PP2018/0158

CONSTITUTIONAL AND LEGAL AFFAIRS AND JUSTICE COMMITTEE FIRST REPORT FOR THE SESSION 2018-19

Ministerial Responsibility for Justice

CONSTITUTIONAL AND LEGAL AFFAIRS AND JUSTICE COMMITTEE FIRST REPORT FOR THE SESSION 2018-19

There shall be a Committee on Justice, Constitutional and Legal Affairs which shall be a Standing Committees of the Court. It shall be entitled to take evidence from witnesses and to report on matters as they affect the Island relating to the administration of justice, legal services, the work of the Attorney General and constitutional issues. It may also hold joint sittings with other Committees for deliberative purposes or to take evidence.

The Committee shall have: a) a Chairman elected by Tynwald, b) two other Members.

Members of Tynwald shall not be eligible for membership of the Committee, if, for the time being, they hold any of the following offices: President of Tynwald, member of the Council of Ministers, Attorney General, member of the Treasury Department referred to in section 1(2)(b) of the Government Departments Act 1987. The Committee shall be authorised to require the attendance of Ministers for the purpose of assisting the Committee.

The powers, privileges and immunities relating to the work of a Committee of Tynwald are those conferred by sections 3 and 4 of the Tynwald Proceedings Act 1876, sections 1 to 4 of the Privileges of Tynwald (Publications) Act 1973 and sections 2 to 4 of the Tynwald Proceedings Act 1984. Committee Membership

Mrs J Poole-Wilson MLC (Chairman)

Mr L Hooper MHK (Ramsey)

Mr C Robertshaw MHK (Douglas East)

Copies of this Report may be obtained from the Tynwald Library, Legislative Buildings, Finch Road, Douglas, IM1 3PW (Tel: 01624 685520) or may be consulted at www.tynwald.org.im

All correspondence with regard to this Report should be addressed to the Clerk of Tynwald, Legislative Buildings, Finch Road, Douglas, Isle of Man, IM1 3PW.

Table of Contents

I. THE COMMITTEE’S WORK TO DATE...... 1

LEGAL SERVICES 1

BREXIT 2

II. MINISTERIAL RESPONSIBILITY FOR JUSTICE...... 2

ORAL EVIDENCE ...... 7

19TH MARCH 2018: EVIDENCE OF HON R H QUAYLE MHK, CHIEF MINISTER, MR W GREENHOW, CHIEF SECRETARY, AND MRS D FLETCHER, DIRECTOR OF EXTERNAL RELATIONS, CABINET OFFICE 9

14TH MAY 2018: EVIDENCE OF MR C COUÉ, COLLECTOR OF CUSTOMS AND EXCISE, AND MS L KENNEDY, TEAM LEADER, LEGAL AND POLICY, CUSTOMS AND EXCISE DIVISION; HON G BOOT MHK, MINISTER, MR R LOLE, CHIEF EXECUTIVE, AND MS J SKINNER, BREXIT POLICY MANAGER, DEPARTMENT OF ENVIRONMENT, FOOD AND AGRICULTURE; HON L SKELLY MHK, MINISTER, MR MARK LEWIN, CHIEF EXECUTIVE, DEPARTMENT FOR ENTERPRISE 37

15TH OCTOBER 2018: EVIDENCE OF MS J O'ROURKE, FORMER CHIEF EXECUTIVE OF THE ISLE OF MAN LAW SOCIETY 65

WRITTEN EVIDENCE ...... 89

APPENDIX 1: FEBRUARY 2001 - REPORT OF THE LEGAL SERVICES COMMISSION 2000 91

APPENDIX 2: 20TH MARCH 2001 - HANSARD EXCERPT OF DEBATE – LEGAL SERVICES COMMISSION REPORT 121

APPENDIX 3: 24TH MAY 2018 - SUBMISSION OF MR W GREENHOW, CHIEF SECRETARY 129

APPENDIX 4: 20TH DECEMBER 2017 - SUBMISSION OF MR J LALOR-SMITH, DEPUTY CHIEF EXECUTIVE, DEPARTMENT OF HOME AFFAIRS 133

APPENDIX 5: EXCERPT FROM THE PROGRAMME FOR GOVERNMENT: HEALTHY AND SAFE ISLAND 139

APPENDIX 6: 8TH MARCH 2018 – SUBMISSION FROM THE ECONOMIC AFFAIRS DIVISION, CABINET OFFICE 145

APPENDIX 7: 14TH MARCH 2018 – SUBMISSION FROM THE TREASURY AND CUSTOMS AND EXCISE DIVISION 149

APPENDIX 8: 16TH MARCH 2018 - SUBMISSION FROM THE DEPARTMENT OF ENVIRONMENT, FOOD AND AGRICULTURE 153

APPENDIX 9: 16TH MARCH 2018 – SUBMISSION FROM THE DEPARTMENT FOR ENTERPRISE 161

APPENDIX 10: 14TH MAY 2018 ORAL EVIDENCE HEARING - OPENING STATEMENT OF HON G BOOT MHK, MINISTER FOR DEPARTMENT OF THE ENVIRONMENT, FOOD AND AGRICULTURE 167

To: The Hon Stephen C Rodan, President of Tynwald,

and the Hon Council and Keys in Tynwald assembled

CONSTITUTIONAL AND LEGAL AFFAIRS AND JUSTICE COMMITTEE FIRST REPORT FOR THE SESSION 2018-19

Ministerial Responsibility for Justice

I. THE COMMITTEE’S WORK TO DATE

1. The Committee was established by Tynwald in October 2017. Since then, we have been working to develop our knowledge of matters relating to the constitution, legal affairs, and justice.

2. We started by holding a series of informal meetings with the Attorney General, the Chief Secretary, the Chief Constable, the judiciary and the Chief Registrar, and the Chief Executive and President of the Law Society. These meetings have helped us to understand the concerns of and the challenges faced by these stakeholders.

Legal services

3. In February 2018, we announced our inquiry into the regulation of legal services, with particular reference to the Advocates’ Disciplinary Tribunal (‘the ADT’) and the Law Society. We heard oral evidence on this topic from representatives of the Law Society and the members of the ADT in April 2018. We then announced an inquiry into the process of becoming a Manx advocate. We have now decided to amalgamate these topics into a broader inquiry into legal services in the Isle of Man, including consideration of the proposed Public Defender’s Scheme.

1 Brexit

4. We have also taken evidence in relation to Brexit. The Chief Minister, the Chief Secretary and Director of External Relations appeared before the Committee on 19th March 2018. On 14th May 2018, we heard from the Collector of Customs and Excise, Mr Charles Coué; the Minister for Environment, Food and Agriculture, Hon Geoffrey Boot MHK, with the Chief Executive, Mr Richard Lole, and the Brexit Policy Manager for the Department, Miss Janice Skinner; and the Minister for Enterprise, Hon Laurence Skelly MHK, with the Chief Executive, Mr Mark Lewin. The oral and written evidence relating to Brexit has been published with this Report.1 II. MINISTERIAL RESPONSIBILITY FOR JUSTICE

5. During the course of our work so far, we have become aware of the fact that there is currently no publicly identifiable executive responsibility for all matters relating to justice and legal affairs. Although the remit of the Department of Home Affairs includes the prison and probation services, it does not include the courts or the Attorney General’s Office, which do not fall directly under the responsibility of any Department or Board.

6. We believe that this is why reform of the Island’s legal and justice system has not been a priority for previous administrations. There is nobody in Government whose duty it is to protect and advance the principles of justice, regardless of which Department is responsible for a particular element of the justice system. We have already encountered numerous examples of areas where scope for reform has been identified, but the implementation of it has been slow or non- existent.

7. For instance, the Legal Services Commission inquiry into the ADT took place eighteen years ago.2 It identified various inadequacies and anachronisms with the ADT’s composition, procedures, and rules. The Report and its recommendations were debated in Tynwald Court in March 2001.3 Tynwald resolved ‘That the Report of the Legal Services Commission 2000 be received and the Council of Ministers be requested, following consultation, to prepare legislative changes to give effect to the recommendations in the Report.’4 Despite this clear resolution, only one of the recommendations has been

1 Oral Evidence and Appendices 6, 7, 8, 9, 10. 2 Appendix 1. 3 Appendix 2. 4 Votes and Proceedings, Tynwald March 2001 (tynwald.org.im/business/vp/VP/tv20032001.pdf).

2 partially enacted: any referral under section 18(3)(c) of the Advocates Act 1976 is now dealt with by a panel of Deemsters rather than the Governor.5

8. When we asked the Chief Secretary for an update on progress with the reforms recommended by the Legal Services Commission 2000 report, he admitted that:

The fundamental issues identified by the Committee regarding the constitution or the rules of the committee have not, it appears, been addressed. After review, it is clear that the responsibility for carrying out these changes was not clearly identified.6

9. Progress with implementing the recommendations of the Select Committee on the Operation of the Jury System has also been slow. Only Recommendation 7 has been dealt with so far.7 While Cabinet Office has taken the lead on some of the recommendations, others have been delegated to Home Affairs and the courts.8 There does not appear to be a co-ordinated approach to addressing the recommendations, notwithstanding the commitment in the Programme for Government to progressing this reform.9

10. Jane O’Rourke also explained to us the difficulty she had during her tenure as Chief Executive of the Law Society in progressing any ideas for reform:

Mr Hooper: […] who within the executive do you see as being responsible for actually delivering that change? So from the Law Society, when you were lobbying, who was it within Government, not within Tynwald necessarily, were you liaising with?

Ms O’Rourke: Anybody who would listen to me! (Laughter)

Q154. Mr Hooper: There was not one overriding … in charge?

Ms O’Rourke: No, I regularly spoke to the Chief Ministers; and Treasury obviously were very important because of the legal aid implications; the Cabinet Office. We regularly did round-robins to all MHKs and MLCs. We would invite them to any events that we had going, just really to enable them to understand. We would have a regular speaking slot at the State of the Nation. It really was about trying to get the message across.

5 Appendix 3. 6 Appendix 3. 7 Appendix 3. 8 Appendix 4. 9 Appendix 5.

3 11. We have also become aware of a certain institutional wariness within Tynwald towards the idea of there being executive and parliamentary oversight of the courts system. We fully understand the reasons why the government and the parliament must not be able to interfere in decisions made by the judiciary in individual cases. Nevertheless, the courts are an essential part of the justice system, and as public institutions it is important that they receive an appropriate amount of executive and parliamentary oversight. This is commonplace in other jurisdictions. The Ministry of Justice in the United Kingdom, for instance, has the courts as part of its remit,10 and the Justice Committee of the House of Commons is accordingly mandated to examine any expenditure, administration and policy relating to the courts system.11

Conclusion

Delivery of change is a fundamental problem in relation to reform of the justice system. There is nobody with clear executive responsibility for all matters relating to justice and legal affairs. This is a fundamental gap which needs to be filled. Reform of the justice and legal system has been stymied by the lack of executive responsibility for this area.

12. We intend to report to Tynwald with the results of our inquiry into legal services in early 2019. We are, however, concerned that there is no clear executive responsibility for justice and legal matters, either to respond to our Report or deliver any change as mandated by Tynwald. Our recommendations run the risk of being lost amongst the many other competing priorities for Government. Justice is too important a matter for it be forgotten.

13. We therefore recommend the following:

Recommendation

That the Council of Ministers should include within the portfolio of a Minister lead responsibility for protecting and advancing the principles of justice. This responsibility should include Government policy in relation to the justice system, in particular the courts and the Attorney General’s Chambers, and delivery of change where required.

10 Ministry of Justice, 'About us', gov.uk (gov.uk/government/organisations/ministry-of- justice/about#responsibilities, accessed 16th November 2018). 11 House of Commons Justice Committee, 'Role - Justice Committee', parliament.uk (parliament.uk/business/committees/committees-a-z/commons-select/justice-committee/role/, accessed 16th November 2018).

4 J P Poole-Wilson (Chairman)

L L Hooper

C R Robertshaw

November 2018

5 6

ORAL EVIDENCE

7 8

19th March 2018: Evidence of Hon R H Quayle, Chief Minister, Mr W Greenhow, Chief Secretary, and Mrs D Fletcher, Director of External Relations, Cabinet Office

9 10

S T A N D I N G C O M M I T T E E O F T Y N W A L D C O U R T O F F I C I A L R E P O R T

R E C O R T Y S O I K O I L B I N G V E A Y N T I N V A A L

P R O C E E D I N G S D A A L T Y N

Constitutional and Legal Affairs and Justice Committee

Brexit

HANSARD

Douglas, Monday, 19th March 2018

PP2018/0059 CLAJ-BX, No. 1/2017-18

All published Official Reports can be found on the Tynwald website:

www.tynwald.org.im/business/hansard

Published by the Office of the Clerk of Tynwald, Legislative Buildings, Finch Road, Douglas, Isle of Man, IM1 3PW. © High Court of Tynwald, 2018 11 STANDING COMMITTEE, MONDAY, 19th MARCH 2018

Members Present:

Chairman: Mrs J P Mrs Poole-Wilson MLC Mr L L Hooper MHK Mr C R Robertshaw MHK

Clerk: Mr R I S Phillips

Contents Procedural ...... 3 EVIDENCE OF Hon. R H Quayle MHK, Chief Minister, Mr W Greenhow, Chief Secretary, and Mrs D Fletcher, Director of External Relations, Cabinet Office ...... 3 The Committee adjourned at 12.38 p.m...... 26

______2 CLAJ-BX/17-18 12 STANDING COMMITTEE, MONDAY, 19th MARCH 2018

Standing Committee of Tynwald on Constitutional and Legal Affairs and Justice

Brexit

The Committee sat in public at 11 a.m. in the Legislative Council Chamber, Legislative Buildings, Douglas

[MRS POOLE-WILSON in the Chair]

Procedural

5 The Chairman (Mrs Poole-Wilson): Good morning and welcome to this public meeting of the Constitutional and Legal Affairs and Justice Committee. I am Jane Poole-Wilson MLC, and I chair this Committee. With me are the other members of the Committee, Mr Laurie Hooper, MHK and Mr Chris Robertshaw, MHK and we are assisted today by the Clerk of Tynwald, Mr Roger Phillips. 10 Please ensure that any mobile phones are off or on silent, so that we do not have any interruptions. For the purposes of Hansard, I will also be ensuring that we do not have two people speaking at once. The Constitutional and Legal Affairs and Justice Committee is a Standing Committee of 15 Tynwald with a wide scrutiny remit. Today we will be taking evidence on the topic of Brexit and its implications for the Isle of Man. By way of background for anyone listening who is not familiar with the topic, on 23rd June 2016 the United Kingdom voted by a simple majority of 52% to leave the European Union. The Isle of Man did not have a say in this referendum. Although the Isle of Man is not a 20 member of the European Union, we do have a relationship with the European Union through Protocol 3 to the UK’s Act of Accession. In summary, Protocol 3 enables us to trade industrial and agricultural goods freely with the EU member states and it also restricts access to certain EU provisions for those defined under it as ‘Manxman’. Protocol 3 will fall when the United Kingdom leaves the European Union in 2019.

EVIDENCE OF Hon. R H Quayle MHK, Chief Minister, Mr W Greenhow, Chief Secretary, and Mrs D Fletcher, Director of External Relations, Cabinet Office

25 Q1. The Chairman: Today we welcome the Chief Minister, the Hon. Howard Quayle MHK, along with the Chief Secretary, Mr Will Greenhow and the Director of External Relations, Mrs Della Fletcher. Thank you for attending today. Could we begin, would you like to make any opening statements?

