Law Reform (Miscellaneous Provisions) (Scotland) Bill [H.L.]

HL Deb 15 May 1990 vol 519 cc159-230

3.30 p.m.

Report received.

Clause 1 [Information as to recognised charities]:

Lord Cameron of Lochbroom moved Amendment No.1: Page 2, line 12, at end insert: ("(b) to a designated body, information as regards any recognised body as to its name, address and its purposes so far as known to the Commissioners,").

The noble and learned Lord said: My Lords, in bringing forward the amendment, to which I shall speak with Amendments Nos. 7 and 49, I was encouraged by the comments made in Committee by the noble and learned Lord the Lord Advocate and by support from other noble Lords for the general line which they take.

Their purpose is to place on the face of the Bill provisions for the production of a register or index of charities, whether a general index or one dealing with specific areas. It would be particularly helpful for those who may wish to apply for assistance from such charities. The aim is to secure the openness which was suggested by the Government in their original consultation paper and subsequent White Paper.

I am grateful to the noble and learned Lord the Lord Advocate for arranging a meeting between Scottish Office officials, officials of the Inland Revenue and representatives of the Scottish Council for Voluntary Organisations in order to discuss the matter as referred to in Committee. Undoubtedly, it was a useful meeting but, while helpful, there appeared to be opposition to the inclusion in the Bill of enabling provisions which recognise the principle of the publication of an index covering the whole area of recognised bodies or of a separate indices covering areas such as overseas aid or mental health. They were mentioned in Committee not only by the noble and learned Lord but also by the noble Baroness, Lady Carnegy.

I remind the House that a register is already in existence in England and Wales. It is kept by the Charity Commissioners and derives from the statutory powers given to them under parliamentary legislation. It has proved to be of assistance to potential applicants, prospective donors to charities and to the general public. As regards our jurisdiction, it may be a means whereby members of the public can obtain reports from specific charities and thus obtain more specific information. That is the intention of the provisions in the Bill which make specific requirements for the production of reports by charities.

I suggest that under the new regime which the Bill introduces for Scotland there should be a register similar to that in England. The present offer of information, which was made at the meeting by officials of the Inland Revenue to representatives of the Scottish Council for Voluntary Organisations, would relate only to one point in time. Therefore, any publication based upon that information might quickly become out of date. That is particularly so if the estimate of some 400 new bodies recognised annually by the Inland Revenue in Scotland is accurate.

I remind the House that charities may come and equally they may go. Clauses 8 and 9 of the Bill provide for that. Their purposes may change and those clauses also provide for that. The provision in Clause 9, secured by Amendment No. 37, will mean that the reorganised charities will be required by the Inland Revenue to become recognised bodies.

I suggest that there should be a continuance of the flow of information from the Inland Revenue in order to allow the production of new indices from time to time or the updating of the old. That will require, first, that the Inland Revenue is free of any duty of confidentiality as regards providing information where an index or register is sought to be set up. Secondly, it will require some restriction to be placed on those who go to the Inland Revenue to seek such information.

Amendment No. 1 is the key to the unlocking of the information, to take up a metaphor used by the noble Earl, Lord Perth, in Committee. It provides for the loosing of the duty of confidentiality. Amendment No. 7 ensures that the key is handed out by the Secretary of State only if he believes it proper to do so. Amendment No. 49 is consequential. They are enabling provisions and no more. I suggest that they need to be on the face of the Bill in order to make certain that the requirement for a register or index is fully understood and that it is available while the regime continues. I hope that the Government will feel able at least to accept the spirit of the amendments. I beg to move.

Lord Morton of Shuna

My Lords, I support the amendment which also stands in my name. Without the provision on the face of the Bill for an up-to-date index people will be unable to discover existing charities that may help them or existing charities to which they may give. It would be unfortunate if we allowed the Bill to pass without making provision for such a list.

Lord Macaulay of Bragar

My Lords, I add my voice on the subject to those of the noble and learned Lords, Lord Cameron and Lord Morton. The matter was fully canvassed in Committee and boils down to the fact that there should be a system whereby the public can have confidence in the running of charities. People should be able to go to a source which may confirm their views on the existence and nature of the charity or which may be able to supply different information. It would also enable a reasonable check to be kept on those who run charities. As we all know, some people purport to run charities but the only charities which benefit are themselves. As regards inducing public confidence in charities I hope that the noble and learned Lord the Lord Advocate will consider the spirit of the amendment.

Baroness Carnegy of Lour

My Lords, since the Committee stage I have discussed the matter with one or two bodies which are interested in having access to such a list of charities and also with some individuals. There is a need for the list which my noble and learned friend indicated would be desirable. It should be broken down to show the types of charities which exist in order to help users of the list to find the information that they need. However, that will not be possible unless the Inland Revenue is able to release the complete list and keep it up to date.

Under the amendments the list would be protected and not widely available. However, the subsequent breaking down would make it available. Therefore, I hope that my noble and learned friend will find a way of providing a list and will take note of the fact that it must be kept up to date. It will be no good if the Inland Revenue releases the details once, but does not do so again. I hope that he can help the House although I realise that he is faced with a problem.

The Lord Advocate (Lord Fraser of Carmyllie)

My Lords, the purpose behind the amendment is not to ensure that there is proper regulation of charities, as indicated by the noble Lord, Lord Macaulay, but rather to provide a more positive purpose: that those who wish to obtain grants from charities might discover which they may approach. Alternatively, someone working in a particular field may discover that there is a comparable body.

As I indicated in Committee when similar amendments were moved, the Government have some sympathy with the suggestion that a directory of charities would be useful. However, I stress again that to do as the noble and learned Lords have suggested and require the Inland Revenue to release to a designated body, in addition to the names and addresses of registered bodies, a summary of their principal objects, would not only be a major undertaking for the Revenue in Scotland; the effort would not be worthwhile. The effort would not be worthwhile because the majority of the purposes which are submitted to them are expressed in such broad and general terms as to be of restrictive value to anyone who may wish to know of the charities. Frequently such deeds list two or three broad heads of charity to preserve maximum flexibility for the trustees. In most instances the name of the charity is likely to be more informative than the objects.

As I made clear during Committee, I do not believe it is a necessary function of government to maintain an index showing charitable purposes nor, for reasons I have indicated, to designate a particular body to undertake this task.

I informed your Lordships that I had asked Scottish Office officials to arrange a further meeting with the Inland Revenue and the Scottish Council for Voluntary Organisations. I am pleased to confirm that such a meeting has taken place.

As part of the publicity to precede the commencement of these provisions the Inland Revenue will issue letters to all known recognised bodies notifying them of their unique number and summarising the new arrangements for supervision. We will afford the Scottish Council for Voluntary Organisations, on a "one off basis, the opportunity of enclosing with this letter a questionnaire for completion by each charity. Completion of the questionnaire would of course be voluntary and it would be returned direct to the Scottish Council for Voluntary Organisations. The information which the questionnaire might seek could include a summary of the charity's purposes, activities or areas of interest. This should enable the Scottish Council for Voluntary Organisations if it so wishes to put in hand the preparation of an index of purposes. I understand that the Scottish Council for Voluntary Organisations has already expressed considerable interest in such a proposal.

Updating any directory will be a matter for the SCVO. It will of course enjoy the statutory access to annual reports and accounts. It will be at liberty to invite trustees to compile a directory entry in whatever format seems most useful, and to update the information and revise the format at whatever interval it judges appropriate. It will easily be able to identify newly-recognised bodies—which I believe was the point about which my noble and learned friend was particularly anxious—because the Inland Revenue will maintain, on an ongoing basis, a list of recent additions to supplement the last revision of the fiche index. I stress in view of the points made by my noble and learned friend that the Inland Revenue is prepared to provide periodically a means of identifying new recognitions to the SCVO. Therefore, it is not, as I accept appeared to be the position in Committee, that the Inland Revenue will provide that once and for all with no question of an update.

In approving new charities the Revenue seeks to ensure that the constitutional document of the body provides that there should be a charitable destination for any funds in the event that the body winds up. The Revenue will note the index whenever it comes to its notice that a charity has wound up. Though the Revenue will not necessarily know if a body ceases to function, this should become apparent on any occasion that the SCVO chooses to consult charities in order to update any directory it may have prepared.

In the case of amalgamations or the transfer of resources to another body, there is a requirement in Clause 9 of the Bill to ensure that the purposes of the new trust will qualify for tax exemption. The Revenue will, of course, note the index to the effect that the former charities have wound up and amalgamated to form a new named body.

While the Government understand what lies behind these amendments, they take the view that there is no need for them. Their purpose will be achieved by the administrative action which I have described. It will not be a once and for all index by the Inland Revenue but it will be updated. Any body such as the SCVO taking up the task of providing a directory will be able to secure the necessary information. As I have indicated, that seems to me to be a better way forward because the information most useful to those who wish to have access to charities will not be available from the Inland Revenue but from the charities themselves.

I hope that what I have outlined is considered to be constructive and appropriate. In view of that I hope that the noble Lord feels able to withdraw his amendment.

3.45 p.m.

Lord Cameron of Lochbroom

My Lords, I am grateful to the noble and learned Lord for the positive way in which he has replied. I have reservations as to whether this can be done by the promise of administrative action in a regime intended to be statutory and intended to continue to be in force even if for example, the Scottish Council for Voluntary Organisations is no longer in existence.

I add that the first amendment was carefully drafted conscious of the fact that the Inland Revenue might not know the purposes, and a qualification to that effect appears at the end. However, in view of what the noble and learned Lord has said, which I shall read, I do not intend to press this matter and I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Fraser of Carmyllie moved Amendment No. 2: Page 2, line 24, leave out from ("its") to end of line 26 and insert ("explanatory document")

The noble and learned Lord said: My Lords, I shall speak also to Amendments Nos. 3 and 8. Clause 1 (3) requires a recognised body to provide to any person who requests it on payment of a reasonable charge, a copy of its trust deed or other document constituting the body. Subsection (4) enables me to instruct the Inland Revenue to note where any body has failed, on payment of a reasonable charge, to provide such a document.

Whereas most bodies should have no difficulty in complying with this request certain bodies—notably some of the long-established Churches—would be unable to provide any single document which would enable a person to ascertain the nature of the body and its charitable purposes. This amendment will permit such bodies to prepare with my approval a document which describes the bodies' charitable objects.

The amendment will meet part of the concerns expressed by such bodies as the Church of Scotland and the Scottish Churches Committee. Your Lordships will wish to know that a further meeting has taken place between officials of the Scottish Home and Health Department and the Scottish Churches Committee to discuss the possibility of more wide-ranging amendments to the Bill which would have regard to the concerns expressed by various noble Lords in Committee about the undesirability of powers enabling me to become involved when mismanagement occurs among religious bodies.

A number of points have been put to the Scottish Churches Committee which, as I understand it, are being considered urgently without, as yet, any clear indication as to whether all the points are acceptable to them in that form. Perhaps I may indicate to noble Lords that in that regard the Government intend to bring forward amendments in Committee in another place, particularly relating to the Churches in Scotland. I beg to move.

Lord Morton of Shuna

My Lords, the amendment is helpful as far as it goes. I merely raise a doubt about the wording of Amendment No. 8. My impression is that a fairly large proportion of charities would rather produce an explanatory document than the trust deed or other document constituting the body. Many of the 15,000 or more charities will produce a document which describes the nature of the body and its charitable purposes. Does the noble and learned Lord the Lord Advocate really wish to study over 10,000 documents to see that they fit the trust purposes? Would it not be better for him to have the right to veto any such documents which came to his attention which were inaccurate and to leave it to the body to define its own trust purposes?

As the noble and learned Lord mentioned the Churches, I should have thought that he would find it invidious specifically to approve any religious body's explanatory document in that way, whereas he might be happier with a power to disapprove a document which he thought did not fully and properly meet the case. The noble and learned Lord the Lord Advocate has taken on a very heavy job for which, according to the Bill's original descriptive documents, he will have a staff of eight. I doubt whether that will be possible.

Lord Fraser of Carmyllie

My Lords, I do not wish to be involved in the redrafting of the articles of faith of any religious body. I understand what the noble and learned Lord is saying. I do not envisage that there will be any particular difficulty in that regard. If I have to consider a large number of documents, clearly more lax arrangements will need to be put in place than had been envisaged.

Lord Macaulay of Bragar

My Lords, before the noble and learned Lord the Lord Advocate sits down, is he able to give an indication at this stage—I appreciate that it may be difficult—with regard to the increases in staff which may be required by his department to consider the documents that will presumably need to be submitted to the Lord Advocate in terms of the amendment? The amendment states that they must be submitted before any person can request them in terms of Clause 1 (3) of the Bill. Can he give us an idea of the potential cost of that exercise?

I merely seek information. I recognise that the terms of the amendment are extremely helpful. I can see that behind it there may be a purpose in saving money and making it work for the charities concerned. Rather than having a trust deed or other documents which can be very lengthy, a simplifed document initially would serve everyone's purposes.

Lord Fraser of Carmyllie

My Lords, I clearly cannot calculate at this stage how many bodies might approach me in seeking my approval. Contrary to what the noble and learned Lord, Lord Morton, said, I envisage that most bodies which already have a clearly defined trust deed will put that forward. One needs to consider—and what I envisage will occur in relation to any directory—that often a trust deed is a long, complicated document. For their own purposes charities may wish in explaining what they do to provide a simplified explanation of their range of activities and how they expend their funds.

The amendment is intended to relate to such bodies as the Church of Scotland or the Roman Catholic Church. I would not wish for a moment to suggest what the Roman Catholic Church might put forward. I do not envisage that I shall have any difficulty in approving a document put forward by the Church.

On Question, amendment agreed to.

Lord Fraser of Carmyllie moved Amendment No. 3: Page 2, line 29, leave out from ("its") to ("as") and insert ("explanatory document").

On Question, amendment agreed to.

Lord Fraser of Carmyllie moved Amendment No. 4: Page 2, line 34, leave out ("Court of Session") and insert ("court").

The noble and learned Lord said: My Lords, in moving Amendment No. 4 I speak also to Amendments Nos. 6, 11, 23, 25, 45, 46 and 48. Notwithstanding that long list, these amendments seek to give effect to the undertaking given by me in Committee to allow, at my discretion, cases to be heard in the sheriff court as well as the Court of Session in all cases where I have power to apply for an interdict or order. Your Lordships will recall that I did not consider it appropriate to do so in Clause 6 in view of the gravity of the measures involved under that section. Clause 8 already contains provisions under subsection (5) for me to appoint a day for extension of proceedings to the sheriff court under that section. The amendments also provide the necessary definition in Clause 13. I beg to move.

On Question, amendment agreed to.

Lord Cameron of Lochbroom moved Amendment No. 5: Page 2, line 35, after ("body") insert ("if incorporated").

The noble and learned Lord said: My Lords, in moving this amendment I speak also to Amendments Nos. 12 to 14, 24 and 27 to 30 standing in the name of my noble and learned friend Lord Morton and myself and also to Amendment No. 47 in the name of the noble and learned Lord the Lord Advocate.

These amendments are directed to a point raised by my noble and learned friend in Committee with regard to the status at law of unincorporated bodies, which certain of the recognised bodies will be. These are not legal persons in the eyes of the law of Scotland and therefore cannot be sued in any legal proceedings.

I refer particularly to Amendment No. 30, which seeks to give the court slightly wider discretion than is presently incorporated within the Bill. It is intended to be helpful. It may be that Amendment No. 47 covers the point which I seek to make in Amendment No. 5 and the remaining ones. I shall be happy to listen to what the noble and learned Lord says and I also welcome his view on Amendment No. 30. I beg to move.

Lord Fraser of Carmyllie

My Lords, the noble and learned Lord, Lord Cameron of Lochbroom, raised a question in Committee on Clause 1 (5) as to whether it was possible to interdict an unincorporated body. I undertook to give this matter further thought. According to Stair Encyclopaedia, Vol. 2, para 818, it would appear to be the case that it is not possible for such bodies to sue or be sued in the Court of Session although it may be possible in the sheriff court. I concluded that the safest course is to make specific provision. Amendment No. 47 therefore extends the present limited definition of "body" in Clause 13. I am grateful to the noble and learned Lord for drawing the matter to my attention.

It is intended that Amendment No. 47 covers the matters raised in the amendments of the noble and learned Lord, including Amendment No. 30. However, I will look at the position again to see whether there is anything that is usefully more extensive than is provided for in Amendment No. 47. I repeat my thanks to the noble and learned Lord, but hope that he will withdraw his amendment.

Lord Cameron of Lochbroom

My Lords, I am grateful to the noble and learned Lord. He has obviously taken the point on board. I will look at what he said. I am also grateful for his offer to reconsider the substance of Amendment No. 30. In those circumstances I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Fraser of Carmyllie moved Amendment No. 6: Page 2, line 37, leave out ("Court") and insert ("court").

On Question, amendment agreed to.

[Amendment No. 7 not moved.]

Lord Fraser of Carmyllie moved Amendment No. 8: Page 3, line 5, at end insert: ("(8) In this section "explanatory document" means —

1. (a) the trust deed of a body or other document constituting the body; or
167
2. (b) such other document as the Lord Advocate may approve, being a document which describes the nature of the body and of its charitable purposes.").

On Question, amendment agreed to.

Clause 2 [Non-recognised bodies]:

Lord Morton of Shuna moved Amendment No. 9: Page 3, line 10, at end insert: ("(b) any Church or other body established for the advancement of religion or established for the purposes of providing, holding, maintaining, repairing or managing ecclesiastical buildings for religious purposes").

The noble and learned Lord said: My Lords, this amendment has in a sense been foreshadowed by what the noble and learned Lord the Lord Advocate said. It was tabled merely in order that something should appear on public record regarding what is happening concerning the Churches.

As the noble and learned Lord said, discussions have taken place with the Scottish Churches Committee concerning the method of dealing with them in relation to charitable purposes, but agreement has not yet been reached. We hope that it will be. At this stage—as no doubt the noble and learned Lord the Lord Advocate will deal with them in reply—I wish to mention some of the difficulties that his intended approach appears to raise.

One difficulty is that the body, the Church or religious organisation, will have to satisfy the Secretary of State that it has membership of not less than 10,000 persons. That is difficult for certain well recognised churches which tend to have numerous adherents rather than members, although those who are not members of that organisation regard the adherent as being a member in any natural sense.

There is also difficulty about various bodies such as the Baptists and the Congregational Union whose organisations perhaps do not fit the other requirement that there should be an internal organisation with a central authority in Scotland exercising supervisory and disciplinary functions. One of the difficulties about that is that if there is to be one central authority in Scotland, it perhaps raises very great difficulties in regard to whether it would fit for a Church which regards its central authority as being in Rome—its central authority on this earth, at any rate—and has eight dioceses in Scotland.

There are difficulties, and I suggest that apart from the detailed points which are still to be discussed, the only way of dealing with this problem is for the Secretary of State or the Lord Advocate to be given powers to designate specific bodies without confining himself to anything more than religious bodies, or something of that nature. Once one goes into the differences of organisations that exist between the different faiths, comparing one with another, it is difficult to obtain one central definition that would fit. I suggest that the only way is to specify the bodies—the Church of Scotland, the Roman Catholic church, the Sikh religion, the Jewish religion, and so on. That is the only way to deal with the problem. Nevertheless, I express my gratitude for the way that the Government have taken the point on board. I beg to move.

4 p. m.

Lord Cameron of Lochbroom

My Lords, before the Lord Advocate replies, perhaps I may also raise one or two further points which occurred to me having been given a copy of the proposed principles on which the Government were intending to bring forward a possible amendment.

The first has already been mentioned by my noble and learned friend regarding the membership of 10,000 and the problems of determining what constitutes a membership. That figure appears to be an arbitrary limit and could discriminate against some of the traditional Churches in Scotland which have a long history but do not rise to quite those numbers. Indeed, one might ask what happens when within such a traditional Church there is a split involving its division into two separate but identifiable units.

