Fifth Standing Committee
on Delegated Legislation
Tuesday 6 July 2004
[Mr. Bill O'Brien in the Chair]
Draft Solicitors (Amendment)
(Northern Ireland) Order 2004
2.30 pm
Mr. Alistair Carmichael (Orkney and Shetland) (LD): On a point of order, Mr. O'Brien. Before we commence proceedings, may I point out that I took from the Table an explanatory memorandum relating to the order, to which the order itself is appended, and attached to it is a regulatory impact assessment on the Motor Vehicles (International Circulation) Order 1975? Have I missed something?
The Chairman: I am advised that the Minister will explain what that refers to.
2.31 pm
The Parliamentary Under-Secretary of State for Northern Ireland (Mr. Ian Pearson): I beg to move,
That the Committee has considered the draft Solicitors (Amendment) (Northern Ireland) Order 2004.
A draft of the order was laid before the House on 24 June 2004. I apologise to the Committee that a regulatory impact assessment, which is not connected with the draft order, was accidentally stapled to the copies made available in the Committee. I assure hon. Members that it has nothing to do with what we are discussing this afternoon.
The order is simple; it contains one substantive provision to increase the limit that the Law Society of Northern Ireland—
Lady Hermon (North Down) (UUP): Will the Minister give way?
Mr. Pearson: If the hon. Lady will bear with me for one moment while I finish this paragraph, I will gladly give way. The order increases the limit to which the Law Society of Northern Ireland is subject in respect of the amount that it may borrow to manage its compensation fund. The limit of £100,000 was set in the original legislation; the Solicitors (Northern Ireland) Order 1976 has not been reviewed since then. The order increases the limit to £1 million and will also permit any future changes that may be necessary to be implemented by secondary legislation.
Lady Hermon: I intervened so early in the proceedings because the Minister sparked a little flame in my heart when he used the word ''simple''. This is not a simple piece of legislation increasing the compensation fund for the Law Society of Northern Ireland from £100,000 to £1 million. It is also does something to which I take great exception: it changes the procedure from affirmative to negative. Let us not go into the matter blindfolded; before we vote on the proposal, will the Minister explain the precedent for changing the procedure when Northern Ireland, without the Assembly, is suffering a democratic deficit?
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Mr. Pearson: I shall gladly explain why the procedure has been changed. It is usual practice when drafting legislation to include powers to vary sums by secondary legislation. It is pretty much custom and practice and I do not know why it did not happen in 1976. It is good practice to have the power to vary something of this nature by order, just as there would be the power through secondary legislation to change fees and charges in certain other areas. There is nothing out of the ordinary about it. What was out of the ordinary was probably the fact that the original order in 1976 contained a figure. It is unusual for a monetary figure to be stated in primary legislation, with no power to vary it by secondary legislation.
Mr. Carmichael: I may have misunderstood the hon. Member for North Down (Lady Hermon), but I thought that she was asking why, whereas this proposal is to be made under the affirmative procedure, subsequent changes are to be made under the negative resolution procedure. With respect, that is a different point to the one that the Minister has just answered. Will he confirm that it is competent for secondary legislation such as that before the Committee to vary the means by which subsequent regulations may be made? Is there a power in the principal Act—the Northern Ireland Act 2000—to allow that?
Mr. Pearson: My understanding is that there is, which is why we are introducing the measure. I do not believe that we are doing anything out of the ordinary, but if I get better advice on that, I will transmit it to the Committee.
Lady Hermon: I am most grateful to the Minister for taking a second intervention so soon. Will he confirm that another extraordinary thing about the procedure in the order is the fact that there has been no public consultation? Will he confirm that, if we change to negative procedure in future, it will not become custom, practice, and acceptable to have no public consultation?
Mr. Pearson: Let me come to the issue of consultation in a few moments; first, I will explain what the fund is.
The compensation fund is an entirely internal fund that the Law Society of Northern Ireland maintains by way of an annual levy on solicitors who practise in Northern Ireland. The fund is used to approve grants in circumstances of loss arising from a solicitor's dishonesty and in circumstances of hardship arising from a solicitor's failure to account for a client's fund.
Schedule 2 to the Solicitors (Northern Ireland) Order 1976 sets a limit of £100,000 on the amount that the Law Society can borrow to replenish the fund. That limit is now outdated; it no longer reflects modern requirements and the amounts of money that pass through the accounts of solicitors. In 2004, I consider £1 million a better limit for the amount that the society may borrow, if it so requires, to help maintain the status of a fund.
I introduced the legislation quickly and without the usual public consultation, as the hon. Lady mentioned, because the Law Society requested that the matter be
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given urgent consideration. It made representations to my Department to the effect that it may in the short term require the security that additional borrowing provides. I also consider the borrowing power of the Law Society essentially a matter for its own internal control. Additional public consultation would not have any material effect on our policy aim. The matter is really one for the society's internal procedures. Statutorily, we require the society to provide a compensation fund, but how it runs that fund and whether it needs a borrowing power should be for the society alone.
In short, the order provides for a straightforward technical change to legislation, which will allow the Law Society the desired flexibility in operating its compensation fund.
2.38 pm
Mr. Desmond Swayne (New Forest, West) (Con): I confess that I do not understand the need for the borrowing powers. I understand that the Law Society of England and Wales does not have such a borrowing requirement, and relies on funds provided by the solicitors—although there are a great many more of them in England and Wales; that might be the reason why there is no such requirement.
