Lords Sitting of 26 January 1999

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

M.40/A.40 London Traffic Flow
Lord Montagu of Beaulieu Lord Montagu of Beaulieu asked Her Majesty's Government:
Whether they have now completed their review of plans for the eastern end of the M.40/A.40 at Acton, and whether they now intend to complete the work.
The Parliamentary Under-Secretary of State, Department of Environment, Transport and the Regions (Lord Whitty): My Lords, the original plans for this area were dropped in July 1997 in the accelerated review. On 8th September last year we announced a three-stage plan of works for the A.40 in Acton. We have already commenced improving pedestrian and cycle facilities at Western Circus. Later this year we shall provide better pedestrian and cycle facilities at Gipsy Corner. In addition we shall remove the present bottleneck by replacing the two railway bridges and improving the dual two-lane section to three lanes. That is likely to start in about 2002. Together with the London Borough of Ealing, we are looking at the best way of using the surplus land.
Lord Montagu of Beaulieu: My Lords, I thank the Minister for that reply which gives some comfort to people who spend miserable hours at that bottleneck. Is there no way of accelerating the improvement of the two-lane section to three lanes before the year 2002? Will the noble Lord confirm that the new Labour Government do not intend to use bottlenecks and traffic jams as part of their policy to stop people coming to London?
Lord Whitty: My Lords, the timetable is partly constrained by the contracting; it is also constrained by our priorities in road building. Therefore I cannot comfort the noble Lord or others who travel on that route by stating that it will be started before 2002. By that time much of the area will be the responsibility of the London mayor. I can confirm that it is not the Government's policy to use congestion as a rationing system. However, there is some responsibility on drivers. Eighty per cent. of traffic on this road at rush hour consists of private cars; and 80 per cent. of those private cars are single occupant cars. That is not a sustainable traffic pattern.
Baroness Gardner of Parkes: My Lords, was not the finance in place and the system ready to go on this section of road when the Government cancelled the programme in July 1997? Is the noble Lord aware that derelict houses which were boarded up for a
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considerable time—some have now been demolished—were infested with rats, to the great distress of local residents? Did the Government provide any financial help to the local borough to deal with those problems?
Lord Whitty: My Lords, in the main the land involved is currently Highways Agency land. It is true that for 10 years there was a degree of blight on that land. While theoretically the plan was in the programme, the programme was never started and the funding was not in place in any committed sense. We decided that it was not a priority area. I appreciate that those who use the road will think otherwise. However, there is adequate public transport. We need to transfer some of the traffic off that road as well as making the improvements to which I referred.
Lord Gisborough: My Lords, if the plan is not to be accelerated, what is being done to improve public transport and provide parking around stations?
Lord Whitty: My Lords, London Transport is to improve substantially the station network. But that will take time. Proposals for establishing park-and-ride facilities further out are currently under consideration by the Government and the appropriate local authorities in Hillingdon and Buckinghamshire.
Lord Berkeley: My Lords, will the Minister consider delaying for ever the introduction of three lanes on that section of the road? Will the Government put more money into rebuilding the houses to which the noble Baroness, Lady Gardner, referred so that a community can be restored along the road?
Lord Whitty: My Lords, I understand that the London boroughs of Ealing and Hammersmith will shortly consider proposals; the Highways Agency has put forward its points. The intention is that the land should be put back into productive use either as a green corridor or for housing. The increase of two lanes to three lanes relates to the railway bridges which are a pinch point on the route.
Lord Burnham: My Lords, I declare the usual interest. Is the Minister aware that down the line as far as Beaconsfield station car parks are totally full by 10 a.m. and that people who wish to come to London are almost forced to travel by road and be caught up in traffic jams?
Lord Whitty: My Lords, I am aware of the inadequacies of car parking at some stations. It is a problem which the Government, local authorities, Railtrack and London Transport need to address.
Baroness Macleod of Borve: My Lords, how many hectares are fallow on this stretch of land?
Lord Whitty: My Lords, I had better write to the noble Baroness with the answer. I might make a guess in acres not in hectares.
Lord Montague of Oxford: My Lords, is my noble friend aware that the A.40 was upgraded to the M.40 on

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the argument that it would be the relief road for the M.1? We have heard about the local traffic, but between now and 2005 when the work begins how much extra traffic is expected from the M.1? I believe that the Minister should reconsider the matter and see whether the date can be brought forward. It is important for those who live in the Midlands.
Lord Whitty: My Lords, two different issues are involved. One is the trunk road network and the other is the pressure on commuting into London along the A.40. We are looking at improving the flow of traffic on the M.4, M.40, M.3 and M.25 connections which take much of the traffic from the Midlands to the south and to the ports. The problem on this stretch of the A.40 is primarily a commuter problem. I repeat that 80 per cent. of the private cars contain only the driver. That is not sustainable, however much money we spend on roads.
Baroness Chalker of Wallasey: My Lords, will the Minister look not only at how he speeds up the work to be undertaken on the A.40/M.40 but also at ensuring that where roads are under repair there are men—and perhaps women, too—working on them? An enormous problem is created on roads around London, including the road mentioned in the Question and also The Mall, which I use regularly, when no one is working although the roads are supposed to be under repair. Will the Minister look at that?
Lord Whitty: My Lords, I agree that the Highways Agency and the local highways authorities need to look at the efficiency of their maintenance programmes. However, it is the case that a road must be closed for a long time before and after the work is undertaken in order to ensure that traffic flows have adjusted. Nevertheless, the noble Baroness has a point.

Squirrels: Control by Warfarin
2.46 p.m.
Lord Rotherwick Lord Rotherwick asked Her Majesty's Government:
Whether they support the use of Warfarin for the control of squirrels where there is no suitable alternative.
The Parliamentary Secretary, Ministry of Agriculture, Fisheries and Food (Lord Donoughue): My Lords, grey squirrels cause extensive damage to broadleaved trees in Britain and have to be controlled in some areas. At present, Warfarin is recommended as the most cost-effective way of controlling them. However, Warfarin cannot be used where there are red squirrels. In those areas, trapping is recommended.
Warfarin's use in grey squirrel control is currently authorised under pesticides legislation designed to protect people and the environment. However, the compound is under review in the European Union as part of a programme which puts the onus on companies to provide safety data.
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Despite several opportunities, we understand that no company has yet provided the necessary data for Warfarin. Unless this can be put right very quickly, the European Commission is likely to propose the removal of plant protection uses of Warfarin.
Lord Rotherwick: My Lords, I thank the Minister for his Answer. Is he aware of the importance of Warfarin in the control of grey squirrels? Is he further aware that in the Forest of Wychwood, an SSSI in the Cotswolds, the Forestry Commission has recorded a large area where every beech tree less than 30 years old has been destroyed by grey squirrels? What alternative chemicals or control measures will the Government come forward with if we are not allowed to use Warfarin?
Lord Donoughue: My Lords, the noble Lord is right in saying that the grey squirrel is a major pest which causes massive damage, especially to broadleaved woodlands. Warfarin is the most cost-effective way of dealing with the grey squirrel. Trapping is very labour intensive and shooting is not intensively effective—
Noble Lords: Oh!
Lord Donoughue: My Lords, I am sure that if noble Lords opposite went in massed ranks to the Forestry Commission land with their guns they would have a major impact—if only because the squirrels would drop dead from fright! Those are the alternative methods, but Warfarin is the best. It is most important that the companies producing the chemical provide the European Union with the data it requires in order to authorise its use, otherwise we have a major problem.
Lord Shore of Stepney: My Lords, does my noble friend not think that this is a matter with which the British Government should be able to deal without obtaining the permission of the European Commission? It is ridiculous.
Lord Donoughue: My Lords, I sense that my noble friend has views on that aspect. It is a matter which the Government have dealt with, although only as the regulator because it is more a matter for the Forestry Commission. But the European Union has rights and powers in relation to pesticides. The Commission has been very reasonable. It wishes to authorise the use of such a pesticide and it has shown great patience in waiting for something like five years for the companies to produce the necessary data.
Lord Marsh: My Lords—
Baroness Trumpington: My Lords, it is my turn, you grey squirrel, you! Was the Minister as surprised as I was that my noble friend Lord Rotherwick did not include the word "grey" in his original Question? Is he aware that red squirrels are being decimated where there are grey squirrels in the same vicinity? Will he enlarge

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on the food houses which red squirrels can use but which grey squirrels cannot get into? I am told that that is one way in which to protect the red squirrels.
Lord Donoughue: My Lords, I am delighted to see the noble Baroness as bright-eyed and bushy-tailed as usual. She is quite right. The Forestry Commission is developing a kind of hopper that is red squirrel friendly; in other words, it cannot get in to be poisoned in the way that the grey squirrel can. However, a little longer is needed to develop that. We try to protect the red squirrels, and Warfarin is allowed to be used only in areas where there are no red squirrels.
Lord Marsh: My Lords, I return to the point made by the noble Lord, Lord Shore. I recognise the rights and powers of the Commission, however regrettable. If this problem arises from the inability of the Commission to obtain certain information from the manufacturers, is it not possible for the Government to take powers to obtain that information and pass it to the Commission?
Lord Donoughue: My Lords, we are doing all we can. The manufacturers concerned German and Swedish, not British. The British company manufactures the product. The Forestry Commission has certainly offered all the help it can give to companies as regards collecting data and has supported also the proposal to extend further that already long-delayed process. The problem is that it is a minor product of the companies and they do not appear to be interested in spending a great deal of time and money in order to produce the data required. But we are doing all we can to maintain Warfarin as an authorised product.
Lord Mackie of Benshie: My Lords, is the Minister aware that probably half the Members of this House are taking Warfarin. Will he explain why it is beneficial for some but bad for grey squirrels?
Lord Donoughue: My Lords, the noble Lord looks the better for it. I advise him to keep taking the Warfarin. It has beneficial uses, especially as an anti-coagulant. However, the noble Lord should not go into any hoppers and have a meal.
Lord Taylor of Gryfe: My Lords, is the Minister aware that the proposed trapping of the grey squirrel has been under review by the Forestry Commission for a number of years? Will the Minister give an indication as to when that new device, which has been examined over the years, is likely to be put into operation? Is he aware also that 50 per cent. of all new planting in this country is now broadleaf but the squirrels have no impact whatever on conifer planting? Will he give an assurance that action will be taken with the Forestry Commission to deal with the control of squirrels? Could the grey squirrel be described as a rat instead of a squirrel to make it less acceptable?
Lord Donoughue: My Lords, I believe that, technically, the grey squirrel is a tree rodent and that the
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rat is a form of rodent. We shall certainly do all we can to promote effective means of control because grey squirrels are pests and should be got rid of.
The Forestry Commission has been developing the new system for some time. It is felt that it is now ready but it must be tested and the Pesticides Safety Directorate must be convinced that it is a suitable mechanism.
Lord Campbell of Croy: My Lords, is the noble Lord aware that, until very recently, dispensing Warfarin for squirrels in Scotland was against Scots law, but it was not illegal for the medical profession to dispense Warfarin to Scottish Peers? I must declare an interest because I have had to take a daily dose of Warfarin for several years now as a result of being a casualty of World War II.
Lord Donoughue: My Lords, the Scots have always had very clear priorities. As I said, Warfarin can be used on humans. That is not under consideration for restriction at this moment. It was forbidden by law to poison squirrels under the Protection of Animals Act 1911. The 1973 Warfarin Order introduced an exemption solely for grey squirrels, but only in certain circumstances. One of those circumstances is that it cannot be used in areas where red squirrels survive, and Scotland has been one of those areas.
Lord Redesdale: My Lords, will the Minister say whether the Government are having any success in preventing the spread of grey squirrels in England? I must declare an interest because I live in Northumberland where we still have red squirrels and I have some in my woodland. But the grey squirrel is moving north at a rate of about five miles per year. Will that advance be stopped?
Lord Donoughue: My Lords, I should be reluctant to claim that success. The grey squirrel came here only 100 years ago and there are now 2 million of them. The Government and the Forestry Commission are doing all that is possible but I cannot claim that it has been a highly successful programme so far.
Lord Swinfen: My Lords, is the Minister aware that local authority pest officers trap grey squirrels which get into houses, where they cause a considerable amount of damage, in particular dangerous damage to wiring? The officers then very often release those grey squirrels into rural areas rather than destroying them painlessly. Will he ensure that that practice ceases and that, as pests, the squirrels are destroyed painlessly?
Lord Donoughue: My Lords, that is an extremely practical point which the noble Lord raises. Of course, often the householder finds that the damage is not covered by insurance in those circumstances.
Baroness Byford: My Lords, does the Minster agree that we are in a ridiculous situation, as the noble Lord, Lord Shore, said? We have an EC directive which allows the use of Warfarin for use by humans and for

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the control of rats, mice and horses but not of grey squirrels. The noble Lord referred earlier to the data which must be provided by the two companies: one in Sweden and one in Germany. I understand that the British manufacturer is willing to act as a go-between, working through a German associate. Would it not be sensible to give the companies longer to produce the necessary data so that we can control the grey squirrels in the only way possible?
Lord Donoughue: My Lords, this is the longest that I have ever discussed squirrels in my entire life. It is not true that the European Union is banning the use of Warfarin. It is following the necessary procedure to license it as appropriate. That merely requires the data from the companies. That is a different situation.
It is more a job for the Forestry Commission than the Government but there is a positive attitude towards those companies and the commission is prepared to assist them in the data collection. The Forestry Commission is supporting a further extension of the consideration of that matter, but it has been considered for about five years. It arose at a working group of DGVI in December which then agreed to delay the matter again until next month. It has been delayed and it is our position that we support a further delay until July in the hope that the matter will then be resolved.

NHS Hearing Aids
3 p.m.
Lord Ashley of Stoke Lord Ashley of Stoke asked Her Majesty's Government:
What plans they have to improve the National Health Service hearing aid by replacing it with a modern version.
The Parliamentary Under-Secretary of State, Department of Health (Baroness Hayman): My Lords, the NHS range of hearing aids has been substantially updated over the past three years. "In the ear" models have been introduced, as have high frequency aids, mini aids and aids in different colours. Additionally, modern features have been incorporated into some of the range of hearing aids to make sounds clearer. The NHS Supplies Authority also introduced a hearing aid specifically for children.
Lord Ashley of Stoke: My Lords, is my noble friend aware that, despite what she says, most national health hearing aids are old-fashioned? I note that the Government have set up a working group to act on this, and that is welcome, but can my noble friend assure the House the review will not drag on for too many years? All the facts are now known and well established. The private sector raced ahead using modern technology and far superior hearing aids are available because of the use of that modern technology. The National Health Service could obtain the benefits of those aids by mass production and the cost-savings of large-scale economy, yet it is not doing so. Can we please get a move on and
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have a commitment from the Government that they will introduce digital aids on the health service? The cost will be minimal.
Baroness Hayman: My Lords, my noble friend makes a number of points. Perhaps I can reassure him on the first; that is, the review that is taking place of both hearing aid and audiology services will not be dragged out. I hope that it will report later this year. I recognise that great advances are on the horizon, particularly using digital technology. We must explore those. However, we must be certain that they are safe, effective and give value for money before including them in the NHS range. My noble friend is right to pinpoint the role of the NHS Supplies Authority as a bulk purchaser. In that regard there will be opportunities in the future for driving down the price of what is, at the moment, expensive new technology.
Lord Clement-Jones: My Lords, can the Minister confirm whether or not she believes that there is adequate price competition in the market for digital hearing aids? If not, is there a good case for referral of the manufacturer of digital hearing aids to the Office of Fair Trading?
Baroness Hayman: My Lords, this is a new technology. It is being introduced at the moment mainly in the private sector. We will have to see how that market and pricing within that market develop. The NHS Supplies Authority has started to look at future provision of hearing aids and one element of its investigations will cover analysis of digital hearing aid technology, including the cost considerations in that regard.
Lord Jenkins of Putney: My Lords, is my noble friend aware that a large number of people of modest means are obliged to pay £500 or more, which they can ill afford, in order to acquire a satisfactory hearing aid which meets their requirements? The old-fashioned type will not deal with many of the problems from which people suffer. Is it not more urgent than is generally appreciated for people to be enabled to acquire a hearing aid at a reasonable cost—or, indeed, without cost—on the National Health Service as soon as possible?
Baroness Hayman: My Lords, I certainly agree with my noble friend that this is a serious issue and one that affects a great number of people. But as I said in my earlier reply, we should not think that there is simply one old-fashioned, outdated hearing aid available. Over the past four years there has been substantial updating in the range of hearing aids available, including in-the-ear aids, high-frequency aids and mini aids. Also, the type of hearing aid provided by the NHS is a matter for the clinician concerned. If it is clinically necessary for the patient, it is possible for a hearing aid outside the normal NHS range to be prescribed.
Baroness Carnegy of Lour: My Lords, since the price of newly invented hearing aids inevitably reflects the cost of development, does it not stand to reason that

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to buy large quantities of newly invented digital hearing aids—provided their success is proven—would rapidly reduce their price? Should not the Government look at the matter in that way? There is no question but that digital hearing aids are infinitely more useful?
Baroness Hayman: My Lords, I alluded to the possibility of bulk purchase by the NHS Supplies Authority driving down the price of what is at the moment expensive new technology. We must recognise that there is a need to evaluate the technology and to conduct trials to see exactly what enhanced benefits there are—for example, against the existing advanced programmable analogue aids—when considering large numbers of users. That is not to say that digital technology does not offer great possibilities of advance. We need to look at how it will be cost-effective and of benefit to patients. Also, we need to look at how the price may be brought down.
Lord Annan: My Lords, does not the Minister agree that the noble Baroness, Lady Carnegy, is entirely right when she says that digital aids have been tested and tried time and again? There is therefore no need to have large exploration and a programme designed to delay any decision on this.
Baroness Hayman: My Lords, the review is not designed to delay a decision. We are looking carefully at what exists. As I understand it, there are needs for other technology in addition to the aid itself—the calibration mechanisms and so forth. It is important that we recognise this and look carefully when considering use by large numbers of patients at what are the additional and cost benefits. That is work we are now taking forward.
Baroness Pitkeathley: My Lords, is my noble friend aware that in the recent Royal National Institute for Deaf People survey 51 per cent. of those hard-of-hearing who were surveyed said that they would not take consultation about the matter for fear that they would be prescribed a hearing aid and did not want to wear one? A further 21 per cent. said that they did not believe anything could be done about their deafness. Does not my noble friend agree, therefore, that a campaign of public awareness as to what can be done to alleviate hearing problems would be beneficial?
Baroness Hayman: My Lords, my noble friend makes an important point. Large numbers of people see hearing loss as a normal part of the ageing process about which nothing can be done to help. Indeed, they have an idea that hearing aids are a cumbersome and old-fashioned mechanism with which they do not want to be involved. It was in order to raise public awareness that the Royal National Institute for Deaf People launched a campaign last year to encourage people experiencing hearing loss to speak to their GP. The Secretary of State was happy to launch that and 39,000 GPs were alerted to the importance of being aware of the problems of hearing and of referring patients for appropriate audiological tests and treatment.

Access to Justice Bill [H.L.]
3.9 p.m.
The Lord Chancellor (Lord Irvine of Lairg): My Lords, I beg to move that the House do now again resolve itself into Committee on this Bill.
Moved, That the House do now again resolve itself into Committee.—(The Lord Chancellor.)
On Question, Motion agreed to.
House in Committee accordingly.
[The PRINCIPAL DEPUTY CHAIRMAN OF COMMITTEES in the Chair.]
Clause 12 [The Criminal Defence Service]:
Lord Kingsland Lord Kingsland moved Amendment No. 145:
Page 8, line 17, after ("shall") insert (", after consultation with the Law Society, the General Council of the Bar and such other providers of existing legal services as its proposals may affect,").
The noble Lord said: Amendment No. 145 has a simple purpose. The noble and learned Lord the Lord Chancellor has, in his Bill, introduced the novel concept of a criminal defence service. The amendment seeks to ensure that before the defence service is established, full consultation takes place with all interested parties. I shall say no more about this amendment now because I know that my noble friend Lord Windlesham wants to speak to it. I beg to move.
Lord Windlesham: I am grateful to my noble friend Lord Kingsland for that brief introduction by way of moving the amendment. We should make no mistake that the amendment to Clause 12 on the introduction of a new criminal defence service represents a landmark in the development of criminal policy. The clause establishes by statute for the purpose of protecting the interests of individuals "involved in"—words to which we shall return later—
"criminal investigations or criminal proceedings".
Those words come in Clause 12(1).
The new criminal defence service will, we should note, be an entirely separate service from the community legal service which was discussed earlier in Committee. I refer to Clauses 5 to 11. Although initially—that word is important—both services will be run by the legal services commission as set out in Chapter 6, paragraph 10 of the White Paper, I should like to suggest that the establishment of a criminal defence service goes much further and may have more profound effects on procedural justice in future than the overhaul of the system of paying legal aid, which is what brought the issue before the House in the first place.
The proposed service is not simply a novelty; it was entirely unforeseen until the publication of the White Paper, Modernising Justice, which appeared virtually simultaneously, within 24 hours of the First Reading of the Bill. From the comments made in a letter to the editor of The Times by the then chairman of the Bar, and later confirmed by the Law Society, there was no prior consultation with, nor any notification to, those two professional bodies.

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The noble and learned Lord the Lord Chancellor has the reputation of a man in a hurry. The reform of legal aid is an issue where perhaps a degree of haste was not overdue—it has been a bugbear of successive governments for many years—but what was the reason for that lack of prior consultation? At Second Reading I asked for an explanation, but received no reply from the Minister of State when he wound up the debate.
Those Members of the Committee who were present at Second Reading will remember that very little was said about the criminal defence service either by the Lord Chancellor in opening or by the noble and learned Lord, Lord Falconer of Thoroton, when he replied, apart from the highly charged exchanges on the fear that employed lawyers in criminal proceedings might be less independent than under the present arrangements. Nobody was more eloquent in advancing that argument than the noble Lord, Lord Hutchinson of Lullington, whom we are all pleased to see in his place this afternoon.
Perhaps I may repeat those questions now: why was there no prior consultation? Was the CDS a last-minute idea? Were arguments raised against it within the Government, and, if so, what were they? Was it a fear of hostile reaction? Were the spindoctors unhappy—surely not—or was it more likely that it was just a misjudgment of the proper way to approach legislative change?
In replying to my noble friend Lord Kingsland on an amendment to Clause 9 last week, the Lord Chancellor confirmed that it was his practice to consult on major innovations. Nobody can question that this is a major innovation. The amendment provides an opportunity to explain why consultation in advance of publication of the Bill did not happen in this instance; but it goes further than that. The amendment looks to the future and not to the past. By accepting that there should be consultation with the Law Society, the General Council of the Bar, and with other providers of existing legal services, once the Bill has become law—that is, after the event, but before the new service is set up—the Government would have a graceful way of making amends for their failure to consult earlier.
3.15 p.m.
The Lord Chancellor: Clause 12(1) imposes a duty on the commission to establish, maintain and develop the criminal defence service to protect the interests of people involved in criminal investigations and proceedings. The amendment would postpone that duty arising until consultations had taken place and would make all subsequent activity by the commission to maintain and develop the criminal defence service subject to consultation with the legal profession and others.
Since becoming Lord Chancellor on 2nd May 1997, I feel that I spend half my life consulting people. If I am "a man in a hurry", certainly the extent of the consultations which I undertake operate as a considerable brake upon that. I believe wholly in full discussions, consultations and piloting before changes are introduced. Looking back over the past year or two
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at the continuing development of what is now criminal legal aid, the Legal Aid Board has consulted and discussed with the Law Society, and others, the development and introduction of franchising in criminal cases. Its proposals for criminal advice and assistance and police station and court duty solicitor schemes, as well as the design of the pilots to test them out, have all been consulted on most fully. Similarly, since last December the board has been involved in discussions with the Law Society and the 68 firms which are to pilot the new youth court arrangements. There have also, for example, been consultations recently with the Bar and the Law Society about the alterations needed to the criminal legal aid scheme to accommodate changes relating to how we pay for bail applications in the magistrates' court; solicitors attending behind counsel in the Crown Court and for work done in the magistrates' courts for indictable-only cases that go to the Crown Court. The Law Society has in addition been very fully involved in the renumeration arrangements for the so-called "Narey" pilots as part of the Government's overall initiatives to reduce delay in magistrates' courts. At the same time the Bar was fully involved in setting up the graduated fee scheme for Crown Court cases. It is currently actively discussing with my department the prospect of extending that scheme and of gaining better control over the 1 per cent. of high cost criminal cases that account for about 40 per cent. of legal aid expenditure in the Crown Courts.
The examples of consultation and discussion that I could give are legion and will grow as we move further along the road to reform. With respect to the noble Lord, I believe that his amendment is based on a misunderstanding of what the Government are about in their reforms of the way in which we secure defence services and how they intend to proceed. The amendment appears to assume that we are on the verge of a revolution when in fact we are already in the midst of continuing evolution of which the changes under the Bill are only a part. I dare say that the noble Lord, Lord Windlesham, is right that this is a landmark, but it does not begin to represent a revolution. The Government have reached the conclusion that in all areas of legal aid they need to become more active in securing services for those who need them rather than simply being reactive and paying lawyers' bills when they come in once a service has been provided; hence the shift over time to contracting or other means of better ensuring that the services are of good quality and value for money in protecting the interests of criminal defendants.
As my examples of recent consultations and discussions indicated, we are already proceeding well along this road as regards criminal legal aid. For example, limited contracting is possible under the current statute. In June last year the Legal Aid Board started a pilot scheme to develop contracts to provide criminal advice and assistance, including at the police station and in the magistrates' court. The Government's aim is that all advice and assistance in criminal matters should be provided under contracts by the year 2000. Contracts for representation in the youth courts will begin to be piloted next month. As the pilot proceeds,

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the contracts will be gradually rolled out to cover more areas and providers and magistrates' proceedings more generally. Even further down the road, and again subject to consultation and piloting by the year 2003 we might expect to see solicitors operating under contracts in Crown Court cases.
Meanwhile I hope to make much faster progress on very expensive criminal cases. Again, my department is currently in discussion with the Bar and the Law Society about the prospect of one-off individual contracts in such cases. However, the current powers to contract are limited and are not appropriate to a system where we expect contracting to become the predominant but not necessarily the only means for securing criminal legal services for defendants over time.
Matters of principle or major changes will need to be the subject of discussion and consultation as we develop the scheme. But the purpose of the Bill is to allow us to go further down the road towards contracting. Perhaps I may explain to the noble Lord that there is not going to be any sudden realisation of a grand plan to be unveiled and foisted on the legal world on the day we implement the Bill. In most respects the organisation and types of services available on day one of the new statutory regime will be no different from what they were on the last day of the current regime.
Perhaps I may take as an example one of the matters raised in our discussions in Committee; namely, how contracting will affect the Bar. At present we have a graduated fee scheme covering trials in the Crown Court of up to 10 days. That will still be there when this Bill comes into effect and in all likelihood it will last until the year 2003. Therefore, depending on what progress we make with the Bar in our discussions on contracting directly with it for its services, that scheme could remain in place for some years. In some types of cases it may remain indefinitely. In that time it might even be extended in its coverage.
This is a practical and incremental strategy and to my mind it is the right way forward. It gives us time to consult as we go. It is no big bang on which there must be some specific consultation exercise. The way in which we are proceeding will ensure that we can pilot new arrangements rather than chancing our arm with major untested changes without piloting and discussion.
I am at pains to emphasise to the noble Lord that there is not, and there is never going to be, a wholesale, redesigned system on which to consult specifically. I take the opportunity to reassure the Committee about that. While I am in no doubt that contracting will play an ever larger part in securing defence services in the future and that there may well be a place for a salaried element in the provision of criminal defence services—we shall discuss that later today—the upshot of what I am saying is that it is not possible to consult on the establishment of the criminal defence service as an entity precisely because there is no fixed grand plan on which to consult. However, we shall need to debate, discuss and consult on key elements and important changes as we go. Indeed, the passage of this Bill and our discussions in Committee on it are providing just such an opportunity.
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I believe in proper consultation. As I said at the outset, I believe I spend about half my time engaged in it. If we are going to achieve real progress in improving defence services, consultation will be a vital, ongoing aspect of the reforms. To my mind the amendment as it stands points to the difficulty of enshrining this in law. The amendment not only seeks to make consultation a precondition of imposing a duty on the commission to establish the criminal defence service. It would also make it a precondition of maintaining and developing it, a task that holds out the prospect of really undefined and uninterrupted consultations stretching continuously into the indefinite future.
I apologise for detaining the Committee but I hope that on the basis of what I have said the noble Lord is reassured and that he will be able to withdraw the amendment.
Lord Hutchinson of Lullington: As regards consultation, the noble and learned Lord said that examples of it are legion. But was there any consultation with the profession concerning the revolutionary proposal of a salaried non-independent public defender before that appeared in the Bill?
The Lord Chancellor: We shall debate that in specific amendments appropriate to that matter. But, yes, I have had discussions in my office with representatives of the Bar and the Law Society on that subject.
3.30 p.m.
Lord Renton: While listening carefully to the noble and learned Lord, it seemed to me that he was making out a very strong case for the amendment. He said three times that he was going to have consultation of the kind envisaged in the amendment. Therefore, why should that not be written into the Bill?
Lord Thomas of Gresford: In rising to support the amendment of the noble Lord. Lord Windlesham, I noted what the noble and learned Lord the Lord Chancellor said regarding there being no "big bang" about the proposals. Nevertheless, major changes are proposed to the way in which people are supported by the state in defending themselves against criminal charges. It is surprising that there has not been a greater degree of consultation than that to which the noble and learned Lord referred.
It is important that there be independence between the defence and prosecution in a criminal case. We have maintained that principle up until now. Criminal legal aid has always been organised and supervised by the courts, which were responsible, first, to the Home Secretary, but from the 1980s, in the case of the higher courts, it became the responsibility of the Lord Chancellor's Department. But independence of the legal aid system for people charged with criminal offences was guaranteed by the interposition of the courts and accountability was secured by the powers of the taxing officer who ensured that expenditure was reasonable and justified. Indeed, at one time it was the clerk who actually heard the case who determined what was

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appropriate in the way of defence costs. But today, in more serious cases, he has been replaced by the central taxing unit and by graduated fees.
However, the criminal defence service which is now proposed in the Bill is a step nearer to government control. It will affect the independence of the defender in a number of ways. For example, the "right to representation", as it is called, is not an inherent right of an individual accused of crime. According to Schedule 3, a person accused of crime has a right to representation only after the court or the commission has, in its discretion, granted that right. Then the grant of that right depends on the criteria set out in paragraph 6 of the schedule, which, as it appears to me, will limit the eligibility of a person charged with a criminal offence very considerably, as compared with the position today.
The right to representation is being limited by the proposals and is being limited on the face of the Bill. There has been no consultation about it. Further, the Lord Chancellor has the controlling power to alter the criteria himself and to determine what is in the interests of justice in the granting of what is effectively legal aid, or the right to representation, to an individual defendant. Then the power of the commission to provide advice and assistance and itself to provide representation, as my noble friend Lord Hutchinson pointed out, introduces the concept of the state prosecutor versus the state defender. It really is only one short step to the removal of the principle that a defendant is entitled to independent counsel of his own choosing. That principle has been part of the law of this country for centuries.
So these are major changes which do appear on the face of the Bill. The sort of consultation to which the noble and learned Lord referred in his initial reply to the noble Lord, Lord Windlesham, related to matters of detail and matters of practicality, which have nothing to do with the broad principles with which this Bill is concerned. As the noble and learned Lord the Lord Chancellor rightly observed, we shall consider the detail at a later stage of these proceedings. However, we are faced with the policy set down by the Government without full and adequate consultation upon it having taken place.
Lord Windlesham: I am grateful to the noble and learned Lord for his full reply to my amendment. I do not doubt for a moment that he spent a great deal of time in well-intentioned negotiation with the professional bodies. However, the noble Lord, Lord Thomas. put very clearly in his final remarks what is in my mind; namely, that the discussion and negotiations have been very much on operational matters—that is to say, the working of the contracting system and the pilot scheme which is in progress. They did not, however, deal with the central issues.
For those who are not familiar with these matters, I should point out that there are six chapters in the White Paper. One of them is 10 pages long and is exclusively devoted to the criminal defence service. Indeed, a clear scheme is set out there. It contains the heart of the proposals and outlines matters that call for
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scrutiny and review. I do not question the interpretation of the noble and learned Lord the Lord Chancellor. That must be how he saw it. Nevertheless, he said that the establishment of the criminal defence service is no big deal.
The Lord Chancellor: I said that it was, "no big bang".
Lord Windlesham: I stand corrected. Let us use more formal language. We are talking about a matter of considerable significance for the future. I am sure that we can all agree in that respect. Nevertheless, I believe that this debate has served its purpose; indeed, we have had a full discussion. If my noble friend Lord Kingsland decides to withdraw the amendment, I shall not object.
Lord Kingsland: The noble and learned Lord the Lord Chancellor was quite right to say that he has consulted extensively on many matters contained in this Bill; and if I may say so, he has, in most cases, done so in an extremely professional way. He has issued well-prepared and well-thought-out documents. He has listened to what has been said in response and has taken into account many of the observations made. That is why the appearance of the criminal defence service in the Bill is so strange. I say that because the rights of the criminal accused are absolutely central to the successful operation of a free society. Therefore, any attempt to change those rights or the framework in which they are exercised, will always be a matter of profound parliamentary concern.
The criminal defence service initiative in the Bill is the odd man out, because no prior consultation of the type which has taken place in all the civil initiatives has taken place in relation to it. I shall read carefully the reply of the noble and learned Lord the Lord Chancellor to the points made by my noble friend Lord Windlesham; and think about either reintroducing this amendment, or tabling a modified one, on Report. In the meantime, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Ackner Lord Ackner: moved Amendment No. 146:
Page 8, line 19, leave out ("involved") and insert ("suspected or accused").
The noble and learned Lord said: In moving this amendment, I shall also speak to Amendments Nos. 147, 148 and 149. This group of amendments was due to be dealt with shortly before 10 o'clock on the evening of last Tuesday. I had marked it down as containing four modest "post-prandial" amendments. However, the timing now makes that a rather superfluous description.
The amendments speak for themselves to a large extent. Amendment No. 146 relates to the word "involved", which I believe is intended to cover "suspected or accused". If that is right, then the latter should be inserted in the wording of the subsection. Amendment No. 147 relates to subsection (2) of Clause 12. I do not know what is intended by the clause and, therefore, I have tabled this probing amendment in an effort to discover why the subsection has been

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worded in that way. The same principle relates to Amendment No. 148. I should like to know what is contemplated as being likely to fall within this subsection. If it is known, then it should be stated with some precision. Who is to do the prescribing? Amendment No. 149 is designed to ensure that the quality of the service provided is kept under careful review so that what is an important change to the whole system of defence is properly catered for by ensuring that it is monitored effectively. I beg to move.
The Lord Chancellor: I appreciate that the noble and learned Lord has tabled this amendment as a probing amendment. Of course because we gave way on the previous Committee day to the suggestion that we should rise earlier the noble and learned Lord is able to move this probing amendment conveniently before afternoon tea!
I think that the noble and learned Lord has failed to appreciate that the provisions he wishes to exclude are, and are intended to be, of exclusively beneficial effect. However, as I say, I appreciate that this is a probing amendment. The wider circumstances encompassed within the word "involved" are deliberate. Clause 12(1) defines the circumstances in which criminal defence services are to be available as those where an individual is involved in criminal investigations or criminal proceedings.
Subsections (2) and (3) respectively define what is meant by criminal investigation and proceedings and give the Lord Chancellor power by order in effect to extend the categories of investigations and proceedings for which defence services are available. The noble and learned Lord's amendments would remove the definition of criminal investigations and the power to extend the definitions of criminal investigations and proceedings. The loss of a power to extend the definition of criminal investigations and proceedings for which defence services are available would be regrettable.
For example, I would not be able to extend criminal defence services to post-conviction investigations such as those by the Criminal Cases Review Commission into alleged miscarriages of justice. Or again, I would not be able to extend the meaning of criminal proceedings for which defence services are available to representation in Parole Board reviews of discretionary life sentences or sentences of young offenders detained at Her Majesty's pleasure.
For those reasons and because the significance of the language is to enable me to give rather than to take away, I invite the noble and learned Lord to withdraw his amendments.
Lord Windlesham: Before the noble and learned Lord replies, I accept that those arguments are intended to be helpful. Nevertheless "involved in" is surely a loose and conversational term. I am rather surprised to find it in the vocabulary of the government draftsman at all.

