOMS has also granted funds to Unlock, of which the noble Lord, Lord Ramsbotham, is president, to increase offender access to financial services. I was very pleased to attend and to speak at the launch of a handbook produced by Unlock to help prisoners with financial issues. We recognise that more work needs to be done to encourage prisoners to save towards their discharge across the estate and to make use of the IT available, which would support them in preparing for release.

More than half of those sentenced to custody are claiming benefits at the start of their prison sentence, and two years after release nearly half are still claiming out-of-work benefits. That is why we are working so closely with the Department for Work and Pensions to overcome the gap in access to benefits, which the noble Lord has outlined, and to ensure that our plans to get Britain working will get more offenders into jobs. However, I do not believe that the noble Lord’s amendment will assist in achieving these aims. It would require us to conduct unnecessary assessments for all prisoners. This is because the work done on entering prison is highly likely to need updating as the sentence continues. At this time of fiscal constraint, it is vital that we look extremely carefully at how resources are targeted.

Staff working in prisons already take relevant steps when someone comes into custody to help sort out their benefits. New prisoners are specifically asked about this at induction and are referred to one of the 140 Jobcentre Plus employment and benefit advisers currently working in prisons. However, support does not end there, as we also recognise that release from prison into the community is a key transition point in the journey from crime to rehabilitation. Prison staff and employment and benefit advisers also take steps to help individuals make an application for a community care grant, usually about six weeks prior to discharge, so that payment can be forwarded to the prison and made available on release. They will also help in explaining how an individual can apply for a crisis loan on release.

[Baroness Hayter of Kentish Town]

I am not so much the night shift as the Welfare Reform Bill shift. Of course, the grants that the noble Lord has just referred to are to be abolished. I trust that prisoners will be aware that they will no longer be available because the Welfare Reform Bill abolishes them.

[Lord McNally]

Yes, but not instantly, and there will be a transition to the new scheme that I will explain shortly. It is unfair, if the noble Baroness sat through the Welfare Reform Bill, to start brandishing her knowledge at this time of night!

All this activity is aimed at ensuring that ex-prisoners can access advice on employment and benefits. It is backed by the new NOMS specification for rehabilitation services which requires, as a minimum standard, that prisoners are supported to sort out their financial problems.

As I mentioned earlier, during the debate on the noble Lord’s amendment on employment and training in prisons, we are working to overcome the remaining barriers as part of the Government’s welfare reforms. This includes our plans to use the work programme as the primary vehicle for help and support, whereby all prison leavers who claim jobseeker’s allowance will enter the work programme from day one of release from prison. This means some 30,000 prisoners a year will claim jobseeker’s allowance and start the work programme on release from prison or within the following 13 weeks.

These changes will also mean that instead of arranging an appointment for the prison leaver to attend and claim jobseeker’s allowance on release, the claim for jobseeker’s allowance will be taken in prison, to start entitlement immediately on release, allowing mandatory referral to the work programme. We will also continue to work with the DWP, Jobcentre Plus and other agencies, including in the voluntary sector, to ensure that prisoners have all necessary information about claiming benefits on release, and in pursuing programmes that prevent reoffending.

The noble Lord has specifically raised concerns about what will happen in the case of ex-prisoners who are not seeking work. As the noble Lord, Lord Freud, also explained in the debate that touched on this issue, we are aiming to address the finance gap through our plans for universal credit payments, which are paid monthly in arrears. Under the proposals, an applicant, on leaving prison and with a valid claim, can be paid their claim immediately through payment on account. I think this will strike the right balance, in ensuring that ex-prisoners can access their benefits quickly through payment on account, and that our resources are primarily focused on getting more offenders into work.

I hope with those explanations that the noble Lord will be reassured to the point that he will withdraw his amendment.

--- Later in debate ---

[Lord McNally]

Part of the problem with this debate is that we cover two areas, which we were discussing earlier. First, there are dangerous people from whom society needs protection, and we have to deal with them within our criminal justice system. Secondly, you do not need to be in this job very long, or to visit very many prisons, to realise that there are people in our prisons who have no place there and who, with a proper policy of rehabilitation in its broadest sense, can be stopped from reoffending. We are really fighting on those two fronts.