Further, one of the principles suggested, or the criterion to be applied, was that such bodies should have as their principal activity the regular holding of acts of public worship. However, within the Churches there are identifiable bodies whose principal activities may be related to the Church itself but directed to other aspects of Church life such as social work. That is a matter which should be taken into account. Furthermore, in the discussions there was some question of waiving certain of the provisions of the Bill in relation to these exempt bodies. I have seen those. Perhaps I may suggest that the exemptions would on any view be best if they included Clauses 1 (3) and (4) as well as (5) and also make provision for exemption wholly from Clause 5 rather than from certain parts of it. That seems to be a much cleaner way.

I simply offer these suggestions because various points have been raised and it would be advantageous to have them on record.

Lord Eraser of Carmyllie

My Lords, as I have already indicated on an earlier amendment, the Government intend to bring forward amendments in another place to deal with the position of established Churches, and I use that description in a loose sense for Scotland rather than in any particular sense.

In bringing forward such amendments, I shall have regard to the points made by noble and learned Lords. While I agree that there is a particularly strong case for exempting the major religious bodies, the amendment proposed is rather too extensive in exempting all bodies established for the advancement of religion. As your Lordships are aware from discussions we had in Committee, I am concerned that there should be a power to act where necessary against certain cult-like sects.

This aspect of charities is a most tricky area. Some are clearly the most honourable and worthwhile bodies in Scotland, but others may well be the most deceitful and dishonourable. Seeking to discover where that line should be drawn is by no means easy. A number of suggestions have been put to the Scottish Churches Committee and we have heard that there may be difficulties over applying the criteria which have been established. I hasten to add that they were not intended to be absolute in any sense. It is a matter for discussion. However, I emphasise that we must insist that not all religious bodies are exempt.

At the other end of the argument, while I understand what has also been suggested in regard to listing, the proposal to list, for example, the Church of Scotland Trust and the Church of Scotland Trustees, as appears in Amendment No. 50, is probably unacceptable as it seems likely to give rise to questions of hybridity. In dealing with this issue in Scotland, that is regrettably a further complication in the way the matter is approached.

Baroness Phillips

My Lords, perhaps the Minister, or the movers of the amendment, can give me an explanation. I am a great admirer of the Lord Chancellor. I speak as a member of the Church of Rome. At least the Pope is a delegate, ultimately, for someone above. Are we considering this particular Church known as the "wee frees"? That Church did not seem to me to be of a very liberal character. I would not support the amendment if that church is to be included.

Lord Morton of Shuna

My Lords, despite the persuasive invitation from the noble Baroness, Lady Phillips I have no intention of discussing one Church as against another, let alone any Church that has recently divided itself.

The difficulty of my amendment was well recognised, but it was tabled only as a vehicle for discussion. It is very necessary that any listing or provision should cover not only the Christian Churches but the other religions which exist to a considerable extent in Scotland. While I agree that there may be one or two cults —the word used by the noble and learned Lord the Lord Advocate—which would rot be appropriate, that is a matter for his judgment. We must deal with this matter in some way, but it appears to me that the only way is to list the organisations that are to be excluded. However, at this stage I ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Cameron of Lochbroom moved Amendment No. 10: Page, line 15, at end insert ("; nor— (c) a charity having neither any permanent endowment nor any income from property amounting to move than £500 or such other sum as the Secretary of State may, by regulation, from time to time prescribe, nor the use and occupation of any heritable property").

The noble and learned Lord said: My Lords, this amendment takes up a point made within short compass in the general debate in Committee regarding Churches. It seeks to withdraw the very small charities from the prohibition in Clause 2 (1) and thus allow them to operate without the necessity to obtain recognition from the Inland Revenue. These are the small charities that have no desire to secure funds by way of gifts under convenant. Indeed, they may be of a character which would be more commonly recognised as public charitable trusts in the eyes of the law and not those which fall within the prescribed definition of a charity for taxation purposes. The existence of such public charitable trusts is recognised in Clause 8 of the Bill. That is in contrast to the terms used in Clause 9, which speak about a public trust which is a recognised body. It is one which has passed the Inland Revenue test.

As the Bill is framed at present, in order to hold itself out as a charity, a small charity would be required to apply first to the Inland Revenue for recognition, although it would not wish the benefit of the taxing statutes. But only if such recognition were granted would it then be able to hold itself out as a charity. If it were refused, the prohibition would bite; and that would seem unfortunate. On the other hand, if it were granted, the small charity would then have to pass the next hurdle of being exempted from the accounting rules. Otherwise it would become liable to the accounting rules.

It seems somewhat unnecessary to make small charities pass two statutory hurdles simply to provide them with the comfort of being able to call themselves a charity. One might ask whether the Inland Revenue would welcome a further increase in the number of bodies applying for recognition in order to escape the prohibition, in particular where the Inland Revenue would have no interest in the result and the body would have no interest in the provisions of the taxing statutes which might be favourable to other charities. What is the public interest in requiring small charities to be so supervised? There seems to be a case for exempting very small charities. That is what the amendment seeks to do. It begins with the provision for the upper limit of the charity's annual income which can be altered according to events. I am anxious to hear what the noble and learned Lord the Lord Advocate has to say on the distinction between a charity under the taxing statutes and a charity as defined in Scots law generally. I beg to move.

4.15 p.m.

Lord Morton of Shuna

My Lords, the matter was discussed fairly briefly in Committee with the amendment about churches, as I recollect. It seems totally wrong that a small body such as a committee which organises a collection or a sale of work once a year to take children from a hospital to the seaside should have to register or run the risk of committing offences for which members of the committee will apparently be liable for about six months' imprisonment. That seems utterly wrong. From the discussion in Committee everyone seems to have agreed that some exemption for these very small charities was desirable from the point of view of administration and everything else. I hope that the noble and learned Lord will say something that deals with the problem.

Lord Fraser of Carmyllie

My Lords, as has been indicated, we have discussed the matter previously. It is the undoubted policy of the Bill to provide supervision over all Scottish charities. That the provision should apply to all charities, irrespective of size, was a policy strongly advocated to the Government by the Scottish Council for Voluntary Organisations. It is difficult to know what should be the appropriate cut-off point if this exception is made. The figure that the noble and learned Lords have selected might be varied without much difficulty one way or the other.

We have accordingly sought to approach the matter in a different way. That is by providing in Clause 4 that the requirement to produce accounts should be tempered. Small charities are not to be required to produce an income and expenditure account—I recognise that that would be a gross imposition on them—but need prepare only a receipts and payments account. Similarly they will be relieved of the requirement to have their accounts audited professionally.

Should a charity have the use and occupation of heritable property we would still wish to supervise it. Moreover, it is open to small charities to amalgamate to form larger trusts or to reform their objects without recourse to the court under the provisions of Clause 9. Why therefore should any provision be made to exempt the small trust? We seek to achieve working efficiency by transfers and amalgamations.

My noble and learned friend Lord Cameron of Lochbroom drew attention to a point of difference that appears at present in relation to Clauses 8 and 9. On a previous occasion we have had a learned discussion as to what is a Scottish charity as opposed to a charity recognised by the Inland Revenue and what is a public trust within the law of Scotland. It would be my intention to bring that into line and ensure that under Clause 9, if there were a trust which was public according to the law of Scotland but which was not charitable according to the test in the Pemsell case, it would nevertheless be in a position to take advantage of what I have previously described as the new administrative cy près arrangements. Although the matter effectively arises at a later stage, it has been raised and I hope that I have reassured the noble and learned Lord, Lord Cameron.

In policy it is difficult to determine where the line should be drawn. However, we have taken the advice that has been proffered to us that if there is to be proper supervision of Scottish charities it should extend to all such charities. I hope that that is suitably tempered by reference to Clause 4. As a consequence of this part of the Bill, such bodies will also enjoy new opportunities by way of cy près to reorganise themselves or to amalgamate.

Lord Cameron of Lochbroom

My Lords, I am somewhat reassured by the attitude of the noble and learned Lord. I am sure that he will read what my noble and learned friend and I have said about small charities. I am not entirely sure that he has hoisted aboard the point about the local gala day which may not be held for a purpose that would be regarded as charitable under the Pemsell case but would still be a charitable purpose under the law of Scotland. It would be a curiosity that that committee would be prohibited from calling itself a charity. What otherwise would it be?

However, I recognise that the noble and learned Lord has listened. I take on board what he has said about my later amendment. In the circumstances I beg leave to withdraw the amendment.

Amendment, by leave withdrawn.

Lord Fraser of Carmyllie moved Amendment No. 11: Page 3, line 17, leave out ("Court of Session") and insert ("court").

On Question, amendment agreed to.

[Amendments Nos. 12 to 14 not moved.]

Clause 4 [Annual accounts and report]:

Lord Cameron of Lochbroom moved Amendment No. 15: Page 4, line 17, at end insert ("which shall include a statement of the principal charitable purposes of the body and the names of the persons concerned in its management or control during the year").

The noble and learned Lord said: My Lords, I speak also to Amendment No. 16. The purpose of the amendment is to provide for the incorporation in the reports prepared by recognised bodies information with regard to those who were responsible for the charity's activities during the year covered by the annual report and a statement of its principal purposes. Such a statement may well have been the subject of amendment by the noble and learned Lord the Lord Advocate. It would be helpful for an annual report to contain such information. It would provide for greater accountability, which is one of the matters with which the Government were concerned in this legislation. It might even be helpful in the preparation of an index by an interested body. I beg to move.

Lord Fraser of Carmyllie

My Lords, I am wholly sympathetic to the aim of the amendments but I do not believe that it is necessary for them to appear on the face of the Bill. My right honourable friend the Secretary of State has powers under Clause 4 (5) to prescribe by regulations the form and content of accounts including any information to be provided by way of notes to the accounts. An inquirer has a right to obtain a copy of the actual trust deed under the provisions of Clause 1 (3). That provision was inserted at the suggestion of the SCVO in preference to a summary of the principal objects. The notes will, however, require a summary of the body's activities over the year having regard to its charitable purposes. As my noble and learned friend suggested, this allows something of a reference back to the making up of a directory if that is what is wanted.

I can confirm that it is my right honourable friend's intention to prescribe in regulations that the names and designations of those who are or have been concerned with the management and control of the body during the financial year should be listed. I hope that my explanation meets my noble and learned friend's point. With that undertaking I trust that he will feel able to withdraw the amendment.

Lord Cameron of Lochbroom

My Lords, I am most grateful to the noble and learned Lord. I am perfectly content with what he has said. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 16 not moved.]

Lord Fraser of Carmyllie moved Amendment No. 17: Page 4. line 36, after ("thereon") insert ("and as to the consideration of the report").

The noble and learned Lord said: My Lords, Clause 4(5)(c) makes provision enabling my right honourable friend the Secretary of State for Scotland to prescribe by regulation requirements as to auditing the accounts which recognised bodies are required to prepare in accordance with the provisions of the Bill.

Since the report which forms part of the statement of accounts will require to be consistent with the audited accounts the auditor will need to address this point in his examination. The amendment makes plain that my right honourable friend may prescribe requirements as to that aspect of the audit. I beg to move.

Lord Morton of Shuna

My Lords, this is no doubt a very good purpose but I am not entirely sure that the words actually achieve that purpose. They certainly do not make it clear. Subsection (5) (c) would now read: such requirements as to auditing of the balance sheet, statement of balances, income and expenditure account and receipts and payments account and any notes thereon and as to the consideration of the report as he considers appropriate". It is not easy to take much meaning out of that sentence. Whose consideration of the report is supposed to be involved? It is not at all clear who is to do the considering. Perhaps the noble and learned Lord will consider that matter.

Lord Fraser of Carmyllie

My Lords, the powers look very similar to those provided in Section 9 of the Companies Act 1989. If they have not been entirely helpfully introduced into the clause I shall look at the matter. I hope that the noble and learned Lord will appreciate that I am not giving an undertaking to come back with anything.

On Question, amendment agreed to.

Lord Fraser of Carmyllie moved Amendment No. 18: Page 4, line 42, after ("shall") insert ("(a)").

The noble and learned Lord said: My Lords, it may be helpful if I speak at the same time to Amendments Nos. 19, 21 and 22. Subsection (7) requires a recognised body to provide on payment of a reasonable charge a copy of its most recent statement of annual accounts to any person who requests it. It will not necessarily be clear to the person concerned whether the accounts are in fact the latest available or whether another set is overdue unless he can ascertain the date to which the accounts are required to be made up. In particular it will be important in the case of a body which has not at that point produced any accounts for the inquirer to be able to ascertain when the first accounts are due to be produced.

Amendments Nos. 19 and 22 provide therefore that the body will also be required to inform inquirers of that date and enable me to direct that any failure to provide this information may be noted by the Inland Revenue for the purposes of Clause 1 (2). Amendment No. 18 is consequential.

Amendment No. 21 and the first part of Amendment No. 22 also take account of the point raised in Committee by my noble and learned friend Lord Cameron that it would be unfortunate if a person were able to complain under Clause 1 (4) or Clause 4 (12) when he had requested information but had failed to tender the reasonable charge for either a copy of the body's trust deed or its accounts. I undertook to give some further thought to that. I am content that no amendment is required to Clause 1 (4), but the same point is not covered in the existing wording of Clause 4 (12) in relation to the provision of annual accounts. Accordingly, Amendment No. 21 and the first part of Amendment No. 22 make provision for this. I am grateful to the noble and learned Lord for drawing the point to my attention. I beg to move.

On Question, amendment agreed to.

Lord Fraser of Carmyllie moved Amendment No. 19: Page 4, line 45, at end insert: ("(b) inform any person who requests it of its accounting reference date.").

On Question, amendment agreed to.

Lord Fraser of Carmyllie moved Amendment No. 20: Page 5, line 23, leave out ("responsible for") and insert ("concerned in").

The noble and learned Lord said: My Lords, in Committee the noble and learned Lord, Lord Cameron, indicated a difference in terminology between what were formerly subsections (7) and (8) of Clause 4 and are now subsections (9) and (10). The amendment brings the terminology in subsection (10) into line with that in subsection (9). Once again I am grateful to the noble and learned Lord. I beg to move.

On Question, amendment agreed to.

Lord Fraser of Carmyllie moved Amendment No. 21: Page 5, line 32, after first ("person") insert ("(a)").

On Question, amendment agreed to.

Lord Fraser of Carmyllie moved Amendment No. 22: Page 5, line 33, after ("accounts") insert ("as mentioned in subsection (7) above; or (b) fails to inform that person of its accounting reference date,").

On Question, amendment agreed to.

Lord Fraser of Carmyllie moved Amendment No. 23: Page 5, line 37, leave out ("Court of Session") and insert ("court").

On Question, amendment agreed to.

[Amendment No. 24 not moved.]

Lord Fraser of Carmyllie moved Amendment No. 25: Page 5, line 41, leave out ("Court") and insert ("court"). On Question, amendment agreed to.

Lord Fraser of Carmyllie moved Amendment No. 26: Page 5, line 44, after ("(1)") insert ("(2),(3),").

The noble and learned Lord said: My Lords, subsections (2) and (3) of Clause 4 specify what elements must be included in statements of accounts prepared by a recognised body. However, there are separate provisions in the Companies Act 1989 governing the form and content of accounts which must be prepared by companies. The company provisions take precedence over those in the current legislation for the supervision of charities. The amendment adds subsections (2) and (3) of Clause 4 to the list of provisions which do not apply when a recognised body is a company. I beg to move.

On Question, amendment agreed to.

Clause 6 [Powers of Court of Session to deal with management of charities]:

[Amendments Nos. 27 to 30 not moved.]

Lord Fraser of Carmyllie moved Amendment No. 31: Page 10, line 34, leave out from ("severally") to end of line 36.

The noble and learned Lord said: My Lords, the noble and learned Lords, Lord Morton of Shuna and Lord Cameron of Lochbroom, and the noble Lord, Lord Macaulay of Bragar, raised in Committee on 27th March the question of awarding expenses against a person who was not a party to the court proceedings and suggested that the proviso that such a person shall be entitled to be heard on the question of expenses did not go far enough. I gave an assurance that the matter would be looked at further. Having done so, I have concluded that it would be preferable to omit all reference to, notwithstanding that he is not a named party to the proceedings … provided that he is allowed to be heard on the question of expenses".

This formulation was intended to provide for the situation where the names of persons involved in the running of a bogus charity might come to light only in the course of an action and was drafted to provide that it would not be necessary to hear all the evidence again. However, in view of the strong representations which have been made about this provision I have decided that the better course is to delete the provision altogether. As a result of my amendment it will be open to parties to an action who wish to have an individual cited in proceedings to sist the proceedings and to call as co-defender any person whom he alleges is involved in the management or control of the body and for the court to hear that person's evidence in the normal way. As I have just indicted, this puts it in the practice and traditions of the court. I trust that now that the features that the noble and learned Lords found objectionable in this provision have been removed they may be able to support the amendment.

4.30 p.m.

Lord Macaulay of Bragar

My Lords, as a point of information, is the noble and learned Lord the Lord Advocate saying that, where it is proposed that a person might have expenses awarded against him in any action, he will be formally cited to the court before any decision is made by the parties to the action? Thus there will be no instance of a case where a person suddenly finds himself liable for £400 of expenses that he had never heard of before he perhaps gets a summons or a visit from the sheriffs officer.

Lord Fraser of Carmyllie

Yes, my Lords, I can confirm that. The history of this is that we started off by thinking how can we get at these people who are behind a bogus trust. When action is taken, how do you get on to them and take some action against them? We modified that to say that if expenses were going to be awarded against them they ought at least to have the right to be heard.

Even with that modification to the original proposal there was objection from the noble and learned Lord and others to this innovation concerning what would ordinarily be the position in the Scottish courts. Having reflected on it, I have concluded that the simplest way is to stick to the ordinary arrangements and avoid any attempt at some new arrangement.

On Question, amendment agreed to.

Clause 9 [Small charities]:

Lord Cameron of Lochbroom: moved Amendment No. 32: Page 13, line 16, leave out ("which is a recognised body").

The noble and learned Lord said: My Lords, the purpose of this amendment and the related amendment to which I beg leave to speak. Amendment No. 44, is simply to enable these sensible provisions to be extended to all public trusts whether or not they are recognised bodies—that is to say, bodies which have passed the Pemsell tests and been recognised by the Inland Revenue. As I say, these are sensible provisions and I understand from what the noble and learned Lord has already said that he is favourably inclined to these amendments. I beg to move.

Lord Fraser of Carmyllie

My Lords, as I have hinted previously, I have considered the suggestions made at Committee stage by the noble and learned Lord and others on this issue and have decided that there is a case for extending the facility that arises under Clause 9 to all public—and I stress the word to the noble and learned Lord, to whom it doubtless makes sense—trusts. The Government intend to bring forward amendments at Committee stage in the other place to facilitate this. In bringing forward an amendment it will be necessary to ensure that where one of the bodies in an amalgamation is already a recognised body, the objects of the reconstituted body would continue to be such.

My Lords, I have indicated that I accept the principle, advocated by the noble and learned Lord at Clause 9, that the facility to reorganise under the provisions of that clause should be extended to small public trusts irrespective of whether they are recognised bodies. Having accepted that principle, I would also accept that there is little justification for restricting the facility for very small trusts with an annual income of less than £1,000 to those which have charitable purposes.

I would therefore accept in principle the amendment. However, I fear that by removing the word "charitable" without further qualification we would be opening up this facility to all trusts—not just charitable ones but public and private ones. I suspect that a further amendment may be necessary to make clear that the clause applies only to public trusts and charitable trusts. Subject to that proviso I am happy to accept the noble and learned Lord's amendment in principle, and thank him again for bringing, this matter before us. Given those assurances, I hope that he will feel able to withdraw this amendment.