The noble and learned Lord pointed out that the suggested wording of "suspected or accused" would leave out quite important categories of activity; for
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example post-conviction review. I believe another category might comprise those who go to a police station voluntarily but are not accused or suspected. The Law Society has mentioned that as possibly an additional category of person who would not be covered by the proposals of the noble and learned Lord, Lord Ackner. I have been closely involved with the question of discretionary life sentences and the representation of those who present their case to panels of the Parole Board. It is clearly important that legally aided qualified people should be available. I suspect that the amendment will be withdrawn. However, will the noble and learned Lord ask the draftsman to reconsider his phrase book to see whether there is a better phrase than "involved in"? It may be possible to make that term somewhat more precise.
Lord Wigoder: I can see nothing in subsections (2) or (3) that would prevent the criminal defence service under subsection (1) having the duty to protect the interests of the prosecuting solicitor, the Home Office pathologist, the witnesses, the jury and the judge. Surely the wording as it stands is too loose. If the noble and learned Lord is not happy with the phrase "suspected or accused", he might consider something along the lines of,
"subject to criminal investigations or criminal proceedings"—
something that links the person involved with the fact that it is the defendant we are considering, not everyone else who is involved in the trial.
Lord Renton: I wish to pursue further the meaning of the word "involved". It seems to me that it could include victims of a crime, complainants, witnesses, and indeed people professionally involved. But I find it hard to believe that that is what is really intended.
3.45 p.m.
The Lord Chancellor: I am not persuaded by the arguments I have heard which suggest that "involved" is the wrong word. Although it is not our practice when in Committee to draft on our feet, I observe that no alternative has been put forward. However, I am well content to take back our discussions on these provisions to the parliamentary draftsman and invite him to consider whether any other expressions are more apt to fulfil the purpose.
I should perhaps have said when I was on my feet earlier that I did not speak to Amendment No. 149 because it is grouped separately. It may be more appropriate for the noble and learned Lord, after he has indicated his intentions in relation to this amendment, to speak separately to Amendment No. 149.
Lord Ackner: On the basis of my noble and learned friend's willingness to look again at that which has been criticised, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 147 and 148 not moved.]
Lord Ackner Lord Ackner moved Amendment No. 149:
Page 8, line 43, at end insert—
("( ) The Commission shall keep under review, or secure that others keep under review, the quality of service provided by all persons or bodies accredited under subsection (5); and the Commission shall withdraw accreditation, or secure that others withdraw accreditation, from any person or body who fails to provide a satisfactory quality of service.").
The noble and learned Lord said: I have already outlined my basis for justifying this amendment. Accordingly I beg to move.
Lord Windlesham: As my name is also attached to this amendment I shall say a few words about it. The amendment bears directly on the quality of service provided for defendants and others who are advised, assisted or represented by the criminal defence service. The three words, "advised, assisted, or represented", describe the functions of the new service. Importance should be attached to that because, despite the very frequent references in the debate so far, in the White Paper and in other published documents to a quality service—"this will be a service of high quality", "quality assurance" and so on—these are in most instances aspirations, and we should accept them as such. Of course it is intended that any new service set up by statute should function properly, and should be of good quality. However, the idea of assuring quality goes somewhat further. We need to look at the enforcement machinery which is devised to maintain standards of delivery.
Amendment No. 149 places a specific obligation on the legal services commission—under whose umbrella the CDS is to come initially—to keep under review the quality of the service provided by those who will have the responsibility for managing it and by its accredited contractors. Furthermore, the amendment provides sanctions by virtue of the power to withdraw accreditation should those standards not be met. The amendment goes further than the power to accredit, which we find elsewhere in the Bill; there is a sanction in the event of a falling short of the standard. It seems to me a reasonable enough provision. I hope that the Government will tell us whether they can accept it.
Lord Campbell of Alloway: Is there any other specific provision in the Bill in which it is expressed or implied that there should be some monitoring of the quality of the service? On the assumption that there is not, how will monitoring be carried out in practice by the Lord Chancellor's Department?
The Lord Chancellor: The amendment sets out what really is implicit in an accreditation scheme—that quality standards shall be kept under review and appropriate action taken if they are not met. One of the main objectives of the Bill is to ensure that the legal services provided by the commission are of high quality. This amendment provides me with the first opportunity this afternoon—I hope not the last in our discussions—to demonstrate to the noble and learned Lord, Lord Ackner, that this is a listening Government. I am grateful to him for suggesting the amendment and I am happy to accept it
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in principle. I am prepared to go even further. I propose to bring forward a similar amendment to apply to the provision of community legal services.
In answer to the noble Lord, Lord Campbell of Alloway, when the Government bring forward amendments to this effect, in line with the undertaking that I have given, I shall indicate how we would anticipate that monitoring will operate in practice. Meanwhile, on that basis, I invite the noble and learned Lord to withdraw his amendment.
Lord Ackner: I am most grateful to my noble and learned friend the Lord Chancellor. This shows that the shorter an amendment the more effective it is. Accordingly, I beg leave to withdraw my amendment.
Amendment, by leave, withdrawn.
Clause 12 agreed to.
Lord Ackner Lord Ackner moved Amendment No. 150.
After Clause 12, insert the following new clause—
CODE OF CONDUCT FOR DEFENCE SERVICE PROVIDERS
(" .—(1) The Commission shall issue a code of conduct ("the Defender's Code") for persons or bodies providing services as part of the Criminal Defence Service ("defenders").
(2) No defender shall be accredited under section 12(5) unless—

(a) where the defender is an employee of the Commission or an employee of a body funded by the Commission, the defender's contract of employment includes the Defender's Code; or

(b) in any other case, the defender is bound by other professional rules of conduct which are as least as comprehensive and as stringent as the Defender's Code.

(3) The Defender's Code shall include rules about—

(a) the defender's duty to the court;

(b) the defender's duty to protect the interest of the individual concerned, including the defender's duty to decline or cease to act because the defender has insufficient skill, experience, competence or available time;

(c) the defender's duty to avoid conflicts of interest and to act with independence, integrity and freedom from external pressures;

(d) the defender's duty not to discriminate because of race, sex or other unjust reason; and

(e) the defender's duty of confidentiality.

(4) Before the Commission issues a Defender's Code, it shall prepare and publish a draft of that Code and consider any representations about the draft; and it may modify the draft accordingly.
(5) Subject to subsection (4), the Commission shall submit the draft Defender's Code to the Lord Chancellor who shall lay it before both Houses of Parliament; and if the draft is approved by resolution of each House of Parliament, the Commission shall issue the Defender's Code in the form of the approved draft which shall come into force on such day as the Lord Chancellor shall by order appoint.
(6) The Commission may from time to time revise the whole or any part of the Defender's Code and subsections (4) and (5) shall apply to any revised Code as they apply to the first draft.").
The noble and learned Lord said: I shall do my best to continue to be brief because the harmony in regard to the last amendment should spread swiftly to this one.
The amendment is designed to provide a code for the defence provider. It is based on the Bar's code of conduct in general terms and has been drafted by the Criminal Bar Association. It is intended to ensure that

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the public are appropriately safeguarded. For that safeguard to exist, there ought to be on the face of the Bill a clear obligation to issue a code of conduct and an obligation which spells out on the face of the Bill the essential provisions and philosophy of the code. I beg to move.
Lord Borrie: The noble and learned Lord, Lord Ackner, has, as one would have expected, very carefully and comprehensively drafted something which would be suitable as a code of conduct—or, rather, a list of requirements for such a code—for those engaged by the criminal defence service to provide criminal defence services. He has covered all the vital matters concerning obligation to the court, integrity, confidentiality and so on. I have only two perhaps relatively minor queries. The noble and learned Lord has, in my view, been extremely constructive in inserting this amendment as part of the provisions concerned with what is, after all, a controversial set of proposals concerning the criminal defence service.
My first query is this. The code is intended for those who are providing a criminal defence service as part of that service. It would presumably be undesirable if in some way members of the Bar or the solicitors' profession who were providing such services independently were under a different set of rules or there were in any way variations between them. In the longer term, does the noble and learned Lord want all people who represent alleged criminals in our criminal courts to be under the same code, or under the same code with statutory backing, or is he merely pinpointing a problem which could arise if variations occur?
My second query is this. The compendious term for those who are engaged by the criminal defence service is rather inconvenient; hence, I suppose, the noble and learned Lord has seized on the word "defender". I do not want to make too much of a meal of it—certainly not in the presence of a number of Scottish lawyers, such as the noble and learned Lord, Lord Jauncey of Tullichettle, and others—but the term may be slightly inconvenient because in Scottish civil litigation the word "defender" means "defendant" in English terms. The Bill applies mainly to England, but certain parts of it also apply to Scotland. It might be mildly inconvenient or inappropriate if the selfsame word were used for entirely different purposes.
Lord Windlesham: The Law Society also supports the principle of a defenders' code for those employed by the criminal defence service, and therefore its name can be added to those bodies referred to by the noble and learned Lord, Lord Ackner, in moving this amendment.
We can probably all agree that there are four key elements which should be covered in any code of conduct: first, independence for the professional judgment of the lawyer; secondly, sufficient freedom of choice for the individual; thirdly, equal competence between prosecution and defence, which is easy to proclaim but sometimes very difficult to achieve; and, fourthly, respect for the rule of law. Where services are provided by an employee of the state, there should
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surely be standards which the lawyers are professionally and legally obliged to put before the interests of the employer.
In this connection the Law Society has drawn attention to the situation in the United States where the American Bar Association has set out standards for representation, both by public defenders and by those providing services on a contract basis. As so often is the case in America, the aspiration does not always meet the reality. As those standards do not have the force of law in many states they frequently have not been observed by public defenders' offices. One of the main features—and perhaps I may ask the Lord Chancellor to comment on this, either now or later—that has arisen is that case-loads are often too heavy. The American Bar Association is supporting case-load limits, and is trying to provide in a code a limitation on the weight of work carried by public defenders.
That may be a relatively narrow point. If the Lord Chancellor does not feel able to comment on it now, as may well be the case, perhaps he would write to me and also to the Law Society with his comments on ways of limiting case-loads.
4 p.m.
Lord Thomas of Gresford: If it reassures the noble Lord, Lord Borrie, the term "public defender" is the one customarily used in the United States and in Australia in dealing with people who are employed by the state to defend accused persons.
There is a prosecutors' code. That code, which is published and is well-known, applies both to those who are employed by the Crown Prosecution Service and who conduct prosecutions in the lower courts and to those who are instructed to prosecute as independent counsel. The code applies across the board. In those circumstances, I see no reason why there should not similarly be a defenders' code which would apply across the board. It would apply whether a person was independent or whether he was employed under the terms of these proposals.
Lord Campbell of Alloway: I totally accept that the code should apply right across the board and that there should be a prosecutors' code which also applies right across the board. Surely the terms of the code, which does not have, as such, legal efficacy, ought to be included in the statute or the clause should be included in the statute. I should be very grateful to have the advice of the noble and learned Lord, Lord Simon, on this point, because so often I have heard him say that one should not clutter up a statute.
Lord Mishcon: I rise only with a query because of the contribution usefully made, as usual, by the noble Lord, Lord Windlesham. Would it not be a precedent, and an unfavourable one, if a statute were to impose on solicitors and counsel privately instructed a code of conduct covering matters which are usually left to their professional bodies to cover? One can well understand that when the Government employ a lawyer or a barrister as an employee one would be entitled to look to an Act of Parliament to see the terms upon which that

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employment took place and the code of conduct which related to it. I ask my noble and learned friend the Lord Chancellor to consider what precedent would be created not only for this profession but for other professions, which are already adequately covered with regard to their ethical codes by their own bodies.
The Lord Chancellor: I agree in principle that it is most important that the criminal defence service, including any salaried defenders engaged by the legal services commission, should uphold the highest standards of the legal profession. Defendants are entitled to expect no less. It is certainly no part of our plans that any service provided by salaried defenders should be second-rate. On the contrary, we believe that in those cases where salaried defenders may be used—perhaps where there might otherwise be gaps in the provision of defence services—they will provide a bench-mark of quality and cost against which other defence lawyers can be judged.
The noble Lord, Lord Windlesham, asked about a problem on the other side of the Atlantic concerning case loads being too heavy. Any provision in that regard would not be appropriate for a code of ethical standards for defending criminal lawyers. However, I shall certainly respond to his invitation and write to him on this subject. Nor do I think, at first blush at any rate, that what the noble and learned Lord, Lord Ackner, is prescribing in his proposed new clause would entail that a stricter standard was being applied to such salaried defenders than is already applied by the Bar or solicitors in independent practice who engage independently in the courts in this class of work.
The noble Lord, Lord Mishcon, called attention to an important point. It would be curious to put on the face of the Bill, by a side-wind from prescribing a code of conduct for salaried defenders, rules which would statutorily override the existing rules of the professions. I tend to think that the closest analogy is probably with the Crown Prosecution Service, which is already subject to a code issued by the Director of Public Prosecution and laid before Parliament as part of the DPP's annual report to my right honourable and learned friend the Attorney-General.
The sense of what I am saying is that I agree in principle with the noble and learned Lord that the commission should be required to issue a similar code. If the noble and learned Lord is content, I would undertake to move a government amendment at the Report stage. However, that said, if the noble and learned Lord is persuaded that it would be right to withdraw his amendment on that basis, I hope that he will not abstain from saying anything that might be of assistance to us arising out of the specific points made in the course of our discussion on his amendment.
Lord Ackner: I am grateful to my noble and learned friend for his indication of sympathy and willingness to take whatever is the appropriate action in the light of this amendment. I am not sure that either the noble Lord, Lord Borne, or the noble Lord, Lord Mishcon, has taken the point that the private practitioner is already covered
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by his code of conduct. The Bar, acting in its private capacity and not as an employee, has its code of conduct. The content of this clause has been largely modelled on it.
Subsection (2)(a) provides what should occur,
"where the defender is an employee of the Commission or an employee of a body funded by the Commission".
That then requires the contract of employment to include the code. The subsection continues:
"or … in any other case, the defender is bound by other professional rules of conduct which are at least as comprehensive and as stringent as the Defender's Code".
That provision seems to be designed to ensure that there is basically a parity of obligation. I submit that that is right, and that this proposal is rational and justifiable. I ask leave to withdraw the amendment, having regard to the offer made by my noble and learned friend the Lord Chancellor.
Amendment, by leave, withdrawn.
Clause 13 [Advice and assistance]:
Lord Ackner Lord Ackner moved Amendment No. 151:
Page 8, line 44, leave out ("it considers appropriate") and insert ("are necessary in the interests of justice").
The noble and learned Lord said: There have been many references to value for money. Although it will be said that what I am proposing can be implied, I believe it is desirable that it should be stressed by removing the words, "it considers appropriate" and inserting,
"are necessary in the interests of justice".
As presently drafted, Clauses 12 to 21 dealing with the criminal defence service contain no specific reference to the requirement of justice. The amendment would allay fears as to the possibility that the essential aim of this part of the Bill is a cost-saving approach and would therefore stress that justice must always be the paramount consideration. I beg to move.
Lord Windlesham: As the noble and learned Lord has explained, this amendment would remove the power of the legal services commission to decide what advice and assistance it considered to be appropriate. To decide what is appropriate is a wide discretion. It would be replaced by an "interest of justice" test. If it is suggested that the phrase, "the interests of justice", is too vague and ill-defined, we should recall that Article 6.3 of the European Convention on Human Rights relates to the right of the defendant to defend himself in person, or through legal assistance of his own choosing or, if he has not sufficient means to pay for legal assistance, to be given it free when the interests of justice so require. That article is a right that has been "brought home"—as a result of recent legislation it now forms part of our domestic law. It already includes an interest of justice test which, if necessary, will need to be argued before the courts. So "the interests of justice" is a phrase with a legal meaning. If there is any doubt about that, it will shortly be resolved as a result of the incorporation of the European Convention on Human Rights.
Lord Campbell of Alloway: I strongly support the amendment. "Necessary in the interests of justice" is the only manner in which it would be possible to consider

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what is done as appropriate. So why not say so? If the rectitude of the act is called into question, if the matter is left as it stands the answer is: why was it not appropriate? That leads to a circular argument. However, if the act is done and is said to be done as "necessary in the interests of justice", that is a far more precise and enforceable requirement.
4.15 p.m.
The Lord Chancellor: I am ready to accept the spirit of this amendment, which would place on the face of the Bill a clear statement that the commission is to provide advice and assistance in criminal cases where that is necessary in the interests of justice.
As I have already said, it is my intention to move an amendment to the Bill setting out more clearly that the purpose of the criminal defence service is to provide advice, assistance and representation where that is required in the interest of justice. That was the intention of the Bill as drafted which at Clause 13(1)(a) places on the face of legal aid legislation for the first time the entitlement of an individual arrested by the police to advice and assistance. The words, "it considers appropriate", in Clause 13(1) were not intended to restrict this entitlement, but to leave to the commission the form and nature of assistance to be made available.
I am receptive to the idea that it would be appropriate to set those decisions in the context of the interest of justice. If he is content, I shall ensure that the noble and learned Lord sees in advance a draft of the amendment that the Government propose to bring forward. On that basis, I ask the noble and learned Lord to withdraw his amendment.
Lord Ackner: I do not know what the procedure is if one wishes to apply for entry in the Guiness Book of Records. With, as always, the co-operation of my noble and learned friend, I have certainly achieved a hat-trick. On that basis, I ask leave to withdraw my amendment.
Amendment, by leave, withdrawn.
Lord Ackner Lord Ackner had given notice of his intention to move Amendment No. 152:
Page 9, line 5, leave out ("or bodies").
The noble and learned Lord said: Merely to show my gratitude, I shall not seek to move this amendment.
[Amendments Nos. 152 and 153 not moved.]
Lord Goodhart Lord Goodhart moved Amendment No. 154:
Page 9, line 13, leave out ("or loans").
The noble Lord said: This is a brief and purely probing point. I am concerned to know why the Government propose to include the power to make loans to individuals to enable them to obtain advice or assistance. In what circumstances will loans rather than grants be provided? Is there to be a means test to decide whether a loan rather than a grant is appropriate? If so, does that not undermine the Government's welcome objective of, by and large, getting rid of the means test in providing criminal legal aid?
The Lord Chancellor: The noble Lord, Lord Goodhart, makes a good point. I am grateful to him for
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drawing my attention to what, on reflection, I regard as an anomaly. In the drafting of the Bill, some elements are common to both the community legal service and the criminal defence service. An identical range of powers, including loans, is contained in the civil context.
In criminal matters, the provision of loans to individuals as one of a range of payment methods for advice and assistance is, I agree, not appropriate. Indeed, no payment is required for advice and assistance in criminal investigations or proceedings. Clause 16(2) makes it clear that it is only in limited circumstances in respect of representation that an individual for whom services are funded by the commission might be required to make any payment. I am therefore content to accept the amendment.
Lord Campbell of Alloway: I refer to the earlier subsection (2)(c), which must run with Amendment No. 154. The phrase "grants or loans" is used in subsection (2)(c) and also in subsection (2)(e). I merely point out that there seems to me to be a need for a consequential amendment.
On Question, amendment agreed to.
The Deputy Chairman of Committees (Lord Murton of Lindisfarne): I must point out that if Amendment No. 155 is agreed to, I shall be unable to call Amendments Nos. 156, 157 and 158, owing to pre-emption.
Lord Archer of Sandwell Lord Archer of Sandwell moved Amendment No. 155:
Page 9, leave out lines 15 to 17.
The noble and learned Lord said: With this amendment it may be for the Committee's convenience if we discuss Amendments Nos. 156 to 158 and 163 to 166.
Having achieved such an accommodating atmosphere, I regret that I am not making greater demands upon my noble and learned friend, but these are probing amendments. Whether they might be discussed in more detail at a later stage depends on what the probe reveals.
Amendment No. 155 deals with the method by which it is intended that the commission shall carry out its duties. We are debating its nature and functions. The amendment is there, granted that the purpose is to fund advice and assistance in criminal cases, to say how it is proposed by my noble and learned friend that that might be done. The idea is welcome, as is the provision to pay people and make contracts in order to provide those services.
These amendments seek to explore the means which would enable the commission to provide those services. I appreciate that the service must operate through salaried employees. I see no objection to those employees, if they are shown to be competent, providing advice in suitable circumstances. It is clear, from the earlier debates today, that that is what is envisaged.
But there may be some dangers which we may need to consider and possibly address, although to some extent they may have been addressed by the concessions

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which my noble and learned friend made earlier in response to the amendments by the noble and learned Lord, Lord Ackner.
First, in any locality the personnel of the criminal defence service and that of the Crown Prosecution Service are likely to be closely acquainted. They are likely perhaps to develop almost a collegiate relationship. There would be a common interest in the disposal of any case which would spare everyone time and trouble. The most conscientious of advisers may be at risk of allowing that to colour the advice which he gives.
We have heard much discussion of defence systems in the United States, mentioned earlier this afternoon by the noble Lord, Lord Windlesham. The Committee may remember that in 1980 Professors McConville and Mirsky produced a report on the system as it then operated in New York. It is fair to say that that was before the code to which the noble Lord, Lord Windlesham, referred. It lists the dangers which might exist. What the two professors said was:
"Indigent criminal defendants in state criminal cases in New York City receive ineffective assistance from lawyers who, for largely systemic reasons, fail to provide competent adversarial representation. Those lawyers cannot fulfil their responsibility to their clients because those in control of indigent defense want low-cost, efficient processing of criminal defendants through guilty pleas and other non-trial dispositions. To achieve the efficient processing of defendants (and to legitimate a system that fails constitutional and statutory mandates to provide effective assistance of counsel), defense providers ally themselves with courts, prosecutors, local government and the organized bar rather than with indigent defendants".
How far that has changed since 1980 I am in no position to tell the Committee, but that those are possible dangers inherent in the system seems to be clear. Certainly that report was the subject of much criticism and controversy and I would not seek to impose on the Committee a review of the arguments on the two sides of the dispute. I am grateful to the Legal Action Group for having collected them. They are available if Members of the Committee wish to have them. I say only that at the lowest it is a possible danger to be addressed.
But it was a more specific concern which impelled me to set down Amendment No. 163 because it is addressed to a more specific question: not the giving of advice but the right of audience. It is not clear from the Bill—although I hope that my noble and learned friend will tell us whether it is envisaged—that salaried employees of the service will appear in the criminal courts to represent defendants. If so, perhaps he might tell us at what level and in what courts and in what kinds of cases that is envisaged.
If so, there are four possible dangers. First, someone who works for a salary and whose career prospects depend upon promotion within the organisation may not appear to the client to be (indeed he may not be) independent of a service which, however fair it seeks to be, has an interest in shortening cases and clearing lists. In any event, the qualities which make for promotion within an organisation are not necessarily those which mark the successful forensic lawyer, prepared to be critical of the Government or of services like the police.
Secondly, the priority given to a particular case may turn on the workload—mentioned earlier, I believe, by the noble Lord, Lord Windlesham—and the resources then available to the organisation.
Thirdly, the salaried lawyers would gain their experience, unless they came into the service after service elsewhere, in a very restricted field, appearing in criminal cases in a particular locality and always for the defence. It may be replied that there are already members of the practising profession in that situation. If so, it is regrettable. But that would hardly justify extending the problem.
The fourth danger is probably the most fundamental. At present a defendant in a criminal case has a measure of choice as to which solicitor and counsel he employs. The question arises: would he have a similar choice if the only provision available to him is through a local salaried service? Alternatively, would he be assigned a representative, possibly the particular employee of the criminal defence service who is attending that court on that day? Certainly defendants are not always consulted now as to who, from their firm of solicitors, or which counsel, shall represent them. But if they have cause for complaint, they can now choose a different firm of solicitors next time. When the only public funding available to them is for representation through the criminal defence service, that will no longer be the case.
I am aware that a case can be made on the other side of the proposition. I do not propose to predict it, but it will be made by my noble and learned friend. I have no doubt that the question has been carefully considered and researched—at least I hope so. For the moment I await the outcome of that consideration and research and details of the method of operation. I beg to move.
4.30 p.m.
Lord Thomas of Gresford: In speaking to Amendment No. 156 which is grouped with Amendment No. 155 I find it necessary to go further than the noble and learned Lord, Lord Archer of Sandwell, in that I object in principle to salaried employees giving advice to defendants or representing them in court. It is perhaps rather trite to say that it is in the interests of the state that guilty people are convicted of criminal offences. That is perfectly laudable provided that those who are convicted have committed the relevant criminal offences. Every miscarriage of justice causes the criminal justice system to fall into disrepute.
Even one case of injustice has a disproportionate effect on public confidence in the system. Public co-operation is weakened, witnesses are less willing to come forward and juries are less willing to convict, quite apart from the effect of an unjust conviction upon the life and family of the convicted individual. Hence, we have the very correct principle that a person who is accused of crime should be properly defended; that there should be equality of arms; that whereas on the one hand a prosecutor backed by the CPS and the police investigation should carry out his duties with skill and integrity, on the other a defender for whom the state provides the necessary resources to defend the accused should have the same quality, integrity and ability as the person who prosecutes.

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Obviously, the resources provided to defenders must be spent wisely and well and they must account for their use. As a matter of principle, however, when the Government are the opposing party—the prosecutor—they should not be able to control in any way the nature or quality of the defence, nor the extent to which the defender can properly prepare his case. If a public defender system competes for funds it may be able to offer only minimal salaries and the quality of defending advocates will suffer; or it may be that the number of advocates employed will be low in order to keep down costs, in which case each defender will carry an overwhelming caseload with the consequence that he will not be able to give adequate time and attention to the investigation and preparation of his case. I do not believe it is generally realised that defence counsel do not simply appear in court and speak but that, together with their instructing solicitors, they must do a great amount of preparatory work and investigation before that stage is reached.
I believe it is essential that the defender is independent of the Government—the prosecutor—although accountable for the efficient use of his time and the state's money. There is also the problem of unpopular causes. I have experience of what can be done in Hong Kong, where a state prosecutor in the shape of the Attorney-General's chambers is matched by an entirely independent legal aid board which on occasions has to my knowledge resisted both public and government pressure on behalf of unpopular defendants; for example, illegal immigrants, Vietnamese boatpeople and, in one important case, Filipina maids. That independence must be preserved. As I said earlier this afternoon, the criminal defence service as envisaged in the Bill is a step nearer to government control. It affects the independence of the defender in the ways that I have already outlined.

There are also practical considerations. I believe it to be undesirable to have sheep and goats in the criminal justice system. It is not right that there should be those who make a career of prosecuting and those who make a career of defending. I say that based largely on provincial experience where the tradition is that counsel engaged in criminal cases prosecute and defend and have experience of both sides. I believe that to be a preferable system to that which tends to operate in London where some people specialise in prosecuting or defending. It is noticeable that Treasury counsel at the Old Bailey normally take silk and defend before they are considered for judicial appointment. One problem that arises from a division of the criminal Bar into defenders and prosecutors is that if one does not have experience of the other side one's approach to the task can be unbalanced.
The noble and learned Lord, Lord Archer, and others have referred to the collegiate common interest that may grow up between the Crown Prosecution Service and a defender service in disposing of cases. Anecdotal evidence from Australia is certainly to the effect that plea bargaining is a curse of the criminal system. On the one hand, over-charging by the prosecution and, on the other. a deal done behind closed doors, sometimes with
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or without the assent of the judge, results in a lack of that independent advice that is so much the mark of the English system.
Another problem that is likely to arise relates to investigation on behalf of the defence. The Crown Prosecution Service has the police behind it. When the CPS presents its case it has all of those resources available to it. One wonders whether a criminal defence service with employed defenders will be able to turn behind it, as it were, to ask for investigations to be made, statements to be obtained, witnesses, to be brought to court and so on. Yesterday I completed a case in which the defence called six witnesses, every one of whom had to be interviewed at considerable length in order to obtain statements. One wonders whether the time and resources would be available in a state defender service for such detailed investigation to take place.
There is also the problem of the defendant falling out with the person who is assigned to defend him. What happens? It happens frequently in our courts that a defendant loses confidence in the person who represents him. With the assent of the court the defendant can obtain representation from another counsel. I believe that a public defender service will make that very difficult. I am forced to the view that the independent Bar chosen and instructed by solicitors who are aware of the abilities of the particular barrister, and monitored as to quality by the criminal defence service, which is all part of this Bill, is still the way to proceed. There is nothing to supplant the independent Bar.
I was very much assisted by reading the speech of the Chief Justice of Australia, the Hon. Sir Gerard Brennan, to the Australian Bar Association conference in San Francisco in August 1996. He said this:
"An absent and independent Bar—how would the voice of the oppressed by heard? Where would one find an effective champion of an unpopular cause? How would the courts be able to function without the distillation of issues by skilled and independent minds; and how would any tendency to judicial tyranny be restrained? The point was well made by Chief Justice McKeekan of British Colombia who said, 'I believe an independent Bar and an independent judiciary are sentries posted by the constitution to guard our people of their danger. A reborn Erskine would remind us that our greatest threat is not from insurrection but rather from earnest, misguided, well intentioned philosophies that suggest that some combination of Jeffersonian democracy and Harvard business school efficiency could organise the legal system better if troublesome judges and lawyers would just get out of the way'".
I feel that that is a spirit which informs some of the proposals here.
When talking about the Australian Bar, which faced similar issues to those we face in this Chamber, the learned Chief Justice said this:
"An Australian Bar will not be created, I hope, merely as a supplier of services in what some economic regulators choose to call the national legal services market. The Bar has far more extensive duties to perform than the provision of services to the so-called consumers. If the Bar were to see itself simply as such a supplier, our national court system would have to be reconstructed with features and safeguards that are presently unnecessary. The survival of the Bar as a separate and independent institution may make little sense to an economist who does not appreciate its social utility and does not foresee the consequences of its destruction. But the possibility that the Bar will not survive is minimal provided the Bar has a sufficient conceit of its function in the maintenance of

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a free democracy and to that end retains its competence and its independence. It must reject the notion that it is concerned with the marketing of expertise rather than with the use of skill and knowledge in the service of the client and the community".
Those are wise words which were spoken recently by the Chief Justice of Australia; and they apply to this situation. I am opposed to a public defender's service which employs barristers or solicitors to defend.
Lord Borrie: Does the noble Lord agree that the quotation he gave, and many of his remarks, would be relevant if there were a proposal in the Bill to replace the independent Bar by a state service?
Lord Thomas of Gresford: I entirely accept what the noble Lord says. However, things being what they are, it is one step towards the replacement of the independent Bar by a national defender's service of employees. I resist that step.
4.45 p.m.
Baroness Mallalieu: Amendment No. 155, and the amendments grouped with it, address a part of the Bill which gives me greater anxiety than any other. In supporting the amendment I must first declare my interest as a practising member of the criminal Bar.
Whatever the scope of the intended use of these provisions, they seem to me to be in danger of breaching three principles which I think important not just to those who defend in criminal cases and those who are accused of crime but to the interests of justice and therefore to the public as a whole. The first principle—it has been referred to—is that the state, which makes the accusation, should not either control the defence of those who are accused by the state or even appear to the accused to do so. The state pays for the defence in legally aided cases. But it must not, either in reality or in perception, call the tune. The ability of an accused person to instruct his or her own independent defence lawyer is the prime safeguard of that principle.
The second principle which is enshrined in Article 6 of the European Convention is that the accused should have the right to be defended by a lawyer of his choosing. The wording of the Bill, we are told, is not itself in breach of that article but I fear its implementation could easily be so in practice, with a defendant being told in effect, "Mr. Bloggins of the criminal defence service will be down to defend you in the morning. Take it or leave it".
There can be no quarrel with the restriction of a publicly funded defendant's right to choose only from those who practise to the required standard or those who have the relevant experience. Of course in reality a lawyer of his choice may well not be the lawyer of his choice. The top Silk may be unavailable. So may his second or even his third choice. But I find it hard to see how the accused in reality would be able to have any meaningful choice of advocate under the proposed salaried defender system, as he does at present when the accused himself—usually, it is true, he acts on the advice of his solicitor—has the opportunity to select the most appropriate available advocate for his particular case.
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The third principle was well expressed, if I may say so respectfully, by the noble Lord, Lord Hutchinson of Lullington, at Second Reading, at col. 1148 of Hansard of 14th December 1998. He said that,

"access to the best should be available for the least favoured and the most stressed".
But in the cases where salaried defenders are employed, these provisions would effectively restrict access to the most readily available member of the CDS staff. Experiences of public defender systems in other countries have varied. The general view—I have no experience of the system in the United States—is that the system is little short of a disaster. Elsewhere, for example in New Zealand, I understand that the situation is much better. But inevitably the result is directly linked to the amount of money available to it. If the service is run "on the cheap" the result is extremely predictable and those who lack experience or the ability to succeed in private practice gratefully accept the reduced rewards of salaried work. Whatever guarantees may be made today may not be met, or may be unable to be met, by others in the future.
Our present system is widely admired. In my field of practice most of those at the very top of the profession still do legal aid work and are therefore available to defend the poorest defendant in the most serious trouble. That is the great strength of the criminal Bar in England and Wales. We surely must not endanger that.
In his speech at Second Reading, the noble and learned Lord, Lord Falconer, said that it was not his intention that these provisions should apply to the majority of cases. At col. 1200, the noble and learned Lord added:
"It will more likely be filling gaps and, for example, providing defence services in the magistrates' courts".
However, the explanatory notes to the Bill include an alarming prophecy. In relation to Clause 14, it states at page 19:
"The intention is that, in time"—
I ask the Committee to note the words "in time"—
"the Commission will provide all, or nearly all, representation exclusively through contracted or salaried defenders, whom it will require to meet defined quality standards".
In his speech at col. 1112 of the Official Report of 14th December 1998, the Lord Chancellor said:
"There should be equality of arms between prosecution and defence".
I agree with that, but under the Bill unamended I fear that there will not be equality. The prosecution would remain free in any case to instruct an independent practitioner or a salaried member of staff and to chose who that should be. In contrast, the defence could simply be provided with an employed advocate from the criminal defence service.
There is no convincing evidence, so far as I am aware, that there is a need for this part of the legislation at present. If and when such a need ever arises, that is surely the time for debate and possibly legislation to fill any gap—but not now, when there are ample, independent practitioners ready to do the work.

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Perhaps I may say, with great respect to the noble and learned Lord the Lord Chancellor, that to take such powers now fuels a rife suspicion that it is intended to set up a cheaper salaried service to undermine and undercut independent practice. We all understand his desire to reduce costs where possible, particularly in the light of other pressing government priorities. But it would surely be ironic if, in seeking to fulfil promises to increase choice and to provide better services in other areas, the seed should be sown now for the destruction of a system which allows our very poorest people the very best there is when their freedom is at stake. I urge the noble and learned Lord to think again about this matter, particularly in the light of the reassurances which he sought to give during earlier stages of the Bill to the independent legal profession, which he has said he is pledged to uphold and support.
Lord Hutchinson of Lullington: I rise to support the previous two speakers and I am sorry if I do so at a little length. This is a matter of profound importance. My inquiries of the Bar Council reveal that there was no consultation about the possibility of introducing a salaried public defender. I do not wish to embarrass the noble and learned Lord the Lord Chancellor in front of any of his colleagues, but I cannot help believing that deep down he is a "radical libertarian". If he is that—and I think of the refreshing, open-minded approach to matters of principle and substance that he has brought to our deliberations—he could most honourably listen to the voices which come from behind him and from other parts of the Committee and face the fact that he has gone too far. I recognise that people who sometimes do not go too far often do not get anywhere. Nevertheless, if one goes too far it is important to recognise the fact and set it right.
What is this character, the public defender? He has been introduced into the Bill as a complement to the state prosecutor, who emerges later in the Bill. Is this salaried employee, who is to be assigned to and not chosen by the defendant in jeopardy of his liberty, to be a full-time advocate, providing a specialist service, answerable only to his client, the court and to his own professional body? Where is his daily workplace to be? What are his career prospects?
How complicated this has all become. I am glad to see the noble Lord, Lord Mishcon, in his place because when I was a young man at the Bar the noble Lord occupied an office near Lambeth magistrates' courts. He was, if I may say so, a high street solicitor; the very essence of the provision of legal services to the ordinary person. I was a young man at the Bar and the noble Lord instructed me time and again in small criminal cases. He was a first-class advocate in a magistrates' court. He did not want and had not the time to be a full-time advocate. He did not want to deal with cases which were going for trial and where questions could be asked in a magistrates' court with a view to what was going to happen in the Crown Court. He did not want to be involved in cases which would probably go to the Divisional Court or the Court of Appeal because he had a huge, vital practice looking after members of the public in a wide area of the law.
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Sometimes the noble Lord would ask me to do cases for nothing; sometimes he would ask me to do cases for a very small fee. There was no problem. He was in his area and I was in mine. We provided a perfectly straightforward, cheap, efficient service to the ordinary person who is often involved in matters of great importance from the point of view of human rights. Why must we have this state salaried defender?
Of course, the noble Lord, Lord Mishcon, has built up a tremendous monument and a wonderful firm of solicitors. I of course, as a mere member of the Bar, have built up nothing. He ended up with Lady Diana. I had to be content with only Lady Chatterley. But there we are—we each had our own areas and the matter was perfectly straightforward. Now we have this massive Bill, the legal aid proposals and the public defender.
We have been vouchsafed only two pieces of information—and the noble Baroness, Lady Mallalieu, has referred to both—as to what the public defender will be. He is to be used only to fill the gaps. So this great new bastion of liberty is to be a part-time, stop-gap advocate. How would the noble and learned Lord the Lord Chancellor feel if, when he had a burst appendix, he was told that a stop-gap, temporary surgeon would look after him when he went into hospital. having been rustled up from the admin block?
The other reference appears on paragraph 97 of the Explanatory Notes. According to that text, the lawyer is to fulfil a more zoological role: that of the guinea pig or the Trojan Horse, to provide,
"the Commission with better information about the real costs of providing these services";
that is, the real costs of providing a defence to a defendant. The Members of the Committee can visualise the picture: "See how cheaply you can do it, George. Cut down the witnesses; avoid any forensic or expert evidence; cut short your cross-examination; make no legal submissions; do not apply for bail; get the defendant to plead guilty; strike a good bargain with your colleague along the road at the CPS; and the judge and Big Brother will be delighted with your performance". It is easy to waste money, but it is even easier to cut costs at the expense of justice.
The Bill focuses on the needs of users and not providers. But what will this user get from the salaried employee operating opposite his colleague in the CPS? I gather that there may even be cross-appointments between the two in order to widen what is called their "mutual experience". What confidence will the user have in the independence and detachment of the advice and that crucial confidences will be kept? What will be the perception of him?
I make no trade union point because a safe, salaried job in the commission would be an attractive proposition for the struggling independent advocate.
Professor Zander, the most revered academic versed in criminal law and a member of the Runciman Committee, pointed out in a recent letter to The Times:
"It's not to do with the integrity of the lawyer, but everything to do with the institutional and bureaucratic pressures that arise unavoidably from being an employee of an organisation".