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The Chief Minister (Mr Quayle): Well, thank you very much, Madam Chairman, and yes, I 30 would like to start by thanking the Committee for this opportunity to discuss work on the Isle of Man Government’s preparations to the UK’s withdrawal from the European Union. I will make an introductory statement and I will then answer any specific questions you may have. My colleagues, Chief Secretary, Will Greenhow and Executive Director of External Relations, Della Fletcher may have some additional contributions to those questions. 35 As the Committee will be aware, Island residents did not vote in the 2016 referendum which has been very kindly pointed out by yourself, Madam Chair, and the Isle of Man Government did not take a position on the referendum debate. This is because whilst the UK is leaving the EU, the Isle of Man is not and it was never a member. But we do have a limited relationship with the EU which is set out in Protocol 3 of the UK’s Treaty of Accession to the European Union. This 40 relationship means that we are effectively included within the UK’s membership of the EU customs union and are subject to certain provisions of the single market for trade in goods. However, we must now deal with the consequences of the UK’s decision to leave and the fact that our own limited relationship with the EU under Protocol 3 will end. To illustrate our preparations are being undertaken, it might be helpful to break down the 45 Brexit process into three separate elements. The first, which is the actual process of withdrawal, concerns the terms on which the UK will leave the European Union. The second element covers transition, which essentially allows for a smoother and more structured exit. The third is the new relationship which will determine how the UK and the EU will trade each other in the future. To these I would add another important element which is the UK’s future trading relationship 50 with the rest of the world and its position within the World Trade Organisation. I would like to cover these components of the Brexit process and then conclude by giving the Committee, if I may, a brief overview of our engagement to date and the structures we have set up to deal with Brexit. Following the triggering of Article 50 in March 2017, the EU stated that phase 1 of the talks 55 would cover withdrawal and would seek to address three key issues: (1) the financial contribution required from the UK; (2) the issue of citizens’ rights; and (3) the question of how the introduction of a border between Northern Ireland and Ireland could be avoided – something that neither the UK nor the EU wish to see happen. The EU has stressed that these elements must be agreed upon before talks on a future relationship could even begin. 60 Discussions did not always go smoothly, but Phase 1 was concluded in December last year, although a clear picture of how the Irish border would operate was yet to be finalised. It was agreed that talks could move forward to the next stage. From an Isle of Man perspective, this was an area where we needed to monitor the discussions in order to ensure that we knew where any elements might impact upon us. We are 65 not involved in the financial settlement, and the Northern Ireland issue, whilst of great interest to us, was not one where our input was required. We did of course have an interest in EU citizens’ rights. Our position was that we would wish to ensure that the rights of EU citizens living in the Isle of Man would reflect what was agreed for those EU citizens living in the United Kingdom. 70 Once the principles to be included within the withdrawal agreement had been settled, the EU worked up a first draft of the text. That draft included explicit reference to the Isle of Man – which is a key point – which ensured that the terms agreed would also cover the Island to the extent of our limited Protocol 3 relationship. The UK and the EU also went on to discuss the ‘implementation period’, as it is described by 75 the UK, or ‘transitional arrangements’ as they are known by the European Union. To avoid any confusion, I will refer to this as the ‘implementation period’ today. The implementation period essentially allows the UK to remain bound by EU laws whilst no longer a fully participating member state. As the draft withdrawal agreement stands, it also allows for our own Protocol 3 relationship to remain in effect during that time. The 80 implementation period will resemble, therefore, the UK transitioning from full EU membership

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to an arrangement comparable to membership of the EEA, where free movement and most EU laws and regulations apply, but without any political influence for the UK within the EU’s institutions. The UK government has determined that this arrangement serves to allow for a more orderly and managed withdrawal. 85 The Council of Ministers’ position up to that point has been that in principle the Isle of Man Government would also seek to retain the characteristics of its existing relationship with the EU, insofar as that is possible during any implementation period which is in line with what the UK is seeking to achieve. It is worth emphasising that if we were not included within the implementation period, the Island could have found itself outside of the EU customs union 90 whilst the UK remained on the inside. This would have meant that tariffs and restrictions would apply on goods moving between the Island and the United Kingdom, with the prospect of the need to introduce customs controls between us. It must be remembered, however, that the terms of the withdrawal agreement and the implementation period can only be finalised once the future relationship has also been finalised. 95 At this stage it is anticipated that this will be in October, but it would not be unreasonable to acknowledge that there could be slippage. As ever with EU negotiations, nothing is agreed until everything is agreed. It is our intention to bring forward an Isle of Man EU Withdrawal Bill, which will give effect to withdrawal and to the implementation period, and we would hope to publish that soon. Once 100 the EU’s negotiating guidelines on the new relationship have been agreed, talks on the future trading relationship will be able to get underway in earnest. In the last three weeks, the UK Prime Minister has set out her vision for a future partnership with the European Union. The President of the European Council has also set out the EU’s own draft guidelines for that relationship. The EU’s position confirmed that a free trade agreement is 105 the only workable option. They have also made clear that agreement will cover goods, but there will be a limit to the extent to which it can cover services, and the EU has reiterated that the UK’s rights and obligations must be balanced, as they are in any trade agreement, which means that there can be no cherry-picking of aspects of EU membership. The UK Prime Minister has also acknowledged that Brexit will mean some hard truths and 110 that the UK will not be able to get exactly what it wants. For the Isle of Man, the options will be limited to whatever the UK can negotiate for itself. As the scope of the UK deal becomes clearer, we will be able to focus on and identify the elements in which we might be able to participate. This is where our future relationship with the EU will be determined and so will be at the top of our agenda over the next six months. 115 At the beginning, Madam Chairman, of my remarks, I mentioned that a fourth element of the Brexit process was the UK’s and the Isle of Man’s position in relation to international trade and WTO membership. Whilst not strictly speaking an EU or Brexit issue, renewed focus on this area has come as a direct result of Brexit itself. The UK is seeking to reset its relationship with the WTO and so we need to ensure that we are ready for that. A great deal of work is currently 120 going into ensuring our compliance with the various WTO agreements that the UK will be party to as an independent member. This work is vital in ensuring that we can benefit from existing trade agreements and also any trade agreements which the UK intends to negotiate in the future. In terms of our overall objectives for trade, we have made it clear that our first priority is the 125 preservation of our current trading relationship with the United Kingdom. It is vital that we are able to continue trading freely in goods with the United Kingdom, and we are confident that there will be no change on that front as a result of Brexit. Trade between the Isle of Man and the EU rests on what terms the UK is able to secure in the next stage of negotiations and also on our securing access to those terms. In relationship to 130 trade between the EU, the UK intends to roll over or transition all existing EU free trade agreements with third countries into bilateral agreements between the UK and each nation. In principle, we would wish to ensure that the Isle of Man remains within the scope of these

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agreements as they are transitioned, to the extent to which they currently apply under Protocol 3. We are currently working on the detail as to how that might happen with the UK 135 Department for International Trade. Retaining the Island’s current trading arrangements post- Brexit provides the greatest certainty and sustainability for our businesses, consumers and investors. Opting not to continue the application of these EU free trade agreements to the Island would reduce market access for Island exporters and could result in the introduction of tariffs and fees on goods leaving or arriving on the Island from these countries. 140 As with all of our external relations work, targeted engagement is the key to ensuring the Island’s position is understood and that we build relationships with the people who will be negotiating the EU on our behalf. Our work to this point has focused on significant and positive engagement with the UK government at a political and official level. It is no exaggeration to say that our current level of engagement with the UK is unprecedented. 145 At a political level, I have been attending quarterly meetings between the Chief Ministers of the Crown Dependencies and Robin Walker MP who is the Parliamentary Under Secretary of State for Exiting the European Union. I was also pleased to host Minister Walker when he visited the Island in August last year and I know he valued the opportunity to meet with representatives of our local businesses, to discuss their concerns. 150 We have also been sharing our views with several UK Parliamentary Committees, including the House of Commons Justice Committee and the House of Lords Brexit Committee. At official level our officers are working closely with their counterparts in the UK in preparation for the UK’s withdrawal. In the same way our officers have been able to enhance their co-operation with their counterparts in the other Crown Dependencies and are gaining a greater 155 understanding of our differences and our shared approaches. In addition, we have of course also been consulting with our own businesses here on the Island. This is an area where the Department for Enterprise has been proactive and they have spoken to a range of businesses in sectors such as financial services, manufacturing, e-gaming, tourism, energy, biomed, construction, retail, as well as others. Additionally DEFA has also been 160 proactive with a range of stakeholders. It has carried out a survey within the fisheries sector to gauge views and they are also engaging very closely with the agricultural sector across a number of issues, as they always do. We therefore have a good understanding of what local businesses have identified as their concerns and their perceived threats and opportunities. I would like to conclude with a brief word about the structures we have established within 165 the Government to deal with Brexit. You will be aware that we have established the EU Advisory Group under the chairmanship of the Chief Secretary to draw together the relevant Departments to organise and co-ordinate our work on Brexit and to advise Ministers on Brexit- related matters. This group has engaged with the Isle of Man Chamber of Commerce and is meeting with lead representatives this afternoon. 170 We have also established a central Brexit team within the Cabinet Office, which is coming together to ensure that this work is co-ordinated and supported by dedicated resource. Various Isle of Man Government Departments and Divisions are engaged in roundtables on several key work strands and specialised working groups with various UK government departments, alongside colleagues from the Channel Islands, on a range of issues which are constantly 175 increasing in volume and complexity. These roundtables and working groups are working on policy and legislative preparations as well as how relations with the UK will work on a practical level, once the UK has left the EU. These work strands include EU citizens’ rights, agriculture and fisheries, customs, international trade, financial services, transport and communications, which include issues like broadcasting and data protection. Departmental representatives are 180 supported in this engagement by the Cabinet Office and again report to the Chief Secretary. Madam Chair, I hope that my opening statement gives a good overview of the position we have reached. I would like to conclude by stating that I think we are about to enter a crucial period. Much will hinge on the sign-off of the agreement of the terms of the draft withdrawal agreement, the

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185 scope of the implementation period and also on the guidelines for the new relationship. Things will become clearer after the conclusion of the March European Council later this week, but it is certain that once talks begin again in earnest, we will need to be ready to assess the potential UK deal and which elements we would seek to be included in. This is somewhat unprecedented. However, I believe the work that we have already undertaken has put us on a good footing, 190 as the negotiations reach their critical final stages during the next six months. Inclusion within the scope of the withdrawal agreement, including the implementation period, is the best outcome for the Island that we could reasonably hope for at this stage. It means that if this can be agreed and finalised, then we will have kept what we have now, as the UK remains in transition. 195 The Island’s new relationship with the EU will depend on the new relationship between the UK and the EU, and our participation in that relationship will be considered on its merits and subject to the agreement of both parties. We will seek to be included within the scope of that agreement. In the areas which we feel best suit our best interests, balancing the benefits we might acquire against the obligations of costs we might occur. 200 I hope that this overview has been helpful and I would add that we would be more than happy to answer any questions you may have. Thank you.

Q2. The Chairman: Thank you, Chief Minister. 205 If I could pick up please with where you have just concluded your opening remarks, in terms of the broad vision for the Isle of Man in connection with Brexit. You have commented there at the end that the Island will have to think about the areas that best suit our best interests and I wonder if we could start by asking you a little bit more about how that vision for what our best interests are is being articulated and what the processes that the Government, the Council of 210 Ministers, working with the groups you have identified and mentioned so far, such as the European Advisory Group, how you are working to develop the vision.

The Chief Minister: Okay, if I could give our overall strategy and means of delivery, I hope that will help the Committee. 215 As I mentioned in my speech, our overall strategy is to preserve or protect our trading relationship with the United Kingdom – about 80% or 90% of everything we do on the Isle of Man is with the United Kingdom – and the ability for people to travel freely between the Isle of Man and the United Kingdom. We are confident that we can achieve open trade with the United Kingdom because the UK 220 government has indicated that it would seek to maintain the customs and excise agreement and also the United Kingdom, Ireland and our fellow Crown Dependencies in the Channel Islands have indicated their intention to retain the Common Travel Area. We would also wish to have the option to be able to participate in a future UK-EU deal and we would wish to have the option to be able to be included within the scope of any existing EU 225 free trade agreements carried forward by the UK and any new free trade agreements negotiated by the United Kingdom. Our means of delivery so far has been the work that I have already outlined, which is focused on engaging with UK politicians and officials to ensure these priorities are understood, ensuring that we have legislation developed to deal with the withdrawal and implementation, securing 230 the future of the Customs and Excise Agreement and the Common Travel Area, working with various UK government departments to ensure that these issues and numerous other day one readiness issues are addressed, and working with the Department for International Trade to ensure that we are ready and able to participate in future free trade agreements which are to be based on WTO rules and principles.

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235 Q3. The Chairman: If I could just go back to the issue though of the areas that best suit our interests, I think I am interested in understanding how the existing structures that have been put in place – the EU Advisory Group – how the process of engaging with different interested parties to understand those best interests, how that is working at the moment. So I wonder if you could provide a little more information on that, please. 240 The Chief Minister: At this moment in time, our officers regularly travel over – I think on a nearly weekly timescale to meet with their UK counterparts So DEFA are regularly away, as an example, meeting their counterparts. It is ensuring that (a) we build up a good working relationship, (b) that we know that when something is going to happen we are ready, prepared 245 and we then are able to get back and talk to those representatives at the coalface in the Isle of Man, to ensure that we can then work on a strategy. So regular … I am away probably every other week in London, either on Brexit or other issues, and we keep a very good working relationship with especially the UK government. Robin Walker regularly rings me up if the Prime Minister is going to make a statement to give me the latest 250 advice and explain some of the behind-the-scenes thought and processes of where that is going. So I suppose the key element is ensuring that our officers work closely with their officers. I don’t know if Mrs Fletcher, who is away probably more than me, would like to expand on that?

Mrs Fletcher: Yes, thank you, Chief Minister. 255 Yes, Chair, what we have established are a number of roundtables with the UK, as the Chief Minister referenced in the key areas, so to put some flesh on how that is working, each of those groups has senior representatives from the Department of Environment, Food and Agriculture, for example and then on the instruction of the Chief Secretary, the External Relations team which sits in Cabinet Office also supports that work. 260 So we are trying to build consistency and continuity by having the Cabinet Office as a central point of contact so we use the DEFA example as a good one, because we have a relationship under Protocol 3 in respect of agricultural goods. There are some of our businesses who export into the EU and who will be affected by the impact. There are a number of animal measures, plant measures, regulations, environmental standards. So in the very early stages, after the 265 European Union Advisory Group was set up, the Chief Secretary instructed that Chief Officers had to support, must make sure they were at the coalface on these issues in their key areas, so working with DEFRA and with DExEU, the groups have been set up. For the first 12 months there was a lot of active engagement about understanding our proposition and what would impact on us and what was of concern. What has happened in the last three to four months is that each of 270 these overarching strategic groups have broken down into technical groups, so we have a technical group on agriculture, we have one on fisheries, we are looking at environment and we have a similar one with the Home Office around the Common Travel Area, passports, immigration. We have one for financial services, which as yet has not broken down in that area into technical groups but in contrast the customs working group has broken down into technical 275 groups with Her Majesty’s Revenue and Customs and with HM Treasury. So in certain areas, we are really distilling down into detail and in others where perhaps there is less of an impact or perceived impact at this stage, because there is not that Protocol 3 relationship but there may be opportunities, that work is still very much at a strategic level.

280 The Chief Minister: If I can also say, there is an awful lot undecided yet. Financial services really has not started. I do not think that will be starting till after April so it is just being as aware … It is the good working relationships, being able to pick up the phone or get in to see key people – having those relationships will enable us going forward to get the very best possible deals we can, being well-informed. It will enable us to dodge ice-bergs, and if there are 285 opportunities out there seize them. But at this moment in time, I suppose you have got to say there is still an awful lot of fog about.

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But when the fog clears, we have the good working relationship, the understanding to position the Isle of Man as well as we can. Chief Secretary, do you want to … ? 290 Mr Greenhow: I was just going to say, Madam Chair, if you are talking about interested parties on Island, I think as the Chief Minister alluded to in his opening remarks, that rests with the Departments in the first instance. The respective sectors they are responsible for, they will be engaging with those sectors individually. 295 The Chairman: Oaky, thank you. Mr Robertshaw.

Q4. Mr Robertshaw: Thank you, Chair, and thank you, Chief Minister for those very fulsome opening remarks. 300 I very much appreciate that it is all about process at the moment, rather than specifics but just to try and de-clutter it a little in my own mind, in terms of what we are now calling the implementation period, rather than the transition period, are we clear yet whether Protocol 3 exists to the end of that period or ceases at the beginning of the implementation period? That would be my first question. 305 The Chief Minister: The end.

Q5. Mr Robertshaw: So we keep it for an additional perhaps two years or so?

310 The Chief Minister: Yes, and we were specifically mentioned in that EU draft statement – the Isle of Man was included in that so it will be to the end, which as I think I said in my opening speech, if we had not achieved that then for anything made on the Isle of Man, if you look at our manufacturing sector, it might have had a tariff imposed on it during that implementation period. So we worked hard to ensure that we were included during the implementation period, 315 because the Island and business could have suffered as a result of that.

Q6. Mr Robertshaw: Another area that would be good to get a better understanding of and that is effectively, in terms of potential transition to WTO rules, what actually is exposed here specifically as an Isle of Man export and what percentage of items, as it were, get merged into 320 the UK as a whole and therefore sit under the umbrella of those WTO rules? You mentioned that 80% or 90% is not affected, but it would be good now to start getting a deeper and clearer understanding of where the exposure actually might be, to what degree it exists and what our plans might be if in fact we cannot find a way through to have ourselves in a position other than sitting under WTO rules for that element. 325 The Chief Minister: Yes, I suppose the biggest affected area we can say would be DEFA. If you look at the fisheries side of things, 90% of all our king scallops, queen scallops are exported to France, Italy and Spain and therefore a tariff being imposed on that movement could mean that our products become uncompetitive. However, they are often exceedingly high quality and are 330 very popular in those regions so that is one area of concern. Obviously we have key aircraft manufacturing parts in our numerous companies on the Isle of Man which do, as you have rightly said, tend to go into the United Kingdom and then maybe go into Germany where some of the fuselage is made or France, and that is obviously something that we are paying particular attention to. 335 But an awful lot of our financial services are dealt with … we do very little with the European Union and it could be argued that any future deal that the UK agrees with the European Union, we will therefore have the full rights.