Lord Cameron of Lochbroom

My Lords, I am grateful to the noble and learned Lord. In the circumstances I am happy to seek the leave of the House to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Fraser of Carmyllie moved Amendment No. 33: Page 13, leave out lines 19 to 23 and insert:

1. ("(a) that the original purposes of the trust, whether in whole or in part—
   1. (i) have been fulfilled as far as it is possible to do so; or
   2. (ii) can no longer be given effect to, whether in accordance with the directions or spirit of the trust deed or other document constituting the trust or otherwise;
2. (b) that the original purposes of the trust provide a use for only part of the property available under the trust;
3. (c) that the original purposes of the trust were expressed by reference to—
   1. (i) an area which has, since the trust was constituted, ceased to have effect for the purpose described expressly or by implication in the trust deed or other document constituting the trust; or
   2. (ii) a class of persons or area which has ceased to be suitable or appropriate, having regard to the spirit of the trust deed or other document constituting the trust, or as regards which it has ceased to be practicable to administer the property available under the trust; or
4. (d) that the original purposes of the trust, whether in whole or in part, have, since the trust was constituted—
   1. (i) been adequately provided for by other means; or
   2. (ii) ceased to be such as would enable the trust to become a recognised body; or
   3. (iii) ceased in any other way to provide a suitable and effective method of using the property available under I he trust, having regard to the spirit of the trust deed or other document constituting the trust,").

The noble and learned Lord said: My Lords, during the Committee stage of the Bill on 27th March I undertook to bring forward at Report amendments to Clause 9 to bring its provisions into line with Clause 8. The provisions of this amendment require trustees of small charities who wish to reorganise the objects of their trust, or to amalgamate with another trust, to be satisfied on all the points a court would be required to have regard to under Clause 8. It is clearly desirable that the same basic criteria should apply to reorganisation whether it takes place in court under the provision of Clause 8 or without recourse to the court under the Clause 9 provisions. I beg to move.

Lord Cameron of Lochbroom

My Lords, I wonder whether the noble and learned Lord has considered the scenario that a trust may see, and indeed obtain, leave to reconstitute itself so that new purposes come into effect and a new trust then comes into being, and some 30 years later those purposes become incapable of being fulfilled? The problem I have is that as presently drafted the words that first appear are "original purposes of the trust".

It seems to me that some thought might be given to the altered trust purposes—as, for instance, those that come under Amendment No. 37—being deemed to be original purposes, so that any subsequent rearrangement that may well come about can be comprehended by this clause. Apart from that, it seems to me that this is a helpful amendment and I would certainly support it.

On Question, amendment agreed to.

Lord Fraser of Carmyllie moved Amendment No. 34: Page 13, line 29, leave out ("or").

The noble and learned Lord said: My Lords, together with Amendment No. 34 it might be useful if I were to speak also to Amendments Nos. 35 through to Amendment No. 43. These are essentially clarifying amendments the intention of which is to make plain that, as well as modifying the purposes of their trust or transferring the assets of the trust to another public trust, trustees may amalgamate with one or more public trusts. The amendments also prescribe the circumstances trustees must have regard to before resolving to amalgamate.

My Lords, Amendment No. 35 enables the trustees to determine that their trust should be amalgamated. Amendment No. 37 inserts a new subsection (9A), which enables the trustees to pass a resolution to amalgamate with one or more trusts and requires them to be satisfied that the charitable purposes of the new trust should be similar in character to the existing trust.

The same amendment inserts new subsection (9B). Under this subsection the trustees are required before passing a resolution under (9A) to have regard to any particular locality to which the trust purposes relate, to ensure that the new trust will continue to be eligible for tax exemption, and to ascertain that the trustees of the other trusts involved are agreeable to the amalgamation. Your Lordships will note that these requirements at new subsection (9B) correspond exactly with those at existing subsection (9) which relate to the transfer of assets. All the other amendments are consequential. I beg to move.

On Question, amendment agreed to.

Lord Fraser of Carmyllie moved Amendments Nos. 35 to 43: Page 13, line 31, at end insert (", or (c) that the trust should be amalgamated with one or more public trusts."), Page 14, line 13, after second ("trust") insert ("or trusts"). Page 14, line 28, at end insert: ("(9A) Where the trustees determine as mentioned in subsection (2) (c) above, they may pass a resolution that the trust be amalgamated with one or more other trusts so that the charitable purposes of the trust constituted by such amalgamation will not be so dissimilar in character to those of the trust to which the resolution relates as to constitute an unreasonable departure from the spirit of the trust deed or other document constituting the last mentioned trust. (9B) Before passing a resolution under subsection (9A) above, the trustees shall —

1. (a) where the trust purposes relate to a particular locality, have regard to the circumstances of the locality;
2. (b) ensure that the trust purposes of the trust to be constituted by such amalgamation will be such as to enable it to be granted an exemption from tax by the Commissioners of Inland Revenue under section 505 (1) of the Income and Corporation Taxes Act 1988 (exemption from tax for charities); and
3. (c) ascertain that the trustees of any other trust with which it is proposed that the trust will be amalgamated will agree to such amalgamation.").

Page 14, line 29, after ("assets") insert ("or an amalgamation of two or more trusts"). Page 14, line 36, leave out ("or (8)") and insert (", (8) or (9A)"). Page 14, line 44, after ("otherwise") insert ("(a)"). Page 14, line 45, leave out ("or, as the case may be") and insert ("(b)"). Page 14, line 46, after ("above") insert ("; or (c) that the trust should not be amalgamated as mentioned in subsection (9A) above"). Page 14, line 48, at end insert ("or amalgamation").

The noble and learned Lord said: My Lords, I beg to move Amendments Nos. 35 to 43 en bloc.

On Question, amendments agreed to.

Clause 10 [Expenditure of capital]:

[Amendment No. 44 not moved.]

Lord Fraser of Carmyllie moved Amendment No. 45: Page 15, line 23, leave out ("Court of Session") and insert ("court").

On Question, amendment agreed to.

Lord Fraser of Carmyllie moved Amendment No. 46: Page 15, line 24, leave out ("Court") and insert ("court").

On Question, amendment agreed to.

Clause 13 [Interpretation of Part I, regulations and orders]:

Lord Fraser of Carmyllie moved Amendment No. 47: Page 16, line 9, at end insert ("and, as regards any reference in this Part of this Act to the institution of proceedings in any court or to any order of a court, shall be construed—

1. (a) in the case of a trust, as a reference to the trustees acting in their capacity as such;
2. (b) in any other case, as a reference to the persons concerned in the management or control of the body;").

On Question, amendment agreed to.

Lord Fraser of Carmyllie moved Amendment No. 48: Page 16, line 9, at end insert (""court", for the purposes of establishing jurisdiction to hear or determine any matter other than under sections 6 and 8 of this Act, means the Court of Session or the sheriff;").

The noble and learned Lord said: I beg to move.

Lord Macaulay of Bragar

My Lords, the amendment has already been spoken to, but perhaps I may draw the noble and learned Lord's attention to the definition of "court" in Amendment No. 48. It states that the word "court" means: the Court of Session or the sheriff". The sheriff is a person. He is not a court. As a matter of construction should not that read "sheriff court" rather than the sheriff as an individual? I put that forward in a helpful spirit.

Lord Fraser of Carmyllie

My Lords, I shall check that point and see what the context is. Undoubtedly the point made by the noble Lord is correct.

On Question, amendment agreed to.

[Amendments Nos. 49 and 50 not moved.]

Lord Fraser of Carmyllie moved Amendment No. 51: Page 16, leave out lines 30 to 41 and insert: ("(5) A recognised body's accounting reference date is the date upon which its accounting reference period ends in each calendar year and it shall be ascertained as follows—

1. (a) in the case of a body which is recognised at the commencement of this section and in respect of which accounts have been prepared up to a date not more than 12 months before such commencement, its accounting reference date shall be that date;
2. (b) in the case of a body which is recognised at the commencement of this section and in respect of which no such accounts have been prepared, its accounting reference date shall be 31 March or such other date as the Secretary of State may, by order, prescribe;
3. (c) in the case of a body which is not recognised at the commencement of this section and in respect of which accounts have been prepared up to a date not more than 12 months before its recognition, its accounting reference date shall be that date; and
4. (d) a body which is not recognised at the commencement of this section and in respect of which no accounts have been prepared up to a date not more than 12 months before such commencement, unless it determines that its accounting reference date shall be 31 March or such other date as the Secretary of State may, by order, prescribe, shall by notice given to the Lord Advocate specify its accounting reference date.").

The noble and learned Lord said: My Lords, this is a somewhat technical amendment, but its effect is to ensure that a recognised body in preparing the annual accounts it is required to maintain under the terms of Clause 4 may exercise choice as to what should be its accounting reference date. The accounting reference date is the date to which accounts are produced. An important effect of these amendments will be to ensure that where a body already prepares accounts to a particular date it will not have to change that date because of the requirements of the Bill. I beg to move.

On Question, amendment agreed to.

Lord Fraser of Carmyllie moved Amendment No. 52: Page 16, line 44, leave out from ("section") to end of line 45 and insert ("and in respect of which any accounts have been prepared for a period up to a date not more than 12 months before such commencement, the period beginning with that date; (aa) in the case of a body which is recognised at such commencement and in respect of which no such accounts have been prepared, the period beginning with such commencement").

The noble and learned Lord said: My Lords, this is a clarifying amendment to make explicit when the first accounting reference period for a recognised body is to commence. In the case of a body already recognised at the commencement of this clause of the Bill, which has completed accounts in the past 12 months, the period begins with the date of the completion of such accounts. In the case of a body also so recognised but which has not completed any such accounts, the period begins with the commencement date of this clause. I beg to move.

On Question, amendment agreed to.

Clause 14 [The Scottish Conveyancing and Confirmation Practitioners Board]:

[Amendment No. 53 not moved.]

Lord Fraser of Carmyllie moved Amendment No. 54: Page 17, line 24, leave out ("Confirmation Practitioners") and insert ("Executry Services").

The noble and learned Lord said: My Lords, this involves a very extensive list of amendments. The principal amendment is Amendment No. 54, but the other important amendments within this large batch are Amendments Nos. 85, 101, 120 and 236. It is a large batch of amendments, but that is merely because they are all part of our revised scheme for the regulation of those who provide what we now refer to as executry services. By that I mean the area covered by the statutory reservation for confirmation of executors and related activities for the administration of the estate.

As I said in Committee on 27th March when we discussed amendments moved by the noble and learned Lord, Lord Morton of Shuna, I intended to have a further look at the whole area with my right honourable friend the Secretary of State for Scotland. I said then that I had some sympathy with the noble and learned Lord's amendments, but I thought that they might be too wide-ranging in the sense of imposing a strict regulatory regime for financial institutions which were already providing a satisfactory service in executry work.

The arrangements which we now propose, which are expressed in this extensive group of amendments, envisage essentially a two-tier form of regulation for those who provide executry services, as now defined, to include the administration, in-gathering, distribution and winding up of an estate as well as work connected with confirmation itself.

There will be two categories of providers. The first group comprises those who are already regulated under statute; that is to say, banks, building societies and insurance companies. Within that group lie bodies such as the main Scottish banks which already do executry work but which may not now of course handle confirmation. We believe that that group is already adequately regulated to provide satisfactory consumer protection. We intend therefore to exempt bodies in that group from the offence provisions relating to the confirmation of executors. They will have to notify the board that they intend to offer executry services and that they belong to a complaints system which complies with any regulations that may be made by the Secretary of State in respect of dealing with complaints.

The board will maintain a list of such bodies and will make it available for public inspection but will not have any regulatory responsibilities for them. The exemption of those bodies from the offence provisions relating to confirmation will be dependent upon their complaints scheme operating in practice in the manner indicated to the board. If that does not prove to be the case, then the offence provisions will stand. That matter is covered by Amendment No. 101.

The regulation of other providers of executry services will, subject to some important changes which I shall explain shortly, be broadly the same as that for providers in the Bill as discussed in Committee. Prospective providers will have to apply to the board for registration and will have to satisfy the board that they are fit and proper persons to provide the services; that they comply with the requirements of the regulations governing education, conduct and practice; and that they have some form of indemnity insurance cover. If they satisfy the board in all those respects they will be admitted to the register and will be entitled to provide executry services under the title of executry practitioners.

The two additional important changes to which I have referred in passing are that the responsibility for the rules of conduct and practice will now rest with the Secretary of State and not with the board. That change is made in recognition of an extended definition of the regulated area. Provision is now made to place the Secretary of State under the statutory duty to make regulations for the maintenance of appropriate standards of conduct and practice of executry practitioners. Those regulations will be made after consultation and are broadly comparable to what is to be provided for conveyancing. That is Amendment No. 85.

The other important change is found in Amendment No. 236. It is also made in recognition of the extended definition of a regulated area in that executry practitioners will be covered by the board's compensation fund. The amendments go a long way towards meeting the concerns expressed in Committee about the degree of regulation necessary over new providers of services relating to executries while avoiding imposing an over-regulatory regime on financial institutions which are regulated separately.

I trust that I have outlined the main features of the new scheme. I apologise for the fact that it has taken some time to do so, but this is probably the most important set of amendments that I shall introduce on Report. Obviously it will be necessary to make a large number of consequential amendments, but I think that they are essentially self-explanatory. I beg to move.

Lord Morton of Shuna

My Lords, I am grateful to the noble and learned Lord for having taken wholly on board the principle which I sought to establish in the amendments I moved in Committee to extend the provision to executry. That is the reason I did not move the previous amendment. I apologise to the noble and learned Lord if I caught him short, so to speak, by not moving it. The arrangements now put forward by the Government in this group of amendments seem entirely satisfactory. I am grateful that the Government have taken them on board.

Lord Macaulay of Bragar

My Lords, I wish to adopt the views expressed by the noble and learned Lord, Lord Morton of Shuna. The areas with which the amendments deal are important for normal, ordinary individuals. The noble and learned Lord the Lord Advocate stated quite properly in relation to Amendment No. 85 that these were important matters. The terms of that amendment go to the heart of the conduct on the part of the new statutory animal, if I may call it such with no disrespectful intent.

The regulations will be directed to maintaining appropriate standards of conduct and practice of executry practitioners. Such regulations may make provision as to educational qualifications and practical training. These regulations cover a wide spectrum, therefore.

Your Lordships will note that the new subsection (11) of Clause 17 in Amendment No. 85 states that: Regulations under subsection (10).. shall be made by statutory instrument subject to annulment in pursuance of a resolution of either House of Parliament". Noble Lords will find a similar provision if we move on to Amendment No. 101. Amendment No. 66 in the name of the noble and learned Lords, Lord McCluskey and Lord Morton of Shuna, of myself and the noble Lord, Lord Carmichael of Kelvingrove, has not yet been spoken to. The amendment deals with negative and affirmative resolutions and sets out to indicate that: No instrument shall be made under this section unless a draft of the instrument has been approved by resolution of both Houses of Parliament". A question of principle has been raised here. My understanding of Amendment No. 66 is that it is analogous to Clause 93 of the Courts and Legal Services Bill, which recently passed through your Lordship's House in relation to English conveyancing practitioners. Of course, the question of the executry practitioners and confirmation practitioners did not arise in the course of the English Bill, as I recall.

The noble and learned Lord the Lord Chancellor conceded that the proper course in relation to these new practitioners was to have an affirmative resolution, not a negative resolution of the House. Statutory instruments leave it all to chance as to whether people discover what is being done in any sphere. I make my observations at this stage in order to ask the noble and learned Lord the Lord Advocate whether he will take away Amendment No. 85 (11 and Amendment No. 101 (5) in order to consider whether, in the light of the provisions in the comparable Bill for England and Wales, it would at least be equitable that the same procedure should apply in Scotland. I await the reply of the noble and learned Lord with interest.

Lord McCluskey

My Lords, I too wish to congratulate the noble and learned Lord the Lord Advocate on having listened to representations and to the debate on this matter. I notice that we put down an amendment to line 22 of the words that appear in italics. It may be that that is part of the Bill which one cannot amend.

I wish to ask the noble and learned Lord the Lord Advocate two questions, one of which is about a matter which is not entirely clear to me. Once one has dealt with solicitors as providing executry services and then with recognised financial institutions, who else is left to be subject to the regulation and to the establishing of educational qualifications and practical training? Whom do the Government seek to regulate? This is not entirely clear to me from what has been said on previous occasions.

Further, on Amendment No. 85, to which the noble and learned Lord the Lord Advocate spoke, once again there is the use of the word "shall" in the first line and "may" in the sixth line. When the noble and learned Lord the Lord Advocate considers these matters further, I ask him to bear in mind the point that was made in relation to other parts of the Bill. It is slightly odd to lay upon the Secretary of State a duty to make regulations and then to give him total discretion as to what he may insert or omit.

The most important provision that he would insert in the regulations—and no doubt that is why it is specified in Amendment No. 85—is the making of provisions as to educational qualifications and practical training. I should have thought therefore that the noble and learned Lord the Lord Advocate would be persuaded that that was an appropriate place in which to use "shall" instead of "may". However I do not wish to spoil the party—at least not at this stage in the afternoon. Accordingly I am happy to welcome the amendments of the noble and learned Lord the Lord Advocate.

Lord Fraser of Carmyllie

My Lords, perhaps I may respond briefly to the variety of points made. Concerning "may" and "shall", we shall come to a separate amendment on that later and I shall leave it until then. Similarly, I listened carefully to what the noble Lord, Lord Macaulay, said about affirmative and negative resolutions. This related particularly to his Amendment No. 66. Perhaps I may suggest that we leave the matter to be dealt with when we reach that amendment.

The one point that I am anxious to clarify was raised by the noble and learned Lord, Lord McCluskey: whom do we seek to regulate if it is not solicitors who are already regulated as members of the Law Society and if it is not an institution provided for under the first part of the tier? What persuaded the Government to introduce this scheme was representations made not only in this House but outside. It was suggested that there might be those who were solicitors and who decided that they would hive off their executry business and deal with it as confirmation practitioners. If they were to act thus, they would find that concerning the winding up of the estate, any matters of delay would take them outwith the disciplinary control of the Law Society of Scotland. I am in no position to calculate or estimate whether that would happen or whether there may be other individuals or bodies who are neither lawyers nor forward in the financial institutions to which I have already referred who would wish to set up.

It was appreciated that if such individuals or bodies sought to go into executry matters, they would be acting in an important area beyond any control. For that reason the scheme has been introduced. I hope that it will now provide a complete and full cover for all those who wish to take advantage of these people's services in the future.

The Earl of Selkirk

My Lords, I am disturbed at what the noble and learned Lord has said. He suggests that people will be thought to hold themselves out as competent professional people when they are not. That is what he suggests in making this provision. It seems to me that from the point of view of the public that could be extremely dangerous. I do not know how the noble and learned Lord will confirm that people are competent to do their job. This proposal will do so, within limits, but here are people who do not fall within this provision who may hold themselves out to be competent. They could be a great danger to the public. What does the noble and learned Lord have in mind?

Lord Fraser of Carmyllie

My Lords, it is precisely because I am concerned that there may be those who would carry out executry services in Scotland without there being any control over them that this new scheme was introduced by the Government. It followed the representations made during the Committee stage.

I do not suggest that these people should be allowed to carry out the work without regulation: it is exactly the other way round. As matters stand at present, they could carry out that work. Under the scheme that I am now introducing with these amendments, they will be regulated. I trust that that will be warmly welcomed.

On Question, amendment agreed to.

Lord Fraser of Carmyllie moved Amendment No. 55: Page 17, line 25, leave out from first ("the") to end of line 31 and insert ("principal functions of regulating —

1. (a) the provision of conveyancing services by persons other than —
   1. (i) solicitors providing such services in the course of practising as solicitors; and
   2. (ii) persons mentioned in section 32 (2) of the 1980 Act (unqualifed persons who may draw and prepare documents relating to heritable estate and confirmations); and
186
2. (b) the provision of executry services by persons other than —
   1. (i) solicitors providing such services in the course of practising as solicitors;
   2. (ii) persons referred to in paragraph (a) (ii) above; and
   3. (iii) recognised financial institutions.").

On Question, amendment agreed to. [Amendment No. 56 not moved.]

5 p. m.

Lord Fraser of Carmyllie moved Amendment No. 57: Page 17, line 32, after ("may") insert (", with the consent of the Treasury,").

The noble and learned Lord said: My Lords, in moving this amendment I wish to speak also to Amendments Nos. 60, 226, 227 and 228. This group of amendments is intended to clarify our intentions with respect to how the new board will be funded. It has always been our intention that the board should be largely self-financing after an initial period when it may require the injection of relatively small amounts of public money to get it up and running. The board will charge fees to those whom it regulates and the fee revenue will be used to meet its running costs.

