Land Registration (Network Access) (Amendment) Rules 2011

Lord McNally Excerpts

Tuesday 5th July 2011 Grand Committee

Moved By

[Lord McNally]

That the Grand Committee do report to the House that it has considered the Land Registration (Network Access) (Amendment) Rules 2011

Relevant documents: 23rd Report from the Joint Committee on Statutory Instruments

[The Minister of State, Ministry of Justice (Lord McNally)]

My Lords, the noble Baroness, Lady Royall, beat me to the punch by whispering across the point that I was going to make. Looking at her sitting in solitary splendour, I am reminded of the advice that you face your opponents but your enemies are behind you.

The rules before us today amend the Land Registration (Network Access) Rules 2008, which make provision about network access agreements. These are agreements with the Chief Land Registrar conferring authority to have access to the Land Registry’s electronic network on a person who is not a member of the Land Registry.

The purpose of these draft rules is to ensure that the criteria that applicants for a network access agreement must meet are consistent with the terms of the Legal Services Act 2007, which makes provision for the regulation of persons who carry on certain legal activities.

It may be helpful if I say something about land registration legislation and the Legal Services Act before considering these rules in more detail. The Land Registration Act 2002 enables the Chief Land Registrar to set up a land registry network to be used for electronic conveyancing. It provides that a person who is not a member of the Land Registry staff may have access to the network only if authorised by a network access agreement entered into with the Chief Land Registrar. The Land Registration (Network Access) Rules 2008 provide the criteria to be met by an applicant for a network access agreement, and also some of the terms that a network access agreement must contain. A conveyancer with a network access agreement can make electronic applications to the Land Registry that may result in a change to the register of land.

The Legal Services Act 2007 regulates the provision of legal services in England and Wales. Among its provisions, it sets out which legal activities are “reserved”, and who can carry out those reserved legal activities. One category of reserved legal activity is “reserved instrument activity”, which includes preparing certain conveyancing documents for the purposes of the Land Registration Act 2002, and making applications or lodging documents for registration with the Land Registry. Under the Legal Services Act, only an “authorised person” is allowed to carry out a reserved legal activity. “Person” includes a body of persons. The authorised person may be authorised to carry out all or only some of the reserved legal activities. It is a criminal offence to carry on a reserved legal activity if a person is not authorised to do so.

Much of the Legal Services Act 2007 came into force in 2010. Later this year, it is expected that further sections of the Act will come into force that will allow for the introduction of licensed bodies, which are commonly referred to as alternative business structures. The purpose is to relax the statutory and regulatory limitations on the ownership and management of legal practices to allow for greater flexibility and choice in the provision of legal services.

The Land Registration (Network Access) Rules 2008 came into force before the changes made by the Legal Services Act. At that time, the provision of reserved legal activities was subject to the provisions of the Solicitors Act 1974 and various other enactments. The network access rules were drafted to be consistent with those enactments. At that time, the regulation of legal services was based around the regulation of individual solicitors, barristers, licensed conveyancers and notaries. Under the Legal Services Act, there is a move towards the regulation of bodies that deliver legal services.

Now that the Legal Services Act has made changes to the regulation of legal services, and more changes are on their way with the introduction of alternative business structures, it is necessary to amend the network access rules for consistency with the new legislation. It would be inappropriate for the Chief Land Registrar to enter into a network access agreement with a person or body that was not authorised under the Legal Services Act to undertake land registration activities.

The rules before us today amend the criteria to be met by applicants for a network access agreement to bring them into line with the Legal Services Act and to make adjustments to take account of alternative business structures. These rules will allow for a person or body that is authorised under the Legal Services Act to carry on legal activities relating to land registration, or a person or body that employs such an authorised person who will undertake those activities or direct and supervise them, to enter into a network access agreement, provided that they also meet other criteria set out in the network access rules. One class of body that can currently enter into a network access agreement will be unaffected—a government department. This is because of the exemption for public officers from the provisions of the Legal Services Act.

In addition, amendments have been made to the definition of “intervention”, and “disciplinary proceedings” to include reference to licensing authorities which will regulate alternative business structures; and the insurance criterion has been amended so that the words correspond with wording used in the Legal Services Act.

Members of the Committee will see that the amendments will come into force on the day that Section 71 of the Legal Services Act comes into force. That section will allow for the commencement of alternative business structures. In drawing up the amendments, the Government intended to ensure a level playing field for all legal service providers—whether traditional conveyancing practices or alternative business structures. This reflects the policy behind the Legal Services Act.

The Lord Chancellor must consult such persons as he considers appropriate before making rules relating to access to the Land Registry’s electronic network. An impact assessment was also undertaken. The majority of those who responded to the consultation and impact assessment supported the proposals.

In summary, the rules update the criteria for entitlement to a network access agreement with the Chief Land Registrar, reflecting provisions already made by the Legal Services Act. I therefore commend these draft rules to the Committee.

[Lord Thomas of Gresford]

My Lords, the important point that should be appreciated—I am sure that it is—is that when a title is registered, it is an absolute title. It can be obtained by fraud or by any other means, but it is an absolute title, once registration has been granted. That means that the person who owns that title can sell it on and deal with it as if it were his own. Any issue as to how that registration has been obtained is left for litigation. Therefore, it is crucial that the integrity of the register is maintained. So much depends on trust. We trust that the people who make these applications will do so honestly, with proper consideration of all the issues and in the interests of their clients. That is why we have all these rules, which endeavour to ensure that the very competent staff of the Land Registry are not deceived by applications from outside.

What is this all about? It brings the alternative business structures system into the position of being an authorised applicant to deal with the Land Registry. I have expressed my views on these alternative business structures so often that I sound a little like Cassandra. However, I foresee trouble. If there is trouble in the future, it is not the lawyers who will suffer; they will do very well. It is the consumer and the customer who will suffer.

There is a lack of confidence in the way that this has been put forward. The summary of the impact assessment says on page 3, under the heading “Other key non-monetised benefits by ‘main affected groups’”:

“The proposals will avoid the potential costs to Land Registry customers outlined in the base case by ensuring only persons authorised to prepare and make applications relating to land registration are able to do so”.

That states the obvious; it is the position at the moment. The summary goes on:

“Land Registry customers may further benefit if the new definition of ‘conveyancer’”—

that is, these rules—

“leads to better quality conveyancing practices compared to current levels”.

Why it should lead to better conveyancing practices than the current system, under which conveyancing is carried out by qualified lawyers or managing executives, I do not know. The summary continues:

“Ensuring ABS firms fall within the definition should also lead to increased competition in the conveyancing market, which may provide efficiency benefits for society, and direct benefits for Land Registry customers in the form of lower prices and/or increased choice”.

The sort of situation that I envisage, particularly in a tight housing market, is that developers will offer a conveyancing service, or an ABS. They will have an interest in the outcome of the conveyance of their own homes and access to the registry. They may act for both parties. All the checks and balances that have developed over the years to protect the consumer and householder will be weakened.

I have had my usual rant on this subject, so I shall leave it at that. I cannot say that I welcome this measure.

--- Later in debate ---

[Baroness Royall of Blaisdon]

My Lords, I shall make a brief intervention on this, with a couple of quick questions. In the Explanatory Notes somewhere it says that the first alternative business structures will be established in October this year. Is it anticipated that that is the case? Furthermore, there is mention of an informal consolidated text in the document. What is the state of an informal consolidated text, as opposed to a proper consolidated body of law?