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So as I say, a very large amount of work is currently underway across Isle of Man Government to ensure that the Island will be compliant with the various WTO agreements and that is 340 something that some of my counterparts would give their eye teeth for, to have that WTO membership. I cannot take any credit as Chief Minister for getting that: we were already a member I think in 1994, off the top of my head. But it is something that we are working exceedingly hard to ensure that the Isle of Man is compliant with the various WTO agreements that the UK will be entering as an independent member, and that is being worked on at the 345 moment. That is a considerable amount of work and I have to thank the officers for ensuring that. That is an area of work that has been conducted by the Cabinet Office but cuts across all Departments and Statutory Boards. I have mentioned obviously the fisheries and the manufacturing side of things, but also we need to ensure that our Island’s regulation of trade in services complies with the General 350 Agreement on Trade in Services (GATS). This involves any area where the Isle of Man Government regulates the provisions of the service in any way and also includes horizontal restrictions, such as our work permit legislation. We are also considering whether the Island would wish for the WTO Government Procurement Agreement (GPA) to extend to the Island. This would permit Manx companies to 355 bid in tender processes in all other signatory countries on equal terms. However, it would in turn mean that our off-Island companies would be able to tender for Manx Government contracts. So there is an awful lot of work going on in this area.

Q7. Mr Robertshaw: Just a follow-up question on the matter of work permits: is that under 360 some degree of stress, then, in terms of WTO rules ? Have I misunderstood what you have just said?

The Chief Minister: Only if we chose … I think when we know where we are going, I think I said in my introductory speech, we will have to decide which elements we wish to take 365 advantage of and there may be areas where we do not want to be involved, because of following the ripples, as I am famous for saying – the consequences could be losing something.

Mr Robertshaw: So it is questionable then.

370 The Chief Minister: Well, it up to us to decide on that one, but I do not want to give any concerns that the current work permit structure would be under threat.

Mr Robertshaw: Thank you.

375 Q8. Mr Hooper: I would just like to pick up on something you talked about so far with the outcomes of all this – obviously it is all up in the air. You said, one of the key outcomes is to protect the relationship with the United Kingdom, (The Chief Minister: Yes.) to protect the Common Travel Area and to retain the option to participate in new UK-EU deals and the continued participation in any existing deals. What you did not talk about was post-transition – 380 so after the two-year period finishes. What is it that we are looking for, or rather what is it that you are looking for as the best-case scenario, when it comes to the current relationship of Protocol 3? What is the Isle of Man’s perfect solution, as it were? Obviously it may not be attainable, but what is it that you are going out there and selling? When you are going to the UK with all these roundtable meetings, what message are we putting across? What does the Isle of 385 Man want at the end of those two years, in relation to the relationship with the EU itself?

The Chief Minister: As close to what we already have – is a very simple answer, but effectively that is it.

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Obviously I want freedom of movement of people. We need to grow our skilled workforce on 390 the Isle of Man to sustain the policies that we want. Most of the developed world has an ageing population: we need to ensure that we can attract skilled workforce to the Isle of Man, and that is not just from the UK but from the European Union and greater afield. So that is a key area that we need to ensure; and if possible, tariff-free movement of our manufactured goods, our agricultural goods, etc. 395 So I suppose as much of the status quo as possible is what we are looking to maintain. That is my perfect world and then look for the benefits of any future UK-EU agreement going forward. At the moment, we were not able to have any input on the financial sector, so we just do not know what the UK will agree with the EU, but we want to be able to take advantage of anything that they do and then any greater connectivity with the rest of the world that the UK negotiates 400 through WTO, we want to be able to be involved with that too. So I suppose, as much of the status quo as possible would be a perfect outcome for the Isle of Man.

Q9. Mr Hooper: That approach, whilst it is quite admirable, there is something that I am 405 getting a feeling from some of the language you are using, that you are waiting to see what the UK develops and then we are going to say, ‘Right, of what the UK has negotiated, which bits might work for the Isle of Man and which bits might not?’ Surely now would be an opportune moment to be going to the UK and saying, ‘Whilst you’re developing these new agreement, how about including x, y, z – wouldn’t this be great for the Isle of Man?’ Has any work been done in 410 that space with the hypothetical, what could be good for us and then obviously how we are pushing the UK on? Maybe they want to think about including certain provisions or including the Isle of Man in certain areas in their deals. What work has been done in that space? Obviously, if you are saying we would just like to retain the status quo, that is quite a reactive position, whereas this is an opportunity for the Government to be very proactive. 415 The Chief Minister: Well, obviously, that is why working with our on-Island coalface, that is one of the reasons that we restructured DED to become DfE, that there will now be an element of strategy and planning. I am only as good as the information I can get from those at the coalface. As a politician I cannot be expected to be knowledgeable on every topic and that is 420 why good working relationships with the coalface representatives of the sectors on the Isle of Man to feed back to the Cabinet Office when we are away will be absolutely key. For example, we have joined the Commonwealth Enterprise Investment Council, which gives us access to 53 countries of the Commonwealth, about 2.4 billion people. In April we are taking away a team of representatives from industry to attend the Business Forum in London. Now that 425 is all designed to enable the business industry to meet to discuss and feed back to us in the Cabinet Office so that when we are formulating our policies we do so, not with a sort of ‘put your finger in the air and try and see which way the wind is blowing’, but based on the impact, the input from those businesses who are at the coalface who can give us the advice that we are looking for. 430 So it is about having good relationships and looking at options all the time, but obviously I cannot go into the greater detail of where I see potential areas where we can secure business, without showing my hand when I am negotiating and discussing with counterparts who would also like to take some of that advantage as well. So I am more than happy to discuss that offline.

435 Q10. Mr Hooper: Is it safe to say, then, that the Isle of Man Government does have policy in these areas where you think there is potential advantage and that policy is being developed, like you say, by working with industry through DfE, through the Cabinet Office? (The Chief Minister: Yes.) So it is safe to say that you do have policies in place already for some of these areas?

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440 The Chief Minister: Well, we are constantly looking at policies, but until we know clearly what the UK and the EU agree … Is it tariff-free? Are there going to be tariffs? Will we be included in financial services? We do very little with the European Union at the moment, because we were not included. We were included in the freedom of movement of people, freedom of movement of goods, but we were never included for financial services. So is that an 445 area? I think that is one I can discuss because it is pretty straightforward. So it is being ready. It is having that close working relationship with our coalface, with the UK representatives so that when we know what has happened, we can then sit down and clearly say, ‘Right, this is what we are going to do; this is what we can do.’ So we are already obviously discussing these issues, but it clearly is not black and white at the moment. There is so much fog 450 out there, until we know what the UK negotiates, then we cannot finalise anything other than following the ripples as much as possible on what could happen if we did x. But until we know what the final deal is, we cannot take advantage of those issues so it is just being prepared and having really good communications, and that is what we have been building up.

455 Q11. Mr Hooper: Again, bringing you back to comments earlier, are you not developing in communication with industry areas of where you would like the Isle of Man to be able to step into? So obviously nothing can be finalised yet, but as you are engaging with the UK, I would imagine at this point that you are able to have discussions saying, ‘Well, we would like to have access to some financial services and we would like to have x, y z.’ Are you at that stage in policy 460 development yet on the Island, or not?

The Chief Minister: Well, obviously we are discussing with the UK what we would like. We have got to see what … It is the most unusual position you will ever find yourself in – we are living in unprecedented times. We still do not know where this is going and we are doing as 465 much preparation work behind the scenes as possible, to try and cover every eventuality. Yes, we are looking at all of that, but I see there is a high percentage of work that the team do which will be, I am not saying totally wasted, but will never get utilised. But it is preparing yourselves, making yourself aware of that. Some elements that I think we can bank on are the freedom of movement in the Common Travel Area – that is something that everyone is signed up to, so we 470 can say, ‘Right, that’s a tick’; the fact that we want to remain in customs union with the UK, no matter what happens is an area where we would be confident that we can carry on going for. We have already been exploring all those options so there are a number of areas but I have to be very careful in saying too much on the areas that we think we have got a competitive edge, because obviously it will not be just local people who will be reading the Hansard on this; there 475 will be a number of countries too who will be taking part and having a good read to see what the Isle of Man’s view are.

Q12. Mr Hooper: Just one last question in this are, if I may. So you have just said that you are discussing what you as a Government, what we as an 480 Island would like out of these negotiations, even if it is, like you say, wasted effort because we do not get there in the end. Can you just describe the policy approval process by which you have determined that that is the message we want to be going over to the UK, and that is what we need to be telling them. Is that purely Department/Cabinet Office or has it gone through CoMin subcommittees? Has it been a CoMin approval process? Who is it really that has decided what 485 we would like, before you have gone out and then sold that to the UK?

The Chief Minister: Well, obviously all Departments are responsible for their own policy so DEFA will go away to their equivalent – DEFRA – in the United Kingdom and discuss their policies. So all Departments are responsible for coming up with their own policy, which they 490 then take to the Council of Ministers. The Council of Ministers will agree on that policy and then obviously the flow then goes to presentations to Tynwald Members for their input and we have

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already given four statements, policy documents to Tynwald Members and the wider world on how we see Brexit going. We are hoping to do a fifth one, but I think I mentioned until March is out of the way and we know where some of the areas are going, it is pointless giving you 495 another document until we know. And then the final solution is, obviously, Tynwald will be asked to vote through various legislation, when they will get to debate policy so at the moment, the Departments are responsible, is the answer to you, for individual policy.

500 Q13. The Chairman: Thank you. Just building on the policy formation, I think the other area if we could just explore for a minute, and it is the structure for co-ordinating the different aspects of policy. So you have talked about each Department is responsible for developing its policy and that at a CoMin level it is coming together, and I do not know whether there is an area where the EU Advisory Group 505 has something to play, but what is the structure for co-ordinating different Departments’ policy? And if you could also talk about it not only on Island, but how it then works when you go to the United Kingdom and engage there. How are we co-ordinated in policy formation and communication?

510 Mrs Fletcher: Okay, Chief Minister, if you are happy? (The Chief Minister: Yes.) Madam Chair, I think it is really important just to go back to where the Chief Minister came from, and to make it clear for the Committee: the policy is still very much in formulation stage. It is part of an ongoing dialogue and I would not wish – arising from Mr Hooper’s questions – to feel that there are a raft of policies now established. As the Chief Minister mentioned, it is really 515 important that we start from maintaining at least what we have got. That is the principal driver and the raft of work that surrounds that is enormous. But as we are looking at what we have got and how we can carry that forward, and working from that policy decision that that is what our key aim was, we are looking at different opportunities and whether there may be anything that will fall out of those different areas. 520 What the EUAG has been charged with doing by the Chief Secretary is that each of the Departments on that group in the Island has been asked to go away and look at the threats and the opportunities and to consider in their Departments different areas or different processes, legislation or policy ideas or how we can mitigate threats or how we can come forward with new opportunities. 525 It is fair to say, I think, that in the last 12 months our focus has been very heavily on maintaining the status quo, because that is the position that the UK is in at the moment of trying to establish its new relationship. There are a number of areas, as the Chief Minister said, that may never see the light of day but of course we are trying to look at what the relationship will be like going forward, what relationship the UK will have with the EU, and what our relationship 530 with the UK will be like going forward. So post-Brexit that is also a key aspect for us to focus on. Then we have, working with the United Kingdom, different roundtables which are actual officer groups, where we look in detail and legislation and international agreement so it is very much a drilling down and what we have been asked to provide is a raft of responses in respect of whether we comply with GATS, with the GPA, with TRIPS, with a range of areas, what our 535 Protocol 3 legislation is, what our international agreements are that we have signed up to, or the United Kingdom has signed up to on our behalf, how we have signed up to those, whether we have signed up in Isle of Man law, whether we are extended with the UK. So as we are starting to unpick all of this – and I would not want to underestimate the complexity of the volume of this piece of work – it is making us think much more fully about 540 opportunities that may come and we bring this back into the EUAG and have conversations around that we put it back through the Chief Secretary to the Departments to say, ‘Your Department needs to look at this area is an opportunity area – is there an opportunity there or is that going to be a threat?’ So whilst the Cabinet Office is focusing on the central work, we are, as

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the Chief Minister said, sending it out into the Departments which are really the masters of the 545 detail in their own sectors.

Q14. The Clerk: Sorry, I think the question was really about the structures within the officers. You have spoken about officer groups. Are they cross-departmental officer groups?

550 The Chief Minister and Mrs Fletcher: Yes.

Q15. The Clerk: So at all levels, people within different Departments are talking to each other – it is not just CoMin, but actually it is across all levels of Departments where there is an area of common interest. So immigration and its impact on agriculture or the hotel trade or 555 whatever is being sorted out by the relevant officials irrespective of which Department they are in?

Mr Greenhow: And that is the purpose of EUAG, that we bring all the senior officers together. I get a briefing when we meet from all the officers and that is the discussion that takes 560 place round that table. We want to be clear that there is clear governance around any decision- making process and that we have got a clear record of how we got to policy decisions and how they were taken forward and ultimately those decisions are taken either through the national strategy group from the Departments or through CoMin as well.

565 Q16. The Clerk: Is there feedback from all the negotiators into the EUAG so that they are aware of the admittedly very private conversations that are being had, that they are aware of the process of what is going on?

Mr Greenhow: The purpose of EUAG is to join up Government Departments so they are not 570 working in isolation; that they are working across the piece for Isle of Man Government.

Q17. Mr Robertshaw: Thank you. One or two questions surrounding the issue of us thinking beyond hanging onto the status quo – I think that is probably where I would like to go if I may, Chair. 575 I think it is fair to say – perhaps I am not using quite the right terminology – but the Isle of Man relationship with the UK in terms of immigration policy is an absolute synergy. What area of – and I think perhaps this is addressed to Della more than anybody – what degree of flexibility and movement have we got if we for example, the Isle of Man, after the dust has settled decide that we want a slightly different immigration policy to the United Kingdom? For example, if we 580 wanted to continue to have maybe more European workers come to the Isle of Man compared to that which the UK deemed it wanted to agree quotas on – do we have any flexibility there?

Mrs Fletcher: Yes, we do, Mr Robertshaw. We have that flexibility of course now, with the arrangements, because of course EU workers come and go under our work permit system. That 585 is an interesting question, because that is one of the post-Brexit questions that applies in respect of our relationship with the UK going forward. The work strand that we have running on immigration, citizens’ rights, Common Travel Area, is a very effective one. The relationship with the Home Office and with Irish officials and our counterparts has actually been very helpful in us thinking around this. It is one of the key points 590 we have made that whatever the UK immigration policy may be going forward and they may need a raft of doctors and the Isle of Man needs a raft of IT workers, we would like a policy that allows us to have some flexibility around that, without allowing us to cause the immigration border to be made vulnerable by whatever we brought in. So we have made it very clear in a number of political meetings and officer meetings that our 595 economy is growing, that we have a shortage of workers and that we would want the final

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arrangement to allow us that flexibility. Now, we have agreed with the UK that we will bring in the EU Citizens’ Settlement Scheme and we will replicate the provisions of that, but what we are working on is the detail, with an eye to bringing that arrangement in. Now, we can do that already under immigration for foreign nationals, and of course, it depends on what the final 600 outcome will be if the EU nationals become foreign nationals; but you can have under immigration, as I think you probably know, a shortage occupation list and you can define under that workers that are important to your economy and you can have different aspirations for those individuals. So the UK is very clear about our need to grow our economy and that we would like 605 individuals who have time spent in the UK or time spent in the Isle of Man or other Crown Dependencies to count, because for the workers that are coming this is important to them.

The Chief Minister: I just want to clarify the point: we will have to ensure that we do not abuse that relationship. It is a good relationship and a good position to have, but if we abused it 610 and opened for far more than we needed, and they were then going into the UK, then that would be revisited. So it is keeping it on a fair evidence-based position.

Q18. Mr Robertshaw: One now, I think to the Chief Secretary: some years ago the Isle of Man moved much more towards engagement on matters of entrustment, and I wonder whether that 615 has developed much in recent years. Is the Isle of Man exercising itself in trying to open new areas where we can operate independently under letters of entrustment with other jurisdictions?

Mr Greenhow: Della can answer further on that as well, Mr Robertshaw. We use them, but 620 we use them in limited form so again, we do not want to overly abuse that system, but it is an option that is there for us to utilise. Della, do you want to add anything to that?

