Non-Contentious Probate (Fees) Order 2018

Debate between Baroness Hamwee and Baroness Browning

Tuesday 18th December 2018 Lords Chamber

[Baroness Hamwee (LD)]

My Lords, I too declare an interest, as a solicitor. I have not practised for some time, so I will not hand out cards suggesting that colleagues consult my old firm. It was the suggestion about advances made by solicitors from their office accounts that consolidated my interest in this topic. However, I want to make a wider point and to ask one very specific question.

I believe that tax is a good thing. It is the price of a civilised society and so on but it must be transparent. It is a question of trust and honesty on the part of government. It is all part of the very topical but for ever issue of citizens’ trust in the Government and how that Government raise money. It is also part of joining up across departments and subject areas, and asking departments to look for their own income generation in the way that this proposal does. Income generation is important but it is not helpful if it is completely siloed.

The Minister refers to Section 180 of the Christmas tree Act, but I rather think that the public—I do not include the subset who understand the origin of the probate service and the family courts—would find it not immediately obvious that fees for the grant of probate should finance the court service generally. They might not say that they are doubtful about whether it is intra vires, but questions will be raised in their minds.

As I understand it, currently there is full recovery of the costs of the probate service. The Minister has referred to improvements to the service, and those must be welcome, but I believe that I have read somewhere that they will lead to savings, not costs, although I dare say that an initial investment is involved. As has been said, there is no option but to use the probate service, which adds to the question of whether one is paying for a service or paying a levy, and that perception is compounded by the administration being the same, regardless of the value of the estate.

My specific question is about Section 180. Subsection (3)(a) requires the Lord Chancellor to have regard to,

“the financial position of the courts and tribunals for which the Lord Chancellor is responsible, including … costs incurred by those courts and tribunals that are not being met by current fee income”.

The subsection goes on, joined by the word “and”, to paragraph (b), which states that the Lord Chancellor must also have regard to,

“the competitiveness of the legal services market”.

I do not believe that there is a market in grants of probate administration. I will be grateful if the Minister can explain to the House how that provision has been considered, what regard the Lord Chancellor has had to the competitiveness of the legal services market and what conclusion the Lord Chancellor has reached.

[Baroness Browning (Con)]

My Lords, I agree with much of what has been said this afternoon. In my mind, this enhanced fee is a death tax, and I should like to take this opportunity to shine a light on what, in practical terms, this will mean for a particular group of people—the people in the middle. It is always the people in the middle whom one has to pay attention to. Clearly, it is a very good thing if people at one end of the scale are taken out of the tax or fee altogether, and I suspect that there will not be a lot of sympathy for those with multimillion pound estates having to pay an additional 0.5% charge. However, we should look at how the scale has changed for an estate of about £500,000. At £500,001 the fee goes up from £215 to £2,500, which is quite a considerable hike. Who are these people with estates of, say, £500,000, who will be subject to this fee? What do they look like? What sorts of lives do they lead? That is a lot of money.

We know from the Lord Chancellor’s briefing to us that about 25% of an average estate is in cash or liquid assets. We can assume that on a £500,000 estate, £125,000 would be in cash or investments—money saved over a lifetime, perhaps some capital taken from a pension after a hard-working life—and a family home of some £375,000. Across the country, that would be regarded as a fairly modest estate. In fact, only a few years ago people were throwing up their hands in horror that those who had bought their council houses were now subject to inheritance tax.