On whether there should be a glide path into work, perhaps that is where we can get the work-in-prison regimes working properly. That in itself can help in that direction. The other thing that I am also very enthusiastic about and would like to see developed, and where the voluntary sector is superbly equipped to help, is mentoring schemes, and finding people who are willing to act as mentors. That could have a powerful effect. I do not think that there is division in the Committee on that. We are trying the perhaps revolutionary idea of joined-up government in making sure that the move from prison to a proper, productive, law-abiding life is not aborted at those first steps through the prison gates because of lack of basic support.

[Baroness Hayter of Kentish Town]

Perhaps the Minister would use joined-up government to do one other thing. I mentioned when I intervened just now that the Social Fund was going to be abolished and that both grants and loans would become the responsibility of local authorities. The DWP has undertaken to issue a “settlement letter” about it to local authorities. One of the areas that we were worried about with regard to the Welfare Reform Bill was that a person would have to have a local connection to be able to claim either their replacement for social care grants or crisis loans. It is exactly ex-offenders who are least likely to be able to qualify because they may not have ties with the place that they go back to. It would be extremely helpful if the Minister could in discussions with the DWP stress the importance of that settlement letter making it clear that ex-offenders should be eligible for those payments even if they go to a local authority area where they have not just moved from because they are coming out of prison. His help on that would be greatly appreciated.

[Lord McNally]

I will gladly draw that to the attention of DWP.

Political Party Funding

Baroness Hayter of Kentish Town Excerpts

Thursday 15th December 2011 Lords Chamber

[Lord McNally]

For a party that has pretty consistently polled over 20 per cent of the vote in recent general elections, there is certainly no self-interest about the 10 per cent figure. Indeed, we should all wait for the next election, which as we all know, usefully, is in 2015. Four years is a long time in politics.

[Baroness Hayter of Kentish Town]

Given that we are all in agreement, maybe I should say that I agree with Nick.

Given that the Liberal Democrat manifesto promised to get big money out of politics by capping donations at £10,000, would not the best way of ending the big donor culture perhaps be for the Minister’s party to return Michael Brown’s money—money that was not his to give and should never have been accepted?

Legal Services Act 2007 (Appeals from Licensing Authority Decisions) (No. 2) Order 2011

Baroness Hayter of Kentish Town Excerpts

Tuesday 15th November 2011 Grand Committee

[Lord McNally]

I will address that in my closing remarks.

I was about to say that the matter of the extension of this order was raised in particular by the noble Lord, Lord Hunt of Wirral, who is not in his place today. Noble Lords will be aware that the Rehabilitation of Offenders Act allows individuals lawfully to conceal certain spent cautions and convictions after a specified period of time has elapsed. The Rehabilitation of Offenders Act allows individuals to do this by declaring certain cautions and convictions as spent. Once a caution or conviction is spent, the individuals need not declare it when applying for most types of employment, seeking licences or applying for insurance.

The Government believe that individuals who have put their criminal past behind them should be given a chance to reintegrate into society. Research has consistently shown that employment reduces the risk of reoffending. By removing unnecessary barriers to employment, the Government are therefore demonstrating their commitment to clearing the way for ex-offenders to lead law-abiding lives. The Government also recognise the importance of protecting the public; therefore, there must be a balance. In certain specified circumstances, for example, it is right that employers or regulators are aware of an individual’s full criminal record history when they are determining the individual’s suitability to fulfil a certain role or carry out a specific activity. The exceptions order amending this Act seeks to achieve this balance towards public protection.

The exceptions order lists specific activities for which the employer, regulator or other relevant body is entitled to information about the spent cautions and convictions of persons applying to carry out that activity. These activities are those that present individuals with a particular opportunity to cause harm to the public or involve regular contact with a particularly vulnerable group. This includes work with children, as well as work in certain sensitive financial or legal positions.

Today, I am seeking to extend the exceptions order to those seeking to hold a restricted interest in an alternative business structure. During passage in this House of a previous amendment in an exceptions order in June this year, a number of noble Lords raised concerns about the risk of criminal ownership to alternative business structures. Following that debate, the Ministry of Justice expedited consideration of a business case, seeking further amendments to the exceptions order in relation to the provision of legal services. After careful assessment of the business case, we concluded that the exceptions order should be extended to persons who hold a restricted interest in an alternative business structure. This, the Government believe, addresses the immediate concern of safeguarding the new structures from the risk of criminal ownership—a point that was made at the previous debate by the noble Lords, Lord Hunt of Wirral and Lord Thomas of Gresford. It effectively captures those who might pose a risk of improper management of firms providing legal services, including the risk of the exploitation of access to client money.