Mrs Fletcher: Yes, thank you, Will. 625 I think it is important to understand that when we are entrusted under a letter of entrustment, it is where the UK passes its responsibility to us for our international responsibilities. We will always be keen to do that. We still look at certain agreements and arrangements in respect of entrustment, but after the flurry of entrustment letters that went on around tax information exchange and those sorts of things – asset recovery – that has fallen 630 away a little bit, but that obligation still stands. I am not sure if you are thinking about entrustment that may fall out of the Brexit situation? (Mr Robertshaw: Yes.) Yes, that is slightly more peculiar because as a British Crown Dependency our sovereign state will remain the UK, and for the UK to entrust us it is usually to entrust us to do something that they would normally do in our stead. 635 So we have thought about this, we have had some quite interesting discussions, Will and I, about how we could be entrusted, and we cannot see that being an option in respect of Brexit at this time while we are a British Crown Dependency. That does not mean, Mr Robertshaw, that something may not come to light as we think around it, but in principle we have looked at it from the point of view about trading relationships, for example. But entrustment is very, very 640 limited and we cannot see that it would be appropriate for us to have any sort of entrustment or significant agreement with the EU or any other international body arising from Brexit through letters of entrustment.

The Chief Minister: If I can just come in and add a little bit more clarification on that, Madam 645 Chairman, in practical terms it is hard to envisage a scenario where the EU would find it beneficial to enter into separate negotiations with the Isle of Man in parallel with the ongoing negotiations with the UK. So additionally, if the Isle of Man was to negotiate a trading

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relationship with the EU or with any other country or body that was in any way different from the UK’s own trading relationship, checks and potentially tariffs could then be required on goods 650 and trade between the Island and the UK. As we have said, our trading relationship with the UK is more important to us than our trading relationship with the EU, so this would not be a beneficial approach to take. But obviously it is something … You have got to explore all avenues and I am not ruling it out but for the reasons I have just given, I think at this moment in time, we cannot see any benefit; 655 but again, we do not know how the end story is going to be. I have said that, but there may be an avenue where as a result of what is negotiated, if we see an opportunity, of course we will take it.

Q19. Mr Robertshaw: We have touched en passant on the Common Travel Area and you 660 quite rightly stated, this is a red line really for the UK as a whole – and thank goodness! But nonetheless most of us are very much aware of the tensions that exist in relation to finally establishing how the Southern Irish and Northern Irish border are going to work on and therefore the implications for us. In all of the presentations that have been made so far about the work which Government is doing, it has clearly and rightly been a matter of engagement 665 with Westminster, but to what extent are we exploring our relationship with the Republic of Ireland directly, in the sense that they have a very peculiar position? I think their export rate to the UK is enormous, it is 80% or 90%. But is the Irish government aware of our interests and position and are we engaged in any way with them? 670 The Chief Minister: I am happy to answer that, through you, Madam Chair. Obviously, we value our positive relations with Ireland and have always sought to engage with them on our varied matters of interest. Through the British-Irish Council I have met the Taoiseach, Leo Varadkar last year in Jersey. The BIC is always an opportunity for constructive and 675 mutually beneficial engagement with our neighbouring jurisdictions. In Brussels last October, I had positive meetings with Brian Hayes, MEP for Dublin and also Émer Deane, the Counsellor on Brexit at the Irish Permanent Representation to the European Union. All members of the Common Travel Area are working together and participating in joint discussions and all member jurisdictions of the Common Travel Area (CTA), including the UK and Ireland, have committed to 680 retaining the area in its current form. In the coming year I hope to have at least two face-to-face meetings with the Taoiseach.

Q20. Mr Robertshaw: Thank you. This is a bit more specific and relates to some degree to the customs union which we obviously wish to retain with the UK. This is a fairly specific question 685 and one I think that you will very quickly recognise where it is coming from but I recall many years ago being engaged in a determination of part of the Isle of Man with the then Treasury Minister to make sure that the Isle of Man tourist industry accommodation sector had 5% VAT. There was a certain amount of resistance at the time from Westminster, but because the Isle of Man went direct to Brussels it ultimately managed to achieve that 5% figure. 690 Once that EU element is removed and there is recognition on their part that it was acceptable, do you have any fears at all that because the UK as a whole has a much higher rate, they will not then feel that uncomfortable just to make an exception of the Isle of Man, and is it important for us to keep our representation levels up in that regard?

695 The Chief Minister: Well, once Brexit is over, we are not going to stop! We will carry on with the unprecedented level of … This is going to go on for years. I expect the next administration will be still discussing the minutiae of the end of Brexit, but we do have very good working relationship with HMRC and HMT and I would expect that having already negotiated the 5%, I would be very disappointed if that was to change. I cannot say never, but we do have the good

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700 working relationship and I cannot see … It is not in their interests to change that. The precedent is already there. It is not something new. It is already in existence, but we will have to cross that bridge if we ever get to it.

Mr Robertshaw: Thank you. 705 Q21. The Chairman: Can I ask, you touched on the Withdrawal Bill to the Isle of Man, which you said you hoped would be ready very soon. It is a question partly in connection with that but partly in connection with a lot of what we have heard about the great deal of work that is going on, some of which may never see the light of day. But I wondered if you could make a comment 710 on how the resourcing for our work is going and what thoughts you have on our likely future need to make sure that we are fully prepared and able to continue to engage to safeguard the Island’s interests?

The Chief Minister: Yes, okay. Obviously Brexit does occupy a significant amount of my time 715 as Chief Minister. That does not mean to say I hope you do not think I am abandoning other areas of day-to-day running of the Government. It just means I have got to run faster, I suppose. It is one of the key issues for both the Chief Secretary and the Executive Director of External Relationships. Additionally our head in the Brussels Office now dedicates a significant amount of time to Brexit. 720 The Cabinet Office has now allocated resources exclusively to Brexit. This includes two policy officers – an EO and an HEO – and one legal officer. The cost of these staff members is being met partially from existing budgets and partially from funding provided by the Treasury’s Brexit Fund. I am also aware that other Departments including DEFA have made arrangements for providing additional resource dedicated to Brexit, because I think from a work point of view, if you park 725 the Cabinet Office, DEFA has the most work to do with agriculture … there is a raft of measures that they have got to work on so I know that they are already putting in place additional staff to cover that area.

The Chairman: Thank you. Yes. 730 Mr Greenhow: If I can just come in, Madam Chair, I meet individually with all the policy leads as well and this is one of the topics that we discussed, about resourcing. DfE are also putting a bid forward for more resource. The AG’s Chambers have legal advice from the UK. They have that on a retainer. So we are building the team and the resource and the knowledge-base up 735 now. I got asked this very question, I think at the start of this House, about the resourcing for Brexit and I was very clear then, that until we know and we have a clearer view on what the requirements are for the teams and the knowledge within the Isle of Man, I was reluctant to actually start resourcing up. Now we are getting that clarity and hence why we are bringing 740 people in, building up the knowledge and hopefully having that there for the future for the next two, three, four years and beyond.

The Chairman: Thank you.

745 Q22. Mr Hooper: Just picking up on your comments there, you say that you are resourcing Brexit in these Departments. Does that mean that you are talking about resourcing operational matters? Is it technical resource, operational resource, is it legislative resource? Is the focus surrounding that sort of angle or is the focus more on policy development?

750 Mr Greenhow: It is policy development under the legislation. There is a raft of legislation that is going to impact right across Government. It is for the individual Departments to understand

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how operationally they are going to deal with some of these issues and come forward with any business cases or any requests for additional resource or additional knowledge and input to some of that decision-making. 755 So as I say, until we have got greater clarity on the impact that this could have on us, it is difficult to identify who we need and what skills we need, but that is where we are starting from, looking at how we engage, as Della has outlined, the engagement with the UK and the teams that we need to have this end, because the UK of course asking us for information to feed into the decision-making process which goes back to your earlier point about the engagement with 760 the interested parties and the relevant stakeholders. We need to be in a position where we can react quickly to some of those requirements and some of those demands and those are the resources that we are putting in place now.

Q23. Mr Hooper: I am just trying to get an understanding of this resourcing that is going in, 765 that has been put in place. Is that trying to address the governmental issues arising out of Brexit – things like the legislation and the regulation, and how we deal with the UK on a day-to- day basis – or is that resource being focused on the more blue-sky thinking, the ‘Where do we want to be? Where do we see ourselves in a few years?’ and actually starting to resource up for dealing with where we will be post-Brexit and the world we are going to be in? 770 Obviously I see those as two separate but related issues and I am trying to understand where the resource focus is right now.

Mr Greenhow: The resource focus right now is on the here and now. The Departments, as the Chief Minister has outlined, have been tasked with looking at opportunities for the future 775 and what our models look like going forward, and that is why we are engaging with the private sector, to engage with the relevant sectors and see where they think the opportunities lie. Those are the questions that I will be asking the Chamber this afternoon, when they are coming in to meet with the advisory group. So it is then being able to react to that. But at the moment, it is the here and now, and the pressures that we are under now to make 780 sure the Island is positioned correctly.

Q24. Mr Hooper: Do you see a risk then that we could be getting quite far into the transition or the implementation process and we are still not thinking about where we need to be the end of the process? So while the resource is focused on dealing with ‘Let’s fix the issues that are in 785 front of us today’, we could actually find ourselves quite far down that process, waiting to react to what the UK is doing, and then we do not leave ourselves enough time to adequately prepare and adequately put the groundwork in place?

Mr Greenhow: No, I am sorry, maybe I was not clear – from day one, the EUAG has been 790 tasked with looking at as well as the risks and challenges and the opportunities that the Island has and that is part of the role of the Departments and taking that back to their sectors to get feedback from the private sector and what opportunities they see us having. We have been building that knowledge base up for the last 12 months or so, and it is now coming to the point of, well, how much of it is realistic? You will know yourself, from working in DfE, Mr Hooper, that 795 some of these initiatives you would find difficult to follow through so it is a case of assessing some of those options and seeing what are realistic for us to move forward with.

The Chief Minister: If I could just come in there. I also wanted to point out that we have got agreement from the UK industry that our experts at the coalface will be able to meet with the 800 UK negotiators. When they are doing whether it be WTO negotiations or opportunities within the EU, our experts will be able to meet with their experts. So whilst we will not be able to sit round the table – but that is not just the Isle of Man; that is also Scotland, Northern Ireland and

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Wales – we will have direct input in to the negotiators who will be aware of where the Isle of Man sees the opportunities. 805 But it is hard to identify concrete opportunities at this stage, so much remains to be finalised. Nonetheless there are some potential upsides that we have already seen. Brexit has resulted in our level engagement with the UK government increasing significantly, and across the board the UK government now has a better understanding of the relationship between the UK and the Isle of Man, and hopefully these new points of contact will be of benefit to us in the years to come. 810 It is also possible that our inclusion within the agreements on the future economic partnership may enable us to access the opportunities that we have not previously had, but it remains too early to offer any specific examples, really.

Q25. Mr Hooper: Is there any work being done then – you mentioned before that this needs 815 to be an evidence-based process – for example, within Cabinet Office, within Economic Affairs, to help some of this forecasting that is going on, trying to say how might these decisions impact on us and then how is that evidence then informing your negotiating approach and strategy on that?

820 The Chief Minister: Well, I think I mentioned in my opening speech that our officers, the team organising Brexit and taking it forward, are meeting with the Chamber this afternoon to get the feedback, but as I mentioned earlier – and you are a member of the Department – the Department for Enterprise having a proper planning and strategy sector which has not been there before. That is where I see those different work forms coming back to advise the Cabinet 825 Office and the rest of the Chief Secretary’s team when looking for the opportunities. It is something that maybe historically as Chief Minister, you did not get that sort of direct line of thinking and I am looking forward to having good communications from the Department for Enterprise going forward.

830 Q26. Mr Hooper: So when it comes to assessing the viability of some of the things that are coming forward and some of the suggestions and some of the conversations that you are having round the table, you are relying on the Department for Enterprise to provide that, rather than relying on your statistical analysis and your evidence-base that could be coming from more of the centre? 835 The Chief Minister: It will be a number of areas. It is not just one area. We will be taking advice and information from all sectors, not just DfE. All Departments are involved and the Chief Secretary chairs the Committee that brings all that information together and prepares policy to advise myself, the Council of Ministers and obviously Tynwald Members. 840 Q27. Mr Hooper: Moving slightly on from there, that senate is quite important really to advise the Council of Ministers and Tynwald Members. So far Tynwald has not been overly involved in anything that would be Brexit-related. All the policy is being worked and developed by Government maybe that is because that is where we are in the process. Can you perhaps 845 outline how you intend to involve Tynwald and Tynwald Members in the process going forwards?

The Chief Minister: Absolutely. Obviously, first and foremost, we have got the Departments working themselves with the policy. Once papers are prepared, it comes to the Council of 850 Ministers and then the Council of Ministers will either support or go against that policy. Once it has an agreed position then there will be briefings to Tynwald Members on what Government propose to do and then obviously there will be legislation changes that we will have to do, and that will be fully debated and voted on in Tynwald.

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855 Q28. Mr Hooper: Can I just pick up on one thing you said there: you said the Council of Ministers will agree the policy, but then the legislative changes will be voted on by Tynwald. What about the policy itself? Is it the intention that after Council of Ministers has agreed a particular direction, a particular approach, that that policy will then be brought before Tynwald or is the intention at the moment to keep everything really within the Council of Ministers? 860 The Chief Minister: I do not think we will suddenly wake up and find everything comes together at once. There is going to be piecemeal, bits at a time signed off and those relevant bits will be taken. Because there will be legislative changes needed, that will then be taken to Tynwald so the debate will be there, but obviously everything that we know will be presented. 865 We have already done four papers and I have given the talks to Tynwald Members. I expect to do one in the very near future. The only reason I have not done one this year to date is because not enough has happened in the events going forward. It is pointless me giving you a briefing when I have not really got anything concrete to tell you. So it is a case of Tynwald Members will get regular briefings on what is happening. They will 870 be able to ask their questions, etc. and any legislative changes will be put to Tynwald. But I do not see it just being in one session. It will be done over 12 months to two years, really. I don’t know if you want to add anything to that, Chief Secretary?

Mr Greenhow: No, I think the question you are asking, Mr Hooper, is what is going to be 875 taken back to Tynwald at what stage, and that is very much up to the Chief Minister and the Council of Ministers to determine, and the level of engagement. As the Chief has said, the four reports that we have done to date have been updates to Tynwald Members, but to engage with Tynwald Members, just to get feedback on where Tynwald thinks we are going as a Government or where the Council of Ministers is going, and 880 the Chief Minister has been very clear in his level of communication with Tynwald Members, and wants to listen to views of all Tynwald Members. So that is going to be important going forward. And as we start to get the clarity, I think that will be important then for the Chief and for Council to decide how much they actually do engage. As the Chief has said, a lot of the policy decision-making is going to rest within the 885 Departments anyway, where political Members do have a role to play in that, and do have a voice within your own Departments. So I think there is still some way to go on how we evolve with some of this discussion going forward.

The Chief Minister: But if I can just clarify, I suppose it is important to remember that so far 890 we have attempted to preserve what we have. When you asked what are my key areas and to seek to undergo an orderly and structured Brexit where we may have need to take more difficult and important decisions on our future relationship with the EU, we will seek to engage with Members of Tynwald to understand their views and of course any implementing legislation which may be required to honour any international commitment we make will require approval 895 in Tynwald or in the branches. So I just wanted to put that on Hansard so it is there to reassure you on that one.

The Chairman: Okay, Mr Robertshaw.

900 Q29. Mr Robertshaw: We had indicated, Chief Minister, that we were interested – perhaps just in passing at this stage – in examining the issues about the benefits system and how it might change as things progress. Is it just going to be a question of legacy commitments on things like child benefit or are there other issues that we need to concern ourselves with?

905 The Chief Minister: We are not expecting Brexit to result in any change to our benefits system. This is not an area policy which is covered by our Protocol 3 relationship. Protocol 3

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requires us to ensure equal treatment is afforded to all EU nationals, which means that any rights applied to British nationals must also apply to all EU nationals. However, new residents who move to the Isle of Man do not qualify for benefits, including social housing and social care 910 provision. You must be either born in the Isle of Man or have been ordinarily resident here for at least five years in order to qualify. So as I say, we are not expecting Brexit to result in any changes to our benefits system.

Q30. Mr Robertshaw: So if you have an EU worker over here who has been resident for five 915 years, whose family is living, shall we say, in Poland, that family would continue to be entitled to Child Benefit after Brexit and after the implementation period. Is that right?

The Chief Minister: At this moment in time that is correct, but obviously that is an area that can be looked at when we know just what the deal is on the table. 920 Q31. Mr Robertshaw: You have quite repeatedly and quite rightly said that we want to try and keep a steady ship as we transit through this whole period. Let’s look at the downside, worst-case scenario. Let’s sit in the world of Yanis Varoufakis’s school of politics for a second and we don’t end up where we want to be and it is a difficult scenario. Do you have contingency 925 plans in place to defend and protect those very specific elements of the economy which would almost immediately perhaps suffer quite dramatic impact?

The Chief Minister: We have obviously looked at the best- and worst-case scenarios, fall-back options, should there be what is known as a hard Brexit – though ‘hard Brexit’ – 930 Mr Robertshaw: Well, a very hard one, I am talking about.

