Non-Contentious Probate (Fees) Order 2018

Lord Beecham Excerpts

Tuesday 18th December 2018 Lords Chamber

[Lord Beecham (Lab)]

My Lords, I begin by declaring an interest in the subject of this debate, albeit a posthumous one. Ultimately, I will not be affected by the proposed changes, although my daughter and son will be. I ought perhaps also to refer to my interest as an unpaid consultant to the firm of solicitors of which I was a senior partner in the light of the closing comments of the noble Lord, Lord Marks, about the professional aspect.

If ever there was a competition for the chronic misnaming of a piece of secondary legislation, the Non-Contentious Probate (Fees) Order 2018 would be a runaway winner. There is nothing non-contentious about it. As we have heard, the order, while exempting estates of £50,000 or less from the payment of fees, increases the cost for larger estates in a range from £250 for estates up to £300,000—or £150, as we heard, when an application is made by a solicitor—to £6,000 for estates above £2 million, generating a profit of £145 million a year over and above the £49 million fee income collected in fees for the service in 2016-17. That is effectively a fourfold increase.

Admittedly, this is somewhat less than the estimated £250 million which would have been garnered by the original proposals in 2017, as outlined in the government consultation document of 2016, and less again than the £300 million extra in additional fee income set out in their response to that consultation in February 2017. If there were a Nobel Prize for elasticity, the Ministry of Justice would, uncharacteristically, be a strong candidate.

The original proposals ignited a blaze of opposition among the general public, the media and both the Secondary Legislation Scrutiny Committee of your Lordships’ House and the Joint Committee on Statutory Instruments. The former declared:

“To charge a fee so far above the actual cost of the service arguably amounts to a ‘stealth tax’ and, therefore, a misuse of the fee-levying power”.


The latter averred that it had,

“a real doubt as to whether the Lord Chancellor may use a power to prescribe noncontentious probate fees for the purpose of funding services which executors do not seek to use—namely those provided by courts and tribunals dealing with litigation”,

a view strongly supported by the Law Society and the Bar Council, the latter pointing out that,

“the grant of probate … is not in reality a judicial or court act at all. It is a simple but authoritative piece of paper, bearing a stamp, produced by a civil servant on a relatively low pay grade in a relatively short period of time, the average cost of which is £166”.

That reads as a mild rebuke compared with the critique proffered by the Secondary Legislation Scrutiny Committee in its report of March 2017, shortly before the Prime Minister called the election which cost the Government their majority, and reiterated in its report of 21 November. The committee deals with the Government’s assertion that,

“it is necessary to fund the wider courts and tribunals system to ensure an efficient and effective service”,

and responds by citing the Government’s guidance to departments in Managing Public Money, a government document stating that,

“different groups of customers should not be charged different amounts for a service costing the same”.

It also cites Managing Public Money’s statement that:

“Cross-subsidies always involve a mixture of overcharging and undercharging … So cross-subsidised charges are normally classified as taxes”,


and concludes:

“To charge a fee so far above the actual cost of the service arguably amounts to a ‘stealth tax’ and, therefore, a misuse of the fee-levying power”,


under Section 180 of the Anti-social Behaviour, Crime and Policing Act 2014 and that the order represents,

“a significant move away from the principle that fees for a public service should recover the cost of providing it and no more”—

a damning judgment which I have included in the amendment in my name. This view is endorsed by the Institute for Family Business, referred to by the noble Lord, Lord Marks, an organisation which is not, to my knowledge, affiliated to the Labour Party—at least not yet.

There is certainly an important principle here. The Ministry of Justice is struggling with an overcrowded and underfunded Prison Service, an overstretched probation service, court closures and diminishing access to justice. Of course the justice system desperately needs better funding, but this should be provided not by a stealth tax but out of general taxation including, possibly, inheritance tax. If the Government go ahead with the provisions of this order, how can we rely on them not to adopt similar stealth taxes to fund other key services, for example by increasing prescription charges to a level exceeding the cost of the treatment supplied by the health service?

The Minister’s letter of 12 December asserted that the fees are being introduced under Section 92 of the Courts Act 2003 and Section 180 of the Anti-social Behaviour, Crime and Policing Act, both of which he has referred to this afternoon. He said that they,

“provide clear authority to set fees above cost to cross-subsidise other parts of the courts and tribunal system”.