Schedule 13 to the Legal Services Act requires all those who hold a restricted interest in an alternative business structure to be subject to a fitness-to-own test. Information about an individual’s spent convictions will form part of that test. Therefore a licensing authority, when determining whether or not an individual is fit and proper, will be entitled to ask questions about the individual’s previous criminal history, which will include any spent cautions or convictions.

While the Law Society and other consultees welcomed the decision to make this further exceptions order, they also expressed a desire for further exceptions to be made, in particular for non-lawyer managers of alternative business structures who do not hold a restricted interest. It is important to state that the framework of the Legal Services Act makes provision for a statutory approval process only for those persons who fall within Schedule 13. There is not a separate statutory provision which allows for the approval of non-lawyer managers who do not hold a restricted interest. Our analysis found that all non-lawyer managers will be captured by this order, unless the percentage of their interest or voting rights falls below the statutory threshold that constitutes a restricted interest under Schedule 13. Our analysis is that such persons would not pose a significant enough risk to the management of an alternative business structure to justify making an exception. However, if a licensing authority deemed it necessary—and if the Legal Services Board agreed to the change to its regulatory arrangements—it has the power under Schedule 13 to make licensing rules so that the threshold at which a person is considered to have a material interest in an alternative business structure is less than the 10 per cent threshold set out in Schedule 13.

I am satisfied that this order effectively addresses the immediate risk to alternative business structures of criminal ownership. As we go forward and begin to see alternative business structures in operation, the Ministry of Justice will consider any future business case to extend the exceptions order further, in the usual way. Should compelling evidence be presented that additional roles in relation to alternative business structures or the legal services sector should be added to the exceptions order, then the appropriate amendment could be made.

I am sure that noble Lords will appreciate that, when deciding whether or not the exceptions order should be extended to a particular role or activity, the Government must be mindful of the careful balance between access to information about spent convictions and the important goal of improving access to employment for offenders who have proven that they have put their criminal lives behind them.

I believe that the decision to extend the exceptions order only as far as necessary, to persons who hold a restricted interest in alternative business structures, will enhance the regulatory safeguards in relation to those seeking to hold a material interest in an alternative business structure, but will also ensure that this balance is maintained. I beg to move.

[Baroness Hayter of Kentish Town]

My Lords, I would like to speak on the first of the two orders. I no longer have formally to declare an interest as I no longer chair the Legal Services Consumer Panel, but it was in that guise that I had such an interest in the implementation of this part of the Legal Services Act and the availability of the alternative business structure—a sort of one-stop-shop—which has been very strongly supported by consumers of legal services.

As the Minister said, this order is part of the architecture for setting up the alternative business structure licensing system, and it will allow the SRA to become a licensing authority by the end of this year—sadly, not by 6 October as was originally hoped, but nevertheless within 2011.

As has been outlined, the order deals with appeals by applicants who want to be an ABS against the granting of a licence, which is effectively the permit to act as a recognised ABS, by the SRA’s licensing arm. Similar appeals about, for example, whether an individual is fit and proper to own an ABS, or to be the head of legal practice or a head of finance administration, and decisions to impose licensing conditions or the imposition of a financial penalty would also be heard. Under the system being put into place by this order, as the noble Lord, Lord McNally, has said, the existing SDT, although slightly adapted, will hear such cases rather than the First-tier Tribunal, which will be used by the other licensing authority, the Council of Licensed Conveyancers. As has been mentioned at an earlier stage, we regret perhaps that there is not a single body dealing with all such appeals in order that a real body of expertise and precedent can be built up, which would give certainty and consistency to this aspect of the new delivery service.

As regards the new service, I know that we do not often congratulate civil servants but the MoJ and the Legal Services Board have worked immensely hard to get all this quite complicated machinery into place. They should be congratulated. As part of that, it is disappointing that the only reason—I know that the Minister gave two—that the Law Society via its SRA arm has insisted on a separate route rather than the First-tier Tribunal is because of the tribunal’s own rules about awarding costs. At the moment the SDT, when considering solicitor conduct cases, has the power to award costs to be paid by the losing to the winning side. Therefore, the SRA’s costs are always met. Under the new process, having gone to the tribunal, the tribunal would hear not the case brought by the SRA but an appeal against the SRA decision. Thus, as the tribunals do not generally have the power to award costs unless it is a case with absolutely no merit, the SRA would have to meet its own costs. I fear that not using the First-tier Tribunal is the reason for this separate order today.