I very much welcome the update of the Land Registry portal guidance notes, which will be important. However, following on from what the noble Lord, Lord Thomas of Gresford, has said, and the noble Lord, Lord Hodgson of Astley Abbotts, there are clearly potential problems with this order. There is to be a post-implementation review in 2015. I have two things to say about that. In view of the concerns expressed by noble Lords, are the five years before there is any sort of review not a little too long? If consumers have been found to be suffering as a result of this order, perhaps the Government might seek to act before then. If the review finds that the policy objectives of the order have not been met and that consumers have been harmed as a result, will the Government seek to act and revise the order in some way to ensure that consumers do not continue to suffer as a result?

[Lord McNally]

I am grateful to noble Lords who have participated. On the important question of when alternative business structures will be introduced, the Legal Services Board and the Ministry of Justice are working towards October 2011 for implementation. The noble Baroness was in government long enough to know that saying that we are working towards that is as firm a commitment as I can make at this precise moment—but that is the objective.

On the question asked by the noble Lord, Lord Thomas, about the importance of the integrity of the Land Registry process, I need no urging on that. I am the Minister responsible for the Land Registry. One thing that I continually impress on colleagues from other departments is that we have a very important public asset in the trust that people put in the Land Registry process, and rightly so. For the great majority of us, the title and ownership of our property—those of us who are house owners—represents the biggest investment that we ever make in our lives. So the integrity of that process is extremely important. Although I have heard before the doubts expressed by the noble Lord, Lord Thomas, about alternative business structures, I would not go so far as to describe him as a Conservative on matters of legal structures.

Our aim is to bring what we hope will be some exciting competitive pressures into the delivery of legal services, and those responsible for delivery will keep a close eye on things. In a recent meeting on related matters, the noble Baroness, Lady Hayter, attending in her capacity as chair of the Legal Services Consumer Panel, expressed confidence in the overall checks and balances being put in place. Alternative business structures will provide opportunities for practitioners from different professions, legal and non-legal, to join up to ensure that it is economically viable for them to continue to provide legal and associated services and gain efficiency savings.

Although we promised a review after five years, Land Registry constantly reviews its practices and will review the network access rules if alternative business structures result, paying particular regard to consumers.

The noble Lord, Lord Hodgson, spoke about the use of databases—I think that he referred to the suspicious activity database. Thorough checks are made before entering into network access agreements and continuing checks are made to make sure that there is no abuse. However, the noble Lord raised an interesting broader point. The advance of technology has meant that the ability of the state and private industry to amass vast amounts of information about the individual could pose a threat to their civil liberties. I shall quote, as I do frequently in other places, something that the noble Lord, Lord Thomas of Gresford, once said to me. He said that in a free society there must be a limit to what the state knows about the individual. In our modern world, vast amounts of information are amassed. What is more, there is almost limitless technological ability to exchange that information unless checks and balances are put in place. That is partly the responsibility of government and Parliament.

I hope that I have covered the points that colleagues have raised. As I have said, the measures bring the various Acts into kilter and anticipate new structures. On that basis, I hope that the Committee will agree the Motion.

Motion agreed.

Rehabilitation of Offenders Act 1974 (Exceptions) (Amendment) (England and Wales) Order 2011

Lord McNally Excerpts

Tuesday 5th July 2011 Grand Committee

Moved By

[Lord McNally]

That the Grand Committee do report to the House that it has considered the Rehabilitation of Offenders Act 1974 (Exceptions) (Amendment) (England and Wales) Order 2011

Relevant documents: 23rd Report from the Joint Committee on Statutory Instruments.

[The Minister of State, Ministry of Justice (Lord McNally)]

My Lords, as the Committee will be aware, the Rehabilitation of Offenders Act 1974 exists to support the resettlement of offenders into society where they have demonstrated that they have put their criminal behaviour behind them. After a prolonged period of time, therefore, the Act declares convictions spent and an ex-offender need no longer declare them. When they apply for jobs, or seek insurance, they need not disclose this information and subsequently not suffer the potential discrimination as a result of it.

There must of course be exceptions to this rule. Where, for example, someone is applying to work with children or with vulnerable adults, it is appropriate that the employer knows the full history of the individual. The exceptions order to the Act is the means by which this is achieved.

The exceptions order lists certain activities that are exempt from the Act. This means that where an individual is applying for a job within a specified activity or is involved in specified proceedings, their full criminal record history is available to the employer. If an individual has a conviction that has been declared spent, the prospective employer will then see it. We must be careful not to jeopardise the operation of the Rehabilitation of Offenders Act, so the activities listed on the exceptions order are only those that present an opportunity for people involved to cause harm to the public or the work concerned is of a sensitive nature, which might include children, the finance sector or national security.

This careful balance between allowing offenders to lead law-abiding lives by removing barriers and maintaining public protection needs to keep pace with the present. The exceptions order must therefore remain up to date with developments elsewhere. The order presented today is an illustration of the Government seeking to maintain this balance in line with the developments occurring in the financial and legal sectors.

Noble Lords will know that wide proposals for reform of the Rehabilitation of Offenders Act are being considered by the Government. Today is not the day to debate these, and I cannot make further announcements at this stage.

The current exceptions order enables the Financial Services Authority to take spent convictions into account when authorising a person to carry out regulated activities under the Financial Services and Markets Act 2000. This amendment will enable the Financial Services Authority to take spent convictions into account when authorising a new category of business—payments institutions.

Payments institutions were brought within the scope of regulation by the Financial Services Authority in 2009. They provide payment services, for example enabling cash to be placed in or withdrawn from a payment account, and range from large credit card companies to sole traders offering to send money abroad for a small fee. Money remitters, for example, transfer large amounts of money to and from overseas, with many specialising in remitting funds to specific accounts, such as in India, Pakistan or Poland, on behalf of immigrant communities. In many cases these customers are financially disadvantaged people, who have limited access to the banking system.

There have been a number of failures of business in the money remittance industry, and the failures have uncovered an element of mismanagement, financial impropriety or fraud. It is therefore important that the Financial Services Authority can assess those responsible for management of these businesses before authorising them to carry on business. This amendment will therefore bring payments institutions within the exceptions order so that the Financial Services Authority can take into account the full background of those responsible for the management of these bodies.

The second amendment relates to the introduction of alternative business structures, which will allow lawyers and non-lawyers to work together to provide legal and non-legal services. These bodies will be licensed and regulated by licensing authorities. Two new roles—head of legal practice and head of finance administration—are being introduced and will be responsible for an alternative business structure’s compliance with their licence. Licensing authorities must be satisfied that individuals applying to be heads of legal practice and heads of finance administration are fit and proper persons for appointment. In particular, not only will persons in these roles be responsible for compliance with the body’s licence, they could have access to vulnerable clients, client money and personal or sensitive client information. Making this amendment means that licensing authorities can seek information on previous convictions and cautions from applicants seeking to take up the role of head of legal practice and head of finance and administration. This will ensure that they are fit and proper for appointment.

I am aware that a further request has recently been made by the Legal Services Board for non-lawyer owners and managers of alternative business structures to be added to the exceptions order. At this early stage, no decision has been made. We will of course give careful consideration to this request, and this process is under way.

The final amendment is one of wording only. There is currently an entry on the exceptions order relating to “actuary”. The term is currently defined in the exceptions order as,

“a member of the Institute of Actuaries or a member or student of the Faculty of Actuaries”.

On 1 August 2010, these two bodies merged to become the Institute and Faculty of Actuaries. In order to continue to give effect to the applicable exception the definition is to be updated to reflect this change.

I hope that I will have the agreement of all noble Lords that the exceptions order is an important means of protecting the public. The instrument presented today responds to the latest analysis of risks. It therefore ensures that legislation is up to date and effective in its aim, while maintaining the vital balance towards the resettlement of offenders that the Rehabilitation of Offenders Act seeks to achieve. I beg to move.