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All Members of the Committee will have seen that in the present parlous state of the CPS where, apparently, 70 per cent. of the lawyers are dissatisfied with the quality of their own service in that organisation.
Perhaps I may just enlarge upon that because it is a matter of the greatest importance. I suggest that this provision is another example of the "dumbing down" of the role of the criminal advocate and the place of the criminal law in our constitutional arrangements. A view very much held in the noble and learned Lord's department and in the higher echelons of my profession is that highly qualified lawyers, professionals, should not be wasting their abilities and the taxpayers' money dealing with unsavoury persons in the criminal courts and that their proper place is in the High Court and the Court of Appeal.
It is in the criminal courts—in the magistrates' courts in particular and in the Crown Court—where matters of personal liberty are fought out; where human rights are most abused; and where miscarriages of justice are most outrageous and acute. It is there that the citizen is daily up against the power of the state, the police and the government and it is there that, as the noble Baroness, Lady Mallalieu, said, the user is surely entitled to the service of the best; that is, a whole-time specialist, an independent and dedicated advocate.
While I am on this matter it is worth noting in passing, without breaking the sub judice rules, that all the advocates for both parties in the Pinochet case are from the criminal Bar whereas not one of the seven Law Lords sitting on the matter has had the advantage of a criminal practice. When the user chooses the noble Baroness, Lady Mallalieu, or used to choose my noble friend Lord Wigoder, what did he get? It was someone answerable to no employer, no shareholder, no partner, no firm, with no certainty of income, pension or perks but someone who, on the cab-rank principle, remained available if chosen, whatever his professional status may rise to be, for the most deprived and oppressed. I say to all Members of the Committee that that is surely a principle worth preserving.
Is not the American experience a sufficient warning in itself because the DA and the public defender have brought the criminal process in the United States into disrepute? At the end of this debate on these amendments, I urge the noble and learned Lord to take away this matter and to think about it again. Ministerial assurances butter no parsnips in this Committee.
5 p.m.
Lord Bach: I rise with some trepidation because I speak in opposition to so many distinguished lawyers who have spoken already in this debate. I notice that they are all Queen's Counsel. In particular, I am in some trepidation because I follow the noble Lord, Lord Hutchinson of Lullington. When I was a Bar student I would go to the Old Bailey to watch him conduct his cases and I said to myself then—and nothing has changed my mind since—that if I were ever charged with murder, I should want him to fight my case, whether or not I was guilty.
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I am a barrister in private practice. The cases in which I appear are 100 per cent. criminal cases and in the great majority of those I am defending. I speak against the amendment. Why do I do that? First, there seems to me two particular ways in which the Bar does itself no favours. Many of those who speak on its behalf do so as though being called to the Bar is some kind of spiritual calling; in other words, that there is something about being a member of the Bar which makes it a distinct, different and much higher job than, for example, teachers or doctors. That is an unattractive way in which the Bar goes about defending itself and it does not cut much ice with the general public. The Bar is a distinguished profession and I am proud to be a member of it. However, I do not see it as being a profession which should have special rights and responsibilities, particularly in the modern world.
Secondly, it always seems to be assumed by those who defend the status quo that the Bar, and particularly the criminal Bar, is full of the most distinguished expert counsel; in other words, that there is a quality among those who defend in our magistrates' courts and Crown Courts that is really universal and that there is no distinction between barristers which can be made.
That just is not my experience. The present system quite often sets up weak defence counsel against strong prosecuting counsel. That is under state legal aid as we have it at present. That happens when those charged with criminal offences are supposed to have a wide choice. They sometimes, and often, end up—and I am not talking about the kind of cases in which those who have spoken for the amendment are used to appearing but in the every-day bread-and-butter Crown Court cases—being defended by barristers who, if Members of the Committee heard them, would not be considered to be of the highest quality.
Lord Thomas of Gresford: Does not the noble Lord agree that the Bar is the most competitive of professions and that as the complexity of the case increases and its importance increases, so only the competent barrister of the independent Bar is instructed? Does he not agree also that in a criminal defence service with employed barristers, the risk is that people who are not up to the job will appoint themselves to defend and find themselves at a distinct disadvantage against a strong prosecutor?
Lord Bach: Perhaps I may say in reply that at present the competition which of course exists at the Bar, as it does in other professions—and sometimes we lawyers tend to forget that—is not such that if you are not really first rate you will not obtain good work. It does not happen like that. It very much depends on what chambers you are in and on the returns system, about which I intend to say more in a few moments. To think that somehow pure competition runs through the barristers' profession is to hide one's face from what actually happens.
Of course, at the very top of the profession, from which the noble Lord speaks, competition is ruthless and the very best get to the very top. It is not always so lower down.

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I wish to turn to the returns system because the point has been made by the noble Lord, Lord Thomas of Gresford, that commonly, there is a relationship between the solicitor and the chosen counsel in a defence case which means that the two of them undertake a great deal of research together before the matter comes to trial.
That may be so in cases of the utmost seriousness. It may be so in cases which will take a long time to try. It does not happen as a matter of course in the ordinary Crown Court case because the barrister may well receive the brief at the very last minute, so there is no question of the barrister and the solicitor together carrying out the research to which the noble Lord referred. There is also the prospect of returns, which happens a great deal and sometimes at extremely short notice. I am referring to every-day, bread-and-butter Crown Court trials. To pretend that there is some kind of mystical relationship between solicitor and barrister in regard to criminal cases which does not exist elsewhere is, in the majority of cases, wrong.
There was also talk about collegiate undertaking and understanding which would occur between a Crown prosecutor and a summary defender, as though that is something that is completely unheard of in our present arrangements. Of course it is not to be approved when it takes place; but one only needs to visit any robing room in any Crown Court in this country to know that bargaining takes place between an independent prosecuting barrister and an independent defence barrister. Sometimes it is for the convenience of the offender; sometimes it is not. To suggest that that is a problem which will suddenly emerge if we introduce salaried defenders seems to me again to be hiding away from what actually happens day by day in our courts.
Also, it has been presumed that the salaried defender, if he or she comes into being, will necessarily be a young lawyer at the start of a career or a more senior lawyer who has failed in private practice. For my part I can see no reason why that should be the case. As I understand it, in some countries where salaried defenders work alongside independent defenders, it is a distinguished career; it is one which may well lead to the Bench in due course; it is one in which only lawyers who have been in practice for a certain number of years can enter. So there is no need today for us to panic and think, "If they are salaried defenders, they will be either inexperienced or failed members of the Bar".
Much of the reaction against this "modest" step—no-one is proposing that our system of centuries should be altered overnight—is very much overblown. The Bar and those who represent its interests should be much more self-confident about the future than they sometimes give the impression of being. The Bar has survived many things. There will always be a place for an independent Bar, particularly in the criminal defence field. Why this modest step should gain such opprobrium from so many Members of the Committee I find difficult to understand. I hope that in due course the amendments will be withdrawn.
5.15 p.m.
Lord Phillips of Sudbury: I had not intended to speak in this debate but was rather provoked by the noble Lord, Lord Bach, into saying just a few words. I do so from the vantage point of being a practising solicitor; in fact, it is 40 years since I first briefed a young barrister called Michael Havers on the South-Eastern Circuit.
I want to refer to what the noble Lord said in relation to the reference of my noble friend Lord Hutchinson regarding the almost "spiritual" quality of the Bar. I detected a note of scepticism, if not scorn, in that remark. Indeed, one can seriously overdo the "noble calling" aspect of this debate; on the other hand, one can understate the importance of the sense of vocation which should and does still exist in the Bar and in defenders at the Bar in relation to their work.
I endorse entirely what was said by the noble Lord, Lord Thomas of Gresford. He read from the speech of the Lord Chief Justice of Australia, which was very relevant. It is easy to underestimate the change in ethos that both branches of the legal profession—particularly my branch—are and have been rapidly undergoing in the past decade or two. It is easy also to underestimate the impact of what I would call the "institutionalisation" of the provision of legal services at all levels. That is a reality. While in no way wishing to denigrate those who work in organisations, I would point out as strongly as I can the virtue I see in the independence of the advocate at the Bar; the ruggedness, often bloody-mindedness and the eccentricity, as some would think, of the independent advocate.
As my noble friend Lord Hutchinson said, lawyers receive no perks, no pensions, no nothing. They exist in a highly-competitive environment and we must consider with care the prospect of replacing such a person whose talents and characteristics of independence are so crucial to the defence process by someone of no doubt equal intellectual capability and integrity, but nonetheless operating within an organisation that is subject to all the constant pressures of price, value for money and so forth. It is too easy to underestimate that.
We engage in short-term economies at the expense of the larger interests. The number of wrongful convictions that we have suffered in our system in recent years of the most notorious kind had huge consequences, not only in terms of respect for the system, but also in terms of the expensive repercussions which one can never quantify because they spin off in all directions—the police, the courts and so forth. I do not believe that this is an area where we should either disregard or underestimate the factors to which I referred. Therefore with great respect to the noble Lord, Lord Bach, who speaks from day-to-day experience, as a solicitor I endorse strongly what has been said on the other side of the debate.
I conclude by saying that of course the present system is not perfect; of course there are returns; of course there are incompetent advocates. But that is not what we are discussing. No perfect system exists. We are discussing a system which loses perhaps its most essential element

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for any prospect of improvement; that is, absolute, rugged, unquestionable independence on the part of advocates.
Baroness Kennedy of The Shaws: My views on this matter were expressed the last time we were together at Second Reading. I expressed them forcefully then and do so again today.
My starting point is that if it is even a possibility that our law officers might introduce a scheme such as the public defender system, it is not appropriate for it to be kept as something which exists as a possibility, to be brought into being at some later stage. It should be contained within a separate Bill, brought before this Chamber and discussed in a debate which allows the public to know what is going on. I say that because the Access to Justice Bill contains many good aspects. On these Benches there are a number of people who, with good will, are supportive of the Government in seeking to widen access to justice, but to slide into such a Bill something as undermining of the justice system as a public defender system is wholly inappropriate and should not be taking place in this way.
I do not demur from holding in regard what I consider to be a vocation. I find it distasteful to sit in this Chamber and hear the profession to which I belong spoken of as if it were some sort of corner shop. In saying that, I in no way demean those involved in the world of entrepreneurship, but I believe that there is something special about being a member of a profession and seeking to fulfil that role honourably.
I do not accept the criticisms of the noble Lord, Lord Bach, that lawyers are somehow seeking to describe their role as some sort of calling. Being a lawyer and doing that well makes special demands on us. If we are to serve our clients well, we have to go the extra mile. I did not go into the law to make large sums of money but because I believed that I might be able to make a difference to people's lives. I have always seen my role in the law as, and my practice in the law has always been about, representing those parts of our community which have little voice. Most of my clients have been the poor, the disadvantaged, and those who have experienced discrimination in one way or another. It is the role of the Lord Chancellor and the Law Officers within the system to protect those persons, particularly because they often have little support in the wider community.
Making representations on behalf of those who may have criminal records and who seek legal aid in criminal cases does not often summon up much support from the public. When the noble and learned Lord the Lord Chancellor tells us that he wants to save money for other services such as health and education, the majority of people will have great sympathy with him. Most of us in this Chamber would share that view. However, the Lord Chancellor and the Law Officers also have the role of protecting the liberty of the subject; of ensuring that the system of justice functions well for those who are disadvantaged and that those who are put on trial are
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well represented, and of being the champions of the honour which there has to be in our profession. Their role is not, I hope, to ridicule it in any way.
So, I can proudly say that I consider myself to be part of an honourable profession. My colleagues here today who are expressing concern about this are not speaking from self-interest—it is so easy to insist that that is the case in our discussions on legal aid and "lawyering"—they are speaking about the disadvantaged and the reasons why legal aid was brought into being. It was to protect the system and its integrity and to ensure that those who are less well off have as much right to justice as anybody else.
Several miscarriages of justice have recently been exposed. Very often the lawyers who acted in those cases were those who went that extra mile in discovering evidence which showed that things had gone wrong. There are serious risks in introducing a system which does not allow for such independent, spirited activity. I believe that that would become lost in a system of salaried lawyers such as has been spoken of today.
How is choice preserved in a system such as that described? How is quality maintained? If the question is, as has been suggested by the noble Lord, Lord Bach, that at the lower end of the scale many people who are not terribly skilled are representing the disadvantaged, surely the challenge is to ensure that quality is improved—but not by creating a salaried system in which lesser quality may be institutionalised. There are other ways of improving a system and ensuring that people are well represented.
At the moment—I am afraid that I must operate in a world which is very different from that of the noble Lord, Lord Bach—the profession is being pursued by many young people as a chosen career. The numbers of people applying to chambers such as mine are countless. The selection process at that stage means that only the best get through, and the best from the widest of choices now that so many of the new universities are providing us with law graduates.
The processes of becoming a practitioner at the Bar are such that there will be fewer and fewer "less able" practitioners, as described by the noble Lord, Lord Bach. I find it most surprising that at a time when the market is being extolled by governments (of whatever political complexion), we are seeking also to move away from the independence of the Bar and the very market which is being so promoted everywhere else. Better performance and competition is the name of the game at the Bar. Those who survive and do well in the profession are those who hone their talents, and continue to do so daily, in the courtrooms.
It is a matter of great sadness to me that this proposal has been included in the Bill. I can only imagine that it was to see whether there was a way of saving public funds. However, there are other ways of saving public funds; this is not the way to do it. It is not necessary for me to repeat what has been said far more effectively by others. All that I would say is that there are ways of driving up quality, if that is what concerns those behind this Bill. However, I urge that this matter

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is not pursued at this time. If there is a serious intention to create a public defender system, I urge that it is contained within a separate Bill and that this House and the other place are allowed to debate it properly, with the public fully aware of the consequences of such an introduction for the interests of justice.
In conclusion, I have seen at close quarters this system working in other parts of the world. It is all very well for the Government to say that it would be introduced only at the lowest level of case, but how can we prevent the creeping nature of such a system? How do we prevent it creating a two-tier system of justice which, inevitably, is what has happened in other places where it has come into being?
Lord Wigoder: The noble Lord, Lord Bach, put forward a number of criticisms of the Bar which have been heard before and which undoubtedly have some validity. However, the noble Lord has compared the Bar as it is now with a sort of ideal that some people create in their minds. The real test is how do we compare the Bar as it is now with how a public defender and public prosecutor service would operate. The answer then becomes rather different.
The noble Lord mentioned three matters. First, he said, quite rightly, that not everybody at the criminal Bar is a person of high calibre. Of course, there are beginners at the Bar and people who last for several years before finally giving up the struggle. All that one can say is that at least the average member of the criminal Bar is likely to be a person of higher calibre than the average member of a state prosecution or defence service. That is not because they work in the state prosecution or defence service, but because the average member of the Bar has survived in a highly competitive world and could not have done so unless he was a person of real ability. The same does not necessarily apply to members of state prosecution or defence services.

The second point which the noble Lord raised is that there are trials in which a private barrister is pitted against an independently instructed prosecutor, and one is very much superior to the other. If I may say so, that is abundantly obvious. However, what will happen if there is a state defender and a state prosecutor? Will the person in charge of the state defender ring the Director of Public Prosecutions and say, "In the case of Jones tomorrow, we are putting up only a class 5 chap. Would you be good enough to put up a class 5 chap as well and then it will all be fair?". Life is not like that. If there were a state prosecutor and a state defender there would be exactly the same disparities as one inevitably gets from time to time now.
The third argument is the old one that as the Bar functions at present there are sometimes problems with the late return of briefs and counsel who are inadequately instructed. That is undoubtedly true. However, it is fair to say that in a well-organised set of chambers if counsel has to appear at the last minute he at least gets the benefit of counsel who were instructed prior to the date of the hearing. His replacement should be given the benefit of his experience. It is not the Bar's problem really, but more of the organisation of the
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courts. The Bar becomes involved in cases which are expected to last two or three days. The individual members of the Bar have their commitments for the following days. Suddenly a witness becomes ill or a case continues two or three days longer than anticipated. There is then a problem with a barrister who has been briefed in perfectly good faith, weeks in advance, in the apparent knowledge that he would be available for a particular trial. I do not blame the judge for not saying, "In that case we shall adjourn for two or three days" and do nothing but have a couple of rounds of golf or whatever it may be while awaiting counsel to become free of his previous obligation. With the way the listing system works there is no alternative but for the Bar to find itself with such problems.
A state defence or prosecuting solicitor or barrister will find exactly the same problems. One frequently has been in a magistrates' court when the prosecuting solicitor has arrived with an armful of briefs which have been handed out that morning because it was the turn of that particular solicitor to attend that particular court, but with no opportunity for preparation. One will get exactly the same problems with a state defence service because one will become involved in a case which has gone on longer than anticipated and a subsequent case has to be handed over to a colleague.
I suggest to the noble Lord, Lord Bach, that the criticisms he made should not be set against an ideal Bar in an ideal world, but against the alternative which is being put forward in this Bill of a state-employed, salaried defender and a state-employed, salaried prosecutor. I believe that if he looks at the matter impartially what can be said in favour of the alternatives in this Bill is that they are probably cheaper. But against the alternatives there is the service which the independent Bar has given and continues to give.
5.30 p.m.
Lord Clinton-Davis: I have listened with very great care to all the lawyers who have spoken in this debate and in particular to the noble Lord, Lord Hutchinson, who paid a very valid tribute to my noble friend Lord Mishcon. I was once his articled clerk. On the very first day of my articles I went to a conference with the noble Lord, Lord Hutchinson. No one had instructed me as to what I was supposed to do. I thought that I ought to intervene from time to time as I considered that to be an obligation. I was asked by the noble Lord. Lord Hutchinson, to remain behind after the conference. He said, "Mr. Clinton-Davis, there is no mandatory requirement to intervene quite as much as you did". I took that to heart afterwards.
I am not persuaded that we should not go ahead with this scheme provided that it is very carefully monitored. We are not living in a situation where we can necessarily take on board that which applies in Australia, New Zealand or the United States of America. We can build on our own experience. I do not see the dire consequences that have been portrayed as necessarily becoming a reality. Until 1984 I also practised in the criminal courts. I gained quite a lot of experience there as a solicitor advocate. But when I wanted to employ counsel situations frequently arose

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about returns which were embarrassing not so much to me as a solicitor, because I was not doing my own advocacy, but to the person whom I represented. I had never seen the person before. He might have had conferences with the barrister who was supposed to represent him. That is very embarrassing not simply in terms of the relationship between the client, solicitor and barrister concerned, but because it also brings the law into some measure of contempt as regards the lay person. We have not heard too much about that.
Of course, it is quite right that in certain circumstances one wonders whether someone in a salaried occupation would fight quite so hard to expose injustice in the way in that it has been over the past few years in particular. We should listen very carefully to the evidence which has been garnered. As regards advocacy, we should apply very high standards which, as the noble Lord, Lord Bach, said, are not always present in either of our professions. One has only to go into court to know that. People get away with rather low standards. We should be concerned about that. The fact remains that it is an important element of the whole argument that we should retain the standards of the independent Bar, and that is what I understood was the subject of the previous debate.
I ask my noble and learned friend what steps he will take to ensure that some of the dire consequences which have been mentioned in this debate by other Members of the Committee will be carefully monitored and that the whole system will be watched carefully. I hope that evidence will be accumulated in order to ensure that such situations do not arise.
There is one other factor which has not been mentioned as regards people employed in a salaried service. I do not want to make too much of it. They can accumulate for themselves quite a lot of experience which can be put to use in the private sector once the learning curve has been undertaken. In the United States one of the great benefits of having young people in particular working in the department of justice, in the district attorney's office or in the security and exchange commission, is that they have some measure of security while undertaking that process of education. That can most certainly be put to the advantage of their clients in the private sector later on without compromising their position. High standards do exist in the United States. It is quite wrong that people write off the experience of other countries as a colossal failure. There is no evidence of that. There is good and bad.
Subject to the caveat which I have entered and to which I hope my noble friend will respond positively and affirmatively, we should engage in what I regard as a useful experiment which could bring better value to the lay client than sometimes exists at the present time. It is not all good or all bad. Many of those who have argued against my noble and learned friend's proposition have adduced good arguments which I find
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very persuasive. But there are good arguments on the other side, too. A balance needs to be maintained and to do that one needs a chip on both shoulders.
Lord Renton: This, for me, is a nostalgic occasion because I was called to the Bar 66 years ago this very evening.
Noble Lords: Hear, hear!
Lord Renton: In fact, it has been a nostalgic occasion for several reasons. I once had the privilege and pleasure of leading the noble Lord, Lord Wigoder, when, while prosecuting a criminal case at Hertford Assizes, we embarked upon a scheme which had not been tried for 200 years and which subsequently became an acceptable part of the law. Moreover, the noble Baroness, Lady Mallalieu, did her first brief in front of me when I was Recorder of Guildford.
However, I wish to be brief. When I first looked at the Bill I was scared. I really thought that it would lead to a deterioration of standards. But, as we have proceeded in Committee, I have become more and more encouraged by the fact that the noble and learned Lord the Lord Chancellor has accepted the views of those who have criticised the Bill. I hope that he will continue to do so.
Baroness Crawley: I am not a member of the legal profession. However, as the noble Lord, Lord Renton, has just told us that this evening is an anniversary of his being called to the Bar, I have to say that my father was also called to the bar as a young man; but only to start a lifetime of serving alcoholic beverages to the great British public.
As a non-lawyer, I hope that Members of the Committee will forgive my boldness in questioning the wisdom of all these amendments, which seek to remove from the Bill the right of the commission to employ lawyers. From listening to noble Lords and noble and learned Lords, it would appear that those supporting the amendments believe that the present system is working, by and large, perfectly satisfactorily and that, therefore, "If it ain't broke, don't mend it".
However, after 15 years of representing constituents who have not always felt that they have been legally defended to the highest possible standard on every occasion, I believe that in no profession can we be complacent and think that change could never improve effectiveness; and that it could not, in this case, achieve greater access to justice for the public by providing a mixed defender system.
Some noble Lords have talked about "thin edge of the wedgery" in this debate, but we are talking about a mixed private and public defender system and not about one overtaking the other. I believe that one of the strengths of that mixed system is the fact that it has within it the offer of competition and complementarity. The present system, unamended, allows a monopoly of private practice to exist, whereas a mixed representation of public and private may well be a significant improvement in terms of efficiency and—let us say it

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out loud—value for money. That is the responsibility of this Chamber, as well as ensuring that the highest possible standards of access to justice exist.
In the offer that a mixed system may give us of efficiency and value for money, I believe that we should consider some of the more recent research which has been carried out in other countries and look at how mixed systems have actually operated. I recommend to Members of the Committee the document, Legal Aid Delivery Systems published in 1997, as an unemotional reference to how this system works in other countries.
The present system has no formal quality assurance built into it. Although noble Lords supporting these amendments may say that the practice of solicitors of only referring cases to banisters in whom they have confidence is a form of quality assurance—indeed, a recognition that the market cannot lie—I contend that people's civil liberties are too important to be left to the vagaries of such a questionable market if a better system is on offer. Indeed, I believe that a better system is on offer in the Bill.
I have in mind a better system where the cost of the salaried service will provide a bench-mark which the CDS can use to assess whether the prices charged by the private lawyers are reasonable. Members of the Committee may also wish to reflect on the fact that, while the present totally private system is about lawyers running a business, a salaried service would mean lawyers would he freed from the burdens of running a business—that is to say, the burdens of paying the rent, touting for business, sorting out car park space entitlement and all the other important matters involved when running a business—and would, therefore, be able to concentrate more closely on the job of securing justice for people. More importantly, as stated in the White Paper, a salaried defender system would expose and fill the gaps in the system where too few local solicitors' firms and barristers' chambers now participate. I urge my noble and learned friend the Lord Chancellor to resist these amendments enthusiastically.
5.45 p.m.
Viscount Bledisloe: In listening to the powerful and eloquent speeches that have been made, I have more and more wondered whether they are tilting at the right windmill. The amendments now before the Committee seek to leave out the power of the commission to use salaried lawyers from its own department; that is to say, one method of fulfilling its duty. If the amendments are passed the commission will not be allowed to provide advice and assistance or representation by means of salaried defenders, even when the accused wants it.
It seems to me that what those who have spoken are against is not that that alternative may be available but the fact that, in certain circumstances, an accused may be forced to have such a state defender. Surely the mischief that gives rise to that possibility is to be found in Clause 14(6), which allows the Lord Chancellor to prescribe that you could only have representatives of a "prescribed description". If that subsection were to be deleted, as suggested in Amendment No. 170, the possibility of providing a salaried defender as an alternative would become innocuous.
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I ask the noble and learned Lord the Lord Chancellor not merely to express his attitude to the amendments, but also to say whether he is minded to accept Amendment No. 170; or whether he is at least prepared to ensure that the regulations cannot produce a situation in which a person could be compelled to have a state defender if he does not want one.
Lord Hacking: When my noble and learned friend Lord Archer introduced the amendments he described them as probing amendments. Indeed, after a debate lasting one hour and 27 minutes, I believe it can now be said that the amendments have had a good probing as, indeed, have the issues involved. However, as the noble Viscount just said, if we were to pass the amendments one means of the commission to provide legal services would be removed. For that reason, and that reason alone, I think it would be undesirable for these amendments to be accepted. In any case they are probing amendments and we have treated them as such.
At this stage in our debate we should consider the overall objectives of the Government in bringing forward the legal defence service. The first objective of the Government is to bring taxpayers' money properly into control. There is a problem. Paragraph 6.6 of the Government's White Paper states,
"In 1992–93, the taxpayer spent a total of £507 million on all forms of criminal legal aid; by 1997–98, the figure was £733 million. This is an increase of 44 per cent., compared to general inflation of 13 per cent.".
Paragraph 6.7 states that,
"42 per cent. of legal aid spending in the Crown Court (almost £116 million) was on just … 1 per cent. of the cases".
When the noble and learned Lord, Lord Mackay of Clashfern, was Lord Chancellor, I was wholly supportive of his measures in this area. This was a concern that he and his department frequently expressed. There has to be a remedy for that problem. We simply cannot go on spending such large sums of money on a legal resource when the Government need to spend money on many other resources; for example, education and health.
The second objective of the Government is to bring quality of service to the criminal defence process. As my noble friend Lord Clinton-Davis rightly said, we should be concerned about low standards. Therefore the proposal that there should be an assessment under the contracting system of the quality of the service of the criminal defender from the private sector is a measure that I believe is sensible and highly desirable.
The third objective of the Government is to provide legal advice and assistance at all levels. Let us start at the level of the high street. Yesterday morning I was walking in Clerkenwell on my way to attend an arbitration. I walked up St. John's Street in Clerkenwell and I noticed a surprisingly long queue of citizens—there must have been 15 or 16 of them—waiting outside a citizens advice bureau for the door to open to gain access to the advice that was on offer there. It was because the citizens advice bureau, which does much noble work, was found to lack sufficient legal expertise that funded law centres were established with salaried lawyers. The proposal in this Bill for criminal law

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centres to be set up seems to me a sensible step. There is also a need for citizens to obtain advice on criminal matters from salaried lawyers. That, incidentally, would be cut out altogether if these amendments reached the statute book.
The fourth objective of the Government is to seek to ensure independent representation in court. I well remember the setting up of the Crown Prosecution Service. At the time I was a practising member of the Bar. All kinds of remarks were made as regards that service lacking independence. That has not proved to be the case. There have been deficiencies in the Crown Prosecution Service, but not as regards its independence.
It seems therefore, looking at the overall proposals of the Government, that it would be entirely sensible to have available salaried lawyers to represent defendants where needed. My noble and learned friend is not proposing a wholesale salaried system or the destruction of the Bar. He is merely proposing to run a few pilot schemes and to give the legal services commission the ability to use salaried lawyers in certain areas where there is a deficiency of defence lawyers; for example, in certain rural areas. This is not a case of putting a great hammer to a nut. It is simply a case of providing a wide scope of resource. On that basis I support my noble and learned friend.
The Lord Chancellor: These amendments would remove the power of the commission to secure advice, assistance and representation in criminal cases by itself employing lawyers. It has been suggested that behind the provisions in Clauses 13 and 14 is some kind of ambition on the part of the Government to introduce a wholly salaried service in place of private practitioners. That, it is said, would result in a serious erosion of the independence and quality of defenders. Let me assure those who nourish such fears that they are mistaken.
It is patently not the case that being dependent on the state for funding or for payment of one's salary undermines independence. I believe that the public think that barristers claim too much for themselves when they claim that only they can be honourably independent, and that they insult those who are in employment by maintaining that they cannot be honourably independent. I go further. I would say that many members of the public think that this is special pleading by banisters.
Is it to be suggested that our judges, who are conspicuously independent, lack independence because they are employed by the state, or that prosecuting counsel, members of the independent Bar, instructed and paid by the Crown Prosecution Service case by case, with the overwhelming bulk of their practices coming from that single source, lack independence? Yet from the standpoint of precariousness such prosecutors are in a more precarious position and in theory subject to greater risk of pressure than a salaried lawyer who has job protection, a steady, predictable salary and other safeguards, including Clause 36 of the Bill. That clause will give statutory force to the overriding duty of all advocates to the court to act in the interests of justice
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and comply with their professional rules of conduct so that salaried lawyers will owe the same duties to their clients and the courts as private practitioners.
In addition, earlier in our discussions this afternoon I readily accepted in principle the proposal of the noble and learned Lord, Lord Ackner, to introduce a statutory code of practice for salaried defenders. I should perhaps remind the Committee that any government employed lawyer has a right of access to the Attorney-General, the leader of the Bar, if he feels he is being pressured to act improperly. I also intend that salaried lawyers will be responsible within their organisation to a professional head to reduce even further any risk to their professional independence. Some Members of the Committee may have other specific ideas about how the independence of salaried defenders could be further guaranteed. If so, I should be more than ready to consider them. However, what I am not willing to do is to exclude the possibility of salaried lawyers from the Bill.
The noble Baroness, Lady Kennedy, if I may say so, casts herself in a quite suitably heroic role fighting for the disadvantaged. Many of us who are lawyers have done this, and in many areas of the law beyond the criminal law.
Most salaried defenders, however, would represent the disadvantaged in just the same way as independent banisters. Nor do I accept that dedicated lawyers of quality, integrity and commitment to their clients are incapable of being attracted to become salaried defenders. The noble Baroness, Lady Kennedy, wants this modest power to be shelved and brought forward, if need be, in a special, separate Bill. I could see the point of that if I was proposing a salaried defender service to replace the independent Bar—but, emphatically, I am not doing that.
I stress that it is not our intention that salaried defenders should supplant the independent Bar or, indeed, the solicitors' profession. That will never happen. We see value in the commission having power to introduce into the system a salaried element, subject to appropriate ethical safeguards. But it will always be a mixed system in which the salaried element will by far be the smaller part.
6 p.m.
Lord Thomas of Gresford: Does the noble and learned Lord envisage a competitive situation—that is to say, a free choice for an accused person either to have the employed defender under the criminal defence system or to have an independent counsel and solicitor team which is paid for by that system?
The Lord Chancellor: I wonder why the noble Lord, Lord Thomas of Gresford, thought that he needed to intervene to ask me that question. Of course I would not let this debate pass without expressing a view on that point. I will do so, in due time, in my reply to this debate.
I see us starting, very small, with pilots. I would expect the pilots to cover the solicitor litigators' role and perhaps advocacy in the magistrates' court. We would of course want to consult on the details and, if we

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decided to extend the scheme, it would only be after we have had experience and the opportunity of a well-informed debate based on that experience. I give my noble friend Lord Clinton Davis, who is following our discussions closely, the assurance that we would start with small pilots and monitor them precisely to see how effective our arrangements were in avoiding the risk to which this debate has called attention. It would only be against that background that decisions could be taken—on evidence rather than heresay.
The noble Lord, Lord Thomas of Gresford, in his intervention and the noble Viscount, Lord Bledisloe, in his contribution asked whether there would always be a choice. The appropriate time to discuss this, as the noble Viscount envisaged, is when we come to Amendment No. 170, when we will have a detailed discussion. Running ahead, there will be certain, special and limited circumstances when there cannot be a choice. That will be discussed in the context of that amendment. We certainly intend that generally there will be a choice between several quality-assured providers, contracted providers and salaried defenders.
One reason this will happen in practice is because both contracted firms and salaried defenders will take their turn as duty solicitors at the police station and the magistrates' court. That is where many people first meet the representative they choose to use. Of course people will not be required to use the police station duty solicitor at their hearing in the magistrates' court unless they choose. In practice, and subject to the detailed explanations we will give in relation to Amendment No. 170, there will be a choice in almost all circumstances.
Running ahead, it might be desirable in order to have an effective pilot, in some cases not to have a choice—for example, in rural areas where no suitable private firm of the requisite quality exists, and in certain other cases. In rape cases, where the defendant is unrepresented, it might be necessary to assign counsel on the day to cross-examine in order to avoid the delay of an adjournment. But generally there will be a choice.
As I say, I am not willing to exclude from the Bill the possibility of salaried lawyers. They could be the most effective way of meeting need where otherwise there might be a gap in provision—for instance, in rural areas or deprived inner-city areas where there is limited or no access to other good quality defence services.
Those who are prejudiced against the concept of public defender systems will not have it that they can ever be good. But of course the same can be said of private practitioners in some countries. It does not follow that all private practitioners are bad or that all salaried providers of services are bad simply because bad examples can be found around the world. There are also good examples of quality salaried services in countries such as Canada. In Quebec 55 per cent. of cases are handled by staff lawyers. Clients there are generally allowed a choice of salaried or private lawyer, and experience has shown that the majority of clients express a preference for a staff lawyer. Indeed, despite the lower average case costs, staff lawyers in Canada were found to achieve broadly similar or slightly better
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outcomes for their clients than private lawyers. Clients of staff lawyers were neither more nor less likely to be convicted than clients of private lawyers.
It is vital that defenders, whether they are private or salaried, should be properly resourced, qualified and supervised. In addition to meeting gaps, one reason why I believe an element of salaried service would be beneficial is that in a mixed economy of private practitioners and salaried defenders we would be able to bench-mark each against the other in terms of quality and cost.
At the outset of our discussions this afternoon there were complaints that the proposal for a salaried defender service has been sprung on the legal world. The noble Lord, Lord Windlesham, suggested that—I see that he is not now in his place. I can only assume that those who feel taken by surprise have not been reading the newspapers and the legal journals, much less listening to the speeches that I and my Minister of State have been making over the past year or more. That may be a very wise allocation of their time but it does not lie in their mouths to say that this very limited proposal has been sprung on an unsuspecting legal world.
Finally, I think I should turn to the amendment put down by the noble and learned Lords, Lord Ackner and Lord Archer of Sandwell, which will remove altogether the power of the commission in Clause 13(2)(g) to do anything else that it considers appropriate for funding advice and assistance. That amendment is part of this grouping too. The amendment would remove what I regard as an essential element of flexibility. Gaps may arise in the provision of advice and assistance in ways that we cannot now foresee. Opportunities, as circumstances change, may present themselves which are not precisely or expressly encompassed by the Bill. So I think that we would risk denying those in need of the benefits that the future may offer if we were vain enough to think that we could identify in this Bill specifically all the ways in which we may be able to secure good quality and cost-effective advice in the future. On that basis, I invite the noble and learned Lord to withdraw the amendment.
Lord Ackner: Before my noble and learned friend sits down, am I right in thinking that one of the main purposes of the public defender system is to establish whether that system can provide an adequate service at significantly less cost than the private system; and if so established, does that mean that the ratio which my noble and learned friend has already described will move more and more in favour of the public defender system?
The Lord Chancellor: I do not deny that the employment of salaried defenders will afford a useful benchmark in terms of quality and cost. I have to say to the noble and learned Lord that I operate within a controlled budget. The truth is that the only money that is left for civil legal aid is what is left over out of that budget after the requirements of criminal legal aid have been met, as those requirements are underpinned, as they should be, by international obligations. But the simple truth is that I have to seek to deliver economy

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and quality together in the provision of criminal legal services. I do regard the employment of salaried lawyers as providing a useful benchmark in relation to that critical mix of quality and cost-effectiveness, both of which are essential.
I am not good at looking very, very long distances into the future but I would expect that salaried lawyers would be in the highest degree unlikely to do more than the lesser cases and never to undertake—it would be very unlikely that they would ever undertake—cases of major difficulty.
Lord Hutchinson of Lullington: Looking into the future, perhaps I may ask the noble and learned Lord one question. He has told the Committee that he has no intention of bringing in a salaried defender scheme. I accept that entirely. But if one of his successors intended and desired to do so and these clauses remain in the Bill, would he be able to do so?
The Lord Chancellor: Subject to the objectives of the Bill, the commission would have the powers which are in the Bill. That is certainly so. The power is there for the commission to employ salaried lawyers for the purposes of defence services. But I can do no better than indicate to your Lordships what I anticipate for the future.
6.15 p.m.
Lord Archer of Sandwell: I now understand how Pandora must have felt. This debate began with what I declared an hour and fifty-four minutes ago to be some probing amendments. I am most grateful to all the noble Lords who participated in the debate which, whatever other controversy there may be, I think we would all agree has been a fascinating and very informative debate.
I set out to ask some questions and to indicate some anxieties. There was even at the back of my mind a hope that we might quietly woo my noble and learned friend into meeting some of those anxieties. I feel a little like someone who suggested a trip round the bay and now finds himself sailing with Columbus. I say at once that I do not endorse everything that has been said in support of my amendment. There may well be a case for salaried employees giving some advice in appropriate circumstances. That is done every day of the week in numerous citizens advice bureaux and in numerous law centres. It may be appropriate in some cases for some people who are not members of the practising profession to represent litigants. It is done in a number of tribunals and, so far as I am aware, it is done without complaint. So I would not go as far as some noble Lords who have participated in the debate, although I am grateful to them for their support.
I think that there are some very real dangers and clearly my noble and learned friend has them in mind and will address them later. I agree with the noble Viscount, Lord Bledisloe, that the appropriate place to discuss them may well be on Amendment No. 170. I say with great humility that I hope your Lordships will excuse me. I have an unavoidable commitment elsewhere and so I will not be able to participate in that debate. However, I understand that the noble Lord, Lord Goodhart, will kindly move the amendment in my place. I shall certainly read with great interest what has been said.
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Beyond that, I think it may be wise for us to read what has been said and to consider it in tranquillity. I ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Thomas of Gresford Lord Thomas of Gresford had given notice of his intention to move Amendment No. 156:
Page 9, line 15, leave out from beginning to second ("or").
The noble Lord said: I do not propose to move this amendment. I have not as yet cited America and I consider that there are many matters which will have to be looked at again. Therefore, I shall be coming back to this series of amendments at the Report stage.
[Amendment No. 156 not moved.]
[Amendments Nos. 157 to 161 not moved.]
Clause 13, as amended, agreed to.
Clause 14 [Representation]:
[Amendments Nos. 162 to 169 not moved.]
Lord Ackner Lord Ackner moved Amendment No. 170:
Page 10, line 7, leave out subsection (6).
The noble and learned Lord said: This matter was referred to during the debates that we have just had as being the right point at which to consider the extent to which a member of the public who requires to be assisted in a defence can be compelled to have a public defender, so that his choice which presently exists, as to how he is defended is taken away from him.
There has been sufficient discussion on this subject for me merely to say at this stage that I wish to move the amendment.
The Deputy Chairman of Committees (Baroness Lockwood): I must point out that if this amendment is agreed to, I cannot call Amendments Nos. 171 to 176 inclusive under the pre-emption rule.
Viscount Bledisloe: In his extremely helpful reply on the previous amendment, the noble and learned Lord indicated his intention to prescribe use of the public defender service only in a very limited number of cases. However, in his reply to the noble Lord, Lord Hutchinson of Lullington, he accepted that as matters presently stand, a future Lord Chancellor could say that the defender service was to be the only recourse available to the accused over the whole spectrum of cases. That is the right answer in the light of subsection (6)(c). Under that provision a future Lord Chancellor could say that in all cases except murder an accused may select only a member of the group of salaried lawyers. It is that mischief that rightly concerns a large number of Members of the Committee. I hope that the noble and learned Lord will be able to tell the Committee that he will in due course at least amend subsection (6) so that it could not have that wide and highly undesirable effect.
Baroness Scotland of Asthal: I did not think that I should be moved to contribute to the debate, either in relation to the previous amendment or this one. However, for the past few moments I have found myself somewhat troubled. That is because I am in sympathy with many of

