Mutual Recognition of Protection Measures in Civil Matters (Amendment) (EU Exit) Regulations 2019

Lord Beecham Excerpts

Tuesday 29th January 2019 Grand Committee

[Lord Keen of Elie]

That is entirely right.

[Lord Beecham (Lab)]

My Lords, as we have heard, this statutory instrument has the effect of preventing UK courts from providing similar protection measures and certificates to secure the recognition and enforcement of their judgments in the EU while, paradoxically, recognising such measures and certificates issued by the EU courts. This is extraordinary. There is not an impact assessment as far as I know—if there is I have missed it—and no indications as to what steps will be taken to ensure reciprocity by the EU on this subject. The noble and learned Lord mentioned that possibility en passant without substantive clarification.

The Law Society recommends that there should be an explicit clarification that protective measures issued in the Scottish and Northern Irish courts will be recognised in England and Wales. Perhaps the noble and learned Lord will deal with that when he replies to the debate.

The Secondary Legislation Scrutiny Committee has recommended that this SI should be upgraded to an affirmative, stating:

“To allow UK civil courts to issue certificates post EU-exit would, potentially, mislead protected persons as to the recognition and enforceability of their UK issued protection measures in EU Member States post exit potentially placing them at risk”.

That sounds significant and I wonder why the Government have chosen to adopt the procedure they have rather than make this an affirmative, given the potential implications identified by the Secondary Legislation Scrutiny Committee. It points out that it is unclear what measures would be taken to ensure UK judgments would be recognised after Brexit and that there is an assumption that the EU states will not respect civil protection measures issued in England and Wales. Can the noble and learned Lord confirm that?

Finally, there is a question about the potential cost to the UK Government, the courts and the police of enforcing EU-issued protection orders, which will still be valid, while ours will not be valid there. It looks one-sided: the cost will fall on us as a nation because contrary positions have been taken up. Can the noble and learned Lord clarify that?

Central Courts IT System

Lord Beecham Excerpts

Wednesday 23rd January 2019 Lords Chamber

[Lord Beecham (Lab)]

My Lords, last May the National Audit Office published a damning report on the Ministry of Justice’s four year-old £280 million IT programme. In the light of the latest fiascos affecting the probation service and the entire criminal justice email system, would the Minister rank the department’s performance in these areas as better or worse than that of Chris Grayling’s recent award of a ferry contract to a company with no ships, or the shameful record of the Home Office over the Windrush debacle?

[Lord Keen of Elie]

I rather fear that the noble Lord’s inquiry has taken sail. The position is that the issue that arose recently had nothing whatever to do with the development of the common platform system for the Ministry of Justice, which is still in its testing phase. It was entirely unaffected by the issue that arose, which was in fact attributable to the corruption of a routing server that has now been replaced.

Civil Legal Aid (Amendment) (EU Exit) Regulations 2019

Lord Beecham Excerpts

Tuesday 15th January 2019 Lords Chamber

[Lord Beecham (Lab)]

My Lords, in general, the view of the Law Society and the Bar Council is that these regulations do not raise many problems but some matters appear to require clarification. I am not sure whether I am about to overlap with what the noble Lord, Lord Thomas, has just raised. He will forgive me—although the Minister may not—if I am going over the same ground.

The Law Society has raised a question on the impact on the provision for legal aid under paragraph 44 of Part 1 of Schedule 1 to LASPO, which states:

“Civil legal services provided in relation to proceedings in circumstances in which the services are required to be provided under Council Directive 2003/8/EC of 27 January 2003 to improve access to justice in cross-border disputes by establishing minimum common rules relating to legal aid for such disputes”.


At present it is unclear, certainly to me, how many people are granted legal aid under this provision. I do not know whether the noble and learned Lord will have that information to hand—presumably not. Perhaps he can provide it later if it is not immediately available.