[Lord Hunt of Wirral]

My Lords, I declare an interest in the global firm of solicitors, Beachcroft LLP, where I have been a partner since 1969, and as vice-chairman of Justice. I say that with trepidation in the presence of the emeritus chairman of Justice—my noble friend Lord Goodhart—because Justice must deserve a great deal of credit for the original rehabilitation of offenders legislation.

However, I need help from my noble friend the Minister on giving a commitment—a commitment that was given by the party opposite when it had responsibility. I also gave personal commitments when I was leading for the Opposition from the Front Bench and made it clear, right at the outset, that a single set of regulatory standards would be required for alternative business structures.

The Minister has received a fascinating brief from his officials to explain the mistake in singling out “head of legal practice” or “head of finance and administration”. I warmly commend the officials for having thought up this reason, but it was two years ago that we made it clear that it is the owners and managers of the alternative business structures who must be the people in the spotlight. It may well be that they will need under them a head of legal practice or finance and administration, but at the end of the day the key role played by the owner/investor/manager of the alternative business structures must mean that they should be subject to the same authorisation rules as solicitors in regard to disclosing criminal offences. Why? Because we must ensure, as both Front Benches agreed we had to, that convicted criminals are not able to become owners and managers of legal practices.

It is not just that a request has only just been received from the Legal Services Board, because it was in June 2009 that the Solicitors Regulation Authority made it clear that a single set of regulatory standards would be required. Why on earth this is not included now I just do not know, because what it means is that someone who has served a sentence for a serious crime such as money laundering does not have to disclose this when applying to be an owner or investor in an alternative business structure firm.

I suppose that my noble friend can immediately move to give me assistance by promising that there will be a further order to rectify this omission, which will then make it clear that the exemption of course also applies to owners and managers of ABS firms, as well as to the heads of legal practice and finance and administration within those firms.

--- Later in debate ---

[Baroness Royall of Blaisdon]

My Lords, I also support what noble Lords opposite have said. Of course, as the Minister said, we have to be careful not to jeopardise the workings of the Rehabilitation of Offenders Act 1974, but there clearly have to be exceptions. Like noble Lords opposite, frankly I do not understand why this order does not encompass ABS firms, or the head of legal practice and head of finance administration, to which the Minister referred. In view of the strong feelings that have been expressed in Committee this afternoon, I wonder whether the Minister would consider taking back this order and relaying it once proper consideration has been given to the inclusion of the owners of ABS firms. I think that all noble Lords present would like to see one single set of regulations. That would make for much better government and much better governance, and I should be grateful for the Minister’s views.

If the noble Lord is not able to take back this order—and he may not be able to do so—I should be grateful for an assurance that he will come back in the very near future with another order that encompasses the ownership of ABS firms. I quote from his honourable friend Jonathan Djanogly, who, when speaking for the Conservative opposition in the House of Commons—I am afraid that I do not have the words of the noble Lord, Lord Hunt of Wirral, in front of me—said:

“The effectiveness of fitness-to-own provisions is a crucial element of the public protections that need to be in place before external ownership of ABS firms can safely be permitted. It is essential to avoid the spectre of law firms being owned by criminal elements”.—[Official Report, Commons, Legal Services Bill Committee, 22/6/07; col. 300.]

I think that, unless we have an order before us in the very near future that encompasses ABS firms, we will indeed have that spectre before us.

[Lord McNally]

I knew I was right when I said that the enemies are behind me, but very constructive enemies they have been. One of the benefits of this procedure is that we can examine orders such as this in a non-partisan but expert way. As much as it is within my power to give the assurances that the noble Baroness, Lady Royall, has asked for, I give those assurances. The points that have been made by my noble friends during this debate should be treated with proper urgency. I am not in a position to withdraw the order, which covers matters that it is important to take forward. However, the noble Baroness is quite right: in opposition both Jonathan Djanogly in the other place and my noble friend Lord Hunt made it very clear that the effectiveness of fitness-to-own provisions was a crucial element of the consumer protection measures that needed to be in place for all ABSs. That position has not changed.

I can assure the Committee that the gist of this debate—or at least Hansard—will be made known to my colleagues in the Ministry of Justice, along with the strong message that a sense of urgency is needed in taking this matter forward. The argument that a compelling case and a clear understanding of the potential risks are needed to justify inclusion in exception orders is valid. Licensing authorities have a range of regulatory powers and will be required to put in place strict licensing rules to ensure that licensing bodies are properly regulated and consumers adequately protected.

Nevertheless, I accept the point made by my noble friend Lord Dholakia. I hope we can carry forward his initiative in producing a new Private Member’s Bill that updates the Act. If we are to get general public support for a rehabilitation of offenders Act, and carry public confidence in it, we must have exception orders to give the protections that the public require. Certainly, the case made today for owners being part of the Act is, to my mind as a lay man, almost unanswerable. I hear what has been said. It would seem only natural to a simple lay man that owners and managers of ABSs should be included in the order. I will take the very strong recommendations of this Committee back to colleagues. In the mean time, I ask the Committee to accept this order.

Motion agreed.

Corporate Manslaughter and Corporate Homicide Act 2007 (Commencement No. 3) Order 2011

Lord McNally Excerpts

Tuesday 5th July 2011 Grand Committee

Moved By

[Lord McNally]

That the Grand Committee do report to the House that it has considered the Corporate Manslaughter and Corporate Homicide Act 2007 (Commencement No. 3) Order 2011.

Relevant documents: 23rd Report from the Joint Committee on Statutory Instruments.

[The Minister of State, Ministry of Justice (Lord McNally)]

My Lords, the commercial order would implement Section 2(1)(d) of the Corporate Manslaughter and Corporate Homicide Act 2007. The amendment order would add two categories of person to the list contained in Section 2(2) of the Act. These are persons owed a duty of care by virtue of either being held in the custody area of UK Border Agency customs facilities or being held in Ministry of Defence service custody premises.

The purpose of the commencement order is to implement Section 2(1)(d) of the Corporate Manslaughter and Corporate Homicide Act 2007—which I shall refer to as the “custody provisions”. The amendment order will extend the provisions to facilities not already covered in the Act; namely, Ministry of Defence service custody premises and customs custody facilities which have now become the responsibility of the UK Border Agency.

Before going into the detail of the orders, I shall briefly remind Members of the Committee of the context surrounding the custody provisions. The Corporate Manslaughter and Corporate Homicide Act 2007 created an offence whereby an organisation could be found guilty of corporate manslaughter if the way in which its activities were managed or organised resulted in a death and amounted to a gross breach of a relevant duty of care to the deceased. The breach must be grossly negligent and a substantial part of it must have been in the way activities were managed by senior management.

The offence was created to deal with the problem of obtaining convictions of corporate bodies because of the operation of the identification principle, which required the prosecution to show that the offence was in essence committed by the “directing mind” of an organisation. This meant that, in some instances, because of the complexities of the decision-making process in big companies, it was not possible to identify a single individual—that is to say, the directing mind—with specific responsibility for the failing. The new offence allows an organisation’s liability to be assessed on a wider basis, providing a more effective means of accountability for very serious management failings across the organisation.

The majority of the Act came into force on 6 April 2008, with the exception of the custody provisions, whose implementation Parliament agreed would be delayed by three to five years. During the final stages of the Bill’s passage through Parliament, a lengthy discussion took place as to whether deaths in custody should be covered by the Act. After much debate, the then Government were finally persuaded to accept clauses that would extend the Act to the management of custody, but argued that custody providers would need time to prepare. A compromise agreement was reached to the effect that the custody provisions would be implemented between three and five years after the Act came into force. The Bill was passed on this basis. Custody providers have since indicated their readiness to implement the provisions in two reports to Parliament, published in 2008 and 2009.

The custody provisions do not create additional duties. All custody providers already owe duties of care to detainees. The commencement order makes these duties of care relevant for the purposes of the offence in the Act, which means that, once commenced, an organisation responsible for the management of custody, including a government department, could be convicted of corporate manslaughter if its management failings led to a death.