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the concerns raised during our debates today; it is also because of the importance of Amendment No. 170 in relation to the preservation of choice.
Choice is at the core of this legislation. The Bill deals with access to justice and the improvement of people's ability to receive appropriate representation. Part of our debate has related to those who are currently at the independent Bar and solicitors not being subject to the pressures involved in accepting state-funded cases.
That is not entirely correct. Independent prosecutors already feel pressure from the CPS and those who instruct them to behave in a certain way. There are approved lists. If people do not comply with the standards that are set for them, they may be dropped from the list. One of the reasons for being dropped is not complying with the way in which those who prosecute see the management of the case. Therefore, independence is already under threat, and we do not yet have a defence system.
If we do not strengthen this provision, I very much fear that choice, which is so important and is at the centre of the Bill, will evaporate.
Lord Thomas of Gresford: Amendment No. 173, grouped with this amendment, stands in my name. The amendment purports to exclude from the Bill sub-paragraphs (a), (b) and (c) of subsection (6). The reason has already emerged in my remarks on the previous amendment.
The right to representation is set out in Schedule 3. As I indicated earlier, it is not a right of representation which exists as the right of an individual. It arises only when, in the discretion of the court or the commission, that right of representation is granted. So it requires a decision by the court or the commission to grant the right. Paragraph 6 of Schedule 3 sets out the criteria for the grant of that right. The paragraph states:
"Any question as to whether a right of representation should be granted shall be determined according to the interests of justice".
But in deciding what are the interests of justice, a restrictive series of "factors" are set out in sub-paragraph (2) under headings (a) to (e), which, under sub-paragraph (3),
"The Lord Chancellor may by order amend … by adding new factors or varying any factor".
So the right of representation is considerably prescribed by the provisions in Schedule 3.
I now turn to the matters that are the subject of my amendment. Clause 14(6) again includes a power, in sub-paragraphs (a), (b) and (c), for the Lord Chancellor to make regulations in prescribed circumstances that,
"the right … is not to apply in cases of prescribed descriptions",
and that the,
"right is not to include a right to select a representative of a prescribed description".
So the regulations may prevent the choice of a lawyer whom the accused person wishes to act for him. And under those regulations the right may be,
"to select only a representative of a prescribed description".
So the limitations upon this so-called right of representation are great. In my submission, the Lord Chancellor ought to be satisfied with the
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limitations imposed in the schedule and not seek to cut the representation down even further by means of sub-paragraphs (a), (b) and (c) of subsection (6).
Baroness Kennedy of The Shaws: I wish to put a question to the Lord Chancellor about choice. A pilot scheme is currently taking place in Scotland in relation to salaried public service lawyers. Locally in Edinburgh, where the scheme is operating, it is known as "trial by astrology", because those who were born in January and February are required to have a lawyer from the public service and are not allowed a lawyer under legal aid from any other source. The aim is to see how the pilot scheme operates. My question to the noble and learned Lord is this. Will the pilot schemes under his jurisdiction operate in the same way? Will they prevent the operation of choice, which is the subject of our concern: or will they, too, require persons arrested who were born under a certain star sign to enter into the public defender system?
Lord Goodhart: My silence on the previous group of amendments was not intended to indicate any lack of support for them but was a recognition of the fact that they were already receiving more than adequate support from these Benches. In this case, although I strongly believe that there should not be a salaried defender service, if there is to be one, when it comes to representation it is essential that the right to choose to be defended by someone who is not a member of that service should not be excluded.
Clause 14(5) seems to me to include a principle of the highest importance. It is that:
"An individual who has been granted a right to representation … may select any representative or representatives willing to act for him";
that is, the right to a lawyer of one's own choice, which features clearly in Article 6 of the European Convention on Human Rights. In those circumstances, paragraphs (a), (b) and (c) of Clause 14(6) go far beyond anything that is legitimate to be provided for by regulations. Under those paragraphs it would be possible to exclude the right to employ anyone other than a salaried defender. It seems to me that that would be extremely dangerous and would represent a serious risk of infringing the European convention.
The amendment in the names of my noble friend Lord Thomas of Gresford and myself substitutes for paragraphs (a), (b) and (c) a right to prescribe by regulations that the defendant may not seek services from someone who is not accredited or someone who is not prepared to accept fees on a basis of reasonable comparability. That is acceptable, as are paragraphs (d) and (e). However, I regard paragraphs (a), (b) and (c) of subsection (6) in their present form as being entirely unacceptable.
6.30 p.m.
Lord Renton: Several Members of the Committee have referred to subsection (6)(a), (b) and (c). However, we should invite the attention of the noble and learned Lord the Lord Chancellor to paragraph (e). It seriously

923
interferes with freedom of choice which, after all, is the basis of confidence in the selection of one's legal representative. It reads:
"that right is not to include a right for an individual to select a representative if another representative has been previously selected by him".
It is just possible that the person who has already been chosen may turn out to be unsatisfactory in one way or another. I need not elaborate on the various possibilities. Surely there must be the right to change one's representative if one feels strongly about it. Therefore I suggest that Clause 14(6)(e) bears that criticism.
The Lord Chancellor: Discussion in the Committee has concentrated on Clause 14(6)(c). Clause 14(5) provides that:
"An individual who has been granted a right to representation in accordance with Schedule 3 may select any representative or representatives willing to act for him".
I omit the following words.
Members of the Committee have called attention to subsection (6):
"Regulations may provide that in prescribed circumstances—
(a) the right conferred by subsection (5) is not to apply in cases of prescribed descriptions".
The concern expressed by some Members of the Committee is within the ambit of regulations that might be made pursuant to subsection (6)(a). Paragraph (c) provides that regulations may provide that in prescribed circumstances:
"that right is to select only a representative of a prescribed description".
I begin by an explanation of the latter provision and shall then revert to the concerns that have been expressed.
The intent of subsection (6)(c) is to allow choice to be restricted to a lawyer with a contract. Contracting will enable us to protect the interests of individuals involved in criminal investigations and proceedings and to ensure that they have fair treatment by providing quality assured services. That is the main purpose of subsection (6)(c). It is intended gradually to extend the provision of representation under quality-assured contractors to cover almost all circumstances. So there will be choice, but the choice will be confined to quality-assured suppliers of advice, assistance and representation. For example, someone who needs advice at the police station will be able to choose any solicitor with a contract with the criminal defence service or call on the duty solicitor. The solicitor chosen at that stage will be expected to continue to represent the client throughout the lifetime of the case, unless there is a compelling reason to change. That is the reason for subsection (6)(e).
Subsection (6)(c) is also necessary in order to achieve quality-assured representation, for example in very expensive cases, where special skills, experience and technology are often needed, especially in complex fraud cases. In those, the defendant's choice might be restricted to those on a specialist panel who had demonstrated the necessary competence. In my view, it
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is better to have such a restricted choice of approved specialists than a wider choice from among non-approved specialists.
The principal concern that has been expressed was heralded in earlier discussions by the noble Viscount, Lord Bledisloe. He first focused upon the significance, or potential significance, of Clause 14(6)(c): that regulations might provide and prescribe circumstances in which the right of selection should be a right to select a representative only of a prescribed description. That was intended to limit choice to quality-assured contractors or to salaried defence lawyers. It was not intended to confer a power to restrict choice, for example, to salaried defenders only.
Having listened to the debate, I take the view that we ought to revisit the expression of subsection (6)(c), to ensure that what I have stated as being our intention is the limited power contained in the regulations referred to. If, on the face of the statute, we go to a provision that makes it plain that the choice lies between quality-assured contractors and what is called the "independent profession" or salaried lawyers, it would meet many of the concerns expressed earlier by the noble Lord, Lord Hutchinson of Lullington. When exceptionally it may be necessary to assign a salaried representative to the defendant—that is to say, to allow no choice, which would be in only very limited and special circumstances—I concede that that outcome could be achieved only by way of regulations under Clause 14(6)(a). The Committee will be aware that under Clause 14(7) regulations made under subsection (6)(a) would be subject to the affirmative procedure. But in the light of discussions I believe that these provisions should be revisited in the manner that I have indicated and I undertake to do so. On that basis I invite the noble and learned Lord to withdraw the amendment.
Lord Renton: Before the noble and learned Lord sits down, is he suggesting that all of subsection (6) should be reconsidered or only certain paragraphs to which he refers? I believe that paragraph (e) has real dangers in it. Suppose that the person first chosen is found to be the brother of the victim of the alleged crime. The accused would have a reason to seek to change his representative and that should be allowed.
The Lord Chancellor: I have said that I shall consider the interaction of Clause 14(6)(a), (c) and 14(7), but I am content in response to the noble Lord, Lord Renton, to think again about Clause 14(6)(e).
Baroness Kennedy of The Shaws: I rise again because my noble and learned friend has not answered my question, which was not intended as a joke. There is a pilot scheme currently in Scotland which does not allow for choice. I wondered whether or not the pilot schemes intended to come into being following the enactment of this Bill would allow for a choice.
The Lord Chancellor: I apologise to my noble friend for not responding to her observations about the astrologically-based pilot in Scotland. I am sure that there is a rational explanation for it as that is going on

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north of the Border. No doubt it is to ensure that there is a random selection of individuals to participate in the pilot. But I confess to my noble friend that I am not fully informed of the details of these astrological excursions north of the Border. I shall inform myself and write to my noble friend.
Lord Donaldson of Lymington: Perhaps I may invite the noble and learned Lord the Lord Chancellor to look also at subsection (6)(b). I raise this point because normally it is possible to arrive at a particular destination either by excluding all other destinations or specifying that destination. I believe that (b) and (c) are two sides of the same coin.
The Lord Chancellor: I see the force of the observation of the noble and learned Lord. I shall consider that matter also.
Lord Ackner: As I understand it, by process of elimination my noble and learned friend is prepared to consider subsection (6) in relation to all of the subsections in the clause.
The Lord Chancellor: I said nothing about (d) but if that will make the noble and learned Lord more content I shall look also at that provision.
Lord Ackner: My cup runneth over. On that basis I beg leave to withdraw my amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 171 to 178 not moved.]
Clause 14 agreed to.
Schedule 3 [Criminal Defence Service: right to representation]:
Lord Ackner Lord Ackner moved Amendment No. 179:
Page 55, line 27, at end insert (", including bail proceedings").
The noble and learned Lord said: Amendment No. 179 and the two following amendments are minor matters and I shall spend virtually no time upon them. Amendment No. 179 seeks to insert at line 27 on page 55 the words "including bail proceedings". That speaks for itself. Amendment No. 180 is essentially a probing amendment to discover on exactly what matter this is meant to focus. Amendment No. 181 is essentially a drafting amendment. I beg to move Amendment No. 179.
The Minister of State, Cabinet Office (Lord Falconer of Thoroton): Under paragraph 2(1) of Schedule 3 a right to representation for the purposes of criminal proceedings includes a right to representation for the purposes of any proceedings preliminary or incidental to those proceedings. In my view that would include bail proceedings and interlocutory hearings. Strictly the amendment is unnecessary, but the noble and learned Lord believes that a restrictive interpretation excluding bail proceedings is possible. There is no dispute between us as to what we seek to achieve, although with the greatest respect I doubt the construction that he puts upon it. He knows that under the tutelage of the noble and learned Lord, Lord Simon of Glaisdale, I am an enemy of surplusage.
926
Nevertheless, in the giving age that now exists in relation to this Bill, and if it makes the noble and learned Lord happier, on behalf of the Lord Chancellor I am content to accept his amendment.
On Question, amendment agreed to.
The Deputy Chairman of Committees: Is the noble and learned Lord moving Amendment No. 180?
Lord Ackner Lord Ackner: I have moved the amendment.
Lord Renton Lord Renton: The noble and learned Lord must formally move the amendment.
Lord Ackner Lord Ackner: I have moved the amendment already.
The Lord Chancellor: Perhaps I may try to assist. Is the Committee not concerned now with grouping No. 69?
The Deputy Chairman of Committees: The Committee is now considering Amendment No. 180 in Schedule 3.
The Lord Chancellor: I do not believe that the amendment has been formally moved.
Lord Ackner Lord Ackner moved Amendment No. 180:
Page 56, leave out lines 3 to 21.
The noble and learned Lord said: I beg to move Amendment No. 180. I have moved the amendment three times. I shall move it a fourth time if the Committee wishes.
The Lord Chancellor: The noble and learned Lord need not be concerned because this is a continuation of the giving age to which my noble and learned friend Lord Falconer of Thoroton referred and into which he moved shortly in order to deal with the previous amendment.
In substance the effect of paragraph 4 of Schedule 3 is to carry into the present Bill powers similar to those contained in Section 20(9) of the Legal Aid Act 1988, which allows the Lord Chancellor to transfer to the Legal Aid Board the power to grant legal aid for representation in criminal cases by providing that,
"In the event of the Lord Chancellor making an order under section 3(4) as respects the function of granting representation under this Part for the purposes of proceedings before any court, the Board shall be competent as respects those proceedings, on an application made for the purpose".
In the event the power has never been used. On reflection, I do not believe that the power as regards representation in criminal proceedings before the courts would ever be used and in principle I am content to remove it. However, if defence services under the Bill were to extend to proceedings not in the courts, such as Parole Board hearings, it might be appropriate for the commission to decide whether representation should be granted.

927
In the light of that explanation, and if the noble and learned Lord is content, I shall come back with an amendment to clarify our intentions on the face of the Bill.
Lord Ackner: I am most grateful to my noble and learned friend. On that basis, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 181 not moved.]
On Question, Whether Schedule 3, as amended, shall be agreed to?
Lord Mackay of Clashfern: I desire to ask a question on this. I have discussed the matter with the Lord Chancellor's officials. I think that I understand t`e position. However, as the noble and learned Lord knows, the House of Lords has a jurisdiction to hear appeals from the Divisional Court of the Queen's Bench Division. That divisional court also has a jurisdiction to hear cases from the magistrates' court. Those are usually concerned with criminal matters, but for some reason I have never fully understood they seem to be treated as civil appeals. That is why they do not seem to appear in this schedule.
I had understood that the matter was under consideration. For convenience it would be better if these appeals from the Divisional Court of the Queen's Bench Division—in the Bill a judge of the High Court being substituted for that—were treated as criminal appeals. For the most part they are concerned with criminal matters.
I wish to ask about that point so that it is not lost sight of. I do not invite the noble and learned Lord to give a detailed exposition now, but simply to keep the matter in mind.
The Lord Chancellor: I undertake to keep it in mind and to write to the noble and learned Lord.
Schedule 3, as amended, agreed to.
Clause 15 [Regulations about payments to representatives]:
[Amendment No. 182 not moved.]
Lord Ackner Lord Ackner moved Amendment No. 183:
Page 10, line, 35, at end insert—
("( ) Such provision shall include provision for separately negotiated remuneration—

(a) for specialist advocates in any criminal proceedings where the court directs that the interests of justice require their services; and

(b) for all representatives in any criminal proceedings where the court estimates that the length of the trial will exceed such number of days as may be prescribed.").

The noble and learned Lord said: The amendment seeks to follow what was in the White Paper. It was designed to ensure that where the case justified it provision would be made for the expert services of the specialist Bar.
I invite the Committee to consider paragraph 6.14 of the White Paper Modernising Justice. It reads as follows:
"So far as possible, contracts with solicitors' firms should cover the full range of criminal defence services, from advice at the police station, to representation in the magistrates' court and, if necessary, the Crown Court. This will eliminate the fragmentation that bedevils the current scheme. Contracts of this type would require the firm to cover a number of duty solicitor slots at local police stations",
and so on. The paragraph concludes:
"These contracts would not set a limit on the number of cases the firm could do. If a case also required the services of a specialist advocate in the Crown Court, this would be provided under a separate contract".
Paragraph 6.15 makes provision for the very expensive cases—those where the trial is expected to last 25 days or more—which fall outside the scope of contracts designed to cover ordinary cases. The paragraph states:
"Instead, a separate contract will be negotiated for each individual case".
A little later the paragraph states:
"The negotiations will usually include the cost of specialist advocates and other experts".
Amendment No. 183 is designed to reflect that. At page 10, line 35 of the Bill it inserts the following paragraph:
"Such provision shall include provision for separately negotiated remuneration—

(a) for specialist advocates in any criminal proceedings where the court directs that the interests of justice require their services; and

(b) for all representatives in any criminal proceedings where the court estimates that the length of the trial will exceed such number of days as may be prescribed".

I beg to move.
Lord Mackay of Clashfern: I support the thrust of the amendment. It is important that encouragement should be given to solicitors and banisters to specialise to some extent in particular types of criminal proceedings where lack of expertise may lead to an unnecessary prolongation of the proceedings. We have had some experience of that over the years.
The Lord Chancellor: I am the first to acknowledge the necessity for specialist advocacy services in the more complex criminal trials. However, I am not at present persuaded that the amendment should be accepted. It seeks to place on the face of the legislation mechanisms for remuneration which are more appropriately dealt with in regulations.
The amendment would require separately negotiated remuneration in two circumstances. The first is where the court appoints a specialist advocate, or directs the appointment of a specialist advocate, in the interests of justice. The second is where the court estimates that the case will last beyond a specified number of days.
On the first proposition—that there should be separately negotiated remuneration where a specialist is appointed—I have power under Clause 15 to settle separate payment arrangements for advocates. Let me state my position. I intend to continue with the graduated fee scheme and if current, and I believe positive, discussions between the Bar and my

929
department bear fruit it may even be possible to extend that scheme beyond the current 10–day limit. Whatever the future may hold for contracts, graduated fees may in some areas continue indefinitely, or at least provide a sound basis for contracting with the Bar. As I have already pointed out in relation to civil matters, but the same is true for crime, the Bill allows me to contract separately with the Bar.
I wish to emphasise that I have long thought and said—and the Bar knows that it is my view—that it should embrace the opportunities of contracting and be ready to contract for the provision of advocacy services either as individual sets of chambers or through particular groupings of barristers so that, equally with solicitors, it can offer volume services. If it were to contract in that way it would be at prices determined by the contract. The Bar would be free of risk of payment for its services via disbursements in solicitors' bills when the solicitors would be the only contracting Party.
I have said many times that the vulnerability of the Bar is obvious. It may be that that is part of the thinking of the noble and learned Lord, Lord Ackner. The solicitor has the contract. What the barrister receives for the provision of his specialist services out of the solicitors contract price, if the solicitor is contracting for the provision of a total service, is what the solicitor agrees to pay the barrister. I repeat that of course the Bar can contract directly. That is what I have been saying for ages. However, the Bar has its salvation in its own hands. We are ready to contract with it and I say that the powers exist so let the Bar get on with it.
The second part of the amendment deals with separately negotiated remuneration for all representation in longer cases. I repeat that we are looking at the issue in the context of graduated fees. What is more, everyone knows about the public concern over lengthy and high-cost cases. Again, my department is talking to the Bar Council and the Law Society about better control and is examining the prospect of negotiating one-off contracts to cover individual high-cost cases. As presently advised, I do not believe that the details of how we go about all of this is a matter for primary legislation. I have said as clearly as I can what our intentions are and how much we would welcome a willingness on the part of the Bar to contract. On that basis, I invite the noble and learned Lord to withdraw his amendment.
7 p.m.
Lord Thomas of Gresford: Before the noble and learned Lord sits down, perhaps I may ask whether he envisages some form of partnership with the Bar. If it is contracting with chambers will the barristers in those chambers be partners and unable to appear against each other? What will be the knock-on effect of such a situation on specialist chambers where partnerships would reduce the choice available?
Lord Renton: Before the noble and learned Lord replies, I hope that he will not encourage any kind of partnership with the Bar. The great strength of the Bar and the judiciary is its tradition of personal
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independence and responsibility. Any attempt to form chambers on a partnership basis so as to include certain types of specialist is wrong in principle.
I have such respect for my noble and learned friend Lord Mackay of Clashfern and the noble and learned Lord, Lord Ackner, that, greatly daring, perhaps I may say that I never specialised. However, one-quarter or perhaps one-third of my work was in criminal cases of a wide variety. They included murders and motoring cases. I remember a long-term fraud case in which the accounts amounted to 900 pages. Was there a specialist to handle that? If we want the judiciary to do its job in the years to come we must be careful that we do not encourage too much specialisation within the Bar.
The Lord Chancellor: With great respect to the noble Lord, Lord Thomas of Gresford, I have to say that he is a lawyer, all members of the Bar are lawyers and I am not in the business of giving them legal advice. I have long since given up doing that, unfortunately. It is not for the state to prescribe any particular method of organisation or business arrangements within the Bar. My long experience of the Bar, not that distant, leaves me with the firm belief that there is enough intellect and inventiveness within it to find a wholly effective means of adapting to changing times and contracting for the provision of volume services.
Lord Ackner: Before the noble and learned Lord sits down, I wish to ask whether he anticipates that it is highly probable that the changes he is making to the opportunities of the Bar to practice could lead to the need for the Bar to move into a co-operative situation such as a partnership in order to carry the risks, particularly of the conditional fee situation. I ask that question because I wholly agree with the noble Lord, Lord Renton, that partnerships are highly undesirable. As I think I told the Committee a day or so ago, when Chairman of Bar I was responsible for setting up a committee to consider partnerships at the Bar. I very carefully chose the noble and learned Lord, Lord Templeman, as he then was not, to preside over that committee. The result was that it came out unanimously and strongly against partnerships at the Bar in the interests of the public who, if there were partnerships, would to a high degree lose their ability to choose. I ask the noble and learned Lord whether, with his knowledge of the Bar as it stands at the moment, he agrees that specialisation is an increasing development at the Bar. The generalist virtually no longer exists.
The Lord Chancellor: I do not know about that. Until May 1997 I managed to continue to practice, I suppose, as a dinosaur, a generalist, in many different classes of civil litigation.
We are, if I may say with respect, a little adrift from the subject matter of the amendment, which refers specifically to remuneration for barristers and whether barristers can aid their position by contracting for the provision of volume services. I am firmly of the view that they can do so without having to enter into partnerships. They can adapt particular contractual arrangements to achieve that outcome.

931
As regards conditional fee agreements, again that is wide of the mark but I have every belief that the Bar will adapt and that a strong, independent Bar, as I wish it to be, will remain a continuous feature of the provision of legal services in this country.
However, I conclude by giving an undertaking to my noble and learned friend which is this. There was an article a little time ago written by a senior barristers' clerk in a set of chambers saying how they had been engaging in conditional fee agreement business for a year or two completely successfully and without any difficulty and he did not really know what all the fuss was about. I am minded to send a copy of that article to my noble and learned friend.
Lord Ackner: My noble and learned friend might have anticipated that I had read it.
The Lord Chancellor: My noble and learned friend did not mention it.
Lord Ackner: It is not always wise to mention all one's knowledge. I should like the opportunity to consider what has been said about this amendment and in the meantime, I beg leave to withdraw it.
Amendment, by leave, withdrawn.
[Amendments Nos. 184 and 185 not moved.]
Clause 15 agreed to.
Clause 16 [Terms of provision of funded services]:
Lord Goodhart Lord Goodhart moved Amendment No. 186:
Page 10, line 41, leave out ("(and the individual is not acquitted)").
The noble Lord said: This is a very short point and really it is a probing amendment. Under Clause 16(2), if a criminal defendant is acquitted then the trial judge cannot, in any circumstances, make an order requiring him to pay some or all of the costs of representation.
Although I do not practise regularly in the criminal courts, I understand that from time to time trial judges make orders that, although a particular defendant has been acquitted, nevertheless, because he, by his conduct, has brought the prosecution on himself, he should not be refunded his costs out of public funds. Clause 16(2) would make that course of conduct impossible and I wonder why that is being done. I beg to move.
Lord Falconer of Thoroton: The amendment tabled by the noble Lords, Lord Goodhart and Lord Phillips of Sudbury, would have the effect that, subject to any regulations, the Crown Court would be able to make an order requiring a defendant to pay towards the defence costs whether or not he was convicted. I think that that must be a correct proposition put forward by noble Lords. That would reflect, under the new system of costs orders, the current position when a defendant has made a contribution towards legal aid. At present, and in exceptional circumstances, the court may refuse to order legal aid contributions to be repaid even on acquittal if the defendant has, for example, brought suspicion on himself or has misled the police into believing that the case against him was stronger than it proved to be.
932
Because there will be no means testing or contributions in the future, there will be nothing to withhold. Nevertheless, in certain rare cases it may still be right for an acquitted person to meet some or all of the defence costs because of serious misbehaviour. The proposed amendment gives that discretion to the court. I believe that that is right. Accordingly, I welcome the amendment and accept it.
On Question, amendment agreed to.
Clause 16, as amended, agreed to.
Clause 17 [Funding]:
[Amendments Nos. 187 to 189 not moved.]
Lord Ackner Lord Ackner moved Amendment No. 190:
Page 11, line 22, at end insert (", but shall always treat the interests of justice as paramount").
The noble and learned Lord said: This amendment seeks merely to insert at the end of the clause the obligation to treat the interests of justice as paramount. The noble and learned Lord the Lord Chancellor may well say that that is implicit. It would look a great deal more impressive if it were on the face of the Bill. I beg to move.
7.15 p.m.
The Lord Chancellor: I am told by the Clerk that this was debated earlier in fact.
Lord Ackner: I did refer to a similar matter but not with regard to Clause 17. I did refer to this matter on Clause 13 and Amendment No. 151 which states:
"leave out (`it considers appropriate') and insert Care necessary in the interest of justice')".
It is not the same clause; it is not the same words, although the philosophy is consistent.
The Lord Chancellor: I indicated in relation to a similar but not identical amendment a willingness to take it away and think about it, so I give my noble and learned friend the same indication in relation to this amendment.
Lord Ackner: I am most grateful. On that basis, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 17 agreed to.
[Amendments Nos. 191 and 192 not moved.]
Clause 18 [Foreign law]:
[Amendments Nos. 193 to 196 not moved.]
On Question, Whether Clause 18 shall stand part of the Bill?
Lord Ackner: I merely wish to raise a note of caution about this particular clause because I am not at all clear how it operates. Clause 18(1) states:
"The Commission may not fund as part of the Community Legal Service or Criminal Defence Service services relating to any law other than that of England and Wales".
I ask why that is so. Will there not be cases—for example, extradition matters—where it may well be necessary for foreign law to be gone into and be the subject matter of expert evidence?
Lord Hacking: I join with the noble and learned Lord, Lord Ackner, in expressing concern about this clause. The noble and learned Lord will remember that I raised the point not in relation to extradition—although it is equally valid made in relation to that—but in relation to the Civil Aviation (Amendment) Act 1996. The noble and learned Lord very kindly wrote to me to assuage my concerns in his letter to me of 18th January. In that letter he said that a situation could arise under the Civil Aviation (Amendment) Act 1996 when it is a ground for a defence to a charge under that Act that the conduct of the offender in the foreign aircraft landing in this country did not constitute a criminal offence in the country of the registration of the aircraft, although it did constitute a criminal offence in this country.
The noble and learned Lord replied in his helpful letter to me that this was an issue of fact to be adduced in proceedings in this country. He said that he was satisfied that this would not be caught by Clause 18, which is directed at advice about the application of foreign law and help in taking proceedings in other directions. Indeed, that latter would also refer to the point raised by the noble and learned Lord, Lord Ackner.
However, the question is that, in the drafting of the Bill, would that be the result? The phraseology in Clause 18 is that,
"The Commission may not fund … services relating to any law other than that of England and Wales.
On a perfectly normal construction, if a lawyer was required, in the example of extradition or under the Civil Aviation (Amendment) Act, to research and advise the client on the law of a foreign country, that would be services relating to the law of a foreign country and therefore would not be covered under the provisions of the community legal service or the criminal defence service—in this case under the terms of the criminal defence service.
All I ask my noble and learned friend is that he look at the drafting of that clause and consider with his officials whether it truly does produce the result that he expressed in his letter to me. If that could be looked at again I would be extremely grateful. We are clearly agreed on the purpose of the clause; it is only a question of the correct execution of that purpose in the drafting of the clause.
Lord Donaldson of Lymington: I share the feelings of anxiety in relation to this clause. Foreign law is always a question of fact in English courts, but it does not cease to be foreign law. I can see an argument for
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saying that Clause 18(1) restricts the grant of assistance to any issue relating to a question of fact which happens to be in the category of foreign law.
We have been talking of criminal cases but there are other categories of case. Nowadays I rely on newspapers for my knowledge of the law. Recently there was an article in relation to foreign marriages in which it was said, as I understand it, that English courts will only recognise marriage if it is valid in the country where it was contracted. The question of whether or not the parties were married from the point of view of English law would therefore turn entirely upon foreign law. It seems a bit odd that in those circumstances there should be no assistance.
Lord Hacking: Perhaps I can intervene to give a further example which occurred to me while the noble and learned Lord, Lord Donaldson, was talking. Under the rules of the Supreme Court it is possible to bring civil proceedings—for example, for negligence—when the event which caused the injury took place in a foreign country, provided that the defendant is ordinarily resident in the United Kingdom. For example, if a person was injured in a motor car accident in France, provided that the driver of the vehicle which caused the injury was ordinarily resident in the United Kingdom, with leave from the High Court it would be possible to bring proceedings in England for that act of negligence which took place in France. So, while the English law of negligence would apply, it is almost inevitable that issues of French law—for example, regulatory law—would arise in those proceedings and advice would be needed on French law.
Lord Donaldson of Lymington: Any contract governed by a specified foreign law would of course require examination of that law.
Lord Wilberforce: Perhaps I may add my small voice to the doubts expressed in relation to this clause. It is puzzling. First, it does not relate only to criminal cases; it relates also to the community legal service, and therefore instances given by other Members of the Committee can be multiplied in the whole area of civil law when a question of foreign law applies.
Secondly, the clause excludes not only Scottish law, which it may be necessary to consider in a number of cases, but also the law of the Channel Islands, the European Community or any other law which may happen to arise here. We all know that one of the great virtues of the English legal system is that it attracts a great number of cases in which foreign law is applied and which people are willing to have tried in this country. It is an important import.
We notice that subsection (2) now gives rise to an exception, though it is a narrow exception. It applies only where it is necessary to fulfil an obligation,
"imposed on the United Kingdom by any international agreement".
That would no doubt cover some things, perhaps governed by community agreements or perhaps human rights or many other commercial agreements, but it is a

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narrow exception. Perhaps the noble and learned Lord would be kind enough to explain why this clause is necessary in the very wide field to which it applies.
Lord Meston: I have spent many happy hours considering the validity of foreign marriages and divorces, but I want to add one more category of cases which can cause concern; that is, cases involving children and international child abduction in particular. As I understand it, Clause 18(2) will largely replicate the existing provisions of the Legal Aid Act under which there is usually no difficulty in obtaining quick advice—often very necessary—about foreign law relating to child custody, child contact and child support. However, there are categories of cases in which the international child abduction conventions, which presumably would be caught by Clause 18(2), do not apply. In those cases the English courts are normally exercising the wardship jurisdiction or the ordinary jurisdiction under the Children Act. Although it is not a case involving an international convention, often it is necessary to obtain details and urgent information about the law and practice in a foreign jurisdiction.
The Lord Chancellor: It is quite obvious that it was not intended to exclude from legal aid, whether civil or criminal, services in order to deal with foreign law when it is a fact in issue in English proceedings necessary to be determined in order to arise at a just outcome. I share the reservations of Members of the Committee about the effectiveness of Clause 18(1) to achieve that end and will therefore take it away and consider it.
On that basis the noble and learned Lord, Lord Ackner, may no longer wish to maintain his position that Clause 18 should not stand part of the Bill.
Lord Ackner: I am grateful to my noble and learned friend for reading my thoughts with such precision. I hope we have now reached a moment when I can go and celebrate for a short period his generosity over the past couple of hours or so.
Clause 18 agreed to.
[[Amendment No. 197 not moved.]
Lord Carter: My Lords, I beg to move that the House do resume. In moving this Motion I suggest that the Committee stage begin again not before 8.30 p.m.
Moved accordingly, and, on Question, Motion agreed to.
House resumed.

Accountancy Practice and Receivership
7.30 p.m.
Baroness Dean of Thornton-le-Fylde Baroness Dean of Thornton-le-Fylde rose to ask Her Majesty's Government whether they have any plans to end the practice whereby an investigating accountant appointed to a company subsequently becomes the receiver of the company.
The noble Baroness said: My Lords, first, I thank those noble Lords who are to take part in this short debate. I welcome the noble Baroness opposite—who is also a friend—who will reply on behalf of the Opposition.
As a junior trades union officer in Manchester in the 1970s, I well recall my sense of shock and anger when, during a period of recession, companies would close down, often overnight and without notice to their employees. The first they knew was when they turned up for the early shift at 6 a.m. the next morning to find the doors barred and no access to work. Invariably, the companies were small or medium-sized, with little financial clout, and which had gone under.
My anger arose not from receiving a call at 6 a.m. from the people I was pleased to represent, but from knowing that the receiver was, all too often, not qualified or recognised and had no duty of care to anyone but those who had appointed him. To rub salt into the wounds of the employees who were left without jobs and the creditors—usually small companies which could ill-afford not to be paid—I often witnessed the scandal of the company's directors setting up new companies, sometimes the next day, quite close by and usually with equipment they had bought from the company they had allowed to go under. That practice is not unknown today. It still happens.
Such was the concern at that time that Sir Kenneth Cork was asked to chair a review on insolvency issues. From that came the Insolvency Act 1986 and the Insolvency Service, which is an executive agency of the DTI. The Act now needs urgent review. I am absolutely convinced of that. I have seen a consultative document issued at the end of 1997 by practitioners in insolvency, but I do not believe that it shows the way forward on the many issues which need addressing.
However, I welcome the recent press reports on the Government's proposals to review the whole area of insolvency. I also note that insolvency was referred to yesterday in the statement of the terms of reference of the Treasury-appointed review of banks to be chaired by Don Cruickshank. However, that reference does not cover the general remit of insolvency; it deals with the competitiveness element within banks. Where are the Government in bringing forward specific proposals in this area?
I do not say that receivership should never be an option. Companies do fail, and they will continue to fail. That is the reality of the business world. I fully recognise that fact and nothing in this debate is intended to escape from it. My debate targets only one aspect of my concerns about the present practice of insolvency. I refer to the conflict of interest when an investigating accountant is appointed, usually by a company's bankers, to look at a company, or part of a company, and then becomes the receiver of that company. In my view, that is a direct conflict of interest.
Some accountancy firms do not even charge for an initial investigation into a company in the belief that they will become the receiver of the company—a judgment they reach before even considering the facts and figures of the potential victim—or victims, as

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I prefer to refer to them, given all the stakeholders in a company. That sort of unpaid offer to be the investigating accountant would, in everyday terms, be called a "loss leader". However, we are not speaking tonight of loss leaders on the sale of milk or bread in a supermarket, but of people's jobs and, in small companies, the lives of directors who have often put up their homes and worldly goods as a guarantee for the company.
Work carried out by Warwick University in 1992 demonstrated that some 97½ per cent. of investigating accountants were subsequently appointed receivers to the company they investigated initially. I have been a non-executive director of a plc which agreed with the company's bank to have an investigating accountant look at part of the business. Time does not allow me to go into details but within a very short time the investigating accountants became the receivers.
I have been, therefore, on both ends of this issue—both representing employees and as a non-executive company director. In that company, the board, strongly supported by a professional company of "company doctors", tried to get the banks to see the sense of the company continuing, albeit against a severe restructuring programme that was put forward. The receivership ensued and the fees in that case were £3.5 million to recover just £ 1 million. Who were the gainers? The receivers. That was a disaster for the company. The bank did not recover all it sought; some creditors were put in jeopardy, and many employees lost their jobs.
Many in the profession recognise this conflict of interest. In 1992 the ethics committee of the Institute of Chartered Accountants revealed that some 30 per cent. of accountants believed there to be an "actual, not just perceived conflict of interest" in the profession. So what I am seeking is for the Government to call on the Institute of Chartered Accountants and other professional bodies to change their rules to preclude the appointment of investigating accountants in a company from becoming the company's receivers. The banks, too, will need to be involved in that process.
In my view, that would be a positive move and have positive effects. It is not a new move. Tom Kennedy, a senior manager at the Royal Bank of Scotland, writing in Insolvency Bulletin in 1997, referred to that bank's decision to change its policy in 1993. His article looked back over the previous four years to the bank's experience as a result of that change. First, the bank put receivership services out to tender. In so doing, it saved as much as 60 per cent. of its costs.
More importantly for my Unstarred Question, the bank recognised the conflict of interest and stopped the practice of a company's investigating accountants becoming its receivers. It also adopted a policy of "rescue" rather than "burial" as a first approach to a company's problems. I gather from a statement today on the subject of this debate that this approach of rescue rather than burial is now more common. Well, they would say that, wouldn't they? We do not see any figures issued of work that has been done, nor are details given to the public. Therefore, I do not have the facts and figures to say whether that statement is correct.
Mr. Kennedy revealed that, as a result of its change in policy over the four-year period, the share of receiverships experienced by the Royal Bank of Scotland fell from 11 per cent. to 5 per cent. of all receiverships. In 1996 the bank's receivership totalled just 48—an overwhelming 82 per cent. drop compared with 1992. Further, using the statistics of the Department for Education and Employment, the bank calculated that if it had not changed its policy, 279 more companies would have gone out of business and some 5,600 more jobs would have been lost. Using that same policy, and the same criteria across all businesses in the UK, some 2,200 companies and 44,700 jobs could have been saved.
Parliamentary time for legislation is limited. I prefer to see statutory legislation, but this change can take place without using parliamentary time; namely, by the professional bodies changing their rules. After all, there are only 1,800 insolvency practitioners in the UK—although it takes seven regulatory bodies to govern them.
I hope that my noble friend the Minister can respond positively and with a commitment from the Government to intervene to bring about this change. It would remove a clear conflict of interest and a practice which does not have a place in today's business world. If the experience of the Royal Bank of Scotland is to be followed, then it would be a positive move, particularly for small and medium-sized businesses in the United Kingdom.
7.40 p.m.
Lord Lucas: My Lords, I am very grateful to the noble Baroness, Lady Dean, for giving us the opportunity to debate this long-standing abuse. Justice has not only to be done, but it has to be seen to be done. We have re-emphasised that in this House recently. If judges received £100 for each person they freed and £1,000 for each person found guilty by them, we would not believe that justice was being done and in many cases we may be right that that was the case. Planning inspectors belong to a professional and well-respected body. If they received £100 for each planning application that was refused and £1,000 for each planning application that was accepted, we would not believe that they were fair. Often they may be doing the right thing, but under those circumstances no reasonable man would believe that the planning inspection system was fair.
Accountants are noble and conscientious. They are always truthful and implacably fair, perhaps with the exception of this accountant. It is a profession which is held in high regard. It is a long-running disgrace that as a profession we should find ourselves in a position where it is quite clearly seen that we are not fair; that it is open and irrefutable that if we act as an investigating accountant and go on to be a receiver, and if we recommend that a company should die, we would do a great deal better than if we recommend that the company should live. That is an abuse and it should be changed.
It is very difficult to produce specific evidence of corruption. Who is to complain? Is it to be the people who allowed the company to go down in the first place?