The other question is: do the Government know how many such provisions are reciprocated by the other side, so to speak? If there are significant numbers involved, the Government should surely ensure that there is funding in the event of a no-deal Brexit but if there is a Brexit deal, this provision should be included on a reciprocal basis, given the number of UK citizens residing in the EU who may well need such assistance. As I say, I do not know whether the noble and learned Lord will have that information but I certainly join the noble Lord who spoke previously in wishing for confirmation that legal aid will still be available for those who need it in these areas.

[Lord Keen of Elie]

My Lords, I am obliged for the contributions. The noble Lord, Lord Thomas, makes a good point about the advantages for all in securing mutual judicial recognition and enforcement. That is why, at an early stage, we sought to take forward those discussions with the profession on what was required. He is right to observe that the matter is not contained in the withdrawal agreement or the existing declaration but is an ambition. That may seem very little but, recognising that, we have taken forward what we can, which is to deal on a unilateral basis with the more recent Hague conventions that have been entered into by the EU on behalf of member states. We have engaged in discussion to become an individual state signatory to those conventions. My recollection is uncertain but I think the 2005 and 2007 conventions were involved. We have engaged with the council of the Lugano convention, which deals with the reciprocal position between EFTA states and the EU, to engage on that. Again, to become a party to Lugano, we require the consent of the EU because it is also party to it. Those steps are being taken forward and we are conscious of their importance. I underline that.

On legal aid provision, there is no question of a disqualification being applied on the basis of residence in the EU. Let me be clear about that. The point is that the scope of the EU legal aid directive is wider than the scope of the legal aid provision under LASPO. This instrument is to bring that into line with LASPO and have a situation whereby, in certain forms of civil and commercial dispute, the directive would require consideration of a legal aid application that would not otherwise fall under the LASPO provisions.

Services of Lawyers and Lawyer’s Practice (Revocation etc.) (EU Exit) Regulations 2019

Lord Beecham Excerpts

Tuesday 15th January 2019 Lords Chamber

[Lord Thomas of Gresford (LD)]

I congratulate the Minister on his timing. This is part of the no-deal preparations along with the fake travel jam, the lorry jam in Dover and the hiring of ferries with no ships, but it is a bit late now, with about half an hour to go to the vote, to frighten the horses any further. It is extraordinary that parliamentary time should be spent in debating a statutory instrument of this nature. It is applicable only if the UK leaves the EU without reaching an agreement. The effect of that is to throw the United Kingdom on to World Trade Organization rules for general agreement on trade and services.

If that were to happen, the most-favoured-nation rules would come into operation prohibiting preferential treatment of any signatory state above another. The whole purpose of this statutory instrument, therefore, is to reduce EU and EFTA lawyers currently practising in this country to the level of the lawyers of third-party countries from around the world whose rights to practise and establish in England, Wales and Northern Ireland, absent a trade deal, are absolutely minimal, if they exist at all. As the noble and learned Lord said, this SI affects about 700 lawyers currently registered with the Solicitors Regulation Authority, 17 registered with the Bar Standards Board and some five EU lawyers registered in Northern Ireland. The other side of the coin, however, which would be of concern to the legal profession, is that the EU will obviously seek reciprocally to reduce the rights of United Kingdom lawyers practising in the EU to those WTO rights.

One of the most important differences between the WTO regime and the existing EU framework is the practice areas in which foreign lawyers are allowed to provide services in Europe. While the directives allow EU, EEA and Swiss lawyers to practise host member state law, including EU law, it is not possible under the current GATT schedule for commitments of the EU, which limits third-country lawyers to providing legal advice in home-country law and public international law, to practise in EC law.

While it is possible in theory for individual member states to grant higher levels of access to foreign lawyers, in practice most member states have not gone beyond these GATT commitments. It follows, therefore, that British lawyers will lose a number of significant rights: rights to provide legal advice on EU law; the right to requalify in host member states; and rights of audience in domestic and European courts. Further, according to the settled case law of the CJEU, lawyers from third countries practising in Europe cannot claim legal professional privilege to protect their clients’ interests. Legal professional privilege is not available to them.