The commencement order simply illustrates the coalition Government’s long-standing commitment to commence a provision which we fought for during the passage of the Bill. We felt then, and still do now, that there is no good reason why a victim of a failing by a government department should not be afforded the same protection as the victim of a failing by a private corporation. We believe that the state has a particular responsibility to those for whom it has a duty of care, such as persons held in custody, and should lead by example. Having established that custody providers are ready to comply with the custody provisions in the Act, we are here today to debate commencement of the provisions at the earliest available opportunity.

We are here today also to debate an amendment order which brings military and customs facilities into the scope of the Act. This is an important amendment that ensures that the law will be applied consistently to all custody providers. The intention to extend the Act is nothing new; it was signalled in the annual progress report that I have already mentioned, and we have been assured by the relevant departments that the custody providers concerned are ready for implementation.

As with commencement, the question is not so much why extend but what possible reason can there be not to extend. I put it to the House that there is none. I believe that both orders constitute positive and necessary developments, and I trust that the members of this Committee will agree.

[Lord Thomas of Gresford]

My Lords, it is helpful to put this order into some context. The corporate manslaughter provisions were considered by the Independent Advisory Panel on Deaths in Custody. When one looks at the statistics on page 9 of the report, which was a joint Ministry of Justice and Home Office report, one sees that in 1999 there were 643 deaths in state custody. That number has reduced in the past two years to 483 and 366, but that is a lot of people who have died in custody. It is important that there should be corporate responsibility, not simply for claims of negligence but for criminal claims. We are very pleased that this order is now being introduced.

I have two questions for the Minister. One relates to service custody. Do I take it that the Ministry of Defence could be criminally liable for a death in service custody abroad? The other matter that concerns me is whether the private organisations that provide prison accommodation and in particular transport come within the provisions of the Act, so that any default on their part means that they will be subject to criminal liability as well as to liability in civil law.

--- Later in debate ---

[Lord McNally]

I thank all noble Lords who have contributed to the debate and for the general welcome that has been given to the orders.

On the question asked by my noble friend Lord Thomas of Gresford, Section 28 provides that the Act extends only to England, Wales, Scotland and Northern Ireland; it will not apply to Ministry of Defence facilities abroad. If I am wrong about that I shall write to my noble friend. However, I believe that to be correct.

On the issue of private providers, which was referred to by both the noble Baroness, Lady Royall, and my noble friend Lord Thomas of Gresford, the Act applies to contracted services. Contracted service providers of custody will continue to be responsible for their actions in delivering safe custody. The Act does not place new duties on them. We will retain residual responsibilities in relation to the management and monitoring of the contractual arrangements, and they will be covered by the Act in this respect. They will have the same duties of care.

On the issue of inspection, in respect of the Border Agency customs facilities, a review relating to the care of an arrested teenager was initiated as a result of a death in custody in 2007 and is due to be finalised by the Chief Medical Officer. Once the recommendations have been finalised, the UKBA will be reviewing its processes and initiating an implementation programme.

In respect of the MoD, the Army has reviewed its need for service custody facilities and in September 2010 endorsed some recommendations, including an immediate reduction of authorised unit custodial facilities from 67 to 22.

The points made by the Committee have been extremely relevant, not least the rather chilling figures of the number of deaths in custody. Over recent years—this applies also to the record of the previous Administration—there has been a consistent attempt by government to address the problems. My noble friend Lord Thomas will agree that the bald figures cover a range of reasons for death in custody. Nevertheless, in recent years the police, prison authorities and all those who have a duty of care have made a real effort to address the reasons for deaths and to prevent them wherever possible. They have changed techniques for dealing with violent prisoners, changed the furniture in cells and limited opportunities for suicides. They have introduced a whole range of activities and initiatives to tackle the problem.

There is no doubt that the Government, as the state, freely accept in this order the responsibilities that they imposed on the private sector with the initial Act. I remember my noble friend Lord Goodhart and others pressing these matters when we were in opposition and I am pleased that we are able to bring these orders together.

Criminal justice is devolved in Northern Ireland and the local Minister and Assembly have the relevant commencement powers under the Corporate Manslaughter and Corporate Homicide Act, which we understand the Assembly is looking at. I am the Minister in the MoJ responsible for contact with the devolved Assemblies and Administrations and I shall make sure that our views on and experiences of this aspect are made available to our colleagues in Northern Ireland.

[Lord Thomas of Gresford]

In relation to private provision of prison and transport facilities, what is the relationship between those private facilities and the department? Could the department resist a charge under the Corporate Manslaughter and Corporate Homicide Act on the basis that the responsibility has been contracted out? My noble friend may not be able to answer straightaway, but I would be grateful if he could clarify that at some stage.

[Lord McNally]

I certainly cannot answer that directly; I will have to write. It is an interesting point. I shall not mention providers by name, but if a private prison or a private transporter of prisoners was guilty of corporate manslaughter, would the line of responsibility run back to the MoJ? I take it that that is the point. It is an interesting point. I suspect that, on the one hand, the suggestion would be that the responsibility for the corporate manslaughter would be that of the provider and that the provider would be charged; on the other hand, there is the argument that the MoJ should never have given the contract to such a body in the first place. This is what makes this job both interesting and frightening at times. I shall write to my noble friend to clarify.

Motion agreed.

Corporate Manslaughter and Corporate Homicide Act 2007 (Amendment) Order 2011

Lord McNally Excerpts

Tuesday 5th July 2011 Grand Committee

Moved By

[Lord McNally]

That the Grand Committee do report to the House that it has considered the Corporate Manslaughter and Corporate Homicide Act 2007 (Amendment) Order 2011

Relevant documents: 23rd Report from the Joint Committee on Statutory Instruments

Motion agreed.

Prisons: HM Young Offender Institution Feltham

Lord McNally Excerpts

Wednesday 29th June 2011 Lords Chamber

[Lord Ramsbotham]

To ask Her Majesty’s Government how many of the recommendations of the public inquiry into the murder of Zahid Mubarek in HM Young Offender Institution Feltham, published on 29 June 2006, remain unimplemented.

[The Minister of State, Ministry of Justice (Lord McNally)]

My Lords, the National Offender Management Service has fully implemented 71 of the 88 recommendations made in the report of the Zahid Mubarek inquiry. Two recommendations were rejected at the time of the publication of the report. The remaining 15 recommendations were either partially implemented or have become obsolete as a result of other developments.

[Lord Ramsbotham]

My Lords, I thank the Minister for that reply. Nineteen year-old Zahid Mubarek was murdered in March 2000 by a known racist psychopath with whom he had been paired in a cell by prison staff. Three and a half years later, your Lordships took the unprecedented step of directing that there should be a public inquiry into the murder, resisted until then by successive Home Secretaries. Its report was published five years ago today, following which, for two years or so, the Home Office convened regular meetings with the Mubarek family to update them on the processing of the 88 recommendations. These meetings have ceased. To demonstrate to the family and to others who are interested that improving the treatment of and conditions for black and ethnic-minority prisoners remains on the agenda, I ask the Minister if he would be kind enough to publish not only the details of how many recommendations have not been implemented but also what action, or inaction, has been taken on each one of them.

--- Later in debate ---

[Lord McNally]

My Lords, I shall certainly do that. I have four or five pages of briefing on actions here and I shall put some of them in the Library. It is not a matter of inaction or refusal to implement; as I said in my initial reply, some of the recommendations have been bypassed by the implementation of other policies. It is certainly true that many lessons were learnt from this tragedy. Contact with the family continued, as the noble Lord said. The thrust and direction of policy that the inquiry initiated has gone on apace, in a way which, we hope, will avoid as far as humanly possible such a tragedy happening again.

