Lords Sitting of 9 December 1997

Preamble
The House met at half-past two of the clock: The LORD CHANCELLOR on the Woolsack.
Prayers—Read by the Lord Bishop of Lincoln.
Lord Coggan—Took the oath.

Family Life: Ministerial Study
Lord Tebbit Lord Tebbit asked Her Majesty's Government:
Whether the Ministerial Group on The Family has yet agreed on the scope of its work.
The Parliamentary Under-Secretary of State (Lord Williams of Mostyn): My Lords, the group chaired by my right honourable friend the Home Secretary is looking at a wide range of issues concerned with family policy as part of the Government's manifesto commitment to strengthen family life. Additionally, a ministerial seminar was held last month to consider the best aims and means for the Government to adopt in promoting successful parenting. A report of the seminar has been prepared and is freely available from the Home Office special conferences unit.
Lord Tebbit: My Lords, I thank the Minister for that reply which he delivered with charm, making it as easy as possible—characteristics for which he is so well known in the House and which cause many of us to hope that the rumours about promotion are true. In these days when the Government will have no secrets, why, despite a number of Written Questions, are the Government unable to explain what they regard as the definition of a family?
Lord Williams of Mostyn: My Lords, this Government do not seek to prescribe how people live
2
their lives. I have a quotation for the noble Lord. It criticises those who,
"cannot imagine that any social structure which does not accord with their ephemeral prejudices could be popular, acceptable, or morally defensible".
That comes from a book called Unfinished Business written by the noble Lord, which I have here. I found it in a bookshop in Moreton-in-Marsh. It was a secondhand bookshop. The price is shown as £13.99 in the UK only. That is to stop those nasty foreign people reading it. Then the infinitely sad palimpsest, "Reduced to £3.50"—but struck out. Then, "Reduced to £2"—also struck out. And finally, "Reduced to £1." I got it for 50p.
Lord Islwyn: My Lords, perhaps I may remind my noble friend of the Conservative Party's traditional claim to be the party of the family. Can my noble friend therefore shed any light on why successive Conservative Chancellors of the Exchequer failed to help the family? In fact, they whittled away any tax advantages that previously accrued.
Lord Williams of Mostyn: My Lords, I am sure that those points are well taken by the party opposite as it reflects upon the consequence of its policies in the form of the effective emphatic repudiation delivered by the electorate in May.
Lord Campbell of Croy: My Lords, will the Minister answer one point about what constitutes a family? Is it restricted to situations in which the parents are married to each other, or does it extend to partners? Does it even extend to nominal parents who are of the same sex?
Lord Williams of Mostyn: My Lords, I venture to repeatwhat I said to the noble Lord, Lord Tebbit, whose good wishes I warmly reciprocate. We are notin the business of preaching or prescribing. Families in our society vary infinitely. Let me give the example which does not fall within any of the categories enumerated by the noble Lord,Lord Campbell of Croy. What about a widower who is bringing up his children alone? What

3
about the widow in similar circumstances? Do they not need help? Do they not need our decent sympathy? I beg to suggest that they do.
Lord Henley: My Lords, will the Minister now answer the Question put by my noble friend Lord Tebbit and offer to the House a definition of what is a family. My noble friend asked a number of Written Questions on this very subject some months ago. The Minister merely referred him to the dictionaries in the Library of the House. I have looked at one dictionary which states that a family is a set of parents, children and relatives. Does the Minister agree with that? Does he agree that the family is confined to that?
Lord Williams of Mostyn: My Lords, I looked up the Written Answer that I gave to the noble Lord, Lord Tebbit, which was:
"Lexicography is not currently a function of Her Majesty's Government".—[Official Report, 29/10/97; col. WA242.]
We live in a diverse society. People are entitled to diverse views about the way in which they wish to run their lives. The ministerial group which is focusing on these issues is directing its attention towards the serious continuing problem of children being brought up in inadequate circumstances. It is not for me or the Government to define precisely what is a family unit. Does a family consist, for instance, of two people who married late in life and who, by definition, will never have children? I beg to suggest that it does. The mark of a civilised society is to accommodate diversity in others.
Baroness Young: My Lords, this is a serious matter. Will the Minister consider what one says to young people, especially in schools, or when bringing them up? He has defined a family widely—much wider than some of us would define it. With all respect to him, there is a great distinction between a widower and a widow, and some other single parent families, because their circumstances are different. What definition of a family—as a signal and in order to help them—would he give to young people?
Lord Williams of Mostyn: My Lords, if they asked my advice I would say that if you bring children into the world you have responsibilities. Bringing children into the world is not simply a private activity because other people are affected. Furthermore, I would advise them that if they had children I hope they would treat them with affection, respect and love, even if their chosen way of life was different from that of their parents.
Lord Parry: My Lords, does my noble friend accept that the ultimate test of a family is that its members recognise that they are in one and are happy within it?
Lord Williams of Mostyn: My Lords, I believe there to be a good deal of virtue in what the noble Lord says.
The Lord Bishop of Ely: My Lords, notwithstanding the fact that no wise government would seek to
4
prescribe how people should live their lives, is the Minister prepared to affirm that marriage is the main means by which family life is strengthened in view of the fact that there are publicly made commitments to one another and a public interest in the successful parenting of the children within that structure?
Lord Williams of Mostyn: My Lords, there is undoubtedly a public interest in the successful raising of families within married life. Not everyone has that infinite benefit. While recognising the validity of what the right reverend Prelate says, perhaps I may say with respect that not everyone has that good fortune. We know that a significant number of people who marry become divorced and we must consider what to do about the children of those circumstances as well as many other circumstances about which we all know so well.

Nuclear Weapons: Maintenance and Disposal
2.44 p.m.
Lord Carver Lord Carver asked Her Majesty's Government:
What is the estimated total cost in the current financial year of maintaining the capability to design, produce, maintain the safety of, store, move and dispose of nuclear weapons in the United Kingdom; and of providing, operating, maintaining and disposing of the Royal Navy's ballistic missile submarine fleet, including its missiles.
The Minister of State, Ministry of Defence (Lord Gilbert): My Lords, the estimated cost of maintaining the capability to design, produce, maintain the safety of, store, move and dispose of nuclear weapons in the United Kingdom is around £410 million in the current financial year. A significant element of this figure is related to the decommissioning of old facilities, warheads and equipment and the management of historical waste.
The cost of providing, operating, maintaining and disposing of the Royal Navy's ballistic missile submarine fleet and its missiles is estimated to be some £530 million in the current financial year. This figure includes the operating cost of Trident, which has been estimated at £200 million a year over the 30-year lifetime of the system. It also includes some warhead-related costs and costs related to the phasing out of Polaris.
We are looking at the basis upon which cost estimates have been calculated in the light of operating experience and as part of the wider Strategic Defence Review.
Lord Carver: My Lords, I thank the Minister for that extremely interesting Answer. Does he agree that when people ask loose questions—for example, questions about the annual cost of Trident—the figures should be

5
quoted and not the £200 million a year, which is merely the operating costs of the ballistic missile submarine fleet?
Lord Gilbert: My Lords, Her Majesty's Ministers always attempt to answer the Question in the terms in which it has been phrased.
The Earl of Carlisle: My Lords, does the Minister agree that the sizeable sum of nearly £1 billion a year could be better spent elsewhere within the defence budget? Will he consider spending it on re-equipping and retraining the armies of the eastern European nations such as the Baltic States, Estonia, Latvia and Lithuania? Will he also consider putting that suggestion to the Strategic Defence Review?
Lord Gilbert: My Lords, I must start from the premise that this Government, like their predecessors, consider that the money being spent represents good value and I have no doubt that the new constructive Opposition will take the same view. I am interested in the menu of suggestions which the noble Earl put forward, but I do not believe that at this time any of them is a practical way ahead for the Ministry of Defence.
Lord Chalfont: My Lords, does the Minister agree that the sum which he has mentioned, which is a small proportion of the defence budget, is a small price to pay for deterring potential aggressors in a world in which the weapons of mass destruction and the means of delivering them are in the arsenals of an increasing number of dangerous and unpredictable regimes?
Lord Gilbert: My Lords, I am obliged to the noble Lord for his remarks and I agree with him. It may be of interest to the House to note that, for example, the current Russian stockpile of nuclear weapons includes many weapons of the 100 to 200 kilotonne range and some as large as 1 megatonne; that is, 1 million tonnes of high explosive equivalent.
Lord Jenkins of Putney: My Lords, I congratulate my noble friend on the completeness of his Answer. Is he aware that the idea that the money might be better spent elsewhere is well founded? For example, if he were to discontinue the spending of so much money on our nuclear weapons he might be able to assist the Russians to get rid of some of their more dangerous weapons.
Lord Gilbert: My Lords, I am always happy to entertain questions from my noble friend, but I am afraid that I am never likely to persuade him to agree with me on these matters. Obviously, we would rather not be in a position where we had to spend money on any armaments, let alone nuclear armaments, but, unfortunately, we must deal with the world in which we find ourselves.
Lord Burnham: My Lords, perhaps I may draw the Minister's attention to that part of the noble and
6
gallant Lord's Question which refers to "maintaining the capability" of keeping nuclear weapons and to the Minister's remarks about decommissioning. Will those costs come out of the defence budget or from some other source, because they appear to have nothing to do with the maintenance of the defence of the realm?
Lord Gilbert: My Lords, it is always the fate of defence Ministers that their budget must accept many costs which, in my view, are not strictly defence costs. However, the decommissioning costs will be expected to come out of the defence budget.
Lord Lewin: My Lords, I should first declare an interest. At one time I was the operational commander of the Polaris Fleet and, as Chief of the Defence staff, I was responsible for giving military advice to the government of the day as regards the choice of the successor system. I am grateful to the Minister for his reply to my noble friend Lord Chalfont. Will the Minister confirm that the Trident missiles are still assigned to NATO because I believe that our NATO allies, in particular the United States, would view with some dismay any change in that arrangements?
Lord Gilbert: My Lords, I am grateful to the noble and gallant Lord, with whom I spent many happy hours at the Ministry of Defence last time I was there. I am happy to confirm that our submarine nuclear forces are still assigned to NATO. The noble and gallant Lord is absolutely right. It would present us with considerable difficulties with our allies were there to be any change in those arrangements and none is contemplated.
Lord Wallace of Saltaire: My Lords, will the Minister tell the House whether the Franco-British defence dialogue, which I understand has been covering nuclear weapons for some time, has identified any areas in which closer co-operation as regards positioning and stationing operations between the two independent nuclear forces could promote savings through a lower level of operation, given that there is no immediate threat to either country?
Lord Gilbert: My Lords, all I can say to the noble Lord is that the results of any such conversations would remain highly confidential.
Lord Monkswell: My Lords, bearing in mind the very large sums of money that the Minister has reported to the House as being involved in keeping nuclear weapons, will he confirm that even larger sums of money will be spent by other major nuclear powers on the maintenance of their nuclear weapons? Moreover, as the Government's long-term aim is to see the eradication of nuclear weapons worldwide, what steps are the Government taking to alert the other countries which have nuclear weapons to the large cost savings which could accrue if they were to join our Government in those long-term aims?
Lord Gilbert: My Lords, I am happy to confirm to my noble friend that the amount of money that the

7
United Kingdom spends on its strategic nuclear capability and sub-strategic nuclear capability is extremely modest compared with those sums spent by the other nuclear powers. I am happy to pass on my noble friend's suggestion to my right honourable friend in the other place that he draws the attention of the other nuclear powers to the sums of money which might be saved. However, I regret to say that I see no immediate progress in that field, despite the recent remarks by President Yeltsin.

EU: International Development Policies
2.52 p.m.
The Earl of Sandwich The Earl of Sandwich asked Her Majesty's Government:
What steps they intend to take to influence European Union policies on international development, and to ensure that more EU development aid goes to the world's poorest communities.
Lord Whitty: My Lords, we seek to influence the European Union both through our formal role in the decision-making process and by regular contact at all levels. Improving the poverty focus of the European Union's aid programme is a key objective. We are pursuing that in discussions in relation to the future of the Lome agreement. We shall take that forward during the UK presidency in work on securing commitments to international development targets and in following up the poverty resolution agreed in 1993.
The Earl of Sandwich: My Lords, I thank the Minister for that long and far-reaching Answer. Does he not agree that the British presidency provides us with a unique opportunity to influence EU development aid? Does he accept that the OECD targets provide a good objective and that we could allocate more aid to social sectors and civil society and delegate more decision-making powers away from the Commission into both overseas projects and local partners?
Lord Whitty: My Lords, the objectives which the noble Earl describes are the Government's objectives: to focus the aid programme on the poorest countries; and within much of our aid programme for all countries, to focus on the poorest sectors. That involves many of the social objectives to which the noble Earl referred. During our presidency I am sure that my right honourable friend will take the opportunity to steer the discussion among European Ministers to those ends.
Lord Steel of Aikwood: My Lords, does the Minister agree that one way in which we could influence the European Union in its development programmes is by trying to speed up the major capital works to which it is already committed? I am
8
thinking, for example, of the Nacala port and railway corridor in Mozambique which is taking a painfully long time to come to fruition.
Lord Whitty: My Lords, we are aware of inefficiencies in the programme both on the ground and within the European Commission itself. Indeed. the Secretary of State has referred to some of those inefficiencies, and the capital programme requires special attention, which it will be given.
Baroness Chalker of Wallasey: My Lords, is the Minister aware that some of those inefficiencies within the European Union could be solved if some of the work were undertaken by member nations working with the European Union? I do not suggest repatriation programmes. However, a number of nations, not only this one, have very good teams which could implement those projects much more speedily and cost effectively than is currently happening in the European Union. Would the Minister please ask the Secretary of State to look at that matter?
Lord Whitty: My Lords, certainly, without prejudice to the delivery of our bilateral programmes, it is our view that the expertise present in this country and in the DfID in particular could be used to greater effect by the Commission and in the European Union's programmes, and we are certainly looking at that.
Lord Redesdale: My Lords, will the Minister say whether the Government will use the presidency of the EU to put forward a European Union-wide ban on the practice of tied aid? That will go a great deal further than many other measures for making good use of aid.
Lord Whitty: My Lords, your Lordships will be aware of the White Paper commitment on changing the direction of aid within this country. Of course, bilateral aid is a matter for each individual member state. It would be presumptuous of us to move into their areas. Nevertheless, I believe that there is something in what the noble Lord says and we shall be attempting a common approach on those matters across all the members of the European Union.
Lord Tebbit: My Lords, will the Minister persuade his colleagues in the European Community that one of the better ways in which to help developing countries in the third world would be if Europe were to desist from its protectionist agricultural policies which cause so much damage to the economies of third world countries as well as increasing the price of food to poor people in Europe itself?
Lord Whitty: My Lords, it is a fairly common position within this House that the CAP is as damaging to that dimension of our policy as it is to others. The Prime Minister and the Secretary of State for Foreign Affairs have put the reform of the CAP

9
firmly back on the agenda. However, that desire does not take away from the need to develop development aid both bilaterally and through the European Union.
Lord Lucas: My Lords, are the Government prepared to make a statement about the particular aims which they hope to achieve during their presidency with regard to EU international aid? If not, are not their fine words just empty, as so many of their recent statements have proved to be?
Lord Whitty: My Lords, I think the noble Lord is not only broadening the debate but is also totally misrepresenting the record of this Government who have been far better at delivering their promises in the short time that they have been in office than were their predecessors.
As regards the part of the noble Lord's question which is relevant to this Question, we are moving up to the renegotiation of the Lomé agreement. Many of the principles which we set out in our White Paper will be applied within that context. We await the Commission's proposals in that area. We hope that within our presidency we shall establish a more effective negotiating position for the Lome agreement. That and some of the other objectives which have been referred to will form a major part of the development council's work in the British presidency.
Lord Judd: My Lords, my noble friend has referred to the importance of the Lome agreement in this context. Will he inform the House about what will be the Government's position, together with their European partners, towards the multilateral agreement on investment in so far as it relates to the needs of the poorest countries of the world?
Lord Whitty: My Lords, that is a complex relationship which is primarily a matter for the Department of Trade and Industry and the Department for International Development. However, there are aspects of that agreement which need to be taken into account and there are aspects which the WTO needs to take into account if they are not to prejudice some of the development aid of ourselves and our European partners.
Lord Lucas: My Lords, does the Minister recognise that he answers in this House for the whole Government, not just for one particular department, and that he should, therefore, give a rather more full answer to his noble friend Lord Judd?
Lord Whitty: My Lords, I believe that it is the tradition of the House that, as far as possible, supplementary questions are limited to the scope of the original Question. Certainly, I have no problem whatever in defending the total record of this Government. However, when a Question is tabled, the House deserves to have an Answer which relates primarily to it. I am not condemning my noble friend, or anyone else, for trying to broaden the discussion, but that is the tradition and I shall stick to it.

Fabian Society Booklet
3 p.m.
Viscount Chelmsford Viscount Chelmsford asked Her Majesty's Government:
What is their view on the Fabian Society publication Information Age: Delivering the Blair Revolution, and in particular on its six recommendations.
Lord McIntosh of Haringey: My Lords, as a former chairman of the Fabian Society, I thank the noble Viscount for the publicity that he gives to its excellent publications.
The Government welcome this Fabian Society paper as an interesting contribution to debate on simpler, better government. The forthcoming Better Government White Paper of my right honourable friend the Chancellor of the Duchy of Lancaster will set out the Government's vision for public services. It will address many of the areas on which the Fabian booklet made recommendations: electronic service delivery; information for users; closer working between departments (including the Inland Revenue, Customs and Excise and the Contributions Agency); partnership between central and local government; and co-ordination between inspectors.
Viscount Chelmsford: My Lords, I thank the Minister for that reply. I, too, welcome the report. Can the Minister say whether the Government will give priority to achieving the savings identified in the report through the re-engineering of tasks performed by the two groups of central and local government departments referred to therein? That will ensure that the work is done once only and not duplicated by each department. It will also enable the citizen to obtain a single point of entry for advice and information and mean that he will not need to visit up to 11 different departments as the report alleges.
Lord McIntosh of Haringey: My Lords, in his supplementary question, the noble Viscount correctly identified the thrust of the work that the Government are already doing. In particular, he referred to central and local partnership. As part of the Deputy Prime Minister's central-local partnership initiative, the Chancellor of the Duchy of Lancaster has set up a ministerial group to develop a framework to encourage innovative pilot initiatives to improve services at the local level, through different parts of government working together.
As regards the noble Viscount's question about electronic delivery, he may have noticed yesterday's announcement by the Chancellor of the Duchy of Lancaster regarding the first paperless form, which is to be applied to those wishing to register as self-employed.
Lord Avebury: My Lords, if the Government are so keen on delivering information electronically. will they consider the case of the Prison Service, which does not have a web page of its own? This created the greatest difficulties when it was asked to provide information for the penal lexicon (a web page which did provide information about the Prison Service). It declines to give

11
any contribution to those people who are carrying out a public service by not making such information available on its own web page.
Lord McIntosh of Haringey: My Lords, I can confirm what the noble Lord said about the Government's determination to make information available electronically. The Prime Minister has made a tough commitment that, within five years, 25 per cent. of communication between government and citizens will be available electronically. I should point out that the Prison Service is included in that project, although I am not aware of the prison lexicon to which the noble Lord referred.
Lord Renton: My Lords, bearing in mind the fact that the Fabian Society originally stood for introducing socialism and state control steadily and not hastily, can the Minister tell the House what is the present Government's attitude towards Fabian principles? Indeed, can the noble Lord say whether the Prime Minister is a Fabian?
Lord McIntosh of Haringey: My Lords, I believe that the Prime Minister is a Fabian. I should remind the noble Lord that the motto of the Fabian Society, in the words of Quintus Fabius Maximus Cunctator, has always been:
"When 1 strike, 1 strike hard".
As far as concerns improving government relations with the citizen, I think that now is the time to strike hard.
Lord Skelmersdale: My Lords, is the Minister aware of a recent statutory instrument laid on behalf of the Department for Education and Employment for which information on what is going on in schools, especially in terms of school numbers, and so on, is demanded both in three written copies and on a computer disk? Does that not show that the Government do not strictly have the courage of their own convictions?
Lord McIntosh of Haringey: My Lords, I am not aware of the case to which the noble Lord refers. I shall inform myself in that respect and then inform the noble Lord of the conclusions that I draw.
Lord Davies of Oldham: My Lords, as a fellow Fabian, does my noble friend the Minister agree that the philosophy behind the report is not just the efficiency of government services but also the impact upon the citizen? Is it not important that recipients of government services—for example, those on benefits—should be beneficiaries of the new technology, rather than being bypassed or disadvantaged by it?
Lord McIntosh of Haringey: My Lords, the Government cannot neglect the fact that £38 billion a year is spent on the delivery of their services. Therefore, the cash nexus cannot be very far from our minds. However, my noble friend is right to say that the purpose of the
12
exercise is not only to save money but also to improve the quality of services and to improve the quality of communication from the citizen to government.
Lord Lucas: My Lords, will the Minister accept my thanks for the fact that, some six long months after first having asked, I have now received my first electronic answer to a Written Question tabled in this House? I am most grateful. Will the noble Lord address himself in particular to the fourth of the requests made by the Fabian Society; namely, to introduce a local help line for people to enable them to find out what is going on in their area and receive answers from their councillors and MPs? Does the noble Lord support that aim, and does he envisage that it will involve a greater provision of offices and support to MPs in their local areas?
Lord McIntosh of Haringey: My Lords, I am sorry that it has taken so long for the noble Lord to receive electronic responses. For a number of months now I have been signing Written Questions contained in a folder to which a diskette has been attached. I thought we could have beaten the timescale that we have in fact achieved.
However, in response to the noble Lord's final question, I would not like it thought that local authorities are not already doing what is recommended by the Fabian pamphlet. Many local authorities already operate help lines or one-stop shops, and information technology is already making it possible for them to integrate advice from local and central government, and from the voluntary and private sector. We are encouraging single-entry points to which all those parts of the broad spectrum of government will contribute.

Business
3.8 p.m.
Lord McIntosh of Haringey: My Lords, at a convenient moment after 3.30 p.m., my noble friend Lady Jay of Paddington will, with the leave of the House, repeat a Statement that is to be made in another place on the White Paper regarding the new National Health Service.
I should like to take this opportunity to remind the House that the Companion indicates that discussion on the Statement, following the end of the Minister's initial reply to the Opposition spokesmen, should be confined to,
"brief comments and questions for clarification".
There is a mandatory limit of 20 minutes from the end of the Minster's initial reply to the Opposition spokesmen.

Supreme Court (Offices) Bill
The Lord Chancellor (Lord Irvine of Lairg): My Lords, I understand that no amendments have been set down to this Bill and that no noble Lord has indicated a wish to move a manuscript amendment or to speak in

13
Committee. Therefore, unless any noble Lord objects, I beg to move that the order of commitment be discharged.
Moved, That the order of commitment be discharged.—(The Lord Chancellor.)
On Question, Motion agreed to.

Public Processions etc. (Northern Ireland) Bill [H.L.]
Read a third time.
Clause 1 [The Commission]:
The Parliamentary Under-Secretary of State, Northern Ireland Office (Lord Dubs)The Parliamentary Under-Secretary of State, Northern Ireland Office (Lord Dubs) moved Amendment No. 1:
Page I, line 6, leave out from ("established") to ("Northern") in line 7 and insert ("a body to be known as the Parades Commission for").
The noble Lord said: My Lords, this amendment and those grouped with it serve to remove Clause 3 of the Bill, which covers the Parades Commission's extended remit, and make the necessary consequential changes. The Government's decision to remove Clause 3 follows extensive discussion in this House at all stages, and the emergence of a clear cross-party consensus that the clause as drafted would not have the desired effect. I believe this decision demonstrates how right the Government were to decide to make this legislation through a Bill rather than Order in Council, an option which was open to us. I have been most grateful for the vigorous debate surrounding this clause, and am now convinced that removing it is in everyone's best interest.
But equally, I have been heartened by the recognition from all sides of this House that the Bill needs to be even-handed and be seen to be even-handed. A number of other amendments tabled today will, I believe, go some way towards reassuring people on this account. But it is highly important that people do not see removal of this clause as leaving us with a Bill which is straightforwardly anti-parading and targeted to the culture of one particular part of the community. We shall continue to consider carefully all suggestions as to how our commitment to implement the findings of the North Report can be carried out in a balanced and even-handed way. I beg to move.
Lord Cope of Berkeley: My Lords, this House is often described as a revising Chamber. We have certainly revised this Bill, or at least we shall have done so by the end of the afternoon. The face of the Bill, as it is now intended to go to another place, is substantially changed. The government amendments to be moved today, all of which, including this first batch, have my support, strike out one of the main clauses, Clause 3, entirely, rewrite six of the other 18 clauses and two of the three schedules, and alter both the Short and Long Titles. That is the extent of the revision. There are some outstanding matters which we shall discuss later in our deliberations.
As regards Clause 3, the Bill came to us with the power for the commission to consider all kinds of other outdoor expressions of cultural identity, including
14
church services and painted gable ends, although not offensive sporting occasions. Now the Bill deals only with processions such as parades and protests. The Bill came to us—as it seemed to many of us—as an anti-parades Bill. However, after all these amendments, it will leave us as a parades enabling Bill, which is what I think it should be.
First, the Secretary of State's powers to ban parades or protests are not now to be easier to invoke, as the original Bill suggested. Secondly, the penalties for parade organisers when a parade goes wrong are not now—as they were originally—to be four times the maximum penalties for those who set out to break up parades. Thirdly, the same penalties will also be available for organisers of or participants in an illegal parade held without notice as are available for the organisers of or participants in a legal parade which goes wrong in some way.
The Government are to use again the old definition of processions, which includes car-borne processions or vehicle processions. The original wording of the Bill was changed from the present law and did not seem to provide for that. The Government have accepted the recommendation of your Lordships' Select Committee on Delegated Powers and Deregulation on the handling of changes to the code of conduct, the procedural rules and the guidelines. That is a complete raft of changes which alter the whole effect of the Bill. Of course we know that some people both north and south of the Border wanted an anti-parades Bill—a Bill which they could exploit as widely as possible. This House, in the amendments we are about to make, will deny them that. This Bill is now fairer, more balanced and much more likely to prove workable, effective and acceptable to everyone of good will.
It is also worth drawing your Lordships' attention to the fact that these revisions have been achieved by different parties acting together and by distinguished Cross-Benchers. I add for the record that the changes have been pressed on the Government by both life and hereditary Peers within this House. The Government were wise to accept the suggestions that have been made. The Minister gave in with good grace and was clearly effective in arguing the case that was put in your Lordships' House with his colleagues in the department. I am therefore delighted to accept all the amendments which the Government will propose this afternoon.
Lord Holme of Cheltenham: My Lords, the Government deserve double congratulations. First, they have achieved the remarkable feat of having united all quarters of the House in opposition to Clause 3, with which this bundle of amendments deals. To unite your Lordships' House—albeit against the clause—is no mean feat. The Government should also be proud that they had the grace to withdraw the clause and thus to improve the Bill when faced with the fact that the clause does not enhance the Bill and might well damage the ability of the Parades Commission to establish itself as a useful way of managing the parades process in the public interest. I use the word "manage" rather than "enable". I say that with respect to the noble Lord, Lord Cope.

15
As regards this group of amendments, and in particular Clause 3, I wish to pay tribute from these Benches to my noble friend Lord Alderdice who in the Committee stage adopted a leadership role which assembled this motley coalition of Cross-Benchers—as has been said—the heavy and weighty guns of the Opposition Front Bench and other quarters of the House against the Government. I believe that it was largely his intellectual leadership which has led us to the point of identifying that the Bill is better without Clause 3.
Like the noble Lord, Lord Cope, I shall support the amendments before us this afternoon. However, at the end of the day, the Parades Commission will have a difficult job next spring. Its task next spring will coincide with the crucial stage of the peace process, running up to the Government's hoped for deadline of 1st May to arrive at a settlement of the difficult and contentious issues in Northern Ireland. It is extremely important that all people of good will, both in your Lordships' House and, much more importantly, in Northern Ireland itself, now try to give the Parades Commission a fair wind in this agonizingly difficult task. It will not be any easier for that body than it has been for successive governments to manage this process. I offer Mr. Alistair Graham and his colleagues best wishes in that task.
Lord Molyneaux of Killead: My Lords, whatever feelings one might have about the Bill and the central objectives—some of us cannot be terribly optimistic—nevertheless it would be churlish not to say that we greatly appreciate the patience and the diligence of the Minister and the effectiveness with which he must have put forward our ideas embodied in these amendments when dealing with various arms of government. It is certainly my intention to reward the Minister in a small way by supporting the amendments which he will move.
Lord Alderdice: My Lords, we are grateful to the Minister for all the work he has done thus far in the passage of this piece of legislation. First, we ought to be grateful to the Government that they wisely chose to carry this measure through as a Bill rather than as an Order in Council. So much of Northern Ireland's legislation is tackled through Orders in Council. This measure was presented as a Bill in order that it could be fully and properly considered. Secondly, it was also a wise decision to conduct the Committee stage in the Moses Room. The atmosphere in the Committee stage was most conducive to discussion not only as regards the environment of the committee but also the participation of all noble Lords who gave considerable time and thought to the measure.
Much thoughtful work was done on all sides. I pay tribute to all noble Lords who participated in a thoughtful, constructive, and at times good humoured way—something that is not often a characteristic when dealing with our problems in Northern Ireland. Of the contributions from Government, the Opposition, the Cross-Benches and colleagues in the Ulster Unionist Party, the noble Lord, Lord Eames, made a striking, moving and extremely significant contribution on Clause 3.
16
I believe that it was a wise decision for the Government to bring the Bill to your Lordships' House first rather than to another place. My experience of much esteemed friends and colleagues in another place indicates that there is a tendency to expand the contentiousness of such matters and such a course might have made it difficult to achieve the consensus and thoughtful and reflective material that has resulted. The Government will be rewarded by taking a better piece of legislation to another place and, it is to be hoped, will find that it has a reasonably smooth passage there.
I have found that there is appreciation in Northern Ireland that the legislation passing through is rather better than when it came to us. It does credit to all of us—the Government, and your Lordships' House. I am grateful to my noble friend Lord Holme of Cheltenham for his kind words on the small part that I played. I found it a most fruitful piece of work. I think that the people of Northern Ireland will be grateful to us. I only hope that the co-operativeness that was obvious in your Lordships' House will infect other forums in which I operate where we are struggling with the matter of talks and finding a resolution. If that infection from your Lordships' House could travel, goodness knows what the new year might bring for us there. I and my colleagues will support the amendments that the Minister puts forward.
Lord Dubs: My Lords, I am enormously grateful for all those comments, for the words of support, and for the welcome that the House has given to the procedure that we followed, both by having a Bill on the subject, and, as the noble Lord, Lord Alderdice, said, by using the Grand Committee procedure for the Committee stage in the Moses Room. That was the result of discussions through the usual channels. I agree with the noble Lord that it led to an informed, interesting, balanced, reasonable, good natured and helpful Committee stage. I think that the Bill has become all the better because of the atmosphere and the way in which we were able to debate in the Moses Room. It may well influence us when looking at future Committee stages, given the success of this one. But I must not prejudge what my noble friend the Chief Whip will wish to do as regards future Bills. I am most grateful for the support expressed, and for the support for this set of amendments which delete Clause 3. I commend the amendment.
On Question, amendment agreed to.
Clause 3 [Functions of the Commission in relation to other expressions of cultural identity]:
Lord Cope of Berkeley Lord Cope of Berkeley moved Amendment No. 2:
Leave out Clause 3.
On Question, amendment agreed to.
Clause 4 [Code of Conduct]:
Lord Cope of Berkeley Lord Cope of Berkeley moved Amendment No. 3:
Page 2, line 26, at end insert ("or a counter-demonstration to a public procession").
The noble Lord said: My Lords, Amendments Nos. 3, 5 and 11 are grouped together. Amendment No. 3 would mean that the Parades Commission not only has to draw up a code of conduct for those organising and

17
participating in parades but also for those protesting against a legal parade. When I argued the point at Report stage, the Minister said that the point would be considered further; and that the results of the further consideration would be dealt with in another place. I entirely accept that. I advance the amendment today only to draw attention to the North committee's view on the matter.
During Report stage, the Minister said at column 1195 that the North Report did not believe that it would be appropriate for the commission to have such a code dealing with protesters. I pointed out at the time that I believed that that was not an accurate statement of the position. The Minister may have confused the position with the subsequent recommendations in Chapter 13, paragraph 55 of the North Report which recommends that the police consider a code of conduct for open air meetings. The Parades Commission has nothing to do with those. In fact at Chapter 13, paragraph 40 of the North Report recommends that the commission's code of conduct should cover protesters. It sets out in some detail what might be in that part of the code. I hope that the Minister and his colleagues will take this clear recommendation of the North Report into account in discussing the matter before reporting their conclusions in another place.
Amendments Nos. 5 and 11 deal with a separate point. They give the Secretary of State the power to ban a counter demonstration. We sought to improve the wording of our amendments between Report stage and Third Reading. I do not think it fanciful to suppose that there may be occasions where counter-demonstrations are expected and the Secretary of State may take the view that the procession should take place, that re-routing the procession is not possible and that the counter-demonstration should be banned. As I understand the Bill as drafted, the Secretary of State can only ban the whole procession, thus removing the cause of the counter-demonstration and indirectly banning that. But by doing so he gives way to the protesters themselves.
I hope that between now and consideration of the Bill in another place that possibility will be considered so that the Bill can be amended along the lines of Amendment No. 11 in particular, but also of Amendment No. 5. I beg to move.
Lord Molyneaux of Killead: My Lords, I believe that there is a strong case for accepting this modest amendment in line with the recommendation of the North Report in particular to deal with the situation which will arise when the date and details of a traditional procession will be known many months in advance. A protest group perhaps organised by a military body—such groups are nearly always organised by such bodies—launches notice of a counter-demonstration, usually with no justification whatever except to create trouble. Clause 4 requires the commission to issue a code of conduct regulating the conduct of organisers of a public procession, but inadvertently your Lordships are denying the commission the power to act in a similar role with
18
regard to organisers of a protest demonstration designed, as the Bill states in another clause, to break up a legal procession.
The Minister stressed the need for balance between sections of the Northern Ireland community. In line with the generosity he showed earlier, and his capacity to influence his colleagues in the Northern Ireland Office, I hope that he will recognise the need for balance between legal behaviour and illegal activities.
Lord Monson: My Lords, Clause 3, which we have just consigned to oblivion, was originally conceived by the Government as a means of achieving balance between what we must now call the traditions. Subsequently, it was realised by almost everyone that Clause 3 went too far and, moreover, that it might well lead to all kinds of unintended consequences. Accordingly, it has rightly been deleted from the Bill. However, we are still faced with a need to achieve balance between the traditions. This group of amendments goes some way towards achieving that end.
3.30 p.m.
Lord Dubs: My Lords, I should like to deal separately with Amendment No. 3 and Amendments Nos. 5 and 11. They deal with substantially different points, although I appreciate that at first sight they seem to cover the same issue.
In regard to Amendment No. 3, the point at issue has already been discussed at both Committee and Report stages. As I said on Report, the Government feel that further consideration of this point would be more appropriate in the other place. However, I wish to take the opportunity of clarifying a point that the noble Lord made at Report stage, on which he has subsequently tabled a Parliamentary Question and to which he referred in his comments a few moments ago.
I accept that there is a certain amount of ambiguity about the North Report's recommendations on the code of conduct and counter-demonstrations. This Bill, which implements the report's recommendations, would treat a counter-demonstration as an "open-air public meeting". It would therefore fall to be regulated by the police under the public order order. The North Report recommended that the police,
"give serious consideration to preparing a Code of Conduct in relation to such meetings similar to that prepared for parades by the Parades Commission".
At the same time, however, the report recommended that the commission have ownership of a code of conduct covering the behaviour both of participants and protesters. That is slightly curious, particularly as the form the code of conduct is recommended to take clearly covers matters such as the organisation of a parade and behaviour on it, which are subjects on which the police rather than the Parades Commission can impose conditions. Moreover, while the North Report makes clear that past breaches of the code of conduct can be taken into account in future determinations on contested parades, it is hard to identify a corresponding sanction which could apply to counter-demonstrators.