It is not surprising, then, that in 2016 the Law Society of Ireland received nearly 1,400 applications from practitioners to requalify in Ireland. Those were British lawyers, mostly from antitrust, competition or trade law practitioners, based in London or Brussels. Last week the Irish Taoiseach specifically said that they were looking at Ireland taking business in legal services away from the United Kingdom. This statutory instrument, therefore, risks unnecessary conflict with the EU legal profession. There will be no reciprocity. Even if there were a no-deal withdrawal from Europe, surely there would have to be an agreement to retain an open market for legal services allowing mutual rights to practise across the borders. You will see no trace of that in the political statement that accompanies the withdrawal agreement. As the noble and learned Lord, Lord Thomas of Cwmgiedd, pointed out last week, we are in a competitive position. Commercial courts where the proceedings are conducted entirely in English have opened up already in Paris and Amsterdam. The noble and learned Lord said that they are being actively promoted as a much better alternative to the United Kingdom because their judgments will be recognised and enforceable across the EU and because of the certainty of their position.

If the EU does unto us what we are doing to it by this statutory instrument, British lawyers will have no rights of audience in these new English-speaking courts. That is a most curious result. Instead of spending time abolishing the rights of European lawyers to practise in this country, the Government might spend time in negotiating mutual rights to practise to replicate the current position. There is nothing, as I have said, in the political declaration that points to such negotiations. I ask the noble and learned Lord: where are we? Have there been any talks on this issue?

[Lord Beecham (Lab)]

My Lords, I refer to my professional interests, although my firm has not been engaging in EU law. I want to thank in particular the Law Society and the Bar Council for very helpful briefings on an important and complex issue. The provisions of the statutory instrument appear to be acceptable, inasmuch as it will still be possible for EU-registered lawyers to be admitted to the solicitor’s profession or to practise under their home title. Can the noble Lord give any indication of the numbers—the proportion of those whom we have heard are already practising in this country who would be likely to continue under this new regime? Is there any estimate of the impact of the change on the likely numbers of those who will be able to continue? What estimate have the Government made of the impact on UK lawyers currently practising in the EU? Is there any information about the likely impact on them? Can the Minister clarify what is meant by the reference in the Explanatory Memorandum to the,

“alternative examination routes open to third country qualified lawyers”,

and indicate how many applicants are expected to take that course of action? What will be the position of EU lawyers currently engaged in litigation in the UK who do not choose to be admitted to the UK professions by the end of the transitional arrangements on 31 December 2020? Will they, for example, have to withdraw from cases still under way on that date?

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.

Brexit: Attorney-General’s Advice

Lord Beecham Excerpts

Thursday 29th November 2018 Lords Chamber

[Lord Keen of Elie]

There has been a resolution in the House of Commons. We are aware of its terms and its scope. We will await the Statement from the Attorney-General to see to what extent it is considered by the House of Commons to meet the resolution that was made.

[Lord Beecham (Lab)]

My Lords, as I understand the noble and learned Lord, the Attorney-General’s report, whatever form it takes, will be published only the day before the debate. Why is it being left to that late date?

Civil Liability Bill [HL]

Lord Beecham Excerpts

Ping Pong (Hansard): House of Lords
Tuesday 20th November 2018 Lords Chamber

[Lord Judge (CB)]

My Lords, in view of everything that has been said about the Minister, perhaps he does not need any help from me in addressing the concerns expressed by the noble Lord, Lord Hodgson, but I will offer him some comfort. Many people will want to make a contribution to the discussion with which the noble Lord, Lord Hodgson, has been concerned. They may not all have the same interest as the judiciary has in seeing that there is a fair balance between the way in which the whiplash injuries damages are to be assessed and the way that all other injuries are assessed—the process of assessing damages as it develops over the years.