I think that it is in the interests of business or consumers to understand the rules as they develop. It is also probably not in the interests of the Government or the LSB, which needs to watch carefully over this new system. It is quite a risk to set up something like alternative business structures. The MoJ and the LSB will need to look over the new system of legal service provision and how it is bedding down. It would have helped to have a single appeals body regardless of which front-line regulator was handling the case.

However, the rules that the SDT will apply are to be welcomed. They are virtually the same as those in place for the First-tier Tribunal, which will help with consistency in the short term and perhaps allow for adjudications to be combined at a later date. With those comments, I certainly support the order.

[Lord Dholakia]

My Lords, I welcome both orders. The Minister will recollect that when the matter was first discussed here, we raised our concern and he was good enough to say that he would take the matter back, examine it and see what appropriate action was necessary. I endorse what the noble Baroness, Lady Hayter, has said. The Minister and his staff have worked very hard to effect those changes, which are certainly welcome.

The order sets out an independent appeal mechanism against a range of ABS decisions, which is right; for example, refusing an application for a licence, imposing a conditional licence, disqualifying a person from working in the ABS or imposing a financial penalty. The most interesting part is that appeals on these matters are to go to the Solicitors Disciplinary Tribunal. I am told that this helps the SRA to license alternative business structures from the new year onwards. I am also told that the SRA has found significant interest from organisations seeking to become ABSs. It has received over 500 inquiries. Examples of such organisations include private equity investors, claims management companies, the expansion of in-house legal departments, major retailers, accountancy firms and partnerships between non-lawyers and insurers.

I particularly welcome the second order as I am involved in promoting a Private Member’s Bill on the rehabilitation of offenders. The noble Baroness, Lady Hayter, hit the nail on the head in regard to this. In the end this is about consumer protection and looking at what information is available. I am delighted to support the measure because it sets out an interesting aspect in simple terms. This is a significant step in that not only will the SRA be able to issue licences, but also the Government have agreed to include non-lawyer owners and, in certain circumstances, the managers of ABSs in the exclusions of the Rehabilitation of Offenders Act 1974. That is right, and we very much appreciate the Minister’s support. Over a period of time this will ensure that all owners of ABSs will have to disclose all their previous convictions and cautions, which ultimately helps the consumer to understand what happens in this legal process.

Again, I thank the Minister for the action that he and his staff have taken on this, and we certainly support the orders.

Legal Services Act 2007 (Appeals from Licensing Authority Decisions) Order 2011

Baroness Hayter of Kentish Town Excerpts

Monday 27th June 2011 Grand Committee

[Lord Thomas of Gresford]

My Lords, I confess to being slightly confused. The Minister has addressed the orders in a different order from that in which they appear on today’s Order Paper—and they do have different aspects. As I understand it, the Law Society and the Council for Licensed Conveyancers are content with the modification of functions order, but the SRA is not content with the other order, which covers appeals against licensing authority decisions. Therefore, we are dealing with both bodies in relation to one order and one body in relation to the other.

I see no reason to object in any way to the proposal that there should be changes, to the powers of, first, the Law Society to enable it to make compensation arrangements, and to those of the council. Both seek to provide a fund for people who are damaged either by Law Society-regulated bodies or Council for Licensed Conveyancers bodies. They will have a common fund, as I understand it, from which compensation can be paid.

I will raise a single point that was put forward by the Law Society in its parliamentary brief, namely its concern about arrangements to ensure that the prospective owners of alternative business structure firms are fit and proper persons.

It is important that the Government should make a commitment that the Rehabilitation of Offenders Act 1974 should not be allowed to stand in the way of the approval of those who wish to involve themselves in alternative business structures. I have had the experience in Hong Kong of appearing, instructed by firms which were essentially Triad-funded, with a front of a solicitor who did very little except ultimately go to jail. The warning was there: one cannot be too blasé in these alternative business structures. The noble Lord, Lord Bach, will know how I feel about alternative business structures, but those arguments seem to be a long way away from where we are today. Can the Minister address the question of whether an exception can be made so that the licensing authorities can stop individuals with criminal convictions from becoming involved in ABS firms, specifically after the 10-year period has passed when their convictions might be concealed for other purposes? That is my only point on this order.