The Chief Minister: – at the initial stage was the fact that we would just be just leaving the customs union and the single market at the time was compared to ‘hard Brexit’ and in that 935 respect we are most certainly heading for a hard Brexit, if you take that as your definition. If there is no deal between the UK and the EU, then goods and trade between the Island and the EU will be subject to the EU’s common external tariff. This may mean that the agricultural produce, as I mentioned earlier, and fish, as well as components that we export, could be more costly for European customers and potentially UK and Manx businesses become less 940 competitive. The best case is that within the parameters of what the UK is seeking, we will see tariff-free trade and measures undertaken to reduce friction at the border, so that although not in the customs union or single market, goods can travel across the border with relative ease. However, we have to be realistic. Our membership of the EU customs union and the single market allows 945 for so-called frictionless trade and that will not be replicated. There are other areas where the UK hopes to negotiate market access for services and for mutual co-operation and it remains to be seen how this might be achieved. However, there is an interesting area for the Isle of Man – well, this is an interesting area – because if even very limited access is available to us, then this could be an improvement on our current position. You 950 all know where we stand currently with Protocol 3. I mentioned this earlier: we do have zero financial rights, financial movements of our services so something … That is an interesting area. But in either a deal or a no deal scenario, the UK intends to roll forward the existing EU free trade agreements with third countries into bilateral agreements, which I mentioned earlier in my speech, which the Isle of Man should be party to. This will allow us to continue the same 955 trading relationship we currently have with these countries and irrespective of its success with the EU, the UK will be able to negotiate its own FTAs in due course, which may also benefit the Island in the longer term.

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Q32. Mr Robertshaw: Thank you. 960 This question relates, to a degree, to the co-operation with the other CDs, insofar as one respects the fact that financial services never, ever really became a single market throughout the EU, and remains a really big area of very significant tension for particularly the City. Bearing in mind that Brussels is, shall we say, competent when it comes to dealing with minutiae in regulations, are we as a group of CDs actually confident that in that process of the UK, the City of 965 London, trying to find its relationship with the EU or Brussels, there isn’t a mechanism that comes into play that would allow Brussels to diminish or damage the CDs and their determination to remain tax competitive jurisdictions?

The Chief Minister: I think first and foremost, the UK has an obligation under law to look after 970 the interests of the Crown Dependencies. We are engaging very closely with Jersey and Guernsey as we always do, and that is helping us build up shared understandings of where we want to go but obviously once the UK comes out of the European Union, we will not have anyone there fighting our corner. But the UK is obliged and does, to its credit, look after the interests of the Isle of Man and obviously any attempt to damage the Crown Dependencies 975 would be damage to the UK economy, so I would hope and expect to receive as much support as possible.

Q33. The Chairman: Two questions coming out of that. One, I suppose goes back to the issues of letters of entrustment before, which you have said are perhaps not a mechanism that 980 the Isle of Man could make use of particularly in relation to the European Union. But the question is, really, as the UK loses its seat at the EU table, what work has been done around the Isle of Man’s ability to advance its position where it needs to, in order to try and gain some degree of influence? And the second question is: although as you have said, Chief Minister, that the UK may be in 985 a position of trying to protect and advance the Crown Dependencies’ interests, what is the situation or what work has been done around where those interests diverge? So where we have a situation where the UK’s interest is not on all fours with perhaps the Isle of Man’s and the other Crown Dependencies’, what work has been done to think about how that will be resolved?

990 The Chief Minister: Well, first and foremost, to the first part if I remember correctly, our relationship with the Department of Industry – that is where we have been promised that any concerns we have or any opportunities that we see our experts – again I am not an expert at any of the individual sectors – we have set up a system where our coalface experts are able to meet with the UK’s negotiators to ensure that when they are negotiating something, they do not 995 negotiate away a benefit for the Isle of Man that might just affect us or be our only angle, and equally any opportunities that we see out there when they are negotiating on our behalf, they will be obviously exploring ways of ensuring that we can take advantage of that. At the end of the day we are a Crown Dependency. We cannot go and negotiate our own terms and conditions outside of the UK. We are reliant on the UK negotiating as good a deal as 1000 possible for us, and then we can seize those opportunities that are available. So therefore having a good working relationship with the Government Departments and getting that sort of relationship where I can bring people from the Isle of Man who are experts in their own field to meet with the UK negotiators – that is the way forward to ensure that we are not disadvantaged in negotiations going forward and are able to seize the opportunities. I believe I have that in 1005 writing, that that process will be there to support the Isle of Man.

Q34. The Chairman: Can you envisage such a significant opportunity for the Isle of Man that potentially would not be or may even conflict with an interest of the UK and if you can, what would the Isle of Man try and do? Or when you talk about thinking about the threats and 1010 opportunities that this whole process represents, has the Island, has the Government and the

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officers, have you thought about how the Isle of Man can best position itself, should there be such a conflict with the United Kingdom?

The Chief Minister: Well, I suppose this is work in process at this moment in time. In my 1015 opening speech, I stated clearly, it is in the Isle of Man’s best interests to remain in customs union with the United Kingdom and therefore that really from a custom point of view, it precludes any specialist deal. We cannot go off and negotiate a special deal with the rest of the world on our own. It has got to be through the UK. So there will be variants where we might be able to look for opportunities but if there was a one-off high significant value event that you are 1020 putting forward, we would really have to look at that scenario and decide our future, because at this moment in time, we would not be able to separately negotiate with other countries. It must be through the United Kingdom and therefore having an exceedingly good working relationship, understanding who the key people are that make the decisions and having influence with them is the best way forward. 1025 I don’t know if any of the officers want to add anything to that?

Mrs Fletcher: If I may, Chief Minister, Madam Chair. Just in support of that, both questions you outlined actually are not new. You have actually set out there quite nicely some of the issues that we deal with on a regular basis with the UK, 1030 where we do have a different position to the UK, and the UK as the sovereign state is supposed to represent our interests. So we are we are quite practised in actually finding ways for this. One of the reasons in 2008 we drew up an international framework agreement with the UK which sets out that the UK is responsible for our international interest, but where our interests diverge, the UK still had a responsibility. So I can see that we will be reverting to that quite 1035 quickly if there was such a scenario where we were at differences. One of the benefits, as the Chief Minister mentioned in his remarks of the continual and intense engagement that we have had over the last 18 months, is that the UK is now much more than ever before aware of the constitutions of the Crown Dependencies and of the Island’s position and what is important to our economy and where there may be some sort of rubbing 1040 along of differences. We have not yet particularly identified anything that could cause us that problem but obviously the question that is always in our mind is about financial services going forward. We have always had a different offering in respect of the UK and the EU. The UK has always held the line with the EU about harmonisation of, for example, of taxation and as Crown 1045 Dependencies, we have always taken our own path. That has not made us very popular within the EU institutions and it has made it very difficult for the UK, which then has on many occasions had to go along and represent our interests, even though as a member of the EU it does not sit. We had similar issues around meat and milk derogations over the years, where the UK as a member state did not support derogations, but as a small island we went on several occasions 1050 with the UK departments to argue that point. So I think what I am saying in a slightly convoluted way is that we do envisage these situations that you have asked us about arising, but we do not feel that we are not practised or able to respond to them. That does not mean that they will be easy or that we will always get what we want, but we certainly are aware of that. 1055 And just following on from the aspect of financial services, it is one of the reasons that DfE has been asked to look at the future of financial services, what the UK proposition may be for financial services and how that may deviate from EU policy or whether they will stay in alignment in which case, how does that impact on us and the Crown Dependencies? So it is quite hard to separate out all the issues because they all have an interplay in different 1060 forms, but I hope that has given you some answer to the question.

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Q35. The Chairman: You are confident that the mechanisms we have are sufficient to help resolve or manage potential issues, where there is potential for conflict.

1065 Mrs Fletcher: The key leverage that we have is relationship building – targeted relationships with people who understand who we are and what we are and what we are trying to achieve. I think it is fair to say that the issues where we have had difficulties, sitting down and explaining it clearly and professionally and trying to find a way through it: that is something that we have had to do a number of years because the soft power option is one that has served us well. It does 1070 not mean that we still will not be looking for other options and trying to find them, but we are very clear about what we are entitled to and what we expect from the United Kingdom.

The Chief Minister: I suppose to put it as a very short phrase: there is a history already of policies where the Isle of Man has had a separate position from the UK, and the UK whilst 1075 opposing that view, have represented us in the past and that will continue going forward, in a nutshell, but targeted …. I am currently working on an area now on behalf of the Department for Enterprise, for example, which I cannot mention, but I have numerous meetings when I feel the Isle of Man has been disadvantaged and I am working behind the scenes to ensure that the UK government look 1080 after the interests of the Isle of Man. It is targeted … We see a number of MPs, Lords, Baronesses in the UK, in Westminster and it is that good working relationship, clear explanation of what the Isle of Man is about. Building up those good relationships is key for the success of the Island going forward.

1085 The Chairman: Thank you.

Q36. Mr Robertshaw: I think this question comes under our Justice umbrella element of our work and that is a question relating to the European Arrest Warrant and extradition processes. Do you envisage that as a result of all that we are going through at the moment this this will 1090 have to be reviewed or will change or will continue as it is now?

The Chief Minister: Well, obviously, I think we would all prefer to see that continue but I do not know just what going to happen going forward, so it is a case of we will visit that if there are any proposed changes, we will just have to decide. But the opportunity to pull people back to 1095 the Isle of Man who have committed the crime and vice versa, I personally would see as a good thing to maintain but –

Q37. Mr Robertshaw: Even if we were no longer complying with the European Court of Justice rulings? 1100 The Chief Minister: Well, it is back to this, it is too early yet to decide where this is going. If there are clear benefits, I think I said in my opening speech, where there are benefits for the Isle of Man, we will be adopting some, keeping EU policies or looking at what the UK and the EU agree and then we will decide as the Isle of Man what we think is beneficial to ourselves. I 1105 suppose it is a case of when we get to that area, we cannot hypothetically talk about something that hasn’t happened yet. We just have an open mind and whatever is in the best interests of the Isle of Man, obviously I am going to be looking to achieve.

The Chairman: Mr Hooper. 1110 Q38. Mr Hooper: Just picking up on your last comment, you said there has been a lot of engagement with Westminster in respect of Brexit. What engagement has there been with the

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devolved administrations of Scotland and Wales? Do you think you could just maybe talk about that briefly? That would be quite helpful. 1115 The Chief Minister: Well, obviously through the British-Irish Council, I personally twice a year get to see the devolved administrations. I saw the Northern Irish representatives, I just happened to bump into them, when I was in Westminster last week. We saw the various leaders. I am on the phone: obviously with the ghost fishing in Scotland, I was on the phone to 1120 the Scottish First Minister behind the scenes. We had a number of conversations on how to move forward on this. I have not spoken to Carwyn Jones as much recently as I would like to. I think I mentioned that at the BIC I had spoken to the Taoiseach. I know I have got two meetings at least this year with them. So behind the scenes we regularly – and obviously with Jersey and Guernsey, our 1125 Crown Dependency colleagues we are regularly … Again I met them last week, the Chief Ministers, Ian Gorst and Gavin St Pier. So we have numerous meetings and a good close working relationship. I think that is the importance of the British-Irish Council. It gives us that ability to have a much closer relationship with key devolved politician representatives than if we were not a member; we just would not have that sort of access that we currently have. So that is 1130 something we must maintain.

Q39. Mr Hooper: So there is no engagement with them over Brexit outside of the BIC?

The Chief Minister: Well, the officers … I do not have regular meetings with the leaders, but 1135 the officers have regular meetings with all of them.

Mrs Fletcher: We do, Chief Minister, Madam Chair. We do and it is worth just referencing the BIC, because Brexit is obviously a key item there and you have all the key players around the table so Brexit is always discussed. 1140 But it is also important to look at it more broadly because the role of the devolved administrations in Brexit is different to the role of the Crown Dependencies, so whilst the dialogue is really useful and to hear how things are going on from their perspective, they are not coming at it from the same place as we are coming at it. They have their own way, through a joint ministerial council, of working with the UK and we have our own input through our 1145 quarterly meetings. So whilst it is helpful, there are a lot of conversations with officers and twice a year it is a very important agenda item, and we do get feedback from the political quarterly meetings as to how that is going but there is a huge amount of noise reported in the media around what Scotland wants and what Northern Ireland does not want and that is all very interesting for us. For us, we 1150 have to keep our focus on what our Protocol 3 relationship is going to look like, how it is going to be impacted whereas because the devolved administrations are part of the UK and already part of the EU. Similarly for the role of Gibraltar, we have engagement with them, but they come at it from a different angle as well, so the information-sharing is very helpful, but we have to factor that in 1155 as part of the package of considerations.

The Chief Minister: Which is why we work closely with Jersey and Guernsey because they are in exactly the same position as ourselves. (Mrs Fletcher: Yes.) That is more of a regular meeting that we have with them. Before we go into meetings with the UK government, we have pre- 1160 meetings with them to discuss policy and areas of concern and areas where we share common concern or where we are pushing for. But I think Della has explained, we are looking at it differently. I was in the Scottish Office in Brussels last year having a chat with their senior officials, so we do have chats, but I am there to look after the Isle of Man and get the best for the Isle of Man, and as Della said, the different

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1165 relationship that we have with the United Kingdom means that really the other Crown Dependencies are the key element on shared concerns.

The Chairman: Okay. Mr Robertshaw? (Mr Robertshaw: No.) Okay? Well, can I thank the Chief Minister, Mrs Fletcher and Mr Greenhow for your time and 1170 information today. Thank you very much.

The Chief Minister: Thank you very much for taking the time.

Mrs Fletcher and Mr Greenhow: Thank you. 1175 The Chief Minister: And if you have any further questions that you think, ‘Damn, I should have asked them that!’, please feel free to drop us a line and we will give you an answer as soon as possible.

1180 The Chairman: Thank you.

The Committee adjourned at 12.38 p.m.

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14th May 2018: Evidence of Mr C Coué, Collector of Customs and Excise, and Ms L Kennedy, Team Leader, Legal and Policy, Customs and Excise Division; Hon G Boot MHK, Minister, Mr R Lole, Chief Executive, and Ms J Skinner, Brexit Policy Manager, Department of Environment, Food and Agriculture; Hon L Skelly MHK, Minister, Mr Mark Lewin, Chief Executive, Department for Enterprise

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S T A N D I N G C O M M I T T E E O F T Y N W A L D C O U R T O F F I C I A L R E P O R T

R E C O R T Y S O I K O I L B I N G V E A Y N T I N V A A L

P R O C E E D I N G S D A A L T Y N

Constitutional and Legal Affairs and Justice Committee

Brexit

HANSARD

Douglas, Monday, 14th May 2018

PP2018/0093 CLAJ-BX, No. 2/2017-18

All published Official Reports can be found on the Tynwald website:

www.tynwald.org.im/business/hansard

Published by the Office of the Clerk of Tynwald, Legislative Buildings, Finch Road, Douglas, Isle of Man, IM1 3PW. © High Court of Tynwald, 2018 39 STANDING COMMITTEE, MONDAY, 14th MAY 2018

Members Present:

Chairman: Mrs J P Mrs Poole-Wilson MLC Mr L L Hooper MHK Mr C R Robertshaw MHK

Clerk: Mr R I S Phillips

Contents Procedural ...... 29 EVIDENCE OF Mr Charles Coué, Collector of Customs and Excise, and Ms Lucie Kennedy, Team Leader Legal and Policy, Customs and Excise Division ...... 29 The next witnesses were called at 11.30 a.m...... 37 EVIDENCE OF Hon. Geoffrey Boot MHK, Minister, Mr Richard Lole, Chief Executive, and Ms Janice Skinner, Brexit Policy Manager, Department of Environment, Food and Agriculture ...... 37 The next witnesses were called at 12 noon...... 44 EVIDENCE OF Hon. Laurence Skelly MHK, Minister, and Mr Mark Lewin, Chief Executive, Department for Enterprise ...... 44 The Committee sat in private at 12.32 p.m...... 52

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Standing Committee of Tynwald on Constitutional and Legal Affairs and Justice

Brexit

The Committee sat in public at 10.30 a.m. in the Legislative Council Chamber, Legislative Buildings, Douglas

[MRS POOLE-WILSON in the Chair]

Procedural

The Chairman (Mrs Poole-Wilson): Good morning and welcome to this public meeting of the Constitutional and Legal Affairs and Justice Committee. I am Jane Poole-Wilson MLC and I chair this Committee. With me are the other members of the Committee, Mr Laurie Hooper MHK and Mr Chris Robertshaw MHK. We are assisted today 5 by the Clerk of Tynwald, Mr Roger Phillips. The Constitutional and Legal Affairs and Justice Committee is a Standing Committee of Tynwald with a wide scrutiny remit. Today we will be hearing evidence from a number of Government officials on the topic of Brexit and its implications for the Isle of Man. By way of background for anyone listening who is not familiar with the topic, on 10 23rd June 2016 the United Kingdom voted by a simple majority of 52% to leave the European Union. The Isle of Man did not have a say in this referendum. Although the Isle of Man is not a member of the European Union, we do have a relationship with the European Union through Protocol 3 to the UK’s Act of Accession. In summary, Protocol 3 enables us to trade industrial and agricultural goods freely with EU member states and it also restricts access to certain EU 15 provisions for those defined under it as ‘Manxman’. Protocol 3 will fall when the United Kingdom leaves the European Union in 2019. Before I begin, could I please ask you to ensure that any mobile phones are off or on silent so that we do not have any interruptions; and for the purposes of Hansard, I will also be ensuring that we do not have two people speaking at once.