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Who will believe them? Is it to be the bank who appointed the relevant people? They rarely have the opportunity to admit that they have made a mistake because they do not have the information. As the noble Baroness said, almost all receivers have been investigating accountants before. If, in the course of the receivership, it was seen that the investigating accountants had been wrong, they are very unlikely to say so. The creditors, the unsecured creditors, employees, other people interested in the business, including the shareholders, do not have the information to prove or to show that the company would have been viable.
But what does show the extent of this abuse is the statistic produced by the noble Baroness, Lady Dean, about the experience of the Royal Bank of Scotland. Under the method it used before, it had an 11 per cent. share of receiverships. When it started to examine whether it could work on rescuing companies rather than using the current system, the Royal Bank of Scotland had a 5 per cent. share. That says pretty directly that half of the investigating reports of accountants recommending that a company should be extinguished are wrong. That represents enormous damage to the companies and shareholders concerned and to the United Kingdom economy. If they are viable jobs and businesses they will be replaced. Often that will be by foreign companies taking the business rather than their United Kingdom competitors. As a country we lose and we also lose, individually through that practice.
As the noble Baroness, Lady Dean, said, it does not take a lot to end this practice. Many accountants recognise that what they are doing is wrong. Most of them recognise that the old argument about the necessity of appointing the investigating accountant as the receiver is an empty one. What happens in practice is that different people carry it out. They rarely pass the files from one to the other. If there is information flowing between the investigating accountant and the receiver, it can pass as a file from one firm to another in exactly the same way as it would pass between different individuals in the same firm. There is no need for that and no benefit flows from it. As can be seen from the figures of the Royal Bank of Scotland, there has been immense damage and abuse in this country. All it would take is for the noble Lord, Lord McIntosh, to say this evening, "Yes, I agree with my noble friend that this is an abuse. When we are looking at the mechanisms for receivership and bankruptcy under the White Paper Our Competitive Future we shall seek to deal with this abuse". Faced with that, the Institute of Chartered Accountants at least would back down and change its procedures.
7.44 p.m.
Lord Montague of Oxford: My Lords, I congratulate the noble Baroness, Lady Dean, on raising this very important matter about which I would initially like to talk from the point of view of my personal experience. When I was a younger man I became chairman of a company that was passing through a difficult period. The bank was worried about its security. It asked whether it could
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request a firm of merchant bankers to have a look at the company which I was chairing with a view to seeing whether all was comfortable. The merchant bank advised that it could not take that role and appointed what amounted to an investigating accountant.
That accountant reported to the bank that in its opinion a receiver should be appointed. I decided to play it long, first, day by day, then week by week and month by month, until finally we got to the year end, when I was able to prove to everybody that the company was on a decent track. That company very nearly closed. It was later sold, when I was still the chairman, for £400 million, with 10,000 employees. That is a practical example which I invite everyone to look at if they so choose. Most certainly I support the view that an investigating accountant should be forbidden from being appointed as the receiver.
However, I do not know that this matter has to be the subject of legislation. We seem to have legislation for everything. I have been reflecting on this and wondering what might be done. Receivers are licensed. I understand that there are five separate sources for obtaining a licence. It seems to me that we need an arbitrator to whom a board of directors, an individual director, an aggrieved party, creditor or employee, can go when there is an imminent prospect of receivership and say, "Look, this is the situation. Your consideration is only financial and it is short term. It is not viewing the future commercial prospects of the company. You have to see the situation in the round".
I believe that there should be a body to which one can turn. I believe that the five organisations which issue the licences should come together with the professions and create a code of conduct. The arbitrator could decide whether that code of conduct has or has not been met. If it has not been met, in the first instance he can decide against the appointment of the receiver. If there is more than a first instance with a particular receiver, the licence of that receiver should be revoked, and also that of the firm of receivers. I presume that these licences are given to individuals and not just to the firms.
There is also the question of Chinese walls. Once a person is allowed into a business the directors and everyone else worry as to whether what that person is told is just for their ears or whether it becomes widespread to the bank and all other kinds of people. I do not believe in Chinese walls. I have read a great deal of nonsense about Chinese walls since time immemorial. As a practical person carrying on business a Chinese wall is like a Chinese takeaway. One takes it home and puts it in the microwave. I suggest to noble Lords that many of the receivers should be dealt with in a somewhat similar way. I do not trust Chinese walls. If one has any doubts about them, one should simply read the Sunday newspapers. In last Sunday's newspapers we were told which companies were to be taken over that week and who was going to take them over. There was no announcement to the shareholders, but simply authoritative leaks. I do not want to hear of anything that involves Chinese walls.
What I believe we need is to have a rounded inquiry and not just as regards the practitioners. What is needed is a rounded inquiry in which people will sit down,

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consider the matter and bring forward recommendations which the professions could implement. As my noble friend Lady Dean said, parliamentary time is precious and it takes a good deal of time to get these things accomplished. Indeed, for people who get harmed, it is too long. All this could be identified and put to bed. An effective code of conduct could be devised with business people. Those parties involved could sit down and make recommendations; it could all be done within a year.
In view of my experience, all I can say to my noble friend Lady Dean is that she is performing a great service. I hope that she will not just give up here. Indeed, things do not happen very much as a result of what is said in the House of Lords. We need a great campaign and I shall be glad to do anything that I can to help.
7.50 p.m.
Lord Sudeley: My Lords, the proper way to tackle the question of this debate would be the eradication of usury in its old sense of lending money without taking a share of the risk. However, instead of that, we really need to go back to the Moslem system of banks entering into business partnerships. The case against usury has been well represented by the Christian Council of Monetary Justice, meetings of which in the other place are chaired by the honourable Member for Great Grimsby and also by the Federation of Small Businesses. I am very conscious about how many parliamentarians shy away from opposition to usury because it is so embedded in our system. So this evening I shall ask for less.
The parties which are exceptionally informative on the subject of this debate would, I believe, be the Independent Banking Advisory Service, the Bankruptcy Association, the Federation of Small Businesses and two academics, Prem Sikka and Professor Christer of the University of Salford. In considering the problem posed by the debate we need to be mindful of the view of the Independent Banking Advisory Service that 30 per cent. of business failures would not have occurred during the last recession if banks had not been in a hurry to get their money back. The Bank of England's quarterly report on small business statistics dated December 1998 reflects the fact that business failures rose by more than 6.2 per cent. last year. We also need to have regard to the lack of sufficient bank regulation. The ombudsman is concerned only with small cases and the Financial Services Authority will not comment on individual cases.
The report in the Daily Mail on 20th January headed, "Beware On Demand Bank Loans" was largely concerned with the case of Lloyd's Bank versus Heritage Plc—distributing household wares to major superstores—in which the courts upheld that "on demand" means immediate repayment. Here lies the problem. The British Bankers Association is not collecting information about on demand loans in the belief that they are rare. On the contrary, the Independent Banking Advisory Service finds that the number of such loans is growing.
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In repaying a loan it is crucial that a debtor should have sufficient time so that his assets can be sold at a comfortable pace to fetch their proper value. Otherwise, the assets go for a decimated value. The proper role of the investigatory accountant, therefore, is to ensure that that should not happen. He should be acting as a debtor's physician and not as his mortician.
Why is that not happening? It is because of the conflict of interest with which this debate is concerned where the investigatory accountant is appointed a receiver and so has a vested interest from the initial investigation, thereby knowing the lucrative fee income available. There is also the problem and foul practice of collusion with outside parties waiting in the wings to acquire the debtor's assets at under-value. Hard though it may be to prove collusion, the opportunity is there. I hope, therefore, that Parliament will be sufficiently sagacious to judge that it is.
In conclusion, this debate is concerned with the questionable methods by which banks pursue many small debtors who would otherwise survive. But which party is chiefly in debt? Obviously the banks themselves, with a fraction in reserve, lending fraudulently way beyond their resources. I thought that the proportion was 10:1 but, when repeating the Statement on international finance on 2nd November, I was delighted to hear the noble Lord, Lord McIntosh, inform the House that, with hedge funding, that proportion is much higher.
7.54 p.m.
Lord Evans of Watford: My Lords, I am delighted to speak in support of my noble friend Lady Dean, as I have some personal knowledge of current insolvency practices in the United Kingdom. Luckily, I have never personally been involved with investigating accountants and insolvency practitioners. But, as I have been in business for over 30 years, I have inevitably seen friends struggle in a quagmire created by nervous bankers and overzealous insolvency practitioners.
Under today's insolvency laws, insolvency practitioners do not break any laws or regulations when they force viable businesses to close, sell assets at a fraction of their real worth and charge fees which are more related to the amount of cash available than the work which has been undertaken. The core problem is that when a bank becomes worried that its loans are at risk, it sends a firm of accountants into the company to "investigate" the situation. With few exceptions, these "investigation units" are part of insolvency practices. If the investigators report that it is possible for the company to be saved and present an action plan for the bank and the company's directors to follow, they will receive only their fees for that investigation and these will have to be fully justified.
If, on the other hand, the investigation team reports that the best way for the bank to ensure the safe return of its loans is to force the company to call in the receivers, the receivers who are then called in will be the insolvency practice which supplied the investigating accountants. The reason is simple. The accountants already have all of the company's books and knowledge

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of its assets and liabilities and, as the largest preferred creditor, it is usually the bank which has the ability to insist on the appointment of the particular receiver.
In return for privileged access to the assets, the receivers make sure that the bank (which is often the real client, however the situation is dressed up) receives all or as much of the money as possible and, after dealing with the debts which cannot be avoided—such as VAT and the Inland Revenue—certain insolvency practitioners, in their guise as receivers, gorge themselves on the cash and assets at the expense of the main body of ordinary unsecured creditors and shareholders. As has been mentioned, the receivers' fees are, of course, preferred and secured over all others.
The situation was most prominently displayed following the collapse of the Robert Maxwell empire. As has been reported elsewhere, the fees charged by the insolvency practitioners concerned were so large that they represented a scandal which came close to rivalling the fraudulent activities of Robert Maxwell himself. This intolerable situation has to change. Companies which could have a viable future are being forced into liquidation. Jobs are lost, wealth is squandered, inappropriate fees are extracted and, not to put too fine a point on it, lives are wrecked unnecessarily.
I believe that we need a regulator, a commission or an effective ombudsperson to whom complaints can be made. There is no effective route for a creditor, shareholder, employee or director to complain about the activities of insolvency practitioners today. For those reasons, I would welcome changes to insolvency law to provide British companies which find themselves in difficulties with a "cooling off period" similar to the American Chapter 11 concept. The concept of "voluntary administrations" as an alternative to receivership, which was introduced a few years ago, has not proved as helpful as was hoped.
I believe that companies in difficulties should have a right to creditor protection for a period long enough to allow them to reorganise and present terms which will be acceptable to a majority of their creditors. We see many such successful corporate resuscitations in the United States. They appear to be almost non-existent in this country. Although it should go without saying, I add that we must also ensure that we provide no opportunity for corrupt company directors to defraud creditors, shareholders and others by using the concept of limited liability to set up serial enterprises which fail. We should strengthen laws with regard to such crooks and we must increase our surveillance of directors who knowingly trade while insolvent and behave in other improper ways which can cause losses to others.
In short, we must provide better opportunities for directors to take risks and create the wealth our economy must have while at the same time requiring them to take more personal responsibility for their actions. Sadly such improvements are long overdue. I very much look forward to hearing that the needs that have been identified this evening will be met in the near future.
8 p.m.
Lord Razzall: My Lords, like other speakers I welcome the initiative of the noble Baroness, Lady Dean, in bringing this debate before us tonight. I am sure that we all agree with the fundamental point she makes; namely, that anything the Government can do, or that the banks can do with the Government's help, to ensure that viable businesses are not allowed to go under must be welcomed.
I have some concerns about the specific proposal that the noble Baroness has brought before us tonight. It seems to me that we are in danger of reversing the cliché and cracking a nut when what we need is a sledgehammer. I was particularly concerned by the comment of the noble Lord, Lord Lucas, when he said that all that it takes to solve the problem that the noble Baroness has identified is for the Government to pass the relevant legislation. I believe that more complex issues are involved in solving the fundamental problem that the noble Baroness has identified.
I shall illustrate why I believe the issue is not as simple as the noble Baroness has indicated. About 10 years ago a company called British and Commonwealth Holdings was in the FTSE 100 companies index. The company got into trouble over an investment it made in a company called Atlantic Computers. The banks that were involved called in Ernst and Young, a well-known firm of auditors, as the investigating accountants to produce a report to assess whether after the debacle with Atlantic Computers, British and Commonwealth Holdings was still a viable operation. Ernst and Young advised the board of the company and the consortium of banks that were involved that the company was a viable operation and that the banks should not foreclose the company. The banks chose to ignore that advice, foreclosed the company and appointed Ernst and Young as the administrators of this large company which employed hundreds of people in the United Kingdom.
As many of your Lordships will have read in the press, 10 years later the creditors have just about been paid the money that they had lost following the settlement of litigation involving various financial institutions. Had the advice of the investigating accountants been followed by the banks—I take into account the massive fees paid to the professional advisers—the company could have been kept alive. It was the banks who chose to foreclose that company rather than the investigating accountants.
I have related that anecdote to illustrate that the solution is more complicated than merely adopting the recommendations of the noble Baroness. A number of noble Lords have made the point that this matter is not just about receivership. We have in our legislative process a panoply of remedies that a creditor can choose. A creditor can choose receivership. Assuming that he has the appropriate charge over a company's assets, a creditor can choose liquidation. He can also choose administration or a voluntary arrangement if the company concerned can organise it.
I entirely agree with the noble Baroness that the system is not working adequately to keep companies alive which ought to be kept alive. They are being sent

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under in whatever form that may take when they are still viable businesses. There is a number of reasons for that. I believe the noble Lord, Lord Evans of Watford, mentioned administration. That was designed to be the equivalent of Chapter 11 bankruptcy legislation in the United States. I think everyone in your Lordships' House would agree that administration has not worked in this country in the way that Chapter 11 legislation has worked in the United States. Large numbers of household-name companies that are still trading and still have viable businesses have been subjected to Chapter 11 procedure in the United States and creditors have been kept at bay to buy time to enable those businesses to continue. That has rarely happened in the United Kingdom. In the United Kingdom most administrations terminate in liquidation. In my view the purpose behind the legislation is not being fulfilled.
I entirely agree with the noble Baroness's implicit attack on the accountancy profession in the following area; namely, that administration has been put in the liquidation-receivership departments of the major firms of accountants. Therefore the kind of people who are appointed as administrators are exactly the same kind of people who otherwise would have been appointed as liquidators and receivers. Therefore instead of "company doctor types" trying to save a company, one ends up with the same accountant who would otherwise have been the liquidator and the receiver.
I entirely agree with what the noble Baroness said about the attitude of banks. She mentioned the Royal Bank of Scotland which has been a pioneer in this respect. It has tried not to put companies into liquidation by appointing receivers but has tried to find ways of saving companies. I hope the Minister will say what action the Government can take to help banks adopt a proactive approach rather than simply closing businesses. I entirely accept that this is a major problem which the Government need to address. However, I am worried that the specific proposal of the noble Baroness will not be adequate.
8.7 p.m.
Baroness Denton of Wakefield: My Lords, first I thank the noble Baroness for the kind remarks that she made at the beginning of her speech. It is customary to thank the initiator of such a worthwhile debate for introducing the debate. That is a courtesy. In this instance it is a genuine expression of gratitude as great changes could be made in this area. I disagree with the approach of the previous speaker. I do not believe one should approach this matter negatively by saying, "It is not that simple". One should approach it positively and say, "Let us make it simple. Let us find something which will change the situation".
The noble Baroness has seen at first hand the effect on individuals' and families' lives of the subject we are discussing. The noble Lord, Lord Montague, has experienced this matter from another point of view. This is a situation of David versus Goliath in many instances; namely, the weak versus the strong. We must ask who runs small businesses. Not everyone is fortunate enough to have the noble Lord, Lord Montague, to fight accountants. I am talking about people who may have
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been made redundant and who know how to produce a product or a service which is first rate but who do not know how they should act in other areas. In the old days those people would probably have lived in a street which contained accountants and solicitors whom they could consult for friendly advice before turning to official advice. In many cases their parents may have run small businesses. However, those sources of information are no longer available and therefore these people are exposed to bullying to a greater extent. We need to act urgently on this matter.
People may be bullied when they are at their lowest ebb. Someone who has a failed business which has gone into liquidation may begin to fear that his judgment is wrong. He may begin to become frightened of taking a decision because previous decisions did not work out. We must now protect these people. It is interesting that the insolvency official body is concerned to protect the interest of its members—but who is protecting the interest of its customers? The suggestions made tonight that someone should be doing that are important.
I am also worried about who is protecting small business overall. In this country we need a strong lobby for small business. This debate has been on the papers for some time, and I have not heard a word from the small business lobby about the size of the problem.
I know from my previous experience in the DTI as Minister for small firms that it is a question of, "I am getting rid of my risk on to you, so you are out". I was at the DTI at the time when the owners of small businesses were being made to sell their homes at the bottom of the market to remove the risk from the banks. This took away their pride as well as their businesses. It is interesting that when I left the DTI to go to the Department of the Environment, my government driver asked, "Did the banks get you to move?" I was obviously fighting the battle well.
It is important that we look at the issue overall and consider the cases where assets are transferred to other members of the family overnight. Small business also has to play it straight.
The Government must look at the problem and keep their house in order—especially in regard to Customs and Excise and the Inland Revenue. If the banks have done their bit, will the Government seek to ensure that they do not put the final spade of soil on these companies? Will there be an arrangement whereby businesses can talk to and lean on the Government?
If the DTI is to follow the policy of a previous Secretary of State to emulate the US spirit of enterprise and entrepreneurship and to see failure as an experience, it must protect and nurture small business and deal with this issue. I repeat my gratitude to the noble Baroness for raising this subject.
Lord Razzall: My Lords, before the Minister rises to his feet, perhaps I may make it clear in response to the noble Baroness, Lady Denton, that I was not in any way being negative. I was trying to get across that this is a very big issue, and I am worried that the narrow solution proposed here does not crack the nut of the major problem. I think the Minister accepts that.
8.13 p.m.
Lord McIntosh of Haringey: My Lords, I share the gratitude that all noble Lords have expressed to my noble friend Lady Dean for raising this important issue. She will have the satisfaction—even before I say anything in response—that every single speaker in the debate has supported her. I agree with the noble Lord, Lord Razzall; I thought he also supported her, although perhaps not in the detail of the solution to the problem.
My noble friend also attracted a number of people who have personal experience of these issues, notably my noble friends Lord Montague and Lord Evans. Although my experience is not quite as direct as that of my noble friend Lord Montague, I did run my own small business for 30 years. I had some difficult conversations with the bank manager but never quite got to the stage reached by my noble friend. On the other hand, I did not get the result that he did. I did not end up with a business worth £400 million, with 10,000 employees. I think he came out on top in the end.
This is an issue which goes to the heart of the relationship between businesses and their bankers and to the professional conduct and obligations of those who practise insolvency.
One of the most common forms of security granted by a company to a lender, usually its bank, is a floating charge. This will cover the whole, or substantially the whole, of the company's assets and undertaking and, most importantly, it will contain within it the power to appoint an administrative receiver. My noble friend Lady Dean was right to point out that before the time of the insolvency Acts there was a free-for-all and no regulation at all, so the Acts were an advance. Under the provisions of the Insolvency Act 1986, a person acting as an administrative receiver must be an authorised insolvency practitioner. An administrative receiver will have the power to seize all the company's assets and to continue or close down its business.
Effective control of the company's affairs passes from its owners and managers into the hands of the administrative receiver, whose appointment is therefore a major step for all concerned. It is certainly not one to be taken lightly or precipitately. Banks make money from lending it to customers and, of course, recovering their loans and any interest. They have no "interest", in the wider sense, in putting their customers in a position where they can no longer borrow and pay interest on that borrowing.
Incidentally, I very much agree with the noble Baroness, Lady Denton, about entrepreneurs losing their houses. I do not think that there were more than five or six years out of the 30 years that I was running a company when I did not have to give a personal guarantee on my own assets, which were, and are, largely my house. If I had ever got to that stage, not only would my business have been closed down, but I would have been homeless.
Where lending institutions—again mostly banks—have substantial exposure on particular lending, they generally take steps to ensure that their borrower provides them with an up-to-date flow of information from which they can assess the security of their advance.
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Where that information is not available or is defective and a bank has concerns about the viability of a borrowing company, it may appoint accountants, often insolvency practitioners, to investigate and report on the company's financial situation and prospects.
In the recessions of the 1980s and early 1990s there were frequent claims that when investigating accountants were appointed the directors of borrowing companies were not told what conclusions they had reached—or indeed the basis on which they had reached them—even though the company was footing the bill. If the investigating accountants were also insolvency practitioners, a recommendation by them that administrative receivers be appointed to the company carried an obvious potential for conflict of interest—which is the theme of this debate—since they were the likely appointee. This was particularly so in the eyes of those concerned in the ownership or management of the company who could feel entirely excluded from a process which had the most serious of consequences for them.
The recessions of the early 1980s and 1990s also gave rise to frequently voiced complaints that banks were too ready to withdraw financial support from troubled companies—or, indeed, to pull the rug from under them at the first hint of trouble.
It is fair to say that when the economy emerged from the recession of the early 1990s, there was a recognition that the relationship between banks, their business customers and, where they were involved, accountants and insolvency practitioners was under considerable strain. That was certainly something recognised by the insolvency profession. In 1994 the Society of Practitioners of Insolvency conducted a survey of their membership which found that in some 65 per cent. of cases investigating accountants recommended steps other than insolvency proceedings, including receivership. That finding, while welcome, shows that there remained a large number of cases—the other 35 per cent.—in which investigating accountants were appointed administrative receivers and it is these cases which continue to cause understandable concern to all noble Lords.
There is a conflict between what I am saying and the figure that my noble friend Lady Dean quoted from the Warwick University research in 1992. I would like to look at that conflict and write to her about that, and, if I may, I will copy it to other noble Lords who have taken part in the debate.
Before I leave that point, we do not have firm evidence of the number of cases where investigating accountants do not charge for their services in anticipation of becoming the receivers. If we can get any evidence, and if the noble Baroness can provide any evidence, we will be happy to take that into account.
The banks, too, recognised that their relationships with their business customers needed to be improved. In March 1997 the British Bankers' Association launched its statement of principles entitled Banks and Businesses: Working Together. The statement of principles seeks to show how banks intend to work together with small and medium-sized businesses to get their relationships right from the outset.

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There are some specific principles addressed as to what should happen when things start to go wrong. Principle five states that banks will alert their business customers, in writing, when they have concerns about a customer's business or their relationship. Principle six explains that banks may ask for additional financial information or seek an independent review of the business where underlying problems are not resolved. Principle seven confirms that if a bank asks for an independent review the requirements of that review will be explained to the customer, as will its terms of reference, who should conduct it and the nature of costs likely to be incurred. Principle eight states that where the bank has requested an independent review, it will seek to discuss the information provided with the customer and, should the customer wish it, with the customer's advisers. No action would be taken before such discussions took place. Principle nine confirms that banks will support rescue propositions they see as viable and, most importantly in the context of this debate, principle 10 states as follows:
"If you [the customer] act in good faith; keep us informed about developments; keep to your agreements with us; heed what your own and any independent adviser say; and are prepared to make the changes needed early enough to preserve the underlying business, we will not normally seek the immediate appointment of a receiver or start other recovery proceedings".
The then government welcomed the publication of these principles in March 1997 and their coming into force on 1st July 1997 was welcomed by this Government. In the Government's view the statement of principles provides a clear recognition of the sort of problems which have been the subject of this debate and a clear statement of intent as to how relationships between banks and business customers finding themselves in difficulty should proceed. The operation of the statement of principles is due to be reviewed in July of this year.
The framework for the relationship between a bank and its business customers, set out in the statement of principles, certainly seeks to provide reassurance first, that banks will not engage in the precipitate appointment of receivers to a company in financial difficulties and, secondly, that the appointment of investigating accountants is not inevitably a first step to the appointment of that firm (or any other firm) as administrative receivers.
The insolvency profession has in place ethical guidance which includes a reference to the situation where investigating accountants might subsequently be appointed as an insolvency office-holder (whether as administrative receiver, administrator or liquidator) of a company. That guidance states that if the circumstances of an initial appointment are such as to prevent open discussion of the financial affairs of the company with its directors, an investigating member or other principal in the practice might be called upon to justify the propriety of their acceptance of that subsequent appointment. The profession may need to consider whether that guidance adequately reflects the degree to which this subject is a matter of real concern in the business community, as expressed in today's debate. In the light of the statement of principles, it is to be
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expected that banks appointing investigating accountants as, say, administrative receivers would give this issue very serious consideration.
When the question of a prohibition has been raised in the past insolvency practitioners and banks have argued that the appointment of a new insolvency practitioner to be, say, administrative receiver of the company would mean that that practitioner would have to devote a great deal of expensive time and resource in "getting up to speed" in relation to the company's affairs. Where the insolvency practitioner appointed is the person who has conducted an investigation on behalf of a bank, such expenditure would be unnecessary. If the company's assets were insufficient to discharge its borrowing the additional costs would be a further burden on the secured lender. Otherwise the costs would almost certainly fall on the unsecured creditors of the company.
In other words, while there is a general recognition that there is a clear potential for a conflict of interest, it has been argued that the balance of advantage—for the company, its creditors and its shareholders—lies with not imposing a prohibition in the terms set out in this Question but rather relying on the professional obligation of the interested party—the insolvency practitioner—to report fairly and impartially, and without regard to his own financial interest, in relation to the affairs of the company which he has investigated.
I admit that we have to qualify that, if I may respond to my noble friend Lord Montague, by admitting that there are eight sources of an insolvency licence—the various bodies of chartered accountants, the Insolvency Practitioners Association itself, the Law Society, the Association of Certified Accountants and, finally, the Secretary of State. These licences are given to individuals, as my noble friend said, and not to firms.
The argument about getting up to speed is, in the Government's judgment, a plausible one to put forward but its acceptance depends on two things: first, a demonstration of the increased cost and disruption that would attend a prohibition on investigating accountants accepting a subsequent appointment; and, secondly, on the insolvency profession demonstrating that it demands and enforces the highest standards of professional conduct from its members in this, and indeed in every other, area. So it is right that I should respond to my noble friend by acknowledging her point about the Royal Bank of Scotland. She was kind enough to point me to the article in the Insolvency Bulletin last year to which she referred.
In 1992 the Royal Bank of Scotland took a unilateral decision that, as a matter of policy, it would not, other than in exceptional circumstances, appoint an insolvency practitioner to be the administrative receiver of a company if that insolvency practitioner had undertaken investigation into that company's affairs. The Royal Bank of Scotland had considered the cost of disruption and decided that they would not be important. There is no evidence that it has passed on any additional costs to its customers. It has argued—and it says that its recent experience supports the argument—that the certain knowledge that they will not be appointed as administrative receivers has caused investigating

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accountants to develop innovative and creative solutions for companies in financial difficulties. It is clear that "the Royal Bank of Scotland experience" must be given due weight in any assessment of where the balance of advantage lies.
In conclusion, there are three approaches that need to be taken to attack this problem. First, when the banks review their experience of two years' operation of their statement of principles—the review is due to take place in July 1999—they will need to examine the subject matter of this debate very carefully. On that point I agree with the noble Lord, Lord Razzall. Secondly, Peter Mandelson, when Secretary of State last year, announced that, parliamentary time permitting, it was the Government's intention to introduce legislation to provide for a moratorium on creditors' actions where a company in financial difficulty requires time to formulate proposals to put to its creditors, proposals which would enable its survival and continued training. I do not think he specifically said that he meant to go as far as Section 11 protection. But that is certainly one element which should be considered.
Thirdly, and perhaps most importantly, in December 1998 the DTI published a competitiveness White Paper which announced a review of the law relating to company rescue mechanisms—the noble Lord, Lord Lucas, and others referred to that—to be conducted jointly by the DTI and the Treasury, because the Government would wish to see as many companies as possible being given the opportunity and encouragement to overcome short-term difficulties.
We have heard this evening that decisions about the appointment of receivers to companies are crucial in determining the future of all those involved in the company's business: owners, managers, employees and suppliers. This is clearly an issue which deserves to undergo a thorough re-examination. I am pleased therefore to be able to confirm to your Lordships—indeed, I just have—that it will be considered as part of that joint review of the law on company mechanisms which was announced in the competitiveness White Paper. I hope my noble friend will feel that we have taken the arguments used this evening seriously and that we propose to advance our consideration of them.

Access to Justice Bill [H.L.]
8.30 p.m.
House again in Committee.
Clause 19 [Restriction of disclosure of information]:
[Amendment No. 198 not moved.]
The Deputy Chairman of Committees (Viscount St. Davids): Before calling Amendment No. 199, I should remind the Committee that, if this Amendment is agreed to, I cannot call Amendment No. 200.
[Amendments Nos. 199 and 200 not moved.]
Lord Goodhart Lord Goodhart moved Amendment No. 200A:
Page 12, line 19, leave out from ("Commission") to ("furnished") in line 20 and insert—
("( ) Nothing in this section shall permit the disclosure of information which has been").
The noble Lord said: I apologise for tabling this amendment at a late stage; however, the matter was drawn to my attention only yesterday morning by my noble friend Lord Phillips of Sudbury.
The amendment relates to subsection (3)(c) of Clause 19. I assume that subsection (3)(c) was intended as a redraft of Section 38(6) of the Legal Aid Act. Like Clause 19 of the present Bill, that section contains a general restriction on publication of information furnished for the purpose of receiving legal aid or public funding but it permits publication for certain specified purposes.
Section 38(6) of the Legal Aid Act provides that information provided by a client to his lawyer is not to be treated as information provided for the purposes of the Legal Aid Act. That information covers statements made by a client for the purpose of contesting the case which might contain, for example, admissions of offences or misconduct of some kind.
As I understand it, the purpose of Section 38(6) is to preserve legal professional privilege against the disclosure of information of that kind. That is done by taking such information outside the scope of Section 38 altogether. That information therefore remains subject to the normal rules of legal professional privilege and cannot be disclosed even under one of the specified grounds in Section 38(1).
Clause 19(3)(c), however, appears to reverse the position. Clause 19(1) states that certain information shall not be disclosed unless it is authorised by other provisions in that clause. Clause 19(2) contains specific grounds for disclosure. Clause 19(3) then states that Clause 19(1)—namely, the general restriction on disclosure—shall not apply to certain categories of information.
On an examination of subsections (3)(a) and (3)(b) it is obvious that the intention is that the information in those categories should be disclosed. It is,
"information in the form of a summary or collection of information so framed as not to enable information relating to any individual to be ascertained from it".
So it is obvious that that information is intended to be disclosed. Sub-paragraph (b) refers to,
"information about the amount of any grant, loan or other payment made to any person or body by the Commission".
Again, one assumes that that information is to be disclosed.
That therefore gives rise to an inference that the information referred to in sub-paragraph (c) should also be disclosed. I do not suppose that that is the intention of that sub-paragraph. However, if that is the case, then the drafting is dangerously ambiguous. Sub-paragraphs (a) and (b) are entirely different from sub-paragraph (c); they authorise the publication of information which was clearly supplied for the purposes of the Act, whereas I assume that sub-paragraph (c) is intended to exclude information by treating it as not supplied for the

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purposes of the Act. Therefore, I suggest that the provision needs to be redrafted along the lines of Amendment No. 200A.
If that is not the case, and it is intended that information referred to in sub-paragraph (c) should be disclosed, that clearly opens up a wholly impermissible infringement of the basis of legal professional privilege. I therefore wait with some interest to hear what is the correct position.
The Lord Chancellor: I am grateful to the noble Lord, Lord Goodhart, for that full explanation. I shall express myself rather more shortly, but it was very helpful of him to set out as he did all the reasons for his concerns. I am minded to take these provisions away and consider them further, for reasons that I shall give shortly.
Clause 19(1) prohibits the disclosure of information furnished to the commission except as permitted by subsection (2). Subsection (3) disapplies the prohibition in subsection (1), inter alia Clause 19(2)(c); namely, information that was furnished to a person providing services funded as part of the community legal service or criminal defence service by or on behalf of an individual seeking or receiving such services.
The contrast between the prohibition on disclosure in Clause 19(1) and the disapplication of that prohibition to the information described in subsection (3), which includes the information described in sub-paragraph (c), might suggest that since the disclosure is not prohibited it is permitted.
The purpose, however, is in fact to prevent someone who discloses such information from being liable to a criminal offence under Clause 19(5). It is not, however, intended to cause the disclosure of the information to cease to be a breach of privilege. Thus, Clause 21(1)(a) is intended to preserve privilege in this area.
However, I am certainly persuaded, for the short reasons I have given and for the additional reasons given by the noble Lord, that the relationship between Clause 19(3) and Clause 21(1) may be unsatisfactory. I undertake to draw this debate to the attention of the parliamentary draftsman with a view to his considering whether the provisions as they stand satisfactorily achieve the outcomes intended or whether they would profit from redrafting. On that basis I invite the noble Lord to withdraw his amendment.
Lord Goodhart: I am grateful to the noble and learned Lord the Lord Chancellor for undertaking to take the matter back to the parliamentary draftsman. On that understanding, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 19 agreed to.
Clauses 20 to 22 agreed to.
Schedule 4 agreed to.
Clause 23 [Orders and regulations]:
The Deputy Chairman of Committees: Before calling Amendment No. 201, I should point out to the Committee that, if it is agreed to, I cannot call Amendment No. 202.
[Amendments Nos. 201 to 204 not moved.]
The Lord Chancellor The Lord Chancellor moved Amendment No. 205:
Page 14, line 8, leave out ("11(2)(a), (b)") and insert ("11(2)(b)").
On Question, amendment agreed to.
[Amendment No. 206 not moved.]
[Amendment No. 207 had been withdrawn from the Marshalled List.]
[Amendment No. 208 not moved.]
Clause 23, as amended, agreed to.
Clauses 24 to 26 agreed to.
Clause 27 [Conditional fee agreements]:
Lord Kingsland Lord Kingsland moved Amendment No. 209:
Page 15, line 15, after ("client") insert ("(including the professional client of a person providing services on a referral basis)").
The noble Lord said: The noble and learned Lord the Lord Chancellor has accused me of being excessively crisp in my interventions on previous occasions. This time I make no excuse for committing the same offence because this is a drafting amendment. It is intended to make clear that a conditional fee arrangement involving a barrister is between the barrister and the professional client instructing him or her and not between the barrister and the lay client.
That interpretation could be read into the words of Clause 27(1) concerning Section 58 (2)(a), but it will not necessarily be so. For that reason I seek clarification from the noble and learned Lord. I beg to move.
8.45 p.m.
The Lord Chancellor: I am grateful to the noble Lord for raising the matter and for his economic expression of the thinking behind the amendment. I am inclined to accept it in principle. It provides a useful clarification of the existing clause. The amendment seeks to put beyond doubt that a conditional fee agreement with a barrister entered into by a solicitor on behalf of his client is a valid conditional fee agreement.
This is sought to be achieved by amending the proposed Section 58(2)(a) of the Courts and Legal Services Act 1990 introduced by Clause 27. The amendment defines client to include the professional client of a person providing services on a referral basis. In practice, the barrister's professional client would be a solicitor.
The amendment is inspired because of the relationship between barristers and clients. Banisters do not, as a general rule, accept instructions directly from members of the public or other bodies. They are instructed by a solicitor as their professional client and members of the public or other bodies are referred to as the lay client. The professional client is technically liable for the fees of the barrister, although he in turn is indemnified by the lay client. The concern, therefore, behind the amendment is

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whether the terms of Section 58(2)(a) sufficiently encompass the arrangements where a barrister concludes a conditional fee agreement with a solicitor acting on behalf of a lay client so as to make that agreement lawful and enforceable.
I desire conditional fee agreements to be effective and I would not wish the legislation to be at all ambiguous on the point. The language of the amended Section 58 was intended to encompass agreements made with barristers. I am keen that they should be able to offer their services under conditional fees. As I have said before, I believe conditional fees represent an important avenue to access to justice for those who have been excluded because they cannot afford to pay lawyer's fees if they lose. I would be most concerned if it could be persuasively argued that the legislation did not adequately provide for the arrangements by which barristers are retained and that therefore conditional fee agreements with a barrister were not sanctioned by law. I should like a little time to consider the exact terms of the amendment and to bring back amendments at Report. On that basis, I ask the noble Lord not to press his amendment tonight.
Lord Kingsland: I thank the noble and learned Lord for his response. In the circumstances, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Clinton-Davis Lord Clinton-Davis moved Amendment No. 210:
Page 15, line 30, leave out from ("agreement") to end of line 32.
The noble Lord said: The amendment stands in my name and that of the noble Lord, Lord Kingsland. The agreements which are set out m Section 58(2)(a) are already permitted at common law, as I understand it. Without statutory requirements, many are likely to be in existence before any new statutory provisions might come into force.
I submit that the public interest is to ensure that conditional fee agreements with improved fees comply with specific requirements. There is not the same need to be prescriptive where legal representatives agree to work for less than their normal fee, if unsuccessful, but do not seek to charge more than their normal fee, if successful. I beg to move.
Lord Falconer of Thoroton: Perhaps I may deal with Amendments Nos. 210, 211 and 213 together. The purpose of Amendment No. 210 in the names of the noble Lords, Lord Clinton-Davis and Lord Kingsland, is to remove entirely from the revised Section 58 of the Courts and Legal Services Act 1990 which is proposed by Clause 27(1), Section 58(3)(c). The subsection provides that a conditional fee agreement,
"must comply with such requirements (if any) as may be prescribed by the Lord Chancellor".
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The purpose of Amendment No. 211 is to insert into Section 58(3) a new paragraph (d) which provides that the agreement,
"may only be entered into by a person or body supplying advocacy or litigation services who is solvent throughout the currency of the agreement".
Lord Kingsland: I am grateful to the noble and learned Lord for giving way. I should already have intervened to tell him that I shall not move Amendment No. 211.
Lord Falconer of Thoroton: I am grateful for that. I shall therefore deal with Amendments Nos. 210 and 213, which I believe still apply, although Amendment No. 211 may not be moved. I cannot accept the amendments. Part of the purpose of the revised Section 58 is to bring into statute the effect of the decision in Thai Trading v. Taylor which has approved certain conditional agreements as being lawful at common law. Thai Trading does not sanction conditional fee agreements prescribing a costs uplift in the event of success. It sanctions solicitors agreeing with their clients to recover less than their normal fee if they lose. In theory, therefore, they could recover nothing. But if they win, they are able to recover the full costs from the unsuccessful defendant despite the agreement for a reduction with their own clients.
Regulation of those kinds of agreements is therefore at present subject to the common law, overseen by the courts. I believe it is right that, as we are bringing these agreements within the statute law, the Lord Chancellor should be able to regulate the agreements under statute. At some time there may be a need to address issues concerning consumer protection or undesirable practice, and the Lord Chancellor must have the means to do that. The Lord Chancellor has no intention of seeking to prescribe requirements, at least initially, for anything other than conditional fee agreements that provide for enhanced fees. He would wish to see similar provision being made along the lines of the present Conditional Fee Regulations 1995 in relation to those agreements—for example, the circumstances in which the success fee becomes payable must be stated. I am quite sure that those noble Lords who are concerned about consumer protection expect nothing less of the Lord Chancellor.
I am confident that the Lord Chancellor will not need to prescribe requirements for those agreements which do not provide for enhanced fees—a matter with which my noble friend Lord Clinton-Davis dealt. However, if it should prove necessary to set minimum standards it is right that provision is made in the legislation to allow for that to be done. In the light of the remarks of the noble Lord, Lord Kingsland, I do not need to deal with Amendment No. 211 and, in view of what is in the mind of the Lord Chancellor, I ask my noble friend to withdraw his amendment.
Lord Clinton-Davis: I shall certainly consider the words of my noble friend. It may be necessary to return to this issue perhaps in another form. It is important that the law in relation to contingency fees should be clarified; more importantly, steps should be taken to