19
As I mentioned earlier, the Government believe it would be more appropriate to deal with this issue when the Bill goes back to another place. The police and the commission will have their own views, and I do not believe we want to introduce hasty amendments at this stage. I would be grateful, therefore, if this amendment could be withdrawn, and we will report back in the other place as to our conclusions on this matter.
Amendments Nos. 5 and 11 deal with the power of the Secretary of State to ban processions, whereas Amendment No. 3 deals with the power of the Parades Commission to determine matters relating to processions, such as the route. As I made clear in Committee and on Report, we are content that the Secretary of State already has sufficient powers to deal with the disorder, disruption etc. resulting from counter-demonstrations. Those powers are contained in the public order order, as amended by Schedule 3 to this Bill.
The amendments introduced on Report by the noble Lord, Lord Cope, would not have had the effect that he sought. The amendments tabled for debate today are, however, technically defective in a different way from those that he introduced on Report. I am sorry to have to say that; I remember, when in Opposition, I was frequently stung by being told that my amendments, both in this House and the other place, were technically defective. However, that is the truth, and I hope that the noble Lord will accept it.
The first problem with these amendments lies in the concept of a "counter-procession". That is nowhere defined in legislation. Indeed, a counter-procession is presumably simply a public procession. If local residents or anyone else sought to oppose a public procession by holding another one in protest, that "counter-procession" would itself fall to be regulated by the commission and could be banned by the Secretary of State, if necessary using her powers under Clause 11 as currently drafted.
On the assumption that this amendment is intended to cover counter-demonstrations rather than counter-processions, however, the noble Lord's amendments would still not have the desired effect. The amendment does not make clear that the revised Clause 11 is intended to cover both public processions and protesters to it. But unlike the amendments laid at Report stage, the factors which the Secretary of State must take into account have not this time been amended. That would mean that the Secretary of State could theoretically permit a public procession to go ahead but ban a counter-demonstration, only taking into account the likely disorder or disruption which the original procession might cause, rather than disorder or disruption as a result of the counter-demonstration which is being banned. That may seem perverse, but it is an inevitable consequence of the amendment as drafted, because, as it stands, the Secretary of State has no power to consider the likely effect of the counter-demonstration in deciding whether to ban it. I therefore urge noble Lords to reject this amendment.
20
Indeed, I should welcome a comment from the noble Lord, Lord Cope, as to his intentions regarding Amendments Nos. 5 and 11. As I said, the fact that counter-demonstrations are not covered in this clause is by no means a sign that the Government do not believe they can be just as much a source of trouble as the original procession. Rather, the Secretary of State has equal powers to deal with both the original procession and the counter-demonstration, but those powers simply happen to be set out in different places in the legislation.
Lord Cope of Berkeley: My Lords, as regards Amendment No. 3, I am grateful for the Minister's comments. If he refers to paragraph 13.42 of the North Report, which sets out the possible elements in a code of conduct for parades, he will find that Part III sets out quite clearly suggestions as to what might be included in a code of conduct in relation to what is described as,
"General behaviour for anyone participating in lawful protest against a parade".
That is what the amendment seeks. However, I am happy to leave the matter to be settled after further consideration, and for it to be dealt with in another place.
So far as concerns Amendments Nos. 5 and 11, I assure the Minister and the House that I have been far too long involved in parliamentary matters to have any pride in my draftsmanship. I understand from the Minister's remarks that the amendment does not achieve my intention. I shall therefore not move Amendments Nos. 5 and 11, but will leave others to consider the matter further. I beg leave to withdraw Amendment No. 3.
Amendment, by leave, withdrawn.
Clause 8 [The Commission's powers to impose conditions on public processions]:
Lord Dubs Lord Dubs moved Amendment No. 4:
Page 5, leave out lines 40 to 44 and insert ("on summary conviction to imprisonment for a term not exceeding 6 months or to a fine not exceeding level 5 on the standard scale, or to both.").
The noble Lord said: My Lords, as I mentioned at Report stage, the Government acknowledge that the sentences in the current Bill are somewhat anomalous. Having a stricter maximum sentence for those defying a condition of the Parades Commission or participating in a banned procession than for those who seek to break up a lawful procession (which would of course itself constitute defiance of Parades Commission's determination) could strengthen the concerns of those who fear that this Bill is directed exclusively at one side of the community. Although the provisions of the Bill merely replicate provisions of existing legislation, we recognise the need for change.
We have been faced with a difficult choice, one shared by noble Lords who at different times have put down amendments, some proposing the one course, others the opposite. Nobody should be under the illusion that the offences in these clauses are not serious ones. The authorities are absolutely determined to maintain the rule of law and to see that decisions of the Parades Commission are not defied. But, equally, the choice lay between levelling up sentences under the Bill or

21
levelling them down. This Government do not believe that the rule of law is necessarily best maintained by the threat of draconian penalties. Rather, we want to see even-handed and effective enforcement of the law. And levelling sentences in the Bill up to a maximum two years would seem disproportionate in the case of offences which need not involve violence or even the threat of violence. In addition, in the past the authorities have found the magistrates' court system adequate to deal with offences under the order, and we are confident that the same will apply in the future.
We believe that the structures established under this Bill will put the whole question of parades on a new, even-handed, transparent and, it is to be hoped, broadly acceptable basis. We do not see coercive penalties as the key for making the new structures work; rather the fostering of local agreement wherever possible and the ability for the first time to make determinations on contested parades on a fair and balanced basis. We therefore commend these amendments to your Lordships. I beg to move.
Lord Cope of Berkeley: My Lords, we are grateful to the Government for moving this amendment, and we support it.
Lord Monson: My Lords, we are obviously living in a time of great compassion, when a convicted mass murderer who has spent no more than 10 years or thereabouts in prison is to be released on 10 days' home leave at Christmas. In the light of that, it would be going against the grain to permit the courts to impose a sentence of as much as two years on someone merely for parading without permission. I therefore support the amendment.
On Question, amendment agreed to.
Clause 11 [Secretary of State's powers to prohibit public processions]:
[Amendment No. 5 not moved.]
Lord Dubs Lord Dubs moved Amendment No. 6:
Page 6, line 35, after ("any") insert ("serious").
The noble Lord said: My Lords, I am happy to introduce this set of amendments which seek to address the perception in some quarters that the Secretary of State's banning power in Clause 11 would effectively make parades easier to ban. I sought to explain in some detail at Report stage why we did not believe that that was a correct interpretation of the existing draft. We are, however, acutely aware that in such a sensitive area perception can be as important as reality. We are therefore happy to propose drafting which provides double reassurance that the banning power will not be used except in the most exceptional circumstances.
The Secretary of State will only be able to take into account disorder, disruption, and so forth, if they are themselves serious. But even that will not be enough, unlike in the existing public order order. It is not enough for the Secretary of State to be convinced that there is a danger of serious disorder, disruption, and so forth. He or she must also believe that, in all the circumstances, banning a parade would be necessary in the public
22
interest. In European Convention terms, this would mean demonstrating that the step of taking a ban was both necessary and proportionate.
I also draw your Lordships' attention in this context to the wording in subsections (2)(e) and (3)(e) of Clause 11. These require the Secretary of State to take into account the extent of the powers exercisable under earlier subsections in the clause. This drafting looks technical, but it is important. In practice, it amounts to a further assurance that the Secretary of State will only use her powers in circumstances where it is proportionate. The banning power is now structured into a power to ban individual parades, a power to ban classes of parades and a power to ban all parades. As the power becomes broader, the Secretary of State will need to demonstrate both that the decision to use it is necessary, taking into account the seriousness of the disorder, and also that using the broader power is proportionate; that is, that using less draconian powers under this clause would not have been enough to deal with the problem identified.
With the amendments I have put down today, and the other changes in the drafting which I have already indicated, I believe that the banning power in the Bill provides greater reassurance than the existing banning power in the Public Order order to those who fear that these are too sweeping powers to curtail what is universally regarded as an important civil right. I can only repeat that the banning power has only been used in exceptional circumstances in the past, and that will remain the case in future. I therefore urge your Lordships to accept these amendments.
Lord Holme of Cheltenham: My Lords, before the noble Lord sits down, can he clarify whether the Government are now satisfied that, with the insertion of the words "serious" and "undue" in these subsections to define exceptional circumstances, the legislation is now on all fours with the European Convention in terms of proportionality?
Lord Cope of Berkeley: My Lords, the answer to that question will be interesting; but, assuming that it is satisfactory, I think that the Government have been wise to accept the suggestions we made at an earlier stage, and I support the amendments.
Lord Dubs: My Lords, I thank the noble Lord for his support. As regards the question posed by the noble Lord, Lord Holme of Cheltenham, it is our understanding that we shall not be in breach of the European Convention on Human Rights with these amendments and that the Secretary of State's other powers will ensure that any decisions are properly proportionate. I believe that the amendments will clarify any misunderstandings that there may have been about the way in which the Secretary of State would use her powers. I hope that the amendments will send out the right message. I can assure the noble Lord that we have taken the European Convention points into account.
On Question, amendment agreed to.
Lord Dubs Lord Dubs moved Amendments Nos. 7 to 10:
Page 6, line 35, after ("or") insert ("serious").
Page 6, line 37, after ("any") insert ("serious").
Page 6, line 39, after ("any") insert ("serious").
Page 6, line 41, after ("any") insert ("undue").
The noble Lord said: My Lords, I beg to move Amendments Nos. 7 to 10 en bloc.
On Question, amendments agreed to.
[Amendment No. 11 not moved.]
Lord Dubs Lord Dubs moved Amendments Nos. 12 to 22:
Page 7, line 3, after ("any") insert ("serious").
Page 7, line 3, after ("or") insert ("serious").
Page 7, line 6, after ("any") insert ("serious").
Page 7, line 8, after ("any") insert ("serious").
Page 7, line 10, after ("any") insert ("undue").
Page 7, line 18, after ("any") insert ("serious").
Page 7, line 18. after ("or") insert ("serious").
Page 7, line 20, after ("any") insert ("serious").
Page 7, line 22, after ("any") insert ("serious").
Page 7. line 24, after ("any") insert ("undue").
Page 8, leave out lines 5 to 9 and insert ("on summary conviction to imprisonment for a term not exceeding 6 months or to a fine not exceeding level 5 on the standard scale, or to both.").
On Question, amendments agreed to.
Clause 16 [Regulations and orders]:
Lord Dubs Lord Dubs moved Amendment No. 23:
Page 10. line 23, leave out subsection (2) and insert—
("( ) A statutory instrument containing any regulations under this Act shall be subject to annulment in pursuance of a resolution of either House of Parliament.
( ) A statutory instrument containing an order under paragraph 4 of Schedule 2 shall not be made unless a draft has been laid before, and approved by resolution of, each House of Parliament.
( ) A statutory instrument containing—
(a) an order under paragraph 9 of Schedule 2 made without a draft having been laid before, and approved by resolution of, each House of Parliament; or
(b) an order under section 7(5)(b) or 12(1) or paragraph 2(2) or 12(6) of Schedule I,
shall be subject to annulment in pursuance of a resolution of either House of Parliament.").
The noble Lord said: My Lords, this amendment might look somewhat indigestible on first sight but its practical effect is quite simple. It takes up the very useful suggestion made by the Delegated Powers and Deregulation Committee on the procedures to be adopted for subsequent amendments to the code of conduct, guidelines and procedural rules. In the Bill as it stands, the first issuing of these documents will be approved under affirmative resolution procedure. Subsequent amendments, however, would be by the negative resolution procedure. The committee accepted that the negative resolution procedure was an acceptable route for subsequent revisions to the statutory documents, while calling on members of both Houses to be aware of proposed changes and to pray against them if they considered that they required fullest parliamentary scrutiny. The Committee also suggested,
24
however, that the Government consider the option of having a choice of either the affirmative or negative procedure.
That has up till now been a fairly unusual approach, mainly associated with European legislation; but we believe it is a helpful suggestion, and highly appropriate for this Bill. We do not believe it will be a good use of parliamentary time to require a debate on any revision of, say, the commission's procedural rules when these may be entirely technical; but, equally, we accept that there is at least a potential of fairly substantial changes to the guidelines, for example.
Your Lordships may ask how the Government will decide which option to use. I cannot, of course, set out any fixed rules, but I can assure your Lordships that each case will be considered carefully on its merits. Our commitment to the fullest possible scrutiny has been demonstrated by our decision to use a Bill procedure rather than an Order in Council, and we shall not be seeking to smuggle major changes through without appropriate scrutiny. Depending on what we perceive to be the gravity and significance of the changes, we shall decide which procedure is appropriate. And, of course, if any noble Lord or Member of the other place believes the changes are significant and should require a debate and a vote, it is open to them to pray against an order which has been laid by the negative resolution procedure.
I believe that this is a pragmatic and helpful amendment, and I urge acceptance of it.
Lord Cope of Berkeley: My Lords, the whole of today's proceedings have demonstrated the wisdom of the Government in bringing forward these proposals as a Bill rather than as an order, as the Minister said. I am grateful to the Minister for proposing this amendment, which we culled from the Select Committee and advanced to him earlier.
On Question, amendment agreed to.
Clause 17 [Interpretation]:
Lord Dubs Lord Dubs moved Amendment No. 24:
Page 10, line 38, leave out ("Commission established by section 1") and insert ("Parades Commission for Northern Ireland").
On Question, amendment agreed to.
Lord Dubs Lord Dubs moved Amendment No. 25:
Page 11, line 13, at end insert (", whether or not involving the use of vehicles or other conveyances").
The noble Lord said: My Lords, I am happy to introduce this amendment, which I think largely speaks for itself. The noble Lord, Lord Molyneaux, has discussed on several occasions the disturbance which politically inspired processions or cavalcades of motor vehicles can cause. Such vehicle processions have been covered by legislation up till now and I believe that it is important that they should continue to be so covered. I accept that the present drafting of the Bill does not make that sufficiently clear and I believe that this

25
amendment, which restores the wording of the 1987 public order order, does what is necessary to provide that reassurance.
Lord Molyneaux of Killead: My Lords, I am deeply grateful to the Minister for the careful and sympathetic attention that he has given to this problem. I know that his decision will be welcomed throughout the community in Northern Ireland, with the exception of certain evil-doers, who are not the main concern of your Lordships.
On Question. amendment agreed to.
Clause 19 [Short title, commencement, transitional provision and extent]:
Lord Dubs Lord Dubs moved Amendments Nos. 26 and 27:
Page 11. line 23, leave out ("etc.").
Page 11, line 25, leave out ("and to section 3(5)").
The noble Lord said: My Lords, with the leave of the House I shall take Amendments Nos. 26 and 27 en bloc. I beg to move.
On Question, amendments agreed to.
Schedule 2 [Provisions relating to code of conduct, procedural rules and guidelines]:
Lord Dubs Lord Dubs moved Amendment No. 28:
Page 15, line 4, leave out paragraph 5.
On Question, amendment agreed to.
Schedule 3 [Amendments]:
Lord Dubs Lord Dubs moved Amendments Nos. 29 to 34:
Page 15, line 29, leave out ("etc.").
Page 15. leave out lines 33 and 34 and insert—("The Parades Commission for Northern Ireland.".").
Page 15, leave out lines 38 and 39 and insert—(""The Parades Commission for Northern Ireland."."). Page 15, line 45, at end insert—
("( ) In Article 4(6) for the words from "liable" to the end there shall be substituted the words "liable on summary conviction to imprisonment for a term not exceeding 6 months or to a tine not exceeding level 5 on the standard scale, or to both.".").
Page 16, line 16, at end insert—
("( ) In Article 5(6) for the words from "liable" to the end there shall be substituted the words "liable on summary conviction to imprisonment for a term not exceeding 6 months or to a fine not exceeding level 5 on the standard scale, or to both.".").
Line 3, leave out from ("of') to end of line 4 and insert ("the Parades Commission for").
On Question, amendments agreed to.
An amendment (privilege) made.
Lord Dubs: My Lords, I beg to move that this Bill do now pass.
Perhaps I can briefly say a word of thanks to all noble Lords who contributed to the discussions at all stages of this Bill, both in the Moses Room, at Report stage and again today. We have demonstrated that the procedure adopted by the Government to introduce a full Bill to deal with this difficult and vexed issue was fully justified in the event. We have made the Bill a better Bill on behalf of the people of Northern Ireland.
26
I am grateful for the good tempered and positive way in which noble Lords responded to the issues. They are extremely difficult issues, as we saw last year and in previous years during the marching season. I hope that the people of Northern Ireland will see this as a positive move forward; that they will accept that the Parades Commission is an even-handed body which will do a useful job in conciliation and in making determinations as necessary. I hope that we shall have better marching seasons in the coming years than in the past years as a result of the Bill.
I end on the note I mentioned earlier; that is, that 12th July is a momentous day in the marching season. It is also the day of the World Cup Final and I hope that that also sends a positive message to the people of Northern Ireland.
Moved, That the Bill do now pass.—(Lord Dubs.)
On Question, Bill passed, and sent to the Commons.

The New NHS
3.52 p.m.
The Minister of State, Department of Health (Baroness Jay of Paddington): My Lords, with the leave of the House, I should like to repeat a Statement being made in another place by my right honourable friend the Secretary of State for Health. The Statement is as follows:
"Today I am proud to announce the publication of our proposals to renew and modernise the National Health Service. These are set out in our White Paper, The New NHS.
"This White Paper is a turning point for the NHS, the 1 million staff who work in it and all of us who use it. This Government were elected to save the health service. We were also elected to change it for the better. We want to give it a new lease of life. Today we outline a 10-year programme of modernisation which guarantees that the NHS gets better each year—delivering quicker higher quality services for patients. The pace of change will be measured, but each year will bring new and visible improvements. Our plans will give our country a modern and dependable health service that is once again the envy of the world.
"We will make a start straight away. This White Paper abolishes the wasteful and bureaucratic competitive internal market introduced by the Tories. It sets out how services will respond more readily to patient needs and describes new targets against which performance will be judged. Doctors and nurses will be in the driving seat. It spells out a whole new approach that we have called 'integrated care'. It will break down the Berlin Wall between health and social care so that patients get swift access to care and treatment rather than being passed from pillar to post.
"The changes we are outlining today will put quality, fairness and efficiency at the heart of the National Health Service. Quality will give patients a guarantee of excellence wherever they live. Standards will be raised right across the country. Fairness will

27
give patients an NHS that is there for them when they need it, where they need it, regardless of their ability to pay—a one nation NHS. Efficiency will deliver more money for patient care. There will be a relentless drive to cut out waste and unnecessary bureaucracy.
"We will abolish the internal market because it has failed. It has failed to deliver quality of care, fairness for patients or efficient services. It set doctor against doctor; hospital against hospital. Its business culture has been at odds with the ethos of the NHS and those who work within it. Patients want an NHS where staff can work together to provide better services, rather than having to compete against each other.
"When I became Secretary of State I promised that we would listen to the people in the front line—the nurses and doctors, midwives and other professionals, and all the staff in the National Health Service. We have kept that promise. We have listened. That is why our proposals go with the grain. We are building on what has worked. But we are discarding what has failed. For us what counts is what works. There will be no return to the command and control structures of the 1970s. Nor will there be a continuation of the divisive fragmentation of the 1990s. Instead there will be a third way—a new model for a new century.
"We will keep the separation between planning and providing services. But we will end competition and replace it with a new statutory duty of partnership so that local health services pull together rather than pull apart. We will end fundholding and replace it with primary care groups in each area putting doctors and nurses in charge of shaping services for all patients. We will end the culture of secrecy and commercialisation and replace it with a new duty of openness that will share best practice for the benefit of all patients. We will end short-term contracts, cost per case contracts and extra contractual referrals and replace them with long-term agreements that offer stability and focus on quality. Our detailed proposals for doing all this are set out in the 81 pages of the White Paper.
"We will set up primary care groups involving family doctors and community nurses in every area. They will be responsible for commissioning services for their local communities and will account to health authorities for their activities. GPs and community nurses will have a choice about the form their primary care group takes. For example, they will have the power to become freestanding primary care trusts, able to run community health services, including community hospitals. They will have a single unified budget, no part of which will be capped. So, the money will always be there to guarantee that patients get the medicine they need, when they need it. The new unified budget will give GPs maximum choice over how patients' needs are met. All primary care groups will work closely with social services to provide properly integrated care.
"For the first time, NHS trusts will have statutory obligations to co-operate with other parts of the NHS and to meet quality standards. They will remain
28
responsible for treatment and care. Hospital doctors will have a greater say in shaping local services for patients.
"Health authorities will, over time, relinquish most of their commissioning responsibilities. The proposals will cut the number of commissioning bodies from around 4,000 to about 500. They will be leaner bodies with stronger powers. They will draw up long-term programmes for improving the health of their area in consultation with local NHS trusts and primary care groups, but also with local authorities, voluntary bodies and education and research institutions. These health improvement programmes will provide the broad framework for local action to improve general health and health services.
"All of us who use the NHS deserve a guarantee of excellence. There will be new national action to extend quality and efficiency into every part of the NHS, backed by a new performance framework which measures what counts for patients.
"There will be a new national institute for clinical excellence to give a strong lead on clinical cost-effectiveness, drawing up new guidelines from the latest scientific evidence. There will be new national service frameworks that will guarantee consistent access to services and quality of care for all patients. They will draw on the best evidence available, to set out the best ways of providing particular services. To underpin this drive for quality, there will be a new commission for health improvement to spread best practice and tackle shortcomings.
"Patients will also have a guarantee that public money is being used to best effect. NHS trusts will no longer be competing. But they will be comparing. Comparison, not competition, will drive efficiency. A national schedule of comparative costs of treating different conditions will be drawn up and each NHS trust will be judged against it. Management costs will be capped. There will be clear incentives and sanctions to help drive improvements in performance at every level. Trust performance will be benchmarked for both quality and efficiency and the results will be made public.
"Over the lifetime of this Parliament, these changes will shift an extra £1 billion from bureaucracy into frontline patient services. This will be on top of the extra £1.5 billion which the Chancellor has made available for the NHS over this year and next. And we will continue to raise spending on the health service in real terms every year.
"These changes will give patients a modern and dependable health service which makes the best use of developments in modern medicine and information technology to offer readily available and high quality services. We have already promised to cut waiting lists. We will have done so by the end of this Parliament.
"Today I want to announce three new milestones by which we will chart our progress towards the new NHS. At home, everyone will be able to contact NHS Direct, a new 24-hour telephone advice line staffed

29
by nurses. Three pilot care and advice helplines will begin in March next year. By the year 2000, the whole country will he covered.
"At community level, patients will benefit from quicker test results, up-to-date specialist advice in the doctor's surgery and on-line booking of out-patients appointments by connecting every family doctor to NHSnet—the NHS's own information superhighway. We will have demonstration sites up and running by next year. By 2002, these services will be available to GPs throughout the country.
"In hospital, everyone with suspected cancer will be guaranteed a specialist appointment within two weeks of their GP deciding they need to be seen urgently. This will start for everyone with suspected breast cancer in 1999 and be extended to all other cases of suspected cancer by the year 2000.
"We have great ambitions for the National Health Service. We will take on those who say the NHS has had its day and all we can do is preside over its decline. We will work with the million people who make the NHS so special to turn it into a modern and dependable service for the coming century. We know that doctors and nurses and all the staff of the NHS wish to rid themselves of the unfairness and inefficiency of the current system. That is our ambition too. It is what they want and what the people of this country want.
"Next year the health service celebrates its 50th birthday. A Labour government founded the NHS and this Labour Government are now modernising the NHS to prepare it for the challenges of the next 50 years—a new National Health Service drawing on new technology, new drugs, new quality standards and new ways of working; a new National Health Service based on its timeless principles that the best health services should be available to all; the best for all, quality and equality, for the new century."
My Lords, that concludes the Statement.
4.3 p.m.
Earl Howe: My Lords, I am most grateful to the Minister for repeating the Statement. It is a Statement which has been long anticipated and which, now that we have heard it, is undoubtedly of fundamental significance for the future of the NHS. Indeed, so multi-faceted are the changes now adumbrated that it is difficult for me to give a full or considered response from these Benches today. For that reason, until the details and implications of what is proposed have been carefully studied, my reaction to the Statement must inevitably be a somewhat guarded one.
I can, however, congratulate the Government on their boldness. I do not doubt that Ministers are seeking in their own way to improve the health service. That is laudable. What some may doubt, however, having listened this afternoon, is whether the course they have charted will remotely be able to deliver the improvements they seek. My instant reaction to the proposals is that they have a great deal of sound and
30
fury about them, but the central question always has to be: will they deliver better care more efficiently to patients?
The proposition put before us is of a health service in decline and disarray. I cannot accept that for one second. Surely to goodness, any dispassionate analysis must acknowledge one truth obvious to all of us who depend for our well-being on the NHS; namely, the admirable and robust ability of the health service over many years—but particularly over recent years—to meet the ever-increasing demands placed upon it. It has succeeded in doing so triumphantly, thanks to the dedication and professionalism of those who work for it. But, in the same breath, let us also acknowledge the enabling part played by government. Spending on the NHS has risen by 74 per cent. in real terms in England since 1979 and over 80 per cent. more NHS treatments per year are carried out now compared with 1978. Those figures do not speak of decline.
As the Government have recognised, there will always be pressure for more money and greater efficiency. The pressures felt by the NHS are nothing new. Ever since 1948 it has had to contend with a growing demand for treatment, an ageing population and the relentlessly rising cost of medical technology. For any government to respond to those challenges, it is necessary to demonstrate not only a commitment to a proper level of resources but also some flair and innovation so as to ensure that those resources are efficiently directed. Those are the two tests on which the Government will be held to account at the next general election.
We have heard much in the Statement about the alleged inadequacies of the previous government's health service reforms. I am saddened that Labour, now that it is in office, cannot be fair minded enough to give credit where credit is due. Those reforms, introducing as they did the distinction between purchaser and provider, better accountability to patients and devolved budgets to fund-holding GPs and trusts, were a vitally necessary set of changes which have been of huge benefit to the quantity and quality of health care delivered by the NHS since 1991. Of course there have been difficulties in effecting those changes. It would be extraordinary if there had not been. Of course we all want to minimise unnecessary bureaucracy, and large slices were indeed eliminated by the previous government. But those, like the Minister, who condemn the internal market should reflect on the transformation that that market has brought about in waiting times, in the information available to patients and in the quantity and quality of treatment delivered. Those are real bench-marks of success and of value for money.
The Statement says that NHS staff want to be rid of the current system. I have yet to come across a GP fund-holding practice which regrets its decision to adopt fund-holding status. There is no doubt whatever that fund-holding has injected new life into the NHS from top to bottom. Yet here we are with an announcement which heralds the end of the internal market and the end of fund-holding as we currently understand the term. In their place we find the proposal that primary care groups

31
should take responsibility for a much greater part of the NHS budget and to a large degree take over the role of health authorities.
If the object of these changes is to open the way to greater efficiencies, I feel bound to ask the Minister how they will do so. The proposals appear to amount to an extension of fund-holding. But we are told that they do not amount to fund-holding. So what are the mechanisms, in the absence of the internal market, which will bear down on waiting lists, conduce to better care and ensure better value for money? It is not clear from the Statement whether the distinction between purchaser and provider is to be retained. Will it be; and if it is, how will it manifest itself? But more than that, how are GPs supposed to be equipped for this new role? To run a budget covering hospital and primary care, and perhaps some areas of social services as well, will require management skills and large amounts of management time.
We are told that the Government are keen to get rid of bureaucracy. But how will these arrangements avoid yet another form of bureaucracy, multiplied hundreds of times across all the GP practices or primary care groups in the country? It is effectively another layer of administration in the NHS.
In moving away from fund-holding, doctors are bound to wonder how their ability to take decisions will be circumscribed by the needs of other doctors in other practices, and to wonder, too, what will happen when there is a direct conflict of opinion. Seven or eight doctors in one practice can agree relatively easily. A committee of 50 is another matter.
The mechanism that we are asked to accept as being the driver of financial discipline is a cap on management costs. How will those be defined? Can the Minister confirm absolutely whether or not there will be a cap on the drugs budget? If not, do the Government have any plans for controlling such expenditure? I ask again: where are the mechanisms to ensure that GPs prescribe within budget?
The Statement also speaks of NHS trusts comparing and not competing. I am not sure how much of that is semantics and how much a real departure, but to base comparisons on a national schedule of comparative costs of treating different conditions is not a facility that comes by waving a wand. The data underpinning such comparisons will need to be collected in detail, and often, if it is to have validity. How will that be done without extensive paperwork and form filling? Will the resultant benchmark be as applicable in London as in Liverpool, or as realistic in Plymouth as in Perth? I need to be convinced about the credibility of such figures and the cost effectiveness of gathering them.
The Government have high ambitions for the NHS and I welcome them. I welcome also their ambition to bring health and social care closer together. It will be admirable if that can be achieved. I shall be grateful if the Minister can expand on how the Government propose to achieve that.
32
In other respects my heart sinks at the terms of the Statement. The word "new" appears in it an off-putting number of times. I am suspicious of the word "new", as it conjures up marketing-speak. It would have been better if the Government had stuck to the substance without trying to doll it up. Further analysis will determine what these proposals amount to. At present I am fearful that the new NHS will mean new bureaucracy. I would genuinely like to believe the best of these proposals, but for the time being the jury is out and I suspect that it will remain out for some considerable time.
Baroness Robson of Kiddington: My Lords, may I also thank the noble Baroness for repeating the Statement made by her right honourable friend in the other place. I agree with the noble Earl, Lord Howe, on two statements he made in his opening remarks. He mentioned his unbounded admiration for the robustness of the staff and the people working in the NHS in view of the greater demands which they have met in recent years. I agree with him. He quite rightly claims that to some extent his party can take credit for some of the changes that have taken place. But it must also take the blame for certain things.
One of the sad aspects of the health service is that this is about the eighth reorganisation of the service since 1974. Therefore, apart from paying credit to the staff of the NHS for the work they do, we must also pay enormous credit to them for the way in which they have kept their allegiance to the organisation during all those changes. It must have been very difficult for them.
As each change has taken place it has meant an increase in management costs. I know that the Statement says that this new reorganisation will reduce those costs, but I find that very difficult to accept. It is stated on page 8 of the Statement that the reorganisation will save the NHS £1 billion. That seems unbelievable. We are not moving towards reducing management costs; in my view we must be increasing them.
By removing GP fundholding we are creating groups of about 50 GPs who will get together to arrive at an agreed statement and demand what they need. In order to do that management structures will have to be set up. Fifty GPs cannot possibly meet round the table and hope to come to a conclusion. They will have to be served by some form of management. GP practices which are not at present fundholders will have to employ a manager. There will be a need to instal up-to-date computers in every practice, just as fundholding groups do at the moment. That is not going to save money. The same situation will apply to the primary care groups. In commissioning services for a particular area they will need a full-scale administrative structure behind them. I would like an explanation as to how we shall save £1 billion by changes of this kind.
I also find it difficult to accept that the internal market will be removed. I cannot see that there is much difference between the providers in the hospitals, as proposed for the future, and the present situation. All I can foresee is that they will have to deal with a larger number of commissioning groups. Instead of 100 health authorities there will be at least 500 local

33
commissioning groups. I therefore find it difficult to accept that there will be the savings that we are looking for.
However, I welcome one statement. That is the extension of the length of contract to be negotiated, which is to be for a period longer than one year. I believe that that will save money and time. It is a good measure, and one which we have been asking for for years. However, I have another request for the Government to consider when they look further into the proposed reorganisation. It is not enough to have GPs and community nurses working together providing what is called a unified health service. I believe that all social care needs to be included. I do not believe that greater control over the NHS budget by GPs will break down the "Berlin Wall" between health and social services. That will only be eradicated when health and local authority budgets are merged, as the Liberal Democrats have long advocated. I regret that it is impossible to go into all the details of the Statement, but I very much look forward to the main debate on the measures in this House.
Baroness Jay of Paddington: My Lords, I am grateful to both the noble Earl and the noble Baroness for their extremely authoritative remarks. I join with them in admiration for, and very much underline the points which were emphasised in the Statement about, the flexibility, skill and resilience of those who work for the NHS in the quality of care that they provide and have provided over a long period of years.
The point about the increase in bureaucracy which both the noble Earl and the noble Baroness thought might result from what is contained in the Statement goes against the point that I made about the reduction in costs of £1 billion a year. That has been very carefully costed. I know that the noble Baroness was concerned that that figure was not broken down in detail in the Statement; however, it is broken down in some detail in the White Paper. If you reduce enormously the transaction costs of individual contracts between individual health authorities and local health providers, as the new system will; if you cap management costs in both health authorities and local commissioning groups; if you abolish extra-contractual referrals and ask everyone to work to a national reference system of pricing for particular treatments; and if you work, as we intend to do, to an agreed and well worked out budget of £3 per patient within each commissioning group, the sum mentioned is not at all unrealistic. It has been appropriately costed. That sum will be demonstrated to have been saved by the end of this Parliament. The simple fact of reducing the number of commissioning bodies, which I mentioned in the Statement, from nearly 4,000—I believe that the absolute figure is 3,700 to 500 across the country must in itself reduce the administrative and management costs at a stroke, as it were.
I appreciate the points made by both the noble Earl and the noble Baroness about the capacity of the local commissioning groups to assume such a very broad agenda. Perhaps I should point out that—again, in contrast with the previous major changes in the health
34
service to which the noble Baroness referred—this will be an evolutionary change. As I said in the Statement, the programme is devised to progress along a 10-year timeframe. We do not expect that every local commissioning group or every local group of GPs will be able to assume full responsibility at the beginning of the process. As is clearly demonstrated in the White Paper, we accept that there will have to be a well structured, evolutionary process from a position where a GP group might be acting simply in an advisory capacity to its local health authority to a position where that local GP group might assume the powers to run local services or, indeed, even the local community trust.
I am not quite sure where the noble Earl and noble Baroness found the figure of 50 GPs sitting around a table. That was certainly not mentioned in the Statement and, as far as I can recall those 81 pages, it does not appear in the White Paper. I should emphasise in general terms that it is intended that there should be great flexibility with regard to the local commissioning arrangements. There will be differing responsibilities and different degrees of authority assumed depending on the skills that can be demonstrated. The groups will be flexible in size and type, again depending on the nature of the community served and the geographical region.
The whole emphasis of the White Paper is that we want to re-establish the National Health Service in terms of national service frameworks, national quality standards, and as a national organisation for clinical effectiveness and for cost effectiveness. However, we expect that local people will want to choose the way in which their local commissioning group and local health authority function. There will be no diktat from the centre about how that should be done, but we shall require it to be carried out within the new statutory general framework. Perhaps the noble Earl and the noble Baroness are looking for something slightly more rigid than appears in the White Paper.
We are extremely keen to promote the amalgamation of social care and health care. That is why there will be a new statutory obligation on both NHS trusts and local GP commissioning groups to form partnerships—not simply with other health service providers, but with other providers and with the leaders of other agencies, both in the statutory and voluntary sectors, at local level.
The noble Baroness had a good point about the funding structure of local services. We shall want to explore that in the development of this work. As both the noble Earl and the noble Baroness will be aware, 42 primary care commissioning group pilot schemes are currently being established to try to develop some of these arrangements in ways which seem to us to demonstrate best practice in different parts of the country.
In the context of the amalgamation of health and social care and the involvement of other agencies such as those relating to education and the environment at a local level, perhaps I should mention the health action zones. They appear in the White Paper but not in the Statement because they have previously been

35
announced. They will bring together all the different functions in 10 pilot projects which will, again, start next year.
Overall, I must reinforce our belief that this change will be effective in reducing bureaucracy. It will enable local initiatives to continue to flourish. Those local initiatives must, however, be contained within the national quality frameworks which will enable us to get away from the lottery of care, which was one of the unfortunate results of the internal market.
The noble Earl said that this change was being made for presentational purposes. He referred to "The new NHS". Perhaps I may draw his attention to the first page of the White Paper which shows that that title has been derived from that of the original White Paper on the NHS in 1948. That White Paper was called "The New National Health Service". Presentational skills may have been less important then.
4.25 p.m.
The Earl of Onslow: My Lords, I wonder whether the Minister will help me a little. From the Statement one gained the impression that she had inherited from the previous administration a collection of tents in a swamp in Bangladesh. I can promise the Minister that the last time that I had to go to hospital I was advised to use the National Health Service. In Surrey, the NHS and our local GP service—I do not know whether it is fund-holding—is of such quality that it should be emulated and copied in all areas. It ill behoves the new Administration to downgrade the achievements of the last government in making the NHS worthy of an enormous amount of admiration. I say that as somebody who applied for an appointment with a specialist the other day and the appointment came through so quickly that I had to postpone it. That is the efficiency of our local health service. It ill becomes the party opposite, which has suddenly become Her Majesty's advisers, to imply that what went before was not absolutely super—because it jolly well was!
Baroness Jay of Paddington: My Lords, I am grateful to the noble Earl for pointing out the excellence of the services in his locale. I wish that it were true throughout the country. Some extremely good services are offered by the NHS. One of the particular frustrations of the way in which the service was fragmented by the previous internal market system was that precisely the excellent service (which I am glad that the noble Earl enjoys in his part of the country) was not spread throughout the country. Excellent services were not available to everyone. They were available only in certain areas. We are not downgrading what happened previously. As I said in my first sentence in response to the noble Earl and the noble Baroness who spoke earlier, all of us are agreed on the enormous skills, dedication and commitment of NHS staff. What we want to do is to improve the service. We do not want to preside over something that people think may last only another 10 years. We intend the service to improve and
36
modernise so that it is there in 50 years' time, serving all of the people of this country in the way in which the noble Earl is being served now.
Lord Winston: My Lords, I am grateful to my noble friend the Minister for repeating the Statement. Those of us who work on a day-to-day basis in the health service know how far short the protestations that we have just heard about the health service are from the actual practice. It is true that the previous government made some improvements—I have grave doubts about the internal market—but despite what the noble Earl. Lord Howe, said, the previous government at least made some investment in research and development. However, one consistent problem has been that that research and development has not been able to be put into practice. I am sure that the House would be grateful if the Minister could refer to the new national institute of clinical excellence and say how it will help us to improve the application of research in the health service and how that body will interface with our existing centres of excellence. We welcome the opportunity of this body; it seems like a very far-seeing idea.
Baroness Jay of Paddington: My Lords, I am grateful to my noble friend. He is right that it is the excellence of research and development and the clinical care by individuals like himself in the health service that maintain the quality of standards. He is also right that we want those standards to be broadly disseminated and most effectively introduced. We hope that the National Institute for Clinical Excellence will do precisely that.
There are a number of such organisations funded within the health service, some of which have been set up in the past few years. For example. the health technology assessment organisation at the University of Southampton is already doing good work in this area. However, these bodies are rather disparate and do not pull together in providing a national basis for assessing and disseminating the best quality evidence on which clinically-led medicine can proceed. The intention is that the national institute should bring together those organisations that already provide some of the evidence and lean on some of the others to ensure that throughout the country the understanding of research and development is put into practice.
Baroness Gardner of Parkes: My Lords, I am concerned that the Statement recites that the health service has set doctor against doctor. I do not accept that for a moment. My experience of the health service is that all of those within it work well together. It is most unfortunate that the Statement says that.
However, my main interest lies in the costs to which the noble Baroness has referred. The Statement says that management costs will be capped. The noble Baroness went on to explain that that would mean £3 per person. Can the Minister elaborate on exactly what that £3 covers? I believe that it refers to the management of the new structure.
The Statement goes on to refer to the fact that there will be clear incentives and sanctions to help drive improvements in performance at every level. It is clear

37
that the budget will be tightly operated. The Minister said that the health service and the social services would be working together. Can she elaborate on the budget? Does this mean that we shall have to pay something for health services or that all of the social services will be free? One of the problems has always been the division of costs as between care, particularly long-term care, in hospitals in the NHS and care in residential homes.
I note that on page 2 of the White Paper the document of 48 years ago is reproduced. I have seen the original document. Until I saw it recently I had not appreciated that at the opening of the National Health Service the then Labour Government said that they were unable to introduce a proper dental service. When the Minister says that we are going back to the position 50 years ago,I believe that that is exactly so. There is still an inadequate NHS dental service. It is only on page 85 of the document that one sees any reference to dentistry. It states:
"Primary Care
Family health services provided by family doctors, dentists, pharmacists, optometrists and ophthalmic medical practitioners".
That is the definition of primary care. Except for doctors and nurses, there is no mention anywhere of how the primary care services are to be run. As a dentist I believe it is very important that people should be given access to national health dentistry again. I ask the Minister to comment on the points that I have just made.
Baroness Jay of Paddington: My Lords, the noble Baroness has made several points. I hope that I can remember all of them. I start with the last point. Of course, the Government intend to include dental care in the organisation of primary care. The precise proposals in that regard will be provided in the consultation document on the framework for developing the management organisation, which I suspect will not be published until after Christmas. It had been intended that it should be published alongside the White Paper but it was regarded as rather indigestible. As regards dentistry, I do not believe that I have said anything to suggest that we want to go back 50 years. In many ways we do not even wish to go back to the 1970s. I was merely responding, perhaps in a light hearted way, to the noble Earl's point about presentation and the adoption of this particular title.
The costs will be much more clearly spelt out in the management framework document. However, we are all aware of the Berlin Wall, as we call it, between social services and healthcare organisations. When we looked at the very specific problem of how to spend the relatively small sum of extra money on the winter pressures, we made a deliberate effort to try to devote some of it to social services, for example to ensure that community care in particular areas was in place over the Christmas period and people were not held in hospital who could otherwise be discharged to their homes. There has been a very effective and co-operative development at practical level, often in mundane areas such as the provision of local patient transport to deal with a short-term situation. But I believe that it bodes quite well for the future development of partnership in this area.
38
As I said in repeating the Statement, there will be a statutory requirement for partnership. It is hoped that some of the more detailed mechanisms or arrangements between the two will evolve. For example, a chief executive of a local authority will not be a member of the local health authority but will be able to take part in that authority's deliberations. The opportunities for partnership are there. As I said in my original answer to the noble Baroness, there are questions about funding which it is hoped we will have a chance to explore through health action zones and other pilots.
Lord Bruce of Donington: My Lords, I rise to congratulate my noble friend on repeating the Statement this afternoon. Over the past 19 years I have watched the tremendous efforts of all those who have participated actively in the health service, in particular in a direct capacity—doctors, nurses and so on. Nevertheless, as one who was marginally responsible for the introduction of the health service in 1948, when I stood behind my noble friend on the other side of the House I witnessed the depressingly steady erosion of the values that we sought in those days in founding the National Health Service. It was very depressing indeed. It has not been pleasant to observe the degeneration in the administration of the health service to a point where it is rapidly becoming a two-tier service, as everyone who has participated in it as a patient or otherwise knows perfectly well.
I am confident that a beginning is now being made—and that I can be cheerful once again—to restore progressively the old values of the health service. I dislike the terms "new" and "modern". I believe that there are two factors which my noble friends in government should bear in mind. First, it is not true that we are at the limit of our financial resources in financing the National Health Service. This country's expenditure on health is marginally less than 6 per cent. of GDP; in France it is 7 per cent. and in other countries it is more than that. Therefore, literally speaking, it is not true that we are at the limits of our prudent financing of the health service. What is true is that we can have a profound effect upon its cost by ensuring that poverty and bad housing are progressively abolished, unemployment ceases to be a chronic problem and the fear and insecurity that lie behind many of the claims of patients in the health service are progressively eliminated. I am confident that my noble friend and her colleagues will do that, and I hope that they will take account of the observations that I have ventured to make.
Baroness Jay of Paddington: My Lords, I am grateful for the observations of my noble friend and his congratulations. I well remember the debate on the 50th anniversary of the Royal Assent to the National Health Service Bill which took place almost this time last year. My noble friend made his contribution from the very place where he had stood behind the then Secretary of State during the passage of that Bill. In a sense that reinforced our understanding of the continuity of the values represented by the NHS. My noble friend is right to say that as a proportion of our national income