Section 92 refers explicitly to anything dealt with in the family court, county court or magistrates’ court. No mention is made of probate. Section 180 of the other Act refers to senior courts, county courts, magistrates’ courts, the Court of Protection and tribunals. Again, no mention is made of probate. The noble and learned Lord has argued the case for a deeply flawed order today.

However, while I can well understand the temptation to seek to annul this order, there is a real problem for this House in so doing. I understand that there have been only four occasions in the last 60 years on which the affirmative procedure has led to an order being struck down in your Lordships’ House. One such occasion, which some noble Lords will recall, was in relation to an order under the Legal Aid, Sentencing and Punishment of Offenders Act—then a Bill—in 2012. My noble friend Lord Bach successfully moved such an amendment and was roundly denounced by the relevant Minister, the noble Lord, Lord McNally, who was then a Justice Minister and leader of the Liberal Democrats. That amendment was not a simple repudiation of the order. It was tabled because the Government had reneged on a promise to amend the proposed provision they were bringing forward and was to give them the opportunity to revert to their earlier position.

Regretfully, we cannot support the amendment in the name of the noble Lord, Lord Marks, but if he presses it to a vote we will abstain. In that event, and assuming that the amendment is then lost, I will seek to test the opinion of the House on the amendment in my name.

[Baroness Meacher (CB)]

My Lords, I speak in support of the amendment in the name of the noble Lord, Lord Marks, to the statutory instrument on so-called non-contentious probate fees. As a member of the Joint Committee on Statutory Instruments, I am very concerned that—as other noble Lords have said—the SI appears to be introducing a hypothecated tax on estates for use in subsidising parts of the HM Courts & Tribunals Service that will not at all be used by the fee payer. The SI introduces a huge increase in the cost of probate, which is just a document to enable the executors to administer the estate. It is nothing to do with courts and tribunals, which obviously involve vast costs.

The current fee of £155 if the application is made by a solicitor, and £215 if it is made by the executors in person, completely covers the cost of the probate service. Until now the fee has rightly not included any tax element at all, so this is a major departure from the way probate fees have been exercised in the past. Will the Minister explain why we suddenly need an entirely new approach to probate fees? Has it something to do with the massive cuts in the Treasury’s support for the courts service? I presume it is, but I do not think that makes the action of the justice department acceptable.

As other noble Lords have said, the proposed new fees are going to be on a sliding scale, up to £6,000 for estates of £2 million. This is a hike of 3,770% on larger estates. All but about £200 of the fee will in fact be a tax.

The committee accepts that Section 180 of the Anti-social Behaviour, Crime and Policing Act 2014 allows a fee to be prescribed that exceeds the cost of the provision of the service. I imagine that this probably allows for, for example, exempting very small estates from the fee at all, so then you need to have a slightly higher fee on bigger estates. That is perfectly reasonable. But the term “fee” has a clear connotation of recovery of costs incurred in the provision of the service. Although Section 180 permits enhanced fees, it remains a power to prescribe a fee, which clearly limits it to a relationship with the costs incurred.

The word “fee” does not equate to the term “tax”. A fee surely cannot comprise £200 to cover costs and £5,800 to the individual as a tax on the estate. If Parliament had intended the Lord Chancellor to be able to raise taxes in this way, it would have included such provisions very clearly in Section 180 to acknowledge that charging such a tax might be ultra vires. In the committee’s view, the 2018 order is a measure of taxation for which there is no clear statutory basis. Indeed, the committee could find no evidence that the Government suggested to Parliament during the debates on the Bill for the 2014 Act that the Section 180 powers would be used to prescribe probate fees in order to fund the operation of the courts generally or to provide for such huge and immediate increases in fees—let us call them “taxes”—in the way now proposed.

Furthermore, our committee’s view was reinforced by the report of the House of Lords Secondary Legislation Scrutiny Committee, as the noble Lord, Lord Beecham, mentioned. This points out that the proposed fees do not appear to conform to paragraph 3.6 in chapter 6 of Managing Public Money, the standard guidance to government departments from HM Treasury. Of course, that guidance makes it very clear that a fee should be equal for everyone involved and should represent the cost of the service. There should not be a sliding scale of a fee: that is made very clear in the Government’s own guidance.

As others have mentioned, the original proposal was to have a sliding scale up to £20,000. That was dropped as a result of the objections of the Joint Committee on Statutory Instruments. Can the Government can explain why, when they now accept that £20,000 is unreasonable, they think that £6,000 is somehow reasonable in this context? I suggest that the importance of this issue is that it could represent a precedent for other government departments. Just imagine the implications for citizens if government departments increased fees by some 3,000% for a wide range of services in order to incorporate a tax element to fund public services more generally. This would of course be ultra vires, as they are meant to be fees, as they are in this case. I hope that the Minister will give an assurance to the House today that the department will revisit the proposed probate fees and reduce them to bring them within the permitted limit.