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prohibit pure contingency fees entirely. I would rather come back perhaps with another amendment to elaborate the point. Meanwhile, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 211 not moved.]
Lord Goodhart Lord Goodhart moved Amendment No. 212:
Page 15, line 32, at end insert—
("( ) A conditional fee agreement of the type described in subsection (2)(a) shall not be unenforceable simply by reason of its being made prior to the coming into force of this Act.").
The noble Lord said: No-win, no-fee agreements without enhanced fees have been common for some time in certain fields not covered by the specific authority of the Courts and Legal Services Act 1990. As a number of Members of the Committee will be aware—certainly including the Lord Chancellor—it was decided by the Court of Appeal a number of months ago in the Thai Trading case that such agreements were lawful and could be enforced. For the benefit of Members of the Committee who are not familiar with that case, there the successful defendant's lawyer acted on a no-win, no-fee basis. The losing party, the plaintiff, was then ordered to pay the costs and argued that it could not be required to pay the defendant's lawyer's fees under the court order because the no-win, no-fee agreement was unlawful and gave the lawyer no right to cover his fees. That argument was rejected and the losing party, the plaintiff, was ordered to pay. But a decision of the Court of Appeal within the past few weeks, Hughes v. Kingston-upon-Hull City Council has suggested, without actually holding, that the Thai Trading case was wrongly decided. If so, clients who have entered into no-win, no-fee agreements and are successful cannot recover their lawyers' fees under the court order and the lawyers who have entered into no-win, no-fee agreements cannot recover from their clients if their client should be paid the costs. The purpose of this amendment therefore is to remove any doubt as to the validity of the Thai Trading decision and legitimate all arrangements entered into in reliance upon it. There are some minor drafting defects in the amendment, but it is obviously a fair one and I hope that the Government will accept it in principle. I beg to move.
Lord Falconer of Thoroton: The purpose of this amendment is to make lawful any agreements of the kind envisaged by what will be Section 58(2)(a) entered into before,
"the coming into force of this Act".
I am not sure to which Act the noble Lord's amendment refers.
Lord Goodhart: That is one of the drafting defects to which I referred. I believe that the amendment should make reference to "this section".
Lord Falconer of Thoroton: I am grateful to the noble Lord. If this ever came back, obviously that matter would be put right. I am a little surprised that this amendment has been moved because it invites
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Parliament to make retrospective legislation. Whichever Act is intended to be referred to—the noble Lord has made clear what he has in mind by his intervention—agreements that might have been unlawful at the time they were entered into would be legitimised by this amendment. I do not believe that that is a particularly desirable outcome and may well lead to the reopening of cases or situations that have otherwise been treated as settled.
The problem that this amendment seeks to cure is that, since the decision in Thai Trading, to which the noble Lord has referred and which allowed lawyers to agree to charge less than their normal fees if they were unsuccessful on behalf of their clients hut to recover their costs if they won, the common law authorises the use of these kinds of fee arrangements. However, as the noble Lord has very frankly said, the common law is subject to development and change by the courts in subsequent cases and it may be that the effect of Thai Trading will change over time. The Hughes case suggests that that is the position.
I do not see that I can do more in this regard than I am doing to make these agreements lawful at statute law. Parliament rightly makes retrospective legislation only exceptionally. I do not believe that this is an appropriate circumstance in which to do so. In effect, the noble Lord seeks to say that all of the Thai Trading-type cases whenever they arose should be treated as lawful when the position may be—I do not know—that the common law will say that they were unlawful. I therefore ask the noble Lord to withdraw his amendment.
Lord Goodhart: I am disappointed by the reply. While I accept that Parliament should not normally legislate on a retrospective basis, there are exceptions to that. One of the exceptions that has been applied on a number of occasions in the past is where an apparently authoritative decision has led people to act in reliance on that decision and it has been subsequently held that, contrary to expectations, the law is different. Further, if the Thai Trading cases are legitimated, it will do no one any harm except those who take improper advantage of a defect in the law. If a party is ordered to pay costs I believe that it is an abuse of rights to be able to avoid paying costs to the successful party's lawyer on the ground that that particular agreement is unenforceable. Since I am sure that Thai Trading, which is very well known in legal circles, will have been assumed by both plaintiffs and defendants to have been correctly decided—as indeed may turn out to be the case—I do not believe that anyone will find himself at an unfair disadvantage if this particular piece of retrospective legislation is passed. However, I do not intend to divide the Committee on this occasion in order to take that point, though I hope that the Government will reconsider the position between now and Report stage. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 213 not moved.]
Lord Kingsland Lord Kingsland moved Amendment No. 213A:
Page 15, line 44, at end insert ("; and
(d) the amount of the increase must not be calculated (expressly or otherwise) by reference to the amount or value of any money, property or other benefit recovered or preserved in the proceedings").
The noble Lord said: The object of this amendment is to prevent anyone, solicitor, barrister, claims assessor—whoever—from acting on a pure contingency fee; that is, one fixed by reference to the amount of damages awarded or property recovered or preserved in proceedings. The background to this is that contingency fees were, and probably remain, unlawful at common law except in certain specific instances. For example, a solicitor may charge on a contingency basis for non-contentious business which includes debt recovery by writing letters or negotiating settlement of any claims without starting proceedings. It also includes acting in tribunal cases, planning inquiries, criminal injuries compensation claims and any other tribunal case. That is because the definition of non-contentious business in the Solicitors Act 1974 is seriously outdated. It only covers litigation before courts making no mention whatsoever of tribunals. The definition dates back to the 19th century when there were hardly any tribunals.
The solicitors' practice rules prohibit the charging of contingency fees only in contentious businesses. Clause 27 covers Thai Trading arrangements. However, that begs the question as to what is a normal fee. The noble and learned Lord the Lord Chancellor will take the opportunity, I hope, to clarify the law and to prohibit pure contingency fees. The noble and learned Lord has often said that he is opposed to contingency fees on ethical grounds. On the other hand, he strongly supports conditional fees. The problem about their use in employment cases is, as I believe he pointed out last week, that the normal costs rules do not apply, so a case conducted under a conditional fee arrangement requires the client to pay from the compensation awarded. As there is no limit to damages in a discrimination case, such arrangements may be possible. However, from a client's perspective, they look indistinguishable from contingency fees. I beg to move.
9 p.m.
Lord Clinton-Davis: I support the principle underlying the amendment. It is extremely important. I have alluded to it in another context. I am not entirely convinced that we have the right instrument to deal with it here, but it is the principle that matters. I support the noble Lord, Lord Kingsland, in saying that this is a good opportunity for my noble and learned friend to clarify the situation so far as concerns the law; and, I hope, to move decisively against contingency fees.
Lord Goodhart: I, too, support the noble Lord, Lord Kingsland. Contingency fees are part of the reason why civil litigation in the USA has become completely out of hand. It has now reached a level which is seriously damaging to the economy. Admittedly, we do not have juries in civil actions, as the Americans do. That is another cause of that problem. However,
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I believe that contingency fees should continue to be forbidden as a matter of common law and should not be validated under the legislation of this Bill, which will authorise conditional fees.
Lord Phillips of Sudbury: I support the amendment.
Lord Mackay of Clashfern: If such an amendment is necessary, I, too, strongly support it.
The Lord Chancellor: The matter is a little more complex than has been indicated to the Committee. The noble Lord, Lord Kingsland, wishes to ensure that contingency fees—that is, fees which are fixed as a percentage of the value of the successful claim—are made unlawful. The purpose of the amendment is to amend the proposed Section 58(4) of the Courts and Legal Services Act 1990 set out in Clause 27 to include a new paragraph (d) to make it a requirement of a conditional fee agreement which provides for enhanced fees that the amount of the enhanced fee may not be calculated by reference to the,
"amount or value of any money, property or other benefit recovered or preserved in the proceedings".
Section 58 seeks to bring the effect of the judgment of the Court of Appeal in Thai Trading into statute law. As my noble and learned friend Lord Falconer of Thoroton said a little time ago, that decision does not sanction conditional fee agreements prescribing a costs uplift in the event of success. It sanctions solicitors agreeing with their clients to recover less than their normal fee if they lose—and in theory they could recover nothing—but, if they win, to recover the full costs from the unsuccessful opposing party despite the agreement for a reduction with their own clients.
It was not the intention of this legislation to make unlawful other kinds of fee agreements that solicitors presently use. For example, it is perfectly lawful for solicitors to work on a contingency fee basis where they are undertaking work in "non-contentious business" as defined by the Solicitors Act 1974. When we turn to contingency fees in relation to other work undertaken by lawyers, I am not convinced that the use of contingency fees in relation to non-contentious business should be unlawful. I have a different view, of course, in relation to contentious business properly so described. There are many services provided on a similar basis to conditional fees by professional people other than lawyers. I think, for example, of estate agents selling homes, or other persons who are remunerated on a commission basis. I do not see any reason why lawyers especially should be prevented from ever being able to offer their services in this way in relation to the many other services they provide apart from conducting litigation.
"Contentious business" is defined by Section 87(1) of the Solicitors Act 1974 as proceedings before a court or arbitrator. "Non-contentious business" means any business not within the definition of "contentious business".
The noble Lord, Lord Kingsland, referred to proceedings in employment tribunals. Under the Act, non-contentious business includes all proceedings in

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employment tribunals because they are neither proceedings before a court nor an arbitrator. However, everyone knows that in practice they are just as contentious as court proceedings. It is only the employment appeal tribunal which is treated as contentious.
I am told that solicitors regularly undertake cases in these tribunals on a contingency basis. Since July 1998 conditional fee agreements have been made available in these tribunal proceedings. There may not be much point in that because of the availability of contingency fees and, a matter to which we referred previously in Committee, costs do not follow the event in these tribunals. Under a conditional fee agreement in employment tribunal proceedings, the uplift would have to come out of the compensation recovered.
That is a state of affairs about which I have some concern. I intend to invite the Law Society to make representations to me. Indeed, the amendment has focused my attention upon that. The revised Section 58 is intended only to give effect in statute law to the decision in Thai Trading and to go no further. My department has received representations from the Bar and the Law Society about whether that has been satisfactorily achieved. I will consider the representations which have been made. It may be that I will see a need to revisit the terms of Clause 27 on Report.
I have indicated my concern about the position in relation to the employment tribunals. That needs careful thought. As I told the Committee previously, the Government are looking at their obligations under European Union law and the ECHR Convention before reaching any conclusions about employment tribunals. It seems to us that this issue, too, needs to be addressed in that context. I do not believe that we should simply consider the position of employment tribunals and related issues of cost or publicly funded support to take cases to them in a piecemeal fashion. However, I am aware of the concern about equality and treatment of the kinds of fee arrangements which barristers and solicitors may use when appearing before employment tribunals and I believe that we must look at the matter with care.
I turn to the strict terms of the amendment. I am not sure that it would have the intended outcome. It would not affect conditional fee agreements which do not provide for enhanced fees and it could not affect contingency fee agreements currently used by solicitors in non-contentious business. I do not believe that the noble Lord intends it to. The proposed Section 58(4), in which the additional words would be inserted, does no more than provide the conditions that are applicable to a conditional fee agreement which provides for enhanced fees; that is to say, fees increased by a specified incentive in the event of success. The earlier provisions of Section 58(4) provide that these agreements may be entered into in respect of proceedings specified by order by the Lord Chancellor; the agreement must state the percentage by which the fees of the lawyers are to be increased; and the percentage must not exceed the maximum amount specified by the Lord Chancellor by order. Therefore, I see nothing in these provisions or anywhere else in
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the proposed Section 58 which legitimates the use of contingency fees. Calculations of the sum payable in the event of specified circumstances occurring will always be by reference to the fees of the lawyer and not by reference to the award of the court. Consequently, as I see it, the position envisaged by the amendment cannot arise. Therefore, I am not minded to accept the amendment for those reasons and I invite the noble Lord to withdraw it. But I repeat my hostility to contingency fees, strictly so-called, in contentious court proceedings.
9.15 p.m.
Lord Ackner: I do not at the moment follow why there should be that hostility to contingency fees. In many ways it is an argument about semantics. I have not brought it with me but the Middleton Report is really quite in favour of contingency fees and it gives its reasons. The conditional fee can, in given circumstances, be much more unfriendly to the plaintiff than the contingency fee. The 100 per cent. uplift which is allowed—and there is no bar on it going up to 100 per cent.—could wipe out entirely the award of damages made, particularly in a personal injury case where contributory negligence is found.
The contingency fee cannot do that. As I understand it, it provides a maximum of the proportion which can be taken out of the damages recovered. I believe that it is 40 per cent., at most, in most American states. Therefore, one is being emotionally illogical in being so hostile to the contingency fee when the conditional fee is merely a species of contingency fee which in certain circumstances may prove more expensive to the plaintiff than the contingency fee. One should think a little more clearly as to what difference, if any, there is.
I remind the Committee that the Green Paper, as I recall it, which first raised the ugly head of this method of remuneration was called Contingency Fees because, quite clearly the conditional fee depends on a contingency. The contingency is success. If that is achieved, then—and I use that horrible phrase—the uplift in costs is permitted.
Lord Clinton-Davis: The noble and learned Lord, Lord Ackner, is quite right that there is a relationship between the two. My concerns in relation to contingency fees mirror those pointed out by the noble Lord, Lord Goodhart, who referred to the experience in the United States where litigation is out of control. There is some attribution of responsibility for that condition to the operation of contingency fees. In any event, that is my view.
I am not really in favour of lawyers having a share of the financial action, so to speak, because that promotes an interest which is less than objective. But I do not wish to argue that point now.
I wish to ask my noble and learned friend whether, during the later stages of the Bill—either here or in another place—he proposes to deal with the disparities between lawyers and non-lawyers; for example, claims assessors and so on who are able to operate contingency fees. And yet, the essential difference between the two is something which my noble and learned friend has lost

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no opportunity of emphasising throughout our debates; that is, quality control. There is no quality control in relation to claims assessors and people of that character.
Does my noble and learned friend intend to do something about that? In the White Paper he envisaged some possible controls over non-lawyers giving legal advice, but no concrete proposals have emerged in that respect save for the one announced recently in the field of immigration. A proposal is to be introduced by the Home Office because in that sector it is quite clear that a number of those non-legal so-called experts have been guilty of aberrant behaviour to the great disadvantage of people appearing before immigration tribunals. It is right that the Home Office should take action to deal with the matter.
But why should there be no quality control over other people who are in direct contact with clients and—it must be said—whose qualities are extremely variable indeed?
I am not suggesting that legitimate and properly controlled agencies giving advice and carrying out representation at tribunals should be curbed; but there is an important point to be made in relation to quality control in some other sectors. Inexperienced people are vulnerable when it comes to claims assessors. They are not told and do not know how claims are made. It is easy to under-assess a large claim—I believe that happens. I do not want to argue the entire case now, but I should like to know whether my noble and learned friend is able to indicate at this stage whether he has any plans to deal with that specific sector.
Lord Donaldson of Lymington: Perhaps I can intervene before the noble and learned Lord rises to his feet, otherwise he will be bobbing up and down again. I entirely support the idea behind the amendment. My dislike of contingency fees is tempered only by my dislike of conditional fee agreements for precisely the reasons given by the noble Lord, Lord Clinton-Davis. Fortunately, when I was a trial judge, I never had two plaintiffs in front of me—the litigant and his lawyer. That is what one is faced with under conditional fee agreements.
My point is that if Amendment No. 213A is accepted, it will be impossible to give statutory or regulatory effect to a rule which is imposed by the Law Society; namely, that the increase—though within whatever may be the permitted percentages (I believe it runs up to 100 per cent.)—should not exceed 25 per cent. of the amount recovered. That cap, whether or not it exists, seems to be extremely healthy and one which the Lord Chancellor might like to be able to impose by an addition to Section 58 through Clause 27. However, if this amendment is included in this form, he cannot do that and that would be unfortunate.
Lord Ackner: My noble and learned friend is probably not aware that I put forward that 25 per cent. should be the top and that that should be incorporated in the regulations. I was defeated.
The Lord Chancellor: I do not believe that even at this hour of the night I was being either illogical or
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emotional but, as ever, entirely reasonable. What I say to the noble and learned Lord, Lord Ackner, is that the real vice of the contingency fee agreement, properly so-called, is that it gives the lawyer interest in the outcome of the action. Where the damages are very high, theoretically there is no limit to what percentage of the recovery the lawyer may claim and that can result in sums which are much greater than would be recovered under the uplifts in conditional fee agreements.
Another reason why conditional fee agreements are entirely different is that, under the Bill, the amount of the uplift will be recovered from the unsuccessful defendant and will therefore not come out of the plaintiff's compensation.
The noble Lord, Lord Clinton-Davis, asked about the work of claims' assessors and related categories. Those are people who offer to recover compensation for members of the public arising, for example, out of personal injury, for a fixed percentage of the damages recovered. I have to say that I have to share his anxieties in that regard. I and my department have received complaints from lawyers about the activities of those people and indeed other practitioners whose activities fall short of the work of litigators and who are otherwise not currently regulated. It is alleged that the services of claims assessors, which are paid for out of settlements, are unduly costly and that the settlements that they achieve fall far below the level that a competent lawyer would achieve.
The Government have a duty to ensure that consumers are protected, especially in the case of legal services where many clients can be ill informed and where the consequences of poor advice can be very severe indeed. If there is a need for regulation in this area to protect the consumers of legal services, I would not hesitate to promote the necessary measures. As the noble Lord, Lord Clinton-Davis, mentioned, the Government are already committed to taking steps to control unscrupulous immigration advisers. The Home Secretary and I have agreed proposals on that subject which he will shortly put before Parliament. Apart from that, although there is limited anecdotal evidence of poor service, there is not yet a detailed picture; nor do I know what measures would be effective; nor the views of legally qualified practitioners. However, I can assure the Committee that I am considering, as a matter of urgency, how best the necessary investigation and research can be undertaken. I hope that I shall shortly be in a position to announce what I intend to do.
The noble and learned Lord, Lord Donaldson of Lymington, made the point that an unlooked-for consequence of the amendment, if acceded to by the Committee, would be to outlaw the recommendation of the Law Society, which I think is generally adhered to in practice, that uplifts shall not exceed 25 per cent. of the recovery. That appears to be another reason why, on reflection, the noble Lord, Lord Kingsland, should withdraw the amendment.
Lord Kingsland: I thank the noble and learned Lord the Lord Chancellor for his extremely thoughtful and, I discern, constructive response to the amendment. He

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said that he will go away, reflect, and consult on it. In those circumstances, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Goodhart Lord Goodhart moved Amendment No. 214:
Page 16, line 1, after ("proceedings") insert (", save those brought under section 82 of the Environmental Protection Act 1990").
The noble Lord said: The Bill rightly prohibits CFAs in criminal proceedings. However, the amendment permits a CFA to be made in a housing disrepair case under the Environmental Protection Act. Such cases are brought by tenants against landlords in the magistrates' courts and, nominally, they are criminal proceedings. However, they are much more akin to civil proceedings for a mandatory injunction. If we have to have CFAs, those proceedings seem perfectly appropriate for funding by a CFA. I beg to move.
Lord Falconer of Thoroton: The purpose of this amendment is to allow conditional fee agreements to be used in bringing prosecutions under Section 82 of the Environmental Protection Act 1990. That section provides for summary proceedings by persons aggrieved by a statutory nuisance. Technically, as the noble Lord pointed out, proceedings under Section 82 are criminal proceedings. As such, they would be excluded under the general exception of criminal proceedings from proceedings in which conditional fees may be used. It is not without interest that part of the effect of the decision in the Thai Trading court case, which Clause 27 of this Bill is seeking to bring into statute, was to approve the use of something similar to conditional fee agreements in cases under Section 82. It is interesting that the Thai Trading case overturned an earlier decision in the case of British Waterways Board v. Norman which said that they could not be used in such a situation—in the latter case an agreement between the solicitor and the client that if a prosecution under Section 82 were unsuccessful the solicitor would not seek to recover costs against the client. That agreement was held to be unlawful and unenforceable in the latter case.
It was not the intention of the Lord Chancellor for Clause 27 to have the effect that has been described accurately by the noble Lord, Lord Goodhart. I would like, if I can, to be able to reach a consensus with him on the best way of addressing the difficulty that he has described. As I have just said, I accept that the courts have explicitly approved the use of what will become conditional fee agreements in the types of cases outlined by the noble Lord, even though they are technically criminal proceedings. However, I ask for a little more time to consider this amendment and to decide what should be done, if necessary, by talking to the noble Lord. Accordingly, I ask him not to press the amendment in those circumstances.
9.30 p.m.
Lord Goodhart: I am grateful for that helpful reply. Naturally, in the circumstances I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Meston Lord Meston moved Amendment No. 215:
Page 16, line 2, leave out from ("proceedings") to end of line 4.
The noble Lord said: The purpose of this amendment is to ensure that no type of family proceedings can be the subject of an enforceable conditional fee agreement. The Bill, as drafted, will permit conditional fee agreements in those family proceedings which consist of a financial matter or a matter concerning property. That proposal has caused concern to the specialist Family Law Bar Association and the Solicitors' Family Law Association, as well as to others, including Relate.
There are several objections to this proposal. First and fundamentally, a conditional fee agreement will require the parties to think in terms of winning and losing, which is now quite contrary to the whole ethos of the specialist legal associations and of current family law and practice. Lawyers are now duty bound, and encouraged by the courts, to limit costs and to limit acrimony by seeking a compromise in financial and property disputes and by avoiding adversarial stances. That applies not just to financial and property matters but also to other aspects of family and matrimonial litigation. Expert mediation will have a formal statutory status when the Family Law Act 1996 comes into full force.
Already there is a successful ancillary relief pilot scheme which places great emphasis on early settlement of property and financial claims, on keeping litigation costs under close control and on ensuring full and frank disclosure of all relevant financial circumstances. Conditional fee agreements will tend to reintroduce a litigious culture to family work, in which lawyers now successfully settle a very high proportion of cases. That high rate of settlement occurs because conscientious lawyers, encouraged by their professional association's guidelines, spend much of their time advising and persuading their clients to put all their cards on the table, face up, and advising their clients to lower their financial expectations.
The second objection is that the nature of the financial and property jurisdiction in this country often makes it difficult to define who has won or lost. Cases are seldom "all or nothing". Usually the courts and lawyers are seeking to achieve a fair apportionment of finite family capital resources and income, both at present and in the foreseeable future. Now those include the reallocation of pension rights in certain cases.
The statutory framework under which we operate gives broad discretion, and requires first consideration to be given to the interests of minor children. Ancillary relief claims are not the same as claims for debt or for compensatory damages. The discretion and wide powers of the court over present and prospective resources mean that there is seldom a precisely predictable result, but rather a bracket of correct outcomes. Thus, a former spouse may "win" in terms of obtaining or retaining capital assets, but at the same time "lose" on the amount of maintenance payable. The party who wants the transfer of the former matrimonial home may not receive it outright but on trust, or subject to a charge back—or on terms that a compensatory lump sum payment is made—or the level of maintenance payable may be limited in duration.
In reality it is much easier to define who has won or lost a simple dispute over a child, but the Bill, perfectly properly, excludes conditional fee agreements from that type of family proceedings. It does so, presumably, on the basis that CFAs can be inconsistent with the welfare of children who are the subject of the dispute; but, of course, many financial and property disputes between former spouses and partners involve a consideration of the needs of the children of the family.
There is a further concern in that the question arises: at what stage should the conditional fee be fixed or become payable? When divorcing parties first see their lawyers—and, quite often, for some time afterwards—they can be unaware of the extent or value of assets of the other spouse, unaware of the present and potential income available and only vaguely aware of their own or the other party's realistic needs. The necessary initial inquiries which give the basis for informed legal advice, and which enable so many cases to settle without hostile litigation, have to be paid for. It cannot possibly be said that there is a winner or a loser in such a situation.
In passing, I should mention that in The Lawyer magazine of 15th December 1998, in an article about this proposal, a spokesman for the Lord Chancellor's Department was quoted as saying that it "would depend on the view of the client" whether any result was seen as a win or a loss. It is hard to believe that that was a complete or accurate quotation but, if it was, it suggests something which is quite unworkable and has not been thought through.
In most cases, the task of the court and of the lawyers in reaching settlement out of court is to distribute assets and income according to needs, the most important of which are normally housing needs. In most cases, the distribution is of very limited resources and the family can ill afford contested litigation. If a conditional fee is payable, the needs of the party concerned will rise requiring a higher award. In matrimonial litigation at present the court is kept informed of the costs incurred on either side and will always bear in mind the overall impact of costs on the family's finances. Yet the court will not be privy to the conditional fee agreement or the terms of the uplift.
Under the present legal aid scheme the recovery of costs can be achieved by the state by means of the statutory charge, which can be deferred if a home is obtained by the assisted party in family cases. That charged amount bears interest. It is an effective way of postponing the payment of costs, which are not recovered from the other party, while still protecting the interests of the public purse. By contrast, CFAs may well lead to so-called "satellite" litigation between the lawyer and the former client about who has won or lost, and they will almost certainly not allow for deferred payment by charge against a former matrimonial asset. Moreover, the nature of the work and litigation will mean that insurance cover to protect against payment of the other party's costs will be unobtainable. Insurance companies would not touch this kind of litigation with a bargepole.
Although it will probably be said that the Bill is only permissive and conditional fee agreements will only be optional, there is a fear that legal aid will be withdrawn because conditional fee agreements are theoretically available if the Bill stands as it is presently drafted. In the long term the Family Law Act 1996 with its emphasis on mediation adding to the current attitudes fostered by the courts and the legal professional bodies will reduce the financial costs and emotional damage of family breakdown. In family cases conditional fee agreements have the potential to increase conflict, unhappiness and expense. I beg to move.
Lord Clinton-Davis: I support the amendment which also stands in my name, and the arguments that have been adduced by the noble Lord, Lord Meston. The introduction of the conditional fee into this sphere runs completely counter to the philosophy and the practice which have been prevalent for the past 20 years or even longer to try to allay the bitterness which the adversarial approach previously had encouraged. When these matters were debated during the 1990 Courts and Legal Services Act it was then asserted—I think with conviction—that conditional fees were wholly inappropriate for criminal and family proceedings.
I ask my noble and learned friend what evidence is there of any demand for conditional fees in disputes in the field of matrimonial property? What research has been done to ascertain that? What research has been done into the availability of insurance—that point was made by the noble Lord, Lord Meston—to cover conditional fees in this sector?
Baroness Scotland of Asthal: I too support this amendment. One of the things that all those of us who have practised in family law have come to realise, particularly in the past 20-odd years, as my noble friend has said, is that when one is dealing with family disputes one is dealing with a lose, lose situation. There are no winners. There is no one other than losers. The whole family is damaged by the disintegration that occurs at times of divorce. What lawyers who are properly instructed should aim at is a damage limitation exercise.
Litigants who are regrettably engaged in divorce and family proceedings do not separate in fact because often they have children whom they share and they will remain engaged in that relationship at some level for a long time. I assure the Committee that matrimonial property, fees and the matter of who paid for what continue the bitter wrangle for many, many years. That does much to undermine the rapprochement that is hoped for families, and does much to destroy the integrity of what is left. One has disappointment and anger.
It is also important for us to remember when thinking of these cases that often the litigant involved is not reasonable. Litigants are often angry, disappointed and have gone through a great deal of pain and suffering. Not surprisingly they feel that there are scores that need to be settled—scores that they would wish their advocates to advocate on their behalf. The lawyer in family cases, be he solicitor, barrister or employed person, is in a difficult position because part of the

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lawyer's role is to assuage that feeling of pain, disappointment and anger so as to permit his client to see what is in the long-term best interests of the family. That will not be enhanced by a conditional fee agreement which means that if the other party loses and is persuaded to see that he has lost, the lawyer gains.
I know that this Government are wholly committed to the family, mediation, conciliation and rapprochement so that the pain that comes from divorce can be muted, if not totally expunged. Therefore, I am confident that the Government will bear those factors in mind when considering this amendment; confident that they will put children and families and those who go through the trauma of divorce first; and confident that they will see the wisdom of this amendment and put this part of the Bill to one side.
9.45 p.m.
Lord Sheppard of Liverpool: We have heard today the Government's responses to reasoned debate. I join others in hoping that the noble and learned Lord the Lord Chancellor will also respond to this important point. When I sat on the Bishops Benches a few years ago I recall that, as chairman of our board for social responsibility, I met the noble and learned Lord, Lord Mackay of Clashfern—then the Lord Chancellor—on a number of occasions. I firmly supported throughout his Bill the idea of trying to get these disputes out of the adversarial setting of the law courts and into something where mediation was much more possible.
I do not believe that you can chop up the different parts of family law. I very much hope that the Government, with their firm support for the family, will want to help couples move out of the pain of marriage breakdown with as little bitterness as possible. I believe that this amendment would help that to happen.
Lord Mackay of Clashfern: The arguments of the noble Lord, Lord Meston, the noble Baroness, Lady Scotland, and the noble Lord, Lord Sheppard, were, in very general terms, the arguments that persuaded me in 1990 that it would not be appropriate to have conditional fee arrangements in relation to family disputes of any kind. Many of your Lordships have sought to persuade me from time to time that some of my decisions in 1990 were wrong, but I still feel a certain degree of affection for quite a number of them, including this one. I will be interested to hear what my noble and learned successor has to say about it.
As the noble Baroness said, people are often in a state of unreason as a result of matrimonial disputes. It may be possible to devise conditional fee arrangements which, in a sense, help to modify that enthusiasm. One of the consequences of the legal aid scheme is that many people in matrimonial disputes have not expected the charge on the matrimonial property, notwithstanding that it was carefully explained to them. Often at the stage of divorce and arguing over the property, one or both of the parties are quite unreasonable and great amounts of money are spent on the legal aid fund. Although they had been told, it had not dawned on them that all that money is coming out of their property and
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they find out later that the matrimonial home is being drained away by the fees of the lawyers they have instructed to fight the matter out to the hitter end. I suppose it is just conceivable that conditional fee arrangements could be helpful in trying to bring that kind of dispute under control.
For my part, until persuaded to the contrary, I remain of the view that the whole ethos of family law, on which the Family Law Act was predicated—I understand the Act is to come into force more fully in the year 2000—was the idea of trying to remove disputes and encouraging settlement, primarily in the interests of the children of the marriage, but also in the interests of the spouses. My present feeling is that the arguments used against this change have a lot of force, but I wait to hear the persuasive eloquence of my noble and learned successor on this important matter.
Lord Phillips of Sudbury: I am sure that many noble Lords have been lobbied, as I have, on this part of the Bill. I would be surprised if any noble Lord had received other than the single plaintive message that I have received from many quarters. It is, "Do not allow this provision to pass". Perhaps I may refer to the survey carried out by Suffolk and North Essex Law Society of its member firms. On the question of contingency fee arrangements—I should properly say conditional fee arrangements—there was, again, a unanimous voice that this class of case is simply not appropriate for conditional fees.
I would make only one other point. Under Clause 9 of the Bill, which sets out the criteria according to which the commission is to fund services, the only class of case that is given special treatment, in subsection (3), is family disputes. Subsection (3) states:
"That the criteria set out in the code shall reflect the principle that in many family disputes mediation will be more appropriate than court proceedings".
It seems to be entirely consistent with that special insight that this amendment should be passed.
The Lord Chancellor: The Government are committed to encouraging the parties involved in family proceedings to resolve disputes in such a way as to reduce conflict and distress and to promote as good a continuing relationship between them for the future as is possible in the circumstances, not least in the interests of the children. The Government are committed, as I have said many times, to the use of mediation in family disputes in order to achieve that end.
The purpose of Clause 27 is no more than that, in cases where there are disputes about property and finance, and nothing else, and where the parties decide that mediation is not appropriate, conditional fees would provide a further alternative means of funding the case. Conditional fees could have the merit that they would allow people who would otherwise be unable to meet that cost to pursue their cases. This could benefit people, particularly those just outside the range of eligibility for legal aid, in taking their cases forward. It certainly was not intended that the use of conditional fee agreements in the manner proposed would undermine the conciliatory approach to family proceedings encouraged

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by the Family Law Act but rather that it should allow an alternative means of funding cases in circumstances where court proceedings could not be avoided. So the removal of the statutory bar on the use of conditional fee agreements in this limited type of family dispute was thought to facilitate the conduct of cases and benefit many people, particularly those just outside the range of eligibility for legal aid.
However, the Government have listened carefully to the views put to us about this proposal. We accept in particular—the noble Lord, Lord Meston, made the point very well—the practical difficulties associated with defining what constitutes a win in these cases. We also accept that this provision could be seen to be encouraging lawyer-driven litigation in marital disputes when the Government's overriding objective is to reduce bitterness and acrimony between the parties. So we have been listening very carefully to representations on this subject made by family specialists and others and we have decided to accept the amendment in principle. We will therefore bring forward an amendment on Report. I invite the noble Lord, Lord Meston, who I see is well pleased with the outcome, to withdraw the amendment.
Lord Meston: I am grateful to the noble and learned Lord and to all those who have spoken. Perhaps I may single out the noble Baroness, Lady Scotland, for her clear and powerful statement of the modern approach to family litigation as she practises it and as I, too, endeavour to practise it. If any outsider now thinks that modern practitioners of family law are cynically concerned to encourage friction and hostility for their own ends, he or she need go no further than to read the words of the noble Baroness. The noble Baroness of course spoiled my argument. I endeavoured to say that there are no winners or losers. When one is against her, she is always the winner.
On the basis indicated by the noble and learned Lord the Lord Chancellor I am happy to beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Kingsland Lord Kingsland moved Amendment No. 216:
Page 16, line 29, at end insert ("and such proceedings shall be specified proceedings notwithstanding that they are concluded without the commencement of court proceedings").
The noble Lord said: The purpose of this amendment is to incorporate in primary legislation the provision in the conditional fee agreements order 1995 which makes it clear that proceedings need not necessarily have been commenced.
Most conditional fee agreements are signed before it is known whether it will be necessary to commence any type of proceedings. The amendment would make it clear that a conditional fee agreement could be used where a case was to be concluded by negotiation or mediation. I do not think I need say anything further. I beg to move.
Lord Falconer of Thoroton: This amendment would amend the new proposed Section 58A of the Courts and
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Legal Services Act 1990 inserted by Clause 27 of the Bill. It seeks to amend Section 58A(4), which presently reads,
"In section 58(4) "proceedings" includes any sort of proceedings for resolving disputes (and not just proceedings in a court)",
By inserting at the end of that section the words,
"and such proceedings shall be specified proceedings notwithstanding that they are concluded without the commencement of court proceedings".
I understand this amendment to be intended to give effect to the decision of the Vice-Chancellor in the case of Bevan Ashford v. Geoff Yeandle (Contractors) Ltd. in which the Vice-Chancellor decided that where an alternative means of resolving a dispute to court proceedings was used in proceedings where conditional fees were permitted, any agreement between the lawyer and the client to work on a conditional basis was lawful and enforceable. The problem arose in that case because of the narrow definition of proceedings in the Courts and Legal Services Act 1990 which defines "proceedings" in Section 119 as, "proceedings in any Court". The intention of this clause is to do no more than to give statutory effect to that decision.
I should at this point say that the Lord Chancellor's officials have received representations from the Law Society among others about whether the wording of Section 58A(4) may go further than the limited extent I have just described. I am urgently considering the points put to me and it may be that the Lord Chancellor will need to come back at Report stage with amendments of his own to this subsection.
The amendment that the noble Lord seeks would insert words which currently appear in Article 3(2) of the Conditional Fees Order 1998 and bring them into the statute. These words are used to ensure that simply because a dispute is settled before proceedings are commenced in the court the conditional fee agreement, provided it is in relation to a proceeding specified by order, is valid and enforceable. Without that it might be open to a client to dispute that a valid agreement existed.
In principle the Lord Chancellor has no objection to the inclusion of the words suggested. However, perhaps we could have an opportunity to consider the detailed terms of the amendment before bringing forward an appropriate amendment. In those circumstances I ask the noble Lord to withdraw his amendment.
Lord Kingsland: I thank the noble and learned Lord for his response. In the circumstances, I beg leave to withdraw my amendment.
Amendment, by leave, withdrawn.
10 p.m.
Lord Kingsland Lord Kingsland moved Amendment No. 217.
Page 16, line 35, leave out ("other authorised bodies (if any)") and insert ("bodies").
The noble Lord said: This is one of those rare occasions in the debate on the Bill in Committee when a request is made for the noble and learned Lord the Lord Chancellor to increase rather than constrain his