During our debate in Committee the noble and learned Lord, Lord McCluskey, referred to the self-financing nature of the Law Society of Scotland and called for the board to be established in a similar fashion. I indicated then that I was prepared to look again at the board's funding to see whether there was any way in which we could provide for finance of a more temporary nature so that the purposes of the board would not be put at risk but yet we could minimise any subsidy from public funds to the commercial activities of those regulated by the board.

I think that the amendments which we are now discussing will achieve this objective. It is now provided that any grant which the Secretary of State may make to the board —and I stress that his powers here are discretionary—may be made subject to specified terms and conditions which could include a requirement for repayment. The detailed arrangements for these grants would be contained in a financial memorandum from the Secretary of State to the board. The amendments also state that the fees raised by the board in connection with its regulatory functions may be applied towards repayment of any grant made by the Secretary of State. There is a further provision to put beyond doubt that the board could borrow money, for example by way of overdraft at the bank. Again the conditions for such borrowing would be laid down in the memorandum.

We have not made provision for the Secretary of State to make loans to the board. I do not think that such a provision is necessary since I believe we can achieve the desired outcome in the circumstances that I have explained by means of a repayable grant.

I indicated at the outset that in moving Amendment No. 57 I wished to speak also to Amendments Nos. 60, 226 and 227. The number for Amendment No. 60 has been omitted from the Marshalled List but I think its position in the Marshalled List is quite clear. I beg to move.

Lord Morton of Shuna

My Lords, this amendment goes some way towards meeting the difficulties I raised on the matter of level playing fields. However it does not go very far. Amendment No. 60 states that, Any grant… may be made subject to such terms". This board is apparently to be set up to help the largest financial institutions which have the best resources in the world in a sense—in other words, the banks and the building societies. Why are those bodies in need of grants from the Government? The noble and learned Lord estimated that the cost of this board would be something like £ 100,000 to start off with.

I have been supplied with information from the Law Society of Scotland. That information contains calculations based on the rent for premises in central Edinburgh and on the accounts of the Scottish Legal Aid Board. The running costs of the proposed board have been calculated to be something over £350,000 a year. Why should this board, which is intended to facilitate the operations of banks and building societies, be provided with grants from the Government when the Law Society and perhaps various other bodies are not? It seems bizarre that the Government should decide that it is necessary to provide grants to banks and building societies of all people in order to enable them to do what the Government say they want them to do. Perhaps the banks and the building societies do not want to do what the Government wish. But surely that is a matter for the banks and the building societies. There is no need for grants to be provided.

In a sense it is difficult to speak to this amendment without mentioning my Amendment No. 58, which appears later on the Marshalled List. If we have to finance this board, it would be better to do so in the form of a loan rather than in the form of a nebulous power to recoup some money, as Amendment No. 60 implies.

Lord Macaulay of Bragar

My Lords, following on from what the noble and learned Lord, Lord Morton of Shuna, has just said, I must ask the noble and learned Lord the Lord Advocate what compulsion there will be on these major institutions as regards the terms and conditions for obtaining repayment to the public purse. The cost of getting the board up and running would be a drop in the ocean for those institutions, if that. These large institutions do not need public assistance. Your Lordships will recall that a heated debate took place in this House and in another place on another matter of loans. We are living in a funny country when young students are being forced into poverty and into debt by the very same Government who turn round to major financial and banking institutions and say, "Here is a little present from the Government to get you going". If the Government cannot do that for students, how can they justify handing out money to large companies which do not need one penny out of the public purse and which will benefit from the constitution of the board by being allowed into the public sector of these legal activities? That does not make any sense at all.

The noble and learned Lord, Lord Morton, mentioned some large figures in connection with the board. However, the noble and learned Lord the Lord Advocate said that a considerable sum would not be needed to get the board up and running. The noble and learned Lord, Lord Morton, referred to the minimum figure that the Law Society of Scotland has arrived at. That figure was arrived at on the basis of rents for offices that were not even in the best areas of Edinburgh. The Law Society calculated that the cost per square foot of office accommodation was £23.50 and that the cost of a basic custom-built computer system was £140,000. The Law Society also calculated that the cost of fitting out and equipping offices was a further £100,000. Then there are staff to be paid, the chairman to be paid and the board members to be paid. The matter was reconsidered this morning and it was estimated that there might be no change out of £500,000. I am sure there are many students throughout the United Kingdom who would be delighted to obtain even £5 of that sum.

Baroness Carnegy of Lour

My Lords, the comparison that has been made between these proposals and student loans is not relevant. The only connection is that the student loans Bill concerns loans and the various speakers in the previous debate wanted to have loans in this case rather than grants. The point that we must not miss is that we are looking for some way of providing competition for solicitors in this field. Solicitors fund their own Law Society and the Law Society is making estimates as regards what such a body may cost. I do not know whether such a body would have to be situated in central Edinburgh. I should not have thought that that was necessary. Perhaps the estimates are unnecessarily large. But the point is that the Bill should permit arrangements to be drawn up in order to find out how the process works and to get the board up and running. Once it is up and running it may well be able to fund itself However, to say in legislation that it should be stopped before it starts by putting disincentives in the way of those who may dip their feet in the water for the first time seems to me a great mistake.

Lord Mackie of Benshie

My Lords, we appear to be talking about the next amendment, which I feel is the relevant amendment. I think it is quite reasonable to lend to banks and other wealthy institutions to enable them to get a start. They should be given loans at a proper rate of interest such as the rates of interest that they charge farmers in this country. That would be quite reasonable. However, the Government are wholly inconsistent in wanting to give banks money while taking money from farmers in order to fund essential research. It is wholly inconsistent and I suggest that we move to the next amendment so that the House can decide the matter.

Lord McCluskey

My Lords, despite what the noble Lord has just said, perhaps I may be permitted to say one word on the matter. I am not happy about the grouping either. I believe that Amendment No. 57 should have been taken on its own. However, the noble and learned Lord the Lord Advocate mentioned Amendment No. 60. He worried me by saying: it has always been our intention that the board should be largely self-financing". That is the first time that the noble and learned Lord has said that. On a previous occasion, as I recall, he said that it was intended to provide moneys for the setting-up and starting costs but thereafter the board should be wholly self-financing. I hope that he will explain whether the use of the word "largely" represents a change of position or whether I have simply misunderstood him.

In a letter to me which he promised at Committee stage to write the noble and learned Lord said: As I made clear in the debate"— and I must confess that he did not make it clear to me — the Board will in due course become self-financing and has been accorded a specific power to raise funds". He went on to talk about pump priming: On the question of how best to provide the necessary 'pump-priming' finance before any fee income is forthcoming, the Secretary of State and I are currently considering whether it should be possible for such funding to be potentially available in the shape of loans, as well as by the means of direct grants". So I do not know what the position of the Government is. No doubt we can explore that question in the course of dealing with the other matters.

However, there is one other matter of which I should perhaps give notice since Amendment No. 60 was spoken to by the noble and learned Lord. That is the curious notion of a grant which is subject to repayment. I know a good word to describe a grant which is subject to repayment: it is called a loan. In addition, the grants which are to be subject to repayment are to be subject to terms and conditions which may be varied after the grant is made. I notice that the noble Lord, Lord Sanderson, has decided to join us on this occasion. No doubt he has some knowledge of the Highlands and Islands Development Board lending sums of money, as will the noble Lord, Lord Mackie. However, I believe that there would be something of a hoo-ha if after the money had been received and spent the conditions for its repayment were then to be changed.

It may be that the noble and learned Lord the Lord Advocate has in mind a grant which is subject to certain conditions and if those conditions are not fulfilled the money may be clawed back, but I do not believe that that is what is said by Amendment No. 60. No doubt in due course we shall receive answers to those particular points. For the moment I should certainly not oppose Amendment No. 57.

Lord Fraser of Carmyllie

My Lords, perhaps I may reply briefly. I am sorry if the grouping is not considered satisfactory but I believe that there is at least some link between the two. As my noble friend Lady Carnegy mentioned, we appear to have ranged widely from the matter of setting up the board to the complaints of the farmers and students of Scotland.

I should like to make it clear that the position remains that the Government envisage that the board will in due course be self-financing. I must make it clear that I am not prepared to see a situation whereby, by putting a number of restrictions around the board, those who wish to see the board's demise should achieve its demise because it is not properly funded. It should be appreciated that that is what appears to be behind the proposal.

I hope that noble Lords will read what I have had to say because I am not anxious to repeat it in detail. We envisage that grants from the Secretary of State might be made subject to such conditions that they should be essentially repayable. They are not quite the same as a loan but there might be circumstances which would mean that they were not repaid. I stress that it is the intention that the board should be of a self-financing character. However, I am not prepared to see arrangements introduced which, if adopted, might mean that the board could not get up and running without that priming at the outset.

The Earl of Selkirk

My Lords, I find it very difficult to follow what the noble and learned Lord has said. There is nothing whatsoever in the Bill about repayment. One is left with the proposition that government money may be provided to assist those competing with independent people on the same ground. I do not understand where the Director General of Fair Trading comes into the matter. This would be regarded as a very peculiar proceeding in the commercial market and it is a very odd proceeding here. I do not understand why it has been done.

Is the noble and learned Lord prepared to state in the Bill that repayment will be demanded in due course, because that does not appear in the Bill at all? If that is the intention it should be made abundantly clear.

5.15 p.m.

Lord Fraser of Carmyllie

My Lords, I should be grateful if the noble Earl would read what I said. I have already indicated that if the Secretary of State were to make any grant to the board—and he may not—his powers would be discretionary. The grant would be subject to specified terms and conditions which could include a requirement for repayment.

The Earl of Selkirk

My Lords, should that not be in the Bill?

On Question, amendment agreed to.

Lord Morton of Shuna moved Amendment No. 58. Page 17, line 32, leave out ("grants") and insert ("loans").

The noble and learned Lord said: My Lords, in moving Amendment No. 58 I shall also speak to Amendment No. 59. Having heard what the noble and learned Lord the Lord Advocate said in the previous discussion I can do so fairly shortly because it appears clear that the Government will accept the amendment.

The purpose of the first amendment is to take out the word "grant" and insert the word "loans". I should make it clear that I am in no sense trying to prevent the board being set up. I wish to make sure that there is, in the hackneyed phrase, a level playing field and to specify very much the same type of finance as was insisted on for all the bodies which were set up under the Financial Services Act, namely that they should be self-financing.

If one converts Clause 14 (2) in the way in which Amendments Nos. 58 and 59 suggest, it would read: The Secretary of State may make loans to the Board towards expenses incurred, or to be incurred, by them in connection with the initial establishment of the Board".

From what the noble and learned Lord the Lord Advocate said that appears to be the Government's intention. If that is so no doubt he can indicate that the amendment is acceptable. If it is not the Government's intention to accept the amendment, why do we have to retain the words: the discharge by the Board of their functions"?

Why is it necessary for the grant to be made to this self-financing body—as we understand it is intended to be—for the discharge of its functions? That is illogical. It certainly does not create a level playing field if banks and building societies are to be subsidised in the discharge of their functions while the solicitors, who are their competitors, are to have no such subsidy. I beg to move.

The Deputy Speaker (Lord Nugent of Guildford)

My Lords, I must point out to noble Lords that if this amendment is agreed to it pre-empts Amendment No. 60. Amendment No. 60 refers to grants and will therefore become supererogatory because "loans" will have taken the place of "grants".

Lord McCluskey

My Lords, I wish to support the amendment. Again one does not need to repeat the points which have already been made. However, the noble and learned Lord referred in a previous answer to those who wish to see the board's demise. I do not number myself among them, but I do not know who it was that he had in mind. It is an unfortunate term for him to use.

As I see it, the board is essential if others are to provide conveyancing and executry services as envisaged by the Bill. I do not think that the House is at the stage of saying that the clause should be deleted altogether. That matter has already been dealt with and this House would not attempt to stop the clause coming into force.

However, to return to the specific matter of grants and loans, it seems almost too clear for argument that the financial institutions and building societies referred to in the previous amendment simply do not need financial assistance from the taxpayer to set up a board to regulate their affairs any more than did the Law Society or the bodies which my noble and learned friend Lord Morton of Shuna mentioned. I should like to know in what circumstances the Government envisage that the board could not repay a loan. If the board is set up and governs the activities of building societies, banks and other financial institutions, in what circumstances could the Government forgo repayment of the sums of money?

I am so puzzled by the Government's attitude in relation to the matter that I wonder whether they have thought through all the implications of what they currently say. Surely the proper answer is that the Government should be prepared, with the consent of the Treasury, to advance sums of money on commercial terms so that those bodies can be set up and in due course, out of their profits, can repay the Government's and the taxpayers' money.

Lord Stodart of Leaston

My Lords, as I understand it, the two noble and learned Lords have based a certain amount of argument on the fact that a sum of money that may have to be repaid is not a grant but a loan. There have certainly been grants in the field of rural housing. I have enjoyed them and have had to repay them. The noble and learned Lords would therefore say that they were not grants but loans. I do not know whether they were described as loans in the original legislation, but I do not think so. I have not researched the matter, so I do not know whether conditions were written into the legislation to the effect that they might have to be repaid. Certainly, the rural housing assistance scheme was known as rural housing grant, not rural housing loan, but in certain conditions it still had to be repaid.

Lord Macaulay of Bragar

My Lords, I shall not add much more to what I said in relation to the previous amendment, Amendment No. 57. However, I should like to know what negotiations have taken place with the representatives of those major institutions in relation to the primary funding of the board and whether there has been any indication from the banks and insurance companies that they cannot afford to get the board going at their own expense. Is there any reason why those institutions cannot get together, decide how much it will cost to get the thing going and collect the money together just as estate agents and solicitors get together if they want to open property centres? They bear the cost of the mutual exercise.

The noble Baroness, Lady Carnegy, suggested that some of us were here to protect the solicitors. We are certainly not here to do that. The system will run parallel with solicitors and there will be competition. The amendment is a matter of principle and concerns the difference between grants and loans in the circumstances which have already been discussed.

Baroness Carnegy of Lour

My Lords, I did not suggest that anyone was here to protect solicitors. I suggested that the point of the Bill was to present solicitors with some competition, which might be beneficial to the public. That is the point of the Bill. If solicitors were unregulated—just imagine the fantastic scene—and the government of the day considered it necessary to set up a law society and to persuade the profession to have a law society, it might well be that there would have to be a bit of inducement to persuade them. However, they have an excellent law society which they finance. The major institutions must be persuaded that the system can work. It may well be that some kind of negotiations must take place. We shall hear from my noble and learned friend, in response to the noble Lord, Lord Macaulay, whether he has anything to say about that matter. It may be that various conditions will apply in negotiations.

All we are discussing is a certain flexibility in the Bill in order to get the scheme going. No one can tell me that the people who object are doing anything more than objecting to the setting up of a board, in spite of what the noble and learned Lord, Lord McCluskey, said. If we are to have the system, we need the board, but he is not too keen on the system. The provision seems perfectly reasonable to me.

Lord Fraser of Carmyllie

My Lords, we are almost rattling around the Circle Line for a second time. I must tell noble and learned Lords who have contributed to the debate that it appears to me that what they are saying depends on making a number of assumptions which may well be right. It may well be that all the major banks in Scotland will immediately seek to become involved in conveyancing practitioner work. It may be that all the building societies and other financial institutions similarly wish to take advantage of that competitive opportunity.

However, a bank to which I spoke indicated that it did not want to do so and a building society has indicated to me that it does not wish to do so either. I do not think that they will change their minds. I have no idea how many institutions will wish to participate in the scheme. I can make no assumptions and I suggest to noble and learned Lords that similarly they can make no assumptions at the outset as to the number of institutions that may choose to participate.

My noble friend Lady Carnegy is correct in that respect. We seek to allow for provision whereby in the early days the Secretary of State can make repayable grants—not loans—to enable the scheme to be set up. However, I reiterate yet again: we intend that the board should be self-financing. If the assumptions which the noble and learned Lord, Lord McCluskey, made are correct—and he may well be correct—I am wholly confident that no subsidy of any kind will be necessary.

I do not think that the issue should generate the controversy which it appears to generate. We are trying to allow for a period at the start-up during which time the Secretary of State, by grants which are subject to conditions including that of repayment, will allow the scheme to get going. I do not mean the noble and learned Lord to get touchy about my suggestion that some people might be anxious to secure the demise of the board. If he excludes himself from that, I am more than happy to accept his assertion, but it is important that we should have that arrangement at this stage to enable the board to get going.

Rather than dealing with the matter by way of loans, as is suggested here, I have spelt out in some detail the way that the Secretary of State proposes to deal with it by way of repayable grants. Anyone who knows my right honourable friend the Secretary of State for Scotland will know that, if he is subjected to any attack in Scotland, as he occasionally is, it is because he is not free enough in making subsidies to institutions in Scotland, not because he is overly generous, as seems to be suggested here.

Lord Morton of Shuna

My Lords, it has been an interesting debate. The semantics of whether a repayable grant is a loan is perhaps worthy of discussion in an essay in the English language. However, that is not the point. The point is that Amendments Nos. 57 and 58 seek to make clear that the money to be provided by the Government is to be repayable and is only for setting up the board, not for the discharge by the board of its functions.

The noble Lord, Lord Stodart of Leaston, referred to agricultural grants. I am not sure what kind of grants he dealt with, but it is common to have a grant of that kind which one must repay if, for example, one sells the property. One gets a grant to repair a cottage or something, and it is only if the property is sold that the grant has to be repaid. It is a different kind of repayable grant to the one that we are talking about here.

I remain puzzled as to why, in the Financial Services Act, all these institutions that were to give financial advice were to be wholly self-financing as set up by the Act and under the framework of the Act. I do not know why we have to subsidise at the taxpayers' expense the banks and building societies who want to do conveyancing. It is an incredible puzzle.

The noble Baroness, Lady Carnegy, referred to the formation of the Law Society of Scotland. She is wrong. The society was formed at the insistence of the Government because they needed it for the Legal Aid Act. The Law Society of Scotland was financed not at all by the Government. It had to be totally self-financing in its set up. That has always been the position. So far as I am aware, we are setting up a unique new body which is to be financed partly by the taxpayer and which is to benefit the building societies and the banks.

That is totally wrong in comparison with the Financial Services Act and other circumstances. This measure does not provide what has been referred to as the level playing field. I regret that I have to ask for the opinion of the House.

5.32 p.m.

On Question, Whether the said amendment (No. 58) shall be agreed to?

Their Lordships divided: Contents, 75; Not-Contents, 95.

DIVISION NO. 1
CONTENTS
Addington, L.	Coleraine, L.
Ampthill, L.	Davies of Penrhys, L.
Ardwick, L.	Dean of Beswick, L.
Aylestone, L.	Dormand of Easington, L.
Blease, L.	Dunrossil, V.
Bottomley, L.	Ewart-Biggs, B.
Brightman, L.	Falkland, V.
Brooks of Tremorfa, L.	Fisher of Rednal, B.
Bruce of Donington, L.	Gallacher, L.
Carmichael of Kelvingrove,	Galpern, L.
L.	Gladwyn, L.
Cledwyn of Penrhos, L.	Glenamara, L.

Graham of Edmonton, L.	Morton of Shuna, L. [Teller.]
[Teller.]	Nicol, B.
Grantchester, L.	Northfield, L.
Gregson, L.	Oram, L.
Grey, E.	Phillips, B.
Hampton, L.	Pitt of Hampstead, L.
Hatch of Lusby, L.	Ponsonby of Shulbrede, L.
Hayter, L.	Prys-Davies, L.
Hirshfield, L.	Rea, L.
Howie of Troon, L.	Robson of Kiddington, B.
Hughes, L.	Rochester, L.
Hylton-Foster, B.	Russell, E.
Jenkins of Putney, L.	Saltoun of Abernethy, Ly.
John-Mackie, L.	Seear, B.
Kennet, L.	Selkirk, E.
Kirkhill, L.	Shannon, E.
Lloyd of Hampstead, L.	Stoddart of Swindon, L.
Longford, E.	Strabolgi, L.
Lovell-Davis, L.	Tordoff, L.
Macaulay of Bragar, L.	Turner of Camden, B.
McCluskey, L.	Underbill, L.
Mackie of Benshie, L.	Wallace of Coslany, L.
McNair, L.	Whaddon, L.
Mason of Barnsley, L.	White, B.
Milner of Leeds, L.	Williams of Elvel, L.
Molloy, L.	Winstanley, L.
Morris of Castle Morris, L.