[Lord Thomas of Gresford]

My Lords, exactly what is the position with regard to overcrowding at Feltham, which is one of the reasons that lay behind the tragic events to which the Minister referred?

[Lord McNally]

My Lords, I am not sure that there is overcrowding, unless one is talking about the ability to provide every prisoner with a single cell. That was one of the recommendations that could not be accepted, simply because the provision of single-cell accommodation would put such pressure on capacity that it could not be delivered. Both staff training and assessment before arranging cell sharing are much more thorough than before. As I said, we hope that this will avoid the kind of tragedy that the Mubarek murder revealed.

[Lord Elton]

My Lords, the report revealed the most woeful state of the paper trail, as it is called, of the documents that are supposed to go with prisoners but very often do not—many of the documents did not arrive. The report said that an important contributory factor related to the Learmont recommendation, made in 1995, that a central electronic database for prisoner security information should be established. Has that been fully established and, if so, with what results?

[Lord McNally]

I am not sure whether that has been fully established, but I will write to my noble friend on the specifics of whether the 1995 recommendations have been fully implemented. Sometimes with these reports, there is a gap between full implementation and actual practicality and resources. However, I know that, in terms of assessing prisoners for cell sharing, and indeed in dealing with prisoners during their time in custody, there has been much improved sharing of information among the various agencies. In the host prison, from the governor downwards, there is now as full as possible an assessment of the prisoner’s susceptibilities that would make it better or not for them to be cell sharers.

[Lord Roberts of Llandudno]

My Lords, following the suicide of failed asylum seekers, what assessment is there of the possibility of such suicides taking place?

[Lord McNally]

My Lords, there is constant assessment of suicide risk for anyone who is held in custody. Certainly as far as I understand them, these assessments are very thorough in trying to avoid suicide. On the specific point, which goes slightly wide of the Question, I will look at the issue and write to my noble friend.

[Lord Corbett of Castle Vale]

Can the Minister confirm that there has been a welcome reduction in the number of convicted prisoners in young offender institutions? Is it the department’s policy, over time, to try to achieve in so far as is possible single-cell occupancy by young offenders?

[Lord McNally]

I do not think that I can make that commitment from the Dispatch Box. In part, that is because part of the advice that we get—this relates back to the suicide issue as well—is that the assessment made of young offenders sometimes shows that cell sharing could be of benefit in the circumstances, rather than leaving them in isolation. I make no bones about the fact that it is partly a matter of the resources that would be required for single-cell accommodation, but we also get strong professional advice that, in some circumstances, cell sharing can be of benefit to the young people concerned.

[Lord Campbell of Alloway]

My Lords, what can be obsolete as a matter of policy in respect of the law of murder?

[Lord McNally]

For example, some of the recommendations in the report related to cell furniture, which had already been changed by the time that the report came out. Part of the difficulty was that some cell furniture could too readily be used for violence. There were changes to the design of cell furniture—for example, bolting cell furniture to the floor so that it could not be so easily used—so that, by the time that the report came out, the recommendation on cell furniture was obsolete.

Social Welfare Law

Lord McNally Excerpts

Wednesday 29th June 2011 Lords Chamber

[Lord Bach]

To ask Her Majesty’s Government what are their proposals for the future of social welfare law.

[The Minister of State, Ministry of Justice (Lord McNally)]

My Lords, our proposals for the future of social welfare law were contained in our response to the consultation paper, Proposals for the Reform of legal aid in England and Wales, made on 21 June. We announced that we would retain legal aid for the highest priority cases, including cases where a person is homeless or at immediate risk of homelessness or to address housing disrepairs that pose a serious risk to life or health and for community care cases. We have decided that legal aid will no longer be routinely available in other social welfare law matters, except for claims currently funded relating to the contravention of the Equality Act 2010.

[Lord Bach]

My Lords, I thank the noble Lord for his reply. A better name for social welfare law would be poverty law. Often through CABs, law centres and private solicitors, this legal aid goes to giving legal advice to the poor and marginalised on legal problems around housing, debt, employment and welfare benefits. The Government, as we have just heard, intend to decimate this type of cost-effective legal aid. Does the noble Lord agree with the reported remarks of the noble and learned Baroness, Lady Hale, that these changes will have,

“a disproportionate effect upon the poorest and most vulnerable in society”?

Does he also agree that this removal of access to justice—because that is what it is—is precisely what the late noble and learned Lord, Lord Bingham, meant when he wrote that,

“denial of legal protection to the poor litigant who cannot afford to pay is one enemy of the rule of law”?

[Lord McNally]

My Lords, under our proposals, legal aid will be retained in the highest priority housing cases, where a person’s home is at immediate risk, for homelessness, serious disrepair, unlawful eviction, orders for the sale of the home, and asylum support cases relating to accommodation. Legal aid will be available in debt matters where a person’s home is at immediate risk. We will still be spending about £50 million a year on this section of legal aid.

I have read the comments of the noble and learned Baroness, Lady Hale. I have said from this Dispatch Box that if you have a policy that is aimed at the poorest in our society and you cut the budget, of course there will be an inevitable impact. But in trying to develop this policy we have tried to minimise that impact and focus our resources on those most in need.

[Lord Carlile of Berriew]

My Lords, would my noble friend like to take a short journey down to the Lambeth County Court and other comparable courts in London, Manchester, Sheffield and other cities, where he would find if he spent half a day there that the only way in which to get your house repaired is to sue the local council? All other measures to obtain house repairs are not succeeding. He would then perhaps realise that limiting legal aid to quite the extent which the Government are ambitious to limit it is going a step too far.

[Lord McNally]

Well, I hear what my noble friend is saying. The department was faced with some very hard decisions on a £2 billion cut in a department which, as I have said before, has expenditure on only four areas—prisons, probation, legal aid and on the administration of justice. We have tried to focus where we can on areas of need. I was very interested in the editorial in the Guardian on legal aid, which was headed, “Unjust cuts”. In the course of that editorial, it said:

“It is now being examined for the eighth time since the Children Act 1989”.

The noble Lord knows very well that his own Administration were looking hard at legal aid and how to cut it. It went on:

“The need for reform, and for a more cost-effective system, is undisputed … Professionals acknowledge that too many of these cases come to court, and welcome the proposal for greater use of mediation … Change is needed. There are savings to be made”.

That is under the title of “Unjust cuts”. Those are the realities that we are facing.

[Baroness Lister of Burtersett]

My Lords, there is considerable disquiet among welfare law agencies about the impact of the withdrawal of legal aid from welfare benefits law at the very time when that law is to be changed significantly. Can the Minister therefore please advise the House as to what steps the Government will take to ensure there is adequate independent advice and assistance for all those affected by the welfare reform legislation?

[Lord McNally]

The hope and the intention is that we can give further assistance to those who are giving advice. One of the analyses we make of this area of law—this goes partly back to the question asked by my noble friend—is that it is not necessarily legal advice that is needed. There may be alternative forms of advice to enable people to manage their way through these difficulties. These problems have been raised with us and we will continue to keep them under review. I take the point that the noble Baroness has made.

[Lord Phillips of Sudbury]

Will my noble friend kindly think again about this whole issue because it really is a case of penny wise, pound foolish? The citizens advice bureaux, which deliver help to 2.1 million people a year and are mainly volunteer manned, reckon that for every £1 of government subsidy they save the Exchequer £8 in welfare advice. How can it conceivably make sense, therefore, to go ahead with cutting their subsidy from £27 million this year to £7 million next year?