EVIDENCE OF Mr Charles Coué, Collector of Customs and Excise, and Ms Lucie Kennedy, Team Leader Legal and Policy, Customs and Excise Division

20 Q40. The Chairman: First of all, we welcome Mr Coué. Thank you for attending today. Before we begin, I would just like to remind you that we have allowed 30 minutes for this hearing today, and if we do not need that long that is fine but if we get to 11.30 I will have to bring the session to a close.

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For the record, please could you state your name and the capacity in which you are 25 appearing here today.

Mr Coué: Yes, my name is Charles Coué and I am the Collector of Customs and Excise in the Isle of Man, a Division of the Treasury.

30 Q41. The Chairman: Thank you very much. Perhaps if we could start, please, Mr Coué, with a general question just telling us a little bit about your current work streams in connection with Brexit and in particular focusing on what you are doing around scenario planning for the potential likely outcomes of Brexit.

35 Mr Coué: Okay. First of all, I would say there exists a historic longstanding relationship with the United Kingdom for VAT customs and excise purposes and that is all laid out under the Customs and Excise Agreement 1979. As a result, we have always had a close working relationship with HM Revenue and Customs and, because of the revenue sharing arrangements that lie underneath the agreement, we also have a close working relationship with HM Treasury. 40 Under the 1979 Agreement, the UK and the Isle of Man are a single VAT area and goods moving between the two territories are treated neither as imports or exports, effectively making us a customs union with the UK. At a very early stage post the UK vote to leave the EU, Customs and Excise Division’s normal quarterly meetings with HMRC and HMT became supplemented by a number of face-to-face 45 roundtable meetings with representatives from HM Revenue and Customs, HM Treasury, the Department for International Trade Department, the Department for Exiting the EU and Customs representatives from other Crown Dependencies, Jersey and Guernsey. More recently, Customs and Excise Division has been engaging with HMRC on what have been termed technical meetings. Here we have been able to discuss and prepare for the 50 practical implications of Brexit, which from a customs and excise perspective revolve around retention of the 1979 Customs and Excise Agreement, continued access to the electronic customs import/export system known as the Customs Handling of Import and Export Freight (CHIEF), and the Customs Declaration System (CDS). That is a transition that was already in place prior to Brexit. They were moving from CHIEF to CDS, so we were already in training on that 55 work with them. But also we have been speaking with the Department for International Trade. One of their agencies, the Export Control Agency, runs another electronic system that our traders all rely on, called SPIRE, through which you can apply to get export licenses and things of that nature. Another stream is to continue to operate the Isle of Man’s own entry processing unit, which 60 is a facility that sits within CHIEF or CDS, and going forward another workstream is the application of the new UK tariff which will replace the EU tariff. That is possibly our largest area of work. Another area is the continued co-operation with other customs agencies with regard to exchange of information in relation to international trade. 65 We have been also looking at the practical areas of work, such as the handling of parcels, freight and passengers over the potential new borders, and of course discussion around our own legislative workstream – the things that we needed to change, to update, to take account of consequential changes from Brexit. We also have to consider the resource and infrastructure implications of a hard Brexit, such 70 as the manning of physical border checks and the facilities at our ports to be able to effect those checks. Of course, there is also the post to control and we have to raise and collect customs and VAT import duties on items arriving in through the post – packages, parcels. And with online cross-border shopping increasing year on year, we will continue to see increasing volumes of goods arriving through the post and it will be Customs and Excise Division’s job to ensure that

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75 the correct import taxes are paid before the items can be delivered and so enter into free circulation. Essentially, Customs and Excise’s role is to police our external borders to ensure that goods entering the Isle of Man, and so the UK, from third countries meet any rules governing their importation and that the import taxes are properly accounted for and calculated. Our Brexit 80 preparations therefore primarily revolve around those objectives.

The Chairman: Okay, thank you very much. Mr Hooper, did you want to come in there?

85 Q42. Mr Hooper: Yes. You have talked there about considering the potential implications of various outcomes of the Brexit negotiations. I am just wondering if you could expand a little bit on that – whether you are doing any kind of scenario planning, how much you are doing. Just if you could go into a bit more detail, really, on that process.

90 Mr Coué: Well, we have been working with different agencies – Isle of Man Post, for example – in relation to having to man on a more regular basis. We are already there at the post sorting office every day in the mornings, but we will probably have to extend beyond that and possibly beyond one officer, so we are looking at the potential for two or maybe even three officers in the future. 95 Basically, every item, every package that comes in – of which we handle currently around 180,000 packages a year – need to be X-rayed. If they are coming from third countries they should carry a customs declaration form on the outside, which should describe the contents and what the value is. We have to raise charges and we have to hold on to that package until somebody has come in and paid the charge and we can release it. Of course, with the advent of 100 Brexit there will be a lot more countries where packages that currently come in do not have to have charges raised will have to have charges raised. Therefore, the infrastructure side of that means that we need secure facilities to hold on to a considerable number of packages at any one time at the post office.

105 Q43. Mr Hooper: How many transactions get processed at the moment, then, through the EPU that are affected by tariffs? And are you planning for any kind of increase post Brexit? There was some evidence given to a UK Select Committee by the Permanent Secretary of HMRC, who was talking about an anticipated potential fivefold increase across the UK. Have you got similar kind of anticipations for the Island? 110 Mr Coué: Yes.

Q44. Mr Hooper: And do you think we are built up, we are capable of dealing with those kind of increases, or is that all part of the workstream? And if it is part of the workstream, if you 115 could expand on that a little bit.

Mr Coué: Well, it is part of the workstream. Clearly at the moment we have very little, other than fast freight and post, that comes directly from third countries into the Isle of Man. Of course we have yachts and aircraft which arrive sometimes directly; we already are staffed 120 sufficiently to look at that. But yes, with the potential for a lot more traffic coming in and potentially the … It depends on whatever the scenario with Ireland happens to be, but potentially we could be looking at policing the border not only for traffic from Dublin but also from Belfast. So yes, we have had preliminary discussions with the Chief Secretary about possible additional staffing requirements. 125 It is very difficult to go ahead and put those in place ahead of really knowing what the outcome

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is there, but I envisage that if we have a hard Brexit and we have to police both the ports and the increasing post we would be looking at in the order of 10 to 15 additional staff.

Q45. Mr Robertshaw: Can I outline my understanding of our current customs agreement as it 130 relates to this discussion – and perhaps you could then correct me if I am wrong? My understanding is that the current agreement recognises that an element of our purchasing power goes to online purchases and therefore comes in through the mail, and that hopefully there is a recognition that the Isle of Man has a predilection for online purchasing perhaps somewhat greater than a population of equal size in the UK. 135 What I am not clear about, though, is to what extent that current agreement recognises that some of our purchases are from EU countries. Does it do that, or does it ignore it?

Mr Coué: It does that. The current mechanism – the Final Expenditure Revenue Sharing Arrangement – essentially is based on consumption in the Isle of Man, whether the goods are 140 actually consumed, used or enjoyed here. So, no matter where they are purchased from – anywhere in the world – if they are consumed, used or enjoyed here in the Isle of Man then we measure that through the likes of what is going on … It has just started. The Household Income and Expenditure Survey will give us the data about where people spend and what they spend on. It does not matter whether you buy a kettle here in Douglas or you buy one over the 145 internet from a UK firm or you have it sent in from China – whichever way it is, we know that that is going to be used in the Isle of Man, we know how much it costs and we know therefore what the amount of VAT that should be accounted for in relation to it is. We therefore, based on that consumption data, calculate all the VAT that is due to the Isle of Man and that is what we then put in place with the UK and that forms the basis for the Isle of Man’s share. 150 Q46. Mr Robertshaw: Fine. So will the Household Survey give you the opportunity to try to identify to what degree purchases are currently being made outside the EU area?

Mr Coué: Yes, it will. 155 Q47. Mr Robertshaw: I think in reply to Lawrie’s question you were talking about perhaps – if I have understood you correctly – 10 to 15 staff to control this whole process up at the post office or wherever you decide to do it. But do we have an understanding of the value of VAT our current Customs Agreement enjoys in recognition of purchases online outside of the UK? In 160 other words, what is the cost revenue comparison?

Mr Coué: No.

Q48. Mr Robertshaw: We don’t have that? 165 Mr Coué: It is not necessary for us to know that. We just need to know the total consumption; we do not actually need to know how it is broken down, only what the commodity is.

170 Q49. Mr Robertshaw: But once Brexit has occurred, then there is a differentiation, isn’t there?

Mr Coué: We still just need to know how much is being consumed, used or enjoyed, what its value is and what the commodity is. Where it is actually purchased from makes no difference to 175 the Revenue Sharing Arrangement. We are due the VAT on that consumption, no matter where it is purchased from.

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Q50. Mr Robertshaw: That is now, but once Brexit occurs, then our customs union with the UK remains intact. But how could we expect, within a customs agreement with the UK, a 180 revenue return from an item purchased from the Isle of Man direct from an area outside the UK’s customs union? That is where I am confused.

Mr Coué: Because when those items enter into the area of the UK’s customs union they will be subject to import duty and VAT. 185 Q51. Mr Robertshaw: Before they get to the Isle of Man?

Mr Coué: Well, possibly, but those that come directly to the Isle of Man are the things that we will raise charges on ourselves, and the charges that we raise we will put back into the 190 revenue sharing arrangement. So, if we collect £1 million ourselves it goes into the pot, but our share is still based on what our consumption is, not how much we have contributed to the pot.

Mr Robertshaw: I understand now, Charles, thank you.

195 Q52. Mr Hooper: Just picking up on that and returning somewhat to the question of the EPU, you said you are anticipating an increase in the number of transactions, and obviously there will be more work with those transactions as well if the UK decides to impose different tariffs to what are currently in place. My understanding is there is quite a tight timescale for delivery of the upgrades to the systems that are involved, all the computer systems in this. Where do we 200 stand in our element of that? Are we on track? Obviously when March 2019 hits and we have the Brexit date, in theory we may need to be fully up and running then. Are we on track for that?

Mr Coué: Well, we are totally reliant on the UK getting the changes made because we sit on their system. CHIEF is their system; we are a user of it. Our EPU sits within that system, so as 205 they transform that from CHIEF to CDS, which was the journey we were already on with them, our EPU will continue to exist within that electronic system. So, provided they deliver it in time for March 2019, then it will be fine; and if they do not, they will have to have their own fall-back provisions as to how they are going to manage around that.

210 Q53. Mr Hooper: Yes, that was going to be my follow-up question. I would imagine you are in regular dialogue, then, with the UK about how work is progressing on this, because it is quite an important aspect of what we do. Have you received any indications from them that things maybe are not on track, or that things are on track? And then, picking up on your last comment, what is the fall-back? What is the contingency that we have got in place in case the worst 215 happens and they are not ready?

Mr Coué: Well, they will continue with their CHIEF system rather than transferring to CDS. If both are run in parallel, they will just have to keep CHIEF running. That is the fall-back, I imagine. The real work for us is not so much about the electronic systems, because those are things 220 which are available to our traders to use. If you are an Isle of Man based international trader and you want to import or export things, then you use CHIEF to do that, or CDS. What we need to ensure here in the Isle of Man is that whatever the tariffs and the countervailing duties or anti- dumping duties, any of the rules around what can or cannot be imported and how much should be charged on it, we have got to make sure that the legislation matches that in the Isle of Man. 225 I could not say to you, ‘You’re bringing in some golf clubs from America – the duty on that is 12% and before we can release them to you, you have to pay it.’ And then you say to me, ‘Well, I know – on CHIEF, or whatever, it tells me the tariff for that, but where does it say in Isle of Man law that that is the rate of the tariff?’ So it is matching whatever the new tariff system is, because at the moment the tariff is set by the EU and it is automatically applied directly to the

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230 Island, so we do not have to worry about following it; it is here. Post Brexit we have to worry about how we follow the UK’s tariff and that is an area of negotiation and discussion we have been having with them. There are three main ways we could do it. We could use our existing legislation, which provides for us to make secondary legislation to follow any changes in relation to Customs and 235 Excise. That is one, but probably the least desirable because it will involve even more staff required to keep up with the number of changes if you imagine how many tariff lines there are or how many commodities there are. The second one: we have requested the UK to introduce a thing called a permissive extent clause into the customer’s bill, which would then allow us to go to them and say, ‘We would like 240 you to apply the tariffs directly to us.’ The third option is that we would use some sort of ambulatory measure in our own legislation to point out whatever their legislation is that sets the tariff and to follow it as it changes.

245 Q54. Mr Hooper: Would I be right, then, summarising from your perspective, the biggest risk that we are facing in your space post Brexit is a legislative risk on the one hand, but then a resourcing risk in how do we deal with putting the relevant staff in place actually when it comes to the systems – and you are okay with all the systems, but actually it is the staffing, the resourcing behind that staffing and then the legislation and the resourcing behind how we deal 250 with that, that is the biggest risk for you?

Mr Coué: It is, yes.

Q55. Mr Robertshaw: Is the UK government inclined to want to co-operate fully in terms of 255 your preferred route? You indicated ambulatory rather than us specifically dealing with it in secondary legislation. Are they likely to resist that or be comfortable with the suggestion from our end?

Mr Coué: Well, we are still hoping to hear back from them as to having this permissive extent 260 clause. That would be the most desirable and we have not had a yes or a no yet, so we are waiting.

Q56. Mr Robertshaw: Because they are themselves incredibly busy anyway. (Mr Coué: Yes.) Have you any fear that we might get … Remember Protocol 3? It sort of got tagged on at the end 265 as a ‘by the way’. Are we possibly in that scenario here if we are not careful, through no fault of our own?

Mr Coué: No, because ultimately we can apply all the tariff measures ourselves through our own legislation; it is just that it is going to require more work at our end to be able to achieve 270 that, but it is achievable.

Q57. The Chairman: Just on the two options that you said were preferable to having to apply everything through our own secondary legislation, you mentioned the permissive extent clause and the alternative is the ambulatory provision. What would you say is the advantage and 275 disadvantage of the second and third options for which way we might go?

Mr Coué: I suppose the main advantage of having it applied to us is that there is less chance of us ever missing anything. If they suddenly decide to in some way apply something new that is not through something we have pointed our ambulatory legislation at, then it leaves a loophole 280 there, but I think ultimately it is also just potentially the work. There would be more work for us to do if we were creating the legislation for the ambulatory legislation.

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Essentially, all measures that we have considered will work, but through it being the easiest and the least likely to create a possible gap, it would be the permissive extent laws.

285 The Chairman: Okay, thank you.

Q58. Mr Robertshaw: Could you just give us a quick few minutes, because we are obviously tight for time … I am aware to some extent of the transmission from CHIEF to CDS, but could you give us a further little explanation as to what SPIRE is? I am not as familiar with that. You 290 mentioned SPIRE earlier on.

Mr Coué: SPIRE is the electronic system that is operated by the Export Control Organisation. If you want to export anything from the UK that may require a licence, you go on to SPIRE to find out. It is a bit like going to look at the tariff to see how much should be charged if it needs to be 295 charged, is it free of charge. The same thing with SPIRE: it tells you about all the other non- revenue regulations around import and export.

Mr Robertshaw: Thank you very much.

300 Q59. Mr Hooper: Probably an unusual question to ask, but do you see, as a result of this process and the fact that we are obviously tied to the UK with our Customs Agreement … What we do is exactly what they do, but there are some advantages to people coming to the Isle of Man at the moment because of the way we approach our VAT. So the processing and operational side of the thing more than anything else – do you see any potential opportunities 305 as a result of the whole Brexit process purely from a customer’s perspective? Anything that we could be looking to be doing here locally, that whilst we need to maintain complete parity with the UK we could try and maybe get a little bit of an edge on them? Probably a cheeky question to ask.

310 Mr Coué: It is a very difficult question to answer. Potentially the UK after Brexit … It is saying at the moment that its chosen path is to retain a VAT system very similar to the EU. However, they will have the opportunity to tweak it. Over the past few years there have been things where the UK would have liked to have treated VAT in a particular way but the EU have said it must be done in a different way. I think on occasion they have even been taken to task over 315 making a change. Going forward, there may be the opportunity for them to change some of those rules, which could advantage us but I do not particularly see that it would advantage us over the UK, although if you look at the exempt sectors – banking and insurance – they have asked for years for some changes and things to make it less costly from a VAT angle for them. That is a possibility, I suppose, from the UK’s point of view which we could benefit from, but to 320 actually come up with something specifically for ourselves which was different to the UK – other than retaining the likes of a 5% rate – I cannot see that the opportunity would really be there.