39
the NHS is an extremely cost-effective organisation. That is precisely what we wish to build upon in ensuring that the evidence-based approach to cost-effectiveness reinforces those standards.
I do not wish to be drawn too much into discussion about the semantics of the "New NHS". However, I would remind my noble friend that in the last paragraph of the Statement we talk of:
"A new National Health Service based on its timeless principles".
I hope that he will accept that.
The question of the organisation of the general social policy as reinforcing those timeless principles is of course essential. That is what I hope we shall see developed within the health action zone pilots, where at least as much emphasis will be put on the policies about which my noble friend talks—local employment, local environmental policies and local education problems—as the delivery of NHS care. I agree with him that policies such as the minimum wage and other similar policies contribute at least as much to the health of the population as the organisation of the health service.
Lord Alderdice: My Lords, there is much in the Statement that will be welcomed by those who work within the health service, especially the warmth, enthusiasm and vigour, the words about partnership and working together, and all the assurances about how much might be available. I welcome in particular comments about health and social services working together, as they have been integrated in Northern Ireland for almost 30 years.
I wonder whether everything in the Statement is quite what it appears to be. While there is talk about ending the internal market, and no more fundholding, it seems to me that in a curious way all GPs will become fundholders. They will not have funds of course; they will have budgets. They will not work as individual practices but as large commissioning groups. I wonder whether that will achieve all the radical changes that are suggested, although I suspect that it might help a little with bureaucracy.
There are then the words about corrosive commercialism. I entirely share that view. However I see little evidence that PFI will disappear. Rather it seems likely to take an increased share of the health service's revenue expenditure in the future. The biggest issue which has not been addressed is that while we can talk about scientific excellence, quality, making everything available and ensuring that everyone has everything that they need, there are questions of resources and whether services have to be rationed.
The health service has available to it now forms of treatment and approaches which were not available when it began, or even 10 years ago. There are expensive treatments and ways of working. There are ways of working which were always available, even in the health service's heyday, but more in the south east of England than in the north of England or the other provinces. However unappealing it may be, there needs to be a national debate on what the NHS can do and some of the things it cannot do.
40
I am a little disappointed that the opportunity to look at the future of the health service has not faced that issue realistically, albeit that the warmth and robustness of the presentation will give a good feeling to many of those working in the health service and those dependent upon it, at least for this afternoon.
Baroness Jay of Paddington: My Lords, I am grateful to the noble Lord for his comments, especially those on the position in Northern Ireland, which, I agree, provides an interesting model. I shall pick up on a point from the Statement which answers the general points that he made. We are determined to ensure that what counts with us is what works. We believe that what has worked has been the effective division between planning and having a strategy for local services and providing. We do not believe that that maintains anything to do with the market.
On the noble Lord's point about the cost drivers of introducing more effective evidence-based healthcare, I believe that there will be a balance. The question will be how that balance works out. I shall give him one example of how scientific evidence has reduced costs. There has been great pressure in this country. much of it led by people who are concerned about their own health, to introduce the prostate screening programme for cancer. The health technology assessment organisation at Southampton, about which I spoke earlier, demonstrated clearly that that was not an effective way of dealing with the matter, and therefore it has not been introduced. There will be a balance.
Lord Glenarthur: My Lords, this is an important Statement which has given those of us who work in the health service much cause for thought. I declare an interest as chairman of St. Mary's NHS Trust, as the Minister is aware. There may be much in the Statement that can be praised in certain ways. The one element that I would take up, which the noble Baroness, Lady Robson of Kiddington, mentioned, is extending the contract for three years. I am sure that that will be supported.
There are a couple of other matters. Will the Minister say what progress is being made, and when an announcement is to be made, on the London review, because that will have a major impact, at least in one part of the country, about what the Statement can achieve? An area upon which she might touch, which does not seem to feature at all, is the role of academic medicine. That, at least in part, helps define how NHS delivery of service is obtained, where and how it can be done and how trusts could co-operate with one another. Will she also enlighten me about what appears to be a contradiction on page 6 of the Statement which states:
"NHS Trusts will have statutory obligations to co-operate with other parts of the NHS, and to meet quality standards"?
The Statement then continues:
"Hospital doctors will have a greater say in shaping local services for patients".
Will those doctors be expected to operate outside the terms of their own trusts or within them?
Baroness Jay of Paddington: My Lords, I am grateful to the noble Lord. On the point about London,

41
I am afraid that I cannot give him a date. It is something which is progressing as rapidly as we can make it progress, and it will emerge shortly.
On the point about academic medicine, I believe that I touched upon that briefly in my response to my noble friend Lord Winston. There is an important part for academic medicine which is dealt with extensively in the White Paper, particularly the R&D side. I am sorry, but I have forgotten the noble Lord's third point.
Lord Glenarthur: My Lords, the doctors.
Baroness Jay of Paddington: My Lords, that is not a contradiction in the two parts of the Statement. There will be the introduction within NHS trusts of what is called clinical governance, which will enable the doctors and the managers to work together. The chief executive of the health trust will be responsible for the hospital's financial and clinical standards. The planning for a locality's health improvement programme could well bridge a hospital and a community trust.

Civil Justice and Legal Aid
4.47 p.m.
The Lord Chancellor The Lord Chancellor rose to move, That this House take note of Her Majesty's Government's proposals for the reform of civil justice and legal aid.
The noble and learned Lord said: My Lords, this debate concerns two inter-related issues: the Government's plans for modernising the civil justice system and taking control of the cost of civil legal aid. They are often seen separately but they are linked.
Our civil justice reforms are based closely on the two historic reports of the noble and learned Lord, Lord Woolf. The Government—in fact, the whole justice system—is indebted to him for his perceptive analysis of the problems of the civil justice system, and for the practical solutions he put forward. Our proposals for both civil justice and for taking control of legal aid have been shaped by the excellent report prepared by Sir Peter Middleton and published in October. The Government made a manifesto pledge to review civil justice and legal aid together, as two halves of a single package. The Middleton review fulfilled that pledge.
I announced the Government's initial response at the solicitors' annual conference in Cardiff on 18th October. Today I explain how our proposals have developed over the past two months; and the steps we are taking to consult widely on how best to tackle the problems facing us, not least on legal aid.
The present legal aid scheme is costing more and delivering less. Eligibility has steadily fallen because costs have risen. Over the past seven years, the cost of civil and family legal aid has tripled to £671 million. The average cost for proceedings that received full legal aid in 1990-91 was £1,442. If that cost had grown in line with inflation, that would represent £1,760 at today's prices. The actual average cost was £2,684. That represents an increase of 53 per cent. above inflation, or an average increase of 8 per cent. per year. While civil
42
and family legal aid continued to rise last year, the number of acts of assistance that it funded fell by 39,000. That cannot be allowed to continue. We are paying more and getting less from the lawyers.
Let me refute the assertion that our proposals for reform are Treasury-driven in order to cut the legal aid budget. This is wrong. We do not intend either to increase or reduce the cost of legal aid in real terms. We plan to spend not one penny less than the previous government planned to do. But we also plan to take control of the legal aid budget. We plan to do that by buying services from lawyers through the mechanism of block contracts. Lawyers will be asked to contract for work at fixed prices. Our intention is that block contracting should be used to take control of both civil legal aid and criminal legal aid.
I have mentioned previously the sums that some lawyers receive from the public purse. Lawyers in the private sector are free to charge what the market will bear. But I make no apology for saying again that the level of fees being charged to the public purse is too high. I intend to bring this to an end. In 1996–97, 35 barristers received between £270,000 and £575,000 for criminal work. In 1996–97, 20 barristers received between £203,000 and £41 1,000 for civil work and that apart from any income they earned from privately paying clients.
A High Court judge earns £112,011. A Lord Justice of Appeal earns £124,511. Many hospital consultants earn £56,000 to £70,000 a year. Judges and hospital consultants work hard over long hours. Judges and hospital consultants have highly responsible jobs. The lives of many people depend on their professionalism. Yet almost 1,000 barristers earned from legal aid last year more than hospital consultants are paid.
It is against that background that our reforms need to be seen. I want to see legal aid reformed to benefit the people who most need help. I will use the same amount of money available for legal aid but, using a combination of better planning and block contracting, will ensure that it will be spent providing the right kind of help at the right time and at the right price to the most needy. Block contracts will be overlapping to ensure constant availability. This way we can both control and plan how much we spend, but also make sure that the money does not run out before the end of the year.
Regional legal services committees will involve local people in drawing up plans which will match services to the needs of a particular area and determine how they can best be delivered. This chimes with the Government's wider objective of returning power to the community.
Using these locally determined plans, the Legal Aid Board will be able to let contracts for services that meet local needs and national priorities in the best way. In particular, that will include contracts for advice work. Advisers who work in areas which are not traditionally of interest to lawyers—for example, housing—will be contracted to provide services.
Hand-in-hand with block contracting, the Government are looking again at the mechanisms available to make sure that taxpayers' money is spent on the cases which are the most deserving. Cutting eligibility, as the previous government did, is a crude and unfair instrument of control. This Government have turned their attention to the operation of the merits test. I want to see it tightened so that only cases with a high probability of success are granted legal aid. I will be issuing a consultation paper next year setting out these proposals in more detail.
Merits bring me to the connected issue of how to identify and deal with public interest cases. These will include cases under the Human Rights Bill when it becomes law. Many of the finest solicitors and barristers in this country work on behalf of the disadvantaged in our society. They represent the poorest and the disempowered. Their commitment is in the best traditions of public service. They provide access to the law for those who are often worst served by the legal system. These are lawyers who do not become rich. They act for refugees, asylum seekers, prisoners, mental patients and victims of abuse and assault. When public authorities or public servants make mistakes or abuse their power, it is regularly the most vulnerable in our communities who are at the receiving end. It is this phalanx of lawyers who take up the law to fight for redress for them.
Only too recently our criminal legal system was shaken by acknowledged miscarriages of justice. If committed lawyers had not spent long unrewarded hours upon those cases, terrible wrongs would never have been put right.
To all of these lawyers, I say that their commitment to their clients will be matched by my commitment to them. In seeking reform of the legal aid system, I intend to focus it sharply on cases involving the social welfare of disadvantaged citizens and cases that raise issues of wider public interest. Within that overall pattern, cases where an individual citizen is challenging an institution of the state will command a high priority. This could include cases where the allegation is of police malpractice. I am determined to ensure that people with serious claims of this kind will be able to obtain the legal help they need under the reforms I am introducing.
I see considerable force in the argument that funding these cases might be justified at a lower threshold of merit than is appropriate for the general run of cases. One of the strengths of our proposals is that the new merits test will be flexible. It will be possible to use different criteria and set the hurdles at different heights to reflect the priority and importance of different types of cases. But a number of fundamental issues are still to be resolved. Is there a category of "public interest cases" that would be better handled by a separate fund rather than within the main legal aid scheme? If so, how precisely are we to define public interest cases? In either event, what criteria should individual cases have to satisfy in order to receive funding? I intend to consult on these issues in the New Year.
I have been talking so far about legal aid and people turning to legal aid in order to secure advice and representation. Legal aid is restricted to the very poor. But it is not the only means of paying for advice. The Government are proposing, subject to consultation, to extend the availability of "no-win, no-fee", or conditional fee agreements, so that the vast majority of people in this country can afford to have real access to justice. The vast majority are those who are not poor enough to have full legal aid, nor rich enough not to have to care how much litigation will cost. The Government will be issuing a formal consultation paper in the New Year setting out their proposals in detail. But we are already engaged in discussions with the professions and others.
I know that some of your Lordships feel very deeply that conditional fee agreements should not have been introduced to this country. I know that some believe that conditional fee agreements put the integrity of lawyers, and their duty to the court, under stress by giving them a direct interest in the outcome of the case. But I have to say that that does not appear to have been borne out since conditional fees became lawful in 1995. The ethics of the legal profession are strong and are strongly enforced. In the recent research, 97 per cent. of agreements included a voluntary 25 per cent. cap on the proportion of damages that could be taken by the success fee. The average mark up for success was 43 per cent. This is a good demonstration of the ability of lawyers to ensure that the needs of the client are not simply suborned to maximising profit, and that they are able to balance duty to the client with the needs of their firm to show profits overall.
The Government are set to begin the task of reforming legal aid by refocusing expenditure towards those areas where publicly-funded legal services are the only option available to the poor. As part of this, we propose to remove from the scope of civil legal aid most cases involving claims for money or damages which we believe can, in future, be funded through conditional fee agreements.
Our critics object that poor people will not be able'to use conditional fee agreements because they will not be able to pay for the preliminary investigations which are needed to determine the strength of their cases; nor, it is said, will they be able to pay the insurance premiums needed to back the conditional fee agreement.
One of the objections that I have heard from lawyers is that they expect insurance premiums to be high. Fortunately, this is not the message that I am getting from the insurance industry. I have been much encouraged in the discussions that I and my officials have had with them. I can tell your Lordships that the scare stories of uniformly high premiums are no more than that. Of course, in some cases premiums will be high to reflect the risk being underwritten. But, equally, premiums are being offered at much lower figures than in the scare stories. Rather than the headline-grabbing £15,000 for medical negligence cases often quoted, I am told that cover has more often been provided at much lower sums—in the region of £3,000. Provided only really strong cases go forward, it is not impossible for a well-run solicitors' firm to run the risk of losing money

45
of that order in the few cases where costs are not recovered from the other side—especially given the costs they will recover, and their entitlement to a success fee in cases that they win.
The insurance industry is competitive. It is already developing the products that will be needed, including products where there would be no up-front costs and where lawyers could protect themselves from an unlucky run of losing cases by "stop-loss" insurance.
There is a wide range of products already available. These fall into the two broad categories of "before-the-event" policies and "after-the-event" policies. Before-the-event policies are traditional legal expenses insurance policies which people buy in conjunction with their motor or household contents insurance. They have been available for over 20 years. Seventeen million people are already covered by one of them. They usually cost between £4 and £20 a year.
There are also after-the-event products available which will cover costs at reasonable premiums. The policies can apply whether there is a conditional fee arrangement in place or not. One product which was quoted to me covered both sides' costs to a limit of £6,000 for a premium of £362 without there even being a conditional fee agreement. The innovative capacity of the industry to match insurance cover to need should not be doubted. The industry has told me that it expects to move sufficiently quickly to develop and launch new products so as to have them available by the time that the changes that I propose to conditional fees and legal aid are made.
I ask your Lordships to contrast that with the gloom and doom of the lawyers' professional bodies when faced with changes which they fear threaten their traditional vested interests.
I do, however, recognise that affordable insurance is only one part of the picture. It is equally important to look at other ways of funding investigative costs and premiums. It could be that in certain types of case—and medical negligence is often the special case cited—the risks and costs cannot be borne by the lawyers. In these cases alternative arrangements may be necessary. I will therefore be talking to banks and financial institutions to see what arrangements can be made. Here again I can tell your Lordships that the insurance industry is already engaged on this task of producing products that marry cover for the risk with funding to run the case as it proceeds.
Some have suggested that I should consider establishing a contingency legal aid fund. The Bar—the main proponents of that—has to work-up its proposals into final form to put to me. My door remains open; but, as I said in my speech in Cardiff, I have doubts how a contingency legal aid fund could operate alongside conditional fees. It seems to me self-evident that the cases with the highest chances of success would inevitably be funded by conditional fee agreements, leaving riskier cases to be paid for from the fund. That would inevitably mean that the fees charged on winning cases would be much higher, or the taxpayer would have to continue to provide money to keep the fund solvent. Also, a contingency legal aid fund would mean that
46
lawyers bear no part of the risks of litigation. It is that which my reforms seek to change. But I say this: if the profession can meet my concerns in these areas, I am more than willing to consider them carefully. I have the opposite of a closed mind on this subject.
It has been said that our intention to change the scope of legal aid by April 1998 is too rushed. I do not agree. I am deeply concerned to begin to meet the areas of need which are not presently covered by legal aid as quickly as possible. I am talking about real people with real problems—and they need help now, not in a year or 18 months or longer. But I cannot provide them with help until I am able to bring the legal aid budget under proper control. I ask your Lordships not to forget that the legal aid budget is rising more quickly than any other area of public expenditure. I make no apology therefore for seeking to move quickly to begin the reforms which will re-focus, not cut, legal aid.
My officials are working hard to ensure the timetable can be met. But I also want to engage in a constructive dialogue along the way with people who understand the work of the civil justice system and the needs of consumers—who are in particular the poor and vulnerable. My officials are currently discussing the issues and problems with a range of professional bodies, consumer groups and other interested groups. I am determined to go wider than any statutory obligation to consult. The Government welcome constructive comment on the whole sweep of our proposals.
Early in the New Year, I shall be issuing consultation papers, which will be informed by the discussions we are having, on conditional fees; the changes to scope of civil legal aid; and public interest cases. These consultation papers will be made widely available. I hope they will encourage a more informed debate. All this moves hand in hand with our proposals to create three routes to civil justice. The first will be an expanded small claims procedure with a £5,000 upper limit. But the small claims procedure, though very successful, is not suitable for every case.
The Government have therefore decided to adopt the proposals of the noble and learned Lord, Lord Woolf, for more "hands on" management of cases by judges, through the creation of the second and third routes, a fast track and a multi track. Power will be transferred from lawyers to judges. Judges will allocate cases to the appropriate track. The courts will have greater control over the progress, cost and length of cases as they move to trial. Both the fast track and the multi track will be up and running by April 1999.
We have been, and will continue, consulting widely on the detail of our proposed civil justice reforms. We consulted on proposed procedures for the fast track and the multi track in the summer. I shall shortly be making policy decisions on the outcome. Consultation papers on clinical negligence procedures, multi-party situations, the other specialist jurisdictions and on our proposals to increase the small claims and fast track upper limit have also been issued. Forthcoming consultation will cover our proposals for a fixed costs regime which we intend should accompany tough judicial case management in the fast track.
Finally, I know that the court fee structure is of concern to many of your Lordships. Some may go so far as to suggest that I should not charge court fees at all. I have said before in your Lordships' House that, while I accept that citizens have what may be called a constitutional right to a court system, I do not accept that they have a right to a free court system. I reiterate that what the state provides free, or at a charge, is a matter of policy for government. I do not believe that any constitutional issue arises in government deciding that, in principle, those who use the civil courts are required to meet the costs of doing so.
However, I am on record as accepting that people should not be excluded from the court system because the fees they are asked to pay are unaffordable. I have already taken steps to help the many who cannot afford the existing fees because of their low incomes. In response to concerns raised in this House, in particular by the noble Lord, Lord Mishcon—whose lifetime's service to the objectives of a just legal system is so well recognised—I have extended exemptions to those in receipt of income-related job seeker's allowance, or family credit, or disability working allowance. This change came into effect on 1st December. Those in receipt of income support have been, and continue to be, exempt from all court fees. The civil fee structure, however, is irrational and hopelessly out-of-date. It needs to be reformed. I will therefore be issuing another consultation paper inviting discussion on the principles which should underlie a new fee structure.
All those reforms, combined with extending conditional fees and taking control of legal aid, will build a civil justice system in which there is equality between the very poor, the very rich and the vast majority in the middle.
Our citizens need and deserve a modern, tailored legal advice service to help them gain access to a reformed civil justice system. In the short term, the work of regional legal services committees in providing better planning mechanisms, together with the use of block contracting by the Legal Aid Board, will enable local people to be involved in making decisions about the kind of advice services they need and how those services should be delivered.
In the longer term, the Government will fulfil another manifesto pledge by creating a community legal service. The service could provide telephone helplines, education in rights and obligations; legal advice on the internet; referrals to alternative dispute resolution; legal representation in tribunals; even interactive kiosks in every high street or supermarket dispensing basic information about the law and the legal system. Those are some of our ideas. There is a project team at work in my department, which is looking forward to learning the ideas of others.
Our reforms will retain a legally-aided safety net for the poor while, at the same time, creating real opportunities for everyone to have access to justice—for the vast majority of the population, not just the very rich and the very poor. This access will be to a civil justice system that is cheaper, faster, simpler and more
48
certain than the one we have today. I am convinced that everyone in due course will benefit from these reforms. I commend them to your Lordships. I beg to move.
Moved, That this House take note of Her Majesty's Government's proposals for the reform of civil justice and legal aid.—(The Lord Chancellor.)
5.11 p.m.
Lord Campbell of Alloway: My Lords, it is a privilege to follow the noble and learned Lord the Lord Chancellor, not only to be able to disagree respectfully with the substance of his speech on the proposed reform of legal aid, but also to scotch the rumour that, during the restoration of his residence, someone found a funny-shaped hat stuffed up a chimney covered with ages of soot. I have it on the authority of Father Christmas that this is just one of those silly jokes. According to today's edition of The Times, a fairy godmother (Mistress Hoon) with a wave of a magic wand, has ordained that the Government shall listen to what is said on all sides of your Lordships' House in this debate; but your Lordships may be given to wonder, having heard the tone and content of the speech of the noble and learned Lord, whether such be the case.
The proposals for reform of civil justice are indeed very much welcomed in principle. No doubt other noble Lords will deal with that aspect of reform. As to the proposed reform of legal aid, the noble and learned Lord's figures speak for themselves. It is common ground that steps can and must be taken to reduce the cost of legal aid to the Exchequer. But the means proposed by the noble and learned Lord—for example, the withdrawal of legal aid from all money and damage claims and the extension of conditional fees to all civil, non-family cases—will dismantle a vital social service and inhibit access to civil justice under those proposed reforms. Your Lordships may well think that a major provision of general public importance such as this ought to be introduced by primary legislation, not by secondary legislation on some ex cathedra pronouncement of the noble and learned Lord.
On the chequer board of government fiscal policy, where the end game is to avoid increase in income tax by reducing the cost, range and quality of a variety of services funded by the Exchequer, this is but one move. Other moves, such as raising council tax, withdrawal of tax concessions, and so on, are irrelevant save to set the perspective. This is a very special and distinct area where the public has hitherto enjoyed, and is entitled to continue to enjoy, the highest professional standards of conduct and the highest quality of professional service; and, indeed, freedom of access to our civil system of justice.
The question is whether those legitimate expectations can be fulfilled either by the extension of conditional fees, or by the legal aid regime as it is proposed to be implemented. Assuredly, extensions of "conditional fees" afford no viable or acceptable substitute for the safety-net provision of legal aid.
The "merit test" on grant of legal aid could, if too stringent, undermine its functions in the future: if too lax, as at present, it could destabilise the financial

49
structure of the system; as, indeed, has been the case. What is needed is the urgent introduction of an effective system of control. For where legal aid would remain available, the Government propose to apply a 75 per cent. assurance of the probability of success. That would remove almost all difficult and complex cases, but nonetheless deserving cases. Assuredly there must be a measure of flexibility.
For many years, and rightly so, the Law Society has pressed for improvement to the operation of the merits test for the grant of legal aid, and for fundamental revision of the guidelines. All too often has legal aid been granted on the basis of counsel's opinion written upon insufficient, erroneous and incomplete instructions, without seeking further instructions on the merits of the case. At times the point of law is only arguable as an open question on the ground that it has not been raised before, although the prospects of success are indeed slender.
As to the merit test, surely it should be the same as when advising a non-legally-aided client: that there should be a substantial prospect of success which some of us put at the order of 60:40, and that account must be taken of the probable costs of litigation (win or lose) of which some estimate is given to the client, as well as the warning of the inherent incertitude of all litigation. It is rare, but it happens, that a client may say, "I have come to you to fight my case at all costs, which I can afford. Will you take it on?" But that has nothing to do with the merits test. It has nothing to do with the legal aid situation.
There is no doubt that the representations of the Law Society are entirely well founded and that there should be a complete overhaul not only of the merits test but of the current regime as to the grant and continuance of legal aid. For example, those who maintain an affluent lifestyle in apparent luxury having disposed of their assets to family, friends or—dare one say it these days?—some trust, thus having little or no income, should have no entitlement to legal aid. The margins of expenditure on any one case should be limited. Some £600,000 spent on one civil case which failed would hardly have been acceptable even if it had succeeded.
All welfare provision is open to exploitation: housing benefit, social security benefit and the common agricultural policy with its set-asides, fictitious vineyards and fanciful olive groves. Legal aid is no exception to any other aspect of welfare, but why not introduce a new, stringent regime of control of legal aid? Why dismember it in favour of a no win, no fee system which can only be workable if insurance is available to provide protection against paying the other side's costs if the case is lost? It is not understood how those on low incomes, eligible for legal aid, will be able to afford the cost of such insurance. It is not understood how they may obtain access to justice. Who will pay? I think the noble and learned Lord mentioned the figure of £3,000. Who will pay that £3,000? My information is that it is much more than that. The whole question of insurance as explained by the noble and learned Lord is in serious dispute. I refer to the alternative arrangements with banks and so forth. Those are nebulous suggestions, but who will pay? Will the solicitor have to underwrite this?
50
Someone has to underwrite it. If the banks are to underwrite it, where is the security? This is all extremely nebulous and unsatisfactory.
Any lawyer who takes on a case on a no win, no fee basis will have to satisfy himself that the damage claim is sufficiently substantial to cover his usual fees with a contract mark up. In order to satisfy himself on that he will have to take proofs of witnesses, obtain documents and very often obtain extra reports which will have to be paid for on demand. It will be up to the lawyer to decide whether he takes on the case on a 50:50 basis; a 60:40 assessment; or a 75:25 prospect of success. However, few would operate very much under 75:25. There is no reason, no compunction and no obligation why they should do so. If the case is taken up, the litigant never receives the true measure of compensation. There is always the temptation to advise settlement at a substantial discount to safeguard the payment of fees.
I apologise for the length of my speech. In conclusion, the steps which should be taken are steps to reduce the cost of legal aid to the Exchequer. They are steps which would introduce a new stringent control to avoid exploitation of a system which in essence is a valuable system in both civil and criminal matters. There is no time for me to deal with the block contracts proposal. I must leave that to other noble Lords. I find it unsatisfactory and abhorrent. The proposed reforms are neither necessary to implement government fiscal policy nor are they well conceived. Litigants whose financial means would have otherwise entitled them to apply for legal aid will not get a fair deal. That is a matter of concern to noble Lords irrespective of where they choose to sit in your Lordships' House.
5.26 p.m.
Lord Lester of Herne Hill: My Lords, I greatly welcome the readiness of the noble and learned Lord the Lord Chancellor to implement the radical recommendations of the noble and learned Lord, Lord Woolf, to reform the civil justice system. I hope that he will be able to provide the necessary resources to make them work in practice. I respectfully join issue with him on one matter of principle, as I did with his predecessor, the noble and learned Lord, Lord Mackay of Clashfern, namely, the notion that the costs of the civil courts should be paid by the users of the civil courts rather than by the general body of taxpayers. I make an exception for commercial users of the commercial court. However, I shall not elaborate on my objection to that principle this evening. There is no time and it goes beyond the debate. It raises a matter of political philosophy which is one's view of the role of the state and the role of public taxation.
I shall confine my remarks to the much more controversial proposals made in the powerful speech of the noble and learned Lord the Lord Chancellor in relation to the public funding of legal services, in particular cutting legal aid for cases where money or damages are claimed and replacing legal aid with conditional fee agreements. I begin by observing that in

51
his keynote address to the Bar annual conference in 1996, when he was shadow Lord Chancellor, the noble and learned Lord, Lord Irvine of Lairg, said that,
"supporters of legal aid must never cease to emphasise that it is a highly successful public social service. In civil cases that reached judgments in 1995–96, judgments were in favour of the assisted person in 81% of cases. The proportion of cases where there was either a settlement or a judgment in favour was 91%.".
I hope that the noble and learned Lord the Lord Chancellor remains of the view that, in his words, legal aid,
"is a highly successful public social service",
even though I did not hear much in his speech referring to the high success of the system.
As I shall try to explain, I agree with most of the long-term aims of the noble and learned Lord the Lord Chancellor, but I do not agree with the means that he has chosen at this stage to implement them. The fundamental question that these proposals raise is, why should public funding of legal services be a priority? I agree with the answer given by the Legal Action Group's admirable 1992 study, A Strategy for Justice. It stated:
"Legal services provide an important counterbalance to the evident inequalities in society, thereby helping to secure equal access to justice for all citizens".
The ultimate aim should surely be, in LAG's words, that,
"anyone with a legal problem has equal access to its just conclusion so that disputes are determined by the intrinsic merits of the arguments of either party, not by inequalities of wealth or power. To achieve that, legal aid policy alone provides too narrow a focus. It is necessary to consider a more comprehensive range of policies relating to the totality of public funded legal services".
That means making public funds available for a community legal service that is able to give more attention to public education, information, advice and representation in social welfare law cases—an important manifesto pledge made by New Labour that has now been relegated to a longer-term goal.
I am all in favour—I agree with the noble and learned Lord the Lord Chancellor—of strictly controlling the burgeoning cost of civil and criminal legal aid, ensuring real value for money, and preventing the undoubted misuse of public funds by some members of the legal profession, whether they are fat cats or leaner members of the species. I am also entirely in favour of preventing lawyers from overcharging for their services where the market place fails to do so because market forces are not working properly. But I cannot support changes made in the name of middle Britain that are likely to be detrimental to the interests of the poor.
Unlike some members of my profession, I have no rooted hostility to the existence of conditional fee agreements in appropriate cases, and subject to effective safeguards. Indeed, I persuaded the then Attorney-General, Sir Patrick Mayhew, to extend them to human rights cases in Strasbourg. But I am troubled by their ethical dangers—the point was not referred to by the Lord Chancellor—for members of an already unpopular legal profession. I find it difficult to understand how the extension of conditional fee
52
agreements will improve the public standing of lawyers whose clients will lose a substantial percentage of their damages to their lawyers, accused, fairly or unfairly, of being shysters.
Nor do I understand how replacing legal aid with conditional fee agreements will in many cases benefit the poor and vulnerable unable to find solicitors to act for them, unable to afford the cost of insurance, and unable properly to assess whether or not their solicitors are accurately assessing their prospects of success.
The Vice-Chancellor, Sir Richard Scott, pointed out in an article in the Guardian on 28th October that there are formidable practical problems about the wholesale extension of conditional fee agreements, and the need to ensure that deserving cases do not fall into a black hole where neither conditional fee agreement nor legal aid is available.
Those problems also apply to middle Britain. To give the example cited by the Vice-Chancellor, first, conditional fee agreements are unsuitable for cases in which substantial costs need to be incurred before it is clear whether or not there is a viable claim—for example, where expert evidence is needed for an opinion on liability to be formed in a medical negligence claim. Secondly, they do not cater for cases in which a successful plaintiff's damages or costs are unlikely to be paid by the proposed defendant. Thirdly, such agreements depend on the loser paying the winner's costs and enough damages for the lawyer to collect a success fee. But there are many cases in which the main purposes of the action are not to claim damages but to obtain, for example, an injunction. Fourthly, conditional fee agreements will not work for defendants. Fifthly, as Sir Richard pointed out, since conditional fee agreements need to be backed by insurance protecting against liability to pay the opponent's litigation costs if the proposed action should fail, access to the civil courts will be possible only for those who can afford to pay the premiums.
Access to justice will effectively be determined by the judgment of the solicitor, whether he or she is willing to take on a high risk case, the availability of insurance, and the ability of the individual to pay the insurance premium and other disbursements. In practice, that will mean that those currently eligible for legal aid, the poorest and the most vulnerable, will have no effective access to justice. The Government have recognised rightly that effective access to criminal justice is a basic human right. The same applies to effective access to civil justice. The right of access to civil justice is just as effectively guaranteed by Article 6 of the convention as is the right of access to criminal justice.
I do not agree also with the Lord Chancellor's proposals to tighten the merits test, not to 60 per cent. as he suggested in his keynote address to the Bar annual conference in 1996 as shadow Lord Chancellor, but to 75 per cent. now that he sits on the Woolsack. It is misleading to suppose that one can possibly forecast the prospect of success with precise percentages in the way suggested. But, more than that, after more than 30 years of practice at the Bar—having read earlier some of the remarks of the noble and learned Lord the Lord

53
Chancellor, I hope that I do not shock him in saying this—I cannot remember a single case, whether legally aided or otherwise, in which I have advised my client that he had a 75 per cent. likelihood of success. And all of my really important successes—and there have been some—have involved an even, or slightly better than even, prospect of success. A requirement of a 75 per cent. prospect of success would operate as a powerful deterrent against litigation which is in the public interest as well as in the interests of justice for the individual citizen.
Lord Mishcon: My Lords, will the noble Lord accept a humble compliment from this side of the Chamber? Is he not aware that he indulges in specialist cases of great complexity where it would be impossible even to forecast what any judge might decide?
Lord Lester of Herne Hill: My Lords, I always find it extremely difficult to forecast what any judge will decide. That is why I would never hazard a 75 per cent. prospect of success, in particular before some of my best friends on the Bench. But I cannot recall any case in which I have been so confident of persuading, for example, noble and learned Lords who sit in this House, that I have been able to advise a 75 per cent. prospect of success. A threshold as high as that will severely restrict the less well-off in their access to legal services and to justice.
The Lord Chancellor has recognised that it would be right to make special arrangements for the public funding of public interest cases. That is most welcome; and I am glad that he has recognised also the contribution that lawyers make in such cases. I am sure that he did not mean to confine his praise only to that class of case. He has not been able to give information about how much will be available for this special fund for public interest cases, how it will be available, according to what criteria, or who will be the judge. Nor has he made clear whether it would be administered independently of the state and its agents. I very much hope that he will be able to give the House more information about what is intended when replying to the debate.
With respect to the other alternatives for controlling public expenditure and increasing access to justice, I am glad that the Lord Chancellor has not ruled out the sensible proposals first advocated not by the Bar Council but by Justice in 1966 for a contingency legal aid fund (CLAF). My noble friend Lord Goodhart is one of the main architects of the Justice scheme. I am sure that he will wish to explain its virtues in a way that I cannot. But a CLAF scheme such as that successfully operated in Australia would allow people requiring financial support to pursue a money recovery case to have their legal costs covered by the fund on condition that they agree to contribute to the fund a proportion of any damages recovered. The fund would be self-financing and could operate alongside conditional fee agreements and civil legal aid for those for whom neither CLAF nor conditional fee agreements are available. I very much hope that the Lord Chancellor, who has an open mind on the question, will look
54
favourably on the idea as modified by the Law Society in its memorandum, Better Value Better Justice, published in June 1996.
Almost 30 years ago I was privileged to work with the Lord Chancellor's former pupil master, the wise and compassionate Morris Finer QC, and Professor Michael Zander and Geoffrey Bindman, when we wrote a Society of Labour Lawyers' report, Justice for All. In it, we examined the problems of the unmet need for legal services and the various factors contributing to the failure of the urban poor to obtain equal access to justice. We pointed out that the legal aid scheme had been grafted upon the traditional structure of the legal profession and had therefore been shaped and restricted by the limits of that structure. Those limits may mean, for example, that there is only one firm of solicitors in a particular working-class neighbourhood which is open only during working hours, which discourages unprofitable work and whose solicitors know much about conveyancing and little about social security. Within such a system the legal aid scheme works fairly well; but the legal profession is simply not organised to provide a social service in areas of special need.
Instead of recommending a vast increase in legal aid, our alternative strategy was, and remains, comparatively inexpensive and cost-effective: a community legal service of legal centres and legally-supported CABs in the heart of areas of special need, staffed by properly paid, full-time qualified lawyers, open in the evenings as well as during the day, giving expert advice on the special legal problems of local residents and, where necessary, referring cases to social workers or private lawyers. Such centres would be independent of government, and would provide a means of protecting the weak against the abuse of government or private power. They would not undermine the independence of the legal profession, nor would they erode its private structure. They would supplement the services already given by lawyers in areas where legal services are not adequately provided.
I still hope that the Lord Chancellor will be able, as he would wish, to give a community legal service high priority, together with the speedy and effective implementation of the vital proposals of the noble and learned Lord, Lord Woolf, to reform the civil justice system. I hope he will reconsider his other proposals in the light of this debate.
In his powerful essay in Law Reform for All, published last year, the noble and learned Lord the Lord Chancellor wrote:
"The ambition of any Labour Lord Chancellor must be to restore legal aid to the status of a public social service which is so highly regarded for its economy and efficiency in securing access to justice that, with the support of the public, it can compete for scarce resources with the most highly regarded services such as health … Legally enforceable rights and duties--enforceable in reality and not only in theory—underpin a democratic society under the rule of law. Rights without a means of enforcement make a mockery of justice".
Those are the ideals of those of us on these Benches, too. I hope that this New Labour Government will transform them into practical reality in the lifetime of this Parliament.
5.43 p.m.
Lord Ackner: My Lords, fellow feeling makes us wondrous wise, and I feel for my noble and learned friend the Lord Chancellor. Many years ago, when I was a judge of the Queen's Bench Division, I was addressed by a highly eccentric Irish litigant in person as, "your worshipful holiness"! Having read much in the newspaper recently about the Lord Chancellor, I can well understand his anxiety at the prospect of early canonisation.
I respectfully express my deep disappointment at the Lord Chancellor's attitude to civil legal aid and his proposals basically to abolish it. At the end of September last year my noble and learned friend was the Shadow Lord Chancellor. The shadow was to change to substance in less than nine months. He gave the keynote address to the Bar Conference, a "tour d'horizon", as he described it, across legal policy. When I read it I was immensely cheered by his statement:
"let me begin with some basic points. I accept that a Lord Chancellor should fight his corner for justice in Cabinet. He must not be a mere hand-maid of the Treasury".
He spoke at length about legal aid, pointing out that, by its very nature being demand led, it attracted Treasury hostility. But under the heading, "Success of legal aid", he made the observations which have already been quoted by the noble Lord, Lord Lester. Perhaps I may read on from where the noble Lord ended:
"Personal injuries litigation for assisted persons is as a category conspicuously successful. Obviously the greater the success rate the closer the legal aid system can approach self-funding. These success figures tell against any argument that legal aid is generally granted too readily, but it must he remembered that there are a small number of very high cost cases which account for a large proportion of expenditure".
I interpose here to say that I understand that when credit is taken for the costs recovered in successful legal aid cases together with contributions made by the plaintiff to his legal aid, plus the clawback of social security payments, the cost to the Revenue is only approximately £100 million. I say "only" because, relative to the total costs of legal aid—some £1.5 billion—it is a very small proportion.
A little later in his address, the Lord Chancellor went on to say:
"There may however he a case for tightening the merits test so that, for example, legal aid should only he granted if Counsel can advise that on current information the prospects of success are at least 60/40".
I believe that 75 per cent. is quite unrealistic. I only once advised that a case would succeed—and succeed it did, in the county court. When it went to the Court of Appeal, my opponent was led, and the entire case was recast. It bore no relation to the pleadings at all. I protested, and the noble and learned Lord, Lord Denning. said, "Oh, we don't worry about that in my court"—and I lost. That cured me once and for all in relation to ever being dogmatic about the prospect of success.
To answer the noble Lord, Lord Mishcon, in regard to the difference between complex and simple cases, perhaps I may give him an example of what I thought was a very simple case. I refer to Smouldon v.
56
Whitworth and Nolan, 1997. The plaintiff's neck was broken when a scrum collapsed during an under-19 colts rugby game. The referee was sued for negligence. I should have thought that that was pretty straightforward and simple. It was the first case of its kind. The case as lost at first instance, and on appeal. Leave to appeal to the House of Lords was refused, and there was an appeal against that refusal. When it reached the House of Lords on its fourth hearing, the plaintiff was successful. Now what on earth does one do about the 75 per cent. costs? Are you forecasting for success in the House of Lords, or are you forecasting for success at first instance?
I also wish to refer to another part of my noble and learned friend's remarks in the course of his speech today which has not been mentioned. He said that, one way or another, he was going to bring the legal aid budget into control. This is what he said nine months ago, when he was but a shadow of himself:
"The legal aid budget is currently within estimate and under broad control so there is no immediate imperative for cost-capping".
I fear that, despite the macho image that has recently been spun around the Lord Chancellor and the unparalleled powers that he apparently wields in and out of Cabinet, imposing his authority on waning political heads of departments, he is, when all is said and done, as he said:
"a mere handmaid of the Treasury".
Having listened to or read the speech to which I made reference, who would have thought that a little over a year later he would be proposing to deprive the poorest in society of access to justice by abolishing legal aid and putting in its place a form of speculative litigation, of which those who have been in receipt of legal aid would be unable to take advantage--if "advantage" is the right word.
Speculative litigation has in recent years been covertly a favourite of the Treasury. It was banged firmly on the head by the Royal Commission on Legal Services, presided over by the late Lord Benson. His recommendation was accepted some four years later in a White Paper by the then government. There was a civil justice review within the Lord Chancellor's Department, presided over by a layman, with a majority of laymen on the review body. That review suggested that conditional fees—or contingent fees—should be looked at again.
Two Green Papers were produced by the then Lord Chancellor at the behest of a sub-committee of the Cabinet Economic Committee, chaired by the then Chancellor of the Exchequer. There was a separate Green Paper all on its own about conditional fees, based on the fact that in Scotland conditional fees were permitted but with no uplift. It was proposed that there should be an uplift of a mere 5 per cent. In due course Section 58 of the Courts and Legal Services Act was passed. The uplift proposed by the Lord Chancellor was 10 per cent. It was later proposed to be 20 per cent., which was agreed to by his advisory committee. It was later proposed to be 100 per cent., 10 times the initial figure he had proposed, so keen was the Treasury to ensure that the system could be put into operation,

