Non-Contentious Probate (Fees) Order 2018

Lord Hunt of Wirral Excerpts

Tuesday 18th December 2018 Lords Chamber

[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.

[Lord Hunt of Wirral (Con)]

I declare my interests as set out in the register, particularly my having been a practising solicitor for more than 50 years. During that time I have dealt with many estates and made many applications to the probate registry. Looking around the Chamber, I see several of your Lordships who have very kindly given me the honour of naming me as one of their executors. I am not seeking any further orders this evening, but this year, for example, I have been in constant touch with the probate registry in dealing with the estate of one of our colleagues who, sadly, died a little while ago.

I want to say at the outset how much I compliment the staff of the principal registry and the district registries, who give a service second to none. I want the House to be aware that they give considered, careful advice and guidance to anyone who contacts the registry. They are to be commended on that first-class service.

--- Later in debate ---

[Baroness Meacher]

Does the noble Lord accept that under the Government’s own guidance this will in fact be a tax, and that taxes should be raised in primary legislation and debated properly in both Houses of Parliament?

[Lord Hunt of Wirral]

No doubt the Minister will give a more considered reply, but I certainly do not regard it as a tax, particularly as it is described as, and actually is, an enhanced fee. I have to admit that I was troubled by the original proposal, but the Government have listened to those concerns and have significantly reduced the enhanced fees from that proposal.

[Lord Deben (Con)]

I genuinely ask out of misunderstanding: surely the point about probate fees is that you have to pay them, whereas other cases in the courts are of a wholly different kind. This is a payment you have to make if there is to be probate. Would my noble friend agree that it would be odd if we had a fee for the registration of birth—which is also compulsory—that was connected with the amount of money that the person registering would be able to pay? It seems odd to call a fee something which is connected with the value of something you have to do. It is the having to do it which makes it different from any other court situation that I can think of.

[Lord Hunt of Wirral]

I can think of many other court situations; I anticipate that the Minister will have a great list for my noble friend Lord Deben. There are many occasions on which you pay a fee; at the end of the day, it is intended to cover the costs of the system. This goes slightly further, I agree, but within a ring-fenced system—if I could have my noble friend’s attention—the money cannot go just anywhere. It has to go toward enhancing the Courts & Tribunals Service. I think this is the right way forward to ensure we have the access that I described earlier. I warmly commend my noble friend the Minister and I support his order.

[Lord Brown of Eaton-under-Heywood (CB)]

My Lords, this order relies above all on Section 180 of the Anti-social Behaviour, Crime and Policing Act 2014. As that name perhaps suggests, it was a great Christmas tree of an Act. One recalls its passage all too well; it occupies no fewer than 231 pages of the Queen’s Printers’ copy, with 186 sections and 11 schedules.

This House discharges its scrutiny function very carefully, with great conscientiousness, but perhaps, just occasionally, Homer nods; did we perhaps nod here as we reached towards the end of this mammoth Bill? Of course, we must now construe and apply Section 180 as enacted. That said, while Section 180 contains apparently no limits whatever to the extent of its permissible use, provided always that the excess funds raised are devoted to the efficacy of the Courts & Tribunals Service, ought we not to construe it somewhat fastidiously so as to guard against its use for what is essentially a tax-raising exercise?

Of course, cross-subsidisation is permissible, but is it no less obviously the case that a point will come at which what is purportedly an enhanced fee with a view to cross-subsidisation becomes truly a tax, improperly raised without primary legislation? Suppose that the proposed maximum here of £6,000 were, not the £20,000 suggested last year but, say, £60,000 for estates over £20 million. What would we say? We know that £145 million is to be raised by this order for cross-subsidisation, but why only £145 million? The deficit in the service is something like £1 billion, so why should £500 million not be raised for cross-subsidisation?

Is the proposed schedule truly a schedule of fees or does it at some point, disguised as such, descend in reality into a schedule of taxes? That, I would suggest, is the question for your Lordships. I shall listen carefully to the Government’s arguments—indeed, to all the arguments. Only at the end of the debate shall I decide how to vote. I recognise that that may be regarded as a somewhat unusual approach in this House, but I have a certain nostalgia for my earlier occupation.