On the order about appeals from licensing authority decisions, it seems appropriate that the First-tier Tribunal should act as the appellate body for appeals in relation to licensing authority decisions. We certainly supported the setting up of the new tribunal system, with the First-tier Tribunal and Upper Tribunal. They contain people of considerable and wide experience, not necessarily totally involved in this area but nevertheless well capable of dealing with the issues that would arise in appeals from licensing authority decisions. I am surprised that the Law Society has decided to opt out and follow its own method of appeal. From the Explanatory Memorandum, it seems that the issue that very properly concerned the Law Society was that of costs. The tribunal has only a limited power to award costs, and the Law Society seemed to take the view that there should be a wide discretion, as for tribunals in other areas, to award all the costs when an appeal is dismissed having been improperly brought. Is that the issue? To set up a separate body to take these appeals seems quite unnecessary. Can the Minister help us with where he is on that basis?

[Baroness Hayter of Kentish Town]

My Lords, I declare an interest as chair of the Legal Services Consumer Panel. I welcome these two orders, which appear a little technical—as, indeed, they are. But they are also important milestones on the road to seeing a new form of company opening for business which will help clients get access to good legal advice and enable “one-stop shops” to serve the needs of consumers. The Legal Services Act 2007 is a key piece of legislation introduced by the previous Government. It set up the Legal Services Board and the consumer panel which I have the honour to chair. That Act established independent oversight of the regulation lawyers. The Act clearly requires that such regulations should be in the interests of access to justice and the rule of law, and also be consumer focused.

The Act, as we know, set up the new legal ombudsman, which came intro operation in October last year. What is pertinent to today’s discussion is that it allows a new form of business, as the Minister has set out, combining law with other services in ways that we hope will better serve the needs of some clients in accessing particular types of service. As has been stated, the orders are part of the preparation for the introduction of the new business structures and are intended to ensure that the licensing authorities, which are the specialist parts of the approved regulators, will be ready to accept applications from October this year.

I, too, will start with the second order: like the noble Lord, Lord Thomas, I had them originally in the other order. The second order deals with appeals that are turned down by the new licensing authorities. It gives the First-tier Tribunal the remit to hear appeals from the Council for Licensed Conveyancers. This is a sensible, proportionate and appropriate regime. The noble Lord, Lord Thomas, said that he was surprised that the solicitors were not similarly covered. I very much regret that absence, and the fact that the Solicitors Regulation Authority did not accept exactly the same system for appeals against its decisions as a licensing authority on the same issue: namely, rejections of applications to be allowed to operate the new business framework. As other noble Lords have been said, the SRA prefers its own Solicitors Disciplinary Tribunal, for which, as we have heard, a separate order will come here in due course. I regret this because it will risk causing a delay to the desired 6 October start date. It will also mean, perhaps more seriously in the longer term, that there will be two tribunals dealing with essentially identical cases. It is in the interest of consumers, and more widely in everyone’s interests, that a single, consistent body of case law should develop about legal services regulatory matters. Despite the absence of the SRA, I nevertheless welcome the order, which allows for an efficient and cost-effective solution to regulation completely independent of the CLC.

On the first order, I simply note and welcome the proposed change in membership of the Council for Licensed Conveyancers, which, as the noble Lord, Lord McNally, explained, will provide for a lay majority. This is in line with the Act’s requirement for the Legal Services Board and also with the LSB’s internal governance rules for all front-line, approved regulators.

[Lord Hunt of Wirral]

My Lords, I support my noble friend Lord Thomas of Gresford in his comments about the Rehabilitation of Offenders Act. I recollect that, with the noble Lord, Lord Bach, we spent considerable time not only in debating the Legal Services Bill, as it then was, but in the previous Select Committee. One basis on which we took forward the notion of alternative business structures was that there should be a level playing field. I explain that by reiterating the fact that the Solicitors Regulation Authority, which was established by the Law Society to discharge the society’s regulatory functions, should have exactly the same powers to regulate ABS firms as it has already to regulate existing firms. We made several commitments at the time to reassure people about the new structures and affirm that there would be a level playing field between ABS firms and existing law firms. That is why we see a problem with the implementation of alternative business structures that is not dealt with through these provisions. Those are the arrangements to ensure that the prospective owners of ABS firms are fit and proper persons. Indeed, I could quote myself, Jonathan Djanogly MP or the noble Lord, Lord Bach, in stressing the importance of this key issue.