57
would work and be capable of being extended. That was firmly disagreed to by his advisory committee.
The noble Lord, Lord Mishcon, with wise cynicism, said: "Hey, if you are going to have this new procedure, it should not impinge in any way upon legal aid". As a result, provision was made in Schedule 19 to that Act to the effect that legal aid should not in any way not be granted merely by reason of the fact that the case was equally appropriate to be taken on a conditional fee basis. Now, without prior consultation either with the professions or, more importantly, with the insurance companies, this radical proposal is made. Yet in his speech in Cardiff the noble and learned Lord the Lord Chancellor had said:
"The thing to do with change is to manage it through consultation and in the spirit of consultation".
By reason of the inadequacy of consultation, not only has insufficient thought been given to the practicabilities of the proposals but they have proceeded on a false basis.
In his Review of Civil Justice and Legal Aid, published in September, Sir Peter Middleton expressed the following view:
"Since 1995, solicitors and their clients have been allowed to make conditional fee agreements in limited areas of work. Although the results of the research into this experiment have not yet been published, there seems to he a widespread consensus that conditional fees have worked well and achieved their primary purpose of improving access to justice for those who do not qualify for legal aid. It seems to me that the value of conditional fee agreements has now been sufficiently well established. Their scope should therefore he widened to embrace all civil proceedings (although in practice, of course, they are mainly relevant where a money claim is involved)".
Sir Peter Middleton, not being a lawyer, did not appreciate the ethical problems that the extension of conditional fees gives rise to. They are conveniently summarised in Chapter 16 of the report of the Royal Commission on Legal Services to which I referred.
The commission accepted, having consulted widely with the public and the professions, that:
"The fact that the lawyer has a direct personal interest in the outcome of the case may lead to undesirable practices including the construction of evidence, the improper coaching of witnesses, the use of professionally partisan expert witnesses (especially medical witnesses), improper examination and cross-examination, groundless legal arguments designed to lead the courts into error and competitive touting".
The results of the very limited research, to which I shall refer in a moment, were published in September. In his Cardiff speech on 18th October—after the publication of the report—the Lord Chancellor made no reference to it but said:
"Conditional fee agreements have been working well in the personal injury field".
As long ago as 1995 the Lord Chancellor's advisory committee had advised that, given the novelty and potential risk to the litigant inherent in setting up conditional fees agreements, there must be effective monitoring of the results. The committee did not believe that monitoring would be effective if it had to rely on a sample which might well be unrepresentative. Nevertheless, all the advisory committee was permitted to do was to commission the Policies Studies Institute to provide a report on sampling.
58
The institute surveyed 300 firms, all specialists in personal injuries; only 120 responded. Those 120 firms were doing on average less than one conditional fee agreement a month. A figure of 28,000 conditional fee agreements to date has been advanced, though one has yet to see any authoritative source for that. Even if it is accurate, it is a remarkably small figure, bearing in mind that conditional fee agreements are available in personal injury cases for the majority of the population who do not qualify for legal aid. The figure for legal aid certificates issued in personal injury cases over the same period is of the order of 250,000.
Far from confirming that conditional fee agreements have been working well, the following was stated in the report entitled The Price of Success:
"However, on the basis of the evidence so far available, there is potentially cause for serious concern about the way risk is being assessed and uplift calculated.
Fairness of the uplift does, of course, hinge on the accuracy of an original assessment of risk and there are some doubts about the accuracy of risk assessment among solicitors' firms. Information about the outcome of these cases, the damages, costs and fees paid is necessary for a full evaluation whether the uplift is fair. However, on the basis of the evidence currently available there is potentially serious cause for concern about whether the scheme is operating fairly and consistently.
The proportion of conditional fee cases with low estimated chances of success is surprising and raises questions about the way in which solicitors are assessing risks. This could cast doubt over the fairness of the entire scheme".
I am surprised that no reference was made to that work, particularly as the Lord Chancellor, in the debate in 1995 on the order to be made with regard to conditional fees, accepted that 95 per cent. of personal injury cases succeed and that in his view a 20 per cent. uplift was quite sufficient. In fact, the uplift has averaged 42 per cent.
I end by saying this. The present position, put quite bluntly, is that we simply do not know enough about the manner in which conditional fee agreements are operating to switch to a system for which they are primarily a means of funding litigation. Matters are still at an experimental stage. There is insufficient material to make a properly informed decision.
The Lord Chancellor recently left the Bar, where he operated with considerable success. Indeed, he is a self-confessed "fat cat". It would be a tragedy of gargantuan proportions if he should rush in, abolish legal aid and take away from the poor and those suffering from various disabilities the means of access to the courts which have been recently referred to as a fundamental constitutional entitlement.
6.1 p.m.
Lord Mishcon: My Lords, perhaps a very slim cat can express his sympathy to his brethren and sisters in this House who, whenever there is a debate in regard to legal matters, find themselves afflicted by one lawyer after another delivering at times rather obscure speeches.
I am reminded, if your Lordships will permit it, of a famous story about Serjeant Sullivan, who was known, as the Irish representative that he was at the Bar, as being fearless. He was addressing the Court of Appeal on behalf of a workman who had suffered injuries at

59
work. The presiding judge of the court turned to Serjeant Sullivan, "Has your client never heard of the maxim of volenti non fit injutia?"; to which Serjeant Sullivan replied, "My Lord, it is the sole topic of conversation in the little village of Antrim from which my client comes."
I feel for your Lordships when somewhat complex arguments are advanced in legal language, and I shall endeavour, if my arguments are not forceful, to at least make them easy to understand. But before I say anything, perhaps I may say that my intervention when the noble Lord, Lord Lester, was speaking was meant as a compliment to the very abstruse cases in which he deals.
Percentages are difficult. I can remember when I was a young solicitor practising in the suburbs. It was at a time when, if anybody walked into my waiting room, there were strict instructions that the door was to be locked and so was the door to the few steps that took one up the stairs of that office. However, a gentleman did come to consult me. He told me that his son had been injured while walking on a pavement by a vehicle which had mounted the pavement. Memories of my final examination reared in front of me and I muttered the words, Res ipsa loquitur, saying to him, "My dear sir, you cannot lose. This case speaks for itself; the very facts speak for themselves". On inquiring further into the case a week later, I found that the gentleman whose vehicle had mounted the pavement had had a heart attack and had never had one before. The result was that my 100 per cent. had to be reduced to 0 per cent., since obviously there was no negligence.
These percentages are difficult for any lawyer to work out. One cannot summarise the speeches so far by saying that they were laudatory in favour of the speech made by the noble and learned Lord. But they have not been particularly constructive in regard to the main task that fell to the noble and learned Lord on his accession to office. We have all made remarks in shadow capacities and turned out to be shadows of ourselves later on. I do not believe that that is particularly relevant.
My noble and learned friend faces a dilemma with which we have been trying to deal for years but never really grasped. It is often said in your Lordships' House that justice for the very poor is all right, and that it is all right for the very rich. But what about the people in the middle? They find it impossible to enter into civil suits by virtue of the costs of their own lawyers, let alone the risk of the cost of the lawyers on the other side if they lose. Yet nobody—I say this with deep respect to those who preceded me—dealt with that question at all.
It is a fact that if one was brought up in the generation of lawyers in which I was brought up, the words "maintenance and champerty" would make one tremble. If one was in the generation of lawyers that I had the privilege of being among, questions of conflict of interest made one worry oneself into insomnia. They were matters of grave importance professionally.
But time marches on. In order to make a constructive contribution to your Lordships' debate, I have been trying to think of a solution. If we take for granted that
60
we adopt all that is in the eminent report of the noble and learned Lord, Lord Woolf, and take for granted that we do not make the lawsuits into the nightmares into which they sometimes develop so that they are speedily heard, we still find a gap in our justice system. It is still too expensive for people in the medium income group.
Incidentally, I am indebted to my noble and learned friend for merely quoting some of the average fees of the Bar and not walking into the sphere of a solicitor's income. I know that it was because he realised how much less those incomes are.
My Lords, where do we go from here? I am forced to the conclusion that, unless we walk into the sphere of conditional fee agreements, there is no answer, unless we have a Treasury that is prepared to pour out not only what we are faced with—that is bad enough at £1.4 billion—but also however many billions we would have to pay if we were trying to cover the medium income group.
I have but one concern, having reached that conclusion. It is this. There is no doubt that if we remove from legal aid most of the money and damages claims, there is a gap in the programme. It is the question of the other side's costs if you lose; it is therefore the question of the insurance premium; and it is the question of disbursements that would have to be incurred.
One of the major problems one faces in this context is one that the noble and learned Lord was good enough to mention. I refer to medical negligence claims. This featured in a letter to The Times sent by members of the Bar who specialise in this field. One of the instances of those claims is brain-damaged children, where parents are agonised by the cost of such children during infancy and childhood and who say to themselves, "What will happen when we are no longer here?" That is the field in which the investigatory work to be carried out by psychiatrists, neurologists, and a whole gamut of expertise, has to be gone through with the lawyers before getting to the stage—you do not measure 75 per cent. or 50 per cent.—of being able to make any adjudication on whether the case is likely to succeed.
Are these people to be dumped into walking into one solicitor's office after another, with the solicitor saying. "I am perfectly prepared to take on this case. I would have taken it on a year ago under legal aid; I would have got the preliminary expenses for the investigatory fees paid. But I am afraid that I am not here as a philanthropic institution—I wish I were. I cannot pay £5,000, which may be incurred in all those experts' fees and investigatory work, or £2,000 or £1,000. I have enough hardship as it is".
I say this to the noble and learned Lord—it is said in a letter to The Times this morning, not just from the Bar Council but from the Consumers' Association, the Law Society, and other bodies which are interested on behalf of the man in the street—let there be a trial of this and more research into this. That research is so necessary because it is idle to talk in terms of experience, if I may humbly say this, since 1995 when personal injury cases, European Court cases and some insolvency cases were transferred out of legal aid. We all know that personal

61
injury cases will, once in a lifetime of professional activity, require a deep knowledge of the law. They are factual. They are easy to assess as a rule. If a car bumps into the rear of another car, we all know that the driver of that car must be negligent. These are cases where conditional fee arrangements work very well. There is little expenditure in any event in investigating them. You have only to apply for a police report and take statements.
The noble and learned Lord has—I say this with deep respect—behaved very gallantly in taking on these challenges. They have been largely neglected up until now. I repeat the need for the middle-income group to be allowed to walk through the courts of justice. He has tackled it. I personally admire him for that. I admire him for bringing these matters before the House and before the country. But I ask for further time for this research to be done and I ask for further consideration to be given to the parents of whom I have spoken.
6.15 p.m.
Baroness Wilcox: My Lords, I contribute to the debate not as a lawyer but as someone whose sole concern today is to ensure that the ordinary person, particularly the poor and vulnerable, will benefit from the changes the noble and learned Lord the Lord Chancellor proposes. I want to concentrate particularly on conditional fees and whether they will be an adequate replacement for legal aid.
When I chaired the National Consumer Council, following as I did my noble friend Baroness Oppenheim-Barnes, who is to speak later in the debate, we supported the cautious introduction of conditional fees. Perhaps I can begin with their advantages. They are likely to increase access to justice for those of moderate means by enabling them to limit the costs of losing. And conditional fees are potentially fairer than legal aid to a winning party, who is able to recover costs from an opponent funding the case by a conditional fee agreement. By comparison, legally aided parties do not normally pay the other side's costs.
If, despite all this, I am rather tentative in my hopes for conditional fees, it is for the reasons I now give. I should like to concentrate on three aspects of the proposed changes to conditional fees and legal aid: safety, outcome and quality. On the point of safety, I have before me the model agreement for a conditional fee drawn up by the Law Society and widely used by solicitors. It is written in commendably plain English and every effort has been made by the Law Society to make it understandable. However, the terms of the agreement are fiendishly complicated. I doubt that many non-lawyers would understand them. But even my non-legal mind can see that a lot of things could be going wrong with conditional fee agreements such as people being rejected unfairly or agreements coming to a premature end. And yet, the noble and learned Lord the Lord Chancellor seems to be proceeding on the assumption that they are trouble free. I wonder by what evidence he judges that.
As far as I am aware, the only research into conditional fee agreements was undertaken by the Policy Studies Institute at a very early stage in the short
62
life of conditional fees. The PSI, mentioned earlier by the noble and learned Lord, Lord Ackner, looked at the initial terms of 197 of the first conditional fee agreements, a tiny proportion of the 30,000 or so now in existence. That research only examined the initial terms of the agreements. It did not follow any of these cases to completion. It did not ask any of the clients how they felt the agreement worked in practice. It did not attempt to identify any problems that arose beyond the original calculation of risk and setting of a success fee. The research raised concerns about the ability of solicitors to estimate risk consistently and to charge a success fee that was commensurate with risk. That is understandable in the early days of conditional fees. But it is vital to know that things are improving with time.
The PSI referred specifically in its research report to what further information would be needed in order to support a decision to withdraw legal aid and replace it with conditional fees. It said:
"Until information is available … on outcomes. costs, damages and the eventual fees paid, a full assessment will not he possible. Any plans to extend conditional fees or … to substitute them for legal aid in areas of law where they are available, needs to take into account that there are many unanswered questions".
It appears that the noble and learned Lord the Lord Chancellor has chosen to proceed without knowing the answers to any of those questions. I hope it is not, but it may now be too late for research into clients' experiences of conditional fees in advance of the withdrawal of legal aid. The objective is to withdraw legal aid from most money and damages claims by the middle of next year. However, it is not too late to begin a programme of monitoring clients' experiences so that they can inform the further development of conditional fees.
I ask the noble and learned Lord whether he will commit his department to undertake this vital monitoring; publish the results of that monitoring and take steps to deal with any problems arising from such monitoring.
In my view, one piece of client monitoring is particularly urgently needed. It is vital to know who is being turned down by solicitors for a conditional fee agreement and on what grounds. The fear of consumer groups is that solicitors—who will only be paid when they win a case—will choose the most straightforward cases and reject cases that appear complicated. A case may be entirely winnable, but raise complex issues of law or fact. A complicated case is not necessarily a weak case, yet under the new payment regime, as far as I can see, complexity may become considerably less attractive to solicitors.
In other cases, it may be the client, and not the issues, that is perceived to be the problem. Clients who are not articulate, or whose first language is not English, may not be attractive prospects to solicitors seeking sure, quick or easy winners. Therefore, will the noble and learned Lord ensure that the grounds for refusal of a conditional fee are based on merit and not unduly influenced by other, less justifiable factors? Will he undertake to monitor this aspect of conditional fees particularly carefully?

63
Next I come to outcomes. Compensation in cases involving money and damages claims is carefully calculated to reflect loss. Its objective is, as far as possible, to put people back where they were before they suffered the loss. I am aware that even under legal aid, people are sometimes required to repay money out of their damages to the Legal Aid Board to make up shortfalls in costs recovered from the other side. However, conditional fee agreements introduce new deductions from compensation that could far exceed those deducted under legal aid.
I have a fear on this point and I hope that the noble and learned Lord will put my mind at rest. As far as I am aware, successful clients will still have to make up any shortfall between their own costs and what is recovered from the other side. That will come out of the compensation. In addition, clients will pay a success fee of up to 25 per cent. of the compensation. And, in addition to that, clients will have to pay the cost of the premium to insure against losing, which could run to hundreds or even thousands of pounds, and may not be recoverable from the losing opponent.
My concern is that, with all of these additional deductions, people made vulnerable through loss will not recover enough to have made the ordeal of litigation worthwhile, or to enable them to put the loss behind them. And I have a further concern: that the deductions from compensation could increase over time.
Once the commercial reality of running a legal practice substantially dependent on conditional fees begins to bite, I fear that the success fees demanded by solicitors will start to creep up. At the same time, solicitors will feel under pressure to settle cases as quickly as possible, and certainly at the first sign of difficulty, whether or not an adequate offer of compensation has been obtained. If cases settle quickly, that is often in the client's interests, but not if they settle badly.
My fear is that compensation could be squeezed progressively from various directions: higher and higher success fees; higher and higher insurance premiums from one direction, and lower and lower settlements in another direction. Will the noble and learned Lord reassure us that he will monitor the levels of damages actually recovered by successful litigants under the new arrangements? We need to ensure that the costs of the new payment regime do not outweigh the benefits, particularly for the poorest.
My final point is about quality. Over several years, the Legal Aid Board has been developing an extensive system of franchising for solicitors' firms. While franchising criteria are not yet perfect, they are nonetheless a useful indicator of certain aspects of quality for inexperienced consumers. Holding a franchise suggests that a firm is well-managed, has a reasonable standard of client care, and is experienced in a particular area of law. Once legal aid is withdrawn from all claims for money or damages, franchising for these areas is likely to be abandoned. Perhaps the noble and learned Lord can tell us how he intends to replace those signposts which reassure consumers. Perhaps, if the Legal Aid Board paid the insurance premiums for those previously eligible for legal aid, some form of franchising would remain.
64
We all want to improve access to the civil justice system and to get value for the money we spend. At the same time, we must be sure that the changes we make to improve access to justice for the middle income earners offer adequate protection for the poor. When we close one door to the poor, we must ensure that what replaces it is not narrower and less accessible to those who deserve entry.
6.25 p.m.
Lord Taverne: My Lords, the Lord Chancellor has described the dilemma which we face. We clearly cannot allow the costs of legal aid to escalate in the way in which they have done in recent years. On the other hand, the system in which only plutocrats or paupers can litigate is a denial of justice: indeed, it is a blot on our claim to be a fair society. So I welcome most of the proposals which the Lord Chancellor has made and in particular the commitment to block contracting on the basis of fixed fees.
But like previous speakers, I want briefly to discuss the major issue; namely, the basis on which lawyers are to be remunerated. The law is a noble profession and I have no doubt that the majority who practise law are concerned to do the best for their clients and are concerned with justice as well as their own rewards. But lawyers are human and how they behave depends partly on the incentive which the legal system provides. Unfortunately, these incentives do not always encourage them to put their clients, or the interests of justice, first.
The Lord Chancellor's solution of extending no win, no fee would set our legal system on the road towards the American system. That has appalled a number of American lawyers who are only too aware of the low regard in which that profession is held in the United States. I do not believe that American lawyers are individually any less honourable than British lawyers, but the incentives of contingency fees have almost certainly had a corrupting effect. One can see that from the way in which they have given rise to an ever-growing, yet far from effective, concern with codes of ethics.
I quote from an excellent lecture recently given by Professor Colleen Graffi of Pepperdine University in California, who also happens to be a member of the English Bar:
"God was able to set out the code of conduct for all of mankind in Ten Commandments, with no commentary, on two tablets of stone. While in the United States, the American Bar Association's code of conduct for lawyers amounts to over 400 pages of text, comment and footnotes. At that rate Moses would have needed the Rock of Gibraltar and full time professional engravers to set out the rules for just one profession".
In the long run there is bound to be very considerable conflict under a no win, no fee system, between the needs of justice and the interests of lawyers. I quote one example from a speech recently made by the chairman of the Bar Council, Mr. Robert Owen, to the Bar Parliamentary Group:
"What happens when a lawyer, who may be a year or two into the litigation and has committed considerable resources to it, suddenly turns up a document which demolishes the case?"
A conflict is clear.

65
Professor Graffi also points out in her lecture that intensive competition has led to excesses in the adversarial system and a decline of courtesy and civility among lawyers. In my relatively short career at the Bar, when I had to refer to my opponent as "My learned friend", it was rare that he was my friend and there were many cases in which it could in no way be said that he was learned. But the formalities at least acted as a restraint against abuse. Civility will not necessarily last if lawyers market themselves on getting results or through more competitive pricing.
My main objection to the direction in which we appear to be proceeding is that the incentives would tend to turn the law into a business instead of a profession, as they have done in the United States. However, we cannot rest on the status quo. If the only way out which will enable middle income citizens to litigate is to have a conditional fee arrangement, we may have to accept it. However, if I may make a submission "with the greatest respect" (as lawyers tend to say when they intend to show a total lack of respect), the legal profession itself must bear a large part of the blame for the escalation of legal aid costs. That is because the incentives of the present system, whereby lawyers are paid by the hour, also have a harmful effect. At present, there are no incentives whatever to simplify or shorten trials. There is every incentive to complicate proceedings and to draw them out and however dedicated some lawyers—most lawyers—may be to promote justice and not their own earnings, as in America the incentives work in the other way, in the wrong way.
The report produced by the noble and learned Lord, Lord Woolf, proposes a move towards greater judicial control. I welcome the announcement that that will be in force by April 1999, but fixed fees would still play only a limited role in our system. I know that it goes against national sentiment to suggest that we should learn from other countries and, with some justice, we are proud of our own legal traditions. But it is worth noting that there is a system of fixed fees which seems to work well. I refer to Germany where the national costs of legal aid per head are much lower than those in this country. The ordinary citizen can still afford to litigate and lawyers still seem to make a good living. I know that the German system is very different, with many more judges who are professional judges. We cannot simply transplant the German system even if we want to. But there is no reason why a system of fixed fees should not be more widely applied in Britain.
I realise that the idea of extending the principle of fixed fees has been received by the legal profession with well concealed enthusiasm, but lawyers cannot have it both ways. They rightly argue that no win, no fee provides the wrong incentives and they are right to argue that a system of incentives matters; but the same argument also applies to the system of payment by the hour or day. The taxi meter principle is no way to limit costs; it should be urgently reviewed.
6.32 p.m.
Lord Hoffmann: My Lords, the provision of justice to the people was the noble aspiration of the legal aid scheme introduced in 1949. Justice is a public good of
66
very high importance. But it cannot be pursued regardless of cost because the provision of, for example, education, health care and public housing are also important public goods and justice has to compete with them for resources. Lawyers sometimes speak as if justice was a thing of infinite value; whatever resources are needed to attain it should be provided. I have detected some of that this afternoon. Doctors feel the same about life and health and teachers about education. They all want to do the best possible job and quite naturally feel that the state should provide whatever is necessary. However, it cannot be done: hard choices have to be made and the consequence has to be faced that, inevitably, some people will suffer injustice. It is easy for noble Lords to produce examples of an injustice which may be suffered as a result of any change in the procedures—there are always winners and losers—but there are people who will not get justice and that must be accepted.
A government can do only two things: the first is to try to reduce legal costs overall, so that there is more money to go round. The second is to allocate the available resources so that they go to the more deserving cases rather than the less deserving ones.
The Lord Chancellor's proposals on civil justice and legal aid recognise these truths and I say at once that they seem to me a bold and imaginative attempt to improve matters on both the points which are within the power of government.
Let me first address the question of reducing costs. The noble and learned Lord, Lord Woolf, has put forward some admirable proposals for simplifying the civil procedure. This will provide a framework within which justice can be delivered at lower cost. It is, however, only a framework. It is one thing to provide a set of rules which will enable lawyers to litigate more cheaply. It is quite another to ensure that they actually do so. The fundamental problem is that under the present system lawyers are paid according to what they do and they decide how much they are going to do. It is therefore in their financial interest to do as much as possible.
It is no moral reflection on lawyers to point this out because this is a case in which the lawyer's self-interest and his duty to his client go hand in hand. The lawyer wants to do the maximum for the client, out of a sense of professional duty and in order to avoid being sued for omitting some step which he might have taken. The same pressures cause the problems of overuse of drugs in the National Health Service. But with lawyers there is the additional factor that they have a personal financial interest in as much as possible being spent on the case. So the result is that rules of court are not the whole answer to reducing the cost of litigation: what lawyers do is driven not only by what the rules say, but by what they can charge for. This is a classic situation in which decisions on the amount of production are wholly in the hands of the producer, who cannot lose by producing

67
too much. Even where the client is paying out of his own pocket, he usually lacks the expertise to exercise proper control. With a fund like the Legal Aid Fund or an insolvent estate or an insurance company, there is even less control because the interest in keeping control is more diffuse.
Perhaps I may give your Lordships an example. I recently attended a conference on the use of information technology in the law. I heard the registrar of the High Court in Liverpool (it may have been Manchester) say that he had introduced a system of video conferencing so that lawyers in London who had cases before him need not send someone up to conduct the case because it could be conducted via the video conference link, thus saving costs. The registrar said that he had been operating the system for six months and that not a single firm had used it—because more could be charged for sending someone up on the train in order to appear at that High Court and then sending them back again.
The noble and learned Lord, Lord Woolf, recognised the problem and his solution is to have more hands on control by judges. They will take a grip of the case and cut down on unnecessary work. Sir Peter Middleton, in his admirable report on the noble and learned Lord's proposals, is willing to take this proposal on trust and see how it works. I must confess to being rather less sanguine. Judges are good at deciding disputes on arguments presented to them by opposing sides. They are much less good at protecting the interests of people who are not represented before them, like the Legal Aid Fund. It is hard for a judge to go against the arguments of both the parties before him and it is often in the interests of the lawyers on both sides to agree that the case is very difficult and important and needs a lot of money spent on it.
These difficulties arise whenever the cost of litigation is being met out of some fund and it is for that reason that I am equally sceptical about the proposal for a contingency legal aid fund. I think that my noble and learned friend the Lord Chancellor's proposals address the problem in the right way, by giving the lawyers a stake in the outcome of the case. It means that when they decide that more work needs to be done, they are potentially spending their own money and must take into account whether the expense is likely to be cost-effective in terms of the prospects of success and the amount likely to be recovered; and they are the people best placed to make an informed judgment on these matters. It seems to me that there is no other way in which principles of cost-effectiveness, or what the noble and learned Lord, Lord Woolf, calls proportionality between cost and outcome, can be properly enforced.
Furthermore, the scheme also advances what I have called the second thing which a government can do, which is to ensure that the more deserving cases come to court. Again, it will be the lawyers, those best placed to make a proper judgment, who will decide which cases they will back with their own money and which they will not.
68
I would indeed urge my noble and learned friend the Lord Chancellor to adopt the suggestion of Sir Peter Middleton and take his proposal to its logical conclusion, by allowing the lawyers to agree to act simply for a proportion of the amount recovered. For one thing, that would satisfy the requirement of the noble Baroness, Lady Wilcox, that the agreement should be less complicated.
The present scheme, under which they are allowed to charge at a higher rate up to a certain proportion of the amount recovered, still encourages them to do as much work as possible in cases where the recovery is likely to be high and even charging at a higher rate would produce a figure within the maximum proportion of the recovery. I think that it would be in everyone's interest for that incentive to be removed.
It is said that giving lawyers a financial stake in the litigation would tempt them to resort to unethical practices to win. Reference has been made to the practice in the United States of America. I think well enough of our own legal profession to doubt whether this is a serious problem, but in any case if lawyers behave unethically the other side will complain. There will be no collusion as there is now over costs and judges will be able to resolve these questions and impose penalties much more easily than they can keep control of costs. I have no doubt that they are much better at that. That is what they are trained to do.
I turn finally to the distribution of resources and the proposal of the Lord Chancellor that those cases which continue to be funded by legal aid should be certified as having a very high prospect of success.
Lord Lester of Herne Hill: My Lords, I am grateful to the noble and learned Lord for giving way. Does he accept that there is a serious problem for the poor living in slums and areas of deprivation obtaining access to lawyers and being able to assess whether or not conditional fee agreements are in their interests? Does he accept that as regards the poor there are serious concerns about these proposals?
Lord Hoffmann: My Lords, I hope that in those areas the poor will be given assistance perhaps by citizens advice bureaux and so forth to enable them to make an informed choice among the conditional fee agreements that are offered. That is the only way in which some kind of transparency can be introduced into the market as between lawyers offering their services.
I come to the question of certifying those cases which have a high prospect of success for the purposes of legal aid. I applaud this proposal. It is not enough that a case should be, as the lawyers say, arguable or have a realistic prospect of success. There are few cases that are not arguable to a barrister and solicitors who will be instructed if legal aid is granted. Is 75 per cent. too high? There is no logical figure.
Lord Simon of Glaisdale: My Lords, perhaps my noble and learned friend will allow me to intervene. Is it not a question of whether a case is more likely to succeed than not, rather than that it is arguable?
Lord Hoffmann: My Lords, as I understand it the present criterion is that the case is more likely to

69
succeed than not. But there is no logical threshold. Wherever one puts the threshold it is designed to prefer cases with better prospects over those with worse ones. Where one puts the figure depends on how much money is available. If there is plenty of money one can afford 40 per cent. or 50 per cent. The Lord Chancellor must be entitled to say that the resources at his disposal require 75 per cent. Critics say that means that cases that might have been successful under the previous system will now not be fought. That is quite right. That is the inevitable consequences. However, that is inherent in any system. Your Lordships would be wrong to compare the proposals of the Lord Chancellor with an idealised system in which everyone got his desserts. The question is whether it is likely to be better than what we have now, and in my view it certainly is.
Lord Ackner: My Lords, before my noble and learned friend sits down, does he agree that there is a very marked difference between the English and American systems? This relates to the suggestion, following the proposal of Sir Peter Middleton, of a contingency fee where a percentage of the damages is taken. In America, juries realise that that is the system and they lay off for it; in other words, if the damages are x they add on y knowing that that represents what the lawyer should get. Here the damages will continue to be calculated as to what is fair compensation. If one takes the case of a child who has been badly injured, the figures will be worked out so that the child can be compensated with regard to future care and so on. All that money is calculated on the basis of the child's need. If one has a contingency arrangement 30 or 40 per cent. of that will go to the lawyer. Therefore the child or any other injured party will be substantially uncompensated. That can change only if the judges here lay off for the contingency figure, which from a forensic point of view would in my view be most unjust visa á vis the defendant.
Lord Hoffmann: My Lords, my noble and learned friend Lord Ackner is quite right. Figures for damages awarded by juries in America are vastly inflated. Indeed, that is probably one of the temptations to unethical practices which exist in the United States. It would be difficult to resist behaving unethically if the temptation was to win a case which would result in one gaining 40 per cent. of ş200 million. As a result of these proposals those children who receive damages—I include in that any other litigant—will get less because they have to pay part of the damages to their lawyers. On the other hand, those people who previously could not go to law at all will get something. There are winners and losers.
6.45 p.m.
Baroness Kennedy of The Shaws: My Lords, I begin by welcoming the important and principled start of the Lord Chancellor in reforming legal aid. He is absolutely right in identifying the escalation of costs to the public purse. It is a source of shame among many of us in the legal profession that there are individual lawyers earning £200,000, £300,000, £400,000 and even £500,000 per annum out of the legal aid fund. It is nothing short of a
70
scandal that remuneration paid for by the taxpayer should reach such levels. Undoubtedly, changes must be made. I am delighted that the Lord Chancellor has repeated his willingness to enter into constructive dialogue with the legal profession and any interested parties in pursuit of reform.
The noble and learned Lord, Lord Hoffmann, reminds us that legal aid was invented by the post-war Attlee government. It was not created so that lawyers could make money out of human misery; it was about servicing need. That great Labour government understood all about social exclusion. It knew that our legal system was like the Ritz. It was of the highest quality and was open to all as long as they could pay. The principle at the heart of the system which was then created was the belief that access to justice had to be available to all and that it was one of a decent society's objectives. The post-war government believed with a passion that the poor were just as entitled as the rich to legal remedies and something had to be done to give meaning to that belief.
When I was a small child my mother, a doughty working-class woman in Glasgow, was struck by a falling slate. It fell from the roof of a tenement building on which men were working. Her head was split open, her eye was damaged and she was out of action for several weeks. I remember well that concerned neighbours advised her to see a solicitor. But the concept of legal aid was still very new and even she, the doughty woman that she was, was fearful of stepping into a lawyer's office. She was worried that it would involve an outlay of money, which was all too sparse.
Those who are not well off do not go willingly to law even today. They are afraid of the legal system because they do not believe that it belongs to them. The challenge of ensuring that the law is not the privilege of the rich remains with us. We should be as clear now as the Attlee government were then that making the law available to all is one of the measures of a just society. The Lord Chancellor will be as concerned as that government to ensure that the principles of access to justice for all should inform whatever changes take place.
The noble Lord, Lord Lester, referred to fat cats. I speak as perhaps one of the leanest lawyer-cats in this House. I have spent the whole of my professional life doing legal aid work—and not of the overpaid fraud trial variety. I believe that I speak from a position of knowledge when I say that there are many solicitors and barristers who are deeply committed to representing those who have the least voice in our society. They are not lawyers who make very much money but they believe in liberty and justice—lawyers who seek to expand the frontiers of the law in a changing world. They are lawyers who act for poor litigants in actions against public authorities where their rights have been wickedly abused.
Those lawyers will be greatly reassured by the commitment to them and the work that they do of my noble and learned friend the Lord Chancellor. Those lawyers are probably not in the least self-interested or self-serving when they express their anxieties about a

71
new form of legal aid. They ask that the noble and learned Lord consider, in the Government's review, the maintenance of legal aid for poor litigants who want to find out whether they have a case. That is the exploratory funding to which some other speakers have referred. The opinion of an expert is sometimes necessary before it is possible to evaluate whether someone has a good case. That was mentioned by my noble friend Lord Mishcon.
Noble Lords may feel that lawyers should be prepared to invest money in the potential return referred to in the Lord Chancellor's opening speech. However, there are lawyers whose firms are run wholly on legal aid and who are in communities such as those described by the noble Lord, Lord Lester. They may be in slum areas. There are lawyers whose commitment is real and where there is no slack in the system that they operate. Their profits are marginal. Those tight margins would not allow them to put forward the sums of money which may seem meagre but which would be considerable for them. So we must be concerned. I know that the Lord Chancellor will be concerned to ensure that such firms of solicitors are protected and that there is legal provision for the type of client that I have described.
Noble Lords will be aware that the public funding of dentistry is supposed still to exist. Yet it is hard for us to find a dentist who still performs under the NHS. There are good reasons for that. Many would say it is because of the way the cuts have taken place. It would be terrible to see that happen in relation to legal provision.
Among the lawyers of whom I speak there is also concern that a poor client might have a reasonable case but that damages would not be at a level which would make the case a commercial proposition for the lawyer. The sums involved may be only £5,000, £10,000 or £20,000. The rewards for the lawyers would not be enough to justify the risk of taking on such cases. So, for example, it may not be worth a solicitor taking on the case of someone like my mother with her head injury because the compensation may not be great enough for him or her. It would have been significant for my mother.
The market does not work well for the poorest in our society. I was recently involved in a review of the availability of further education. Market principles have been introduced into the running of colleges. What has happened is that the colleges pursue the obvious student—the student who is likely to succeed easily. Many of the students who are fearful of continuing education, who find it harder to get in and who have problems about staying in are those that the colleges do not feel worth pursuing because of the resources involved in keeping those students on board. I ask my noble and learned friend to consider ways in which people might fall through any new system and to seek to prevent that happening.
I am especially pleased that my noble and learned friend recognises the importance of ensuring that public interest cases are funded properly. It is crucial that
72
public servants do not abuse the law, hold themselves above it and cock a snook at the citizens. It is clearly in the public interest that officials should be accountable.
In the set of chambers in which I work, a significant number of actions over the years have been taken against police officers, prison officers, immigration officers and other officials for abuse of their power. Knowing that remedies may be sought in the courts is one of the ways of keeping certain kinds of policemen honest, I am afraid.
The problem I raise with the House is not that the plaintiffs in cases alleging police assault are invariably lying. They are often people with previous convictions. They may often be people with mental illness or drug problems. They are not people who will be readily insured. I ask that that is taken into consideration when the Lord Chancellor considers reform.
Those are not people who are readily believed. It would be difficult for lawyers taking on such cases to say that they fulfilled the 75 per cent. chance of success criterion. Yet those people can often be telling the truth about having been beaten up in police custody. They would never be accepted on a conditional fee basis. There is a famous case of which most criminal lawyers are aware. It is known about in the civil courts also. It is the case of a man with previous convictions called Treadaway. He was taken in by the West Midlands police, whose behaviour became somewhat notorious, as the House will be aware, in cases throughout the 1970s and 1980s. He was taken into custody in an inquiry about an armed robbery. He was subjected to what became known as the "bagging" procedure. A plastic bag was put over his head until he was on the point of losing consciousness. He ended up confessing to a crime. He was convicted. He sought to take legal action against the officers in the case.
That case was successful. It was tested to a high level by Mr. Justice McKinnon. Those police officers were found by him to have behaved appallingly against a man with a criminal background by forcing him to confess to a crime which, on balance, it could not be accepted had been committed. The conviction was overturned ultimately in the Court of Appeal. That case pointed out how vulnerable people in police custody can be. It is crucial that legal aid be maintained for such cases—cases against public officials and arms of the state where people might be abusing power.
The black community is worried because a number of the most prominent cases in recent years relating to police assault have involved young black men being arrested unfairly, manhandled and assaulted by police officers. If legal aid were not available in such cases, the public interest would not be served.
I am sure that I share with many members of the legal profession a welcome for the idea of a public interest fund: for example, for test cases, although I hope that legal aid will be maintained for the kind of cases that I have described. However a public interest fund might be invaluable for taking on test cases of public significance, such as cases involving informed consent or the sterilisation of the mentally ill. It is important for the medical profession to know what are the rules. Clarification of the law is always to the public benefit.