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discretion. The simple purpose of the amendment is to remove the qualifying word "authorised" in the expression:
"other authorised bodies (if any) as he considers appropriate"
in subsection (5)(d) of Section 58A. I see no reason why the bodies consulted should be so constrained. I beg to move.
The Lord Chancellor: I believe that this amendment merits further consideration. Section 58(4) provides that the proceedings for which enhanced fees and the permitted percentage of any enhancement are applicable must be specified by order made by the Lord Chancellor. Prior to making the order, the Lord Chancellor shall consult specified bodies, including any authorised bodies not specifically referred to. Authorised bodies are defined in the Courts and Legal Services Act and they are professional bodies.
I am conscious that limiting consultation to authorised and specific bodies may be too restrictive, given the increasing role and interest of non-professional bodies in the provision of legal services. For that reason, I am willing to consider the matter further and, if necessary, to bring forward amendments at Report. On that basis, I ask the noble Lord to withdraw his amendment.
Lord Kingsland: I shall, of course, do so. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Clinton Davis Lord Clinton Davis moved Amendment No. 218:
Page 16, line 38, leave out (-party") and insert ("claimant").
The noble Lord said: It may be for the convenience of the Committee if we also discuss Amendments Nos. 219, 220, 223, 224, and 225. Most Members of the Committee will welcome the proposal made by the Government that success fees in conditional fee cases should be paid by the losing party in the litigation. That is a precondition to the Government's proposals to abolish legal aid in personal injury cases. That is not something I am entirely happy about, but that is another debate. Without it, personal injury victims would face losing up to 25 per cent. of their compensation by way of lawyers' fees.
Amendment No. 218 proposes that the right to recover success fees should be limited to claimants. It is only claimants who lose the right to legal aid under the Bill. It is not to be expected that lawyers acting for defendants will be prepared to act routinely under conditional fee agreements with success fees. There are substantial difficulties in defining successful defendants. Insurance premiums for after-the-event insurance will rise dramatically if costs payable by after-the-event insurers in lost cases rise to include payment of success fees to defendants.
Amendment No. 219 provides that a court order for the losing party to pay costs shall—that is instead of "may"—include payment of the success fee by the losing party. The claimant should not face the uncertainty of not knowing whether the success fee will be recovered. Similarly, this should only be additionally subject to the rules of court if the Government are able
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to publish draft rules dealing with procedure and principles to be applied in the assessment of success fees by cost judges.
As for the other amendments, the Government's proposal that legal expenses insurance premiums in conditional fee cases be paid by the losing party to the litigation is very welcome. But the amendment proposes that this should be restricted to claimants. They are the only people who lose the right to legal aid under the Bill. If defendants can recover insurance premiums, does this include public and employers' liability premiums paid and, if so, over what period?
The amendment provides that the recovery of insurance premiums should be mandatory and not discretionary and should be additionally subject to rules of court only if the draft rules are published in advance. I beg to move.
Lord Goodhart: I am unable to support this amendment for the reason that it clashes with amendments that stand in my name in the next group. I shall develop my arguments when that group of amendments is considered. I am somewhat concerned by the fact that a distinction is sought to be drawn between claimants and others. There may well be cases in which it is the defendant who has to rely on a CFA. For example, I can envisage certain cases in which a landlord seeks an order for possession against a tenant where it will be the tenant rather than the landlord who needs support via a CFA.
The Lord Chancellor: The purpose of this amendment is to make the recovery of the success fee and the insurance premium mandatory in cases where a claimant, and only a claimant, successfully uses a conditional fee to pursue a claim. Although the general rule in this country is that costs follow the event in litigation, the recovery of costs is always at the discretion of the court.
These amendments are supported by the Association of Personal Injury Lawyers (APIL), which argues that clients should have certainty that they will recover the success fee and the insurance premium if they are successful. It also argues that, where defendants successfully defend a claim using a conditional fee agreement, they should not be allowed to recover the success fee; otherwise, the costs of insurance premiums will increase if there is a possibility of having to meet a success fee in addition to the normal costs under the policy.
I am not willing to accept the amendment for two basic reasons. The first reason is that discretion must always be retained by the courts to do justice in individual cases. The second reason is that which appealed to the noble Lord, Lord Goodhart: the provision proposed for defendants would prescribe not an equitable but an inequitable balance of power as between plaintiffs and defendants in civil litigation. The provision would place claimants in a significantly stronger position in litigation where they used conditional fee agreements. The clauses as drafted seek

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to place the success fee and the insurance premium in the same position as normal costs—in the discretion of the court subject to rules of court.
No litigant ever enters into litigation in the certainty that he will necessarily recover all of his costs even if he is successful. Although court rules make a general presumption that costs will follow the event, the court always retains a discretion to decide otherwise. For example, that discretion would be exercised where the behaviour of the successful party had been unreasonable or there had been contributory negligence. For the recovery of the success fee and the insurance premium to work equitably, I think it important that the courts should retain this flexibility. It is for this reason that we have provided for the operation of the recovery of success fees and insurance premiums to be made subject to rules of court. I fully intend to ensure that any rules made under these provisions will continue the principle that costs should follow the event of success, but I am equally sure that it will be necessary to allow the courts to exercise a discretion within this general presumption. I cannot think that it would be right that the courts should be obliged to award the success fee and insurance premium in full when it was otherwise exercising its discretion not to award costs or to award only part of the costs.
There is one respect however where I cannot hope to meet the proponents of these amendments and that is in regard to making recovery of the success fee and insurance premium available only to claimants. I do not regard that as fair. It must be remembered that these provisions will apply across all fields of law, not simply personal injury, in which conditional fees are allowed. I simply could not agree to placing one party at a significant disadvantage from the outset of litigation by the operation of the costs rules.
APIL well knows the benefit for claimants under conditional fee agreements of the provisions of the Bill enabling the uplift and the insurance premium to be recovered—and they will be, in the overwhelming majority of cases which succeed, for plaintiffs under conditional fee agreements. These will ensure the success of conditional fee agreements in practice. But I regard these amendments as going too far and altering the balance of power and advantage in litigation against the interest of defendants to an unacceptable extent. I therefore invite the noble Lord to withdraw the amendment.
Lord Clinton-Davis: My noble and learned friend should not have a monopoly over reasonableness tonight. I thought that his arguments were reasonable. I therefore beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 219 and 220 not moved.]
Lord Goodhart Lord Goodhart moved Amendment No. 221:
Page 16, line 39, after ("subject") insert ("to subsections (6A) and (6B) and").
The noble Lord said: In moving the amendment, I speak also to Amendments Nos. 222, 226 and 227.
It is an important and difficult group of amendments and I am sorry that I have to raise the issue at this late hour of the night. The purpose of the amendments is to provide that the mark-up on an enhanced fee CFA agreement is recoverable from the losing party only if the court thinks it just in all the circumstances to make an order to that effect, and not on the basis, as the Lord Chancellor indicated, that there would be a presumption that the mark-up should be recoverable.
I start from the widely shared belief that there are some quite serious drawbacks to CFAs. The integrity of lawyers is absolutely essential to a properly functioning legal system. But giving lawyers a financial interest in the outcome of their case may tempt some of them to breach professional rules, for example about disclosure of documents. More often they will be subject to a strong temptation to settle cases for too little. As soon as an offer is received which is enough to cover their enhanced fee, lawyers will be under great pressure to accept that offer rather than to press on and risk losing everything.
I am not saying that there will be wholesale breakdown of professional integrity as a result of CFAs. That would be absurd. But there are risks in CFAs. While the legal system should tolerate CFAs, it should not encourage them. I find the enthusiasm of the Lord Chancellor for CFAs somewhat disturbing.
Of course where CFAs give access to justice—where it would not be possible without them—we must have them. They help the problem of those who are too rich for legal aid but too poor to litigate at their own cost. I also accept with some reluctance but ultimately without doubt that public funding should not be provided where CFAs offer a viable alternative, but where someone can afford to litigate at their own expense they should be encouraged to do so. Such a person has an option. He can litigate on a conventional basis: if he loses he has to pay the costs; if he wins he gets the winnings clear and has his costs paid. If he chooses to insure himself against the risk of paying costs by going for a CFA and an insurance policy, that is a matter for him and it should not affect the other party's cost liability. Of course, a poor person does not have that choice. A poor person can litigate only with the benefit of the CFA.
Making enhanced fees under CFAs recoverable more or less as a matter of course, at least as a matter of general principle, will have two undesirable consequences. First, almost everyone will be tempted to go for CFAs, whether they need to or not. If you lose you pay nothing; if you win you get your damages clear. It is a, "heads I win, tails you lose" situation. Secondly, in such a case the losing party has to pay three sets of costs; his own, plus the other party's costs twice over. Not all losing parties have acted unreasonably or are wealthy corporations. I believe that to require a losing party to pay triple costs is seriously unfair.
We therefore propose that the courts should have a discretion whether or not to order payment of enhanced fees under a cost order and should only do so when it is just. Hardship to a successful party is one case where it might be just. Let us take the case where a plaintiff is

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paid a large sum in damages for catastrophic injuries after what has been a difficult and expensive case. In such a case, it would be wrong to deduct 25 per cent. of the damages to pay the lawyer's enhanced fees. Again, where the successful plaintiff had no choice because he could not afford to litigate at his own cost it will usually be just to order the other side to pay those advanced fees. Again, where the defendant has increased the costs by unreasonable displaying tactics, the defendant should bear the burden and not the successful plaintiff. But to say that enhanced fees can be recovered as costs more or less irrespective of the circumstances, even when the plaintiff has had a real choice whether to sue at his own expense or by a CFA, would be unfair to defendants and I believe damaging to the legal system.
The noble and learned Lord the Lord Chancellor seems to regard CFAs as a panacea. They are not; they serve a purpose. Their use should not be encouraged where they are not necessary and I do not think that the consequences of encouraging their use has been adequately thought out.
I turn more briefly to Amendments Nos. 226 and 227. These concern the recovery of costs of insurance premiums under a cost order and seek to apply the same principle. They raise the same issue as enhanced fees for CFAs, though in a less acute form. There are two forms of insurance cover. Pre-event insurance to cover legal costs of actions which may arise in the future is the first. That includes household policy cover for occupiers' liability or a professional negligence policy. If I am sued for negligence and successfully defend the action how would it be possible to identify how much of my premium should be recovered from the plaintiff? Indeed, if I could recover it. it would be an absurd anomaly because I would then be better off than if I had not been sued at all. If I had not been sued the premium would still be the same and there would be no one to recover it from. I do not believe that Clause 28 is intended to cover pre-event insurance, but perhaps the noble and learned Lord the Lord Chancellor will clarify that.
Secondly, there is post-event insurance. That will normally be restricted to cover the opponent's costs and coupled with a CFA. Such a policy will sometimes have a benefit for the other party because if the insured party is poor it will produce a fund for the payment of the other party's costs which might otherwise have been irrecoverable. But that is not true if the insured party could afford to pay the costs from his own pocket if he loses the case. If the winning party has chosen to protect himself against the risk of loss which he could have afforded to meet, why should the loser have to pay the costs for both parties and the premium on top of that?
There is a second type of post-event insurance; that is, insurance to cover one's own costs as well as the opponent's costs. In such a case, the prospective plaintiff will pay the lump sum premium to insurers who will finance all the costs of litigation. Clause 28 would permit the cost of that premium to be recovered without the protection from excessive mark-ups provided by Section 58(4) of the Courts and Legal Services Act. That loophole should be stopped. As with enhanced fees, the courts should be able to order payment of the successful party's insurance premiums only when it is just to do so.
I ask the noble and learned Lord the Lord Chancellor to consider very carefully the problems which recovery of enhanced fees and insurance premiums will cause in those cases. I beg to move.
Lord Ackner: I support this amendment. I am extremely unhappy about the provision for loading on to the unsuccessful defendant the uplift of the cost of insurance. It seems to me to be contrary to the ordinary principle.
If, before CFAs were allowed, a plaintiff raised, and had to raise, a very large loan in order to bring proceedings, no one would have contemplated that in addition to the damage he recovered, he would also be able to recover the interest which he paid on the loan which was necessary to finance his action. That would be because it was looked upon as too remote.
In principle, the same situation can be applied to CFAs. The only difference is that the Government are so anxious and enthusiastic that conditional fee agreements should work, thereby removing the cost of some legal aid, that they are prepared to do two things: they are prepared to have this form of penal costs order; and they are prepared to avoid monitoring how CFAs are working.
I and others have asked time and time again when the Government will monitor what is happening. We know from the very limited monitoring that occurred in early cases that the average mark-up in personal injury cases is over 40 per cent. We all know that that is far too high because it is accepted that in about 97 per cent. of cases they are dead-cert winners which settle comfortably.
At this late hour, I do not wish to go on further but those are my reasons for supporting the amendment.
Lord Phillips of Sudbury: I too strongly support the amendment moved by my noble friend Lord Goodhart and I identify myself with the remarks just made by the noble and learned Lord, Lord Ackner.
There are many people outside the Committee and in it who are deeply concerned about the potential effect on the probity of the legal process of even the qualified step of conditional fees. The Government extended conditional fee arrangements just before the Summer Recess but they had not given proper or full consideration to the consequences.
There were two considerations. The first was that lawyers should be discouraged from taking on weak cases; and secondly, lawyers should be discouraged from stringing out cases. Both activities are discreditable, but one must accept that some lawyers will act in that way. The irony is that under conditional fee arrangements, those lawyers who are unscrupulous could have a field day because of the potential 100 per cent. uplift in fees.
Perhaps I may give one illustration of why the amendment proposed is needed and, further, why the Lord Chancellor may consider establishing a monitoring process which would look at the wider integrity issues surrounding conditional fees. For example, consider the case of a lawyer retained on a conditional fee to act in a very strong case where the client will not be in a

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position to understand its strength. If unscrupulous—I repeat, one of the suppositions underlying the need for this conditional fee arrangement was unscrupulous lawyers—the lawyer, far from wanting to hurry the case to a conclusion, will have an incentive under the arrangements to string out the case even more than he might have been inclined to do formerly. For every hour and every step by which he strings out the case he will be paid not once but twice. He will be certain of that double payment because he will know that the strength of the case assures victory in the end.
The conditional fee agreements will also tempt lawyers to embark upon the full panoply of High Court or county court proceedings unnecessarily when they know that the issue of proceedings is not in any way necessary for the conduct and satisfactory conclusion of the case they are handling. Those are but two potential abuses which the conditional fee arrangement, far from reducing or controlling, will inadvertently encourage. That is why the amendment proposed is timely and necessary. There are of course many other examples of where the oversight of the courts must be brought to bear to see both justice to the legal system as a whole and justice to individual parties to litigation.
I add one final point. My noble friend Lord Goodhart surprised the Lord Chancellor when he talked of the defeated party having to pay three sets of fees—that is, his own fees and, in cases of 100 per cent. uplift, two lots of fees of the winning party. But it is worse than that. Under Clause 28 of the Bill, he will also be paying the insurance premium. The large insurance company DAS, which provides after-the-event insurance, charges a premium of 15 per cent. of the damages recovered. It is not confined by contingency arrangements. Therefore, not merely will the defeated party be paying three sets of fees, but he or she will also be paying 15 per cent. damages on top of the damages awarded.
The consequences of the totality of these arrangements and the way in which conditional fees may work could have unforseen results in terms of unfairness and could deter citizens from defending proceedings where they ought to have that opportunity, exacerbated by the proposals to shift out of legal aid categories of cases that are now capable of being dealt with under the conditional fee arrangements. I hope therefore that the amendment commends itself to the Government.
The Lord Chancellor: The purpose of these amendments is to bring on to the face of the Bill considerations the court should have in mind when determining the liability for and the amount of any success fee and insurance premium that a person who has used a conditional fee agreement successfully should recover from his opponent.
Amendments Nos. 221 and 222 to Clause 27 impose on the court a number of considerations before it can make the success fee recoverable, including such things as the hardship towards the person liable to pay the costs and the extent to which the case could have been funded without using conditional fees.
10.30 p.m.
Lord Goodhart: I apologise for intervening. I think that the noble and learned Lord the Lord Chancellor has, in fact, made a slip. Paragraph (a) does not refer to hardship caused to the party which has been ordered to pay the costs, but to the hardship caused to the successful party if the uplift is not paid.
The Lord Chancellor: If I misread that, I apologise. I shall study Hansard to see whether that is so. Although I shall, of course, also read carefully the fairly lengthy speech of the noble Lord, Lord Goodhart, I feel that to the extent to which these considerations need to be dealt with at all, they are far better dealt with in rules of court. In any event, I am concerned that they would, in effect, establish satellite litigation while arguments are made based on such considerations.
Amendments Nos. 226 and 227 seem to proceed on the assumption that the provisions of Clause 28 apply only to premiums used to support conditional fee agreements. Clause 28 extends to other forms of "after the event" insurance and the premiums paid for such insurance. Consequently, it is not only concerned with the recovery of premiums in cases where a conditional fee is used. I have to say that I would need a lot of convincing—
Lord Goodhart: Can the noble and learned Lord the Lord Chancellor confirm that Clause 28 does not apply to "pre-event" insurance?
The Lord Chancellor: Yes, the noble Lord is right about that.
What I am really concerned about is whether the application of these considerations would create satellite litigation while arguments are made about whether, for example, a person could have afforded to take a case without using conditional fees or an insurance premium in relation to the accuracy of the calculations, and so forth.
I believe that, generally, it is entirely right that a successful party should be entitled to recover any costs to which it has been put in prosecuting or defending a claim. I do not accept that it is in any way objectionable in principle that the costs uplift, or the costs of the insurance premium, should be recovered from defendants who are liable to plaintiffs; those being the circumstances in which plaintiffs can secure justice against such defendants. Therefore, I find it difficult to accept that the court should have to consider the various issues set out in the proposed amendments, particularly in relation to costs orders where one party has used a conditional fee agreement.
I believe that it would be far simpler to allow the normal rules on costs to apply: a presumption that costs will follow the event of the judgment with a discretion to the court to vary this in appropriate circumstances. I would, however, be prepared to consider further the concerns behind the amendments and to read closely the speech of the noble Lord, Lord Goodhart, which he delivered commendably at this hour of the night at a considerable pace, so as to consider whether some of

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the concerns can be met in the context of drafting the necessary rules of court. For the present, I do not accept the amendment and I ask the noble Lord to withdraw it.
Lord Donaldson of Lymington: Perhaps I may take up a point made by the noble and learned Lord the Lord Chancellor. He said that he accepted, or supported the principle, that all costs incurred in litigation should prima facie be recoverable on the basis of costs following the event. That is not the principle. The court has a discretion to award half the costs, a quarter, or those of particular issues. That is a different matter. The taxation of costs always produces something less than the totality of the costs paid by the party. Partly, no doubt, because of the hour of the night and partly because it might be regarded as a detail, although not for the litigants themselves, the noble and learned Lord is failing to take account of the difference between indemnity costs and ordinary party and party costs.
The Lord Chancellor: If that is the first slip that I have made in the course of a long day perhaps that is not too bad. I entirely recognise that the costs to be recovered are subject to taxation. I have had that very much in mind in considering making the uplift recoverable from the unsuccessful opponent. His protection will be in taxation if the amount of the uplift is unreasonable.
Lord Goodhart: I regret that the noble and learned Lord, while giving slight ground on this, is unable to be more substantially forthcoming. However, at least for tonight, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 222 not moved.]
Clause 27 agreed to.
Clause 28 [Recovery of insurance premiums by way of costs]:
[Amendments Nos. 223 to 228 not moved.]
Clause 28 agreed to.
Lord Clinton-Davis Lord Clinton-Davis moved Amendment No. 229:
After Clause 28, insert the following new clause—
RULES FOR ASSESSING COSTS
(" . Rules of court shall provide that when assessing costs payable by another party no account shall be taken by the court of any funding agreement between the receiving party and their legal representative.").
The noble Lord said: In moving this amendment it is for the convenience of the Committee if we also discuss Amendment No. 230. I can be quite brief. Under the Bill as presented to the Committee there is a liability remaining for the client to pay the solicitor's and his own costs if there is any shortfall between the fee agreed in the event of a win and the fee recovered from the loser. Even if the lawyer subsequently agrees to waive the shortfall, he cannot do it in advance because at common law the client would not then be entitled to recover any fees from his losing opponent because there would be nothing to indemnify.
Therefore, the Bill should provide to enable lawyers to agree in advance with clients to charge what can be reasonably recovered from the opponent by agreement or on taxation. That could benefit individual clients who agree with their lawyer that they pay nothing, win or lose, and other lawyers providing services through trade unions and also legal expense insurers. The amendment seeks to achieve that purpose by divorcing the right to recover costs from the losing party from the funding arrangements between the winning party and his lawyer. I beg to move.
The Lord Chancellor: As I understand these amendments they seek to abolish what is known as the indemnity principle for costs. Put at its shortest, the indemnity principle provides that where one is successful in an action and awarded costs against the opponent, one may not recover more in costs from him than one is liable to pay to one's own solicitor. The principle goes back a long time in case law.
Recent case law has made the operation of the principle on taxation very difficult and conditional fees, legal aid regulations and fixed costs in fast track trials, together with other matters, have, to some extent, disapplied the operation of the indemnity principle in recent years. The time may well have come to consider whether that principle should be abolished.
However, the principle is central to the present basis upon which costs are taxed by the courts, and it does operate to place some limit on the sums that can be recovered. Its absolute removal might well lead to costs inflation because of the removal of the limitation on the sum that can be recovered under that principle.
My response to the amendment is to say that I would wish to carry out a proper consultation exercise before deciding what, if any, rules of court might be needed to retain the beneficial effects of the indemnity principle once the principle enshrined in the common law had been abolished. Therefore, I should like to consider most carefully the precise terms of any amendment. I am not saying that I will be able to come back on Report in relation to this proposal, but I am saying that, in effect, I intend to reflect upon the ramifications involved and to consult widely. On that basis, I invite my noble friend not to press these amendments at this stage.
Lord Clinton-Davis: In view of the fact that no Member of the Committee wishes to speak to Amendment No. 230, I can respond to my noble and learned friend. I am grateful to him for indicating that he is prepared to carry out this consultation. In the circumstances, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 230 not moved.]
Clause 29 [Replacement of ACLEC by Consultative Panel]:
Lord Clinton-Davis Lord Clinton-Davis moved Amendment No. 231:
Page 17, line 9, leave out subsection (1).
The noble Lord said: I can deal with this amendment extremely briefly; indeed, almost as briefly as the noble Lord opposite dealt with his. Simply put, I believe that

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the proposals made by the Government to abolish the Advisory Committee on Legal Education and Conduct, both in respect of its composition and its tardiness in coming to conclusions, could be dealt with by reform rather than by abolition. Perhaps my noble and learned friend would like to comment on that proposition. I beg to move.
Lord Falconer of Thoroton: When I first saw this amendment, I guessed that my noble friend Lord Clinton-Davis had tabled it as a probing amendment in an effort to discover why we are abolishing ACLEC and replacing it with the new legal services consultative panel. I assume—I hope, correctly—that no Members of the Committee want two quangos doing the job that one currently does, which, strictly speaking, is what the amendment would achieve.
ACLEC has had a succession of exceptionally distinguished chairmen, many of whom are Members of this Chamber; and, indeed, many distinguished memberships over the years. Its present chairman is a most distinguished lawyer and it has been ably served by loyal staff. Nevertheless, it has, in some senses, failed. It is a large, rather unwieldy committee whose members have often fallen into predictable camps, resulting in stalemate over important issues. I believe that it has failed to foster the expansion of legal services. To some extent, ACLEC has been a prisoner of the procedures created around it by the Courts and Legal Services Act. These have proved exceptionally complex and time consuming, with the result that important applications for the approval of rule alterations have sometimes taken years to resolve.
The most striking example of delays and problems caused by the current statutory procedure concerns that part of the Law Society's application for rights of audience in the higher courts which related to employed solicitors. The application took no fewer than six years to resolve, and was considered by ACLEC at least three times and twice by the Director General of Fair Trading, the Lord Chancellor and the designated judges. ACLEC initially gave defective advice, urging that the Courts and Legal Services Act should be amended, and had to be directed by the then Lord Chancellor to reconsider the matter. When ACLEC gave its final advice, it was split down the middle. Eight members and the chairman advised against allowing employed solicitors to appear in the higher courts; the other eight members criticised the way that their colleagues had approached the issue and advised that the Law Society's amended application should be granted.
The results of six years of painfully slow debate, consultation and advice about what rights of audience employed solicitors should have in the higher courts were in practice negligible. The then Lord Chancellor and the designated judges granted the Law Society's application in a very limited form, allowing employed solicitors to appear in substantive proceedings in the higher courts if they succeeded in obtaining the Law Society's higher courts qualifications, but only if led by an advocate in private practice. An employed solicitor
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can appear as the sole advocate only in preliminary proceedings which do not dispose of the merits of a case.
This Bill will change those procedures, but it is also time to replace ACLEC and appoint a different body in its place. ACLEC is not cheap to run. It is a large quango with paid members and its own staff and offices and it costs the Lord Chancellor's Department the best part of a million pounds a year. The Lord Chancellor wants and values independent advice on legal services and legal education, but thinks this could be better provided by a smaller, more focused and more flexible body whose members were appointed solely for their individual expertise and not as representatives of particular organisations or interest groups. The Lord Chancellor will of course take account of the desirability of ensuring that the panel represents different perspectives, including those of the consumers of legal services, as well as the providers. The next group of amendments will give us the opportunity to discuss how the panel members should be appointed. I see the Committee waiting in expectation for those later amendments.
The legal services consultative panel's programme of work and research will be agreed by the Lord Chancellor so that it can be tied into the department's priorities. He wants to be sure that this valuable and expensive resource is tackling the questions that he needs answered. The panel will be a leaner organisation than ACLEC, which will cost the taxpayer less while providing advice that is no less independent and no less expert. The creation of a body independent in mind and approach is not solely a matter for legislation: it depends in large measure on the appointments that the Lord Chancellor makes.
Let me make it clear on behalf of the Lord Chancellor that he expects the panel to give him advice of the highest quality and of the greatest independence. He wishes it neither to be swayed by what it takes to be his views, nor by any vested interests. He will be under a statutory duty to make available to the panel appropriate administrative support. This means that the secretarial support which will be provided by the Lord Chancellor's department will be sufficient to meet the panel's needs. The panel will also be able, through the Lord Chancellor's department, to commission research in line with the agreed programme of work. The Lord Chancellor is confident that the panel will be of sufficient strength to let him know if it ever feels that its work is being under-resourced.
I should add that the Lord Chancellor will bring forward an amendment to enhance the status of the panel in conducting its work by making it clear that, in performing its duty of assisting in the maintenance and development of standards in the education, training and conduct of persons offering legal services, it may seek information from or give advice to any body or person.
I hope that the detailed explanation given sufficiently reassures my noble friend and that he will withdraw the amendment.
10.45 p.m.
Lord Clinton-Davis: I am most grateful to my noble friend. Clearly, he has presented a case of an organisation that has not worked efficiently and that is not worth trying to fix. I am completely convinced that the course he has outlined is the right one. There was some benefit in tabling this amendment: it has flushed out the Government's thinking on this issue. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Baroness Wilcox Baroness Wilcox moved Amendment No. 232:
Page 17, line 15, at end insert—
("( ) In appointing such persons to the panel, the Lord Chancellor shall have regard to the desirability of appointing persons who have experience in, or knowledge of—

(a) the provision of legal services;

(b) the provision of advice services;

(c) civil or criminal proceedings and the working of the courts;

(d) the maintenance of professional standards among barristers or solicitors;

(e) social conditions;

(f) consumer affairs;

(g) commercial affairs; or

(h) the maintenance of professional standards in professions other than the legal profession.").

The noble Baroness said: I was greatly heartened by the very positive response from the Lord Chancellor to my amendment about the membership of the legal services commission earlier in this Committee stage of the Bill. I rise to speak to Amendment No. 232, which relates to another body established under the Bill—the legal services consultative panel. The panel will replace the Advisory Committee on Legal Education and Conduct, known as ACLEC, which has been described in detail by the noble and learned Lord, Lord Falconer. I tried to listen carefully to the noble and learned Lord, but I fear that I may repeat him at some stage. I am not sure whether I shall get everything I want or absolutely nothing, but at this stage I shall plough on in hope.
This important new body will have a key role in maintaining and developing standards in the education, training and conduct of people providing legal services. From my perspective, as one interested in consumer issues, I believe that it is important that providers of services—including legal services—should be user-focused in their work.
The Woolf reforms and the other reforms that we are debating in the Bill aim to bring about a huge cultural change in the way in which legal services are delivered. The only way that that will happen is if the education and training of those providing the services is geared more than it was in the past towards putting the needs of the client and the consumer first. Having consumer membership of this consultative panel will maximise the chances of bringing about the sweeping changes to education and training that I think we all agree will be needed.
I turn to another role of the panel: the conduct of those providing legal services. The Government know only too well the problems that have arisen in the past,
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with imprecise rules of professional conduct leaving large gaps into which the interests of clients sometimes fell. Costs information to clients is one of those gaps which has given rise to huge numbers of complaints from clients. In the White Paper Modernising Justice the noble and learned Lord the Lord Chancellor has highlighted the problems for clients caused by inaccurate estimates of costs from the lawyers at the start of the case. Indeed, the White Paper wants to rectify this. It says,
"In future, the Government expects to see lawyers give clear and firm estimates of the likely cost of cases, so clients can make informed decisions about whether to proceed. The circumstances in which an estimate might have to be changed, and how any change would be calculated, should also be explained clearly at the outset".
Presumably the consultative panel will have to work at this particular problem.
In addressing this and other issues, it is important that the panel have a balance of interests, including those who speak with the client's voice undiluted by any competing interests.
Until now, the main providers of legal services have been solicitors and barristers. But the reforms which began two years ago have meant that advice agencies are increasingly providing legal services under contract from the Legal Aid Board, soon to become part of the legal services commission. It is equally important that the panel has input into the education, training and conduct of the advice sector, and therefore it is crucial that the advice sector's voice is also heard on the new panel.
Perhaps it might be helpful if I say a few words about the thinking behind the wording of this amendment. The provisions in Clause 29 abolish ACLEC, as set up in the Courts and Legal Services Act 1990, and establish the new consultative panel. The legislation establishing ACLEC specified the types of people that should be its members. By contrast, this Bill does not specify what types of people should be on the consultative panel. Given what I have already said about the importance of consumer and adviser voices on this new panel, that is a worrying omission. My amendment aims to address this and, in so doing, expresses the concerns and fears in this area of the National Consumer Council and the National Federation of Consumer Groups.
In the two years that I have been a Member of your Lordships' House I have learnt that when devising amendments it is often a good idea to use the wording of legislation that already exists because the precedent is already there. That thinking is followed in this amendment. It is almost identical to the provisions of subsection (5) of Section 19 of the Courts and Legal Services Act, which specifies part of ACLEC's membership. One significant difference, however, is the addition of the advice sector, for the reasons I have already mentioned. I have not been as specific as the previous Act in the membership of ACLEC. ACLEC relied heavily on academics and lawyers. My hope is that the new legislation will enable the new body to take a fresh approach by incorporating a broader range of interests.
I do hope that the Lord Chancellor will be as generous in his response to this amendment as he was to my amendment to Clause 1 earlier in the Committee stage. I know from what he said then that he, as well as I, is keen to shift the focus of the civil justice system towards the users of the service. Accepting this amendment would be one further important step in that direction. I beg to move.
Baroness Goudie: I welcome and support the amendment moved by the noble Baroness. It is important that we name the kind of people that we would like to be part of the panel. Not only should they be people with a legal background but people with an education background and those who have worked in consumer affairs. I hope that the Lord Chancellor will feel that he can accept the amendment.
Lord Kingsland: I rise to speak to Amendments Nos. 233 and 235, both of which stand in my name. Amendment No. 233 is quite specific about some of the people who ought to be members of this body. I am not sure whether my noble friend Lady Wilcox would entirely agree with the specific categories of lawyers or indeed the number of lawyers that I have included in Amendment No. 233. The thinking behind the amendment is that we need a body which can match in skill and experience the membership of the legal services commission as one of the jobs of this new body will be to monitor the work of the legal services commission. The members will therefore need skills of a similar, if not an identical, kind.
I am aware that on one interpretation Amendment No. 235 might be said to contradict Amendment No. 233 because in Amendment No. 233 I have called for one practising solicitor and one practising barrister whereas in Amendment No. 235 I have called for two of each. But I also note that Amendment No. 235 suggests "not fewer than nine members" and "not more than 12 members". If it is 12 members, there would be plenty of room for two barristers and two solicitors; but if the figure is nine I accept that I shall have to be content with only one of each.
Baroness Crawley: I support Amendment No. 232 moved by the noble Baroness, Lady Wilcox, who has in her refreshingly no nonsense way pointed out an omission which should not be allowed to stand. She has also been consistent in that this amendment is very much in the spirit of Clause 1, which now seems several years, let alone days, ago. The amendment would ensure that in the membership of the legal services consultative panel representation of consumer interests would be included and the education and training work of the panel would benefit greatly from that wide base of representation. This inclusion of user-friendly involvement would genuinely reflect the place that consumer interests have in the very heart of this Bill.
Lord Mackay of Clashfern: Entering the debate on Clause 29, I feel like someone attending the funeral of a rather precious relative.
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It must be remembered that one of the features of ACLEC was that it had a preponderance of lay membership. So the idea that lay people, users of the courts, have come into the contemplation of the Lord Chancellor for the first time since the noble and learned Lord came to the Woolsack is a slight misrepresentation of the position. However, history moves on. I certainly do not wish to say much more about this particular matter.
It is also true to say that there was no question of the members of ACLEC being appointed as representative of the profession. The idea was that they should be appointed after consultation. We used effectively the advertisement and the Nolan system for making the appointments. But it was found difficult, and divisions between the parties such as that mentioned by the noble and learned Lord, Lord Falconer, went right down through the lay people as well. So the persuasive powers of the two groups seemed to influence the lay people almost equally.
It was my intention that ACLEC should be able to resolve some of those difficult issues. It may well be that the new panel will be able to do what ACLEC has failed to do. However, the future alone will determine that.
Lord Donaldson of Lymington: Perhaps I make what I suppose is a footling point on Amendment No. 233. I am intrigued as to why a retired circuit judge or someone who has been a circuit judge is eligible, but a retired Lord of Appeal in Ordinary or a retired judge of the Supreme Court—unless he has on the way to that position been a circuit judge—is not eligible. I hastily disclaim any interest in becoming a member.
The Lord Chancellor: The noble and learned Lord's request for information should not be addressed to me but to the proposer of the amendment, who has not risen to the bait. However, I take the point.
These amendments either specify the composition of the consultative panel or set out factors which must be taken into account in appointing its members. The membership of the panel has been deliberately left unspecified in the Bill. That is because the membership of ACLEC is spelt out in some detail in the 1990 Act, and the need to allocate members to the various interest groups—I do not shrink from the expression "interest groups"—(barristers, solicitors and teachers of law) and to have, as the noble and learned Lord, Lord Mackay of Clashfern, pointed out, a lay majority has led to a large committee, with members sometimes voting on predictable "party" lines. We wish to be able to appoint the best members, based on their individual experience and expertise, rather than to be bound by prescriptive statutory criteria.
The two amendments of the noble Lord, Lord Kingsland, go a considerable way towards returning us to the composition of ACLEC, and I believe that that is not wise. In particular, I do not think it appropriate to have a barrister and a solicitor (or even two barristers and two solicitors) appointed effectively as delegates from the Bar Council and the Law Society. That would have a tendency to polarise members of the panel into

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two camps, and would hinder them in giving effective, independent advice. "Independent" in this context should not mean only independent of the Lord Chancellor it should also mean independent of the professional bodies.
The approach is further flawed by the fact that the noble Lord seems to have forgotten that there are now more than two authorised bodies. The Institute of Legal Executives has been authorised to grant rights of audience since last year. If the Bar and the Law Society are to have their statutory representatives, so should ILEX and so should any other body that may be authorised in the future.
That said, it is inconceivable that the panel will not include some members of the legal profession of appropriate standing and experience.
What I want the panel to consist of is not factional representatives of particular interest groups, but independent experts who can advise me. I will advertise the posts and appoint the best applicants. Having said that, I will, of course, in appointing them wish to ensure that a wide variety of expertise is included and that the interests of consumers are not overlooked.
The Government intend that all appointments to the legal services consultative panel will be made in accordance with the Nolan Committee's recommendations on public appointments. There will, therefore, be an opportunity for professional and consumer bodies to urge candidates to apply. We hope that they will do so. But I do not think it is appropriate for the authorised bodies to be able effectively to nominate their own appointees to the panel. I do not guarantee that every authorised body will necessarily have a member on the panel.
In making appointments I will have in mind very much the kind of criteria proposed by the noble Baroness, Lady Wilcox. I am therefore happy to accept her amendment in principle. On the first day of Committee, when we were considering a similar amendment concerning the composition of the legal services commission, the noble Baroness was kind enough to say (at col. 504 of Hansard, 19th January) that I had "pleased [her] very much". But today it is the noble Baroness who is pleasing me by hitting the target yet again. The only fault I see in her amendment is that it, too, refers to barristers and solicitors, rather than to the wider categories of authorised advocates and authorised litigators to which they belong. But that is a technicality which is worthy only of a lawyer.
I will therefore return with a government amendment on the subject at Report stage. Again I undertake to show the noble Baroness a draft for her consideration before Report. In the meantime, I hope that the noble Lord, Lord Kingsland, and the noble Baroness will agree to withdraw their amendments.
Baroness Wilcox: I am more in control of myself than I was the last time I stood up to speak to an amendment. I am extremely grateful to the Hansard
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reporters who omitted the words, "Gosh, thanks", which is apparently what I said. For once, may I address Hansard and thank the reporters.
Lord Goodhart: The noble Baroness has not entirely got away with it. In one of my later speeches I am afraid I referred to the words she used which have been recorded in Hansard (at col. 540, 19th January).
Baroness Wilcox: I am grateful to the noble and learned Lord the Lord Chancellor for his kind consideration of my amendments. I look forward to reading the wording he returns with at Report stage. Naturally I would not be me unless I wanted everything and I wanted the same wording as with the legal services commission. However, I must not be greedy. I am grateful to the noble and learned Lord because he listened and is prepared to return with further wording I wish also to express my thanks to the noble Baronesses, Lady Goudie and Lady Crawley, for supporting me at this late hour. I apologise to my noble and learned friend Lord Mackay of Clashfern if I in any way quoted ACLEC as not being as representative as I should have suggested. I therefore beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Kingsland Lord Kingsland had given notice of his intention to move Amendment No. 233:
Page 17, line 15, at end insert—
("(1A) The persons appointed shall include at least—

(a) one Lord of Appeal in Ordinary or judge of the Supreme Court of England and Wales;

(b) one person who is or has been a circuit judge;

(c) one practising solicitor, appointed after consultation with the Law Society;

(d) one practising barrister, appointed after consultation with the General Council of the Bar; and

(e) one person with experience in the teaching of law, appointed after consultation with such institutions concerned with the teaching of law and such persons representing teachers of law as the Lord Chancellor considers appropriate.