To practise as a solicitor, one requires a form of indemnity or insurance against a malpractice suit. If that is a condition of practising, why is a fund needed to meet the requirements of those who do not have such insurance? They are not allowed to practise without it. That defeats me.
Notwithstanding the fact that the power has been sought with some urgency by the Law Society, my inquiries have given me to believe that it has no immediate intention to borrow £1 million. I was always taught as a banker that when a client sought a facility that they did not intend to use but just wanted, it was a matter for much greater scrutiny, but if the solicitors and the Law Society want such a power, as the Minister seemed to imply, who are we to stand in their way?
2.40 pm
Mr. Carmichael: I should first remind the Committee that although I have never been qualified to practise in Northern Ireland and have never sought to do so, prior to becoming a Member of Parliament I was a solicitor, and I remain an enrolled solicitor in the Law Society of Scotland.
The Minister still has not explained why the order should specify that subsequent changes to the fund be made under the negative resolution procedure. I should have thought that it would be fairly clear in the primary legislation which procedure was to be applied, and it is unusual, to say the least, to specify a new procedure in subordinate legislation. Also, can the Minister tell me whether the regulatory impact of the order has been considered and, if so, when the assessment was published?
I have no objection in principle to the Law Society being given increased borrowing powers. We are dealing with something that reflects a different and probably more sensible procedure, but unless the
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basics are right, we will have a piece of secondary legislation that is not properly made. Does the Minister want to intervene?
Mr. Pearson indicated dissent.
Lady Hermon rose—
Mr. Carmichael: I give way to the hon. Lady.
Lady Hermon: Perhaps the Minister was trying to indicate that there is a reference at the beginning of the order to the Northern Ireland Act 2000, which is supposed to be emergency legislation to cover the period of suspension. It would be unfortunate if the order had a primary impact rather than being secondary legislation. That was perhaps the query with which the Minister was trying to intervene.
Mr. Carmichael: I stand in awe of the hon. Lady for knowing exactly what was going through the Minister's mind, because it was not so clear to me, but I accept that it was a reasonable inference to draw. Notwithstanding the Minister's reluctance to explain it, the hon. Lady's intervention indicates that that was so. However, a reference to the negative resolution procedure in a statutory instrument is somewhat unusual and, inasmuch as it seeks to vary something, it is primary, rather than secondary in nature.
2.43 pm
Lady Hermon: I have been completely taken aback by the brevity and swift measure with which the hon. Member for New Forest, West (Mr. Swayne), the Tory Front-Bench spokesman, has dealt with this legislation for the people of Northern Ireland.
In a previous incarnation I taught in the law faculty at Queen's university. Any of my remarks about a generation of lawyers that I know well and have taught has no reflection on their professional capacity. I am proud of them all.
The order has caused me considerable consternation, to put it mildly. It seems to be simple, to use the Minister's word, but it is not. It is about a solicitors' fund that was set up under the Solicitors (Northern Ireland) Order 1976, and it is staggering that there has been no incremental increase in 28 years. The Minister nods; perhaps he could reflect on that and enlighten the Committee with the reasons advanced by the Law Society as to why, after no increase for 28 years, it has suddenly made such an application.
Let us please bear in mind the fact that, according to paragraph 6 of the explanatory memorandum,
''The Law Society has approached the Department with an urgent request to amend the borrowing limit for the Fund'',
but paragraph 5 of the same explanatory memorandum simply indicates that the Law Society requires
''the potential to borrow much more than it is currently able to do under the 1976 Order.''
Will the Minister clarify what appears to be a contradiction between those two paragraphs of an explanatory memorandum that is meant to be helpful? I have not found it helpful.
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Does the Law Society intend to borrow up to £1 million? What is the urgency? Is there a particular case or a judgment that may be issued against a particular solicitor or firm of solicitors? What explanation did the Law Society give the Minister to persuade him that he should introduce the order to the Committee today without any public consultation? The words ''urgent request'' appear in paragraph 6 of the explanatory memorandum. Clarification of the matter would be helpful to the Committee.
There is another thing that I find astonishing, and I am sorry that the Minister appears to have made no reference to it. We are told—I appreciate the explanation—that there is one statutory opportunity each year to raise funds by way of a levy on solicitors, and that that opportunity occurs in January each year. We are now in July. Did the Law Society drop a nought or a couple of noughts off its calculations in January when it was fixing the levy for the members of the profession? Why, when the levy was set only six months ago, did it fail to anticipate the need for a huge increase—a 10-fold increase—from £100,000 to £1 million in the borrowing capacity?
As I said at the beginning of our debate, the Committee should not be asked to vote blindfolded. I should like the Minister to throw some light on those issues and to explain again why we are changing the procedure. As I said in an intervention, there is currently a democratic deficit in Northern Ireland. Much of our legislation is passed by Order in Council, in Committee, down the Corridor. My comments are no reflection on the members of the Committee this afternoon. I appreciate the fact that they have turned up, and would like to hear them speak more often on Northern Ireland affairs. However, I would like the Minister to tell me whether it is common practice to change from affirmative to negative procedure. I am not reassured by his earlier explanation. I should be delighted if in short measure he could tidy up all those grey areas.
2.48 pm
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