PUBLIC TRUSTEE OFFICE: COST OF PROPOSED CHANGES (Hansard, 20 September 1972)

LORD PEDDLE
My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.

§ THE LORD CHANCELLOR (LORD HAILSHAM OF SAINT MARYLEBONE)
My Lords, dealing first of all with the first of the three subordinate questions, the costs to public funds about which the noble Lord asks will depend on the outcome of discussions with the corporate trustees which are not yet completed, and the extent to which settlors and beneficiaries avail themselves of the option to transfer their business from the Public Trustee. This cannot be known with certainty until some time after the necessary legislation has been passed. The total amount of withdrawal fees waived at the discretion of the Public Trustee could amount to about £4 million, although receipts of that order would, of 1112 course, have been spread over a great many years if there had been no change of policy.
With regard to the second of the subordinate questions, it would be the intention of Her Majesty's Government that business remaining with the Public Trustee after the option to transfer has been exercised should continue to meet its costs from its fees for as long as may be practicable. With regard to the third part of the noble Lord's Question, the total annual fees income from trusts that would be available for transfer was, for the year ending March 31, 1972, about £1,100,000, but no calculation of the amount which would in fact be transferred has been or could be made.

§ LORD PEDDIE
My Lords, I thank the noble and learned Lord on the Woolsack for that detailed reply, which I think deserves some study. In the light of the figures that he has given, whether or not ample justification is found in such a transfer of revenue to private interests, may I ask what justification there is for the decision that has been taken by the Government to bring the Public Trustee Office to an end?

§ THE LORD CHANCELLOR
My Lords, as I have said in answer to previous Questions, the justification lies in the Report of the Hutton Committee, which I can only commend to the noble Lord's study. I cannot see anything in the figures which I have given that affects one way or the other the findings of that Committee, which were that the Public Trustee Office would die for want of public support. The decision has not been to end the Public Trustee Office, but to transfer it to the Official Solicitor and to relieve it of the duty of accepting new business. So far as the figures in my Answer are concerned, the only two figures that I gave were £4 million as the maximum which could be lost by waiving withdrawal fees, and £1,100,000 as the income belonging to beneficiaries which would be available for transfer. The latter is not a figure of public money, and the first is a purely notional figure, apart from the speculative elements in it, because of course if there had been no change of policy there would be no fees to be waived until the notional time, whatever that was, when the trusts came to be wound up. So I cannot see how those 1113 figures have any bearing on the merits at all.

§ LORD PEDDIE
My Lords, if I may ask a further supplementary question, is it not difficult to reconcile the figures with the statement that the Public Trustee Office was dying for want of public support? Furthermore, may I point out that I have read the Report? May I ask the noble and learned Lord whether or not he also attaches some significance and importance to the advice that has been given by the majority of professional bodies, which runs quite counter to the recommendations of the Hutton Committee?

§ THE LORD CHANCELLOR
My Lords, I can only say that there is nothing in the figures to alter the view of the Hutton Committee, which was based on a careful analysis of the use which was being made of the Public Trustee Office. Their Report certainly came to the conclusion—and I personally found it persuasive—that the decline in the work given to the Public Trustee Office would lead to a time when it ceased to be a viable unit and would have to be run down anyhow. The choice which faced the Government, assuming one accepts the Committee's factual analysis, was whether to let the office die naturally—which no doubt would have been less trouble to us, but very bad planning—or to organise its transfer to the Official Solicitor's Office so as to give the proper efficiency of administration and adequate support for the morale of the staff. As regards the professional bodies, I cannot help noticing that those who have been most articulate in their desire to retain the Office are those who live closest to it.
This is a body which operates from London without branch offices. There is no such thing as a Public Trustee in Scotland and over 60 or 70 years of life of the Office there has been no motion in Scotland, so far as I know, to create one. In the Provinces people either correspond or come to London to visit. These things do limit the operations of the Office, but of course the social and economic background against which the Public Trustee now operates is quite different from what it was in 1906. I think that on the whole the noble Lord would be wise to wait for the Second Reading of any Bill which may be neces- 1114 sary—because it cannot be done except by legislation. I do not think we can go more fully into the matter at the present time.

§ LORD GARDINER
My Lords, does the noble and learned Lord realise that the clients of the Public Trustee, of whom I must confess I am one, have always been extremely satisfied with the service that they have had? Would the noble Lord agree that the Report is a very thin document compared with the two earlier Reports and that the main object of the exercise is to push the clients into paying the higher charges of the banks and insurance companies, instead of the moderate charges of the Public Trustee?

§ THE LORD CHANCELLOR
I hardly think that that is so, my Lords. The question with which I was faced was: what would become of the Office over the next 15 or 20 years. That was the question which had to be answered, and I thought that the correct way of dealing with it was by means of a committee. It is a short Report, but not necessarily the worse for that. I cannot say what the wishes of the clients of the Public Trustee will be until they have been asked. They have the option of remaining with him, and so far as I am concerned as long as they remain with him they will be catered for without, I hope, any diminution in services.
So far as the relative levels of fees are concerned, it is not my information at the moment that the level of the Public Trustee's fees (which are bound to pay for themselves under the Statute by which he is constituted) is in fact lower than that of the corporate trustees who operate through banks, insurance companies and solicitors. This may be so, but it is not my information. If the noble and learned Lord has information to the contrary, of course I will consider it. However, the corporate trustees' fees are relatively moderate and the Public Trustee's fees are relatively moderate and those who care to stay will have the option of staying.

§ LORD GARDINER
My Lords, is it not a fact that the moderation of the fees charged by the Public Trustee tends to limit the fees which banks and insurance companies can charge? If this change is made, is it not a fact that there will be 1115 no control whatever over the size of the fees which the banks and insurance companies can then charge without competition?

§ THE LORD CHANCELLOR
My Lords, this is something which I think could be more usefully explored in the course of a debate rather than by question and answer. But if the noble and learned Lord will study again the Hutton Report I think he will see that the proportion of trusts which in fact go to the Trustee is so small in comparison with the total business available that it is really quite unlikely that they do play a great part in reducing the fees of the corporate trustees. If the noble and learned Lord will reflect on the assumption underlying his question, I think he will ask himself, and possibly give himself the obvious answer to the question, whether the corporate trustees are not in competition with one another and whether in fact competition is not the effective and operative factor in keeping their fees down. My feeling is that they probably are in competition with each other and it is competition that keeps the fees down.
As regards the object of the exercise, I am not quite sure what the noble and learned Lord meant. All I can say is that I asked the question that I obviously had to ask; I appointed what I believe to be a committee of very high quality; and I took their answer. I had no object except good administration.

§ LORD PEDDIE
My Lords, I apologise for putting a third supplementary question, but I think the character of the reply given by the noble and learned Lord to my previous question demands it. May I ask, in the light of his comment upon the nature of the evidence that has been submitted by the professional bodies, whether the noble and learned Lord is informing the House that such evidence was motivated by personal considerations on the part either of the Law Society or of the chartered accountants?

§ THE LORD CHANCELLOR
My Lords, I was asked a Question calling for a certain number of figures. Those I have given. The supplementaries have sought to enter into a debate on the merits of the proposals, but I must say in 1116 answer to the noble Lord that I know of no reason to suppose that the Law Society or the chartered accountants are less public spirited than he is.