Q60. Mr Robertshaw: My last question because we are running out of time, but – again I ask this out of ignorance – as I understand it, with VAT being fundamentally an EU type of taxation 325 system which the UK is going to continue with, and given that again I understand that part of the – and correct me if I am wrong – UK’s contribution to the EU is measured against its VAT revenue, in our Customs Agreement with the UK is there any element, even though we are not in the EU, that the UK contributes an element of revenue from the Isle of Man into the EU; and as such, is there therefore an opportunity for us to tweak our Customs Agreement? I hope that 330 question makes sense. Does it?

Mr Coué: The thing we are talking about is the EU’s own resources and that is calculated as 0.3% of the net VAT pool of any of the member states. So, because our share of that is part of

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the UK’s net VAT pool, then whenever the net VAT is left over – the revenue for Government – 335 0.3% of that is paid as a contribution to the European Commission.

Q61. Mr Robertshaw: Do we have an understanding of what that would be in our terms, then?

340 Mr Coué: Well, it would be 0.3% of our share of the revenue.

Mr Robertshaw: Right, okay, got it – whatever that is.

Mr Coué: Whatever that is, yes. I hope you are not going to ask me! 345 Mr Robertshaw: Get your calculator out!

Q62. The Chairman: We do need to bring things to a close, but one final question, if I may. We understand and we are sorry to hear that you are due to be retiring in the near future, and 350 given what you have talked about in terms of the amount of work and also the various issues that the Department is facing, I just wondered if you could talk a little bit about whether you have any thoughts on key person risk in your area and how to manage through what looks like it is going to be quite an intensive period of work and change.

355 Mr Coué: Yes, well, in one sense probably the most key person risk to us is our legislation. Recently, Ray Todd, who was with us for many years, retired, and Lucie Kennedy, who has been here today, has replaced Ray. We have also brought in an extra member of staff to that team. So the legislation is probably our greatest risk and I think that we are amply ready for that. Certainly when it comes to matters of legislation I would turn to Lucie to ask for her assistance on that; 360 she is very good. The other side, the customs borders and what have you, there we have got two longstanding members of staff who are very well versed in all of those and they will be there throughout the whole of the passage of Brexit. So I do not have concerns that my leaving will leave any sort of lacuna, that people will not 365 know what to do. It is very clear – I think Government has a staff survey and one of the things in the staff survey is to ask ‘Do you understand what your job is and what you are there to do?’ and I am pleased to say that in every staff survey we have a 100% record that everybody is very clear what they need to do and why they are there to do it, and I am sure that Brexit and me going will not change that. 370 Q63. Mr Robertshaw: Are you confident that we will be able to keep our capacity, going forward, about having a generalist grasp across the whole landscape of VAT regulations … will be retained in your Division in the way it has been done so eminently well in the last 20 or 30 years? 375 Mr Coué: I very much hope so. I think I leave behind a deputy who still has, I think, somewhere in the region of 10 or 12 years left to go, and the head of our VAT Assurance Team probably also similarly has at least 15 years to go. So there is a good base of people who understand all of this. 380 Also, because of the changes to the revenue sharing arrangements and the new FERSA – this year being a new base year for that – we have had a project running to make sure that we get all the data in that we need and we have made an actual FERSA project manager post, which is another member of staff in Customs and Excise, so I think retention of knowledge in all these areas is safe.

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385 The Chairman: Thank you. Anything else?

Mr Robertshaw: No.

390 The Chairman: Okay, thank you very much, Mr Coué, for your time this morning.

Mr Coué: Thank you.

The next witnesses were called at 11.30 a.m.

EVIDENCE OF Hon. Geoffrey Boot MHK, Minister, Mr Richard Lole, Chief Executive, and Ms Janice Skinner, Brexit Policy Manager, Department of Environment, Food and Agriculture

Q64. The Chairman: We continue with this morning’s evidence session from a number of Government officials on the topic of Brexit and its implications for the Isle of Man. 395 Now we would like to welcome Mr Boot, Mr Lole and Ms Skinner. Thank you for your attendance here today. I would just like to ask if you could please make sure any mobile phones are switched off or turned to silent; and for the purposes of Hansard I will be ensuring that we do not have two people speaking at once. I would also like to start by reminding you that we have allowed 30 minutes for this hearing today, so if we get to 12 p.m. I will have to bring the 400 session to a close. For the record, please could you each state your name and the capacity in which you are appearing here today.

The Minister for Environment, Food and Agriculture (Mr Boot): I am Geoffrey Boot, Minister, 405 DEFA.

The Chairman: Thank you.

Mr Lole: I am Richard Lole, Chief Executive, DEFA. 410 Ms Skinner: I am Janice Skinner, Brexit Policy Manager, DEFA.

The Chairman: Thank you. Mr Hooper. 415 Q65. Mr Hooper: The first question I would like to ask you: in your submission to the Committee, one of the things that you stated was that the UK is wishing to ensure the Crown Dependencies are not in a position to compromise any trade agreement reached with either the EU or a third country. That flagged up to me that perhaps there may be situations where the 420 Island has a slightly different set of needs to the UK and there may be opportunities the Island may wish to take advantage of that the UK is either not aware of or maybe is not really something that is high on their list. Something that was discussed recently with the Chief Minister by this Committee was the potential for expanding our entrustment provisions, and really I was just wondering what DEFA’s position was when it comes to the possibility of

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425 exploring opportunities that may exist through getting more entrustment to the UK to really engage in our own trade negotiations and get our own trade agreements in place.

The Minister: First of all, Chairman, if I may just say I did have a statement prepared. It is normal that I can make a statement before we start on the detailed questioning, but it is at your 430 discretion, obviously.

Q66. The Chairman: In this case, Minister, it was really the fact that we have got such a short hearing period that we wanted … If we get through the questions, by all means if there are additional things you would like to say to the Committee – or you could always send it to us as 435 well.

The Minister: We will see how we go. Going to Mr Hooper’s question, there is quite a lot of meat on that, really, in terms of where we are going. Obviously, from the Isle of Man Government perspective we have been engaging 440 with the UK for quite a long time at quite high a level. The Chief Minister, for instance, has been visiting the UK almost weekly on occasions and taking different Ministers with him. We are engaging at all levels and we have commitment … In fact, there is a letter from the UK from David Davis, which actually clarifies that. I do not know whether you have got quick access to his statements on that, which might help clarify the situation, Janice? Here we are.

The report also calls on the Government to continue to fulfil its constitutional obligations to represent the interests of the Crown Dependencies in international relations, even where these differ from those of the UK.

445 And later:

We shall take full account of the Crown Dependencies’ interests in the negotiations.

That is quite a big commitment and certainly our experience with DEFRA, where we are meeting … I do not know – how often?

Mr Lole: We are currently meeting in a formal sense every two months typically, and other 450 more informal meetings with DEFRA officers certainly monthly, and then conference calls in between. So there is a very close understanding of each other’s position.

The Minister: And it is fair to say that they are sharing as much as they know. If you watched the political programmes over the weekend, Brexit remains as opaque and uncertain as ever, so 455 we are shooting at a really moving target all the time. Going to the latter part of your question, you are talking about negotiating our own trade agreements. I think the practical situation is that we are 84,000 people and any trade agreements … We would be part of a World Trade Organisation situation if that is the way things run, but nearly everything that we do goes through the UK. Trying to negotiate our own 460 agreements I think would be fraught with difficulty. Richard, do you have any feeling for that?

Mr Lole: I think we would share the view that I think Della Fletcher expressed when she was in front of you last time, which was that at the moment we do not see a need for entrustment and believe that negotiation through the UK is likely to be as effective as anything else. 465 Obviously circumstances change, but that was the position laid out at that point.

Q67. Mr Robertshaw: Thank you. I think the Policy Review Committees, Minister, are very aware of the fact that we do not want you to have to replicate the statements you have already made to other Committees, and as I sit on the two we have agreed that what we will do is try to

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470 avoid that today and focus on a particular area in the short time that we have got, so that you do not have to keep saying the same thing to us. Where we would like to look this morning … Thank you very much to the Chief Executive for that very informative letter that he sent us, and I would like to go through, on behalf of the Committee, one or two of those points that you have kindly raised. 475 It has become very clear to the Policy Review Committees that DEFA is very much in the frame in terms of Brexit. You are really, in terms of work burden, the lead Department to a great extent. If I may address the Chief Executive, you talk in your letter about 71 pieces of secondary legislation that need amending before Exit Day. Well, two questions. Before Exit Day? And to what extent are those amendments laborious or time consuming for you? Could you talk us 480 through that?

Mr Lole: Briefly – and then I think Janice may be able to add a little bit more of the detail – we effectively have obviously had to schedule those and we are hoping at the next political meeting to agree a set of priorities around that. And so we will be prioritising the legislation that 485 is necessary for trade purposes first, and then there are more and more granular aspects that need tidying up. Not all of those pieces of legislation are of a significant concern, but they are all areas where we have not kept exact pace with where the EU has gone. I think our last legislation person starts within a matter of days and we will then be in a position to say that is the plan, that is what we need to do, those are the top priority and let’s 490 get on with them and bring them forward as fast as we can.

Ms Skinner: It was over about 14 months the gap analysis was undertaken to ascertain the 71 minor – well, not necessarily minor pieces of legislation, but there are certainly 71. Some of those 71 might end up in one single Order, so we might amend 12 in one Order because it might 495 just be a few minor amendments. But there are some big gaps, more so because the EU have recently produced a new regulation replacing most of the animal welfare, plant health food and feed, and food hygiene items. It is EU Regulation 2017/625, which came into effect last April, and that is actually repealing 77 items of EU law and consolidating them. That is having a massive effect across most of what we have done, so we need to take that on board as well. 500 Q68. Mr Robertshaw: So is your Minister going to be up and down, up and down?

Ms Skinner: I think so, yes, I’m afraid!

505 The Minister: I think it is fair to say that as we get nearer Brexit the fact that we basically had equivalency or complied with some of the EU legislation and we have relied a little bit on the UK for that, the UK are now looking at this more granularly in terms of how we might have to comply with WTO. They do not want the Crown Dependencies to let them down in that process as part of it, so they are being more analytical about where we are and we are having to look at 510 what we are doing to make sure that we are in compliance. The one that comes to mind straightaway is the Montreal Treaty, in terms of refrigerant gases. We have basically had equivalency on that, but now we need to do our own piece of work on that. At the moment, we are not able to export refrigerant gas, which is not very good because we cannot dispose of it on Island. 515 Q69. Mr Robertshaw: And these 71 pieces of work – depending on how many times you have to be up and down in Tynwald – is this before Exit Day? On Exit Day? Is there an active date? Would that co-ordinate with Exit Day, or would you be able to do it anyway, as a matter of course, before Exit Day? I am not quite clear there.

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520 Ms Skinner: It depends on when Exit Day is, of course. If it is a hard Brexit, Exit Day will be 29th March 2019 and there is absolutely no way we could get that legislation up to date.

Q70. Mr Robertshaw: I am sorry to talk over you. The 71 pieces, you could not get them by that date? 525 Ms Skinner: It would be, I think, nigh on impossible unless we threw extra resources at what we have. If Exit Day is, as proposed, with a transition to 31st December 2020 – as the EU and the UK have sort of agreed, but who knows – we have got that two-year transition period in which to get other things up to date. So it is all a bit up in the air at the moment. 530 Mr Robertshaw: I understand where you are coming from, because it was just the ‘before Exit Day’ in your letter that I thought, ‘Wow, that’s a bit of an ask, really.’

Q71. The Chairman: Just a point of clarification. Perhaps I have misunderstood this, but some 535 of what you are talking about almost sounds like it has been triggered by the prospect of Brexit but it is actually more urgent than Brexit. The point you are making about what we can and cannot do, have I misunderstood that?

The Minister: Well, no, I think Brexit has triggered an analytical look at the way we interact 540 with the UK and that is a trigger, but when Janice is saying we could not, obviously if we had to we would have to. At the end of the day it would be difficult, but it would be a prioritisation situation and we would have to enable trade or transfer of material in some cases. We would just have to do it – it is as simple as that, really.

545 Q72. The Chairman: So the prioritisation you are talking about is the things that absolutely have to happen irrespective of Exit Day?

The Minister: Some of these things are going to happen now that they been exposed, as it were. It is not that we have not been compliant; it is just that the paperwork might not be as 550 thorough as it could be in terms of looking at where we are. So it will be a useful exercise in any case, but it will be a matter of prioritisation to make sure that we can do certain things if there is a hard Brexit.

The Chairman: Thank you. 555 Mr Robertshaw: Time flies when you’re having fun.

The Minister: When you’re having fun.

560 Q73. Mr Robertshaw: So the second part of your letter, which concerns the 21 pieces of secondary legislation requiring application, which is different to the 71 – is it in addition to the 71? Okay, right, thank you. I have got that as a yes?

The Minister, Mr Lole and Ms Skinner: Yes. 565 Q74. Mr Robertshaw: Just for the tape. What are they are about? Have we not applied stuff we should have done, or what?

Ms Skinner: It would appear to be the case, yes. I think that since the European Communities 570 (Isle of Man) Act 1973 came into being there has been quite a lot of lack of understanding about what actually applies to the Isle of Man under Protocol 3 and somebody has said, ‘Actually, we

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don’t need something to do with biocidal products.’ In my research I found something going back to 2004 when the Attorney General said, ‘Actually, you don’t need this,’ but now it transpires that we actually do. So it is stuff that we have not historically applied because it is an 575 immense amount of legislation for maybe three people who were dealing with this type of stuff.

Q75. Mr Robertshaw: Have you any concerns in terms of those 21 areas not applied? Are they, in their application, going to cause any concern for anybody who is subject to that legislation that thus far has not even known about it? Have you any concerns there? 580 The Minister: Can I just say it is not quite as black and white as that, because we have looked at things in the past from a practical situation, from the Manx situation, as to whether Protocol 3 does not oblige us to do a lot of the things that we do. We do it because we want equivalency in terms of exporting or importing or working with the EU environmental standards etc. So we 585 have not had to do all of this stuff. Basically, we have done a lot of it because it is the right thing to do and when we are trading with the EU – the UK is the front door to the EU – we need to have done that in equivalency terms. So we have not done anything wrong; we have just applied sensible solutions to rafts of legislation that, frankly, we did not need to adopt at that particular time. I think that would be a 590 fair assessment.

Mr Lole: I think that would be a very good assessment. I think you could segment them between areas that we have addressed in other ways, but that does not necessarily mean we have the exact same wording in the legislation. We have used lots of policies. In some of the 595 agricultural examples we have used the Agricultural Support Scheme to require compliance with things without necessarily therefore having to put the legislation in place. So it is about tidying it up, and that is back to that comment about prioritisation. There are areas associated with trade where we do need to get the exact wording to ensure we can demonstrate compliance and I think some of this is simply driven by … We have done a really 600 good audit on where we are and similarly the UK have, so they have identified situations where we need trade products with them but we are not actually complying with the standards that they have for trade.

Q76. Mr Robertshaw: Taking you back to my point, will there be any need for any sensitivity 605 testing on your part to make sure that any of the applications of these 21 pieces do not impact in a way that would be detrimental to trading companies etc?

Mr Lole: We have done quite a lot of work with businesses that we saw being directly affected, certainly on the more high-priority pieces of legislation, but there is more to do. 610 Q77. Mr Robertshaw: Thank you very much indeed. Turning to the next element of your letter, international obligations, you have specifically raised the issue of waste. Could you talk to us about that? There seem to be concerns about international obligations about waste and we are not complying. Perhaps if I have 615 misunderstood your letter forgive me, but could you talk to that a little bit?

The Minister: I have already mentioned the Montreal Treaty, which is specifically mentioned there, but there are are a number of other areas. Richard, would you like to …?

620 Mr Lole: If I have a broad comment, then Janice may wish to pick up detail. There is an awful lot of EU legislation which we are excluded from under Protocol 3, especially associated with the environment. We have signed up to obligations and they bring a sliding scale of expectation, and so we are to be compliant at different levels by different terms

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in the future, whereas the EU may have moved at a faster pace. So there are places where we 625 are compliant with international obligations but we are not compliant with the current EU position on it because they have chosen to adopt things faster. The Montreal Treaty is a good example of that. Where that involves us trading products with the EU – well, with the UK but they are part of the EU – the UK are rightly saying actually we should probably be compliant with the EU’s standards on those matters because it is about trade of products. 630 Q78. Mr Robertshaw: Do we have any areas there where application of part of those regulations will cause difficulties for us?

Mr Lole: If we carried on with the Montreal example, as the Minister mentioned earlier, since 635 that issue emerged the UK have said we probably should not be sending redundant fridges and redundant refrigerant materials until we are compliant with their standards, so we need to establish a register and various other things to enable that piece of trade to take place. So there is currently a stockpile of fridges.