NOT-CONTENTS
Abinger, L.	Kaberry of Adel, L.
Allenby of Megiddo, V.	Killearn, L.
Allerton, L.	Kimball, L.
Arran, E.	King of Wartnaby, L.
Ashbourne, L.	Lauderdale, E.
Auckland, L.	Layton, L.
Belhaven and Stenton, L.	Long, V. [Teller.]
Belstead, L.	Lucas of Chilworth, L.
Blatch, B.	Lyell, L.
Blyth, L.	McColl of Dulwich, L.
Borthwick, L.	Margadale, L.
Brookeborough, V.	Marshall of Leeds, L.
Buckinghamshire, E.	Merrivale, L.
Caithness, E.	Mersey, V.
Camegy of Lour, B.	Montagu of Beaulieu, L.
Carnock, L.	Morris, L.
Clanwilliam, E.	Mountevans, L.
Constantine of Stanmore, L.	Munster, E.
Cork and Orrery, E.	Murton of Lindisfarne, L.
Craigavon, V.	Nelson, E.
Craigmyle, L.	Norfolk, D.
Davidson, V. [Teller.]	Nugent of Guildford, L.
Denham, L.	Orkney, E.
Dundee, E.	Orr-Ewing, L.
Eden of Winton, L.	Park of Monmouth, B.
Elles, B.	Pender, L.
Elliot of Harwood, B.	Radnor, E.
Elliott of Morpeth, L.	Rankeillour, L.
FaithfuU, B.	Reay, L.
Fanshawe of Richmond, L.	Renton, L.
Ferrers, E.	Rodney, L.
Fortescue, E.	Sanderson of Bowden, L.
Eraser of Carmyllie, L.	Sharpies, B.
Gibson-Watt, L.	Somers, L.
Goold, L.	Stodart of Leaston, L.
Gray of Contin, L.	Strathclyde, L.
Greenway, L.	Strathmore and Kinghorne,
Grimston of Westbury, L.	E.
Harmar-Nicholls, L.	Sudeley, L.
Henley, L.	Swansea, L.
Hesketh, L.	Swinton, E.
Hives, L.	Thomas of Gwydir, L.
Holdemess, L.	Trefgarne, L.
Hooper, B.	Ullswater, V.
Howe, E.	Vaux of Harrowden, L.
Jenkin of Roding, L.	Westbury, L.
Johnston of Rockport, L.	Wynford, L.
Joseph, L.	Young, B.

Resolved in the negative, and amendment disagreed to accordingly.

5.40 p.m.

[Amendment No. 59 not moved.]

Lord Eraser of Carmyllie moved Amendment No. 60: Page 17, line 35, at end insert — ("() Any grant made under subsection (2) above may be made subject to such terms and conditions (including conditions as to repayment) as the Secretary of State, with the consent of the Treasury, thinks fit and the Secretary of State may, with such consent, vary such terms and conditions after the grant is made.").

On Question, amendment agreed to.

Lord McCluskey moved Amendment No. 61: Page 18, line 21, leave out ("may") and insert ("shall").

The noble and learned Lord said: My Lords, this is the first of a number of amendments which seek to achieve the same result; that is to remove the word "may" and replace it by the word "shall" in order to compel the Secretary of State to make regulations containing certain provisions.

I invite your Lordships' attention to Clause 15 (5) which states: The Secretary of State shall… by regulations make such provision as he considers appropriate as to the requirements to be satisfied by any person applying for registration under subsection (2) above, and such regulations may, in particular, require that the applicant maintains… suitable procedures for dealing with any complaints … suitable arrangements … to satisfy any successful claims made against it in connection with the provision of conveyancing services; and … suitable procedures for ensuring that the provision of conveyancing services by it complies with the regulations".

I believe that those requirements are necessary. The regulations would not be worth much if they did not contain provisions governing the requirement for suitable procedures, suitable arrangements and suitable procedures respectively as specified in subsection (5) (a), (b) and (c). In other words, there must be suitable procedures for dealing with complaints; suitable arrangements for dealing with successful claims against the new breed of paralegal practitioners; and suitable procedures as specified in subsection (5)(c).

The measure proposed in Amendment No. 61 would ensure that the regulations obtain appropriate provision. It would still give the Secretary of State a good deal of discretion by allowing him to determine what was appropriate in achieving those particular objectives. I remind the House that in Committee the noble and learned Lord the Lord Advocate said that he would reflect upon the matter. I do not see any evidence to show that the reflection has been productive of fruit but no doubt he will tell us. I beg to move.

Lord Eraser of Carmyllie

My Lords, I appreciate that the regulations made under the clause are of considerable interest not only to those in the existing legal profession but also to those who have a keen interest in protecting the consumer as regards the provision of new conveyancing services.

When we began our debates the clause contained two "mays". I conceded that one "may" should become "shall" and now another "shall" is demanded of me. I am anxious to indicate to noble Lords that if I were to accept the noble and learned Lord's amendments I should be going too far down the road of prejudging the content of the code before the Secretary of State had had time to consult fully on what it should contain, taking account of all the debates on the Bill here and in another place. I can, however, assure the House that the topics listed in subsections (5) and (11) will be covered in the code and I also make it absolutely clear that there will be consultations on the regulations before they are made.

As the noble Lord, Lord Macaulay, indicated, we shall shortly debate Amendment No. 66 about the parliamentary procedure to be attached to such regulations. I shall now comment briefly upon it. I accept the point that he accurately made. Comparable provisions are contained in a Bill promoted by my noble and learned friend the Lord Chancellor. The Bill provided that such regulations should be subject to the affirmative resolution procedure rather than the negative. That is a fair point. While I am not prepared to accept Amendment No. 66 there is a strong case for allowing north of the Border what is already provided for south of the Border. I do not say that lightly or in an attempt to put off matters. However, it appears that under the existing arrangement contained in the clause, particularly if there is attached the requirement that the regulations should be subject to affirmative resolution, the anxieties that have been expressed in various quarters are not as well founded as was feared.

I have reflected on the matter but not to the extent that the noble and learned Lord may have wished; namely, to introduce "shall" instead of "may". In Committee my noble friend Lord Renton asked whether, if "may" remained in the clause, the Secretary of State could be subjected to judicial review. My reflection on the matter is that yes, undoubtedly he could.

I hope that in those circumstances the noble and learned Lord will withdraw the amendments, particularly in the light of my comments on Amendment No. 66.

The Earl of Perth

My Lords, is my noble friend saying that he agrees that the provisions in subsection (5) (a), (b) and (c) will be included?

Lord Fraser of Carmyllie

My Lords, yes.

The Earl of Perth

My Lords, that is equivalent to "shall".

Lord Fraser of Carmyllie

My Lords, as I have said, I do not wish to prejudge too precisely the content of the code. That is a matter for the Secretary of State for Scotland. However if at that stage he considers that the contents of the code are insufficient —and it is important that we should have consultations—I shall look seriously at introducing the affirmative resolution procedure. That would appear to be consistent with the line taken by my noble and learned friend the Lord Chancellor in the Courts and Legal Services Bill.

Lord McCluskey

My Lords, I am content with the noble and learned Lord's reply and shall not seek to divide the House. He has said in terms that the topics contained in subsections (5) and (11) will be covered in the regulations. He has also indicated that the affirmative resolution procedure would be appropriate in that case. Therefore, if the Secretary of State were to omit them the House will have in mind those words. I trust implicitly and completely the Lord Advocate and the Secretary of State in relation to this matter and I am happy with the assurances that I have been offered. In those circumstances I beg leave to withdraw the amendment. I shall not move Amendment No. 62.

Amendment, by leave, withdrawn.

[Amendment No. 62 not moved]

Lord Morton of Shuna moved Amendment No. 63: Page 19, line 18, at end insert ("including a requirement that conveyancing practitioners must offer each prospective conveyancing client an interview with a solicitor at a place convenient to that client, at which any possible conflict of interest will be reviewed and the scope of the service being provided explained.").

The noble and learned Lord said: My Lords, as is usual in these debates, the amendment reverts to a matter raised in Committee. It is the requirement that: conveyancing practitioners must offer each prospective conveyancing client an interview with a solicitor".

I recollect that there was general agreement that that should be done. I do not wish to take up the time of the House and I beg to move.

Lord McCluskey

My Lords, this amendment is also in my name. It is worthwhile emphasising that in Scottish law as well as in English law an agent has a duty to disclose to his principal all the benefits which he obtains from a transaction in which he acts as agent. He must account for any secret profits.

The purpose of this amendment and Amendment No. 65 is to ensure that these paralegals also make full disclosure of all such matters as may bear upon their interest in the transaction. The best that can be hoped for is that if full disclosure is made to the client or customer then that client or customer will be able to make his own judgment as to whether he should continue to be represented in the transaction by the person acting under this clause.

This is a matter of some importance and it received support in Committee from all quarters of the House. I hope that the Government will respond positively.

Lord Gray of Contin

My Lords, I like the wording of these amendments, particularly Amendment No. 63. I like the thought behind it that the opinion of a solicitor, who is after all an independent adviser, will be available.

There were two matters about this legislation which I disliked when we considered it earlier. As regards the first (the anxiety which I had for the future of solicitors in rural areas), my noble and learned friend has given me some consolation —if I may put it that way —by telling me that the Secretary of State will have another look at the situation and will have research carried out of which we shall all receive the benefit. If that research reveals that there is likely to be hardship, then the assumption is that the necessary action will be taken. It does not go quite so far as I should have liked, but it is at least recognition by the Secretary of State that the problem exists.

My second objection to the Bill is the whole question of what I see as the unhealthy—and I mean unhealthy for the consumer—relationship which is now developing and likely to develop further between building societies, banks, estate agents and insurance companies. It is on that point that I wish to relate my remarks on this amendment.

Most people require a mortgage to purchase a home. In the case of young couples—and sometimes not so young—borrowing involves a multiplier of three or even four times. For the benefit of the uninitiated, the multiplier is the number of times the borrower's gross annual salary which the lender regards as a safe level for loan purposes. Such borrowing involves severe repayment and interest pressures. In relation to the level of the multiplier, there is a very clear connection between that and the extent of the funds available to the lending institutions. With 100 per cent. loans and immediate interest charges, the old presumption that the property can always be sold to repay the amount borrowed has been breached. The surplus of funds for lending has led to many lenders paying commissions to intermediaries for placing loans with borrowers.

Lenders of their subsidiaries not only make profits from lending mortgages but also from ancillaries connected to those mortgages such as survey fees, building and contents policies and premiums, mortgage guarantee premiums—and most profitable of all, the sale of mortgage linked insurance products. Insurance companies pay commission to the intermediary who sells the policy to the investor. The amounts vary but in some cases over 60 per cent. of the first year or two years' premiums may be paid. Therefore it is only after two years that the policy acquires any investment value whatever to the purchaser. Investment insurance is inextricably linked to the house market and estate agencies. That is demonstrated clearly by the recent and continuing buying up of estate agencies by banks, building societies or insurance companies which see those agencies as the ideal sales point for their particular financial product.

Furthermore, that trend continues with banks and building societies becoming tied to particular insurance companies thereby not only avoiding the most arduous responsibilities associated with the Financial Services Act, including the need to disclose commission, but also obtaining higher commission levels which are paid through, although not by, the insurance company. The commission is deducted from the policy premium and is paid by the consumer.

Estate agents view their business today as not only to sell houses but in ever increasing numbers to sell mortgages and insurance related products. That means that they must act as buyer as well as seller; and given the substantial sums of commission involved, there is a great temptation to ensure that the buyer with their insurance product obtains the house.

In relation to mortgage linked policies, there has developed an appalling malpractice known as churning. That is the practice by unscrupulous financial advisers of persuading mortgagees to unnecessarily surrender existing endowment or other investment policies linked to mortgages when the mortgagee comes to increase or change the mortgage on a change of house. The adviser then sells a new mortgage for the full amount of the law loan thereby maximising the adviser's commission. The Law Society of Scotland estimates that as much as £70 million per year may be lost by the unnecessary surrender of life policies.

If this Bill is passed in its present form, it is quite obvious that in due course some lenders will offer to waive conveyancing charges altogether which will be done in-house. However, it will in effect be paid for by the purchaser—in other words, the consumer—through the huge commission which the lender is receiving through the sale of insurance-related accessories on behalf of that self same consumer.

One remedy might be the requirement that all commissions be made known to prospective clients in advance, and other associated loopholes can perhaps be remedied by appropriate amendments to the Financial Services Act. Not surprisingly, I fear deeply that the lack of independent advice, which may be the result of this legislation unless every care is taken, could leave the consumer in a very much less favourable position than presently exists.

The wording of this amendment involves the consultation with a solicitor and therefore maintaining the independent advice. I am afraid that I should become deeply suspicious not of the professional virtues of the solicitor who works for the building society, but of his general attitude in as much as he will be torn between two loyalties—his loyalty in offering the best possible advice to the client and his loyalty to the building society, bank or insurance company which pays his cheque. I do not believe that that is a healthy situation and is something which I find worrying.

In Scotland we have a proud record in relation to our solicitors. We have a conveyancing system which is comparable with that of any other country and is envied by many of them. I should not like to see that conveyancing system tainted by some of the practices which I have outlined this afternoon.

6 p.m.

Lord Macaulay of Bragar

My Lords, I should like to add my support to the spirit of Amendment No. 63. Other amendments are tabled along the same lines and the question of independent advice is central to the operation of the new conveyancing system.

The way in which the amendment has been phrased is perhaps a little narrow when dealing with conflicts of interest because that means different things to different people. Most people look upon it as a conflict between the buyer and the seller. However, I support the spirit of the amendment which is in keeping with what was proposed when the new conveyancers were introduced by the Bill.

Baroness Carnegy of Lour

My Lords, my noble and learned friend the Lord Advocate wrote to me because he observed that I had a great interest in this subject. He explained that the regulations to which the noble and learned Lord, Lord McCluskey, referred will require practitioners to offer all potential clients an interview before any instructions are accepted. The idea is that that provision should be contained in regulation rather than on the face of the Bill.

I heard from the bodies representing consumers that they are very pleased with the amendments being accepted by the Government on various aspects of the Bill and are pleased with the progress on this matter. There is one important aspect of the amendment which I should like my noble and learned friend on the Front Bench to confirm. It is not only important that there should be a free interview, but that it should be held at a place convenient to the client. There is no point in holding an interview somewhere where the client finds it difficult to attend. That needs to be made plain, if not in the Bill then in the regulations. Perhaps that point could be confirmed.

My noble friend Lord Gray of Contin spoke at length on matters discussed at an earlier stage and certainly threw additional light upon them. He spoke partly about the process known as "churning", in which I too have taken an interest. The interview is extremely important. My noble and learned friend the Lord Advocate explained that it will be free in the sense that if the client decides not to proceed with that particular practitioner, there will be nothing to pay for the interview. As several noble Lords mentioned in Committee, the cost will have to be added to the fees charged for interviews. The people who are paying fees will pay for the interviews which were free to the people who did not take up the arrangement with that particular practitioner.

I hope that the point on the place of the interview being convenient to the client will be incorporated in the regulations whether or not the amendment is accepted.

Lord Coleraine

My Lords, I support the amendment. I anticipate that my noble and learned friend will say, as was said during the passage of the English Bill, that these matters are better dealt with by regulation than on the face of the Bill. If that is so, I have taken careful note of the comments of the noble Lord, Lord Macaulay of Bragar. It seems to me that my noble and learned friend should say that any interview envisaged between the conveyancing practitioner and the client or customer should clearly include provision for the conveyancing practitioner to outline potential conflict of interest not just between vendor and purchaser, but between the conveyancing practitioner and the client or customer.

Lord Fraser of Carmyllie

My Lords, this has been an interesting debate on what is undoubtedly an important part of the Bill. Perhaps I can deal first with a number of matters raised by my noble friend Lord Gray of Contin before turning to the specific provisions of the amendment.

The noble Lord, Lord Gray, raised a number of issues which are of concern both to those who provide the services and to those with a consumer interest in mind. What emerged clearly from the examples and estimates of calculations that he gave was that many of the problems he envisages for the future are problems which exist at present. I suggest that we need to tackle the issue of the provision of financial services not exclusively in relation to the conveyancing regime, but as the Securities and Investments Board are doing at the moment, reviewing the rules that apply to all who provide financial services. Ministers of the Department of Trade and Industry recently stated their clear intention to tighten up elements of malpractice by estate agents which have been identified; but those exist at present, not just in relation to what might be provided for under the Bill.

The noble Lord also made the point regarding "churning". That was taken up by my noble friend Lady Carnegy. That is a matter better dealt with in the broader context of financial services. Perhaps I can say that one matter appears to have been overlooked as we consider this part of the Bill. It is that the tying-in of financial services to conveyancing is prohibited for the whole of Great Britain in the Courts and Legal Services Bill. The reason it appeared in that provision is because it is possible that those who might be offering the financial services could be on this side of the Border rather than in Scotland. In any event, the tying-in prohibition is there for the whole of Great Britain.

Turning to the specific amendments, as I said at Committee, I have no difficulty in accepting that the matters which these amendments seek to import into the statutory code of conduct for conveyancing practitioners are important features of our proposed scheme. The draft conveyancing code which was set out in the Secretary of State's consultation paper, The Legal Profession in Scotland, and the further suggestions made in the statement, The Scottish Legal Profession: the Way Forward, deal in terms with all the points. Where I part company with what is suggested is that it is desirable to include such detail in the list of items which guide the Secretary of State in framing the regulations. Various suggestions can readily be accommodated within the list of items we have. The requirement to offer an interview with prospective clients would be part of what is Clause 11; the manner in which conveyancing practitioners conduct the provision of conveyancing services.

Perhaps I could say to my noble friend Lady Carnegy that we will be consulting on what will be the contents of the conveyancing code, but it is certainly the intention that the location should be convenient to the prospective client. I should not like to tie it down absolutely by saying that it has to be at his home. If, for example, in a part of the country which she knows someone who worked in Dundee wished to purchase a house in the rural areas of Angus, it may be convenient for that person to see a conveyancing practitioner in Dundee. What is important is that we should focus on the idea that it is a point of meeting convenient to the client to whom the services may be offered.

I am grateful to my noble friend for underlining what I said with regard to that interview—that it should be free. It will be free in the sense that if the services are not taken up, the prospective client will not have to pay. But somehow, of course, someone will have to pay. We cannot fashion interviews in the time of professional men out of nothing.

Turning to conflicts of interests, as your Lordships will be aware it is spelt out in the simplest of terms that under subsection (11)(c) conflicts of interest are to be covered by the code. It seems to me important that conflicts of interest stated in that broad fashion should be allowed to stay on the face of the Bill. However, I confirm that specific prohibitions on acting for specific combinations of parties whose interests conflict are envisaged as being contained in the code. It is a difficult issue. There may well be circumstances in which purchaser and seller wish one person to act for them both. It might appear to be an unnecessary restriction if that possibility were to be excluded in all circumstances. I suggest that we leave that to consultation and the code of conduct.

I can assure the House that the matters referred to in these amendments will all feature in appropriate terms in the regulations issued for consultation. There could be no end to the detailed list of items for inclusion in the code. Indeed, the draftsman would be concerned. The more items that are suggested, the less scope there is for measured reflection on what is important as distinct from how that importance is expressed. We would not wish to restrict conflicts of interest too much in case such a step curbed what the Secretary of State can do.

With the clear appreciation that these matters are important and should be contained in the code of conduct but not on the face of the Bill, I hope the amendment can be withdrawn.

