§ 3.7 p.m.
§ The Parliamentary Secretary, Lord Chancellor's Department (Baroness Scotland of Asthal):
My Lords, on behalf of my noble and learned friend the Lord Chancellor, I beg to move that this Bill be now read a second time.
Following past criticisms of the Public Trust Office by the Public Accounts Committee and recommendations made in a quinquennial review, a refocused role for public trustee work was agreed. This involved removing trust work from the Public Trust Office and relaunching that office as the Public Guardianship Office with effect from 1st April 2001. The trust work was transferred to the office of the Official Solicitor, to be handled with his existing estates work. The policy for both that office's existing estates' work and the public trustee's trusts work is to accept new cases only as a public sector trustee of last resort; that is, to be available to act to protect the vulnerable, or persons under legal disability, or where there is a social need to do so when there is no one else suitable or able to do so and an injustice would otherwise result.
1050 This has led to a diminishing trusts caseload. Furthermore, trusts which are commercially viable and which do not involve the need for special protection for people under incapacity, or otherwise disadvantaged, have been encouraged to transfer to the private sector. We are convinced that this was the correct course of action for the management of the work and services provided by both offices. However, as a consequence of the changes, the accommodation and other overhead costs attributed to trust work increased significantly from 1st April 2001, while the income from trusts work has reduced, and is projected to continue to reduce.
There is a statutory requirement for full cost recovery for trust work contained in Section 9(4) of the Public Trustee Act 1906. The only way to meet this requirement is to increase the level of fees. The level of fee increases required to achieve full cost recovery would be very high—an in-year increase for this financial year would be in the region of 100 per cent.
Some of the clients affected by these fees include the very vulnerable in society. A large number of the clients are elderly. Additionally, there are 50 cases where the Public Trustee looks after the interests of beneficiaries of vaccine damage or other compensation settlements. Another 100 cases involve mentally or physically disabled beneficiaries and a further eight benefit under charitable provisions.
Some clients, particularly the elderly, are reliant on the income they receive from their trust funds and others are reliant on the expectation of inheriting trust capital. Significant increases in administration fees would reduce both the amount of capital-generating income and that ultimately available for distribution.
As an alternative to large fee increases, this short Bill removes the requirement for full cost recovery for trust work. It seems sensible to use this opportunity to regularise the position in relation to trust fees now to bring fee setting for trust work in line with fee setting provisions for other work. At the moment, the majority of fee setting powers are held by the Minister with responsibility for the policy—for example, in the case of civil court fees the Lord Chancellor prescribes the fees with the concurrence of the Treasury. However, the power to set fees for trust work is set out in Section 9(1) of the Public Trustee Act. This provides for the Treasury to set fees with the sanction of the Lord Chancellor. It would seem sensible for the position to be regularised now.
As a modernising measure, the Bill also repeals Section 7 of the Public Trustee Act. In accordance with modern financial practice, it removes the Consolidated Fund's liability to make good any sums required to discharge the Public Trustee's liability and places the liability with the Lord Chancellor. In reality, any sums would come from within the Lord Chancellor's Vote. It also tidies up the position on the Public Trustee's liability to beneficiaries by removing a purported limitation on such liability that in law has no effect. I commend the Bill to the House.
Moved, That the Bill be now read a second time.—(Baroness Scotland of Asthal.)
§ Lord Thomas of Gresford
My Lords, we on these Benches have examined these provisions with some care, as the House would expect, as it is the amendment of the Liberal government Bill of 1906 with which we are concerned. That Bill did much to regulate the pre-existing position. Clearly in the period of time that has elapsed anomalies have arisen.
I am glad that the Government are taking the interests of the vulnerable, the elderly and the injured into account in bringing forward these measures, which will undoubtedly reduce the level of fees that will have to be paid. It would be quite wrong that fees should eat into the capital or the income of those in the vulnerable positions to which the Minister referred. Accordingly, the Bill will have the full support of these Benches. We wish it a hasty passage into law.
§ Lord Kingsland
My Lords, the Opposition share entirely the sentiments expressed by the noble Lord. The Bill is most welcome. In particular, it provides that the Lord Chancellor rather than the Treasury should set the fees in future. Anything that reduces the power of the Treasury must be in the public interest.
Moreover, the change that permits the application of the charging regime to be sensitive to those who are financially less fortunate must be a good initiative. For both of those reasons, we commend the Bill.
§ Baroness Scotland of Asthal
My Lords, I am delighted to find that we are in total agreement. I thank the noble Lords, Lord Thomas of Gresford and Lord Kingsland, for their support for the Bill.
On Question, Bill read a second time, and committed to a Committee of the Whole House.