[Lord McNally]

My Lords, perhaps I can answer both that question and the one that the noble Baroness has just posed by saying that the Government recognise the important role played by not-for-profit organisations and citizens advice bureaux. We are working with the sector, and across Government, to ensure that the implementation of government reforms helps to improve the efficiency and effectiveness of advice services available to the public. My right honourable friend the Lord Chancellor will by now, I hope, have announced in another place that we will be providing additional funds of about £20 million in this financial year to help achieve this. We will continue discussions with CABs and not-for-profit organisations about future funding.

Gender Recognition (Approved Countries and Territories) Order 2011

Lord McNally Excerpts

Wednesday 29th June 2011 Lords Chamber

Moved By

[Lord McNally]

That the draft orders laid before the House on 26 April, 17 May and 23 May be approved.

Relevant documents: 20th and 23rd Reports from the Joint Committee on Statutory Instruments, considered in Grand Committee on 27 June.

Motions agreed.

Gender Recognition (Approved Countries and Territories) Order 2011

Lord McNally Excerpts

Monday 27th June 2011 Grand Committee

Moved By

[Lord McNally]

That the Grand Committee do report to the House that it has considered the Gender Recognition (Approved Countries and Territories) Order 2011.

Relevant Documents: 20th Report from the Joint Committee on Statutory Instruments.

[The Minister of State, Ministry of Justice (Lord McNally)]

My Lords, the order before us today revokes and replaces an order made in 2005 regarding the legal recognition of transsexual people in the gender they live in permanently, their acquired gender. The order prescribes overseas countries and territories with gender recognition processes equivalent to our own. The purpose of this draft order is to enable transsexual people who have gained legal recognition of their acquired gender overseas to apply for legal recognition in the UK through a simplified application process. The order prescribes countries and territories that are approved under the Gender Recognition Act 2004 for the purpose of this application process.

Members of the Committee may find it helpful if I outline the purpose of the Gender Recognition Act before considering this order in more detail. The Gender Recognition Act 2004 enables transsexual people to change their legal gender and gain the rights and responsibilities of their acquired gender. This means, for example, that a transsexual woman—that is, a transsexual person who is born a male but who subsequently transitions to live permanently as a woman—can gain the right to marry a man, or to form a civil partnership with a woman, as well as the right to claim state pension at the pensionable age for women. The Act sets out a stringent set of criteria which all applicants must meet in order to be granted a legal change of gender. Applicants for gender recognition must satisfy an independent judicial body established by the Act, the gender recognition panel, that they meet these criteria.

First, the person must have or have had gender dysphoria, which is the recognised medical condition of feeling oneself driven to present oneself in the appearance of the opposite sex. Secondly, the person must have lived permanently in their acquired gender for the two years prior to the application being made. Thirdly, the person must intend to live in their acquired gender until death. Successful applicants who submit evidence to show that they meet these criteria receive a gender recognition certificate.

Many other countries have their own gender recognition system, and for this reason the Act provides for an alternative application process for those who have gained legal recognition overseas. The intention of the overseas application process is to minimise bureaucracy without compromising the integrity of the criteria set out in the Act. When the Act was passed, Parliament was mindful of the danger of creating a system which might allow transsexual people who could not meet the criteria in the Act to effectively sidestep those criteria. Such people might travel overseas to obtain gender recognition in a country with weaker criteria and then obtain legal recognition in the UK by virtue of that overseas recognition. This would have undermined the robust criteria in the Act agreed by Parliament.

The Act therefore contains a power that puts on a statutory footing the countries and territories which are approved for the purpose of the overseas application process. Applicants submitting an application through this alternative application process must satisfy the gender recognition panel that they have obtained legal recognition in one of those approved countries or territories. An order made in 2005 sets out the countries and territories that are currently approved for the purpose of the overseas application process. At the time that the order was made, those countries and territories were deemed to have a gender recognition system equivalent to our own.

When the 2005 order was approved, it was the view of Parliament that the list of countries and territories approved under the Gender Recognition Act 2004 would have to be amended as countries or territories established new schemes for legal recognition. Gender recognition is a relatively new and fast-developing area of law, and some countries and territories have indeed introduced new systems for legal recognition of a gender change since 2005. There are also some jurisdictions that have amended their existing gender recognition systems. Quite simply, the 2005 order is out of date.

--- Later in debate ---

[Lord Bach]

My Lords, I can be brief. The Opposition support the order. I thank the Minister and other speakers in the debate; I thank him particularly for the clear way in which he outlined the order. I ask him to respond to the interesting points made by the noble Lord, Lord Moynihan, about the position as regards sport.

This is clearly an affirmative order; it has to come before the Committee. There will be changes in the future, of course; I hope that other countries come on to the list rather than countries coming off it. Will it really be necessary to bring that to a Committee sitting in this House and the other place, or is there any way around that? I do not know whether the previous Government willingly made this an affirmative order or whether it was forced on them by the then Opposition; it could have been either. In my view, if this is the sort of order to come forward, it would be much better for it not to be affirmative.

[Lord McNally]

My Lords, I thank the speakers who have participated in the debate. The noble Lord, Lord Lester, has a long and proud history in such legislation. Like him, I welcome the fact that we live in a world of growing tolerance in this area, which for the individuals concerned needs tolerance and understanding.

The noble Lord, Lord Moynihan, raised an important point and one on which I will try to give some clarification. The effect of a UK gender recognition certificate is the same regardless of whether it is obtained under the overseas application process or the standard application process. The overseas application process simply enables a transsexual person to obtain legal recognition in the UK through a simplified process if they have already satisfied authorities overseas that they live fully and permanently in their acquired gender. It does not enable a person to be treated in the UK as they would be in their home state. The effect of a gender recognition certificate is subject to UK law. That includes a transsexual person’s right to compete in competitive sporting events in the UK.

As originally drafted, Section 19 of the Gender Recognition Act made it lawful to prohibit a transsexual person with a gender recognition certificate from participating in a sporting event in their acquired gender if the restrictions were necessary to secure fair competition or the safety of other competitors. The Equality Act 2010 presented an opportunity to replace Section 19 and an overlapping provision of the Sex Discrimination Act 1975. After all, the Gender Recognition Act is not intended to protect transsexual people from discrimination; rather, it provides a mechanism whereby a transsexual person can obtain a change of legal status that reflects the gender in which they live permanently. Protection from discrimination lies in equality legislation. For this reason, Section 19 of the Gender Recognition Act and Section 44(2) of the Sex Discrimination Act were repealed and their effect replicated in Section 195(2) of the Equality Act. That provision makes it lawful to restrict participation of transsexual people in separate sporting competitions for men and women if this is necessary to secure fair competition and the safety of competitors. The participation of a transsexual person from overseas in a competitive sporting event in the UK is subject to these provisions. This remains the case even if that person has obtained a UK gender recognition certificate. I hope that that gives the noble Lord, Lord Moynihan, the clarity and reassurance that he sought. I know how important that is.

I was intrigued by the final question of the noble Lord, Lord Bach. We would have to amend the procedure for future orders but it is a valid point. I suspect that, at the time, Parliament was still getting used to this whole idea. We may need to look at the procedure and discuss matters through the usual channels to see if it can be done without the necessary affirmative resolution. Perhaps this is something that will only come before the House once every four or five years as updates are made. It is a valid point and I will take it back.

[Lord Lester of Herne Hill]

In looking at this again, one might look at the Civil Partnership Act. My memory is that that Act, with similar provisions, does not require the affirmative procedure every time we recognise another jurisdiction in the way that we are doing here. It might just be worth looking at. Of course, my memory is always faulty but I have just an idea that it might be a way of dealing with that. It would need amendment but I can think of no logical reason for treating civil partnerships differently from general recognition of equality.

[Lord McNally]

I always know that a distinguished QC saying, “My memory might be faulty,” means that he is absolutely accurate in what he says. Again, that is an extremely helpful suggestion. When I take this back to the House authorities, the point that the noble Lord, Lord Bach, has made and the suggestion from my noble friend Lord Lester may be the way forward.