73
If my noble and learned friend the Lord Chancellor is seeking new ways of finding money for the Legal Aid Fund, which would keep the Treasury happy, I shall make a number of suggestions. The idea arose in the past but it has not been considered recently. Solicitors' client accounts earn interest. When people pay money to a solicitor during the preparation of a case that money goes into an account. It creates interest, which could make a sizeable contribution to the Legal Aid Fund. In New Zealand and Australia the interest on solicitors' client accounts is used for the furtherance and development of the law.
I have a friend who is a judge in New Zealand. He was in this country recently and he explained to me that that money was used for conferences to advance a legal issue. There is a precedent for such a use of that interest in that the Bank of England is funded by the interest on deposits made by commercial banks. That is one of the reasons why the wine is so good if one goes to a dinner or another function at the Bank of England. Will the noble and learned Lord consider whether the interest on solicitors' client accounts can be used as I suggest; that is, to supplement the Legal Aid Fund and to ensure that it is maintained at a level which will satisfy the anxieties expressed by committed lawyers?
Lord Hacking: My Lords, will the noble Baroness kindly give way? I am a practising solicitor and I may be able to help her on the issue of interest on client accounts. That interest belongs to the client.
Baroness Kennedy of The Shaws: My Lords, but why can it not be used? It is used in New Zealand and Australia where people pay over money, as do any of us when, for example, we have builders working for us; we pay over a contribution for the work to be done. We never ask that the interest accruing on the money might be paid back to us. I suggest that we should look at ways in which other jurisdictions make use of the money creatively in furtherance of the law.
Noble Lords may ask why rich litigants should contribute in that way to their poorer brothers. I suggest that there are good reasons. The majority of the developments of the legal system occur on legal aid. Many of the beneficiaries are involved in commercial cases. The common law and commercial litigants are able to take advantage of the law as it is developed under legal aid. It is not inappropriate for client accounts to be used in the way that I suggest for the benefit of the law as a whole.
I hope that the noble and learned Lord the Lord Chancellor will do as was suggested in the report of the noble and learned Lord, Lord Woolf; that is, to require judges to hold the reins tighter in the management of cases. Furthermore, it might be worth considering the appointment of an inspector of courts who would be able to control the profession in its use of legal aid. There is too much double manning—of leading counsel with juniors in cases where it is wholly unnecessary. There is a protraction of cases, to which other noble Lords have referred. Perhaps we should even consider a right of action by legal aid boards against lawyers whose
74
careless advice causes the continuation of funding beyond a certain point. That would certainly sharpen legal acuity.
I submit to this House that priority must be given to access to justice. I am glad that the noble and learned Lord the Lord Chancellor has been creative and has expressed his willingness to listen to those who have ideas to offer. Those opportunities should be seized by everyone to engage in fruitful dialogue because the justice system is essential to the well-being of this nation.
7.3 p.m.
Lord Hacking: My Lords, having listened to every speech in the debate, I reflect that we are living in unusual days. I was only a schoolboy, as was the noble and learned Lord although perhaps a little younger, when the post-war Labour Government introduced their great social reforms of the late 1940s. Of those, undoubtedly the most important were the foundation of the National Health Service and the legal aid scheme. In today's parlance, those important measures provided access to healthcare and to justice for every citizen in the land, from the poorest to the richest. Both are close to celebrating their fiftieth birthdays—the legal aid fund in 1999—and both have been subject to such massive changes that their original forms are hardly recognisable.
I use those bold words because at the heart of the noble and learned Lord's proposal on legal aid is the removal from the legal aid net, subject to consultation. of all money and damages claims from next April. I use those bold words because the noble and learned Lord has described legal aid as becoming a leviathan with a ferocious appetite That is not a description that one of his predecessors as Lord Chancellor, Lord Jowitt, would have recognised when he introduced the legal aid scheme into your Lordships' House in the 1940s. If it had been my government which introduced such a measure, as opposed to the noble and learned Lord's, there would have been an uproar.
During my early years at the Bar, more than 50 per cent. of my practice was under legal aid. It worked reasonably well: there was access to justice; good co-operation between the legal profession and legal aid; we accepted fees which were usually half the market rates; and no great excesses arose. Certainly, we were not in receipt of the riches to which the noble and learned Lord referred.
At that time, I served on an area legal aid committee in Leicester. I believed it important that I should do so. The committee met once a month and we did not hesitate to return papers to the applicant or his solicitors when we believed that a prima facie case had not been made out or to reject the application for legal aid when there was not sufficient justification.
The question which must be asked—and many questions must be asked about the proposals—is: what has gone wrong? The issues are not in the control of lawyers. There has been an increase in the range of civil claims; for example, in the field of negligence. We have become a more litigious society. Court proceedings—

75
functioning, I emphasise, under increasing volumes of paper—have not been functioning so well and legal aid has been too easily granted. It is not that the threshold has been too low, but that the test has not been properly applied. Your Lordships may have read about the extraordinary applications made in the past few years to the Legal Aid Board by defendants who claim that bevies of plaintiffs should not have been granted legal aid, in response to which the board withdrew the legal aid certificates.
I believe that our starting point is one of sympathy with the noble and learned Lord the Lord Chancellor over the problem that he faces and his proposals to deal with the shortcomings in the civil justice system and the legal aid scheme. I read with great care the noble and learned Lord's speech to the Law Society on 18th October. I also read with great care the speech made in another place by his Parliamentary Secretary when it held a debate on these proposals on 21st November. I entirely agree with all noble Lords who have spoken that justice should be accessible to everyone, not just to the very rich and the very poor.
I believe that the noble and learned Lord has begun with sound proposals relating both to the civil justice system and to legal aid. As regards the latter, a number of sensible proposals emanate: for instance, contracting for legal services and fixed fees. The noble Lord, Lord Taverne, will take pleasure in that, although I, as a member of the Bar of the State of New York and a practising solicitor, did not take pleasure from some of the noble and learned Lord's remarks.
Other sound proposals were the application of quality standards, monitoring predictions on the opinions of merit, the merits test and that more hard reasoning should support claims. It was good to hear that we have a listening Government and that the noble and learned Lord intends to continue to consult with the professions and other interested parties. Congratulations should be extended to him on his conversion—I do not describe it as a Pauline conversion—as regards the conditional fees scheme, remembering the reservations which he expressed in this House when those proposals were put through by my government.
So far so good, but real concerns have been expressed. Your Lordships have expressed them during the course of the debate; for instance, the merits test of 75 per cent., the difficulties over the funding of disbursements and insurance, particularly in medical negligence cases, and the substitution of legal aid by the conditional fees scheme. I need not enlarge upon the comments made about the merits test of 75 per cent., although the noble and learned Lord received some support from the noble and learned Lord, Lord Hoffmann. However, I wish to enlarge upon the problem of funding disbursements and insurance.
When the Government have been pressed on that aspect, the answer has been given, certainly by the Parliamentary Secretary, that the solicitors can fund those disbursements; they can fund the premiums on the insurance. I have certain personal experience of that. At the moment I am supporting a case being brought by
76
my son who was grievously injured in a motorcar accident in 1991. Without going into the details—it is a brain injury case—I can tell your Lordships that the cost of the medical reports and the expert witnesses for that car accident have now exceeded £25,000. That litigation is not taking place in England; it is taking place in New South Wales. Just transfer that type of expenditure on to any law firm, whether it be a country, provincial or London law firm and one can work out what the law firm would have to fund if it had 10 or 20 such cases.
The real worry in relation to the substitution of the legal aid fund is not as regards the introduction of the conditional fee scheme but as regards the cutting off of the legal aid fund. Sir Peter Middleton, in his report at paragraph 5.48 stated:
"My preferred approach, therefore, would be to allow the Legal Aid Board to consider, as part of the merits test for granting legal aid, whether a case was suitable for funding by some form of private arrangement".
Therefore, the crucial question which we should address is not the extension of the legal aid fund but whether, as of 1st April, it should be substituted by the conditional fee scheme.
Those concerns have been expressed in many quarters. I chaired a meeting in your Lordships' House which was addressed by the Law Society, the National Consumer Council, the Consumers' Association, Shelter, the Legal Action Group and the Advice Services Alliance. Out of those, only one represented a legal group and the Bar was not represented. At that meeting, all the concerns expressed in your Lordships' debate were expressed.
Subsequently, I have received representations, as, I know, have other noble Lords, from the National Association of Citizens Advice Bureaux, the Law Centres Federation and Justice. Again, all took up those concerns. I was minded to read from the Justice report but since one of the authors of that report, the noble Lord. Lord Goodhart, is about to address your Lordships, I shall not do so but I hope he will.
The noble Lord is receiving the same representations. When the noble and learned Lord the Lord Chancellor sums up at the end of the debate, we should all like to know what heed he is taking of those representations.
What about other questions? How are the issues relating to disbursements and insurance being addressed? What are the precise arrangements for that agreement with the insurance industry about which the noble and learned Lord expressed pleasure? What form does it take? Is it binding? Are the premiums affordable? What are the experiences which have been gained so far in relation to the conditional fee scheme? Where is the evidence? How does the noble and learned Lord propose to deal with public interest cases? Why are there no proposals for mediation, conciliation or other forms of alternative dispute resolution, although those have been extremely successful and highly recommended by that noble and learned Lord, Lord Woolf? Above all, why is the noble and learned Lord proposing to substitute the legal aid system with the conditional fee scheme rather than following the good advice of Sir Peter Middleton; namely, that before you can receive a grant of legal aid you must satisfy the

77
Legal Aid Board that alternative funding is not available? Of course, that would require a statutory change because under the present arrangements that is not a test which can be applied.
In posing those questions, these words of the noble and learned Lord at his Law Society speech ring in the ears: "If you act in haste, you repent at leisure". Of course, like his predecessor, the noble and learned Lord the Lord Chancellor must work with the Treasury, but to dismantle the legal aid system to satisfy the Treasury accounts of next year or the year after is an act in haste which we shall all repent.
7.15 p.m.
Lord Goodhart: My Lords, I share the concern expressed by almost all noble Lords who have spoken this evening in relation to the proposals of the noble and learned Lord the Lord Chancellor for the reform of the legal aid system. In particular, I share the concern expressed by many noble Lords as regards the over-hasty substitution of conditional fee agreements (or CFAs) for legal aid in money claims.
CFAs have advantages; they appear to be working in personal injury cases. They are undoubtedly here to stay. I accept that and, to some extent, welcome it because I believe they provide a facility for those who are just above the level of legal aid which has not previously existed.
However, personal injury cases and in particular, motor accident cases have special factors which, as the noble Lord, Lord Mishcon, pointed out, make them particularly suitable for CFAs. First, it is clear that there has been an accident. Secondly, that accident is almost always someone's fault. There may be the occasional accident like a tree falling on top of your car in a high gale which is not due to the fault of any human being, but that is quite exceptional. Thirdly, in motor accident cases which result in personal injury, there will have been a police investigation which will have helped very greatly to establish whose fault it is. The result is that the plaintiff can obtain insurance against liability for the defendant's costs for a fairly modest premium.
In other types of cases, that is much more unlikely to happen. Let us take as an example, as have many other noble Lords this evening, the case of medical negligence. In that case, one must start by asking the question: has there been an accident at all? It is true that the treatment or operation that the patient has undergone may not have worked, but that does not of itself show that there has been anything which could be described as an accident, let alone establish that someone is at personal fault for it.
Therefore, in such cases and other cases of professional negligence in other professions, a much more elaborate preliminary investigation is needed and at the preliminary stage at least, there is much less certainty of success. It is not at all clear in such cases that conditional fee agreements will work; nor is it clear that an acceptable insurance product can be provided in such cases for an acceptable premium. Whatever the insurance companies promise now, we must remember
78
that their promises in cases of this kind are untested. We wonder what premiums will be charged in a few years' time.
Therefore, I ask the noble and learned Lord the Lord Chancellor to consider trying proposals for a contingency legal aid fund (or CLAF). CLAF is not a new idea. It was first proposed by Justice in our report on motor accident cases in 1966. That proposal was followed up by a report published by Justice in 1978. I was chair of the working party which drafted that report. Another small working group of Justice, of which I am a member, has looked again recently at our proposals and confirmed our support for them, although with a modification to which I shall turn later. CLAF is indeed supported rather strongly by the Bar Council.
So, for the benefit of those who are not familiar with it—and that may include a number of lawyers—what is CLAF and how does it work? The basic idea is that a potential plaintiff with a money claim (and, like CFAs, this will work only where there is a money claim), applies to the fund for help. If the application is accepted, the fund will pay the plaintiffs legal expenses in the same way as legal aid does at present. If the plaintiff loses, the fund will pay the defendant's costs. If the plaintiff wins, or gets damages in an out of court settlement, the defendant will pay to the fund the costs that it has incurred on behalf of the plaintiff. The fund will also be entitled to a deduction from the damages payable to the plaintiff in the same way as a solicitor is entitled to deduct a success fee from damages under a conditional fee agreement.
The original Justice proposal was that the deduction should be a specified proportion of the damages awarded to the plaintiff. At that time there were no CFAs. Our revised proposal, in the light of the existence of CFAs, is that the deduction should be calculated as a percentage of the costs incurred on the plaintiff s behalf in the same way as CFAs. That percentage need not be fixed as the same percentage for all cases, but can be assessed on a case-by-case basis.
Therefore, one might ask why a CLAF rather than a CFA? The latter has the advantage of simplicity. A potential client can go to a solicitor, agree a success fee—I was going to say "negotiate", but it is unlikely that much negotiation will take place—then the solicitor arranges the insurance policy and he can get on with it. That is true enough, but I also suggest to your Lordships that CLAF has significant advantages over CFAs. For example, CLAF has advantages for solicitors. Many solicitors would prefer the certainty of getting their normal fees to the risk of getting no fee at all if they enter into a CFA. That is especially true of smaller firms which will not have enough CFA work on a regular basis, to enable them to know how accurately to calculate the risk, and which do not have regular contact with insurers.
CLAF has advantages for the administration of justice. Lawyers will not be at risk of losing their fees if they lose the case. It removes the risk that, for example, a lawyer may be tempted, as has been suggested, to withhold the disclosure of damaging material which emerges at a late stage in the

79
proceedings. At the same time, the fund can negotiate fixed-fee contracts to ensure that the problems quite rightly pointed out by the noble and learned Lord, Lord Hoffmann, are held in check. Finally, CLAF has advantages from the point of view of the client. He will not have to pay the up-front costs of preliminary investigations or of an insurance policy which, certainly in medical negligence cases, are not only enough to put off those who currently qualify for legal aid but also many who do not qualify for it.
Will CLAF be more expensive than CFAs? There is no reason why it should be. It is true that there is the cost of administering the fund which would have to be met, but the wider pooling of risk, the greater experience of risk analysis and the absence of need to buy an insurance policy from a profit-making insurance company, should offset that fact. CLAF is, of course, intended to be self-financing. It could be administered by the Legal Aid Board or perhaps contracted out, as the administration of legal aid originally was, to the Law Society or some other organisation. The most that would be required in terms of finance would be a possible short-term loan or guarantee to cover payments that would have to be made out of the fund before the success fees started coming in.
I do not share the fears expressed by the noble and learned Lord the Lord Chancellor in his speech to the Law Society conference; namely, that if CLAF and CFAs are in competition, the latter would necessarily cream off the stronger cases. It is possible that CFAs would become the predominant method of financing certain types of case, in particular road accidents and other straightforward personal injury cases. However, in others, such as medical and other professional negligence cases, I believe that most potential litigants would actually prefer CLAF to a CFA. CLAF is not a panacea. However, I believe that it is an idea well worth trying. Indeed, an experimental scheme in Hong Kong has worked so well that it has been considerably expanded.
In his speech to the Law Society conference in Cardiff, the noble and learned Lord the Lord Chancellor promised to consider CLAF. He repeated that promise today. I ask him to do so and to take the next step; that is, to set up a pilot scheme, perhaps on a regional basis in some part of the country, for an experiment in CLAF to see whether it will work. I believe that he may well be pleasantly surprised by the result of that experiment.
7.25 p.m.
Lord Simon of Glaisdale: My Lords, there has not been one speaker who has addressed your Lordships today—and none, I believe, who is to follow—who has not put access to justice high among the social goods. However, as has been pointed out, that is not alone. There is access to health; there are such fundamental matters as national security, both external and internal; there is our duty to the poorest of our fellow citizens, and so on. Indeed, one could go on almost infinitely.
80
My noble and learned friend the Lord Chancellor hastened to say in his opening remarks that his scheme was not Treasury driven. I do not believe that it would require an apology if it were. I say that because, unless accounts are kept in the counting house, there will be no bread and butter to eat in the parlour. The figures that have been given show that by 1992 the Legal Aid Fund was utterly out of control. My noble and learned friend Lord Mackay of Clashfern, as Lord Chancellor, brought in measures to curb it. They mainly—I believe almost exclusively—went to the eligibility test. As your Lordships have been reminded, when the legal aid scheme was set up there were two tests. The first was that of eligibility—in other words, you had to show that you need support to have access to legal aid. The second was a merits test. The case had not to be, as my noble and learned friend Lord Hoffmann seemed to think, merely arguable; it had to be the sort of case which was worth presenting to the court and was more likely to succeed than not.
My noble and learned friend Lord Mackay of Clashfern was furiously attacked on that occasion. It was in a debate which took place on 3rd February 1993, initiated by my noble and learned friend the Lord Chancellor who presently sits on the Woolsack. I took note of some of the terms that were used, not all of them by my noble and learned friend. For example, it was said that the proposals "would destroy access to justice"; that they were "a disaster" and, indeed, an "outrage". Reference was also made to the "madness" of the scheme.
It would be naïve politics to suppose that the invective of opposition is automatically transposed into the policy of government. In fact, finding that legal aid costs have increased despite the measures of his predecessor, my noble and learned friend on the Woolsack has gone on to further them. As I understand it, the main components are threefold: first, contracting for legal aid services from the professions; secondly, upping the merits test to require a 75 per cent. chance of success; and, thirdly, mopping up by a comprehensive no win, no pay scheme, thereby pushing further the proposals of the noble and learned Lord's predecessor.
As regards the contracting, I wish to ask only one question. Much depends on the terms and particularly the length of the contract. Is it likely to lead to a scheme of public defenders? That would, I think, be regarded very much askance by all who are conversant with the criminal system. That is all I have to say about the first item.
The second item, a 75 per cent. chance of success, eliminates an enormous tranche of those who were previously eligible; all those, in other words, whose chance of success was better than 50:50, whose case was more likely to succeed than to fail. They will have to show instead a 75 per cent. chance of success. I agreed with what was said by the noble Lord, Lord Lester of Herne Hill, and I believe others. I cannot remember ever having quoted a percentage figure. One generally said that there was a good or a reasonable chance of success. One was warned against the rare cases where a client had been told that he was sure to

81
win and the case was infallibly lost. Therefore, there is an enormous number eliminated from access to justice through legal aid.
When my noble and learned friend's scheme comes into operation, there must be only a few "middle incomes" left who would be eligible. How does my noble and learned friend propose to deal with the vast numbers of "middle incomes" that the Rushcliffe Committee counted on bringing under the legal aid scheme—legal aid which had previously been available only under the forma pauperis' scheme and the Poor Prisoners Defence Act, on which many young counsel cut their teeth, and sometimes no doubt a client was lucky enough to light upon an Erskine, a Clarke or, dare I say it, an Alexander, a Gardiner or a Baroness Mallalieu? I am being invidious as I have missed out the noble Baroness, Lady Kennedy. There was luck in the draw but some were lucky. All those who badly needed it obtained the service. However, my noble and learned friend proposes to deal with all those who are now included—and will be excluded—by a generalised no win, no pay scheme.
The first thing to say is that it reaches only money and property cases. The second is that the cost of insurance has been dealt with and is likely to be far more discouraging than any legal aid contribution that there has been in the past. The third thing is that it is not only those financial and technical matters that should concern your Lordships. We have had examples of no win, no pay. My noble and learned friend says that the scheme so far has not thrown up examples of abuse. However, as has been pointed out, it has been barely tested. Moreover, we know what it has led to in America. There are grave signs that it may go the same way here. An advertisement caught my eye which asked people if they had any complaints about medical treatment or mistreatment in a hospital. They were advised to communicate that with the advertising solicitor.
Moreover, in my time in practice there were one or two who practised no win, no pay, although that was quite unprofessional. I remember one member of the Bar who was habitually instructed by his brother, a solicitor. I am sure that the noble Lord, Lord Mishcon, will immediately recognise the malign pair. They were up to every mischief that could be performed in a court of law. On one occasion counsel was rebuked for telling a jury that the defendant was insured. Counsel said blandly, "I did not know that that was illegal. I thought it was merely a gross breach of professional etiquette". Do we really want that? Are we not in danger of that? Of course, little has gone wrong so far because the members of the legal profession have been brought up in a tradition that discountenanced that sort of behaviour where the financial result to the practitioner depended on his winning the case. But it is a serious temptation to people whose career might be in balance, who perhaps have calls on their finances which they must meet, and so on. It is dangerous.
That process might be acceptable if it were the only way of plugging this enormous gap that has been created by my noble and learned friend and his predecessor and indeed by ordinary economic events—affluence moving
82
people out of the scope of eligibility. If that were the case we might be prepared to accept it, however reluctantly, but it is not the only expedient.
The noble Lord, Lord Goodhart, whom I am glad to follow, has explained in detail and with great clarity the advantage of the Contingency Legal Aid Fund. I urged it on your Lordships when we were discussing legal aid in the context of the Human Rights Bill. It has now been put forward with great authority and cogency. At one time it was thought by the Royal Commission that it was not viable: there would be too many bad cases and too few good cases. But now we have all those cases ranging from a 50 per cent. to a 75 per cent. chance of success. Many cases are likely to succeed; they will be well worth taking on. It would be an affront to shut those people out from access to justice. Moreover, as the noble Lord, Lord Goodhart, mentioned, the scheme has been tried out in Hong Kong. It was a success and has been expanded there. It has also been practised in two Australian states. There, too, I think that it has been successful.
In summary, I am entirely with my noble and learned friend in his aim to contain the legal aid budget. But I have the deepest trepidation about his main theme; namely, demanding an eligibility test of 75 per cent., and having recourse to plugging the gap from the no win, no pay scheme, with all its disadvantages and dangers. I urge my noble and learned friend to consider seriously the criticisms of the no win, no pay scheme that have been made overwhelmingly today from all parts of the House and instead to consider the scheme propounded by the noble Lord, Lord Goodhart.
7.41 p.m.
Lord Windlesham: My Lords, when I put my name down to take part in the debate, I had intended to make a short speech concentrating on a single aspect of the Government's proposals to curtail, if not to withdraw completely, legal aid from most civil cases. However, your Lordships will be pleased to hear that in the light of the opening speech by the noble and learned Lord on the Woolsack, it will be possible to shorten my remarks even further.
I hope that I am right in understanding that legal aid will continue to be available to eligible applicants charged with criminal offences. But for a few moments I wish to draw the attention of your Lordships to those persons with one foot on either side of the line dividing criminal and civil proceedings.
What will be the situation when prisoners, many of whom are indigent, bring civil actions by way of judicial review seeking remedies for wrongful decisions or policies relating to their detention in custody? We must remember that not all such applicants will have been convicted of a crime. The growth in the remand population means that a substantial proportion are held pending trial, or sentence or awaiting deportation. Civil actions are brought by prisoners on various grounds. Their challenges may include the lawfulness of detention or continued detention after the expiry of the penal term. We must expect a considerable growth area

83
in that category in the light of the extended sentences which are forecast in the recently published Crime and Disorder Bill.
Litigation may arise also from conditions in custody, prison rules or regulations, or many administrative decisions made by officials. Some of the grounds for complaint will fall within the ambit of the convention rights under the European convention which are due to become part of our domestic law when the Human Rights Bill is enacted, as it will be shortly.
I had intended to raise the funding of civil cases brought by prisoners claiming violations of convention rights after incorporation during the Committee stage of the Human Rights Bill. In the event, I was unable to be present when the amendments on legal aid were finally reached; but I gave notice that I intended to raise the matter again today. Although the noble and learned Lord the Lord Chancellor spoke rapidly in the early part of his speech—he had much ground to cover—I believe I heard him accurately to say that cases brought in the domestic courts under the Human Rights Bill when enacted will be subject to legal aid. If that is so, I am delighted to hear that the Government have avoided what would have been the illogicality of one procedure at Strasbourg—British prisoners, having exhausted their domestic rights, take their case before the Commission and Court of Human Rights at Strasbourg where there is a limited amount of legal aid payable once a case has been found to be admissible—and another procedure, and a less favourable one, in our own courts.
At a later stage, if not when the noble and learned Lord winds up the debate, I hope that it will be possible for the Lord Chancellor to confirm that consistency with the Strasbourg procedures will be maintained by not requiring an unsuccessful applicant to contribute to the costs of the Government against whom he has made a charge of breach of a convention right.
That leaves us with the prison litigant who cannot bring his or her claim within the enumerated convention rights. But in the light of the Lord Chancellor's mildly encouraging comments about public interest cases—
Lord Lester of Herne Hill: My Lords, I am grateful to the noble Lord for allowing me to intervene. Since he presses upon the House with great force, and in my respectful view with reason, the need to ensure that we have the same advantages in our systems in Strasbourg, is the noble Lord aware that one of the advantages of the Strasbourg system is that an unsuccessful applicant does not have to pay the Government's costs? Therefore, there is no risk as to the other side's costs in those proceedings. That is not the case under our domestic proceedings.
Lord Windlesham:: My Lords, I am grateful to the noble Lord for that point. I had thought of making it, but in the interests of brevity I have not done so. I am glad that he has placed it so clearly on record. Therefore there is this remaining sub-group, the status of which will be the subject of a consultation process forecast for the New Year.
84
Finally, based on many years' experience, I am well aware, as are others in the House, that prisoners are not the most popular of litigants. But effective redress against the abuse of arbitrary power must not be jeopardised by these reforms. I am mildly encouraged by what the noble and learned Lord the Lord Chancellor said in his opening remarks. I hope that that spirit will be preserved in this instance throughout the consultation procedure and the legislation which will follow it next year.
7.49 p.m.
Baroness Williams of Crosby: My Lords, as one of, I think, only three speakers in the debate who have previously been Members of another place, my experience of the law as a Member of Parliament may be a good deal less favourable than that of a number of people who have spoken who happen to be professionally involved in the law. Indeed I remember, on many occasions, deeply confused constituents coming to me who, in some cases, had paid £50 or £100 which they could not afford in order to have a letter written to a Minister by a solicitor which could have been written by their MP for no more than the cost of a stamp, if that.
I remember repeatedly coming across the extraordinary degree of illiteracy in relation to the law that exists in this country because we teach nothing of it in our schools and little enough in our colleges, and therefore the way in which many of my poorest constituents were open to exploitation. I found the profession deeply divided between those who were all too ready to exploit the ignorance of those I represented (and of myself) as compared with the handful of lawyers who devoted themselves a great deal of the time to some of the most tremendously serious cases I have ever encountered—and still do: cases of women, for example, gaoled by lower courts because they have failed to pay debt, who are then taken out of custody only as a result of a judicial review, usually brought by a lawyer who is paid little or nothing for his services. So I see the profession as profoundly divided. I have considerable sympathy with the phrase used by the noble and learned Lord the Lord Chancellor. He described the present system as, "too expensive and too exclusive". He is right in saying that substantial reforms need to be made.
Perhaps I may draw a momentary comparison with the other service which is publicly funded and which we discussed today, the National Health Service. It is less clear to me that the professional interests of those in the health service have been as predominant in terms of the way in which the money flowing to that service has been used as have the interests of at least some in the legal profession. I apologise for putting it so strongly, but I was reminded time and again of the saying of Anatole France that,
"The law in its majesty forbids the rich and the poor alike from stealing bread or sleeping under bridges".
That saying rings through my head from that day to this. As the House will appreciate, I have no financial interest in this debate.

85
I welcome particularly the remarks of the noble and learned Lord the Lord Chancellor about fixed fee contracts. I am delighted that so many noble Lords and noble Baronesses have recognised the force of that argument. Listening to the noble and learned Lord introducing the debate, I began to wish that he might relent for a short while and regulate rewards in the City, which perhaps require his ministrations even more than the legal profession. I welcome that measure. I welcome, too, the noble and learned Lord's efforts in trying to bring about an extension of the conditional fees, at least in those areas where cases are straightforward and where the matter of conditional fees works satisfactorily.
I wish, however, briefly to raise four concerns, some of which were mentioned by other speakers in the debate. I do not wish to pursue them, but merely to ask the noble and learned Lord whether he will be so kind, in replying, as to address them.
The first, raised by the noble Baroness, Lady Kennedy of The Shaws, and my noble friend Lord Lester, concerns public interest cases. Like the noble Lord, Lord Windlesham, I am conscious of the fact that cases where the chances of victory are certainly not 75 per cent. or are uncertain, may be cases where the public interest is of central importance. The noble Lord referred to the absolute necessity of ensuring that public servants are not above the law. Nobody who has been a Member of Parliament, or for that matter an active member of a non-governmental organisation, can pretend that everything in our police force, our prisons, our Immigration Service and, not least, our treatment of refugees is such as to deserve no legal sanction should their powers be abused. If their powers are abused, every time that happens it is another blow against trust in the democratic system, and rightly so. It is the wretched of the earth who tend to be the victims in such cases, and their public interest must be defended.
I therefore wish to press the noble and learned Lord the Lord Chancellor with regard to public interest cases where it is difficult to make an estimate as to a likely outcome of 75 per cent. or more. In particular, would he be willing, in exceptional cases, to consider the possibility of including not only those who are qualified lawyers but perhaps one or two others drawn from the ranks of Citizens Advice Bureaux and law centres to share in decisions as to the cases that might go ahead? I do not believe that lawyers have an absolute monopoly on wisdom in selecting which cases are of such importance that they should be further considered.
My second consideration—the first being public interest cases and the link to the 75 per cent. test—concerns the issue of "up-front" costs, addressed so eloquently by the noble Lord, Lord Mishcon. Again, I do not wish to delay the House, but ask the noble and learned Lord the Lord Chancellor to say a little more about those cases where the up-front costs of finding independent witnesses and so on are likely to be high before any decision can be made about the likelihood of success.
Thirdly, I wish to turn briefly to the civil justice proposals so admirably advanced by the noble and learned Lord, Lord Woolf, and ask about cases
86
involving small claims of under £5,000 where, although the claim itself may be for less than £5,000, much more is at stake for the person involved. The noble Baroness, Lady Kennedy, referred to the case of her mother. Another case that comes to mind is that of tenants seeking repairs from rapacious landlords where the actual cost of the repair may be much lower than £5,000 but for the tenant the likelihood of being able to stay in a house, and the house being livable in, is of central importance to his or her quality of life. Will the noble and learned Lord the Lord Chancellor comment further on up-front costs for those on low incomes?
Penultimately, perhaps he will say something about mediation. I have seen a good deal of the effects of mediation in the United States, particularly in the states of Massachusetts and Maine. I have been very impressed by its effectiveness, particularly in cases, for example, of marital conflict in relation to the division of property, but also in some cases relating to boundaries between gardens and matters of that sort. I noted how large a proportion of the costs that would otherwise be involved was saved by the use of mediation in appropriate cases.
Finally, I turn to the noble and learned Lord's remarks about community law services. I said that as a nation we are relatively legally illiterate. Most of us do not even understand what a plaintiff is; most of us cannot understand legal language; and I have seen many of my constituents totally confused and in awe before a court because they simply do not know what is going on, except that at the end of the day they will probably find themselves behind bars.
The community legal service is therefore of crucial importance. I would like the noble and learned Lord to say more about it, remembering what he also said on the Human Rights Bill with regard to the possibility of assistance and help in respect of learning about human rights as well. Will he address the possibility of making legal expert systems available in public libraries and in the offices of other non-governmental organisations? Such systems sound very swish. They are not; they are often very simple descriptions of people's legal rights, including, not least, their rights to social security. Will he also consider a more radical proposal; namely, making such on-line legal advice services available in prisons?
7.59 p.m.
Baroness Mallalieu: My Lords, I should declare an interest: I owe my living to the Legal Aid Fund as a practising member of the Bar, albeit the criminal Bar, and certainly not one eligible for the list that the noble Lord the Lord Chancellor gave in his opening remarks; and I am also the paid chairman of an independent council of an ombudsman scheme, which is relevant to something I shall say.
I believe that the House will be grateful to the noble Lord the Lord Chancellor for giving it an opportunity to discuss what are, on any view, radical reforms to the legal aid system and the criminal justice system. There has been a great deal of detailed examination by noble Lords from all sides. Perhaps I could go back for a

87
moment to the first principles of what civil justice, as I understand it, is all about. The civil justice system surely exists to serve the public. It should be run in their interests and for their benefit, not for the judges, the lawyers, the Lord Chancellor's Department or the Treasury. Its purpose is to ensure that justice is done between our citizens when disputes arise which cannot be resolved in other ways. Our Government bear the ultimate responsibility for ensuring that the system works, and I hope they accept the responsibility for ensuring that, where possible, given their other priorities, public money is available to see that it does work.
Civil justice, after all, underlies good order in our society. If it breaks down or fails, so does public respect for and compliance with the rule of law. A civil justice system can surely be said to be working well only when it fulfils five criteria. First, it should deliver justice of a high quality in which the public has confidence. That, I hope, is a principle which will never be sacrificed in the interests of expediency or cost. Secondly, the system should be as simple as can be devised. It should not be necessary to have to take the hand of a lawyer every time one needs to enter the labyrinth of the law, particularly in its lower reaches. Thirdly, it should be speedy. Wrongs must be righted quickly or their effects magnify. Fourthly, the system must be worth the money. Those who pay for it, whether they are individuals or the public, must get their money's worth. Finally, it must be accessible to all. No one should be excluded by reason of cost.
The noble and learned Lord the Lord Chancellor inherited a system which is open to criticism under each of those five headings. I believe that under some of them it seriously fails the public. The measures which the noble and learned Lord proposes are all intended to restore that system to good health, given the constraints which every government department faces at the present time. Most of the proposals he makes are right on course and will have much of the effect that is desired. About one of them, I, in common with many noble Lords who have spoken this evening, have some reservations, to which I shall refer.
First, I believe that the proposed community legal service should be the starting point for the necessary changes. The court should for most disputes be the port of last resort. "Do not litigate" is usually the best advice that any lawyer can give; too often it is advice which is simply not given. By expanding the work of the citizens advice bureaux and the legal advice agencies, giving active support to alternative forms of dispute resolution, such as ombudsman schemes, financed by their respective industries, and pointing members of the public in the right direction redress can in many cases be provided in a way which is cost-effective, widely accessible and fair and without recourse to the courts at all.
If cases do come before the courts, implementation of the proposals of the noble and learned Lord, Lord Woolf, particularly in relation to small claims jurisdiction, fast-tracking and judicial case management, is particularly welcome as a means of tackling the delay,
88
complexity and waste which riddle the present system. Greater predictability about the likely costs should also result—and about time, too.
My main reservation with regard to these proposals centres around the plans of the noble and learned Lord the Lord Chancellor for tackling an area in which the current system is most manifestly deficient—accessibility. As the noble and learned Lord has pointed out in the past, we are failing to produce a system which is affordable to a significant proportion of our people. Ironically it is not the same proportion of our people who were denied access to justice back in the late 1940s when legal aid was introduced by a Labour government. The very poorest are now covered by legal aid. Indeed, I understand that most recipients of legal aid are in receipt of state benefits. The dispossessed are now those who have little—sometimes only a very little—and those on middle incomes.
It is universally accepted that action is necessary. The Lord Chancellor's choices are limited. Legal aid cannot realistically be extended to them, much as many, if not most, would wish it to be; nor can the Government do nothing. Unlike some noble Lords, notably the noble Lord, Lord Campbell of Alloway, and the noble and learned Lord, Lord Ackner, while I retain instinctive reservations about conditional fee agreements, I am not implacably opposed to them. I suppose that those instinctive concerns are because I was brought up in a profession in which to have a direct financial interest in the outcome of a case was regarded as undesirable. I can see that in certain circumstances the interests of a lawyer will not be those of his client: they may indeed be opposed to his client's interests. His interests may not necessarily be the interests of justice either. However, I am bound to say that my views are philosophically incompatible with those of the noble and learned Lord, Lord Hoffmann. who would appear to go much further in his wish to see contingency fees.
The change from a professional ethos to a commercial approach will he an uncomfortable one for many of us within the profession; but, if it needs to be made, it must be made. My discomfort is in part because, as experience in other jurisdictions has shown, this is not necessarily a change which is of benefit either to the public or to the profession. I was glad to hear from the noble and learned Lord the Lord Chancellor at the outset that in his view these conditional fee agreements are working well. But I retain considerable reservations about whether the system could cope with the massive explosion which would undoubtedly and necessarily occur if legal aid were to be terminated for such cases, as he proposes, in April of next year, in just over three months' time.
My main concern was articulated most eloquently by the noble Lord, Lord Mishcon. I am concerned that smaller high street firms, which at present offer the public a choice, will reject complex cases, partly because they will require what I think are known as work-up costs, the preparation of the kind of reports to which he and the noble Lord, Lord Hacking, referred, experts' reports, and so on, particularly if the costs are to be borne by the solicitors themselves. It may be that the noble and learned Lord the Lord Chancellor has had

89
promising discussions with the insurance industry. But at the end of the day someone will have to pay the premiums, and many people will not be able to afford even those which are considered reasonable. Larger firms may be prepared to take such risks and loss-leaders; they may not. I am afraid that litigants with a good case who need help may find themselves going from door to door to door, down the high street and beyond, until their cases are taken on, if they can find anyone to take them on, by the least well qualified and least reputable firms. Lawyers' profit margins, and still less insurance companies' profit margins, are not necessarily the same as the interests of justice.
Like other noble Lords, I am pleased and relieved that the Government accept that public interest cases will require special provision. I am also encouraged that the noble and learned Lord the Lord Chancellor accepts that the merit test will in some cases have to be flexibly applied and, who knows, might even be applied so as to allow some of the cases of the noble Lord, Lord Lester, to be treated in such a way. I hope that, in view of all that has been said, particularly by those with great experience in the profession over many years, the Government will not contemplate the hasty removal of the present legal aid provisions in April without first having in place satisfactory insurance provisions to guarantee that the poorest people are not put back into the pre-1949 position.
The noble Lord, Lord Goodhart, spoke of the contingency legal aid fund. I add my voice to the numerous voices which urge the Lord Chancellor to consider that to be an idea well worth trying. If it should prove to be something which, after initial start-up costs, could be self-financing, it would appear to offer an alternative means of ensuring that the litigant with a good cause, whatever his means, has access to the courts. Without such a provision and in the absence of legal aid, I have grave doubts as to whether conditional fee agreements could fill the void that would be left behind. Also, I am troubled by the apparent timetable of April 1998.
I therefore ask my noble and learned friend to assure us that the present system will not disappear before he is quite satisfied that that part of our present population which is least able to pay will not be worse off under the new one. There is universal support for change; it has to come. There is universal support for modernisation of our civil justice system, and I congratulate my noble and learned friend for grasping the nettle and, if I may put it this way, thinking the unthinkable. But before we make these changes, we must be quite sure that they are also improvements.
8.10 p.m.
Lord Brightman: My Lords, I intend to speak quite briefly on one subject only; namely, the legal aid scheme which is known as the contingency legal aid fund—commonly called CLAF. It gave me great satisfaction to hear it supported by the noble Lord, Lord Goodhart, by my noble and learned friend Lord Simon of Glaisdale and by the noble Baroness. Lady Mallalieu.
90
As your Lordships will know, the purpose of CLAF is to protect a plaintiff who has a good cause of action against liability for his own costs and liability for the defendant's costs if, contrary to expectations, his action fails. The prospective burden of costs is undoubtedly one of the most frightening features of civil litigation for the ordinary person. It is the factor that is most likely to deter a plaintiff from enforcing his rights, however just his case may seem to be, for almost all litigation contains an element of risk.
A CLAF scheme has three undeniable advantages. First, if properly managed it is self-financing and costs the taxpayer nothing. Secondly, it does not displace other forms of legal aid, but can exist alongside them. Thirdly, it is not subject to any means test because, being self-financing, it needs none.
CLAF works in this way. A central fund is first established. I will mention later how that has been done elsewhere. A plaintiff who wishes to be indemnified against the risk of having to pay his own and the defendant's costs must show that he has a good case which, prima facie, ought to succeed; an arguable case, a case with a mere 50:50 chance of succeeding is not acceptable under a CLAF scheme. CLAF is not intended for speculative litigation. It is for what my noble and learned friend the Lord Chancellor described as a case with a high probability of success.
The percentage of damages recovered by successful plaintiffs payable to CLAF is intended to cover the costs payable by unsuccessful plaintiffs and the administrative costs of running the CLAF scheme. It will be appreciated that CLAF is not designed for the protection of defendants; it is a service for the benefit of plaintiffs. The beauty of CLAF is that it gives legal assistance to deserving plaintiffs without any resort to central funds and without involving lawyers in the outcome of the law suit because they are not affected.
CLAF has been under consideration in this country for a long time. It was first advocated in 1966. It was mooted before the Royal Commission on legal services in 1978—the Benson Commission. It was debated in a consultation paper issued by the Lord Chancellor's Department in 1991 and in the report presented to the Lord Chancellor by Sir Peter Middleton in September of this year. Sir Peter advised that the possibility of establishing a CLAF, "is definitely worth exploring".
A CLAF scheme was set up in Hong Kong in 1984 as an adjunct to legal aid. The initial funding consisted of a loan from the State Lotteries Fund. That loan was fully repaid in 1988. In the first six years the success rate of accepted cases was approximately 95 per cent., which was adequate to cover the liabilities arising out of unsuccessful cases and also the administrative costs. In the year 1994-95, which is the last year for which I have been able to obtain any details, income comfortably exceeded expenses by about 125,000.