I specifically asked that we should not have the concurrence of the Lord Chief Justice. We simply asked that he should be consulted. When he is consulted, like everyone else who has been consulted, he will be someone making a contribution to the final decision of the Lord Chancellor. As he will be merely consulted and not asked to concur, there is no danger that my successor many years down the line will find himself at the wrong end of a claim.

[Lord Beecham (Lab)]

My Lords, I refer to my interest as an unpaid consultant with my old firm. I begin somewhat unusually by congratulating the Minister on having improved a pretty flawed Bill since it left us. I assume that he has played a significant part in that. In particular, I strongly endorse the provisions of Amendment 1, which are an improvement on the original wording. However, we would still have preferred the retention of the existing system which allows judicial discretion on the level of compensation to be awarded based on judicial guidelines. To answer the noble Lord, Lord Hodgson, that is how the system operates and there seems to be no good reason why the assessment of damages for this kind of injury should be different in those terms from any other form of injury.

Of course, we also continue to be opposed to the increase in the small claims limit by an amount higher than inflation, in accordance with the review carried out by Lord Justice Jackson several years ago of civil litigation costs. In fact, the increase is something like 100%, although I take the noble and learned Lord’s point that that is not strictly within the scope of this Bill.

The Justice Select Committee warned that,

“increasing the small claims limit for PI creates significant access to justice concerns”.

The Government’s plans to increase the small claims limit will mean that more cases are allocated to the small claims track. That will leave tens of thousands of working people priced out of getting proper legal representation. These measures are a further gift to insurance companies which are already experiencing increased profits at the expense of people injured through no fault of their own.

What assessment have the Government made of the impact of the changes to the operation of the courts, given that increasingly claimants will be unrepresented? Within the last fortnight, the Permanent Secretary at the Ministry of Justice has told the Justice Select Committee that two of the main spending assumptions were fundamentally “unrealistic” and that even the Treasury recognised that the department was under “considerable strain”. In these circumstances, how confident is the Minister about the ability of the courts to deal with an increase in unrepresented claimants from 5% to 30%, as predicted in the whiplash impact assessment? That of course relates only to that particular area; there will be another shortfall in relation to other claims. How long do they anticipate will be the “long term” envisaged before the courts operate at cost recovery level, as suggested in the whiplash impact assessment? To be clear, whiplash impact for this purpose is on the system, not on the unfortunate claimant.

It is estimated that insurers will gain £1.3 billion a year. I hope that the noble and learned Lord’s confidence that the industry will ensure that those savings are passed on to policyholders will be proved correct. Why will it be six years before the Treasury reports to Parliament on the savings accrued to policyholders, as apparently will be the case? It seems an inordinately long time to assess the impact of this provision. Further, is it not ironic that the Government, who make so much of the need to protect policyholders from the impact of exaggerated or fraudulent claims, have themselves increased insurance premium tax four times in eight years, thereby currently collecting £2.6 billion a year more from the people they purport to be helping through this Bill?

While the commitment given at Third Reading in the Commons that vulnerable road users will be exempt from the changes is welcome, why are children and people injured at work not included in the exemption? Extending the change to those two groups would seem to be a reasonable move.

By sheer coincidence, today sees the publication of the report of the Constitution Committee. It is highly critical of the Government’s increasing reliance on secondary legislation. The committee supported the views of the Delegated Powers and Regulatory Reform Committee earlier this year that key measures should be included in the Bill and not left to secondary legislation. Also, most tellingly, it said that judges, not the Lord Chancellor, should set the new tariff and that the Lord Chancellor should not be granting powers to make provision for damages relating to minor psychological injury. This accords with amendments debated during the passage of the Bill through this House but not enacted.

I hope that a review of this measure will provide an opportunity to return to this issue and adopt that approach in due course. I repeat that the Bill comes back to us in better condition than it was, but I remain convinced that it is not in as good condition as it should be.

[Lord Keen of Elie]

I am obliged to the noble Lord, Lord Beecham, for acknowledging that we have at least achieved a curate’s egg, if nothing more.