[Lord Moynihan]

Before the Minister concludes his remarks, I thank him for clarifying the position and emphasising the fact that governing bodies of sport would be entitled to exclude a male-to-female transsexual person if competitive parity of the safety of other competitors was at stake. I should have declared my interest as chairman of the British Olympic Association and apologise to the House for not having done so.

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

Lord McNally Excerpts

Monday 27th June 2011 Grand Committee

Moved By

[Lord McNally]

That the Grand Committee do report to the House that it has considered the Legal Services Act 2007 (Appeals from Licensing Authority Decisions) Order 2011.

Relevant Documents: 23rd Report from the Joint Committee on Statutory Instruments.

[The Minister of State, Ministry of Justice (Lord McNally)]

My Lords, I ask that the Committee consider these two orders together. Both were laid before the House on 17 May and, subject to parliamentary approval, the orders will be made by the Lord Chancellor under the Legal Services Act 2007 on the recommendation of the Legal Services Board.

The Law Society and the Council for Licensed Conveyancers, both of which are currently approved regulators, have applied to become licensing authorities. The role of licensing authorities is to license legal service providers which are wholly or partly owned or controlled by non-lawyers—known in the 2007 Act as alternative business structures or ABSs. This will be possible only when Part 5 of the 2007 Act is commenced in full later this year.

Although not connected in subject matter, the two orders will allow the society and the council to put in place the necessary arrangements in anticipation of the new licensing regime. The order to be made under Section 69 of the 2007 Act will also make improvements to the two bodies’ existing regulatory arrangements.

Let me turn first to the Legal Services Act 2007 (The Law Society and the Council for Licensed Conveyancers) (Modification of Functions) Order 2011. The purpose of this order is to make changes to particular aspects of the functions of the society and the council to enable them to improve their regulatory arrangements both as approved regulators and, if designated as such, as licensing authorities. Since both are statutory bodies, those changes can be made only by legislation—in this case, Section 69 of the 2007 Act.

Let me explain what regulatory arrangements the order changes and why. Article 4 amends the Administration of Justice Act 1985 to allow the society to make rules requiring firms of solicitors to pay periodical fees to the society unconnected to any application for authorisation. This will allow the society to authorise solicitor firms on an indefinite basis. At the moment, the society can charge fees only when an application for authorisation or an application for renewal of authorisation is received, which is usually annually. Under the ABS regime in the 2007 Act, licensing authorities can charge periodic fees and license ABS bodies indefinitely. The change is intended to make the society more efficient and effective by harmonising the arrangements applicable to both types of firms, allowing it to operate a single system of regulation for both ABS and non-ABS bodies. Article 7 of the order makes similar provision for the council.

Article 5 gives the society the power to make compensation rules in relation to licensed bodies for a transitional period by extending its existing powers under Sections 36 and 36A of the Solicitors Act 1974. Without this power, the society would have to develop a separate set of compensation arrangements for ABS bodies. The society is currently reviewing its compensation arrangements for all the bodies that it regulates and it considers that it would be disproportionate and inefficient to set up separate compensation arrangements for ABS bodies while this review is under way. By December 2012, when these provisions come to an end, new long-term compensation arrangements will be in place for all types of solicitor firms, including ABS bodies, following the conclusion of the review.

Article 6 will allow the society to make rules about the recovery of costs in its role as a licensing authority. Such rules allow the costs of investigating a breach of its licensing arrangements to be recovered from the ABS body or persons closely connected to it—for example, its head of legal practice. Article 10 makes equivalent provision in relation to the council’s regulation of ABS bodies to ensure consistency between different licensing authorities.

Article 8 extends the council’s power to make rules about compensation arrangements to any reserved legal activity in relation to which it has the statutory power to act as a regulator. The council has applied to extend the reserved legal activities that it can regulate and these provisions will allow the council to extend its compensation fund to cover those additional reserved legal activities if its application is successful.

Finally, Article 9 amends the constitution of the council to change the balance of membership so that it will have a lay majority. At the same time, it changes the definition of “lay member” to exclude all lawyers, not just licensed conveyancers, while allowing any lawyer working in a firm regulated by the council to become a lawyer member of the council. Finally, it removes the specific requirement that two members are appointed to represent consumer interest. This will allow more flexibility in the range of interests represented by its lay membership while still allowing consumer interests to be considered.

Under Section 62(2) of the 2007 Act, there is a requirement that the Lord Chancellor may make an order under Section 69 only if the Legal Services Board has made a recommendation to do so. As required under Section 70 of the 2007 Act, the Legal Services Board has consulted widely on the provisions included in the order and on the draft order itself. It has worked closely with the society and the council to ensure that the order reflects their requirements before making its final recommendation to the Lord Chancellor. Both the society and the council consented to the recommendations being made, as is required in the 2007 Act. The Lord Chancellor has agreed that these amendments will benefit both bodies in terms of discharging their regulatory duties, both as approved regulators and, if designated as such, as licensing authorities. The Lord Chancellor would be content and has agreed to make this order should Parliament approve it. I therefore commend this first order to the Committee.

The purpose of the second order is to modify the functions of the First-tier Tribunal to hear and determine appeals from decisions made by the council in its capacity as a licensing authority, should it be designated as such. This order contains three key provisions. It modifies the functions of the First-tier Tribunal to enable it to hear appeals from decisions made by the council under Part 5 of the 2007 Act or the council’s own licensing rules. Secondly, it sets out the order that the First-tier Tribunal may make on appeals from decisions made under the council’s licensing rules; for example, it may uphold, substitute or quash the decision made by the council. The order that the tribunal will be able to make on an appeal against a decision made under the 2007 Act is set out in the Act itself. Finally, it modifies the 2007 Act so that appeals from decisions of the First-tier Tribunal can be made to the Upper Tribunal in accordance with the Tribunals, Courts and Enforcement Act 2007.

Under the 2007 Act, the Legal Services Board may only approve an application to become a licensing authority if there would be a body with the power to hear and determine appeals against decisions the applicant could make in its capacity as a licensing authority. The council has chosen to use the First-tier Tribunal as the appellate body for its licensing decisions rather than using its existing regulatory appeal body, the discipline and appeals committee. This order is needed for there to be an appropriate appellate body for the council’s licensing decisions. Without appropriate appeal arrangements, the council cannot be designated as a licensing authority. The Legal Services Board has obtained the consent of the Tribunals Service and the council to this order as required by the 2007 Act.

Following discussions between the Tribunals Service, the council and the Legal Services Board, it is anticipated that appeals from the council’s licensing decisions will be heard by members of the general regulatory chamber of the First-tier Tribunal, who have experience in regulatory matters. The licensing authority decisions which can be appealed are either set out in the Act itself, in Section 96—“Appeals from financial penalties”—and Schedule 13, or in the council’s licensing rules. Appealable decisions would include, for example, the refusal of an application for a licence and refusal to designate as a head of legal practice. This is in line with guidance issued by the Legal Services Board setting out what licensing decisions should be appealable. A memorandum of understanding between the Legal Services Board, the Tribunals Service and the council will be put in place and the arrangements monitored and reviewed at the end of the first year of operation should the council be designated as a licensing authority. As noble Lords might expect, there will be additional costs for the First-tier Tribunal and the council. The council has agreed to meet the establishment and running costs of the tribunal in setting up the new function. If the council is designated as a licensing authority, it will recoup the costs through the fees that it will charge to licensed ABS bodies.