91
I ought just to say a word about the arguments against CLAF which were outlined in Chapter 6 of the Lord Chancellor's 1991 consultation paper. At paragraph (11) it was said,
"It might be thought wrong in principle to expect successful litigants to subsidise the unsuccessful".
So it would he if such subsidising were imposed on a successful litigant. But there is nothing wrong in principle in allowing a potential litigant to agree to such an impost, if he thinks fit, in return for the cover against costs that would be afforded by a CLAF scheme.
Paragraph (12) states:
"It might be thought wrong in principle that successful parties should have to forgo a proportion of their recovery to finance their case".
The CLAF system is merely a type of voluntary insurance. Whereas normal insurance involves paying a fixed premium at the commencement of the period of risk, a CLAF scheme involves paying a variable premium at the termination of the period of risk and then only if the risk insured against does not materialise. The litigant in effect insures against the risk that he will lose his case and be liable for his own and his opponent's costs by promising to pay a premium if and only if he wins. Of course it results in successful litigants financing unsuccessful litigants. But there is nothing wrong in that. Take an ordinary policy of insurance; the insurance company takes money from those who do not have fires in order to compensate those who do have fires. I see nothing wrong in principle in a CLAF taking money from those litigants who win their cases so as enable the CLAF to compensate litigants who lose their cases.
Paragraph (14) states:
"Litigants with good prospects of success would decline to use the scheme, putting its financial viability in jeopardy".
I do not agree. However good a case may appear to be at the start, litigation—particularly in personal injury cases—involves some element of uncertainty. Few cases are 100 per cent. certain of success. No doubt when the surgeon amputates the wrong leg, negligence and causation present no problem and the only area of dispute will be the quantum of damages. But most cases involve some element of risk and if there is an element of risk prudent persons will wish to insure against that risk. For those reasons I do not accept the generalisation that litigants with good or very good prospects for success will decline to make use of a CLAF scheme.
Paragraph (16) states:
"Although a CLAF would ultimately be self-financing, some initial funding would be required while it established itself".
That is so. In Hong Kong a loan facility of 1 million Hong Kong dollars was made available from the State Lottery Fund when the scheme was set up, but only £31,000-400,000 Hong Kong dollars—was drawn down; and, the debt was paid off in two-and-a-half years. If cases are accepted with due care and the percentage fees payable by successful litigants are appropriately fixed, I see no reason why a comparable result should not be achieved in this country.
92
Paragraph (17) states:
"It may not be possible for a CLAF to cover all classes of case".
I agree, and suggest that a cautious and selective approach is essential, particularly in the beginning. The scheme can always be widened later, as it has been in Hong Kong.
Lastly, paragraph (20) states:
"A CLAF imposes little or no discipline on litigants, in terms of weighing prospects against the cost of their case".
I think it would be wise for a CLAF scheme to impose discipline by requiring a plaintiff to pay a small percentage of the costs payable by him to a successful defendant. By this means an applicant for CLAF support would have an incentive to take a realistic view of the prospects of his case. I do not find the arguments against a CLAF scheme in the 1991 consultation paper particularly overwhelming.
I would ask my noble and learned friend the Lord Chancellor to accept the conclusion of Sir Peter Middleton, that:
"The possibility of establishing a CLAF is definitely worth exploring".
I would submit that the Government should embark on that exploration.
8.21 p.m.
Baroness Oppenheim-Barnes: My Lords, I was fortunate enough to make my maiden speech in your Lordships' House in 1989 in the debate on the reform of the legal profession. I apologised then for my presumption, as I do now, for I am only too well aware of the great wealth of legal expertise and skill in advocacy in your Lordships' House. which, unfortunately, I do not have. My only appearance in court was as a defendant in a speeding case, so I cannot claim any qualification. However, I have the temerity to take part in this debate because my feelings are so strongly engaged.
At the time of the 1989 debate I was chairman of the National Consumer Council. In that debate I referred to what was then our recent publication Ordinary Justice, my main concern being access to justice for those at the lower end of the income scale. Indeed, I particularly welcome today the proposal to raise the limits for small claims court cases. It is interesting to recall that back in 1972, when the then Conservative Government were proposing new ideas on the small claims court in order to make them less daunting for ordinary people, there was uproar from honourable Members in the legal profession on both sides of the House. I am sure that noble Lords will not be surprised to hear that that was the case even then.
At the time of that debate I was concerned mainly that the costs and the delays in going to law made it a daunting experience for many people. Since then, as has been said often in today's debate, legal aid costs have soared, as have legal costs outside legal aid. One must wonder what the connection is. A bonfire has been lit and if noble Lords will excuse the mixed metaphor, at the same time the pendulum has swung far too far against the interests of a very large sector of the public—those on middle incomes, those on lower middle incomes and even those on upper middle incomes—for whom there is virtually no access to justice. They cannot possibly afford to prosecute or

93
defend a case in which their opponent is legally aided. Even if they win the case and costs, they are usually landed with the bill for their own costs because their legally aided opponent has no means with which to pay. That is deterring a large section of the community—not litigious people but people who are defending themselves. They may realise that it could be cheaper for them to make an offer than to be landed with costs. That cannot be considered justice.
The Legal Aid Board is fully aware of that when it sanctions legal aid, all too often where the case of its clients is far from strong and where numerous adjournments are used because they will not cost the legally aided party anything but disastrously swell the costs of the other party and the fees of the legal aid lawyers. They go along very happily with these adjournments and anything that will bump up the costs. At the other end of the scale huge sums of legal aid are paid out on behalf of those who have successfully managed to conceal their wealth. I know that the Lord Chancellor has those people in mind just as much as the others.
At this point I should like to emphasise that I do not go as far in my condemnation of the status quo as some people who have said that legal aid is a "gravy train" for unscrupulous lawyers at both end of the scale, that lawyers avail themselves of a blank cheque in legal aid payments and that this has led to a very great increase in legal costs all round. But I do assure your Lordships that one is hearing that kind of criticism more and more frequently these days and some of it is merited.
Many of your Lordships have spoken of particular concerns and anomalies that could arise for certain groups if the proposals go forward unaltered. Many of those examples will, I am sure, be considered by the Lord Chancellor. My chief concern in that category is the effect that the proposals could have on personal injury cases. This point has been raised by noble Lords with great expertise. It is one of the areas that will need careful attention. As for insurance and its cost, it occurs to me that any solicitor defending on a contingency basis a person with no means whatever, and who will not be called upon to pay any costs even if he loses, will not find it beneficial to buy insurance.
A great deal has been said in the debate about ethical questions in relation to contingency fee cases. As someone said, there may be shyster solicitors chasing ambulances and things of that nature. There is not very much difference between that and those lawyers today who use legal aid costs as a blank cheque for their own means. In ethical terms I cannot see that there is a great deal of difference.
A number of noble and learned Lords of great distinction and legal expertise have said, or insinuated often, that the proposals that we are debating are Treasury driven. Maybe they are and maybe they should be. But the principle of giving access to justice, which is now denied to so many by cost, is what we should keep in the forefront of our minds at this time. I believe that the principal purpose of these proposals is right. I congratulate the noble and learned Lord the Lord Chancellor on his courage in bringing these matters forth. I wish him every
94
success in future in what I am sure is going to be a long battle, but if he continues in the same vein he will certainly continue to have my support.
8.30 p.m.
Viscount Bledisloe: My Lords, I have to confess that I am yet another lawyer, albeit one who has not for many years derived much benefit from legal aid. It is a fairly shaming confession to have to make in this debate when one contrasts the extreme length of the speeches made by virtually every legally qualified person with the extreme brevity of the speeches made by those few participants who are not legally qualified. Some cynics might think that that has something to do with the high burden of legal costs.
Much less of this debate has concentrated on the reform of civil justice as opposed to the cost of legal aid. I suggest to your Lordships that the high cost of litigation nowadays is very much a product of our search for perfect justice. I very much endorse what the noble and learned Lord, Lord Hoffmann, said, that there has to be a compromise between the demands of perfect justice and the cost. Some savings may mean that there is somewhat less than full discovery or a somewhat less than perfect trial on every available issue.
The legislation and practice of the past 20 or 30 years have all gone in the opposite direction. Whenever anything goes even slightly wrong in legal proceedings the natural step has been to lay down longer and longer procedures to make sure that that particular matter never goes wrong again. We then have a situation where the search for perfect justice is costing more than I suspect it is worth. If we are to strike a balance, we have to recognise that we may have to sacrifice what is thought to be perfect justice, although I have no great conviction that cases nowadays are decided any more rightly than they were when I started at the Bar and they were tried in a much shorter time.
We must also recognise that if costs are to be controlled and limited, there will be cases where a lawyer is not able to take what he deems to be a necessary or desirable step either because the fixed costs have run out or because he can no longer fund it on the contingency basis. Where on earth does that leave him in relation to negligence? Suing a professional is very much a growing trade, and again, as the noble and learned Lord, Lord Hoffmann, said, the fear of being sued for negligence can often drive people, whether doctors, lawyers or whatever, to take steps that may not be strictly necessary. But they must guard themselves.
I ask the noble and learned Lord whether he will contemplate in his scheme giving protection against negligence where a lawyer says, "I would like to do this, but I cannot manage to do so on the limited fees or on a contingency basis". Therefore, he decides not to take that particular step. It is then said that in an ideal world that step should have been taken. I do not believe that lawyers can be expected to practise with limited resources if they are to be blamed for not doing something which would have cost even more.
Turning to the conditional fee agreement scheme, I find it at this stage—as indeed may have been intended—very vague. I am unclear as to how it would

95
work in practice in relation to those litigants who are poor or fairly poor. The noble and learned Lord sought to explain that insurance would be available at what he suggested was not too inordinate a cost. He quoted £3,000. It seemed to me fairly surprising to contemplate that many solicitors would be prepared to put that sort of money up front. But when the noble and learned Lord quotes £3,000, I suspect that that is for a case with a high prospect of success, perhaps within the 75 per cent. limit target which he mentioned.
I fully agree with the noble Lord, Lord Lester of Herne Hill, that it is rare that one can possibly say, even in a fairly simple case, "You have as much as a 75 per cent. chance of success". It is even rarer to be able to say that at the very beginning of a case. But if an insurance company is going to quote a premium for defence costs, it will surely want to receive an advice as to the merits of the case. In a case of any complexity one will not be able to give that advice until considerable steps have been taken and may be expert reports have been obtained. So the lawyer is to fund the obtaining of expert reports, taking proofs and statements, with the prospect of then having to pay the insurance fee.
But what happens if the insurance is not available because not enough is thought of the prospects of the case or the insurance premium quoted is more than can be afforded? If the case is then dropped, all the costs incurred have been wholly wasted at the lawyer's expense. I am not clear whether the noble and learned Lord contemplates that it will be open to a plaintiff to go ahead on a contingency fee basis without any insurance, saying to himself, "I am so poor that I do not really mind if an order for costs is made against me because there is nothing for it to be enforced against". Is it going to be allowed that he goes ahead without the insurance, and if the solicitor goes ahead without it, is the solicitor himself at risk of being held personally liable for the costs on the basis that he has an interest in the case? Until one has answers to some of these questions it is difficult to know what one thinks of the scheme.
The difficulty to which I have referred and the other difficulties which have been mentioned today, lead me to wonder whether it would not be more appropriate if for many cases legal aid were available at the beginning of the case and then at some pre-ordained stage laid down by the Legal Aid Board the case could be reconsidered to see whether it should then switch to a conditional fee agreement. If legal aid were available until that stage, and then one did not have to go on and pay anything further and it remained a first charge on recovery, the costs of legal aid for each case would be much smaller. One could then have a much higher limit of eligibility, so one would have relieved the point that at the moment it is only the very poor who can have access to justice by this means.
8.39 p.m.
Viscount Dilhorne: My Lords, I must begin by declaring an interest as a practising barrister—of advanced years perhaps but of a short term in practice. A large percentage of my practice depends on legal aid,
96
but I hasten to assure noble Lords that I am far from joining the category of fat feline beneficiaries to which the noble and learned Lord the Lord Chancellor referred in opening the debate. I wish that I could experience being part of that club for even five minutes. However, I am not qualified to comment on that aspect. I have also had practical experience over a number of years in a previous incarnation in the international insurance industry, albeit a few years ago.
The embarkation on a long-overdue reform of the civil justice and legal aid systems is thoroughly welcome and desirable. None of the noble Lords I have heard in this debate disputed the fact that civil justice is too expensive and too exclusive; nor that the legal aid system requires anything other than radical reform. If it is not impertinent of me, I should like to congratulate the noble and learned Lord the Lord Chancellor in the same terms as those used by the noble Lord, Lord Mishcon, on his courage and forthrightness in confronting a dilemma which has not been grasped for years. I sincerely hope that the noble and learned Lord the Lord Chancellor will not find himself metaphorically transported even temporarily from the Woolsack on to the horns of the dilemmas contained in this Bill. I wish him well.
I should like to refer briefly to the report of the noble and learned Lord, Lord Woolf, published in 1996. I think and hope that it will be useful in bringing us back, if necessary, to the purpose that we are trying to achieve, which was clearly expounded by the noble Baroness, Lady Mallalieu. That report was expressly concerned with looking at the civil justice system to make it more possible for all persons in the United Kingdom to achieve justice. Many recommendations were made—all born of careful and meticulous thought, as one would expect from the noble and learned Lord—to increase access to justice, to reduce the cost of litigation and to increase the speed at which justice can be efficiently achieved.
At this stage, I must ask myself whether the proposal to exclude legal aid from money and damages claims will provide a system which gets to the heart of a problem and succeeds in resolving it painlessly, speedily and at reasonable cost. That seems to me to be what we should be trying to achieve. I have every hope that the noble and learned Lord is seeking to achieve those aims.
I shall not speak for long, but I should like to refer to two matters. I refer first to the vexed question of costs from a practical aspect, as I have experienced it. The noble and learned Lord is right in his determination to drive down costs for the benefit of the individual litigant. I suspect that he is also right to look carefully at who the recipients of legal aid are, especially with regard to where assets have been hidden or cannot be touched. There are many aspects to that matter and I hope that the noble and learned Lord will consider how the long hand can reach out and collect some of that money.
A material start to such a campaign is to cut out the waste and duplication. Although that point has been mentioned, I shall go into more detail than hitherto. Waste and duplication are manifest and inherent in the

97
present system. From my experience, I do not think that they are the exception. Sadly, it is more often the rule than the exception that legal aid papers arrive on counsel's desk in a state of muddle and disarray. Money is then wasted by either the instructing solicitor putting the papers into order or the barrister doing it. Time ticks on. Time is consumed. When to that there is added, as I have found, the time taken in making on each and every possible occasion interlocutory applications on every small point, the time consumed becomes enormous. What the action was originally about is forgotten in counsel's mind some six months later—and I have had legal aid cases that have gone on for years.
Added to that, there are constructive delays in the system. There is the pure and simple delay when one might say that "Sleeping Beauty inertia" takes over. When inertia is eventually overcome, often some months later, there are further additional costs to the system without any benefit being derived by the funded litigant. I take heart from the noble and learned Lord's proposals that the judiciary will exercise special management in such matters. Counsel is often in a difficult position and cannot do very much about it.
My next point relates to the application of the "merits test". I am not exactly sure where the noble and learned Lord is going on that because a test was laid down in the legal aid guide some three years ago which required to be followed. Under the present scheme, the test places the barrister under a continuing strict duty to bring to the notice of the Legal Aid Board any matter which might affect the assisted person's entitlement to legal aid at whatever stage the proceedings have reached. The sword of Damocles hanging over the barrister's head is that his advice on the merits may be taken into account at a later stage when a wasted costs order is being considered on the grounds of the barrister's non-compliance with the Act. Many legal aid cases which require later consideration can be considered in full detail if the papers are put in properly ordered form to the barrister in the first instance. He usually gets very near the target.
In giving advice on the merits, the barrister has to look at the legal merits test and the reasonableness test, and to address each separately. He has to address all factual issues and set them out in sufficient detail to enable the board to assess their relative strengths and express a clear opinion. Particular attention is required to be drawn where evidence is likely to be contested and where there is any lack or incompleteness of material. Confirmation is required that the proceedings are cost-effective—that is, that the proceedings are likely to be justified by the benefit to the client bearing in mind the statutory charge.
Counsel is then required to estimate by percentage the prospect of success. Various noble Lords have used percentages, but counsel now has to consider the following: (a) is "very good" and is equal to an 80 per cent. or more likelihood of success; (b) is "good" and is equal to between 60 and 80 per cent; (c) is "reasonable" and is equal to between 50 and 60 per cent. The present proposals of the noble and learned Lord are that those cases considered to be "reasonable" by that test over the past three years—that is, those in the 50 to 60 per cent.
98
bracket—no longer qualify for legal aid and that 15 per cent. of those considered "good" likewise will not qualify. That really means that only the "very good" (at 80 per cent.) and only the top 5 per cent. of the "good" will now be considered in appropriate cases for legal aid. I have to echo the concern that has been expressed by many noble Lords today that there is a gap—there will be people who cannot get legal aid, particularly on civil matters, and who will not get redress. That point concerns me.
Matters are still at an experimental stage. I hope that the Lord Chancellor will allow there to be some trial or some research project, carefully monitored, to test the operation of these interesting and radical steps. That would certainly be merited. In the meantime, I feel that the considerable savings that I have suggested could be effected should be put into operation. I doubt very much whether the advice on the merits is honoured fully in the observance. It never used to be. One used to look at the papers and say, "On the balance, it seems to be a possible runner". One could never go so far as to put a percentage upon it, but now one has to. One must do a good deal of preparatory work if one is conscientious about it. I hope that the sword of Damocles of wasted cost that hangs over barristers and people who do not do this will act as a motivation to do it properly.
I deal with one other small but important matter. I believe that the noble Baroness, Lady Mallalieu, expressed the view that the aims of justice were not compatible with the aims of insurance underwriters. I hope that I do not attribute to the noble Baroness words that she did not utter. My experience of the insurance market, small though it was—I spent about seven to 10 years in it—and at the Bar dealing with insured cases was that the insurer would probably insure on an excess of loss basis. As soon as the upper limit had been reached, irrespective of the legal merits and where one was going, the plug would heartlessly be pulled out and the litigant would gurgle down the pipe so that the insurance company could preserve its profits. This matter must be looked at in order to prevent any poor unsuspecting litigant from gurgling down the pipe into the main drain. That is what will happen. The insurance underwriter is hard-nosed, objective and, following recent adverse experience, will be careful to draft the contract so that he gets a profit out of it. One is very concerned to look carefully at this and tie up the ends of such a project.
8.52 p.m.
Baroness Dean of Thornton-le-Fylde: My Lords, I welcome this debate this evening. I thank my noble and learned friend the Lord Chancellor for giving us the opportunity of this very wide-ranging debate. In my short time in the House I have noticed that it appears to be the practice of those who are not lawyers to apologise when they have the temerity to take part in debates on the law. This evening I should like to break that mould. My brashness—indeed, boldness—is not borne of arrogance that I know better but out of my experience as a trade union leader. I note that the four non-lawyer Members of this House who have had the temerity to enter this debate are all noble Baronesses who have

99
different experiences in life but who have expressed very similar views this evening irrespective of the side of the House on which they sit. On the basis of many years' experience as a trade union officer, I welcome this debate.
It is quite clear from the figures that have been given that—to use an old saying—something has to be done. Something does have to be done. In the newspaper industry Rupert Murdoch once said to me, "Brenda"— I was a general secretary, and still am—"the music has changed but the dance remains the same". I just wonder how people in the legal profession will change given some of the views that I have heard.
I am encouraged by the fact that we have a Lord Chancellor of great experience. Above all, he does not lack courage on this particular issue. Courage will be the name of the game in the debate ahead of us. I also welcome the way in which, almost in a humble manner, my noble and learned friend said several times during his contribution that consultation would take place, that this debate was taking place now and he wanted to hear what people thought. He said that he would not proceed according to the narrow requirement of consultation but would consult widely. A consultation paper is to be published in the coming year. At a training seminar yesterday his honourable friend in another place said—I am sure that he would not have said it without checking—that the final decision would not be taken until consultation had been completed.
I declare my interest, perhaps retrospectively, but it is a very practical interest. I speak of my involvement in the trade union movement. My concern is that, contrary to the intention to save money or to maintain expenditure—in other words, to bring back control over legal aid expenditure—because of the claim that we cannot have special interest or special cases, there will he a fundamental change from what happens at the moment in regard to personal injuries.
When I was general secretary of a union part of my work involved instructing lawyers. Sometimes I took their advice and sometimes I did not. Sometimes I was pleased that I did not take their advice and at other times I regretted it. But my job was to instruct lawyers to act on behalf of union members who when they paid their contributions were unaware that part of them were an insurance so that if they had an accident on the way to work, from work or at work the union would step in and provide legal assistance for them. There would be no cost to the member, win or lose. We were not the only union that did that.
In the past year the trade union movement supported five times more personal injury cases than the Legal Aid Board: 150,000 cases as opposed to 30,000. When we had legal advice sometimes people had to hear the hard words that a particular case could not be pursued. Ninety six per cent. of personal injury cases pursued by unions succeed. Last year £330 million was recovered in damages, and £179 million was paid back to the Department of Social Security in benefits recouped as a result of legal cases.
100
Injuries at work are an area different from most others, with the exception of road traffic injury cases. Here we already have an employer's liability to insure. The people with whom our lawyers deal are not litigants but insurance companies. My experience was that there was a complete denial irrespective of whether the particular case was patently clear to everyone. A company might admit its fault, for example that a safety guard on a machine had been left up perhaps resulting in a dreadful accident. When the insurance company could no longer deny it it would delay. That delay ratchets up the cost. Many a time such cases are settled on the steps of the court. If we place a ceiling on costs my concern is that such activity will grow.
My other anxiety relates to one part of the Woolf Report that I did not welcome. My concern is that the "loser pays all" principle will be set aside. One will have a situation in which the cost limit is reached. Liability has been denied and there is delay. One knows that if one goes on, one will win but the union will be faced with a claim that it may not be able to afford. At the moment this money is recycled. It will cost £25 million if this scheme completely stops. The money is recycled because one pays out the legal fees. If one wins one gets back the costs. Those costs go back into the fund which then helps to fund other cases that are coming through. That is an efficient use of revenue. That is my concern about some of the issues that we have before us.
I have another area of concern. We have on the statute book now protection for people who suffer from industrial deafness. How did that happen? It happened as a result of unions taking up individual no-hope cases. The unions persisted until they were successful. The pneumoconiosis cases gradually became successful, one at a time, over many years.
Today's modern complaint is RSI. As general secretary, I authorised expenditure with regard to household names such as the Financial Times and other newspapers. They related to men and women doing repetitive work in factories. We knew that they were probably no-hope cases, but we gradually built up experience of such cases.
There is at the moment an RSI case in London relating to five employees of the Midland Bank. Behind those five people there are hundreds of cases. The five employees are a test case. The union is funding the case. The employees know that there is no limit. If they lose the case, the union will have to pay the costs; if they win, they will win their costs and so the cases of those hundreds of people will be able to be processed.
Of course taxpayers' money must be used efficiently, but this is not the taxpayers' money. I hope that I do not embarrass my noble and learned friend the Lord Chancellor when I say that in the courts he represented some of the most vulnerable people whom I was proud to represent. He pulled the rabbit out of the hat on many occasions and succeeded for our members. That leads me to believe that he knows that the issues are real. I ask him to consider those matters because I cannot believe that there is an intention to sweep away the commitment which exists, and which will go if there is

101
a cap on what one can reclaim. That fixed cap means that unions will he funding cases which they will win but in which the costs will not be met.
The individual union member pays nothing. It is part of being a union member. Many members are surprised when they learn that. Many of them, with all due humility, are terrified of lawyers. They would no more dream of seeing a lawyer than of doing something that they would not normally do. They would not know the name of a lawyer to ring. It is something that the legal profession needs to address.
I thank my noble and learned friend the Lord Chancellor for this debate. There will be a response to the consultation document, but I should greatly welcome it if he can respond this evening to some of the points that I have made.
Lord Campbell of Alloway: My Lords, before the noble Baroness sits down. I should like to say from these Back-Benches how greatly her contribution is appreciated. I have, in my professional life, acted for and against unions. She speaks with a wealth of accurate expertise. It is not for her to apologise for her contribution or those other lay contributions; it is for the lawyers to apologise for monopolising so many of your Lordships' debates.
9.4 p.m.
Lord Byron: My Lords, fat cats, thin cats, and possibly even Lord Chancellors, need their dinner, so I shall not detain noble Lords for long. I shall apologise, since I have been invited to do so, by saying that I am yet another lawyer. I am a practising solicitor. I could have some interest in this matter, but the firm of which I am a partner does almost no legal aid work. So I am unlikely to be a loser. Whether I shall be a gainer depends, I suppose, upon whether conditional fee arrangements make their way into the commercial field.
I shall focus on just one or two points. There are some advantages in speaking at the end of the debate. I can tear up my notes, because everything that I was going to say has already been said by those much more eloquent than I am. There are three tests by which the proposals need to be addressed: are they necessary? Are they workable? Are they wise?
With regard to necessity, I believe that the noble and learned Lord has made out the case that something needs to be done to provide better access to the courts. But the case for sweeping away a whole tranche of legal aid has not been made out. As I understand it, the areas of legal aid which might be replaced are among the least burdensome on the Legal Aid Fund. Indeed, personal injury actions nearly wash their face. It is inevitable that some residual form of legal aid will be required, for many of the reasons so eloquently expressed by the noble Baroness, Lady Kennedy. I echo the suggestion made by the noble Viscount, Lord Bledisloe, that cases could perhaps be started on legal aid and then transferred at the appropriate time to a conditional fee agreement. That would overcome some of the hurdles relating to the start-up costs of which we have heard so
102
much tonight, and which make things so difficult for those who cannot finance them. So much then for necessity.
Are the arrangements workable? To get the scheme off the ground there will need to be underwriters prepared to provide an after-the-event insurance product in a wide range of possible cases. It was suggested by my noble friend Lady Oppenheim-Barnes, who I see is not in her place, that impoverished plaintiffs could avoid insuring in the knowledge that they would not be able to meet an adverse costs order. As I understand it, that is not the case, because solicitors financing and supporting plaintiffs would, under normal common law rules, be regarded as maintaining the action, and would themselves become liable for those costs. Insurance is necessary, whether the plaintiff has means or not.
It is difficult to he confident that there will be no substantial gaps in the insurance which can be offered. We have experience only in relation to personal injury where the vast majority of cases are successful and almost all defendants are insured. I do not believe that the present system has been operating sufficiently long for real assessments to be made of the way in which it is working. In relation to general claims for damages, even if we take 75 per cent. as a reasonable threshold expectation of success, there is a 25 per cent. risk of failure and a consequent adverse cost award. If in a substantial case the costs run to £40,000 there would be a possible premium of about £10,000. That is aside from the uplift element which a solicitor would be able to charge if the case were successful.
Practical problems abound. I wish to raise five points for the noble and learned Lord to answer not necessarily tonight but for future thought. First, is it intended that the Law Society's voluntary cap of 25 per cent. of damages should be made statutory? If not, does the noble and learned Lord the Lord Chancellor consider that there should be any restriction on the percentage of damages taken as a conditional fee?
Secondly, does the noble and learned Lord foresee any likely increase in awards of damages to compensate for the impact of conditional fees either as a result of legislation or as a judicial response to the operation of such fees? Thirdly, has there been any research into the attitude of litigants to conditional fee arrangements, including those who fail to get a solicitor to act under such an agreement? If so, with what results?
Fourthly, can the noble and learned Lord give any figures for the projected savings from the legal aid budget if all damages claims have to be brought by means of a conditional fee agreement? Fifthly, do the Government have any plans to address the problem of the inability of low income households to find the insurance premium and disbursements required to get a case off the ground?
So much for practicality. What about questions of policy? Are we right to make lawyers partners in a commercial joint venture with their clients? Perhaps I may give a couple of examples from the coalface of litigation. It has been said that expert evidence should be seen to be the independent product of the expert, uninfluenced as to formal content by the exigencies of

103
litigation. All lawyers know that even lawyers without financial interests in a case, whether they be solicitors or counsel, involve themselves probably far too much in assisting, drafting and preparing expert reports. Is that more or less likely to happen if the lawyers are joint venture partners in the outcome of the litigation? The same could be said for witness statements and many other aspects of the litigation.
I turn to documents and the obligation to give discovery. I doubt whether there are many people, even including those in the legal profession, who understand the pressures put on a solicitor in the middle of a case who is handed a new file of documents which he has never previously seen; documents which will almost certainly be fatal to the case which he is running, but documents which nevertheless must be disclosed. As the system stands, judges as well as lawyers can be reasonably confident that those whose responsibility it is will ensure that the documents are disclosed. But once that confidence is shaken, one will be striking at the heart of the administration of justice as we know it.
It is said that the system is working well and that conditional fee agreements have not given rise to any of those difficulties. However, a few years is a short time. I suspect that all those lawyers who were brought up in a system in which they were denied any financial interest will, when they are given a financial interest, be doubly careful to ensure scrupulous behaviour. But situations can change over time and generations. A different generation may grow up with different expectations and interests and with a more commercial approach and we must be a little more cautious before rushing completely and wholeheartedly down that road.
My final comment is a plea to the noble and learned Lord to progress the debate without the unattractive anti-lawyer spin which has been placed on the proposals. It was said that legal aid,
"must be made a tool to promote access to justice for the needy and not be seen by the public as basically a means of keeping lawyers in business".
Is that really how legal aid is seen? Does legal aid exist to provide a living for, for example, the noble Baroness, Lady Kennedy, or is she there to provide a service for those who need it?
Is the National Health Service seen as basically a means of keeping doctors in business? It can hardly be denied that it does keep them in business and without it, there would be fewer doctors and much less access to medical care. Society is happy to pay for that for we all fear that one day, we may grow old. It is perhaps fortunate that we do not dwell too often on the possibility that we may need to use the courts. I am sure that those who do are grateful that they are able to receive legal aid and no doubt disappointed when they cannot. Whatever else may be said about the proposal, it is patently wrong to suggest that it will promote access to justice for the really needy rather than, perhaps, to those who lie in the middle.
At the conclusion of his speech in Cardiff, the noble and learned Lord the Lord Chancellor suggested that the new regime should go a long way towards heightening
104
the public standing of lawyers. When the widowed mother loses part of her carefully calculated damages to pay for the lawyer's increased fee, will the public and press acclaim the lawyer for his role in obtaining damages for the client or will they rather denigrate him as a greedy fat cat, forgetting that lawyers are merely doing their best to operate a system which they never perhaps expected to have to operate?
There are difficulties and with respect, I urge caution. I believe that we are on the right track and there is undoubtedly a will for these reforms. But I suggest that we are rushing a bit and I urge some caution on the noble and learned Lord.
9.16 p.m.
Earl Russell: My Lords, the noble Baroness, Lady Dean of Thornton-le-Fylde, said that all the non-lawyers who had taken part in the debate were Baronesses. I do not know whether she took me for a lawyer or a Baroness but in either case, I thank her for the compliment but must in modesty disclaim it.
I must apologise also for intervening in the gap. When I had to decide whether to put my name on the list today, I had to calculate whether I should arrive in time for today's debate. I calculated that I did not have a 75 per cent. chance of success. I arrived in time due to the chances of a long Statement, a pupil who had not done his essay and finding a taxi within 30 seconds. That was not a 75 per cent. chance of success but here I am.
Lord Campbell of Alloway: My Lords, I apologise for intervening, but I was brought up by my noble friend Lord Denham to believe that you never intervened in the gap unless you had had the privilege of hearing the opening speeches. perhaps I am wrong. The last person in the world against whom I would wish to make a point is the noble Earl. but is this in accordance with the procedures of the House?
Earl Russell: My Lords, I believe that the noble and learned Lord on the Woolsack will bear witness that I did hear the opening speeches.
Whenever we are considering any proposal for capping, I view it with a certain amount of anxiety because, as many uncomfortable school memories remind me, caps do not always fit. The effects are rife. When one considers any proposal designed to control expenditure, one must consider what will happen instead. The late Cyril Hare, alias Judge Gordon Clark, once compared the law to a chimney by which all the noxious fumes go out of the house. If you close the chimney, where will the fumes go instead? If we attempt to cap the legal aid budget, even if it is not the noble and learned Lord's intention, there will be cases in which people do not manage to get their cases to court. What will happen instead?
There is a Treasury guideline which says that any Minister contemplating a reduction in public spending—and I think in Treasury theology, prevention of an increase constitutes a saving—must consider the resource implications for other departments. Therefore,

105
we need to know the behavioural effects of denying access to the courts. What will those people do instead and what will be the resource implications of those actions? For example, they may take the law into their own hands. They may spread libels and slanders. They may remain ill and on benefit and there will be no compensation recovery. But until that calculation is undertaken and we know those behavioural effects, we cannot know what will be the effect of those proposals.
Also, I feel some misgiving about leaving the Government to be exclusive judges of costs in anything. We have heard about lawyers having an interest, but, equally, the Treasury has an interest. Lawyers at least are competent to judge legal costs; but government are not competent to judge costs in a field where expertise is necessary. In particular, the Treasury seems to be ignorant of the concept of a true cost. It also does not seem to understand that, in a quality market, competition drives costs up and not down. If you are facing a possible sentence of life imprisonment, the market value of the second-best lawyer is nil. Listening to my noble friend Lord Taverne, I wondered whether the effect of these proposals may be to increase public spending and not to control it.
9.20 p.m.
Lord Thomas of Gresford: My Lords, I should, first, declare an interest as a lawyer. I have been in receipt of legal aid fees for as long as I can remember, both as a solicitor and later as counsel. I have also appeared for trade unions. Therefore, I believe that I have some experience in the field.
The rise of legal aid expenditure has been attributed in some parts of your Lordships' House today to rather overblown cases which have been presented to the courts. I regret to say that I do not agree with my noble friend Lord Taverne that there is no incentive to shorten cases in courts. Clearly my noble friend has not appeared in front of the noble and learned Lord, Lord Hoffmann, for some time. I strenuously agree with the noble Viscount, Lord Bledisloe, that it was all different in our youth. Indeed, we went into court, we called our witnesses, we got on with the job and got the judgment. However, these days, as I drag my trolley along the fast track of litigation towards the courts, I am laden down with reports, with photographs, with the bundles of documents and the core bundle, with the skeleton argument, the timetable and everything which is supposed to hasten the proceedings. In fact, that usually causes an adjournment during which the learned judge has to read it all before the case begins.
The true reason for the rise in legal aid expenditure is the relentless increase in legislation—indeed, it affects all parts of our lives—and the problems associated with social deprivation leading to marriage breakdown, difficulties with children and with juveniles, increased crime and bad housing. In addition, there are changes to society which are not necessarily to be deplored, as the noble Lord, Lord Hacking, pointed out. There is also the growth of consumer groups and specialist legal interest groups, together with a growing awareness by the public of rights—rights which are to be exercised and to be exercised by taking proceedings in court. I have no
106
doubt that more litigation is to be expected in the light of the Human Rights Bill which is currently going through Parliament.
When the legal aid scheme was first introduced it covered 80 per cent. of the population but in the years that have gone by that percentage has been reduced by half, although the legal aid bill has risen sharply. So reducing eligibility for legal aid does not seem to have done anything towards reducing costs. However, interestingly enough, 40 per cent. of the population of this country still qualifies for legal aid. There has been something of a tendency this evening to describe those people as "the poor". Indeed, removing legal aid from the poor does not sound too big a job because we do not think that there are so many poor people. But, if we say that we will be removing legal aid from 40 per cent. of the population, that suggests that there is a bigger problem than at first appears to be the case.
As I understand it, over the past two years there have been about 32.000 CFAs (conditional fee agreements), as compared with 230,000 legal aid certificates. What does that mean? If in April, 1998, legal aid certificates are to disappear, over the next two years we can expect 230,000 CFAs, each of which runs to 10 pages and is incomprehensible to anyone, and 230,000 additional insurance policies to cover the liability that goes with it.
There is also the possibility of a denial of justice for a significant proportion of those people. If there is to be a 75 per cent. threshold, what does that really mean? You only have to prove your case in a civil court on a balance of probabilities. You must be more likely to be correct than not. If the 75 per cent. is to be the threshold for getting any legal aid, a significant proportion of people who would have succeeded will not receive any legal assistance.
If the result is obvious and if you are 75 per cent. sure you will win, and your opponent is 75 per cent. sure that you will win, there is never a trial, there is a settlement. No one will appear for the defence if he thinks that he has only a one in four chance of success. It is at the beginning of a case when the solicitor sees the client for the first time that he will consider whether there is a 75 per cent. chance of success. On his instructions, and believing everything that his client tells him—as he is bound to do—and on the case as pleaded, he has 100 per cent. surety that he will win, tempered only by experience and by the knowledge that things go wrong in litigation. That appreciation may be very different as the case proceeds and as witness statements emerge from the other side and so on. So when is this 75 per cent. assessment to be made? It is pointless saying at the beginning that the percentage is 75 per cent. The best test is that which we have at the moment for legal aid; namely, is it more likely than not, on the information that you are putting before the Legal Aid Board, that you will succeed? You cannot put it any higher than that. You cannot say on day one, "I have a 75 per cent. chance of succeeding in this case".
Reforms have already taken place in the legal aid scheme. The Bar Council agreed a system of graduated fees in criminal cases that was successfully introduced earlier this year. Its impact on reducing the cost of