The Bill makes important changes to our personal injury compensation system; it makes that system fairer, more certain and more sustainable in future for claimants, defendants, motorists and the taxpayer. That builds on our wider reforms to cut the cost of civil justice claims and strengthen the regulation of claims management companies, which play such a big part in this. The first part of the Bill will deliver a key manifesto pledge. It will support the consumer by bringing down the cost of living through a crackdown on exaggerated and fraudulent whiplash claims that lead to higher insurance costs. The second part of the Bill will provide a fairer method for setting the personal injury discount rate and reviewing it so that it does not remain at one level, as it did for 16 years.

I am grateful for noble Lords’ observations and careful scrutiny of the Bill. I want to touch on one or two of their points. The noble Lord, Lord Sharkey, commented on the complexity of the approach taken on Clause 11. That approach was carefully crafted after consultation with interested parties, including the FCA, to ensure that it is as effective as possible. At the end of the day, the Government’s approach has been determined by the need for a rigorous and proportionate regime for insurers as far as savings are concerned. We have to remember that the FCA is an independent body. Clearly, we cannot confirm exact FCA action in respect of these matters but we assure the House that it will take very seriously any case where an insurer does not treat customers fairly. That could include a public commitment not being met if that formed part of a policyholder’s or consumer’s expectations.

The Government have taken a careful and considered approach to what is sometimes termed “naming and shaming”, particularly with regard to the provisions in Article 6 of the European Convention on Human Rights. There are circumstances in which the FCA may decide publicly to censure a firm, but that would typically follow a detailed investigation. The idea of somehow naming and shaming a firm before such an investigation could raise questions about convention rights under Article 6. I suggest that we have taken a considered approach to this but, ultimately, those outliers—if I can call them that—who might seek to abuse the system will be open to censure, potentially publicly, by the FCA in due course.

In the context of the point made by the noble Lord, Lord Hodgson, I readily adopt the observations of the noble and learned Lord, Lord Judge. At the end of the day, consultation with the Lord Chief Justice will allow the judiciary some input into, or comment on, the setting of the tariff of damages against the background of its knowledge of the general level of damages awarded for personal injury in diverse cases. One would hope that this would ensure no material divergence in levels of damages as far as that is concerned.

The noble Lord, Lord Monks, raised a number of questions. Regarding Amendment 1, the primary legislation approach to setting the tariff is not considered appropriate because it should be amenable to review and flexibility. Setting it in stone would not allow for that. Regarding the question of employers’ liability and employers’ liability clauses, we consider that the courts are equipped to cope with such claims. On cost recovery, referred to in the impact assessment at paragraph 5.66, I note that the aim is ultimately to try to achieve cost neutrality so far as the court process is concerned, but I acknowledge that that is a long-term aim.

Third Parties (Rights Against Insurers) Act 2010 (Consequential Amendment of Companies Act 2006) Regulations 2018

Lord Beecham Excerpts

Wednesday 17th October 2018 Grand Committee

[The Advocate-General for Scotland (Lord Keen of Elie) (Con)]

My Lords, the Third Parties (Rights Against Insurers) Act 2010 (Consequential Amendment of Companies Act 2006) Regulations 2018 will make amendments to the Companies Act 2006. The amendments are consequential to the changes in the law introduced by the Third Parties (Rights Against Insurers) Act 2010. They are necessary because of the effect of the interaction of the Third Parties (Rights Against Insurers) Act 2010, the Third Parties (Rights against Insurers) Regulations 2016, and the Companies Act 2006 on the ability of insurers to exercise their rights of recourse against other parties liable for the same loss.

I will make clear that the draft regulations are concerned only with the ability of one insurer to obtain money from someone else, typically another insurer, where the first insurer has already paid out an award of damages. They do not affect the rights of personal injury claimants.

The Third Parties (Rights against Insurers) Act 2010 simplified and modernised the previous law and procedure by which victims could obtain compensation for wrongs done to them by insolvent wrongdoers. Most importantly, the 2010 Act allowed claimants to take legal proceedings directly against the insurer of the insolvent wrongdoer, rather than having to establish the wrongdoer’s liability in separate legal proceedings.