Legal Services Act 2007 (Approved Regulators) Order 2011

Baroness Hayter of Kentish Town Excerpts

Tuesday 5th April 2011 Lords Chamber

[Baroness Hayter of Kentish Town]

My Lords, I declare an interest as chair of the Legal Services Consumer Panel, which is an independent part of the Legal Services Board that recommended the order to the Lord Chancellor.

I warmly welcome the order, which will enable ILEX, as the body that regulates legal executives, to allow certain members to conduct litigation. The order is a notable first and is important for two reasons. First, it will permit associate prosecutors to be regulated by a professional body—the Institute of Legal Executives —in regard to the litigation work that they do. I believe that this arrangement will ensure that the consumer interest is reflected through these regulatory arrangements. Secondly, the order makes ILEX an approved regulator for litigation rights generally, which is a step on the way to ILEX empowering legal executives to provide litigation services to the public.

I would like to say a word about ILEX and its members, whom I hold in high regard. ILEX grew out of the old Solicitors Managing Clerks Association and has taken a real lead in diversity—in which I know the Minister takes a particular interest—in the profession. Three-quarters of ILEX members are women and 13 per cent are from black or ethnic minority backgrounds, compared with under 8 per cent in the population. Perhaps particularly important today, as my noble friend Lady Gale referred to, ILEX has provided a route to qualification as a lawyer for those who have neither started as a graduate nor had contacts in the profession. Indeed, just 2 per cent of ILEX members have a lawyer for a parent. ILEX has been a real beacon in providing “second chance” professional entry that is open to people from a wider range of backgrounds than many of our learned societies. Four out of five members do not have a parent who went to university. Very few ILEX members come from traditional legal or professional backgrounds.

Yet ILEX has created opportunities while firmly maintaining the standards of qualification. There are some 7,500 fellows of ILEX, who are subject to the code of conduct and all the same expectations of professional and personal standards and commitment to their clients as any other lawyer.

This order will help ILEX to continue to act as a gateway to the solicitors branch of the profession for a wide range of entrants. From a consumer perspective, it is a step towards clients having access to those from a wider social understanding and background, mixed with common sense and empathy. Your Lordships will understand why I am so supportive of this order—I recognise that not every lawyer is—but I am confident that, overseen as it is by the Legal Services Board, ILEX and its members will show themselves worthy of the new responsibility that they are about to get with this order.

[Lord Thomas of Gresford]

It is a pleasure to follow the noble Baroness, Lady Hayter, in her recommendation of ILEX. We were talking earlier about social mobility. It is exactly as she says, ILEX has provided a route to professional qualifications for many people who did not have the background, and sometimes not the university background, which would enable them to qualify any other way.

In my youth, managing clerks were a very important part of the solicitors’ branch of the profession. They were highly experienced people but in those days they could not appear in court. It was always very useful to follow the advice and the instructions that they gave and to enjoy the personal connection that they had with clients. We have moved on since those days and we now give members of ILEX the opportunity to acquire audience rights, which they have exercised very competently. Associate prosecutors under the CPS have done a great deal of work that would otherwise occupy a great deal of time and money and involve qualified lawyers, which is unnecessary. I very much support this measure.

Advocacy is a skill that cannot really be taught: either you can do it or you cannot. Much of the ability to be an advocate is acquired through experience. I am sure that ILEX, in performing its training and regulatory function, will ensure that those who go into court are fully conversant not just with the law that they have to apply, and that they have the ability to stand on their feet and speak, but that they will have a knowledge of ethics because, so far as prosecution is concerned, legal ethics is a very important part of the responsibilities of the advocate. I think, for example, of the necessity to disclose fully any evidence that may be in the hands of the prosecutor which could assist the defence. These matters do not necessarily come to the mind of an untrained person. I look to ILEX to continue its excellent training function and to ensure that these associate prosecutors have the full competencies to enable them to fulfil their role. I very much support the order.