--- Later in debate ---

[Lord Keen of Elie]

My Lords, I am obliged to all parts of the House for contributions to the debate on this order. The noble Lord, Lord Pannick, correctly identified that there are two issues. One is whether the proposal is constitutional or unconstitutional. The second concerns fairness. Of course, at times the two arguments have merged. I will endeavour, however, to address each in turn.

On the question of whether the instrument is intra vires or not, I have to say that it is quite clear that statutory justification for it is given by Section 180 of the 2014 Act. The noble and learned Lord, Lord Judge, may, for reasons he has expressed in the past, deprecate the extent to which Parliament has given powers to the Executive in this regard: I think that in this instance it is entirely proper. Nevertheless, the power is there. On the point raised by the noble Baroness, Lady Hamwee, with reference to Section 180(3)(a) and (b), subsection (b) was referred to in the impact assessment, where it was determined that there was no identifiable or significant impact upon competitiveness in this context—which is hardly surprising in the circumstances.

The noble Baroness, Lady Meacher, suggested in the context of the vires of the instrument that it was necessary that the fee should be equal for all involved, otherwise it would be a tax. With great respect, at present there is no fee for estates worth less than £5,000: the current system is not equal in that respect. It is certainly my recollection that the probate fee was progressive until about 1999. The fixed fee came in only in the recent past, less than 20 years ago. Again, one has to see this in context. Let me be clear: the idea of progressive fees is not exceptional or unusual. A civil money claim for £1,000 may often be far more complex and demanding than a civil money claim for £100,000, but the fee in respect of civil money claims is progressive by reference to the sum to be recovered. These elements already exist in our system.

With this instrument, we are intending to remove more than half of all estates from any probate fee whatever, yet the logic of the noble Baroness, Lady Meacher, would be that we cannot do that because if we did the fee would not be equal for all involved. It is entirely appropriate that there should be a progressive fee system, just as there has been in the past and just as there is with other elements of judicial and related claims. In that context, an application for probate is an application for, in essence, a determination of status in order that somebody can ingather an estate and distribute it, so it is in a sense a judicial process, albeit, as it has developed over the years, it is seen as an administrative application.

There is clear statutory authority for the making of this order and the introduction of these sensible and proportionate fees in this context. The provision is there; I will not seek to repeat it. On the issue of fairness, I emphasise that more than half of all estates will be taken out of any fee whatever, the maximum fee will be £2,500, and the fee can never exceed 0.5% of the value of the estate.

The noble Lord, Lord Sharkey, raised some of the observations that have been made with respect to charities. Let us be clear: if a legacy is left to a charity and it is of a fixed sum, it will not be impacted at all by the provision. It would arise only in those—perhaps exceptional—circumstances where the entire estate is left to the charity. One has to appreciate that it is only in those exceptional circumstances that there could be any indirect—I emphasise that—effect on the value of the legacy itself.

At the end of the day, we are taking a proportionate and sensible approach to the need to ensure that we can maintain access to justice throughout our entire courts and tribunals system. We have been fair with regard to the level of the fees which have now been fixed for this purpose. I emphasise that we are dealing with a question of fees, not with the issue of a tax. In that regard, therefore, I invite noble Lords to concur with my Motion.

[Lord Beecham]

How does the Minister reconcile the position the Government have taken with the guidance to departments in Managing Public Money, to which I referred?

[Lord Keen of Elie]

There is clear statutory authority for the fixing of these fees in order that there can be an element of cross-subsidy between the various elements of the courts and tribunals system. It is justified by that statutory permission.

--- Later in debate ---

Moved by

[Lord Beecham]

At the end insert “but this House regrets that the draft Order will introduce a revised non-contentious probate fee structure considered by the Secondary Legislation Scrutiny Committee to be “so far above the actual cost of the service [it] arguably amounts to a stealth tax and, therefore, a misuse of the fee-levying power” under section 180 of the Anti-social Behaviour, Crime and Policing Act 2014; and that this Order represents a significant move away from the principle that fees for a public service should recover the cost of providing it and no more.”

[Lord Beecham]

My Lords, I beg leave to test the opinion of the House on the amendment in my name.