(1B) Subject to subsection (1A), in appointing persons to be members of the Consultative Panel, the Lord Chancellor shall have regard to the desirability of securing that the Panel includes persons with experience or knowledge of—

(a) the provision of legal services;

(b) the work of the courts;

(c) the maintenance of professional standards in the legal and other professions;

(d) consumer affairs; and

(e) management.").

The noble Lord said: I shall certainly not say, "Gosh, thanks!" to the noble and learned Lord for the way that he reacted to my amendments. Nevertheless, I do not intend to move Amendment No. 233.
[Amendment No. 233 not moved.]
Lord Kingsland Lord Kingsland moved Amendment No. 234:
Page 17, line 24, at end insert ("and publishing those recommendations").
The noble Lord said: At an earlier point in Committee I tabled a similar amendment to the recommendations expected to be made by the Legal Services Commission in seeking to give advice to the noble and learned Lord. I believe my memory serves me correctly when I say that at that time the noble and learned Lord reacted quite positively to that suggestion. I have made a similar recommendation in respect of the consultative panel and look forward to receiving a similar response from the noble and learned Lord. I beg to move.
The Lord Chancellor: I am happy to accept this amendment in principle. The noble Lord's amendment would require the consultative panel to publish any recommendations that it made to me about the maintenance and development of standards in the education, training and conduct of persons offering legal services. The Government strongly believe in open government, and I therefore agree with the amendment in principle. I see no good reason why the panel's recommendations to me should not be made public. I go further. The noble Lord's amendment covers only those of the panel's activities that are dealt with in paragraph (a) of the new Section 18A(2) of the Courts and Legal Services Act 1990 which deals with maintaining standards of legal education, training and conduct. I believe that the panel should also publish any advice that it gives to me under paragraph (b). This would cover responses to any requests that I made from time to time for advice about any other matters related to the provision of legal services. I shall therefore table a suitable amendment, and on that basis I invite the noble Lord, Lord Kingsland, to agree to withdraw his amendment.
Lord Kingsland: The noble and learned Lord the Lord Chancellor could not have been more generous in his response and in those circumstances I beg leave to withdraw my amendment.
Amendment, by leave, withdrawn.
Lord Falconer of Thoroton Lord Falconer of Thoroton moved Amendment No. 234A:
Page 17, line 31, at end insert—
("( ) The Consultative Panel may, in performance of the duty in subsection (2)(a), seek information from or give advice to any body or person.").
The noble and learned Lord said: The Lord Chancellor intends that the new legal services consultative panel shall be a strong body of undoubted independence. This amendment underpins that intention by emphasising that the panel should have powers to act on its own initiative. New Section 18A(2)(a) of the 1990 Act inserted by Clause 29(2) of the Bill gives the consultative panel the duty of,
"assisting in the maintenance and development of standards in the education, training and conduct of persons offering legal services".
This replicates an existing duty of the Lord Chancellor's Advisory Committee on Legal Education and Conduct. This amendment gives the panel the right to,
"seek information from or give advice to any body or person".
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The intention is to ensure that in carrying out its work under new Section 18A(2)(a) the panel should be able to make reasonable requests of others in formulating its recommendations to the Lord Chancellor.
I recognise that particularly with regard to work on legal education, which may continue over time, the panel may wish to give its views to those closely involved, such as the professional bodies and the academic institutions, as work progresses without the need on each occasion to put its views to the Lord Chancellor first. The purpose of the amendment is not to give the panel any power which it would otherwise be denied by the Bill but to emphasise that the panel may,
"seek information from or give advice to"
others in the course of its agreed work.
I should emphasise from the outset the importance which the Government attach to education. The success of our legal system depends on having lawyers who are properly trained in law and its practice. Legal education must evolve to reflect the developing law and to ensure that the lawyer is fully prepared for practice. And of course legal education and training do not end once the lawyer starts working; continuing professional development is rightly becoming more important for lawyers as well as for other professionals.
The Lord Chancellor will continue to have a role in approving alterations to qualification regulations for barristers, solicitors and other authorised advocates and litigators. But he will have a wider interest in ensuring that lawyers remain of an appropriate standard. In both those areas he will look to the advice of the panel.
I pay tribute to the work on legal education and training carried out by ACLEC. It has produced reports, largely directed to the professional bodies, which have given rise to much debate. There is a creative tension between the academic institutions, the providers of vocational training, the professional bodies and the legal practices. They each have their own view, sometimes a variety of views, of what a legal education should provide. If nothing else, ACLEC has done much in bringing the various players together and encouraging a dialogue between them. ACLEC has organised the Standing Conference on Legal Education, a twice-yearly meeting of the key players when topical issues can be canvassed. I believe that the standing conference has been useful and the Lord Chancellor proposes that the consultative panel and his department should continue to organise something along the current lines of the standing conference. At present consultation is taking place between interested parties on how this might best be done.
As I have said, the consultative panel will have a statutory duty,
"of assisting in the maintenance and development in the education, training and conduct of persons offering legal services".
This is the same general duty as ACLEC's. The Lord Chancellor intends that the panel should be strong and independent, to use words which were used by the Lord Chief Justice and now have a particular resonance. The Lord Chancellor will agree with the panel its programme of work. This is not with the aim of constraining the advice the panel gives but rather to

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ensure that the panel gives its consideration to issues which are important to the Government as well as to those which the panel considers important. A close and co-operative relationship between the Lord Chancellor and the panel will pay dividends. It will give the panel greater focus and, I believe, greater standing.
It would be premature to set out now what issues the panel should at first consider. Indeed, the panel is yet to be appointed. There will be an open competition in due course. But I emphasise that the Lord Chancellor expects the members of the panel to be appointed for their individual expertise and experience rather than because they represent a particular viewpoint or interest.
Finally, let me add that the Lord Chancellor will be under a statutory duty to make available to the panel "appropriate administrative support". This means that the secretarial support which will be provided by the department will be sufficient to meet the panel's need. The panel will also be able through the Lord Chancellor's department to commission research in line with the agreed programme of work. The Lord Chancellor is confident that the panel will be of sufficient strength to let him know if it ever felt that its work is being under-resourced. I beg to move.
11.15 p.m.
Lord Mackay of Clashfern: I wish to take the opportunity warmly to support what the noble and learned Lord said about the work of ACLEC in the field of legal education. It has done a tremendous job. As the noble and learned Lord said, there is a lot of interest with different perspectives in that general area. It has done a great deal to advance the cause of legal education in England and Wales, and I think that it deserves the gratitude of all Members of the Committee.
On Question, amendment agreed to.
[Amendment No. 235 not moved.]
Clause 29, as amended, agreed to.
On Question, Whether Clause 30 shall stand part of the Bill?
Lord Ackner: Clause 30 deals with barristers and solicitors, their rights of audience and their rights to conduct litigation. The clause has been based largely on a consultative paper issued last summer entitled Rights of Audience and Rights to Conduct Litigation in England and Wales: The Way Ahead. That consultation paper was in many respects seriously flawed.
Perhaps I may deal first with the position of solicitors in private practice. Immediately after the Courts and Legal Services Act was passed, the Law Society applied to amend its rules to enable solicitors to apply for full rights of audience in civil or criminal proceedings, or both, in the High Court. The Law Society recognised, as indeed does the Lord Chancellor in his foreword to the paper to which I referred, that its members have to be properly trained to exercise these rights. The Law Society therefore produced various recommendations to ensure that there was proper training.
Its application in respect of solicitors in private practice was approved on 8th December 1993. Accordingly, for nearly the past five years solicitors in
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private practice have had rights of audience in the higher courts on the terms proposed by the Law Society. Nowhere in the noble and learned Lord's paper is it suggested that the Law Society's tests or requirements were other than reasonable. However, your Lordships may not know that there was a high failure rate among candidates who took the test. It is understood that in 1995 the pass rate for the civil test was 28 per cent.
The test is not unduly onerous. This is borne out by reports to the Law Society by the advocacy training adviser and chief examiner. Commenting on the low pass rate in the civil test, the chief examiner stated in his 1995 report:
"The result in the first civil test in June 1994 was promising. Since then there has been an alarming decline in the pass rate, which has fallen from 65 per cent., to 42 per cent., to 28 per cent. It is difficult to diagnose the cause. The reason for the poor results in the civil test is a matter of conjecture. By and large, the candidates are competent in procedural matters but not in other aspects of the test. The expectation may be that they are accustomed to appearing before masters and district judges, but leave it to counsel to decide on other matters; for example, the admissibility of evidence".
Professor Scott, the Law Society's then advocacy training adviser, stated in his 1996 report:
"In my view, the papers that the test board has produced have provided a fair test on matters that advocates going into the higher courts really ought to know about. The number of candidates failing the test has been a matter for comment. I do not think that any criticism can be directed at the test board in this respect. The candidates taking the test are meant to be experienced in lower court advocacy. Those who failed have in my view deserved to fail. Indeed, often I have been astonished am the ignorance of some candidates, especially those doing poorly in the criminal test".
In his 1996 report, the chief examiner suggested that poor results in the early years of the criminal test may have been the result of candidates not preparing properly but assuming that their practical experience would suffice. He noted that the civil test results continued to be "disappointing"—37.5 per cent. and 50 per cent. passes. He stated that the quality of answers on professional conduct and ethics was very disappointing.
In his consultation paper the noble and learned Lord the Lord Chancellor drew attention to the fact that only 624 solicitors out of more than 70,000 have so far obtained the Law Society's higher court qualification. That is not the fault of the system. Solicitors in private practice are not being "debarred" from appearing in the higher courts.
What is the reason for the slow take-up of the opportunity available to solicitors in private practice to appear in the higher courts? There is some very interesting material on that subject to be found in an article published by the International Journal of the Legal Profession, Volume 4, No. 3, 1997 entitled, "Rights of audience in the higher courts in England and Wales since the 1990 Act—What happened?". That is an article by Professor Zander.
It is apparent from that article, although, strangely enough, it does not figure in the paper of the noble and learned Lord the Lord Chancellor, that in 1994, ACLEC—that is the Lord Chancellor's own committee—commissioned research to try to determine:
"The extent to which the granting of wider rights of audience is contributing to the development of new or better ways of providing legal services".

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The successful bidders for that research were a team from Westminster University, led by Professor John Flood, and from Bristol University, led by Professor Gwyn Davies. That research reveals that even solicitors who have the higher court qualifications may not be using them to any great extent.
Of the many reasons, three important ones were found to be: first, the uncertainties of listing of cases and the resultant loss of time spent hanging around court rooms; next, the insufficiency of the volume of advocacy work; and, thirdly, the fact that barristers were generally cheaper than solicitors for most routine work.
That material in Professor Zander's article completely destroys the suggestion that, although there are solicitor advocates,
"the vast majority of defendants in the Crown Courts and litigants in the High Court above are forced to employ a barrister in private practice in addition to the solicitor who is already working on the case".
That is referred to in paragraph 2.1 of the Lord Chancellor's paper.
The suggestion that the choice is "limited by out-of-date restrictive practices" is quite inaccurate; and yet it is an essential part of the foundation upon which the noble and learned Lord the Lord Chancellor bases his justification for the abolition of the judges' statutory right to control the exercise of rights of audience in the higher courts.
One other quotation is important. It comes from the Bar Council memorandum and reads as follows:
"The high failure rate proves the necessity for the maintenance of the standard, not the converse, at least if the public interest is the touchstone. In short, the answer to a high failure rate cannot be to lower the pass mark unless quality standards are to be relegated in importance".
That is precisely what the Lord Chancellor is proposing to do. He is making it clear that all solicitors can expect to have full rights of audience having passed a test which must be less than the current test because that only provided 650-odd advocates. Hence this reference to the quality of service is an illusion.
If we provide solicitors with a significant test, but a fair one, they do not take it—it means work; it means effort. And, even if they do take it, they do not use it, for the reasons I suggested. But if we lower the requirements, then they have no excuse for not taking the test, qualifying with advocacy rights and then being obliged to exercise those rights (which they are not at the moment) by the terms of the block contracts which they will be obliged to face up to.
Clause 30, therefore, is quite unnecessary. The present situation in which the solicitors in private practice have full right to enjoy higher court advocacy is there for the taking, but for the reasons provided to the Lord Chancellor from the research but which he did not see fit to include in his paper, it is the barrister in constant practice who is the obvious person to do the work in the higher courts.
11.30 pm
Lord Falconer of Thoroton: As the noble and learned Lord, Lord Ackner, points out, subsection (2)(a)
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of Clause 30 makes the same provision in respect of solicitors' rights of audience that subsection (1) makes in respect of barristers. All solicitors are deemed by that subsection to have full rights of audience in all the courts, but—and it is an important "but"—they may only exercise those rights if they comply with the qualification regulations and rules of conduct imposed by the Law Society. This provision differs from the current provision and, as I understand it, it is that difference to which the noble and learned Lord objects.
At present, all solicitors have rights of audience in the lower courts but unlike banisters they are not deemed to have rights of audience in the higher courts. Instead, solicitors are granted rights of audience in the higher courts only once they have obtained the Law Society's higher courts qualification. If they obtain such a qualification, they are retrospectively deemed to have been granted full rights of audience on admission to the roll of solicitors in accordance with paragraph 3 of Schedule 19 to the Courts and Legal Services Act 1990.
At the heart of the noble and learned Lord's argument was that, because independent persons have said that many of the people who apply to be qualified solicitor-advocates do not pass the exam and therefore cannot be up to it, this clause poses a danger of incompetent people becoming qualified advocates who are solicitors. Speaking for myself, I should have thought that precisely the reverse conclusion was to be drawn from the present situation. The Law Society, which has set its standards, has set an appropriate standard which has weeded out those who are no good. I do not know the basis on which the noble and learned Lord says that the Law Society will immediately lower its standards. Perhaps I may make it plain that neither the Lord Chancellor nor anybody on this side has any desire to see unqualified or incompetent advocates practising in the higher courts or anywhere else.
The position under subsection (2)(a) will still be that solicitors can appear only in the higher courts if they have met the requirements which the Law Society imposes, just as it is at present. Solicitors will be in the same position as barristers: they will have full rights of audience, but whether they can exercise them fully will depend on whether they have complied with the relevant rules. Of course, there will still be a marked distinction in practice. The Bar is essentially a specialist advocacy profession. Most solicitors are not specialist advocates, and those who do not want to appear in the higher courts, and do not obtain the necessary qualifications, will still not be able to appear in the higher courts.
The 1990 Act enabled solicitors to obtain full rights of audience in the higher courts, yet nine years on less than 1 per cent. of the profession—about 730 solicitors out of more than 78,000 in practice—have obtained those rights. In my book, that does not signal a huge appetite by solicitors to become specialist advocates. Nevertheless, the changes made by this Bill should encourage more solicitors to take up the rights of audience to which they are well entitled, if suitably qualified. The expansion of solicitors' rights of audience will not pose a threat to the continued existence of the Bar. I believe that that point underlies the noble and learned Lord's speech. Experience in Australia and

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New Zealand, where barristers and solicitors have either formed a merged profession, or where both branches of the legal profession have long had full rights of audience, is clear evidence that there is still plenty of mom for specialist advocates to thrive. Of course, there is no reason why solicitors should be precluded from being specialist advocates if they wish, as the long tradition of Scotland proves. Procurators fiscal have acted as solicitor advocates for centuries. Scotland also has a long tradition of specialist solicitor advocates in the sheriff courts.
Subsection (2)(b) of the new Section 31 which will be inserted by Clause 30 simply maintains the status quo by providing that all solicitors are deemed to have been granted rights to conduct litigation under the Courts and Legal Services Act. I do not understand my noble and learned friend to object to that provision.
As I have explained, Clause 30 sets out the basic proposition that all banisters and solicitors have full rights of audience. In itself, that provision would leave in place current restrictions on the exercise of rights of audience which I believe are unwarranted and contrary to the public interest; for example, the current rules of the Bar Council prevent employed lawyers appearing in the higher courts in almost any circumstances. That leads to the extraordinary result that barristers of such distinction as Dame Barbara Mills or David Calvert-Smith, the former DPP and the present DPP, are not able to appear in the higher courts, which strikes one as a very odd result.
The rules of the Law Society similarly impose restrictions on those employed solicitors who have obtained the higher courts advocacy qualifications which do not apply to solicitors in private practice: they may not appear as sole or senior advocate in any substantive case in the higher courts. I may add that these restrictions were effectively forced on the Law Society in 1997, when the Law Society's application for employed solicitors to be granted rights of audience in the higher courts was finally resolved—that is, after six weary years. I believe that we have spoken about this previously.
Those restrictions on employed banisters and solicitors are unjustified. They are the worst kind of restrictive practice—designed simply to protect the work and incomes of privately practising barristers, with no shred of benefit to the public. I do not believe that the professional bodies should be in a position to impose such rules which discriminate against their employed members. Clause 31 therefore provides that employed advocates are not bound by restrictions imposed on their rights of audience which do not also apply to their colleagues in private practice.
I emphasise that that does not mean that employed lawyers should not be subject to regulation—of course, they should be, but that regulation should be in the public interest. It should not be designed to promote the interests of one small, although important, section of the legal profession over those of all other lawyers.
The Government do not intend that the professional bodies shall have to apply the same regulations in every respect to employed advocates as those that they apply
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to advocates in private practice. Clearly, they should be allowed to allow for differences between them. For example, it would not be appropriate for employed banisters to have to work from chambers as those in private practice have to. But employed advocates should not be prevented by their employed status from effectively exercising their rights of audience.
I believe that that deals with the kind of things which Clause 30 is designed to deal with. I emphasise that it is not intended to lower the quality of those solicitors who appear as advocates.
Lord Mackay of Clashfern: At Second Reading I raised a question about this particular clause. The noble and learned Lord the Lord Chancellor very kindly wrote to me on 12th January, dealing, among other things, with this question. In the time available to him, the noble and learned Lord, Lord Falconer, did not have time to reply to all the questions raised, which is a perfectly normal situation.
However, the point I wanted to be clear about was that the regulations for the qualification of the exercise of the rights of audience by solicitors would not be less stringent than the present regulations which have been adopted in order to secure competence in the exercise of those rights of audience in the higher courts.
In the letter to which I have referred, the noble and learned Lord the Lord Chancellor explained that the clause would grant theoretical rights of audience on admission to the solicitors' Roll, which would be the same as barristers on Call, but that the right to exercise those rights of audience would be dependent on securing the necessary qualification. So far, that seems to reproduce the present position in practice although not quite in theory.
In writing to me, the noble and learned Lord said that, if the Bill was passed—I should say that he said, "once the Bill is passed",—which may be subtly different—
"the Law Society will wish to modify the Legal Practice Course, to provide advocacy training for solicitors joining the profession—"
In other words, that is a change in the general system. That would cost something and it is a question of whether that cost is necessarily something that should be undertaken. That is a matter for the Law Society. The letter continues—
"so that they are ready to take up rights of audience in the higher courts once they start practising, if they wish to do so".
To train to do something that you may or may not wish to do may be wise or it may not. The point I am really anxious about is the next sentence, which states,
"I also expect that the Law Society will wish to propose changes to the requirements of its higher courts qualifications, in order to encourage more solicitors to take up rights of audience in the higher courts".
What does that mean? How is one going to encourage more solicitors to take up rights of audience in the higher courts, having regard to the history which my noble and learned friend Lord Ackner has described? One way of doing it is to reduce the standard marginally or more than marginally. The noble and learned Lord the Lord Chancellor and the noble and learned Lord, Lord Falconer, say that they want to have competent

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people. I am not quite clear how changes in the qualification regulations will encourage more solicitors to take up rights of audience unless these changes reduce the threshold or the standard. I should say in fairness to the noble and learned Lord that his letter continues,
"Having said that, neither the Law Society nor I have any desire to see badly trained or incompetent advocates let loose in the higher courts, and I will ensure that this does not happen".
I entirely accept that last sentiment. "Letting loose" in the higher courts such people obviously would not be a very desirable thing to happen. But I am not very clear in that respect about the relationship between that last sentence and the penultimate sentence that I have read out.
I certainly believe that the research that Professor Flood and his colleagues from Bristol undertook is valuable and I believe that they prophesied that as time went on the number of solicitors who would qualify would increase in any event. I should like a little more clarification on that particular aspect of the matter, because it is quite important.
11.45 p.m.
Lord Hacking: Having taken part in long debates in 1990 during the proceedings on the Courts and Legal Services Bill regarding rights of audience with the noble and learned Lord, Lord Mackay of Clashfern, with my noble and learned friend and, indeed, with the noble and learned Lord, Lord Ackner, I desire to make a brief intervention.
I should like, first, to concentrate on what the noble and learned Lord, Lord Mackay, said. He questioned how, other than dropping standards, more solicitors could be encouraged to take up higher court advocacy. It does not have to involve the dropping of standards. The noble and learned Lord referred to difficulties that, apparently, some solicitor candidates had in getting higher court advocacy certificates on matters of evidence. The experience of my side of the profession—and I believe that it is so for the other side of the profession—is that the training can be greatly improved to deal with the situation. There are now many more training sessions available, not only to those who aspire to be either a barrister or a solicitor, but also to those who have now qualified. There is a continuing training requirement on my side of the profession and I believe that to be so on the side of the Bar. Therefore, the means of further encouraging members of my profession to take the higher court advocacy is to assist them in the training so that they are better prepared. When they pass that test they will become better and more proficient advocates.
However, the central point—and this concerns all of those who need to resort to the courts—is to have able and sufficient advocates. The fact that we have a bifurcated profession is a historical accident that goes back to the end of the 18th century and the beginning of the 19th century: how the Inns of Chancery collapsed and the Inns of Court managed to keep going. It was the Inns of Court which had the rights of audience in the King's Court and the Inns of Chancery had the rights of
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audience in the courts of equity. No one would have designed a profession bifurcated in the way that now applies to our profession. Anything that gives an equal opportunity to lawyers of either side of the profession to practise their skills to the top of that profession should be endorsed by anyone who uses those courts. I say that for the one very simple reason that we want the best of advocates to appear for us in the courts.
What I find pleasing in the now re-written Sections 31 to 33 of the Courts and Legal Services Act is the fact that there is an even playing field. Members of the Bar have to satisfy the qualification regulations imposed upon them by the General Council of the Bar before they can practise in the higher courts of the land and the same requirements are imposed upon solicitors. By that means, I hope that we will have advocates coming up from either side of the profession who are properly trained and tested and that they will provide the advocacy services that the user of the courts both wants and needs and to which he is indeed entitled.
The Courts and Legal Services Act was structured in such a way—and no better person than the noble and learned Lord, Lord Mackay of Clashfern, knows this—as to open up the system, but to do so in circumstances where one side of the profession had a total monopoly on the rights of audience in the higher courts. When I started at the Bar as a solicitor one only had rights of audience to appear in a magistrates' court or in the county court; and that was it. If one had a client who needed a plea of mitigation to be made in the Crown Court or, as it was then, in the courts of assizes or quarter sessions, you had to go to members of the Bar. There was a total monopoly by one side of the profession. Anything that makes that position more equitable is for the better. What was achieved in the Courts and Legal Services Act was an opening out of the system. However, it was not an opening out on the basis that each side of the profession had the same training regulations or the same requirements that they had to meet in order to become a higher court advocate.
The reason I wholly support Clause 30 of this Bill, which seeks to replace Sections 31 to 33 of the Courts and Legal Services Act with the provisions that are set out in the Bill, is that it creates an even playing field, and it also creates the opportunity for the users of courts to have good advocates whether they come from the stable of a solicitor or the stable of the Bar.
Lord Ackner: I rise for two reasons, one is to discover whether my noble and learned friend the Lord Chancellor will reply to the questions raised by my noble and learned friend Lord Mackay, because he raised matters which I should have thought call for a reply. Then I propose in a matter of three or four sentences to deal with what was said against my application.
Lord Falconer of Thoroton: I intended to reply but my attention wandered briefly at the vital moment and that is why I did not get to my feet quickly enough, for which I apologise. First of all, in relation to the points made by the noble and learned Lord, Lord Mackay of Clashfern, what the Law Society does is obviously

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matter for that body in the first instance. Secondly, it is perfectly conceivable that it can produce rules that would encourage greater numbers of applications by members of the solicitors' profession to become higher court advocates, for example by imposing training requirements at an earlier stage, by making the qualifications that are required to become a higher court advocate more relevant to the particular experience that solicitors have had up to that time, and also by changing the requirements for training.
As I say, that is a matter for the Law Society. However, I should emphasise that it is the intention of the Lord Chancellor to use the powers which the Bill contains to maintain the standards of advocacy and to allow no lowering of those standards. Such standards are necessary to make the courts function effectively and to meet the needs of those represented. He would not approve proposals from either the Bar Council or the Law Society which had the effect of imposing inappropriate standards. He considers it important that high standards are maintained in both professions, although, of course, he will be ready to consider proposals for change which may seek to do things better or in a different way. He will also look to the legal services consultative panel, the Director General of Fair Trading and the designated judges for considered advice. I hope that provides some answer to the noble and learned Lord's question.
Lord Ackner: I have two points in answer to my noble and learned friend. First, he spent some of his riposte in relation to my submissions on Section 31. That comes next and therefore I shall delay dealing with that. My second point relates to what is in the Lord Chancellor's consultative paper, to which I make few references. In the foreword signed by my noble and learned friend the Lord Chancellor, the observation is made,
"the right to maintain properly high entry standards to a profession must not be misused to impose restrictive practices for the benefit of those already established in the profession".
There is no warrant for that comment at all.
Then there is a reference at paragraph 2.5 which is equally hostile to the Bar on this particular subject. It reads as follows,
"The Government accepts that rights of audience should not become the subject of a 'free for all', and that these rights must generally be reserved to qualified members of the legal profession. However, the present position is over-restrictive. The Government does not agree that the majority of qualified lawyers should in most circumstances be debarred from appearing in the higher courts, which is currently the case".
The only debarring was by the solicitors who either did not apply to get their rights of audience or, having got the rights of audience, did not exercise them.
Clause 30 agreed to.
Midnight
Clause 31 [Rights of audience: employed advocates]:
Lord Thomas of Gresford Lord Thomas of Gresford moved Amendment No. 236:
Page 19, line 3, at beginning insert ("Subject to subsection (3),").
The noble Lord said: It is a real pleasure to address your Lordships at this scintillating hour. I notice that your Lordships are exhausted and bowled over by the generosity of the noble and learned Lord the Lord Chancellor in conceding so many amendments tonight.
Amendment No. 236 is a paving amendment to Amendment No. 238. As the noble and learned Lord, Lord Ackner, pointed out, we have already had a paving response from the noble and learned Lord, Lord Falconer. However, this amendment seeks to maintain the status quo so far as the rights of audience of the CPS and other employed government lawyers are concerned.
The whole purpose of the Crown Prosecution Service was to divorce the decision to prosecute from the investigation of the crime. I note in the White Paper that the purpose of the provisions was expressed in this way:
"We intend to sweep away the unjustified restrictive practice that prevents most qualified lawyers from appearing before the higher courts … This will help, in particular, the Crown Prosecution Service to provide a more efficient and effective service to the taxpayer and the law-abiding public".
I challenge the assumptions that are contained in the White Paper.
The result of the Crown Prosecution Service taking over the role of prosecutor in the magistrates' court is that each qualified solicitor or barrister employed by the CPS has a very heavy workload. I recall that when my son was a pupil or in his first year of practice, he customarily made a living by taking on some 40 or 50 cases in the day, and getting paid by the day for the work that he was doing. That was the sort of workload that the qualified solicitor in the CPS had to take on.
So it is that in the higher courts the Bar provides a service with distinct advantages to the law-abiding public—never mind about the public which is not law-abiding. First, the barrister is independent: he is independent in the advice that he gives to the Crown Prosecution Service on matters pre-trial—for example, disclosure; on the charges that should be brought; and on the evidence that should be placed before the court. He is independent in his decision making during the course of the trial and is insulated from the pressures that could occur and do occur upon the Crown prosecuting solicitor who is in direct contact with the police. The independent prosecuting barrister is insulated from that type of pressure.
Secondly, and very importantly, he has time. One of the benefits of being at the independent Bar is that if research is required, one has time to do it. If the barrister who is appearing in the higher courts does not take that time to research and to produce his skeleton arguments, then he will face the dire consequences when he goes into court.
He has daily experience of going in and out of court before the same judges. He will gain knowledge of the judges, the particular areas in which he practices, and the particular courts which he attends; he will become accustomed to the procedures and customs of that court. He has flexibility. It is impossible to know in the profession where one will be next week, or the week after, largely because it is impossible to control the length of cases. That is why one has the return of briefs,

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to which reference was made earlier today. But he also has the expertise and training to pick up the brief quickly and to present it quickly. That is what he is paid for. He has low overheads because he does not have to carry a large office staff. It is a fact that the average solicitor will spend something in the region of 70 to 75 per cent. of his gross earnings—I have been a solicitor so I know—on office costs. At the Bar it is likely to be one-third or less. So he has flexibility, he has low overheads and he has a strict discipline imposed on him not merely by the rules of his profession but by the chambers of which he is a part, by the head of chambers and by the disciplinary procedures of the Bar. He is also able to appear in the higher courts without always having behind him the Crown Prosecution Service solicitor. It is extremely rare that a CPS solicitor will be in court. He may be at the initial conference with counsel. He is unlikely to be in court and he will be represented by a clerk. All those are the advantages of being a member of the Bar who is independent.
On the other hand, if one envisages the position of the CPS prosecutor, it is quite clear that a two-tier system must arise. Someone has to do the magistrates' court work. The experienced advocate will be sent to the higher courts—to the appeal courts—and he will become the upper echelon in a two-tier prosecuting system. He will still need support staff; he will still need to have the clerk sitting behind him in order to carry out all the necessary day-to-day work that that person performs; he will also be subject to the same problems of timing, clashes of his diary, and of having to attend a plea and directions in one court, a trial in another and a plea in a third.
When one comes to consider the public interest, the cost is a matter that has to be taken into account. Almost by definition, the CPS prosecutor will be paid less than the independent barrister. His salary will be less. Unless it is smaller, there is no point in having the system at all. There has to be a cost saving for the whole purpose of these provisions to go through. But to his salary has to be added the pension, the paid holidays, the working hours, subject to European directives, and so on. The effect of the lower salary and of these conditions will mean that the quality of the CPS prosecutor will be less than that of the independent barrister. In addition, he has a closer association with the police and he has to deal with promotion. The yardstick is success. He will be subjected to the temptation of overcharging and plea bargaining. Not even in Scotland are rights of audience given to the procurators fiscal in the higher courts, despite their centuries of experience. Yet, here we are, straightaway opening the entire system to the CPS employed lawyer.
The existing system allows for pilot schemes, which are actually taking place. There has been no research, no assessment of the pilot schemes that have taken place. Yet, as I say, the door is being flung open. I beg
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to move this amendment, and shall seek to move this series of amendments, in order to preserve the status quo.
Lord Bach: Although it is very late, I make no apology for dealing with one of the matters mentioned by the noble Lord, Lord Thomas of Gresford, in relation to his arguments as to why the independent Bar should be entitled to a monopoly on prosecuting in the higher courts. I shall deal with one only; namely, the noble Lord's proposition that there is effectively absolute independence for an independent prosecutor while he is in the process of prosecuting a case in the Crown Court.
The best independent prosecutors, of which there are many, will tell us that in this day and age the reality is that their decision-making powers are extraordinarily limited in the context of a case that they are prosecuting. Perhaps I may offer a brief anecdote. A few weeks ago. in a case in which I was involved, a prosecution witness of tender years completely changed his story in cross-examination. It was clear that the case was over; there was nothing else for it. The learned judge told the prosecutor to consider her position. Instead of taking the course of immediately saying, "It is my independent judgment as a prosecutor that no evidence should be offered in this case", the prosecutor said—and it was understood by everyone else in the court—that she had to go away and take instructions. That meant taking instructions from a lawyer who works for the Crown Prosecution Service in the area. It was only 35 minutes later, after she had no doubt given her advice but listened to his decision, that she came back to court and offered no evidence.
There may be contrary examples; however, my experience as someone who practises both as prosecutor and defender in these courts is that the independence of the independent prosecutor in ordinary Crown Court trials is extraordinarily limited and should not be put forward as one of the arguments for not allowing Crown Prosecution Service lawyers to appear in the courts.
Lord Kingsland: I support the remarks of the noble Lord, Lord Thomas of Gresford, in introducing his amendment and seek to speak briefly to mine, which is in the same grouping.
I wish to ask the Lord Chancellor two questions. First, in examining the overall cost position, about which he has said much in the three days that we have spent in Committee on the Bill, will he take into account any additional costs that the Attorney-General's Department will experience in relation to the CPS? In assessing the overall increase in expenditure of the Bill on criminal expenditure, we must add any increases in the cost of the CPS that derive from the terms of the Bill to whatever effect it has on the Legal Aid Fund in order to assess the overall cost implications.
Secondly, perhaps I may invite the noble and learned Lord to reflect, in the way that he did earlier on, on how he sees the development of the CPS in relation to the independent Bar. The noble and learned Lord will recall that, yesterday, he allowed himself to say that he did not think that the criminal defence service was likely to expand beyond some fairly minor incursions into

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criminal defence work. Would the noble and learned Lord take the same view about the Crown Prosecution Service in relation to the independent Bar practising in the criminal courts?
The Lord Chancellor: The amendments tabled by the noble Lords, Lord Thomas and Lord Kingsland, go to the heart of one of the Government's main proposals on rights of audience. They would deny Crown prosecutors the benefit of Clause 31 of the Bill, which prevents employed lawyers from being subject to restrictions on the exercise of their rights of audience which do not also apply to lawyers in private practice. The amendment tabled by the noble Lord, Lord Thomas, would go further and exclude all advocates in Crown employment from the scope of Clause 31.
That would mean that although the Bill would enable employed lawyers in the private sector to appear as advocates in the higher courts, those in public service would still be unable to do so while the rules of their professional bodies remain as they currently are. Perhaps I may try at this late hour to enliven the proceedings, I hope in a good natured way. The noble Lord, Lord Thomas, proves by this amendment that he is a barrister first and a Liberal second, a card-carrying member of the barristers' party, QC section. Bright and Cobden must be turning in their graves.
The Committee should be in no doubt that one of the intentions of the Government in bringing forward the Bill is to enable suitably qualified and experienced Crown prosecutors to prosecute in the Crown Court. Many people are amazed that Crown prosecutors cannot already prosecute cases in the higher courts. I see no reason why the overall costs of the CPS should increase as a result.
There are those in this House and outside it who have suggested that there are fundamental reasons why this is an improper reform. I do not find the arguments convincing. I try to look at the issue in a practical way. First, it seems to me bizarre that a distinguished criminal silk, like the current DPP and his predecessor, Dame Barbara Mills, forfeited their right to appear in the higher courts at the moment of appointment to Crown service.
The position of ordinary Crown prosecutors who would be able to exercise full rights of audience the moment they returned to private practice is equally anomalous. All those lawyers are professionals, paid to exercise their independent judgment and subject to the discipline of their professional bodies.
If there really were an objection of principle to prosecution by an employee of the state, how is it that we have tolerated a position in which Crown prosecutors prosecute in the magistrates' courts where 97 per cent. of criminal cases begin and end. How is it that the Scots tolerate prosecution by the procurators fiscal? How have we put up with a position in which the most serious criminal cases tried at the Old Bailey are prosecuted by senior Treasury counsel whose practices are, in effect, almost exclusively prosecuting crime?
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It has sometimes been suggested that there is a constitutional principle that a prosecution in the Crown Court should be conducted by a lawyer in private practice and not by a Crown prosecutor. Constitutionally, prosecutions are brought in the name of the Crown and are subject ultimately to the control of the Attorney. Until fairly recent times it was common for the Law Officers to prosecute in person in particularly serious or important cases.
It is true that a prosecution lawyer or any lawyer is required to be independent. But the independence required is independence of mind. The chief difference between the Crown prosecutor paid by the state to prosecute a case and a criminal barrister in private practice paid by the state to do so is that the former has security of employment but the latter who is in private practice is potentially in a more precarious position because he is beholden to his dominant client.
Some members of the Committee may be tempted by the argument that someone who is paid a salary by the state cannot be truly independent. All that is needed to refute that argument is to look at the position of the judges whose independence is not questioned. The senior professional judiciary are full-time salaried servants of the Crown. No one has plausibly suggested to my knowledge that they would increase their independence if they went freelance and were paid for their services on a case-by-case basis, although the exigencies of life and the Consolidated Fund might make that welcome to them albeit on other grounds. I believe that those members of the Committee who are not barristers will recognise these amendments as a set of special pleadings by the Bar. I hope that the noble Lord, Lord Thomas, will agree to withdraw his amendment.
12.15 a.m.
Lord Thomas of Gresford: Since my integrity has been attacked I should inform the noble and learned Lord the Lord Chancellor that I fought two elections as a Liberal before I became a barrister. In those days I was a solicitor. I had the privilege of transferring from one side of the profession to the other. Let it not be thought that to transfer from one side of the profession to the other has ever had any effect on my political convictions.
The noble Lord, Lord Bach, does not appear to appreciate that, like him, I am in the kick and rush business. Both prosecuting and defending I am in daily contact with the courts. In certain circumstances one informs the CPS what one proposes to do before one does it. That does not mean that one asks for permission to do what one believes is right in a particular case.
My purpose in moving the amendment is not that ultimately I have any objection in principle to the CPS prosecuting in the higher courts. I seek maintenance of the status quo in order that the pilot schemes that are now going on can be evaluated. I firmly believe that the quality of the CPS prosecutor at the present time is not up to the kick and rush in the higher courts and appeal courts where the most difficult and complex criminal litigation takes place. It may be that I shall be proved

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wrong, but at the moment the pilots that are being conducted have not produced any results that convince me to the contrary.
Further, I do not believe that the terms of service of the CPS can conceivably attract the best qualified people. Overall, therefore, the public interest may be damaged because there will be weak prosecution in the higher courts. If one still has independent people defending in such cases a weak prosecutor will be out
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of his depth. Having said that, I do not press the amendment at this time of night. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord McIntosh of Haringey Lord McIntosh of Haringey: My Lords, I beg to move that the House do now resume.
Moved accordingly, and, on Question, Motion agreed to.
House resumed.
House adjourned at nineteen minutes past midnight.