Lord Morton of Shuna

My Lords, it is always difficult to work out what should be on the face of the Bill. I agree with the noble Baroness, Lady Carnegy, that this is a crucial item and it is difficult to see why it is not in the Bill. It does not add very much to the length of the Bill which seems in any case to get longer as it proceeds through this House.

I am aware that the grouping suggests that Amendment No. 63 should be debated with Amendment No. 65. I deliberately spoke only to Amendment No. 63 because it appeared to me that the grouping was not particularly useful. I am sorry if that was not clear. Therefore, I shall speak separately to Amendment No. 65. Perhaps others will also do so. However, at this stage I ask leave to withdraw Amendment No. 63 more in disappointment than appreciation.

Amendment, by leave, withdrawn.

Lord Macaulay of Bragar had given notice of his intention to move Amendment No. 64: Page 19, line 18, at end insert ("including, in particular, provisions for a reasonable opportunity for customer interviews and regular communication").

The noble Lord said: My Lords, I listened to what the noble and learned Lord the Lord Advocate said in relation to Amendment No. 63. It is clear from the points made in support of Amendment No. 64, which is associated with Amendment No. 68—I believe these came from the citizens advice bureaux—that the Lord Advocate has in mind the review of the matters contained in these amendments. In the circumstances, and particularly in the light of the partial concession made in relation to Amendment No. 66, we shall await with interest what comes out at the end of the day.

Lord McCluskey

My Lords, before the noble Lord sits down, does he intend to move the amendment?

Lord Macaulay of Bragar

My Lords, I do not intend to move it.

The Deputy Speaker (Lord Hayter)

My Lords, is the noble Lord moving the amendment?

Lord Macaulay of Bragar

My Lords, it is not moved.

[Amendment No. 64 not moved.]

6.15 p.m.

Lord Morton of Shuna moved Amendment No. 65: Page 19, line 22, at end insert ("including, in particular, provisions restricting practitioners from providing their services both to the owner of any property and to the purchaser or prospective purchaser of that property;").

The noble and learned Lord said: My Lords, the amendment covers a slightly different but crucial issue. There should be provision that no person can act for, or provide services to, both the owner of a property and the purchaser or prospective purchaser of a property. This is obviously a matter that has to be dealt with. It is included in the list of matters to be considered in the regulations. I accept that the regulations may allow for the exceptions one would expect; for example, a parent conveying his house to a child, or something of that nature. That would be excluded from the regulations.

However, I suggest that it is necessary that there should be a prohibition from acting for both sides put on the face of the Bill in the sense that it has to be in the regulations. This simple but crucial point must be dealt with.

I emphasise that the wording of the amendment refers to services in general so that it covers rather more than merely providing the conveyancing. It provides for various other services such as insurance, and so on. It is an important amendment which I hope will be acceptable to the Government. I beg to move.

Lord McCluskey

My Lords, the noble and learned Lord, Lord Morton of Shuna, and I owe an apology to the Deputy Speaker, the noble Lord, Lord Hayter, and others who have occupied the Woolsack, because many of these amendments have been tabled in both our names. My name has appeared first, followed by that of the noble and learned Lord, Lord Morton, who has risen to his feet first. Both of us have had judicial duties today and it was uncertain whether both of us could be here. To the delight, I am sure of the noble and learned Lord the Lord Advocate both of us have managed to be present.

In supporting this amendment I simply refer back to what the Lord Advocate said. He said that this type of provision would feature in the regulations. Again, if I am right in thinking that the affirmative resolution procedure is contemplated for these regulations I am sure that the House is happy to have that assurance. That gives a sound basis for criticising the Secretary of State in the unlikely event that that undertaking is not honoured.

I draw attention to one word which the noble and learned Lord the Lord Advocate used a few moments ago. I refer to the word "restricting" which I consider to be important. I do not envisage that one should prohibit altogether the possibility of a solicitor or conveyancer who is not a solicitor acting for both parties. I can envisage circumstances in which persons fully aware of what is happening are prepared to trust the solicitor or other conveyancer to act for both sides. I believe I mentioned that in Committee. This amendment would allow representations to be made to the Secretary of State on what the restrictions should be rather than move towards total prohibition. For those reasons I support the amendment.

Lord Fraser of Carmyllie

My Lords, bearing in mind the grouping of these amendments I believe I have already made my views clear. However, perhaps I may tell the noble and learned Lord, Lord Morton, that it was precisely his observation that there might be perfectly reasonable circumstances where there is nothing wrong in one solicitor or conveyancing practitioner acting for both sides that underlined my concern about writing such a matter on to the face of the Bill. I repeat, I consider that clearly there are circumstances which should be spelt out in which there would be an unacceptable conflict of interests if a conveyancing practitioner were to act for both parties.

The simplest way in which I can underline my concern is in relation to the present conflicts of interests rules of the Law Society which were introduced in recent years. As I understand those rules, there are no fewer than six specific exceptions to the general rule that one should not act for both parties. If there are six specific exceptions—perhaps six is too many; maybe there should be only four and we should be restricting the code of practitioners to another number—and if we are referring to numbers of that sort it would seem to be appropriate to leave the Bill as it stands whereby conflicts of interest are to be dealt with on the clear undertaking that the Secretary of State recognises the concern. As I further indicated, such matters are likely to be subject to the affirmative resolution procedure.

Baroness Carnegy of Lour

My Lords, before my noble friend sits down, may I ask whether he recollects that at Committee stage I moved an amendment suggesting that the provisions in these regulations should be incorporated into the rules of the Law Society? That was not accepted by the Government or by the House. We did not take it to a vote. If the amendment were taken to a vote and carried, would be consider that matter again? We seem to be asking something that is not required of solicitors. As the noble and learned Lord has just said, that would not be a level playing field in the other direction.

Lord Fraser of Carmyllie

My Lords, perhaps I may comment briefly on that. The issue would emerge in this way. If after consultation some representation was made that the list of exceptions as applied to conveyancing practitioners was to be shorter or indeed longer than that applied to the Law Society, one would have to consider very carefully what the exceptional circumstances were that brought about the difference. I envisage that my right honourable friend the Secretary of State for Scotland would take as his starting point on conflict rules the rule which applies to the Law Society of Scotland. That does not bind him in any sense to provide for that in the regulations.

However, as my noble friend has said, it would seem appropriate in these circumstances that any rules that are applied, and any exceptions to rules, should relate equally to solicitors and conveyancing practitioners.

Lord Morton of Shuna

My Lords, I shall not press the amendment to a vote. However, I should have thought that the amendment is restricting practitioners and is not a prohibition. Some of the comments of the noble and learned Lord the Lord Advocate may have been made on the basis that the amendment contained a prohibition. It does not. I agree wholeheartedly with the noble Baroness, Lady Carnegy, that the restrictions should be the same for the Law Society as for the conveyancing practitioner. Perhaps I would go further than she would—we usually agree on this matter—by saying that the restrictions should be tighter than has the Law Society at present. With that expression of a purely personal view, I beg leave to withdraw Amendment No. 65.

Amendment, by leave, withdrawn.

Lord McCluskey moved Amendment No. 66: Page 19, line 37, leave out ("subject to annulment in pursuance of a resolution of either House of Parliament.") and insert: ("(2) No instrument shall be made under this section unless a draft of the instrument has been approved by resolution of both Houses of Parliament.").

The noble and learned Lord said: My Lords, I shall deal with the amendment briefly, although it is an important matter. The House understands that what is being introduced is an entirely new system in relation to conveyancing and executry services. No one has any clear idea how it will work although many people have expectations or fears. There have been no pilot studies. There is no parallel that we can look at in England. The consultation before the Bill was relatively minimal and did not appear to me to be very effective although certainly there have been considerable improvements since the Bill was read a second time in this House.

Finally, the content of the regulations is rather imprecise. The noble and learned Lord the Lord Advocate has satisfied many of us by indicating what the contents will be. In those circumstances, given what he said earlier, I hope that he will be able to accept the amendment and to allow the affirmative resolution procedure in relation to those instruments. I beg to move.

Lord Fraser of Carmyllie

My Lords, having given those previous indications, I hope that I too can deal with the amendment briefly. In view of what has happened in the Courts and Legal Services Bill, as has been fairly pointed out by the noble Lord, Lord Macaulay, it would appear to me appropriate that these regulations ought to be subject to affirmative resolution. I give that undertaking that that should be the case. However, I am not prepared to accept the amendment as it stands, on the undertaking that it will be brought forward in another place.

The noble Lord, Lord Macaulay, raised a further matter: that provisions in relation to executry services are subject to negative resolution. I do not go so far in relation to those provisions at the present time. However, I appreciate the point that he has made: that if these matters are subject to affirmative resolution, there is a case for subjecting provisions in relation to executry services also to affirmative resolution.

Lord McCluskey

My Lords, in the light of what has been said, I see no need to press the amendment. I beg leave to withdraw it.

Amendment, by leave, withdrawn.

Lord Morton of Shuna moved Amendment No. 67: Page 19, line 47, at end insert ("and to imprisonment for a period not exceeding one month").

The noble and learned Lord said: My Lords, in moving the amendment, I speak also to Amendments Nos. 73, 74, 99 and 100. I can put the purpose of the amendments very briefly. It is to create a level playing field for the imposition of penalties upon solicitors and practitioners who offend. I beg to move.

Lord Fraser of Carmyllie

My Lords, I am aware of the comparable provisions that apply to solicitors in Scotland which admit the possibility of imprisonment; and the arguments about the level playing field. I am not convinced that the quality of treatment would necessarily require the use of the Scottish solicitors' model. The parallel provisions for English solicitors and licensed conveyancers provide only for fines. I intend to bring forward an amendment on Thursday which will remove the penalty for imprisonment for offences under the Solicitors Act. I can do so in view of the schedules attached to the Bill. It is a more sensible step that preserves that legendary level playing field. In those circumstances, I invite the noble and learned Lord to withdraw the amendment.

Lord Morton of Shuna

My Lords, certainly. I beg leave to withdraw the amendment. It seems a very satisfactory solution.

Amendment, by leave, withdrawn.

[Amendment No. 68 not moved.]

Lord Macaulay of Bragar moved Amendment No. 69: After Clause 15, insert the following new clause: ("Beneficial interest of practitioners It shall not be lawful for any conveyancing practitioner, or solicitor, or any employee or associate of a conveyancing practitioner or solicitor, to have any beneficial interest in any transaction relating to heritable property other than by way of fees from the client. ".

The noble Lord said: My Lords, the provision refers back to the discussion that began at Amendment No. 63. It is another aspect of the regulations that apply to the conveyancing practitioner. It ensures that solicitors and other conveyancers have only their clients' interests at heart. In view of the discussions that we have had, I do not propose to take up the time of the House in going over the ground again.

I do not withdraw the amendment at this stage because it is linked with Amendments Nos. 72, 97, 98 and 102 which deal with the contravention by anyone of the rules of conveyancing practice. Those are very important matters.

At page 21, line 20, the Bill states that: Any person who—

1. (a) wilfully and falsely —
   1. (i) pretends to be a qualified conveyancer; or
   2. (ii) takes or uses any name, title, addition or description implying that he is a qualified conveyancer; or
2. (b) being a qualified conveyancer, provides conveyancing services at a time when his registration as such is suspended,

shall be guilty of an offence and liable on summary conviction to a fine not exceeding level 4 on the standard scale".

The subsequent amendment seeks to make provision for proceedings on indictment. The view is taken that anyone who indulges in these activities should not be dealt with at summary level. It has to be spelt out in the Act that to behave in the way suggested in that paragraph is a serious matter, and that the courts and prosecution will take a serious line on such activities. I beg to move.

6.30 p.m.

Lord Fraser of Carmyllie

My Lords, I must ask the House to resist the amendments. They would have the effect of paralysing the Government's intention that providers should be able to offer conveyancing services and undertake confirmation work for their clients. Our policy is to increase choice, and one way in which we wish to do this is by allowing financial institutions to provide a straight through service to clients in house purchase and executry services. We do not pretend that the services will be identical to those offered by solicitors, although the amendments will also severely restrict the capacity of solicitors to earn income from services related to conveyancing.

Of course independent financial advice will not be available to the client who chooses to obtain a mortgage and have conveyancing done by a building society, We are however committed to a whole range of measures which will allow the client to make an informed choice of legal adviser. It will be a requirement of the code of practice that the conveyancing practitioner makes clear to the prospective client that independent financial advice is not available about particular financial products and, at the same time, the adviser will be bound by the terms of the Financial Services Act to give best advice to the client. This will extend, for example, to advising on particular types of house purchase finance as distinct from particular products. Failure to comply with the code will be a disciplinary offence subject to investigation and disposal by the board. The powers of the board will extend to revoking the right to practice.

We have therefore made provision for clients to be informed about the nature of the services being offered by conveyancing practitioners who are also financial institutions. In pursuing the policy, which we believe is right for clients to give them greater freedom of choice, we cannot place restrictions in the way of financial institutions which would prevent them providing a straight through service to clients. With that explanation, I hope that the noble Lord will feel able to withdraw the amendment.

Lord Macaulay of Bragar

My Lords, I am grateful to the noble and learned Lord for that explanation. As with all other new legislation, only time will tell whether the regulations will have the effect on the practices of conveyancing practitioners, and so on, that it is hoped they will have. In the light of the explanation, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 16 [Qualified conveyancers]:

Lord McCluskey moved Amendment No. 70: Page 2 1, line 2, after ("required") insert ("either").

The noble and learned Lord said: My Lords, in moving the amendment, I shall speak at the same time to Amendment No. 71. As noble Lords will see, Clause 16 (10) as it is worded implies that the recording and registration of deeds are cumulative steps. In fact they are alternative methods of dealing with deeds. Accordingly, a warrant is required either for a recording or for a registration. The amendments simply reword the provision in order to make that clear. I beg to move.

Lord Fraser of Carmyllie

My Lords, I admire the confidence with which the noble and learned Lord addressed the two amendments on the difficult issue of the registration of deeds in the Registers of Scotland.

While I understand the purpose of this amendment, I have to say that statutory authority is not required in order to register deeds in the Books of Council and Session alone. The amendments are therefore unnecessary in this respect. On that basis I would therefore invite the noble and learned Lord to withdraw the amendments. There is however a technical point which has arisen in relation to the existing terms of Clause 16 (10) (a) in so far as it relates to dual registration of a deed —registration in both the General Register of Sasines and in the Books of Council and Session. The point will be pursued with the Keeper of the Registers of Scotland, and I undertake to bring forward at a later stage any amendment necessary to place a qualified conveyancer in the same position as a solicitor regarding registration of deeds. I hope that that is entirely clear to the noble and learned Lord.

Lord McCluskey

My Lords, the noble and learned Lord the Lord Advocate has recognised the shallowness of my learning in these matters. Nonetheless, I understood what he said. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment Nos. 71 to 74 not moved.]

Clause 17 [Confirmation practitioners]:

Lord Fraser of Carmyllie moved Amendment No. 75: Page 21, line 30, leave out ("confirmation") and insert ("executry").

On Question, amendment agreed to.

Lord Fraser of Carmyllie moved Amendment No. 76: Page 21, line 33, leave out from ("applicant") to end of line 38 and insert ("fulfils the conditions specified in subsection (2A) below,").

The noble and learned Lord said: My Lords, I spoke to this amendment with Amendment No. 54. I beg to move.

On Question, amendment agreed to.

[Amendments Nos. 77 and 78 not moved.]

Lord Fraser of Carmyllie moved Amendment No. 79: Page 21, line 40, leave out ("confirmation") and insert ("executry").

On Question, amendment agreed to.

Lord Fraser of Carmyllie moved Amendments Nos. 80 to 85: Page 21, line 40, at end insert: ("(2A) The conditions referred to in subsection (2) above are that the applicant —

1. (a) is a fit and proper person to provide executry services;
2. (b) complies with the requirements prescribed by regulations made under subsection (10) below; and
3. (c) maintains suitable arrangements (whether by means of insurance policies or otherwise) to satisfy any successful claims made against it in connection with the provision of executry services.")

Page 21, leave out from beginning of line 44 to end of line 7 on page 22 Page 22, line 22, leave out ("a confirmation") and insert ("an executry") line 29, leave out ("confirmation") and insert ("executry") line 31, leave out ("confirmation") and insert ("executry") leave out lines 32 to 43 and insert— ("(10) The Secretary of State shall, subject to section 32 of this Act and after consultation with such persons as he considers appropriate, by regulations make such provision as he thinks fit with a view to maintaining appropriate standards of conduct and practice of executry practitioners and such regulations may, in particular, make provision as to educational qualifications and practical training. (11) Regulations under subsection (10) above shall be made by statutory instrument subject to annulment in pursuance of a resolution of either House of Parliament.")

The noble and learned Lord said: My Lords, I spoke to Amendments Nos. 80 to 85 with Amendment No. 54. I beg to move.

On Question, amendments agreed to.

Lord Macaulay of Bragar had given notice of his intention to move Amendment No. 86: Page 22, line 32, leave out ("may") and insert ("shall").

The noble Lord said: My Lords, we have already been through the "may" and "shall" argument. The House will see that subsection (10) reads: The Board may, subject to subsection (11) below, make rules with a view to the maintenance of appropriate standards of conduct and practice of confirmation practitioners".

The noble and learned Lord, Lord McCluskey, has already given his views on "may" and "shall". I adopt those arguments in relation to this matter. If the board is to be given power to make the rules with a view to maintaining appropriate standards of conduct and practice, that should be made compulsory within the framework of the Bill. It should not be left to the board itself perhaps to make up its mind to do or not to do something.

The Deputy Speaker

My Lords, I apologise to the noble Lord. I should have said that if the House agreed to Amendment No. 85, which it has done, I could not call Amendment No. 86.

[Amendment No. 86 not moved.]

[Amendments Nos. 87 and 88 not moved.]

Lord Fraser of Carmyllie moved Amendments Nos. 89 to 96: Page 22, line 46, leave out ("a confirmation") and insert ("an executry"). Page 22, line 47, leave out ("confirmation") and insert ("executry"). Page 23, line 2, leave out ("a confirmation") and insert ("an executry"). Page 23, line 3, leave out ("rules") and insert ("regulations"). Page 23, line 8, leave out ("a confirmation") and insert ("an executry"). Page 23, line 10, leave out ("a confirmation") and insert ("an executry"). Page 23, line 11, leave out ("a confirmation") and insert ("an executry"). Page 23, line 11, leave out second ("confirmation") and insert ("executry").

The noble and learned Lord said: My Lords, I spoke to Amendments Nos. 89 to 96 with Amendment No. 54. I beg to move.

On Question, amendments agreed to.

[Amendments Nos. 97 and 98 not moved.]

Lord McCluskey moved Amendment No. 99: Page 23, line 14, at end insert ("and to imprisonment for a period not exceeding one month. (12) Where an offence under this section has been committed by a body corporate and it is proved to have been committed with the consent or connivance of or attributable to neglect on the part of any director, manager, secretary or other similar officer of the body corporate, or any person purporting to act in any such capacity he as well as the body corporate shall be guilty of the offence and liable on summary conviction to the same penalties.").

The noble and learned Lord said: My Lords, the amendment repeats the point about imprisonment for a period not exceeding one month. I do not intend to repeat any submission in relation to that. However, it also contains a proposed new subsection (12) which deals with offences by bodies corporate and makes the officers in certain circumstances liable to prosecution also.

This is a usual type of provision to find in a statute creating offences capable of being committed by a body corporate. Responsibility should, if possible, be personal. Officials of a company—the guiding hand of the company as it were—should not be able to shuffle off that responsibility by getting the company to pay a fine. It ties in to some extent with the imprisonment proposal but it can survive without it. In these circumstances, I ask that the Government should explain their position in this relation, and I beg to move.

Lord Fraser of Carmyllie

My Lords, I shall have to look at this. I understood that what was being put forward was in the context of the imprisonment provision. That may be a misunderstanding on my part of what was being proposed. I thought that it had been covered by what I said in relation to Amendment 67. I shall have to come back to the noble and learned Lord on this.