--- Later in debate ---

[Lord Bach]

My Lords, I served under the noble Lord, Lord Hunt of Wirral, on a Joint Committee looking at the draft Bill. I was not a Minister at the time that the Bill went through, although I took some part in it from the Back Benches, so while I have some form on this, I do not have as much the noble Lord. I thought at the time, and I think even more strongly now, that the Bill was a very significant piece of legislation indeed, one that is already beginning to have genuinely profound effects on all three branches of the legal profession.

I congratulate the board on what it is doing. It has done a fine job until now, but as with all changes, and some of these are fairly revolutionary, it is important that the details are right and particularly important that they must be introduced sensitively. That is why I strongly support what has been said by the noble Lords, Lord Thomas of Gresford and Lord Hunt of Wirral, about the point of the Rehabilitation of Offenders Act. I, too, will ask the question because it really is essential that the order is brought forward as soon as possible, and therefore before alternative business structure firms become a reality. Indeed, I am not going to be as shy as the noble Lord, Lord Hunt, about quoting the Minister’s colleague, who was an opposition spokesman when the Bill passed through the House of Commons. He said this:

“The effectiveness of fitness-to-own provisions is a crucial element of the public protections that need to be in place before external ownership of ABS firms can safely be permitted. It is essential to avoid the spectre of law firms being owned by criminal elements”.—[Official Report, Commons, Legal Services Bill Committee, 22/6/07; col. 300.]

If that was true then, it is certainly true now, and he is in a position, as is the noble Lord, to do something about it. It is important that the order amending the exceptions to the Rehabilitation of Offenders Act is brought forward, and we look forward to the noble Lord telling us, when he replies to the debate, precisely when it will happen. We do not oppose either of the orders, and—again, rather late in the day—I thank the noble Lord for introducing them so clearly.

I want to say a little more before sitting down. On the statutory instrument concerning appeals, as I understand it the Law Society’s concerns were around the point that appeals from ABS firms, which were regulated by the Solicitors Regulation Authority, would go to the First-tier Chamber, whereas appeals and decisions from other law firms would go to the Solicitors Disciplinary Tribunal, the SDT. Now the SRA has agreed to use the SDT for appeals to do with alternative business structure firms. That was apparently agreed in March this year, but there is some surprise that no statutory instrument has yet appeared to put that decision into effect. Finally—as I am sure the Minister will be relived to hear—when will that statutory instrument be brought forward, and why has there been a delay? I congratulate the Minister on bringing the orders forward.

[Lord McNally]

My Lords, I have said before that, as a non-lawyer there is nothing more daunting than facing the noble Lord, Lord Bach, who, as he confessed, was the Minister responsible when the key legislation was—

[Lord Bach]

I am sorry to interrupt. The noble Lord was not listening with his usual attention, or else I was particularly inarticulate. I served on the Joint Committee under the noble Lord’s chairmanship as a Back-Bencher, and was indeed a Back-Bencher when the legislation went through, so I cannot be held to blame or praise for the legislation itself.

[Lord McNally]

I now fully understand. I will have to look at the noble Lord’s CV: I had always assumed that he had ministerial responsibility going back well over a decade.

[Lord Bach]

I am delighted that the noble Lord assumed that, but he was wrong. There was a gap in the middle.

[Lord McNally]

In any case, both the noble Lord, and the noble Lord, Lord Hunt, fill me with fear on this.

I am sorry about presenting these matters as separate orders; I was only following orders, as they say. I am pleased that the contributions have been, in the main, supportive and that it is agreed that the initial legislation and what we are trying to do now take us forward into a new era of legal service provision. In that respect, I was particularly reassured by the fact that the noble Baroness, Lady Hayter, from her position as spokesperson or defender of consumers in these areas, found them useful.

My heart, too, sank when I saw that, despite all the consultation and so on, we had ended up with two lines of solutions, whereas one would be much more preferable. We will continue to use our good offices to encourage regulation and lines of appeal in this area to be as simple and clear as possible. I share with the Committee that, the other day, I had the great honour of meeting the Vice-Minister of Justice for the People’s Republic of China. In a matter of general discussion, he asked me quite out of the blue if I could explain to him the regulatory system for our barristers and solicitors. The brief mentioned about nine different organisations, with any multiple of them having lines of appeal. I ended up by assuring the Vice-Minister of the absolute integrity and independence of the various branches of our legal profession and that I would write to him.

[Lord Bach]

That was the question I was going to ask. I thought the noble Lord would say that he would write to him.

[Lord McNally]

Yes, in Mandarin and with a suitable chart. We hope that the orders go some way along the line of trying to get some order into these things.

On the matter of the missing orders, they are being drafted. We are undertaking further consultation. At this stage, the draft standing order relating to the society is not finalised. Until it is, it cannot be approved to be laid before Parliament. As the order is subject to the affirmative resolution procedure, it will require parliamentary debate and approval before the order can be made. We will be back, folks.

Quickly, on the Rehabilitation of Offenders Act, that again is under review. The point that was made is being taken on board. The Law Society Council will have arrangements in place to consider fitness of owners. They are set out in its licensing rules. The Law Society Council has asked for the Rehabilitation of Offenders Act to be extended. An order has been laid before the House adding the head of legal practices and head of financial administration to be covered by the law. Again, I note what has been said here. These are serious matters and areas that need to be tidied up as we go through the process of bringing the ABSs on board and getting the right lines of appeal.

I am just seeing if there is anything else that I have either not understood or not covered. A draft order will be debated in the House next week. We are aware of the additional requirements sought for owners and managers. The matter is being discussed at the moment so, again, watch this space. I thank the contributors to the debate. I hope that this has been enough clarification. If I have missed things I will write to noble Lords.

My noble friend Lord Thomas raised the point about what the solicitors did not like. The Law Society did not sign up because of a principal concern that changes were needed to the First-tier Tribunal general regulatory chamber rules to allow a general power to award costs. The LSB has asked the tribunal procedures committee to consider changes to its costs rules but, on 1 March 2011, the committee came to the preliminary view that the rules in their current form were adequate to determine whether one party or another should pay costs. The Law Society has not consented to this order. As was said, it has made provision in its proposed licensing rules for the Solicitors Disciplinary Tribunal to be the appellate body for its licensing appeals.

[Lord Thomas of Gresford]

Before the Minister leaves that point, will he give us an assurance that he will take on board the point made by the noble Baroness, Lady Hayter, that it is quite wrong that there will be one way of appealing for ABS firms and another for Law Society-regulated firms? As she said, it is very important that there should be a common body that creates precedents on which people in future can advise and act.

[Lord McNally]

As a lay man, I was impressed that it was a consumer champion who made that point. Certainly I will take it on board. I know that in trying to get agreement one has to make sure that the profession is protected and that there are proper guarantees that these matters will not be repeatedly revisited. It is also important that, in getting through the negotiations, consideration is given to the consumer and to securing the clearest and most understandable forms of regulation. As I said when I read my brief, my heart sank a little when I saw that agreement had not been reached and that the bodies were going off in different directions. That was not the initial aim of the Act or the direction of travel that we want. Therefore, I hope that those responsible in the professions will note what has been said in this debate. I will report back to noble Lords and see whether we can help push these things in the right direction.

Motion agreed.

Legal Services Act 2007 (The Law Society and The Council for Licensed Conveyancers) (Modifications of Functions) Order 2011

Lord McNally Excerpts

Monday 27th June 2011 Grand Committee

Moved By

[Lord McNally]

That the Grand Committee do report to the House that it has considered the Legal Services Act 2007 (The Law Society and The Council for Licensed Conveyancers) (Modifications of Functions) Order 2011.

Relevant Document: 23rd Report from the Joint Committee on Statutory Instruments.

[The Deputy Chairman of Committees (Baroness Gould of Potternewton)]

Moved formally?

[The Minister of State, Ministry of Justice (Lord McNally)]

Moved formally. Sorry.

Motion agreed.