---

Legal Services Bill [HL]

The noble Lord, Lord Maclennan, is absolutely right to say that the purpose of this stage of our deliberations is to define the issues that noble Lords feel are of great concern. I hope that he will recognise that one of my roles—I am not the policy Minister on this legislation—is to carefully consider what is said in debate. That is why I am grateful to all noble Lords who have, helpfully, intervened and spoken. Of course, I would say that I think that the language is clear, but I take the point. Parliamentary counsel—who, as the noble Lord will appreciate, are always wonderful in all circumstances—are, in my experience, alive to ensuring that issues raised in your Lordships’ House have been appropriately dealt with. I know—and I say this not so much to your Lordships but, through your Lordships, to outside bodies—that your Lordships have the advantage of being used to working in the language of parliamentary counsel. It is sometimes quite hard for those unfamiliar with it to see that, by being written in a particular way, the language does not suggest what a lay person might immediately think of. It is also possible to define things in a way that might appear helpful at first, but actually lends itself to difficulties later on, as mentioned in our previous discussions on the word ““proportionate””. The Government’s policy has always been that day-to-day regulation rests with the approved regulators. We want them to use their regulatory experience and knowledge to ensure that high standards are maintained and that the oversight regulator intervenes only where regulators fail to meet these high standards. We do not intend in any way, shape or form that the board should become a micromanaging regulator. That is why there is the statutory duty in Clause 3 to ensure that, when carrying out its activities, the board has to have regard to better regulation principles. That includes the fact that activity should be targeted only at cases where action is needed. Those principles are extremely important in the context of this debate. We think that this is sufficiently clear in the Bill; part of our purpose is to make sure of that. We want the board to be in a position to take action where acts or omissions on the part of an approved regulator have had or are likely to have an adverse impact on the regulatory objectives. That means that, where a regulator is failing, the board can enforce the statutory obligations under Clause 27 on the approved regulators to act in a way that is, as far as is reasonably practicable, compatible with the regulatory objectives. We think that this creates a sufficient demarcation of the roles of the board and the approved regulators without placing the duty suggested in statute. Looking at this clause and Clause 27 in concert might enable noble Lords to see more clearly what we have been seeking to do. The amendment could have the opposite effect and lead to more micromanagement, which is not what noble Lords, the Government and, I am quite sure, the professions want. The Government’s clear principle is that the costs will be paid by the professions. My discussions with them have shown that there is a concern to make sure that we set up the regulatory framework in a proportionate way. Sir David Clementi looked at preparing some broad cost estimates. PricewaterhouseCoopers prepared its report based on its knowledge and assumptions; we asked it to do so because of its great expertise in this area. It worked with the professional bodies in estimating the costs that noble Lords know about. As we establish the Legal Services Body and the OLC, we will continue to work to constrain any costs. In so doing, we are making sure that we do not add on any proposals for greater activity from the Legal Services Board. The implication is generally, although not always, that adding on activities costs more. Our firm position—and I have offered to talk further to the professions about this—is that costs should be considered in terms of the clear understanding that we expect them to be paid by the professions. We hope that in what we have sought to do in the Bill we have clearly demarked the relationship between the regulatory bodies and the Legal Services Board. We are mindful of the costs issue and want to make sure that the principles of better regulation are followed, meaning that the Legal Services Board intervenes only where necessary. I hope that noble Lords will support that fundamental principle.