Lord McCluskey

My Lords, I do not want to take up time by developing this argument. There is a slightly different point. There may be circumstances in which it is appropriate to bring the individual to court even if it is not a question of imprisonment. Sometimes the moral opprobrium is worth directing against a person who has been guilty of some particularly reprehensible act. However, in the circumstances, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Macaulay of Bragar moved Amendment No. 100: Page 23, line 14, at end insert ("or on conviction on indictment to a fine or to imprisonment for a period not exceeding two years or to both such imprisonment and fine.").

The noble Lord said: My Lords, this is a probing amendment to obtain the Government's views on the question of taking proceedings on indictment. As was mentioned on more than one occasion, we seem to be limiting the punishment to summary procedure, and in the context of this amendment, although it could apply to others as well, we should like to know whether the Government are ruling out using solemn procedure in relation to offences in this section of the Bill. I beg to move.

Lord Fraser of Carmyllie

My Lords, in debating Amendment No. 67 I thought that we were covering Amendment No. 100. I indicated that on Thursday I shall be bringing forward an amendment that deals with the imprisonment point. I suggest that this matter might be left until we discuss that.

Lord Macauiay of Bragar

My Lords, in those circumstances, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Fraser of Carmyllie moved Amendment No. 101: After Clause 17, insert the following new clause: {"Executry services by recognised financial institutions

1. .—(1) A recognised financial institution may provide executry services if it has notified the Board that—
   1. (a) it intends to do so; and
   2. (b) it is a member of, or otherwise subject to, a scheme which —
      1. (i) has been established (whether or not exclusively) for the purpose of dealing with complaints about the provision of executry services; and
      2. (ii) complies with such requirements as may be prescribed by regulations made by the Secretary of State with respect to matters relating to such complaints.
2. (2) In this section "recognised financial institution" means any institution which is —
   1. (a) an institution authorised by the Bank of England to operate a deposit-taking business under Part I of the Banking Act 1987;
   2. (b) a building society authorised to raise money from its members by the Building Societies Commission under section 9 of the Building Societies Act 1986;
   3. (c) a body authorised to carry on insurance business under section 3 or 4 of the Insurance Companies Act 1982; or
   4. (d) any subsidiary (as defined by section 736 (1) of the Companies Act 1985) of a body falling within paragraph (a), (b) or (c) above whose business, or any part of whose business, consists of the provision of executry services.
3. (3) The Board shall maintain a list of recognised financial institutions which have given notice under subsection (1) above and shall make the list available to any person without charge.
4. (4) The Board shall, as soon as practicable after 1st April in each year, send a copy of the list maintained under subsection (3) above to each sheriff clerk.
5. (5) Regulations under subsection (1) above shall be made by statutory instrument subject to annulment in pursuance of a resolution of either House of Parliament.").

The noble and learned Lord said: My Lords, I have already spoken to this in relation to Amendment No. 54. I beg to move.

On Question, amendment agreed to.

Lord Macaulay of Bragar moved Amendment No. 102: After Clause 17, insert the following new clause: ("Beneficial interest in funds invested etc. No confirmation practitioner or solicitor shall have any beneficial interest, directly or indirectly, in the investment or deposit of—

1. (a) executry or trust funds; or
2. (b) funds which, immediately before any investment or deposit, were transferred to a beneficiary from an executry or trust under the control of the practitioner or solicitor, unless the beneficiary was a client or customer of the practitioner or solicitor before instructions to obtain confirmation were received.").

The noble Lord said: My Lords, this is another mirror of the previous amendment that we discussed. This relates to beneficial interest in funds invested. It is directed towards preventing the practitioner, or solicitor, having any beneficial interest either directly or indirectly in the deposit of the executry or trust funds, or where people have become beneficiaries in putting the money under the control of the practitioner or solicitor unless the beneficiary agrees. It is a protection to the client and to the fund which is sought to be brought in by Amendment 102. I beg to move.

Lord Fraser of Carmyllie

My Lords, looking at the groupings I had understood that we were discussing this amendment along with Amendment No. 69, which was subsequently withdrawn. In any event I do not think that I have anything to add to what I said in relation to Amendment 69.

Lord Macaulay of Bragar

My Lords, in the light of that explanation, short as it is, I shall look back at what was said in relation to Amendment 69. In the meantime, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 18 [Professional misconduct, inadequate professional services, etc.]:

Lord Fraser of Carmyllie moved Amendment No. 103: Page 23, line 17, leave out ("a confirmation") and insert ("an executry").

On Question, amendment agreed to.

Lord Fraser of Carmyllie moved Amendment No. 104: Page 23, line 21, leave out ("rules made under section").

The noble and learned Lord said: My Lords, I spoke to this in relation to Amendment 54. I beg to move.

On Question, amendment agreed to.

6.45 p.m.

Lord McCluskey moved Amendment No. 105: Page 24, line 23, at end insert: ("(5A) The Secretary of State may by order made by statutory instrument which shall be subject to annulment in pursuance of a resolution of either House of Parliament amend subsection (3) (e) or (4) (b) above by substituting another sum for the sum of money for the time being specified in that provision.").

The noble and learned Lord said: My Lords, in Clause 18 (3) (e) and (4) (b) fines are described as, a fine not exceeding £10,000".

The purpose of this amendment is simply to allow that sum to be altered without the need to return to the House for primary legislation. Accordingly it is proposed that an order may be made by the Secretary of State, (and it is quite sufficient for this purpose that it be subject to a negative resolution procedure) to allow that sum to be changed. It simply introduces some flexibility. I beg to move.

Lord Fraser of Carmyllie

My Lords, the only comment I have to make on this amendment is that following shortly I have Amendment No. 108, which I consider in a slightly improved fashion covers the same point. I think that the point at issue is precisely the same, and on that basis I would invite the noble and learned Lord to withdraw this amendment.

Lord McCluskey

My Lords, I will accept that invitation, and beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Fraser of Carmyllie moved Amendment No. 106: Page 24. line 42. leave out ("confirmation") and insert ("executry").

The noble and learned Lord said: My Lords, I spoke to this in relation to Amendment 54. I beg to move.

On Question, amendment agreed to.

Lord Morton of Shuna moved Amendment No. 107: Page 24, line 45, at end insert: ("(a) where a practitioner or qualified conveyancer is found guilty of professional misconduct or of providing an inadequate professional service and").

The noble and learned Lord said: My Lords, in speaking to this amendment I shall also speak to Amendment No. 267, which is an amendment to the same purpose as is intended here to the solicitors discipline tribunal rules. What is provided for here is that the board where it is dealing with a misdemeanour or a complaint, so to speak, investigates it and publishes its decision. What is sought to be done by this amendment and Amendment No. 267 for solicitors is, if a complaint if found to be not made out, that there should be no reason to publish that decision.

If somebody makes a complaint that turns out to be unfounded, why should the fact of the complaint require to be published? It is for that reason that this is put forward. Certainly it would be a very considerable step for solicitors and could cause damage to them if they published the fact that there was a complaint against them which had in fact been found to be unfounded. It could do great damage to the solicitor, to his partners and to his business.

Of course we cannot say what would happen to the practitioners under this particular amendment because there are not any, but I would imagine it would have the same effect. It would appear that if the board, or the discipline tribunal, finds that a complaint is not made out and acquits, there should be no requirement that that should be published. I beg to move.

Lord Fraser of Carmyllie

My Lords, I recognise that this amendment seeks to give effect to a matter which was discussed during Committee stage; namely that named publicity for decisions of the discipline tribunal should be mandatory only in cases where the solicitor was found guilty of professional misconduct or of providing an inadequate professional service. I indicated in moving a comprehensive amendment about the procedures of the discipline tribunal that I wished to look again at this question.

The present position is that my right honourable friend the Secretary of State has considered, along with the Lord President of the Court of Session, whether a change should be made along the lines proposed in these amendments. He has resolved that such a change should be made. Clearly whatever is decided for the discipline tribunal should also apply to the conveyancing board, as the noble and learned Lord underlined in moving this amendment.

I can assure the House that this matter will be resolved when the Bill reaches another place. I should, however, indicate at this stage that, in restricting the mandatory publicity only to guilty findings, we would nevertheless wish to retain a discretion for the tribunal and board to withhold names, even where there has been a finding of guilty, where the interests of third parties might be seriously affected. I accept that the change should be made along the lines that the noble and learned Lord has indicated and, with that assurance, I hope that he will withdraw Amendment No. 107.

Lord Morton of Shuna

My Lords, I am grateful to the noble and learned Lord. A wise decision has been made—if not by him, he supports it. I ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Fraser of Carmyllie moved Amendment No. 108: Page 25, line 17, at end insert: ("() The Secretary of State may, by order made by statutory instrument subject to annulment in pursuance of a resolution of either House of Parliament, amend subsections (3) (c) and (4) (b) above by substituting for the amount for the time being specified in those provisions such other amount as appears to him to be justified by a change in the value of money.").

The noble and learned Lord said: My Lords, I referred to this amendment when we discussed Amendment No. 105. It is the fruit of a discussion which took place in Committee between the noble and learned Lord, Lord Morton of Shuna, and myself. The amendment closely corresponds to a provision in the Solicitors (Scotland) Act 1980 which enables the upper limit on fines imposed by the Scottish Solicitors Discipline Tribunal to be varied by order of the Secretary of State.

The purpose of the power is merely to ensure that the deterrent value of the fine is not eroded by gradual inflation. While I do not expect any change in the fine maximum to be necessary for a considerable period of time, especially since it has been set in the Bill at the sizeable sum of £10,000, it is as well, as the noble and learned Lord, Lord McCluskey, indicated, to have the provisions relating to the fining powers of the board and the tribunal as alike as possible. I beg to move.

On Question, amendment agreed to.

Lord Fraser of Carmyllie moved Amendments Nos. 109 to 115: Page 25, line 18, leave out ("confirmation") and insert ("executry"). Page 25, line 20, leave out ("confirmation") and insert ("executry"). Clause 19, page 25, line 25, after ("by") insert ("(a)"). Page 25, line 26, leave out ("a confirmation") and insert ("an executry"). Page 25, line 27, after ("client") insert: ("; or (b) a recognised financial institution in the course of providing executry services for a client,"). Page 25, line 29, leave out ("body") and insert ("practitioner or institution"). Page 25, line 36, leave out ("a conveyancing practitioner and a confirmation practitioner") and insert: ("(a) a conveyancng practitioner; an executry practitioner; and (c) a recognised financial institution in relation to the provision of executry services,").

The noble and learned Lord said: My Lords, I spoke to these amendments when speaking to Amendment No. 54. I beg to move.

On Question, amendments agreed to.

The Deputy Speaker (Lord Hayter)

My Lords, I cannot call Amendment No. 116 as the House has already agreed to Amendment No. 115.

[Amendment No. 116 not moved.]

Clause 20 [Interpretation of section 14 to 18].

Lord Fraser of Carmyllie moved Amendment No. 117: Page 2), line 38, leave out ("18") and insert ("19").

The noble and learned Lord said: My Lords, in speaking to Amendment No. 117 I shall speak also to Amendment No. 118. The amendments are consequential upon the insertion by the Committee of what is now Clause 19. I beg to move.

On Question, amendment agreed to.

Lord Fraser of Carmyllie moved Amendment No. 118: Page 25, line 39, leave out ("Confirmation Practitioners") and insert ("Executry Services").

On Question, amendment agreed to.

Lord Fraser of Carmyllie moved Amendment No. 119: Page 25, leave out lines 41 to 45.

The noble and learned Lord said: My Lords, in speaking to Amendment No. 54 I spoke also to Amendment No. 119. I beg to move.

On Question, amendment agreed to.

Lord Fraser of Carmyllie moved Amendment No. 120: Page 26, line 7, at end insert: (""executry practitioner" means a person registered under section 17 in the register of executry practitioners; "executry services" means the drawing and preparation of papers on which to found or oppose an application for a grant of confirmation of executors and services in connection with the administration, ingathering, distribution and winding up of the estate of a deceased person, but does not include anything which constitutes investment business within the meaning of the Financial Services Act 1986;").

On Question, amendment agreed to.

Lord Hayter

My Lords, I cannot call Amendment No. 121.

[Amendment No. 121 not moved.]

Lord Fraser of Carmyllie moved Amendments Nos. 122 to 124: Page 26, line 5, leave out ("a confirmation") and insert ("an executry"). Page 26, line 16, leave out ("and"). Page 26, line 18, at end insert: ("; and "recognised financial institution" has the meaning given to it in section (Executry services by recognised financial institutions) (2)").

The noble and learned Lord said: My Lords, I spoke to these amendments with Amendment No. 54. I beg to move.

On Question, amendments agreed to.

Clause 21, [Rights of audience in the Court of Session, the House of Lords, the Judicial Committee of the Privy Council and the High Court of Justiciary]:

Lord Morton of Shuna moved Amendment No. 125: Page 27, line 28, at end insert ("which shall correspond as nearly as may be to those which apply to advocates.")

The noble and learned Lord said: My Lords, the amendment is the same as one which I moved in Committee and which the noble and learned Lord the Lord Advocate informed me was acceptable in principle. As he has not come forward with an amendment, at any rate so far as I can see, I have repeated the amendment to see what is to happen to it.

The purpose of the amendment is to ensure that the rules of conduct for the solicitor advocate are the same as the rules of conduct for the advocate. It is obviously desirable that they should be the same because they appear in the same courts. It is also desirable for the Council of the Law Society to make rules of conduct for any other purpose and it can now look at the rules of conduct of the Faculty of Advocates and use them as a base or even adopt them wholly. Something of that nature is necessary because there should be more or less just one set of rules of conduct. In the hope that this time the noble and learned Lord will accept the amendment in fact and not merely in principle, I beg to move.

Lord McCluskey

My Lords, I wish to add just two points. One purpose that the amendment would serve would be to give the Lord President clear guidance as to what he should be looking for in the draft rules prepared by the Law Society. Also, if the rules contained appropriate provisions of that kind, the judges would have greater confidence that all appearing before them would be observing the same standards, as it were, behind the scenes, in the preparation and conduct of cases. I support the amendment for all the reasons given by the noble and learned friend Lord Morton plus those additional reasons.

Lord Macaulay of Bragar

My Lords, I too support the spirit of the amendment. It does not stipulate that the rules must be the same. The words: as nearly as may be", are perhaps of some significance, because they give scope to take account of the different branches of the profession doing the same job. There may be situations where the rules cannot be the same for both sets of people, but they should be as nearly the same as possible.

Baroness Carnegy of Lour

My Lords, is, as nearly as may be", something that can be interpreted in law? I am fascinated. The noble and learned Lord, Lord Morton of Shuna, is nodding. Perhaps the expression is a legal one. I wondered how a judge would interpret it.

Lord Fraser of Carmyllie

My Lords, at this stage of the Bill, I am not in the business of making my intentions opaque. I had thought that the noble and learned Lord would appreciate that what I propose in Amendment No. 131 is intended to cover the matter which I undertook to take away when we discussed it in Committee. The latter amendment provides: and in considering any rules made by the Council under subsection (5), the Lord President shall have regard to the desirability of there being common principles applying in relation to the exercising of rights of audience by all practitioners appearing before the Court of Session and the High Court of Justiciary". As the noble and learned Lord, Lord McCluskey, said, it would give the Lord President a signal. I indicated during that discussion in Committee that I was—I do not depart from it—sympathetic to the amendment's aim. I shall invite the House to approve Amendment No. 131, which I believe achieves broadly the same objective as that put forward in Committee and again in Amendment No. 125.

In my view, the Lord President is in the best position to judge the precise extent to which the rules governing solicitors practising in the Supreme Court should correspond to those governing the conduct of advocates. Amendment No. 131 therefore places a duty on the Lord President, when considering such rules, to have regard to the desirability of ensuring that both sets of rules are based on the same principles. The amendment will serve not just to ensure that the same high standards of conduct are required of all Supreme Court practitioners, but that their professional conduct will be determined by the same principles. I shall move the amendment in the hope that it will meet the concerns which were expressed in Committee.

It is interesting to note that in the preface to the guide to rules of conduct for advocates prepared by the Dean of Faculty, there is quoted the Royal Commission on Legal Services in Scotland. Reporting in 1980, it recommended that: The Faculty of Advocates should promulgate an authoritative written guide to the professional conduct expected of advocates which should be supplied to advocates and be available to the public". In so recommending, the royal commission said: We believe that professional rules for advocates could be stated … succinctly in the form of general principles". My point in moving Amendment No. 131 is that what is to be established—and the Lord President is well placed to do it —is the general principles that ought to be observed. It may be that the formulation of those principles in terms of rules may vary for solicitors and advocates. What is intended by Amendment No. 131 is that there should be that common core of principles governing those who are in practice. That seems to me to be the right way round.

Perhaps I may quote again from the preface to the faculty's guide: In places, it has been found convenient to state 'the rule' or 'the general rule'. Although convenient, use of the word 'rule' would be misleading if it were thought to imply that the rule is absolute and subject to no exceptions whatever the circumstances. The Guide must be read as a whole and interpreted according to its spirit rather than its letter. For the same reasons, it must not be assumed that it is enough for an advocate to keep within the letter of a 'rule' as stated in the Guide". That further underlines the approach that I consider to be appropriate. The Lord President can be expected to consider what are those principles, and in the application of the particular rules put forward by the Faculty of Advocates, or more precisely in these circumstances the Law Society, he will see that there is a common spirit to both of them.

Lord McCluskey

My Lords, with the leave of the House, perhaps I may make one point in reply. I am perfectly happy with what the noble and learned Lord the Lord Advocate said. I apologise that I did not pick up the true import of Amendment No. 131, to which we shall come. However the House will appreciate that, in common with other noble Lords, I was a stranger to about 200 of the amendments until late last night when fortunately the noble and learned Lord the Lord Advocate faxed me a copy of all his amendments. I have been trying to digest them ever since and I have obviously not been entirely successful.

7 p. m.

The Earl of Selkirk

My Lords, where does the Lord President come in? In the rules in the book, the council should make these rules under this section. Does this override that section, or is it primarily a matter for the council to deal with?

Lord Morton of Shuna

My Lords, perhaps I may reply to the noble Earl. The council can only make rules with the approval of the Lord President. Therefore when the provision mentions the council making rules, it shows that the Lord President could have exercised his veto over them if he had wished to do so.

I am happy to withdraw the amendment. My excuse comes rather later in time because I did not see the government amendments until half-past one today. They were not available to me until then. Also no doubt a rather lame excuse is that I understood that the Government had some say in the groupings. If we were to interpret Amendment No. 131 as an answer to Amendment No. 125, they might have been grouped together. However, that is no doubt a lame excuse. I ask leave to withdraw Amendment No. 125.

Amendment, by leave, withdrawn.

Lord Fraser of Carmyllie moved Amendment No. 126: Page 27, leave out ("an appropriate") and insert ("a").

The noble and learned Lord said: My Lords, in speaking to Amendment No. 126 perhaps I may also speak to Amendments Nos. 128 and 130. These amendments refine subsection (6) of Clause 21 along the lines of our discussions at Committee stage. In particular, they seek to meet the points raised in the helpful intervention of the noble and learned Lord, Lord Emslie. As I indicated during the Committee's consideration of Amendment No. 223A, I am mindful of the need to ensure that the integrity of supreme court pleaders is beyond doubt in every case. The second of these amendments therefore requires the council, when making rules relating to the acceptance of instructions by solicitors with rights of audience in the supreme courts, to set out those matters to which a solicitor should have regard when deciding whether to accept instructions from a particular client.

I would expect this part of the rules to be based largely, though not entirely, in paragraph 4. 5. 4 of the Guide to the Professional Conduct of Advocates, since the considerations set out therein will be material for all supreme court pleaders. I do not think it would be appropriate to set out in detail on the face of the statute the precise matters to which solicitor advocates should have regard in deciding whether to accept instructions and I hope that the House is content to leave this to the council to decide. Of course, as the noble and learned Lord, Lord Morton, has indicated in response to the noble Earl, any rules made under this clause by the council will require the approval of the Lord President.