107
criminal legal aid is yet to be assessed. Neither the Bar Council nor the Law Society has demonstrated that they are resistant to change. Indeed the Bar Council is embracing the idea of the contingency legal aid fund. It is far too easy to jump up and down on lawyers. The noble and learned Lord the Lord Chancellor in his article in the New Statesman on 31st October stated,
"A heavy impediment is the entrenched interests of the legal professions. Not surprisingly, they are attached to the old regime because it was designed to cater for the idiosyncratic ways they do business and to deliver a healthy income from the taxpayer".
Today the noble and learned Lord has talked of the legal profession expressing doom and gloom at his proposals. This is part of the "anti-lawyer spin" to which the noble Lord, Lord Byron, referred a moment ago. I respectfully remind the noble and learned Lord the Lord Chancellor that even healthier incomes are derived by lawyers instructed by insurance companies, banks, large commercial concerns, and local government organisations, all of whom derive their funds not from mid air but from the ordinary people of this country as consumers of goods and services. The problem is to maintain some kind of relationship between the levels of remuneration of these commercial lawyers and the rest of us who are engaged in the nuts and bolts of society; those of us who are engaged in criminal defence work, marriage breakdown, children cases, and in winning damages for the man who is injured at the workface or in a devastating car accident. The resolution of the toils and tribulations of the "little" man may be far below the whiskers of the fat cats and may be beneath their notice. But the legal profession must attract men and women of talent, dedication and calibre to be the mechanics who keep society going with the tools of their trade in what New Labour would no doubt wish to call the "people's courts".
The first principle has to be that the lawyer's interest is never in conflict with the interests either of justice or of the client. When we talk about a strong and independent Bar that is not some kind of mantra; it means something. It means that barristers will not settle a case at any price in order to make sure that they are paid. It means that barristers will not wilfully mislead the court to win a case. When the noble Lord, Lord Byron, spoke I was reminded of a situation when His Honour Judge Fricker, who is now a noted judge in York—at that time he was a barrister—approached me on the third day of a civil case and produced a letter which he said his client, a local authority, had not disclosed. He said, "I withdraw from this case". And so he did. We won hands down because he did his duty. He would have done it whether or not he was paid. But some counsel may quietly have forgotten about that letter.
The same applies to solicitors. Are they expected to pay experts up front for complicated medical negligent cases? Are they supposed to pay the insurance premiums for their clients under conditional fee agreements? The Gwynedd Law Society consists of practitioners in Anglesey, Caernarvon and Merioneth. At its AGM on 8th November last, it passed a resolution which stated:
"Extension of conditional fees will degrade Solicitors from being independent financial advisers to mere financial speculators".
108
The society, of which no doubt the noble Lord, Lord Cledwyn, is a member—it was his brother who wrote to me—regretted that a Labour Government were to be responsible for scrapping vital parts of the legal aid scheme in a way which will have a serious detrimental effect on firms supplying general legal services outside large centres of population. It is all very well to talk in terms of London. But out in the country where I have practised for most of my life it is a very different scene. There the local society requires support.
I join with my noble friend Lord Goodhart, and the noble and learned Lord, Lord Brightman, in asking for consideration of the CLAF scheme. That is not a no win no fee situation. If that scheme is put into effect solicitors will not be mere financial speculators.
The second principle is that access to justice is the priority, not the curbing of the legal aid budget. The noble and learned Lord, Lord Ackner, pointed out that the Lord Chancellor said last year that there was a considerable underspend on the budget. Therefore it does not look as though the legal aid budget has been bursting at the seams for the past two or three years. The conditional fee system may have its attractions, but it is at an experimental stage. It has been operating for two years; 32,000 policies have been written; many have not yet been settled or come to trial; and there has been no detailed analysis of those which have. We do not know the impact in money terms. We do not know the impact in money claims for example, between two small businesses, or in consumer cases. But, more importantly, how is the insurance aspect to be worked out?
In personal injury cases—they have been operating for two years—the insurance industry worked with the Law Society for over three years to produce Accident Line Protect. The ALP scheme limits the risks to insurers in a number of ways. First, it deals only with solicitors who are members of the Law Society's accident line scheme, and therefore employs someone who is on one of the Law Society panels as a specialist. Further, to avoid any participating solicitor sending only his bad cases, he has to undertake to send all cases. That is well and good, but how are those conditions to be spread over the whole range of proceedings where damages are to be claimed? It is not too difficult to predict a result in mainstream personal injury work whereby all the documents are seen. But what will be the situation when one is dealing with actions against the police or prison officers, or where the defence is funded throughout, or public interest cases where the defendants have access to unlimited funds? Many years ago, I recall appearing on my own in a Divisional Court with Treasury Counsel—he is not in his place today—and about six or 10 civil servants instructing him throughout. He was good enough to thank me for coming; and I am glad to say we won.
I hope that the noble and learned Lord the Lord Chancellor will note that there is an almost united voice from all parts of the House asking for a more gradual approach to reform. We heard that view from the noble Baroness, Lady Mallalieu, the noble Lords, Lord Mishcon, Lord Campbell of Alloway and Lord Byron, and others. The Law Society, the Bar Council and consumer groups all seek greater research into

109
conditional fee agreements and the assessment of their success. The noble and learned Lord, Lord Brightman, and the noble Lord, Lord Goodhart, sought a pilot CLAF scheme so that that can be assessed. There is no reason for the noble and learned Lord the Lord Chancellor "to boldly go where no man has gone before". Unless something catastrophic happens, he has perhaps four to four-and-a-half years left in which to deal with this problem; "festina lente" must be the motto. Legal aid in civil cases has a long history of service to the people of this country, and it must not be destroyed without proper thought and without proper schemes in place.
9.35 p.m.
Lord Kingsland: My Lords, the debate has been of an exceedingly, indeed for someone who has to wind up, intimidatingly high standard. I think everybody congratulated the noble and learned Lord the Lord Chancellor on his bold and courageous approach to what seems to all of us to be an intractable problem.
He is absolutely right to set the question of legal aid in the context of the civil justice reforms proposed by the noble and learned Lord, Lord Woolf. Any Chancellor of the Exchequer considering taxation would never dream of doing so without examining the other side of the coin; namely, public expenditure. Equally, any Lord Chancellor considering the financing of legal services has to examine their cost. I was struck by the fact that a great deal was said in the debate about the financing of legal services, but rather less was said about the reforms proposed by the noble and learned Lord, Lord Woolf.
I refer in particular to the fast-track procedure and the fixed cost regime that will accompany it. Sir Peter Middleton expressed some reservations about introducing both at the same time. I wonder whether the noble and learned Lord shares those reservations or whether he thinks that between now and 1999 he can get both on foot.
I wonder, also, whether he shares Sir Peter's reservations about raising the limit for small claims to £5,000. That will inevitably mean that more people will represent themselves in disputes. Is he satisfied that the necessary training is available, and that the necessary resources are available to help people help themselves? Those are important questions. I do not ask the noble and learned Lord to respond to them all now. However, I hope that in the course of the next six months, when he reports to this House, he will be able to keep us abreast of his thinking in this area.
The single most imaginative part of the proposals—and here I share entirely the views of the noble Baroness, Lady Mallalieu—is the proposal relating to a community legal service. Just as preventive medicine makes us a healthier society, so advising people about their rights before they get into deep trouble will make us a less litigious society. As the noble Baroness rightly said, that must be a good thing for a modern liberal democracy.
I also believe that we have, in principle, to endorse the contractual approach that the noble and learned Lord laid out briefly, but rather tellingly, by explaining the
110
way in which the state should relate in future to the provision of legal services. If I have a reservation about the way in which that might operate, it is this. Inevitably, in such a contractual relationship, the state will be in a very powerful position and will, perhaps on occasions, give in to the temptation to make unconscionable bargains. I should therefore like to know more about the contractual framework. What kind of rights will the private sector side which participates in such contracts have? What limitations will there be on the state to impose conditions? We have heard a great deal about overpaid lawyers. But at the largest part of the Bar, the criminal Bar, there is a large number of underpaid lawyers. I believe it is extremely important that their interests are properly represented.
If I have one reservation about the noble and learned Lord's overall approach to the subject, it is with regard to what I would describe as his excessive cynicism towards his own profession. Our history is littered with examples of disinterested lawyers who sacrifice their livelihoods to pursue matters of principle. I can see no logical reason why the legal profession should have baser motives than any other profession. Indeed, the noble and learned Lord has himself displayed throughout his distinguished professional career many examples of disinterested behaviour. I heard with great interest the noble Baroness, Lady Dean of Thornton-le-Fylde, describe the role of the noble and learned Lord the Lord Chancellor in employment cases. And, if I may add a lighter touch, he spent five years as shadow Lord Chancellor. I hope he will not be tempted to ascribe baser motives to other members of the profession when he has himself exhibited such laudable ones.
When discussing his relationship to the Treasury, the noble and learned Lord said that his proposals for reform were not Treasury-driven. Anyone who heard the speech of the noble Lord, Lord Byron, must agree that that is so. Of all the areas of legal aid, civil legal aid is the most cost-efficient, particularly in relation to cases which have money remedies. We cannot be sure because we have not seen the accounts, but it has been said—by the noble Lord, Lord Byron, and by others—that that part of the legal aid system washes its own face. If the proposals of the noble and learned Lord the Lord Chancellor were Treasury-driven, he would be looking not at that aspect of civil legal aid but at family law, criminal law and many aspects of disputes between the citizen and the state, such as immigration law. However, the noble and learned Lord has either left those areas completely alone or dealt with them less fundamentally than the area of civil law.
I was particularly struck by the noble and learned Lord's comments about the application of the 75 per cent. principle in disputes between the citizen and the state; I do not disapprove. He talked about differential hurdles; I believe he is absolutely right. Many of the most important welfare decisions, such as decisions on housing and immigration, would never have been taken in our courts had the 75 per cent. principle applied, because they would never have reached the courts.

111
I applaud his approach to public law disputes between the citizen and the state and endorse what so many noble Lords and noble and learned Lords have said about it.
However, the principle of access to justice does not discriminate between the incarceration of the individual and the expropriation of his property. Effectively preventing individuals from pursuing money remedies in the courts because they have no means of doing so unless they are supported by public funding is an act of expropriation; they cannot obtain property they are entitled to. I am not sure that making a distinction in terms of access to justice between remedies under public law and remedies under private law is justified.
If the noble and learned Lord applied the 75 per cent. test to his own approach to the proposals that he has outlined, and which he intends to introduce by April 1998, I do not believe that they would pass. It is not that I think that they will not work; it is just that there is not yet sufficient evidence in front of us to prove that they will. I share the views of noble Lords who have said, "Let us give it a little more time to see whether the system will work".
Indeed, I believe there is a very good chance that it will work in straightforward personal injury cases. That is what the noble Lord, Lord Mishcon, and many other noble Lords said. But when it comes to much more complicated medical negligence cases, it will fail disastrously unless the approach suggested by the noble Viscount, Lord Bledisloe, is adopted of starting off with legal aid, and then baling out when it is clear that there is an appropriate chance of success—and the way forward is clear-cut. In those circumstances the Lord Chancellor's proposals could be allowed to come into operation.
I am also influenced by the speeches of the noble and learned Lord, Lord Brightman, the noble Lord, Lord Goodhart, and many other noble and learned Lords in relation to the CLAF proposals. They will sit well alongside both our traditional system and the conditional fee system if some variable formula can be introduced in relation to the proportion of damages that is paid back into the fund. That is a matter that can be worked on. If I am proved wrong, well and good. But it certainly deserves much more thought before we plumb for one system rather than another.
I am sure that all noble Lords will agree with me when I say that we are deeply indebted to the noble and learned Lord the Lord Chancellor for bringing these proposals before us. I am sure that I can say with confidence that we all hope that we will be kept in touch with the development of his thinking over the months ahead.
9.47 p.m.
The Lord Chancellor: My Lords, I am grateful to all noble Lords who contributed to this debate. It has been interesting and profitable and I listened to every word. The Government welcome constructive comments on their proposals. Our minds are open to innovative ideas and new solutions. We claim no monopoly on good ideas. We acknowledge that our proposals for the reform
112
of legal aid are controversial in some quarters; they are certainly radical, and the two often go together. We are about looking for radical new solutions to old problems.
Your Lordships will forgive me if I do not at this late hour take an inordinate time to do justice to all the valuable contributions. The noble Lord, Lord Campbell, charges that I propose to dismantle a vital social service and inhibit access to civil justice. That is the opposite of my object. My object is to save and to enlarge access to justice; not to bury it. He attacks a merits test of 75 per cent. I say this. I would not litigate with less prospects of success than 75 per cent. and would probably require a good deal better. I say further that any sensible plaintiff would be well advised to do the same.
Just think of the grief and pain associated with litigation that one loses. I agree with my noble friend Lady Mallalieu that often the best advice is not to litigate. Around 83 per cent. of serious medical negligence cases that fight lose. We heard a great deal about the brain damaged child; but think of the grief and pain of losing 83 per cent. of those cases.
Nor do I see why the state should fund cases which sensible people would not support out of their own funds. Think too, as some noble Lords have addressed—and the noble Baroness, Lady Wilcox, drew attention to it—of the unfairness to a defendant who is sued by a plaintiff with full legal aid and the plaintiff loses. The defendant has succeeded but whistles for his costs. Under our proposals the plaintiff's insurers will have to pay those costs so that major injustice will disappear. The noble Baroness, Lady Oppenheim-Barnes, emphasised that important point. I agree with her. I insist that these steps are not being taken to reduce the cost of legal aid to the Exchequer. They are designed to bring the cost under effective control, not to increase or decrease the legal aid budget in real terms.
The noble Lord, Lord Lester, quoted my description of the legal aid system as, "a highly successful public social service". I said that in my keynote address to the annual conference of the Bar in 1996. I agree with it and I want to make it an even more successful social service. The noble Lord suggested that I had not referred to the ethical dangers perceived by some in relation to conditional fee agreements. In fact, I did refer to them. I spoke of how some saw these as putting the integrity of lawyers and their duty to the court under stress. I said that I rely on the ethics of the legal profession, which are strongly enforced.
Poor people will gain access to conditional fee agreements if they have strong cases. The noble Lord, Lord Lester, said that he tells his clients to proceed only if he thinks that they have even or better than even prospects of success. His modesty is well known and his success rate should have made him more confident. He should have given robuster and stronger advice. I have read far too many opinions by lawyers which are of the "on the one hand" or "on the other hand" variety, when greater precision is what clients deserve.
I entirely agree with the noble and learned Lord, Lord Hoffmann, and disagree, with respect, with the noble and leaned Lord, Lord Simon. I deprecate

113
opinions which say that a case is arguable, or reasonably arguable, whatever that means. Lawyers should offer a precise quantification. That is always what I did myself, so no doubt it was bad for business. I told people if I was confident that they would lose their cases. Then no doubt they went off to some lawyer whom they believed to be more sympathetic to their case who told them they would win. Then no doubt they lost and blamed an unsympathetic judge for the outcome.
Earl Russell: My Lords, before being so confident about offering a precise quantification, should the noble and learned Lord remember that there are many rich bookies?
The Lord Chancellor: My Lords, I do indeed remember that. But all one should say is that this has not less then a 75 per cent. prospect of success. I personally would not find it a very difficult exercise to say that.
The noble and learned Lord, Lord Ackner, expressed deep disappointment with my attitude to civil legal aid. I have always known that the noble and learned Lord, for whom I have a high regard, and I would not agree on everything all of the time. I accept that the Lord Chancellor should fight his corner for justice. I appreciate that the noble and learned Lord was pressing the betrayal button rather early on in his speech. I am not a handmaid or a manservant of the Treasury. I repeat that the costs of legal aid will neither be reduced nor increased in real terms but will be refocused on the most vulnerable in society.
I am grateful to my noble friend Lord Mishcon for pointing out that it is middle income Britain that is shut out from access to justice by the present rules. That is what my conditional fees proposed extension specifically addresses. None of your Lordships, with the exception of those who have advocated a CLAF, has addressed any specific means of bringing middle-income Britain—the great majority of people in our country—in from the cold. I say to the noble and learned Lord, Lord Simon of Glaisdale, that that is the way in which I intend to bring in middle-income Britain. That will be one hundred times better than the present state of affairs where it is simply excluded.
Lord Campbell of Alloway: My Lords, I am much obliged to the noble and learned Lord for giving way. Why cannot these people be brought in without dismantling the legal aid system? That is what I cannot understand.
The Lord Chancellor: My Lords, there is no money to bring them into the legal aid system. That is the short answer. Legal aid for middle-income Britain must take its place in the queue of other candidates for scarce public resources such as schools and hospitals. I am not persuaded that the country would prefer to spend more money on legal aid for middle-income Britain than more money on schools and hospitals. I welcome the support of the noble Lord, Lord Mishcon, for the proposition that this is probably the only way forward.
114
It is said that the gap in the programme is the matter of the other side's costs, the insurance premiums, disbursements and the like. Conditional fee agreements are profitable contracts for solicitors when they win cases. Every other business incurs investigation costs in assessments of the potential for profitable investment in order to decide whether to enter into a contract on the basis that it is likely to prove profitable. It is only lawyers, reared in a legal aid culture, who are paid, win, lose or draw and who want to be exempt from what every other business in the country would regard as an ordinary business cost to be borne by the business to investigate whether a particular contract is worth their commercial interest to enter into.
Lord Ackner: My Lords, I am grateful to my noble and learned friend for allowing me to intervene. He has said repeatedly, "every other business". Is he drawing no distinction between businesses and professions, or are they all to be treated alike?
The Lord Chancellor: My Lords, I draw no distinction between lawyers as a business and other businesses from the standpoint of determining whether it is right that they themselves should bear the cost of investigating whether it is commercially right for them to enter into contracts as part of their business on the footing that they are profitable.
I enjoyed the contribution of the noble Baroness, Lady Wilcox. It is undoubtedly refreshing to have non-lawyers contributing to our arcane discussions about contentious legal issues. I welcome the fact that many noble Baronesses chose to do that. It may be, as the noble Baroness said, that more research is required, and I am ready to consider that. But I remind her that the PSI research to which she referred accepted that many of the potential problems identified before conditional fees were introduced seemed to be successfully addressed. I shall certainly consider and take account of what she said about the need for monitoring. I shall consider carefully her proposal about monitoring damages to see that successful plaintiffs do not end up paying lawyers too much. It may be that a case will be made out for stronger regulations.
The noble Lord, Lord Taverne, spoke in a supportive sense, although not unqualifiedly. He acknowledged that it may be unfortunate that lawyers are paid by the hour on a time basis because then they have an inevitable incentive to spin out cases. I take that to be implicit support, which I welcome, from the noble Lord for the fixed-fee contracting to which we shall be moving. Nothing concentrates the mind more than a fixed fee. Nothing operates more as a disincentive to spinning out costs.
The noble and learned Lord, Lord Hoffmann, detected in the contributions of many of your Lordships a belief that justice is of infinite value and something on which the Treasury's cornucopia should be boundless. I repeat that I am not the handmaid or the manservant of the Treasury by declining to adopt such an impossible brief. I welcome the noble and learned Lord's realism. It makes his support that much more valuable. He says that the key is to give the lawyers a stake in the outcome

115
of the case so that costs are not unnecessarily driven up to the potential prejudice of their own pockets. I invite your Lordships to remember that if the lawyer has a stake in the outcome, he has an interest to work hard and effectively for his client to secure his own reward.
I welcome the general support of the noble Baroness, Lady Kennedy. I note her concern that some poor people presently protected by legal aid may fall out of protection. That is certainly not my intention. I note her apprehensions with regard to solicitors who have no fat but who provide a valuable service to the poorest parts of our country. My department is analysing the funding and the matter of insuring against the risks and costs of cases to enable me to be satisfied that lawyers will profitably take on poor people's cases. If I find that that is not possible in some cases, I shall of course consider how taxpayers' money might continue to help to fund such cases. That, too, is my response to the noble Baroness, Lady Williams, who expressed a similar concern.
I welcome the sympathy that the noble Lord, Lord Hacking, expressed for the problems that I have inherited and his specific welcome to my proposals to go over to a system for contracting fixed fees.
The noble Lord, Lord Goodhart, complained of an over-hasty substitution of conditional fee agreements, which, he claimed, were spoken of by almost all of your Lordships. We shall all read Hansard, but I do not regard what the noble Lord said as an accurate summary of our debate today. I have experienced broad support for many parts of my proposals from many quarters of the House.
The noble Lord, Lord Goodhart, supports a contingency legal aid fund. I listened carefully to the reasoned speech of the noble and learned Lord, Lord Brightman, supporting that proposition and I shall consider it with care. I note, too, the support for that proposition from the noble Lord, Lord Thomas of Gresford.
It is true that Sir Peter Middleton said that it is worth exploring CLAF. The noble and learned Lord, Lord Brightman, quoted Sir Peter and I agree with what he said, but I remind your Lordships that in his previous sentence Sir Peter wrote:
"My preference would be to emphasise the development of conditional fees, because they put the risk on those best able to manage it".
I have to confess that despite having listened to the arguments of those who favour a CLAF, I continue to have the reservations that I expressed in my opening speech. The Bar is still the main proponent, but it is still not ready to put before me the fully worked out scheme that I want and which I undertake to consider with great care when it is put to me. I hope to receive it very soon. But that is down to the Bar and not me.
The main argument in favour of CLAF was that the lawyers would always be paid. That is really the point. To my mind, CLAF does not have the merit of a stake in the outcome, which is the critical feature of conditional fee agreements and is an incentive to greater efficiency.
116
The noble Lord, Lord Windlesham, asked me a number of questions. I hope that he will permit me to write to him so that my reply to this debate is not of inordinate length. In my speech I dealt with the question of how to identify and deal with public interest cases. I said that they would include cases under the Human Rights Bill. I also said that cases brought in domestic courts under that Bill would, when that became law, be covered by the present legal aid system. Once the convention is incorporated, cases brought under it before the English courts will fall within the scope of the present legal aid scheme. Therefore, those bringing such cases, including prisoners, will have to meet the criteria that all civil legal aid applications must meet. It is no part of my intention to remove judicial review proceedings from legal aid. I hope that I have been as clear as I possibly can.
In reply to the noble Baroness, Lady Williams, a lesser merits test may well be appropriate for public interest cases. I have noted and will consider her sensible suggestion that the decision as to which cases go forward as meritorious should not necessarily be taken exclusively by lawyers but that people with a broader experience of the world should be included.
I welcome the generous expression of support for my proposals by the noble Baroness, Lady Oppenheim-Barnes. It is particularly welcome coming as it does from a distinguished past Minister of State for Consumer Affairs and chairman of the National Consumer Council. I also welcome the support of the noble Viscount, Lord Bledisloe, for my daring to grasp the nettle. It is a nettle that must be grasped. I also welcome the support of the noble Baroness, Lady Dean. She was kind enough to commend my courage for tackling this issue. She had the courage to survive as the general secretary of SOGAT. In response to her concerns I can inform her that recently I met the general secretary of the TUC, who was accompanied by distinguished trade union leaders. I am considering the representations that they have made to me about personal injury cases, particularly their concerns about a fixed cost regime in the fast track.
I apologise to your Lordships if any unattractive, anti-lawyer spin is being put on these proposals, but there are some truths about the fees earned from legal aid which simply must be told in the public interest. I like to believe that I am not cynical about my profession. I hope that I am neither an optimist nor a pessimist about legal practice but only a realist.
The noble Viscount, Lord Bledisloe, raised some difficult questions on which I shall write to him. I do not attempt to give an authoritative answer this evening. But the very poor litigant may not want insurance because in practice a successful defendant will be unable to recover costs from him. Middle-income plaintiffs would, however, want insurance cover because it would be worth while for successful defendants to pursue them for costs. As to the more technical position of solicitors, I believe that they may be subject to a different risk if they take cases forward for uninsured plaintiffs. I believe—I shall confirm this—that a Court of Appeal judgment is awaited on the question of whether a solicitor may be legally liable to the defendant in these

117
circumstances for having maintained the action. I also say to the noble Viscount that I do not rule out the possibility that a green form, or special fund, may be created for cases where the investigation costs would be very high if no other alternatives could genuinely be found.
I welcome especially the fact that the noble Lord, Lord Kingsland, thought it right to congratulate me on boldly tackling this, as he put it, intractable problem. I am grateful to him also for the measure of support that he felt able to give me from the Dispatch Box at which he stands.
The noble Lord, Lord Thomas of Gresford, urges festina lente—hasten slowly. I do not wish to proceed with undue haste, but the Latin tag does not live happily with a state of affairs in which expenditure continues to grow at about 8 per cent. per annum—a rate well above inflation.
We are consulting widely. The contributions made by noble Lords today will help to shape the consultative documents which we shall be issuing. I shall gladly listen to any further views from your Lordships and others when those consultation papers are published.
Lord Lester of Herne Hill: My Lords, before the noble and learned Lord sits down, there is one matter with which he has not dealt in his comprehensive reply. It is the community legal service emphasised by the noble Baroness, Lady Mallalieu, myself and other speakers. I wonder whether he could make haste more quickly in that area by indicating to the House his timetable for giving effect to that important manifesto pledge.
The Lord Chancellor: My Lords, that, too, is a matter upon which we shall be consulting and listening to representations. I hope to make a public announcement shortly.
On Question, Motion agreed to.

Drugs
10.12 p.m.
Lord Layton Lord Layton rose to ask Her Majesty's Government, in the light of the appointment of a "Drugs Czar" from the police force, what direction their policy will take and how the funding will be allocated.
The noble Lord said: My Lords, it was with a certain amount of misgiving that I read that the Government had appointed a "drugs czar" to head up their fight against drug addiction in this country. That is not because I have anything against Mr. Hellawell or his deputy, who both have the right credentials and, what is more, the right understanding necessary to deal with the problem. No, my objection is to the term "drugs czar", which imitates the title of Mr. Hellawell's counterpart in the US. They have had little joy with the anti-drugs programme over there. If the Government are thinking of following the direction of the American programme there is little hope of success. What is needed in this
118
country is a radical change in the approach by government. I shall lead up to that change, which is the main object behind the Question.
As a large part of the subject with which we are dealing concerns the illegal use of drugs, I shall speak briefly about the law and enforcement. On the whole. there is no point in prosecuting drug users for possession or use of drugs. In most cases they should be treated as victims rather than perpetrators of criminal activity. However, that said, they must take responsibility for any other criminal activities in which they take part. These days custodial sentences tend to lead to increased rather than diminished drug use, and will continue to do so while rehabilitation programmes in prison are inadequate and drugs are rife.
The full weight of the law should concentrate upon the suppliers of addictive substances at all levels. No police force in the world can hope completely to eradicate the supply of drugs, since they are fighting the most incredibly rich and powerful multinational organisations imaginable, but the fight can go on. The punishment inflicted upon suppliers must be draconian to discourage any participation in the trade.
One of the most serious and sad problems that besets the country at the moment is the consumption and abuse of alcohol by minors. Once again, the target should not be the children but the suppliers. Those who supply alcohol to minors should be treated in a mandatory way, using the same approach as is used against those who drink and drive. If a publican loses his licence and hence his livelihood that is a fitting punishment for his irresponsible behaviour. The laws as they stand need to be enforced, then perhaps some progress will be made.
I cannot agree with decriminalisation. The emphasis should be moved away from the user, but as cannabis is still a "gateway" drug suppliers should be punished. However, there should be a move away from the easier option of chasing cannabis towards the more difficult task of chasing the hard drugs.
The backbone of any drugs policy must be education, which must start at a very early age. Only by indoctrinating—and I mean indoctrinating—our children about the evils and ultimately degrading nature of drugs and drug dependency can we hope to secure their futures. They need to be taught these evils alongside the concepts of right and wrong, which everyone understands and accepts even though they may not adhere to them. Only by understanding inherently the harm which drugs can do to the self, like a baby quickly understands that flames burn, will the avoidance of drugs become second nature.
The second part of education that is of considerable importance is the education of ourselves; that is, you and I and the ordinary man in the street. We must understand that people with dependencies are victims—I use that word again—and that they need our compassion and not our approbation. People with dependencies are suffering and must be treated as such. They are as ill as the Aids or cancer sufferers. Would you turn your back on them? Perhaps I may read from something given to me by a person in recovery. I have had to change some of the words.

119
"First, you start using for pleasure and fun and it's good. Then you start using to take away negative feelings and it works for a bit—makes you feel better. Then it stops making you feel better and you realise that it is time to stop. Then you try and you realise you can't. And you don't feel any change when you use, and the pain doesn't go away, and you still can't stop. That is the most frightening thing of all".
Over the years, alcohol has become a more socially acceptable dependency. Society has seen enough of it to extend a helping hand perhaps because it is legal and, as many people say as they down a pint, "There but for the grace of God go I", and so forth. We must extend that helping hand to all colours of the dependency spectrum.
I turn to the third war zone in the fight against dependencies, which is rehabilitation. I call it a war zone because like all the previous aspects there are many separate battlefields. If education is the backbone surely rehabilitation is the heart. Rehabilitation is a very intense and long-drawn-out process. Most doctors agree that three months is probably the minimum time for effective treatment. As a result, it is a very costly affair.
In the early 1960s there were between 400 and 500 registered drug addicts in this country. At that time, about 100 NHS beds were available for specialist drug treatment with no time limit specified as to how long the treatment should last. By the end of that decade the number of addicts had increased to about 2,000 and had become the cause of concern.
Since then the number of addicts has risen more than 20-fold to more than 45,000—and that is a conservative estimate. Today there are about 100 NHS beds available for specialist drug treatment. And to say that there is a large number of beds available in general mental wards begs the question, as the treatment under those circumstances is on the whole inadequate and basically a waste of resources.
Luckily, the private sector has done very well during the past few years, expanding to meet the demands of the ever increasing problem. That is fine if you are a well-heeled drug user or your insurance company recognises your chosen treatment centre. But what of your average NHS drug addict? His chances of finding an NHS berth are remote and if he does, because of the enormous demand, the time allowed for treatment has been reduced from the no time limit, as in the 1960s, to, currently, 28 days with a great deal of consideration being given by management to a further reduction to 14 days. I prefer to make no comment on that.
If the NHS patient is lucky in where he lives, he will have a champion who will perhaps get him into the private sector with funding arranged through the addict's local council. It may still take months. And when he is in recovery, where does that vulnerable person go? If he relapses, his chances of being accepted into treatment are greatly diminished. Yet it is an accepted fact that sometimes treatment must be repeated several times, just like for the cancer patient who needs radiotherapy or chemotherapy.
Where does that person go when the treatment is finished? Protected housing is available but, unfortunately. it is not as protected as it claims to be.
120
Therefore, that is another avenue for funding by government and investment by the private sector.
Three main ingredients are needed in rehabilitation: first, crisis wards along the lines of the one at the Maudsley Hospital to catch the drug addict at his lowest point; secondly, funding for treatment—with the money available, the centres will follow; thirdly, funding through benefits for protected housing.
I shall take the second of those points as it most graphically highlights the problems. As I said before, treatment for dependency is an expensive and time-consuming occupation. Because of the uneven and at times non-existent funds available through local government's limited allocations, it is essential that central government handle the funding if rehabilitation is to be successful.
I should also like to see a change in the Government's policy in relation to the registration of counsellors as reiterated by the noble Baroness, Lady Jay. on 4th November at col. 1321 of Hansard when she said that the Government have no plans to introduce statutory registration. Perhaps if the Government are involved in spending funds, they will insist that counsellors are registered and regulated as they always should have been.
But which ministry gets to spend whose funds and on what? The drugs problem crosses boundaries between health and education, social security and employment, and environment and the Home Office; and do not forget the Treasury. How can any solution be found if those boundaries are not eliminated? How can any drugs czar expect to carry out any policy if he has no executive power?
The drugs czar in the United States is a perfect example of that failure. Although its programme has not been successful for the reasons I have stated, the Americans have come up with some extremely robust statistics about rehabilitation. For every one dollar per day spent on keeping an addict in treatment, whether he relapses or not, the savings in terms of health, law enforcement and all the ancillaries is seven dollars per day. There is a short-term answer that serves also to solve the long-term situation: make funding available; saturate the market with treatment centres; and look at the savings to be made. But unless the government can make the necessary radical changes and invest the programme with executive powers, any drugs policy they have will be nothing but window dressing.
I should now like to thank all noble Lords who have waited so long to speak in the debate. I leave it to them to put some flesh on my bones. I await with great interest the noble and learned Lord's reply for the Government.
10.24 p.m.
The Lord Bishop of Wakefield: My Lords, I am most grateful for this opportunity to speak for the first time in your Lordships' House and for the helpful

121
encouragement and advice that I have been most kindly given by the Officers of the House, both before and since my introduction.
The appointment of the new anti-drugs co-ordinator has been greeted with some dismay and concern in the West Yorkshire area of my diocese. We are dismayed at losing an excellent chief constable and we are concerned lest, through lack of adequate support for him in terms of policy and funding, our loss will turn out to have been in vain.
As the noble Lord, Lord Layton, indicated, there is no doubt that Mr. Hellawell has the experience and the vision required for the job. Long before it was fashionable, he was advocating special drugs courts which would not simply send people to prison but would sentence them to be treated for their addiction. The sadly increasing drug problem for which he is to recommend a new national strategy is certainly evident in my west and south Yorkshire area: young girls who, in order to pay for crack cocaine, become prostitutes as young as 12; and experimentation with heroin which is also starting among 12 year-olds.
In one area of my diocese there has been a 300 per cent. increase in heroin use since 1992. A kilo of heroin bought in Liverpool for £18,000 will, when sold to our local people, produce profits totalling £250,000. I am very distressed that one of my parishes, once famed for its colliery, is now known as the heroin capital of south Yorkshire.
The reasons why people become addicted to heroin are complex; and I know that it is not true that deprivation and high unemployment inevitably link with illicit drug use. Nevertheless, those of us who know these coalfield communities well can see the obvious correlation between this new level of addiction and the sudden and tragic devastation of the local economy, which took place five years ago. Male unemployment in one of my pit villages is at 40 per cent. and, in some parts of it, 90 per cent. It is tragic that the bodies, minds and spirits of the young people there are being nurtured in such an atmosphere of hopelessness in which, of course, drugs find easy targets.
I am very concerned by the suggestion in the 19th September edition of the British Crime Survey that the focus of drug taking is now moving northwards—and that at a time when, nationally, the key level of primary contact on the ground with drug users has, for the most part, broken down. Effective co-ordination between those working with drug users happens all too rarely. Funding for local assessment and groundwork is, sadly, getting less. In Tower Hamlets a number of innovative projects, including those working with Asian drug users, have disappeared through cuts in health authority funding. I believe that there is a case for the excellent drug action teams to have more strategic influence over funding, and for the very good drug reference groups to have more drug users on them. I believe that I am right in saying that only 15 per cent. of them really have the opportunity to listen to people who are on drugs. We need to follow the practice in the United States which 1 hear is a very good practice of
122
"Street Voice" in Baltimore or "Outside" in Portland which are groups that actively listen to what drug users are saying.
The Church has long been active in such matters, not least in pressing, since the 1960s, for more education and preventive work; and, indeed, in reaching those who are detached from contact with existing services. Here I am thinking especially of detached young people. The Young Womens Christian Association's Maze project in the East End was funded to do precisely this by the former Urban Programme. Then the local health authority took over the funding, and cut its grant without warning. As a result young people who were being helped have now been further damaged.
It is youth workers who are often the first point of contact for the street drug user. Their informal style of education, and informal pastoral support, are absolutely crucial to the kind of tasks that Mr. Hellawell has been appointed to perform. But the youth service is claimed to have been so seriously underfunded as to be near its demise, and certainly not capable of giving the kind of support in that crucial area which Mr. Hellawell will certainly need.
The noble Lord, Lord Layton, has rightly emphasised the importance of aftercare and rehabilitation. During the 1960s many aftercare centres were run by Christian groups, one of which, the Coke Hole Trust in Andover, is still active. In fact it is the small, intensive residential group work which is so good for aftercare and rehabilitation. There are examples such as the excellent Langley House Trust which give good credence to that. But I am afraid that many others have collapsed, again through lack of funding on the ground. The director of the Institute for the Study of Drug Dependence recently described rehabilitation as the Cinderella of the drug services. The whole story is remarkably sad. But all who are concerned with drug users on the ground know that their crucial work can be saved or wrecked by government policy and levels of funding.
I believe that the Government deserve to be congratulated on bringing into this uncertain area a drugs czar who has a welcome vision. But his vision will not become a reality unless the Government maintain a tough international policy on drugs and the evil syndicates; it will not become a reality unless the Government next year adopt a policy that is in tune with Mr. Hellawell's sensitively nuanced approach and his likely recommendations; and it will certainly not become a reality unless there is better co-ordinated and adequate local funding for the workers and agencies who are there on the ground alongside those who are at risk or already addicted. Without such levels of support he may find it impossible to do his job. Were that to happen, we would like our chief constable back!
10.33 p.m.
Lord Desai: My Lords, I am sure the whole House will agree with me that we have heard a most excellent maiden speech. It is not for nothing that the right reverend Prelate is known as the people's Bishop; that is very fitting in the days of new Labour. He is a man who gets about. Although he now proudly displays his