Wrongdoers which are dissolved companies were brought within the scope of the 2010 Act by the addition in the Third Parties (Rights against Insurers) Regulations 2016 of new Section 6A. This also meant that claimants no longer had to spend time and money restoring the company to the register of companies simply for the purpose of suing it, establishing its liability and thereby gaining access to its insurer.

The creation of this direct remedy against the insurer affects the insurer’s rights of subrogation in respect of their ability to recover payments of contribution from other wrongdoers and their insurers potentially liable for the same loss. Subrogation is a common law concept allowing a person who pays out a claim to “stand in the shoes” of the payee as regards other rights of action the payee had in relation to the claim. An insurer who pays damages to the claimant is therefore subrogated to the rights of the insured in relation to the claim.

Importantly in this context, as a result of the 2010 Act claimants no longer have to restore companies to the register. As a result, the current six-year time limit imposed on the restoration of dissolved companies, other than in relation to personal injury claims, will bite on insurers who are directly sued under the 2010 Act. This is because a claim for subrogation is not a personal injury claim.

The effect is particularly acute in personal injury claims for exposure to asbestos, where Section 3 of the Compensation Act 2006 makes any defendant liable for the whole of the loss to the claimant, irrespective of whether others might also have caused the injury and might also have an obligation of contribution.

Damages in these and other personal injury cases are usually paid by the defendant’s insurer. As a result of the payment the insurer is subrogated to the rights of the defendant against other parties liable for the same loss. However, a right to subrogation can be exercised only if the company to be sued exists. A dissolved company clearly does not, and a company that has been dissolved for more than six years cannot currently be restored to existence.

The changes to the law introduced by the 2010 Act, which removed the need for a claimant to restore a company, have therefore had the indirect consequence in personal injury cases that the insurer has to restore the dissolved company to be able to exercise rights of subrogation, but cannot do so if the six-year limit has been exceeded. A right to be subrogated to a claim for contribution against such a company has therefore been made inoperable, with the consequence that one insurer will have to bear the whole loss. This was not the intention of the 2010 Act.

The draft regulations cure this problem by allowing an application to restore a company under Section 1030(1) of the Companies Act 2006 outside the six-year time limit for the purpose of an insurer bringing proceedings against a third party, typically another insurer, in the name of that company in respect of that company’s liability for damages for personal injury. This change ensures that the same subrogation result is produced for direct claims against insurers under the new Section 6A of the 2010 Act as is already produced for indirect claims where the person who suffered the loss claims against the insured wrongdoer and the insurer pays for the loss. In other words, this solution restores insurers’ rights of subrogation without prejudicing any third party. We submit that it is a fair and sensible way to resolve the problem inadvertently caused by the 2016 regulations. I beg to move.

[Lord Beecham (Lab)]

My Lords, try as I might, I can find absolutely nothing wrong with the regulations. I have tried very hard to do so and failed completely. It is perhaps worth noting that it is unfortunate that this problem arose in the first place; presumably the original drafting ought to have anticipated and dealt with it. However, it is being corrected, although somewhat belatedly. What are the consequences, if any, for cases that have already gone through the process? It is presumably too late to apply the present terms to cases that have already concluded. Will there be litigation to go back over cases that have already been determined?

Victims Strategy

Lord Beecham Excerpts

Monday 10th September 2018 Lords Chamber

[Lord Beecham (Lab)]

My Lords, I thank the Minister for repeating the Statement. I join him in congratulating the noble Baroness, Lady Newlove, who is not in her place today, on her role in representing victims. I am sure all noble Lords will recognise the great contribution that she has made over the last few years.