The third of these amendments meets another point raised by the noble and learned Lord, Lord Emslie, and enables the council, when making rules of precedence between courts for the purposes of establishing where a solicitor advocate's proper duty lies, to distinguish between the Inner and Outer Houses of the Court of Session and between the High Court of Justiciary sitting either as a court at first instance or as a court of appeal.

These amendments therefore clarify the way in which subsection (6) is going to work in practice and make it clear that solicitor advocates will be bound by broadly comparable obligations to ensure representation to those who need it as are advocates. I beg to move.

Lord Morton of Shuna

My Lords, in dealing with this amendment the noble and learned Lord said, I think, that he was also dealing with Amendments Nos. 128 and 130. I quite see that the rules should provide for various positions. However, it is difficult if one puts into a statute that the rules are to deal with orders of precedence of courts. Those courts differ, depending on what is being done in which court. One cannot just state that one court has precedence over another because it may be that the continuation of a case before a lower court has precedence over something relatively insignificant in a higher court. Therefore I am not sure that Amendment No. 130 sits happily with the others, nor that it is necessary at all. In a sense I am foreshadowing the discussion that we may have on Amendment No. 127, which would remove the question of the council establishing an order of precedence.

Lord Fraser of Carmyllie

My Lords, perhaps I may respond to say that the noble and learned Lord is correct. In speaking to Amendment No. 126 I was also dealing with Amendments Nos. 128 and 130. The noble and learned Lord may recollect from his knowledge of the guide for the Faculty of Advocates, to which I have already referred, that in it not only is an order of precedence for the courts set out but in a subsequent paragraph the types of circumstances are spelt out where one would not necessarily follow that order of precedence.

The obvious example is where one had a single bill to appear before the Inner House and was halfway through a proof in the Outer House. There are general criteria to be set out which would establish for the solicitor-advocate that he ought to have regard to his duty to complete that continued proof rather than take up the single bill in the Inner House.

That is what Amendment No. 128 intends. It points the Council of the Law Society in the direction that I quoted in paragraph 4. 5. 4. Generally, I accept that just setting the order of precedence does not answer all the questions of what instructions one should follow. I hope that by giving this indication to the Council of the Law Society—it being well aware, as I know, of what is provided in the guide for the Faculty of Advocates—the matter will be truly dealt with.

Lord McCluskey

My Lords, I am reasonably satisfied with what the noble and learned Lord the Lord Advocate said in relation to this subject. The problem arises with a number of different amendments. However, I am still puzzled, as I was at Committee stage, by a concept contained in this clause and repeated in the amendments. The Bill states in subsection (6), page 27, line 29 onwards, the concept of a solicitor being instructed to appear in a court. In Amendment No. 128 the noble and learned Lord the Lord Advocate refers to the solicitor determining whether or not to accept instructions.

As I have already pointed out, as regards the Court of Session or the High Court of Justiciary, I understand the position to be that counsel is instructed not by the client but by the solicitor. The instruction will take the form of a letter which is sent to him requiring him to appear in a particular case on a particular day. Those are his instructions. However, I do not understand how that concept works in relation to a solicitor because he is dealing directly with a client. Unless the client is a corporate body or someone in that position, he is unlikely to issue the solicitor with a formal letter stating that he instructs the solicitor to appear in a particular court on a particular day. I do not know how this provision will work. I do not know whether the Government have considered it deeply or whether they are content simply that the matter should be left to the Council of the Law Society. I am not sure that these provisions will work until someone has grasped that particular nettle.

Lord Cameron of Lochbroom

My Lords, I am bound to say that I disagree with the noble and learned Lord. I should have thought that the word "instructions" is capable of being read in various lights according to the relationship between the client and his solicitor or that between the client, the solicitor and the advocate. I can conceive of a situation where a client may give general instructions to a solicitor to appear for him in a matter which involves criminal proceedings. I should have thought those instructions would be covered by the word that appears in Amendment No. 128. However, if the word were read as narrowly as the noble and learned Lord suggested, there could be problems, but I am bound to say that I would not read it as narrowly as that.

Lord Fraser of Carmyllie

My Lords, I did not envisage the word "instructions" in this context to be a term of art that applied only to advocates. However, I shall ask the Law Society of Scotland whether it envisages any difficulty in determining what the word "instructions" amounts to. If the matter needs to be looked at again, it can be dealt with in another place.

On Question, amendment agreed to.

Lord Morton of Shuna moved Amendment No. 127: Page 27, leave out lines 34 and 35.

The noble and learned Lord said: My Lords, this amendment concerns rather a different point. It is a fairly straightforward, easy point. The noble and learned Lord, Lord Emslie, has spoken on this matter. It is bizarre that the council should make rules establishing the order of precedence of those courts. The Council of the Law Society should not make rules establishing the order of precedence of the High Court of Justiciary or of the Court of Session. That is a matter for the courts.

I suggest it would be proper for subsection (6)(a) of the proposed new Section 25A to be left out because that would not make any difference to the rules that the council will make. However, it would remove the suggestion that the Council of the Law Society is setting the order of precedence of the supreme courts in Scotland. That is the purpose of the amendment. I beg to move.

Lord Macaulay of Bragar

My Lords, perhaps the noble and learned Lord, Lord Morton of Shuna, is reading this part of the Bill rather narrowly by suggesting that the council will make the rules establishing the order of precedence. I should have thought the provision was more directed towards the matter of publication of the existing rule; in other words the council itself will not make the rules. I realise that the provision states that it shall make rules but I doubt whether that was the intention behind the wording. I should imagine that the rules will be set and can be published for guidance.

New practitioners coming into what is a complicated field should be given as much guidance as possible regarding where they should be at any particular time, and in particular which court takes precedence over another. Perhaps the noble and learned Lord the Lord Advocate may wish to reconsider the wording of subsection (6) (a) of the proposed new Section 25A and adopt my view, if that is the right view. Of course if it is the wrong view, the noble and learned Lord will inform me of that.

Lord Fraser of Carmyllie

My Lords, I certainly do not envisage that the Law Society of Scotland will stand on its head the order of precedence of the courts in Scotland. Indeed the order of precedence of courts is a matter extending beyond the jurisdiction of the Scottish Courts into Europe. There is such an order of precedence set out in the guide of the Faculty of Advocates. I have referred to that. I envisaged that the Law Society would follow that guide. Frankly I cannot imagine any circumstances in which the Law Society is likely to depart from that established order of precedence. However, it is important that that should be set out in rules for the benefit of a new practitioner who may have had little experience of these matters. In any event, if there is any risk of the Law Society going off the rails in this matter, I can only repeat the point that the noble and learned Lord, Lord Morton of Shuna, made earlier, which is that the rules would be subject to the approval of the Lord President.

Lord McCluskey

My Lords, another point that arises in connection with this matter is again one which I sought to raise in Committee. However, it came out in rather a confused fashion in the report of the proceedings. The position is that it is not simply a matter of precedence as between courts. An advocate or a solicitor may be instructed—if that is a possible concept—to appear at a planning inquiry or before an industrial tribunal. Someone has to determine whether his appearance in a summary criminal court which may last for half an hour takes precedence over his duty to appear for his client in a planning inquiry which may last for half a year. There must be some solution to a conflict of this kind. I do not think that the Bill, as it stands at present, addresses that matter at all. I have found no trace of that matter either in the Bill or in the proposed amendments.

7.15 p.m.

Lord Morton of Shuna

My Lords, the matter is merely a question of English. The Bill states: the Council shall make rules establishing the order of precedence". If the word "establishing" was replaced by "stating", the position might be much clearer. It is the concept of the Council of the Law Society establishing the order of precedence that gives a sense of power to the council. That is inappropriate. That was all my amendment sought to suggest. However, in the hope that the noble and learned Lord may see there is some force in the argument, and in the hope that he may put the matter right elsewhere, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Fraser of Carmyllie moved Amendment No. 128: Page 27 line 35, at end insert: ("() stating general criteria to which solicitors should have regard in determining whether to accept instructions in particular circumstances; and").

The noble and learned Lord said: My Lords, I have a ready spoken to this amendment in relation to Amendment No. 126. I beg to move.

On Question, amendment agreed to.

Lord Macaulay of Bragar moved Amendment No. 129: Page 27. line 37, leave out ("possible") and insert ("reasonably practicable").

The noble Lord said: My Lords, this amendment comes within the area we have just been discussing. It considers the issue of how practical it will be for solicitors to follow the practice of advocates whereby the latter are from time to time taken out of one case and put into another. That occurs particularly where there is a shortage of criminal practitioners. Subsection (6) of the proposed new Section 25A states: Where a solicitor having an appropriate right of audience in any of the courts mentioned in subsection (1) is instructed to appear in that court, those instructions shall take precedence before any of his other professional obligations, and the Council shall make rules securing, through such of their officers as they think appropriate, that, where possible, any person wishing to be represented before any of those courts by a solicitor holding an appropriate right of audience is so represented".

It appears that the Council of the Law Society must, through its officers, find an advocate-solicitor, if the client wishes to obtain one. As the provision presently stands, the words "where possible" are used. However, what is possible may not be reasonably practical. It may be easy enough, for example, to take an advocate-solicitor from the south of Scotland up to Inverness to conduct a criminal trial, but whether it would be reasonably practicable for him to do so is another matter. He may have an existing contract with the present client. He may be in the middle of a difficult case. He cannot leave that case, as matters stand, without laying himself open to an action for damages at the hands of the client although he is literally forced to leave the client and fulfil his duties under the terms of subsection (6)(b) of the proposed new Section 25A.

The purpose of the amendment is to take reality into account and give the broader base of reasonable practicability in the instruction rather than the narrower one of possibility. It has to be borne in mind that we do not know how many solicitors in Scotland will take advantage of the provisions of the Bill and seek rights of audience in the higher courts. We hear varying accounts of how many people will do so, ranging from four in Edinburgh, four in Glasgow, and two in Aberdeen, to 200 solicitors. If the number is at the lower end of the scale and the Law Society is forced to use one of a very small number of advocate solicitors that would create great difficulty for the advocate solicitor. It would make it easier for everyone if the broader concept of reasonable practicability were adopted. I beg to move.

Lord Mackie of Benshie

My Lords, it might also make it reasonably possible.

Lord Fraser of Carmyllie

My Lords, this is a point which has been raised before. It is one on which I believe the Law Society of Scotland is unduly sensitive. The society is required to make rules; securing, through such of their officers as they think appropriate, that, where possible, any person wishing to be represented before any of those courts by a solicitor holding an appropriate right of audience is so represented". We are dealing with a situation in which somebody needs to be represented in court not just by an advocate or a solicitor advocate but exclusively by a solicitor advocate rather than by a member of the Faculty of Advocates with rights of audience. I find some difficulty in believing that such a set of circumstances will arise very often.

I see little to be gained by accepting the amendment. The provision makes perfect sense as it is drafted and the distinction between what is possible and what is reasonably practicable seems a nice one. It is reasonable to expect the Law Society to fulfil its duty under subsection (6) where it is possible for it to do so. I am aware that it does not in any way wish to diminish the importance of that duty. Since I am confident that it will take all possible steps to fulfil its obligations, I see little to be gained by accepting the amendment. I hope that if the society reflects on the matter it will be reassured that the likelihood of any difficulty arising is extremely limited.

Lord McCluskey

My Lords, I support the amendment. The noble and learned Lord the Lord Advocate said that there is little to be gained by accepting it. I wonder whether there is anything to be lost by accepting it. "Possible" and "practicable" in law almost certainly mean the same in a context such as this. "Practicable" means able to be achieved by known means and resources; "reasonably practicable" introduces a concept of flexibility and allows for some tolerance.

I sympathise with the difficulties. It may well be that those difficulties will be experienced in the early days but not thereafter. It may be that the council could modify its rules in due course. However, unless the noble and learned Lord the Lord Advocate believes that there is something wrong with the proposal rather than a matter of semantics, since people feel quite strongly about the subject I believe there is something to be said for it. I support the amendment.

Lord Fraser of Carmyllie

My Lords, I am not prepared to make any firm undertaking on the subject. The impositions on the Faculty of Advocates where someone wishes to secure the services of an advocate are very stern indeed. If the Law Society of Scotland is prepared to accept that its members are to be given rights of audience it should not enjoy any lesser duty. "Possible" seems to me to be an appropriate test. If in very rare circumstances there were difficulties I have to say, so be it. The rights of audience are to be the same as those given to members of the Faculty of Advocates. However, I shall reflect on the matter so long as that is not taken as an indication of a promise to bring anything forward.

The Earl of Selkirk

My Lords, as someone looking at the matter from the outside I believe the amendment to be much more sensible because it is practicable. If something is possible that means that one goes to almost any lengths to do it, which is not what is intended. I believe that what is intended is what is most practicable and satisfactory for solicitors.

Lord Macaulay of Bragar

My Lords, I do not believe that the Law Society wishes to be difficult or sensitive about this matter. It has to face up to the realities of life in the courts. It was in an effort to be helpful that the amendment was tabled. As has already been observed, there is no difference between the two sets of words in terms of practicability. There would be no harm in the Government thinking again and taking the wording proposed by the Law Society. In the meantime I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Fraser of Carmyllie moved Amendment No. 130: Page 27, line 40, at end insert; ("and for the purposes of rules made under this subsection the Inner and Outer Houses of the Court of Session, and the High Court of Justiciary exercising its appellate jurisdiction, may be treated as separate courts.").

The noble and learned Lord said: My Lords, in speaking to Amendment No. 126 I also spoke to Amendment No. 130.

Lord Renton

My Lords, although my noble and learned friend has spoken to the amendment, I believe that it is within the rules of order for me to suggest that the word "may" should be "shall".

Lord Fraser of Carmyllie

My Lords, I was not conscious that I had finished moving the amendment. I beg to move.

On Question, amendment agreed to.

Lord Fraser of Carmyllie moved Amendment No. 131: Page 27, line 46, at end insert ("and in considering any rules made by the Council under subsection (5), the Lord President shall have regard to the desirability of there being common principles applying in relation to the exercising of rights of audience by all practitioners appearing before the Court of Session and the High Court of Justiciary.").

The noble and learned Lord said: My Lords, when we debated Amendment No. 125 I explained at some length the purpose of Amendment No. 131. There may be other points that I can answer on the amendment. I beg to move.

Lord McCluskey

My Lords, I do not want to keep noble Lords from their dinner, but I should like to congratulate the noble and learned Lord the Lord Advocate on using a gerund in the third line of the amendment. I hope that this reformation in his character and syntax will pervade other parts of the Bill in due course.

On Question, amendment agreed to.

Lord McCluskey moved Amendment No. 132: Page 28, line 38, leave out subsection (15).

The noble and learned Lord said: My Lords, noble Lords will recognise that I am returning to a matter which greatly concerned me at the Committee stage. This is the first of several provisions —although there are slight differences in relation to particular clauses—which provide that: Where a function is conferred on any person by this Section he shall exercise that function as soon as is reasonably practicable".

The only persons on whom a function is conferred by this clause are the Secretary of State and the Lord President, because, if I am right, the Council of the Law Society is not a person. Accordingly, although it has many functions which are conferred by subsections (2), (3), (4), (9), (12) and (14) the obligation which is laid upon the Secretary of State and the Lord President to carry out those functions quickly is not conferred upon the Council of the Law Society. I wonder why the Council of the Law Society, which has most of the functions, is to be free from the obligation to exercise its functions as soon as is reasonably practicable.

Why is it, on the other hand, that the obligation is laid upon two great officers of state? On a previous occasion I asked why it was that this provision was included and no precedent could be found for it. I asked which of those great officers of state is not to be trusted. I was told that both could be trusted. I want to ask what is the hurry about this, because, as we know, the Secretary of State does not necessarily intend to bring in this provision by commencement order immediately. It may be postponed.

My last point is a question for the noble and learned Lord the Lord Advocate, of which he has had ample notice. Is it intended that there should be judicial review in relation to a failure by the Lord President or the Secretary of State to move as soon as is reasonably practicable? In other words, can any person who can qualify an interest in a title say to the Lord President, "You are not moving quickly enough", raise an action for judicial review and have the inactivity of the Lord President or the Secretary of State brought under review by a judge in the Court of Session? That is a question of some importance which arises more than once.

In those circumstances I believe that there is some value in the amendment. I beg to move.

7.30 p.m.

Lord Cameron of Lochbroom

My Lords, I support my noble and learned friend on this matter. At first blush it seems to me that there is no necessity for the provision. Having read through it again, like my noble and learned friend, I still fail to understand why it should be there when the only persons to whom it could possibly relate are the two persons whom he identified. I can see no other identifiable person.

The Earl of Selkirk

My Lords, I find the same problem. I have never understood what the provision meant, why it meant what it did and who was gaining or losing. It does not make sense. I thought that it referred entirely to solicitors and that they must use their right of audience straightaway, otherwise someone would take it away from them. That is the only sense that I can make of the provision, although I am sure that it is wrong. Can my noble and learned friend make any sense or useful purpose of this small and rather ridiculous provision?

Lord Fraser of Carmyllie

My Lords, in view of the expressions about the last provision in Clause 21, it might be appropriate to break for dinner after this amendment. If I understand the groupings correctly, the noble and learned Lord was also speaking to the comparable provision in Clause 22.

Lord McCluskey

My Lords, perhaps I may assist the noble and learned Lord. There are slight differences and I do not want to deprive myself of the right to add a few words in relation to the other amendment.

Lord Fraser of Carmyllie

My Lords, that may be so, but I believe that the noble and learned Lord made a slip because he indicated that the Secretary of State might delay in introducing Clause 21. I do not think that I have ever indicated that. However, I have certainly indicated that, to avoid the Lord President and the court being over-taxed in those matters, the Secretary of State would have it in mind to delay the introduction of Clause 22. That is why I thought that the noble and learned Lord was dealing with both provisions.

The noble and learned Lord said that the council appears, to be excluded from the provisions of subsection (15). That was not intended. If it has been omitted from that extremely useful provision in Clause 21, steps can certainly be taken to ensure that it is subjected to it.

When the provision comes into effect, it is important that all due progress should be made on it. It has been considered by the Government and I can only repeat what was said at length in Committee; namely, that it was considered desirable that anyone who had a function conferred on him or her should exercise that function as soon as was reasonably practicable.

We want to ensure that there will be no delay in bringing the provisions into effect once the commencement order has been secured. In a sense, that applies with greater force to Clause 22. That is why I am keen to link it to the provision with regard to the elaborate arrangements set out in the clause.

I know that the noble and learned Lord does not like the provision. He alternates between saying that it is anodyne and/or nonsensical and suspecting that there is something deeply sinister behind it. I do not think that it is anodyne and I certainly do not consider it to be sinister. It is a useful indication for the legislature to give to those who have functions to perform. I suggest that it should remain within the clause.

Lord McCluskey

My Lords, I do not think that the provision is anodyne or sinister; it is just silly. That is the point that I have sought to make from the beginning.

I was not guilty of making a slip. I appreciate what the noble and learned Lord said about the Secretary of State not bringing into force the then Clause 21 until Clause 20 had been brought into force. The provisions of Clause 62 permit the Secretary of State not to bring the clause into force once it is a section, so it might be six months or 10 years before it is brought into force. There is nothing to compel him to do that.

Those who want to be conveyancers will recall the disappointment that was felt in England when the then Lord Chancellor, the noble and learned Lord, Lord Hailsham, failed to bring into force the provisions which allowed certain people to do conveyancing. The Secretary of State could do precisely the same here in relation to these matters.

I am surprised to hear the noble and learned Lord the Lord Advocate confess that he thought the word "person" embraced the Council of the Law Society. That seems to me to be a glaring error. I cannot imagine that the Council of the Law Society, distinguished though it may be, would allow itself to be called a person. The functions conferred upon it are not therefore struck at by the provision.

That is just one of the reasons why I think the provision is silly. However, at this time of night I do not propose to divide the House. In the circumstances, and for the moment, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

The Earl of Strathmore and Kinghorne

My Lords, I beg to move that further consideration on Report be now adjourned. In moving this Motion, perhaps I may suggest that the Report stage begin again at twenty-five minutes to nine.

Moved accordingly, and, on Question, Motion agreed to.