123
West Yorkshire badge, he is of course a Lancastrian who likes Yorkshire. He has been in many places round the country, Taunton, Sarum, and now Wakefield. He is a radical in many respects in many Church matters, as I am sure many noble Lords know. I believe that his speech today indicates that he will contribute many times to our debates. I welcome him to our House.
First, I thank the noble Lord, Lord Layton, for tabling this Question. I must declare an interest: I chair a management committee of a charity, City Roads, which is a 24 hour, pan-London service which treats drug addicts. Drug addicts are referred to us and we have a small number of beds. We look after addicts and reassimilate them into the community. I am glad to say that the return rate is not high. In many senses, the community consists of some of the most deprived people. Drug addiction, especially in the cities, has race and gender dimensions. With women addicts, there is the welfare of children to consider.As the noble Lord, Lord Layton, and the right reverend Prelate said, on the issue of drug addiction, health, social security, environment and crime are interrelated.
Let me say that we welcome the appointments of Mr. Hellawell, and Mr. Trace. We must not forget that this is a balanced ticket. I do not like the word "czar". The Americans have a misconception that czars were efficient kings. They may have had a lot of authority; they were often cruel; but they were never efficient. Therefore "czar" is not a good word to use. I presume that "czar" is a vulgarisation of Caesar; at least we have a dual remit in Mr. Hellawell and Mr. Trace. Let us hope that together they will continue the national drug strategy, which is based on partnership.
At this late hour, I do not wish to take up too much of your Lordships' time. Drugs misuse is a complex issue, as other noble Lords have said, and as many people know more than I do. From my limited experience as chairman of the management committee of the charity to which I referred, I know that when funding reforms take place in the health service or local authority, people often do not recognise that there are effects on the way we finance drug rehabilitation. For example, the charity now faces separate negotiations with all the London boroughs as well as all the London health authorities. If one London health authority has a budget problem it often finds that paying for drug misuse by one of the people in its community who comes from north London to City Roads is a marginal item. It is easy to cut it out.
If someone knocks on the door of a drug charity at one o'clock in the morning, we cannot say, "Are you from that part of London? We are not accepting you because your health authority is not paying us any money". It is a complex problem. I know that money is always short and that there are priorities. But in this area a small amount of money goes a long way at this stage. It makes good economic sense to invest in rehabilitation and treatment of drug misusers. If we treat them, many other costs which they might impose on society through crime, ill-health or unemployment are lessened. It is
124
sound economics to say that rehabilitation of a drugs misuser deserves good funding because it is an efficient use of our money.
Some noble Lords will have been present when my noble friend Lady Jay made a Statement about the new White Paper on the National Health Service. She spoke of the Berlin Wall between health and social services which had to be broken down. I entirely welcome that. In the field of drugs misuse it is important that we break that wall down.
Again, experience shows that there are considerable problems for such people in being able to claim the benefits to which they are entitled. The paperwork has increased enormously in recent years. And, sad to say, the Government are notoriously late payers of outstanding bills. It is a matter that I have often taken up with Ministers both in this Government and the previous one. It is important when drug policy is co-ordinated, both at government level and by means of the new appointments, that we examine this question. We should make quite sure that those agencies—especially local agencies—that do the very hard work of looking after drug misusers are at least adequately funded, and that they are not undermined and do not have obstacles put in their way by way of delay, changes in regulations or arbitrary cuts in the funding to which they are entitled.
I welcome the appointment of Mr. Hellawell and Mr. Trace. They will have to take a rounded view of the multifarious and complex issues raised by the drugs question. They will have to take an independent, strategic view of the problem. I hope, too, that they will be able to elicit the co-operation of all the government departments to which they can appeal to solve this problem. In saying that, I welcome the initiative.
10.41 p.m.
The Earl of Strafford: My Lords, I, too, thank the noble Lord, Lord Layton, for launching this debate. It is particularly opportune because of the Government's appointment of the two drug czars. I was most encouraged to hear Keith Hellawell describe the brief that he and Michael Trace had been given. He explained that it included a review of the national drug strategy, to be published in April, and that 200 of the key players in the drugs field had been asked for their views. He went on to say that his report would consider a broad range of views, it would be honest and realistic, and would identify best practice and programmes that were succeeding. So far, so good. However, I was disappointed that a review of the 1971 Misuse of Drugs Act was not in their remit. I know that a detailed study of that Act is under way, but that report will not be out for 20 months, and to update the national drugs strategy without referring to that 26 year-old Act, which has proved seriously flawed, would seem difficult.
The 1971 Act was a reaction to an increase in opiate use, over-prescription by a few doctors and the need to harmonise national laws with the American-inspired 1961 UN single convention on narcotic drugs. The British system, under which doctors could prescribe a maintenance dose of a Class A drug such as heroin or

125
cocaine, was virtually over. So addicts turned to the black market. We had finally accepted that the American solution, prohibition, was the only way of tackling drug problems. Under the Act, any new psycho-active recreational drug which proved dangerous and had no medical use was banned. A medical committee was established as a referee.
The conventional wisdom was that if medical experts said that a drug was dangerous, and if it was made illegal, people would avoid it. The problem would simply wither on the vine. The opposite has happened. What we failed to appreciate was that that approach works with therapeutic drugs but not with psycho-active and recreational drugs. Human beings have always used these drugs to alter the conscious state. It is part of the human condition. It is normal. We are a very inquisitive species, and when new drugs have appeared we have experimented with them, and if they fill a gap they become part of the repertoire. The introduction of tobacco from America is a classic example.
Prohibition is a very unsubtle method of drug control. Not only does it not work very well, but it ensures that the black market will flourish. The result, since 1971, with the world shrinking to a global village, has been a staggering increase in the availability of illegal drugs. The UN 1997 World Drug Report estimates the trade at £250 billion, an eighth of world trade. In this country the number of drug offenders dealt with has gone up from 7,000 in 1969 to 94,000 in 1995 and the quantity of heroin seized has gone up from 3.2 kilograms in 1973 to 1,390 kilograms in 1995.
Are there more intelligent ways of dealing with the drug problem? First, we must assess the problem. The Home Office crime statistics tell the story from the drugs seized and the persons convicted. Of the six most widely used drugs, two stand out: cannabis, which accounts for 80 per cent. of the seizures and convictions; and heroin, which, though only comprising 5 per cent. of drug offences, makes up 90 per cent. of the notified cases of addiction and causes the same amount of drug-related crime.
First, cannabis: we must ask ourselves why cannabis was classified as a dangerous drug in the first place. After all, it has been around for a very long time. Both its medical and recreational qualities have been known for several thousand years. The classification happened largely by accident. In 1925 there was an international conference in Geneva concerned with controlling opiates. Largely thanks to an emotional outburst from the Egyptian delegate concerning cannabis, it was included in the ban. It was not a decision based on scientific evidence. Cannabis was successfully demonised in America in the 1930s and has remained on the classified list ever since.
In 1968 the report of the Wootton Committee, set up by the Government to advise on cannabis, was published. The committee found no evidence that cannabis led to crime or aggressive behaviour, nor that it produced psychotic states in otherwise normal users. The report concluded:
126
"Having reviewed all the material available to us, we are in agreement with conclusions reached by the India Hemp Drugs Commission and the American La Guardia report that the long term consumption of cannabis in moderate doses has no harmful effects".
Unfortunately, society at the time could not accept those findings and, largely because cannabis was seen as the gateway to hard drugs, the ban remained.
The Dutch, who have a pragmatic approach to social problems and treat drugs as primarily a medical and social issue, had studied the various reports and in 1975 decided to decriminalise cannabis—to separate clearly soft and hard drugs. Licensed coffee shops, strictly regulated, can sell a small quantity, 5 grams, of cannabis for personal use. The policy works. The consumption of cannabis has risen, though not dramatically. Holland has an estimated 675,000 cannabis users out of a population of 15 million—far fewer than in this country. The glamour has been taken away and the authorities estimate that only between 1 and 2 per cent. of heavy users (those using it 10 or more times a month) have problems serious enough to go to a drug clinic.
The Dutch have also disproved the gateway theory. In Holland hard drug use is the lowest in Europe, at 1.6 per cent. of the population. The figure for this country is 2.6 per cent. and for the rest of Europe 2.7 per cent. Here I must disagree with the noble Lord, Lord Layton. The principal gateway drugs to heroin are much more likely to be alcohol and tobacco.
The present position is that cannabis is quietly becoming normalised. An estimated 6 million to 7 million people in this country have tried it and almost all have found it a benign experience. Public attitudes are also changing. In 1983, 82 per cent. of the public thought that cannabis should remain illegal. Ten years later the figure was down to 58 per cent. In a poll in the Mirror in October this year nearly two-thirds were in favour of decriminalisation. The campaign in the Independent on Sunday—in which I must declare an interest as a signatory—has highlighted that there is a thoughtful and informed minority who feel that the law must change because on the evidence it is clear that cannabis is not a particularly dangerous drug.
The authoritative report by the BMA on the therapeutic uses of cannabis is bound to fuel the pressure for change. When it happens, and drug offences are reduced by 80 per cent., it will be easier to concentrate on what I believe is the most serious drug problem we have, namely the growth of heroin addiction.
It is vital to increase the network of clinics to treat whole addiction; to treat addicts either on methadone or, if that does not work, on heroin, as was practised successfully by Dr. Marks on Merseyside in the late 1980s. His approach dramatically reduced the amount of drug-related crime and the rate of new addictions. The Swiss have done the same very successfully since 1994, and a recent referendum was 70 per cent. in favour of the continuation of that policy. We must move away from prohibition and concentrate more on harm reduction. We must move towards the far more successful Dutch approach based on a more pragmatic public health oriented policy.
10.50 p.m.
Lord Rea: My Lords, I thank the noble Lord, Lord Layton, and congratulate him on his choice of Unstarred Question. It is a vitally important subject.
I know that Keith Hellawell is an excellent and forward-looking police chief, but by choosing a policeman as the "drugs czar", the Government send out a message that their concept of the drug problem is basically one of law and order. To use a name for the new drugs chief which is American, despite its Russian, or even further back perhaps, its Roman origins, suggests that the whole approach to drugs will have a transatlantic flavour.
The war on drugs started in the United States. It has been expensive but remarkably ineffective, though it is true that crack cocaine use in the United States is now declining. That may simply be that users have discovered that crack is a bad-tempered drug that has little to commend it. What is clear is that the campaign against drugs, particularly cocaine, in the USA and in Latin America has been hugely expensive but totally ineffective in curbing the supply and the enormous profits of the major dealers. In fact, those have steadily increased over the years, as the right reverend Prelate, in an excellent maiden speech, pointed out to us.
The cocaine trade and the US-backed efforts to control it are playing a major part in prolonging and deepening the violence on the streets of American cities and in many Latin American countries, particularly Colombia, about which we heard in the Unstarred Question of the noble Viscount, Lord Waverley, a month ago.
Phrases that are much bandied about when talking about drugs—we have heard them this evening—are "demand reduction" and "harm reduction" in the context of the existing legislation of prohibition. Demand reduction depends on education in an attempt to dissuade young people from experimenting and starting with drugs, and treatment to get dependent people off drugs. Sadly, there is little evidence that health education messages have much effect, and they may even be counter-productive. While some treatment programmes can claim success, it is mainly with addicts who have already decided that it may be time to stop.
In the context of the Unstarred Question of the noble Lord, Lord Layton, can the Minister say whether treatment centres are likely to expand and receive more secure financial support in the future? I echo my noble friend Lord Desai in that regard. There is sound evidence from the United States (the CALDATA programme in 1992) that money spent on treatment in the community is well spent, both in reducing demand and, more particularly, in reducing crime: $290,000 spent on treatment resulted in an estimated saving of $1.5 billion in California, a similar figure to that given by the noble Lord.
Can my noble friend also say whether Her Majesty's Government have heard and understood the plea of SCODA for a more enlightened sentencing policy for those convicted of drug-related offences? It is far more cost-effective to put those offenders into appropriately managed treatment units than into mainstream prisons,
128
where they are likely not only to continue their habit but to sell drugs to other prisoners, who only too literally form a captive market.
Harm reduction—reducing damage to the health of the addict and damage to society through acquisitive and violent crime—may consist of giving a substitute drug. such as methadone, instead of heroin to those who are finding withdrawal otherwise impossible. Unfortunately, methadone itself is not a safe drug, so that, according to Home Office figures, deaths from misused methadone are now as high as those from street heroin. When controlled supplies of heroin itself—through reefers, if possible, to avoid injecting—were given to long-term addicts in the Wirral, a remarkable fall in the local crime rate was observed, as the noble Earl, Lord Strafford, pointed out, as well as an end to local drug-related deaths and hospital admissions. This was one of the few examples of the use today of the British or Rolleston system, named after the chairman of the committee which reported in 1926, and which worked perfectly well from 1926 until the 1960s, when it was then superseded by the more prohibitive Misuse of Drugs Act 1971. This was brought in under the influence of a more puritanical American approach. It restricts the supply of maintenance drugs to known addicts and tries to wean them off drugs even when their motivation is lacking. Sadly, the psychiatrist Dr. John Marks, mentioned by the noble Earl, Lord Strafford, whose clinic was using the Rolleston approach in Widnes until 1993, was then prevented from continuing to use it by the local health authority, with the result that several deaths from the use of street heroin have since occurred in that area. The reduction in crime and the reduction in new heroin use which had been achieved due to the end of the need for addicts to go in for "pyramid selling" to support their habit—I am sure my noble friend knows what "pyramid selling" is—was sent into reverse.
My own belief, as one who has had many drug addicts as patients over a long professional life, is that current legislation on drugs needs scrutiny, perhaps leading to a fundamental review. This view is shared by an increasing number of people whose work brings them into contact with problem drug use—doctors, police chiefs, social workers and judges, including no less than the Lord Chief Justice, the noble and learned Lord, Lord Bingham, himself, who has suggested that there should be an inquiry into the operation of the law in this area.
The danger to the individuals who use drugs and to society comes from the fact that drugs are prohibited, so that their composition and strength cannot be controlled. The use of the drugs themselves, if they were available in a pure state, in known dosage, would cause far fewer problems. This applies to "hard" drugs as well as to "soft" drugs, though there are some synthetic preparations that do have dangers even in low dosage—crack cocaine, lysergic acid (LSD) and possibly methadone. Cannabis, as well as having its well known effects in reducing anxiety and inducing a pleasant mild euphoria, has been shown, as the noble Earl, Lord Strafford, pointed out, in a recent BMA monograph, to have considerable therapeutic uses; as an analgesic, a

129
bronchodilator and anti-nauseant, particularly for patients with cancer. Unlike alcohol, it is associated with affability and friendship rather than aggression. In the long term there are some worries about paranoia, memory loss and carcinogenesis. However, it is difficult to undertake the epidemiological studies that are needed to confirm or deny the extent of these possible dangers when possession of the substance concerned is illegal.
To legalise or decriminalise the possession of a substance does not necessarily mean that its consumption will rise, especially with a substance like cannabis which any school child can quite easily obtain as things are. The evidence from Holland appears to be that, among Dutch people at least, the consumption of cannabis has not actually risen. The rise in consumption mentioned by the noble Earl, Lord Strafford, is probably due to consumption by visitors. More importantly, the consumption of heroin has definitely fallen. Unfortunately, an enlightened policy in one country alone will run into difficulties because, as has happened in Holland, it will act as honey to a bee to visitors from more restrictive homelands.
That is why it is encouraging to hear another voice in favour of decriminalisation from across the Channel, from the French Minister for health. But, as with global warming and paying for the United Nations, the chief influence acting against progress lies on the other side of the Atlantic. That may seem surprising, perhaps, considering the disastrous experience of the prohibition of alcohol which occurred in the United States in the 1920s.
Offering a legal supply through registered outlets would make it possible to control the quality of the product and to get an accurate measure of how much is consumed. That is of greater importance for drugs other than cannabis, especially those which are injected or ingested, such as heroin or ecstasy. To use such drugs, bought from suppliers who have only a very approximate idea of their strength, and who may have adulterated it themselves, is to trust one's life to dangerous amateurs. Yet so great is the need or curiosity of millions of younger people that they take this risk cheerfully every week. They do that despite the law and the establishment telling them that it is wrong and dangerous. The slogan "Just say no" is about as helpful with regard to drug use as it is as a method of contraception.
In calling for a fundamental review of drugs policy, I am not calling for a free-for-all; quite the contrary. Supplies should be carefully controlled through registered outlets, with a more restricted supply of the drugs which have known potentially harmful effects. As well as doing away with the scourge of drug related crime virtually at one stroke, deaths and serious illness due to drugs would stop and the international drug smuggling mafiosi would suddenly find that their market had disappeared. And even if prices came down as much as 75 per cent. there would still be a large sum to be collected by the Government in excise revenue instead of the current, large expenditure on policing our ineffective drug legislation. This legislation, to steal a phrase from "Hamlet",
"is a custom more honoured in the breach than the observance".
130
When that can be said about the law of the land, that law is surely an ass and needs to be changed.
11.2 p.m.
Viscount Waverley: My Lords, there should rightly be a concerted call for a worldwide war against drugs. That is without doubt the challenge for the millennium. The narcotic evil that brings misery around the world, not only in life deterioration through addiction, but in the vast profits which fund instability through terrorist campaigns around the world, combine an essence of the policy of this Government. They are to be congratulated.
Drugs and terrorism are a lethal mix, and both are certainly in the national interest to fight. But I believe that we should hear more of the detail of the Government's policy and I hope that tonight is the night.
This evening I wish to introduce a simple premise: without precursor chemicals there would be no cocaine or heroin. The second reality is that the majority of precursor chemicals that end up in the hands of illicit drug producers come in greater part from the principal consuming nations.
So if we are ever going to be serious about the drug curse, what are we going to do about this? I do not single out the United Kingdom as being especially at fault. I suspect that we do more than most, but that said, this is an undeniable problem area and, most importantly, is where we can make a real difference contributing in the international fight against drugs—here in our own backyard.
I do believe that the European Union should be doing much more to have all member states agreeing to a concerted programme and with the United Kingdom having the presidency from the New Year, presents us with an ideal opportunity to take a decisive lead.
A major goal has to be preventing the diversion of precursor chemicals for the illicit manufacture of drugs such as cocaine and heroin, and synthetic drugs such as ecstasy and amphetamines. I somehow sense that there are too many loopholes in UK anti-drug legislation, combined with which our Customs and Excise, together with specialist police units, such as the National Criminal Intelligence Service (NCIS) have a next-to-impossible task as things stand. They simply do not have the resources to follow through on a precursor campaign.
I find it staggering that NCIS has only three police officers, one Home Office analyst and a Customs and Excise official in its dedicated precursor chemical unit, combined with which there is no dedicated unit at the Home Office. Ministers must, in my view, be encouraged to consider this as a matter of urgency.
Another area that needs attention is the essential statutory requirement that a pre-export notification of movement of chemicals is established to include all shipments originating from the European Union to third countries. Licence procedures must be in place to ensure that failure to have such would constitute an offence.
Other measures could encompass the control of glassware that is necessary for the production of controlled drugs. In the United States, for example, it is

131
an offence to possess three-necked flasks without full authority. In addition, we should consider also that it be unlawful to possess certain category precursors. Similar legislation is in place in the Netherlands.
Is the Minister also aware that a precursor chemical company does not need to co-operate with police in controlled deliveries? That is considered unhelpful and is an omission from the Criminal Justice (International Co-operation) Act. The Act should be revised to reflect this, together with other matters, and generally given more teeth. For example, there are no formal disclosure laws of the need to inform the police of suspicious transactions such as exists in the Drug Trafficking Offences Act for money-laundering, where there are offences for non-disclosure and non-compliance. Will the Minister undertake to consider amending the Act in such a way as would make it more effective, but paying attention to ensure that it is not then made overly cumbersome?
Perhaps I may say a word on Customs and Excise. It has an often horrendous task to deal with. It is poorly equipped, for example, to deal with the hazardous nature of its work, misdescribed chemicals being a case in point. Adequate on-site field testing, training and protective clothing are required. Again, will the Minister undertake to look at this?
I can recommend that the Government study the MOU between the International Council of Chemical Associations and the World Customs Organisation. It sets useful guidelines. Commercial operators must be more vigilant and legally have a duty to alert competent authorities about any suspicious transactions. Operators must be required to maintain records and documents for all transactions for a period considerably longer than three years and there is a case for examining whether a more strict licensing regime should be introduced. All exports must be made contingent on the issuance of an export permit, with the exporting country requiring exporters to identify accurately ultimate consignees, as well as intermediaries such as brokers. Here there is a real difficulty that needs addressing. Brokers are a weak link.
The question has to be asked whether the UK chemical association has the will and even the capacity for self-regulation. I remain to be entirely convinced, but it has to be said that that is through no undue fault of its own. The association, for example, has approximately 200 or so members but how many manufacturers are there in the United Kingdom producing precursor chemicals and indeed, how many of those are brokers? To fight drugs effectively, mandatory registration would seem to me to be a must.
I am not brandishing the chemical association; it is made up of decent people and I have little doubt that they care as much as me about the international drug scourge. But the point is that they have conflicting allegiances with principally commercial interests at heart. They must consider the need to balance that with a recognition that the control of precursor chemicals is a principal concern of many, not least the drug-producing countries.
132
When I met the chemical association to prepare myself for this evening that body had the following to say, which I believe it is appropriate to share:
"It is our belief that the statutory controls are clear and robust, and that the most effective method of combating illicit use is to augment the controls through increased information, collaboration, education and constant alertness rather than through increased regulation".
I have already stated my view. I have a particular interest in such matters, in that Colombia is a country with which I am associated. I know something of its anti-narcotics efforts. Perhaps noble Lords will allow me to suggest an initiative this evening that will undeniably help. Cannot the chemical industry work to introduce a signature in the chemicals manufactured that will enable anti-narcotics authorities to analyse seized precursors to establish country of origin and, ideally, producer origin? That would be a major step. Specific ports could also be designated for the loading and receipt of shipments of such substances. Prior to the departure of such shipments the authorities at the port of arrival could be informed of the route and itinerary of the shipments. Twenty-four hours' notice of the arrival of precursor chemicals might also usefully be given to the destination port.
How ready are the Government for the UN session in Vienna set for June next year? What proposals are they taking to the table? Do the Government now recognise that studies on the production, trafficking and use of precursor chemicals in illicit drug processing are urgently required in order that initiatives and suggestions can be considered? In addition, most countries are not even complying with stipulations in the convention signed in Vienna in December 1988. What is to be done about it? Does the Minister consider that further goals should be the strengthening and harmonisation worldwide of technical, judicial and economic agreements between countries?
In conclusion, much needs to be done. The more I probe the more I believe that we should consider legislation to allow greater governmental control over precursor chemicals. But to help determine this will the Minister undertake to organise a meeting between the Home Office, NCIS dedicated units, Customs and Excise and the chemicals association as a first step to see what could and should be done? He may also wish to have the views of the Colombian anti-narcotics authorities who are here in London to ensure that their ideas are factored in, as it is they who are in the frontline and who have as good a reason as any to see precursors effectively addressed.
11.13 p.m.
Viscount Astor: My Lords, I thank my noble friend for initiating this debate and congratulate the right reverend Prelate on his maiden speech. Drugs are a menace to our society. We support any policy that is designed to take effective action against the demand for them and their supply. Drugs do not just ruin the lives of addicts but are a common cause of crime; therefore ruining the lives of others. The Conservative Party will help the Government build on our approach to reduce the amount, effect and consequences of drugs in our

133
society. We must ensure that an anti-drugs policy is concerned with educating young people about the dangers of drugs, as well as enforcement. The Government must also build on the work of drug action teams established by the previous government which are responsible for organising and co-ordinating the work of local authorities, health authorities, the police and the voluntary sector in the fight against drugs.
I welcome this opportunity for the Government and the Minister this evening clearly to outline the remit of the new drugs czar: how it is envisaged his role will develop and what his budget and powers will be. I agree with the noble Lord, Lord Desai, that "drugs czar" may be a rather unfortunate title. Nevertheless, that is what we have. Much more important is what he will be able to do.
The social costs of drugs are horrific. They ruin the lives of addicts and families alike. They cause the destruction of a person's ability to cope with ordinary life; the destruction of a person's relationships; and the destruction of ordinary, decent families who do not understand what is happening when one of their members becomes addicted. Drug peddlers spread evil, affecting communities and neighbourhoods.
The illegal trade in drugs is becoming more and more violent as drug traffickers brutalise and corrupt the communities in which they operate. Drug-related crime includes not just possession, drug dealing and trafficking but offences such as theft and burglary which are committed by drug addicts to finance their addiction.
Drug dealers trade in human misery. They deserve tough sentences. We took action to ensure that they got them. Tackling drug-related crime and catching drug dealers are now major police priorities. Education is vital. Drugs are a problem in all schools, whether private or public, good or bad. Drugs are not discriminating. They can affect children from any background, whether rich or poor, employed or unemployed. Tougher penalties alone will not solve the drug problem.
Educating people, especially the young, about the dangers of drug abuse is important. It was the previous government who made drug education in schools compulsory as part of the national curriculum introduced by the Education Act 1988. It placed on school inspectors the duty to conduct inspections and scrutinise schools' drugs education classes and policies. They gave LEAs £6 million in 1996 to train teachers in drugs education. They gave over £1 million to train youth service workers to tackle drug abuse among the young.
Those steps were crucial. I should like to hear from the Minister this evening that funding for such programmes will continue. As part of our anti-drugs strategy, £8.5 million was provided to 100 drugs action teams across the country. Those teams were responsible for organising and co-ordinating anti-drugs initiatives at local level. They work with local authorities, health authorities, the police and the voluntary sector. Will the Government continue with that initiative and funding? How will the drugs action teams relate to the post of drugs czar?
134
There has always been a problem with drugs misuse in prisons. All prisons have now introduced mandatory drug testing schemes and random drug testing programmes. Will the Minister say something about the result of those programmes and whether drug problems in prisons will fall within the remit of the drugs czar?
It is not just a matter of educating the youth of our country; it is educating the public as a whole about the dangers of drug abuse. Young people are vulnerable, but it has been shown that they value highly the drugs education that they receive. It helps them, because drugs pose a fatal risk to the health of anyone who uses them.
Perhaps I might say a word on the debate about legalising or decriminalising drugs. We believe that the legalisation of any drugs would be a disaster. The inevitable result would be that more young people would be put at risk. Drug taking would become a legitimate activity. The legalisation of drugs such as marijuana or cannabis would not reduce drug-related crime. That applies also to decriminalisation. There is no doubt that soft drugs lead to hard drugs.
There might be cases with special medical circumstances. We have read in the press that marijuana, for example, might help with some diseases, but we have to be firm about this. In that I declare an interest as the father of teenaged children. All of us with teenaged children know that those children, during their education in their schools and during their holidays, have been faced with a decision when someone offers them drugs. It has happened to almost every child in the land. It is universal. If we do not hold the line we shall open the floodgates to a terrible situation.
I understand that the remit of the drugs czar extends to Scotland. The noble and learned Lord, with his particular knowledge of Scotland, will be able to explain that and whether the drugs czar will be funded in Scotland and Wales. Will the proposals for devolution change that? Will he be answerable to two parliaments?
I do not wish to speak at length tonight; the hour is late. The key question was posed by my noble friend Lord Layton and we look forward to hearing the Minister's answer. What will be the executive powers of the drugs czar? What will his funding, role and powers be? Without the necessary powers to do the job he will not be a success.
We on this side of the House support any initiative which works in the fight against drugs. If the Government can demonstrate that the initiative will work, we look forward to supporting it.
11.21 p.m.
The Solicitor-General (Lord Falconer of Thoroton): My Lords, too, thank the noble Lord, Lord Layton, for giving the House the opportunity to consider this important subject. I add my congratulations to the right reverend Prelate the Bishop of Wakefield on his well-informed and moving maiden speech. Tonight's contributions have been informative, well-informed and helpful and I hope to refer to them all in a moment. However, perhaps I may first respond directly to the Question, set out the Government's

135
general policy in relation to drugs and deal in particular with the role of the UK anti-drugs co-ordinator, if I may call him that rather than the drugs czar.
I turn, first, to the basics. It is this Government's view that drugs are a major menace in our society. They can destroy individuals who are dependent on or involved in them. They can destroy an individual's life chances at a time and at an age when society should be helping him through a vulnerable and difficult period. Drugs demoralise and undermine the families of those involved. They threaten whole communities where the evil of drug dealing becomes a bullying, threatening, destroying presence over an estate or area where dealers dominate or they become a warped role model for those whose lives are brought down by drugs or deprivation. They are a most potent motive for crime and a sweeper aside of responsibility, which causes crime. No one should for one moment consider that this Government are not wholly committed to standing up and fighting against the menace of drugs.
Enforcement has an important part to play in that fight; but so, too, does the treatment of those addicted, the education of those who may be affected and the prevention of children and young people becoming involved. They recognise that the problem of fighting drugs cannot be looked at in isolation from social conditions. They believe that policies to combat drugs must include measures to address not just drug abuse directly but also the social exclusion, deprivation and social conditions which cause it. They recognise that there are two kinds of drug user. First, the person who usually starts young—often very young—who is the victim of social deprivation or exclusion, who becomes dependent on or involved in drugs, whose life begins to revolve around drugs and who frequently resorts to crime to feed his habit. Secondly, there is the so-called recreational drug user. He hopes to avoid dependency. He is gambling that the chemicals he is putting into his body from unsupervised, unregulated sources are not doing him long-term damage. One hopes he is not misguided in that belief.
In May 1995, the previous government introduced their White Paper called Tackling Drugs Together. It focused on the need for enforcement, treatment, prevention and education in relation to drugs and led to the setting up of the drug action teams throughout the country. At the time, the Labour Party welcomed those proposals. It believes that the problem of drugs is too important a matter on which to take political points. It wishes to build on the progress made by the previous government and to reinvigorate the fight against drugs. It wishes to ensure that the fight against drugs is a fight to prevent people using drugs; a fight against those who profit from drugs; and a fight against the economic and social conditions that encourage their use.
This Government also wish to see the fight against drugs being conducted on a comprehensive cross-departmental, cross-agency basis, with all the appropriate departments and agencies focusing together on the problem. Since this Government came to power, there has been very real co-operation between the main departments involved—the Department for Education
136
and Employment, the Department of Health, the Treasury and the Home Office, under the leadership of the President of the Council.
In addition, a comprehensive spending review has been introduced and implemented in relation to the discrete area of drugs itself. That comprehensive spending review, the terms of reference of which have been published, is designed to identify what is the current level of spending on drug-related programmes across government; to form a view about the social and economic costs to the country of drug abuse; and to establish all relevant information on which the review's proposals can subsequently be made. After that information is available, it will then consider what is the best way to target money in relation to the fight against drugs.
I move from the general to the specific and, first, the appointment of the UK anti-drugs co-ordinator. I believe that Mr. Keith Hellawell and his talents are well known to this House. I felt that the right reverend Prelate the Bishop of Wakefield spoke with real regret at the loss of the chief constable from West Yorkshire. He has been appointed and takes office on 5th January. His deputy, Mr. Mike Trace, has also been appointed. He has already reported. Mr. Hellawell will report directly to the President of the Council. He can call on the support of the Prime Minister where appropriate. His first task will be to review the existing strategy overall and to put forward new proposals for tackling the drug problem with renewed vigour. He is expected to report with his plans in or about the spring of next year. Although he is still engaged as the Chief Constable of West Yorkshire, he is presently embarked on wide and detailed consultation in preparation for the plan he proposes to put forward in the spring of next year.
I pick up the question asked by the noble Lord, Lord Layton, and the noble Viscount, Lord Astor. Mr. Hellawell's role will be to provide visible leadership; to galvanise partnerships both within and outside government. The fact that he is from the police force does not mean that the policy will be skewed in the direction of enforcement. His background shows that he has a firm commitment to prevention, education and treatment measures. He will aim to build on good practice. He is keen to learn from and focus on that which actually works. We believe that his approach will be entirely and eminently practical. He will wish to focus on ministerial commitments which have already been flagged up. In particular, he will wish to ensure that there is a greater focus on young people, especially those at risk; for example, those excluded from school or in care. He will wish to investigate the links between social deprivation, unemployment and drugs.
Again, as the right reverend Prelate the Bishop of Wakefield said, drugs cannot be dealt with in isolation. It is impossible not to reach the conclusion that there is a link between social deprivation and drug use. Regeneration projects and welfare-to-work all have their part to play in the war against drugs. He will also seek to ensure that there is effective enforcement to reduce the flow of drugs into this country to enable drug action teams to root out drug-related crime.

137
The Government have already taken a number of steps, quite apart from the appointment of the anti-drugs co-ordinator, to fight drugs. Perhaps I may mention just a few of them. First, we will reverse the plans for the reduction of the number of anti-smuggling Customs and Excise officers by 300. Customs has a very impressive record and an important part to play in the war against drug dealers. For example, there have been two trials recently concluded in Bristol where important drug dealers of a major sort were convicted and imprisoned for long periods as a result of the intensely brave and committed efforts of the Customs people.
In addition, the Customs national investigation service and the police regional crime squads have recently agreed on operational protocols to facilitate working arrangements. The Government have also funded 79 local anti-drugs projects under the £2 million drugs challenge fund in England. Those projects act in concert between, on the one hand, the Government and, on the other, private industry or the voluntary sector.
In the Crime and Disorder Bill presently before the House, the Government have introduced provision for a new drug testing and treatment order, so that those who offend because of drugs can agree at an early stage to a treatment order as part of a sentence, coupled with drug testing provisions which will permit their progress in trying to throw off drugs to be monitored. My right honourable friend the Home Secretary has announced that a new key objective for policing will be to target drug-related crime in partnership with other agencies. Again, that will encourage the multi-agency approach. The Prison Service is currently in the process of reviewing its drugs strategy. Around 44 pilot drug treatment programmes are already under way in prisons.
Those are some of the steps that have already been taken. I hope that I have set out the basic commitment of this Government to the war against drugs and indicated the extent to which we accept the need for enforcement against the drugs barons and also for education, treatment, prevention, and, indeed, the need to seek to address the problems of social deprivation that lead to drug problems.
I shall now deal with points made by noble Lords during the course of our short debate. The noble Lord, Lord Layton, objected to the phrase, "Drugs Czar". I agree with him that it is an inappropriate phrase. He pointed out that there has been little joy in relation to the adoption of such a czar in the United States of America. We do not intend to seek to emulate the American experience, although some lessons can be learnt from it. In particular, what the UK anti-drugs co-ordinator and his deputy will seek to do is to provide recommendations, galvanisation and leadership for a team approach to the problem of dealing with drugs.
I agree with the noble Lord, Lord Layton, that there should be stiff penalties on suppliers and that the war should be primarily directed to them. As far as this Government are concerned, there is no war on young people. It is against the suppliers, the dealers and the profiteers from drugs that the enforcement effort should he directed. I agree with the noble Lord that decriminalisation is not an option. Indeed, the
138
Government believe that decriminalisation would simply lead to greater drug abuse and would not achieve anything. I also agree with the noble Lord that there should be a greater emphasis on education. At present there is a substantial emphasis on the latter, but in the view of this Government that can only be increased.
The noble Lord referred to the importance of rehabilitation and described it as being at the heart of a drugs programme. Again, I agree with him. Indeed, rehabilitation is of great importance. Like everyone else, I accept that there are not enough rehabilitation places available. However, the comprehensive spending review will consider the best way to target resources in that respect. Finally, I entirely agree with the noble Lord that the attack on drugs must cross the boundaries of ministries and those of agencies. That is what the Government very much hope to do.
The right reverend Prelate the Bishop of Wakefield expressed concern about the funding and the policy for support as regards the Chief Constable he is losing. It is for Mr. Hellawell to make his recommendations and to give us his plan. The latter will coincide with the comprehensive spending review. The last time detailed costings were made as to how much was being spent on fighting drugs was in 1995, and the figure was something in excess of £500 million. It is to be hoped that more is being spent now, but the comprehensive spending review will determine how what is being spent can best be targeted. I can unfortunately offer no prospect of more money but I can offer the prospect that all of the money that is being spent will be considered and will be targeted as effectively as possible.
I agree entirely with the right reverend Prelate that effective co-ordination and targeting of resources are important. I agree with the priority that he placed on drug action teams. I believe that targeting of resources and effective co-ordination constitute precisely the kind of action the chief constable can bring to bear in the fight against crime.
The noble Lord, Lord Desai, declared an interest; namely, his involvement in the City Roads project. This project is well known and has contributed much to the guidance issued by the central drug co-ordination unit which seeks to co-ordinate within Whitehall action in relation to drugs. He, too, focused on the need for co-ordination. That was a theme in a large number of the speeches. The Government accept that need and it is in part for that reason that the UK's anti-drugs czar—I apologise, I meant to say anti-drugs co-ordinator; that was a Freudian slip—will have such an important role to play.
The noble Earl, Lord Strafford, welcomed the appointment of the UK anti-drugs co-ordinator, but he referred to what he described as the inefficiencies of prohibition and raised the question of the decriminalisation of cannabis. I think I have already made clear that decriminalisation of cannabis would simply lead to the greater misuse of drugs; it is not on the agenda of this Government. I do not accept the noble Earl's argument that the Dutch experience encourages one to believe that cannabis should be decriminalised. I believe rather that the opposite is the case. I believe

139
that the open sale of cannabis in Holland may well mask the covert sale of hard drugs. The Dutch experience suggests that soft drugs cannot be disengaged from the sale of hard drugs.
As I understood it, the noble Lord, Lord Rea, to some extent supported the decriminalisation of some drugs. He suggested that there should be a limited supply through licensed outlets. That is not on the Government's agenda. We believe that the decriminalisation or legalisation of drugs will simply lead to their greater misuse. His view that to decriminalise drugs, or provide a legal supply through licensed outlets, will get rid of the black market in drugs is, with the greatest respect to him, misconceived and misguided.
The noble Viscount, Lord Waverley, discussed primarily the position of precursor chemicals. The Government obviously recognise the importance of precursor chemicals in relation to the manufacture of illegal drugs. Over the past few years the precursor chemicals industry has significantly contributed in many respects to the apprehension of illegal drugs laboratories through the provision of vital information. The noble Viscount, Lord Waverley, asked me a large number of questions about the chemicals industry, none of which it would be appropriate for me to answer at this stage. I shall read Hansard carefully and write to the noble Viscount.
I very much welcome the support given by the noble Viscount, Lord Astor, for the appointment of the UK anti-drugs co-ordinator. The noble Viscount asked whether the funding of £8.5 million will continue for the drug action teams. The answer is that it will continue in relation to them. However, when the UK anti-drugs co-ordinator has produced his plan,
140
after a comprehensive spending review, precisely how much will be given to drug action teams will have to be considered again. They will continue.
The noble Lord asked what is happening in relation to prisons. The Prison Service is currently in the process of reviewing its drugs strategy. There are around 44 pilot drug treatment programmes under way across the prison estate. They are currently being evaluated, with a report due early next year. Voluntary testing units in drug-free wings are being established across the prison estate in accordance with the Government's manifesto commitment. Mandatory drug testing, aimed at reducing the level of drug misuse in prisons, is carried out on a set percentage of prisoners every month. A review of mandatory drug testing is due to be completed early next year.
The noble Viscount, Lord Astor, asked whether the UK anti-drugs co-ordinator's remit would relate to Scotland. He will focus primarily on a drug strategy for England, although obviously he will look to see what is going on in Scotland. There may well be complementary strategies there. The noble Viscount also asked what the executive powers of the UK anti-drugs co-ordinator will be. I have described what his role will be. As regards his funding, he will operate out of the central drugs co-ordination unit. He will not be the person given the whole of the budget for anti-drugs activity in the Government. His role will be to provide plans, to galvanise, to invigorate and to provide the ideas for the effort in government against drugs.
I am sure that I have not answered all the questions I have been asked. However, I have very much overshot my time and it is late in the evening, so I shall bring my remarks to a close. I hope that I have set out in general terms the Government's strategy in relation to drugs and the role of the UK anti-drugs co-ordinator. Again. I express my gratitude to the noble Lord, Lord Layton, for giving us the opportunity to have this short debate.
House adjourned at nineteen minutes before midnight.