Welcome though the publication of a victims strategy is, as my honourable friend Gloria De Piero pointed out in the House of Commons, it comes three years after being promised and in the shape of secondary legislation rather than the primary legislation envisaged. Even now, as we have heard, further consultation is to take place—for example, in relation to the victims’ code and the creation of the post of independent public advocate. Could the Minister indicate the nature of such consultation and its potential timescale?

Will the Government review the position in relation to judicial review where the cuts to legal aid over the last few years have in some cases prevented the pursuit of justice? The Statement is made on the same day that the Metropolitan Police have revealed a drop in the investigation of serious crimes, including sexual offences and violence. How is this supposed to help the victims of such brutality?

We are all aware of the enormous strain on police forces up and down the country, not least in London. There is no indication of additional funding to meet the challenges in the rise of serious crime, including violent crime and sexual offences. Indeed, the Police Superintendents’ Association is warning of a “perpetual state of crisis”. Surely this is unacceptable.

We welcome the promise to revise the victims’ code. How will that exercise be carried out, and what is the timescale envisaged? We also welcome the proposed changes to the criminal injuries compensation scheme. Again, could the Minister indicate the process and timescale for that exercise? We also support the idea of an independent public advocate in major disaster cases. The experience of these over the years has been, to put it mildly, very unsatisfactory for the many people involved in some of those disasters.

What is the estimated cost of the changes, and where will it be paid from? Will the Minister confirm that it will not be financed by cuts in other areas of the justice system? I remind the Minister that the female offender strategy, for example, was underfunded by £15 million. Will the Government look again at their funding of that important initiative?

The Minister described for the first time a cross-government victim strategy. To what extent will other departments be involved? I presume that the Ministry of Housing, Communities and Local Government, the Department for Education, the Department of Health and Social Care and, of course, the Home Office will all have a role. Will the custodial and probation services be involved in the approach to the new environment being created for the victims of crime? In dealing with offenders they will, I hope, be promoting the need for offenders to avoid such conduct in future, particularly where they have been involved in offences of this kind.

The proposals in the Statement are welcome as far as they go but will come to little without adequate funding and adequate engagement with all interested parties. I look forward to seeing how the proposals develop in practice, particularly in terms of adequate funding across the piece envisaged by the Statement. We look forward to that and I hope that the department succeeds in persuading the Treasury that investing in the ideas in the Statement and presumably to be debated across the justice system will be adequately met. Without that, any hope of change will be lost in practice.

Law Commission: Funding

Lord Beecham Excerpts

Tuesday 10th July 2018 Lords Chamber

Asked by

[Lord Beecham]

To ask Her Majesty’s Government what assessment they have made of comments made by the Chair of the Law Commission that reductions in the Commission’s funding could put its independence at risk.

[The Advocate-General for Scotland (Lord Keen of Elie) (Con)]

My Lords, the Law Commission’s independent status is protected in law. Following reductions in its core budget, the commission has undertaken more funded projects. It is for the Law Commission to decide which projects it recommends are taken forward.

[Lord Beecham (Lab)]

My Lords, the commission’s website proclaims that it is a statutory body that aims,

“to ensure that the law is as fair, modern … and as cost-effective as possible … to conduct research and consultations … to codify the law, eliminate anomalies, repeal obsolete and unnecessary enactments and reduce the number of separate statutes”.

The commission’s budget has been cut by 54%—£2.1 million—since 2010, resulting in projects being delayed and, even more worryingly, in the words of the current chair, Sir David Bean, “elbowed aside” in favour of projects commissioned by the Government. Will the Minister confirm the commission’s independence and its right to select projects without being obliged to prioritise unduly work commissioned by the Government?

[Lord Keen of Elie]

My Lords, I have already sought to underline the commission’s independence with regard to these matters. The Government continue to value the important work of the Law Commission and recognise that it must retain the ability to make independent choices about reform projects that it chooses to take forward. There are, of course, circumstances in which departments of government will, as it were, seek to instruct or seek approval for particular projects to assist with the Law Commission’s budget. At this point, I pay tribute not only to the work of the Law Commission but to its outgoing chair, Sir David Bean.