640 Q79. Mr Robertshaw: That was one example. Have you any others that are of concern to you, that stand out?

The Minister: There are a number of conventions that we are signed up to where there may be issues, but one that did flag up is EURATOM, which is the transfer of radioactive material. You 645 think, ‘Radioactive material? Where does that impact on us?’ Well, if you think about it, the Hospital uses quite a lot of radioactive material, so it is one of those areas where if we cannot import or send spent material back to the UK, then we have problems in the very near future. These are the sort of examples of where we need to tidy up at the moment. We are continuing to do that, but there are deficiencies in terms of the reciprocal agreements. So yes, there are 650 and will be other areas.

Q80. Mr Robertshaw: I do not know whether we have already covered this, but you also mentioned there is difficulty in ascertaining which agreements we are actually signed up to. Is that encapsulated in what we have already discussed, or is that a separate element? 655 Mr Lole: We believe we now have a comprehensive list of the international obligations that we are signed up to.

Mr Robertshaw: Thank you very much indeed. 660 The Chairman: Mr Hooper.

Q81. Mr Hooper: We have spent 20 minutes talking about legislation, and from reading the letter and from that discussion it seems to me that the biggest risk facing the Department from a 665 Brexit perspective is the legislative risk – that you do not get enough legislation in in time, you do not have the resources to bring the legislation forward. And also you say you have been engaging with industry about the potential impacts if we do not get some of these things sorted. It all seems to be about the potential negative impact. From my perspective DEFA is one of the Government Departments that are outward looking, 670 you are one of our outward faces, so one of the things I would be interested in is how much resourcing has been allocated to looking at what potential opportunities may come out of Brexit. You have talked about additional resources being applied to your legislative team and to your Health and Safety Directorate, but I am not seeing a lot of talk or a lot of resourcing going towards actually what is out there for the Island, how can we make this work for us, what could 675 be the potential upside of Brexit.

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Obviously you guys are very focused on the potential downside, which I do fully appreciate, but what is there that you are doing to try and capture the upside potential?

The Minister: I think, in terms of resource, we put in a Treasury bid and we have got three 680 extra individuals involved, allocated one and a half posts within the Department and reallocated their work loads. So we are working hard on that. When it comes to opportunities, there are some potential opportunities. There is a tendency to dwell on the negativity and there is quite a bit of negativity if we do not get it right, but there will be opportunities. 685 For instance, the fisheries sector, the London Convention, the UK has already served notice on that and that will mean that the historic access … Boats from France, Belgium and various other places will no longer have access to UK territorial sea, which includes the Isle of Man. The quota system under the EU fisheries policy will – but we are not sure – presumably fall or be renegotiated, which means there may be more quota available and some species that we are 690 not able to catch at the moment because we do not have any quota, because we sit within the UK gambit. The Fisheries Management Agreement (FMA), which we work with the devolved jurisdictions around the Irish Sea, is well past its sell-by date and needs revisiting. It will give us an opportunity and we have already prepared a position paper for DEFRA in the UK in respect of 695 that. There will be opportunities to actually seize more control, I hope, of our territorial sea. We still want some historic access to persist both ways because if we get more quota – scallops are the big thing at the moment and whelks, but that may not last forever and it may change, so we may want historic access to some of the waters around us. But yes, there will be opportunities there and I am really looking forward to being able to renegotiate the FMA because there is 700 great potential there for improvement. So yes, there are opportunities. If we move forward, at the moment some of the markets, the scallop market for instance, we are very reliant upon Europe but we have been more outward facing. We are selling a lot of whelks to South Korea. There are implications if we come out of the EU – or the UK comes out of the EU. We do piggyback on some of their trade agreements but maybe we would be more 705 outward facing ourselves in terms of new markets and opening new markets that may offer us new opportunities in the agricultural and fisheries sector.

Q82. Mr Hooper: That brings me almost full circle to where we started. Everything you have described there, we are almost wholly reliant on the UK, UK waters, UK quotas, UK trade 710 agreements, which brings me right back to my first question. Are there not real opportunities here for us, in some cases, to be exploring new markets that the UK possibly is not looking at, is not actively engaged with, and is it maybe something DEFA would or should be looking at in regard to its own departmental policy on trying to get the ability to negotiate some of our own external-facing trade agreements? 715 The Minister: I will ask Richard to put some detail on this, but if all the EU agreements fail – and we will be reliant on the agreements that the UK reach with the EU – and it is a very hard Brexit, then we are going to fall back on to WTO trade rules. We have a WTO agreement at the moment, but I am not sure how that sits with the UK. Richard, can you add some detail to that? 720 Mr Lole: The UK are busy re-establishing individual membership of the WTO. I am not sure that is the right terminology, but that is the practicality of what they are doing as they come out of Europe where their membership has been through Europe. Thinking about the specifics of in what scenario might we want to negotiate differently to the 725 UK, for the most part the markets that we seem to be identifying to be higher priority for us – and some examples of that would be South Korea, where we are selling a lot of whelks and

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America, where we are now selling an increasing amount of cheese – fortunately the UK is also keen to access those markets. If we found ourselves looking at a really key market that was not a priority for the UK, we 730 might have different views. The Minister identified their commitment to represent our wishes even if they are different, so in theory they would still make those negotiations. I think everyone is going to be quite thinly spread and I am sure they will prefer to be led by their own priorities, but it is really important to acknowledge that so far they have been really keen to listen, they have shown understanding of the areas that we are concerned about and have shown 735 commitment that they would still take part. That is the reason that we have not seen entrustment as a necessary way forward.

The Chairman: I am mindful that we are almost at the end of our time. Did you have –?

740 Mr Robertshaw: But we could always drop you a line. I do not think my final question was particularly key. I will leave it.

Q83. The Chairman: Can I thank you very much. Is there anything else that you wanted to add for us? 745 The Minister: Following Mr Robertshaw’s comment, if you have any more detail that you want, please feel free to write to us and we will be happy to furnish you with that.

Q84. The Chairman: And if you would like to send us a copy of your statement, Minister, as 750 well?

The Minister: I will indeed. Thank you very much.

The Chairman: Thank you very much for your time.

The next witnesses were called at 12 noon.

EVIDENCE OF Hon. Laurence Skelly MHK, Minister, and Mr Mark Lewin, Chief Executive, Department for Enterprise

755 Q85. The Chairman: Good morning and welcome to the continuation of this morning’s evidence session where we hear from a number of Government officials on the topic of Brexit and its implications for the Isle of Man. Now we would like to welcome Mr Skelly and Mr Lewin. Thank you for attending today. Can I first of all explain for the purposes of the record that as Mr Hooper is a Member of the 760 Department for Enterprise he has recused himself from this part of the hearing. Can I also ask people, please, to check that their mobile phones are switched off or turned to silent to avoid any interruptions. Mr Skelly and Mr Lewin, I would like to remind you that we have allowed 30 minutes for this hearing today, so I will be bringing the session to a close at around 12.30. 765 For that reason also, with the previous evidence sessions we have had this morning we have not invited opening statements. Because of the short time period for questioning, we have just progressed to our questions. For the record, first of all, though, please could you each state your name and the capacity in which you are appearing here today.

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The Minister for Enterprise (Mr Skelly): Yes. Laurence Skelly, Minister of the Department for 770 Enterprise.

Mr Lewin: And Mark Lewin. I am the Chief Executive of the Department for Enterprise.

Q86. The Chairman: Thank you very much. 775 Perhaps if we could begin, please. As a Government Department that has a very outward- facing role and indeed has recently undergone a restructure to enhance that outward-facing role, could you tell us a little bit about the work that you are doing, particularly using the new agency structure, to ensure a good understanding of the issues that different sectors face with Brexit. 780 The Minister: Yes. Gura mie eu, Caairliagh. First of all, I appreciate you highlighting the fact that we have gone through a major restructure. I would also highlight that we have treated this matter with utmost priority. Ever since it was announced, we have actually been engaged very early with regard to the 785 implications for the Isle of Man. I think we have been involved with four different interim reports, some pre-Brexit announcements and others post, so there are four different reports that we have been involved with. Very clearly our role and responsibility is understanding what those future trade relations are going to be. Right the way through the process of the transition, moving towards the executive 790 agency model we have actually focused in at having Brexit has a standing item. As a Department we have it as a standing item every two weeks, the executive agencies will also have it on their agenda and we have been planning for this change right from the get-go. We have regular meetings with industry, the 20 different sectors, as you know, that we do represent, and we have now channelled that into the four executive agencies. So you have the 795 finance, which is clearly outside; you have the digital, which has a lot of that outside; then you have e-business, which carries a lot of the other sectors; and of course the Visit, which is the tourism sector. So we have a number of face-to-face meetings. We are also very heavily involved with the cross-Government work so that we can feed in the input that we have from industry to the EU Advisory Group, which is obviously cross- 800 Government. So we are very much focused in on understanding what the implications are and also exploring what those opportunities are as well as those are changing.

Q87. Mr Robertshaw: I hope you will be reassured that the Policy Review Committees are also establishing how we can work together and contribute to the whole process of finding our 805 way through this very opaque world that we are entering into and that hopefully we can make a positive contribution to the whole process. (The Minister: Thank you.) To follow on from the Chairman’s comments, what from your departmental perspective, are the issues emerging that you would like to point us towards from the various sectors?

810 Mr Lewin: If I could start, Madam Chair – and again, thank you for giving us the opportunity to talk about this really important topic today – you said in terms of an opaque … That is one of the challenges, actually navigating a way through what can be a really complex topic that continually moves and continually has different sides to coming to that. As the Minister said before, we spend a lot of time with industry. We talk often in the here 815 and now about things they are facing today – either challenges in terms of helping them fulfil their full potential or, in some cases, opportunities they see and how do we as a Government make sure we can create the right environment for them. So, apart from right from the early days when Brexit became not just an idea but a reality, we have spent time partly talking about some of the topics, some of the thoughts on the kind of 820 scenarios there might be, but also from them, getting it from their own perspectives. A lot of

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businesses that are here that have tentacles or stakeholders out in other jurisdictions will have their own thinking as well, and what we try to do as a Department is bring that together and then we play that out and check it and bring it forward. In terms of challenges, part of it is navigating and simplifying that down. There are clearly 825 some of the main challenges around things like access to skills. That is a challenge we know we face today and we know it is a hugely important part of our future. As a Department, as a Government, we are committed to working with industry to address that and to help. Again, all those businesses that have confidence and are looking to grow, how do they make sure they access that talent? We are competing in a global space for these skills, so we absolutely have to 830 make sure that through all of these scenarios we are still able to secure the skilled workers we need going forward. On the opportunities side, obviously our main strategy, our main principle here, is to preserve what we have today. That came out right from day one from industry in terms of a frictionless and tariff-free mechanism for goods. But as that conversation flows and as the UK 835 enters into new relationships, is there an opportunity in there for us, from a service perspective, to improve our access to markets? That has come out right from two years ago as one of the early opportunities. Underneath that, what the Department tends to look at is … Individual sectors, from financial services through to, again as the Minister said, some of digital businesses, have their own views 840 of what either the risks might be or some of the opportunities that come out, and we have been working to first of all make sure, where we get it coming from an individual business or from an individual sector, that can be sense checked and rolled up and then we can feed that up ultimately through the likes of the Department and then through to the likes of the Chief Secretary’s EU Advisory Group. If that has policy options or impacts that we would want to 845 further discuss or consider, then it can go right through to the Council of Ministers. But at this stage a lot of it is still very early-stage ideas. One of the challenges, in terms of keeping the topic alive, is we have talked about them, we have recorded them, we have produced the four reports and we share that with industry, but until we get some clarity as to what some of those end points might look like … One of our roles is to keep it alive, but it goes 850 through these peaks and troughs with whatever the main topic at the time will be.

Q88. Mr Robertshaw: I appreciate that it is a difficult environment we are all in, one way or the other, because of the opaque nature of the circumstances, but what is emerging for us, our Policy Review Committees, is the degree to which DEFA in particular has a significant level of 855 exposure at a whole range of levels, as they have discussed – you may have caught it there at the end – and as you will know anyway, legislation, but also specifically both threats and opportunities perhaps for the fishing industry should the circumstances emerge that might be reasonably anticipated. Are you working with DEFA in terms of perhaps what might be verging, to a degree, on a 860 reinvention of our fishing sector and redirection of our targeting, redefinition of our territorial waters and the degree to which investment would have to go in at that point to give confidence for that sector to move forward? I know that it is opaque, but also there is a degree of need for scenario planning. Is that something you are able to do?

865 Mr Lewin: The Department for Enterprise looks after a number of sectors: we have got financial services; in this context manufacturing is a big component of the discussion; the visitor economy through tourism; our digital economy. DEFA lead on the fisheries side, so we are aware of it and there are some overlaps – the Department has jointly supported things like the Food Matters Strategy – but very much DEFA lead on that and lead on that liaison so that industry 870 does not get it from multiple points.

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The Minister: It is important to also recognise that there are opportunities there – there is no doubt about that – across a host of different sectors. What we are doing is having those discussions usually behind closed doors because those opportunities would probably not benefit 875 from being in open discussion at this particular time. So we are very much aware of opportunities that are there in a host of different sectors. In DEFA’s case we would be working very closely with them to be able to support them, and a lot of that would feed into also the EU Advisory Group so that we can highlight where there are risks and opportunities. 880 Q89. The Chairman: Just taking that point about the opportunities and also some of the sensitivities around talking about them in public at the moment, one of the things that we have heard from DEFA this morning is the challenges of the Isle of Man trying to capitalise on its own opportunities by separately trying to negotiate beyond what the UK is looking for. 885 I suppose I am interested in hearing from you, as far as you can, about where we have opportunities that perhaps do not all align – so we might have sectors in the Isle of Man and their particular opportunities do not necessarily align – and what the strategy approach is, how Government is working in a cross-departmental way, whether through the EU Advisory Group, in order to try and assess and develop a coherent strategy that takes account of the different 890 potential opportunities and that also tries to influence the UK as far as possible to see that these opportunities can be progressed.

The Minister: Yes, absolutely, and that has always been the case about being prepared – consider the options, consider the alternatives – and that is the strategy right from the start for 895 us, and for that clearly understanding the regulations and standards and also the relationships you mentioned with regard to the UK. We have actually resourced a new policy lead and he would be here with us today, only he is in London meeting HM Treasury regarding financial services with regard to Crown Dependencies’ issues there. So we are very much alive to this ever-changing scenario and what we are trying to do is to play out all those to understand where 900 the best position is for us. We also have another stream, of course, with regard to legislation, which is very important, clearly; in our case probably not as big. We do have areas with regard to the intellectual property that we need to ensure because we have a lot of global outward-facing businesses here, so if there are any EU-related aviation, maritime … those are obviously big industries also 905 for us and the legislation connected to that. We need to ensure that we do have the right position for the Isle of Man in these particular areas. Partnerships are important – the UK, which we just touched on, but also beyond that the WTO – understanding our adherence there in terms of regulations. There are also the opportunities around the Commonwealth which are now starting to open up and be explored 910 due to our involvement now with the Enterprise and Investment Council and the Business Forum. So those partnership relationships are going to be very critical going forward.

Mr Lewin: If I could just add to that, there are roundtables to talk about if there are areas where our interests may not align with the UK, but the roundtables are hugely useful in terms of 915 bringing together the UK government and the Crown Dependencies to talk about specific topics, to better understand. It starts with understanding. Again, most of our business and most of our trading activity actually is with the UK and it is quite hard to imagine scenarios where we have a different type of relationship at the end and the complexity that might give, either through goods or through services ultimately flowing 920 through the UK. But it is, as you say, about influence and being at the table, participating, making sure we come to the table armed with a good understanding of what we have today, a good understanding of what might be happening and how that plays. One of the work streams is making sure that, for example on the WTO, the UK really commits to that relationship, that we

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understand what those commitments are in terms of goods and services and make sure as part 925 of that is there anything in there that we would want to call out as being different – the work permit review is an example that was in that space – that we understand it, we declare it and we can therefore make sure, as those conversations progress, it does not come as a surprise at the 11th hour.

930 Q90. Mr Robertshaw: We are already halfway through our half an hour, so we need to clatter on a bit, I think. You mentioned legislation. We have heard from DEFA. I think they talked about 92 items that they are focused on. We all know historically that drafting issues and legislation is a bit of a constraint for us. Have the various Departments of Government, do you think, got a clear 935 understanding across the piece as to when we go from ‘We don’t know where we are’ to ‘Go’, that we can get all this collaborative legislation through? Can we get the camel through the eye of the needle, do you think? Is there an understanding? I suppose it would be the European Advisory Group focused on this. Are we going to find ourselves in a bit of a mess there, do you think? 940 The Minister: It is a massive issue, to say the least. For us, employment law, intellectual property, aviation and maritime are our key areas. And whilst yes, there is a significant commitment, we are feeding that in and it will be all about prioritising, from our perspective politically, to be able to drive those through. 945 So we are preparing for it and I think this is the whole point from the get-go. As I said, the strategy is always that we are looking at all the implications, we are looking at legislation as one of those very key work streams. From our perspective it is probably not as big as potentially the likes of DEFA in terms of how much their commitment is there, but what we are doing is ensuring that … In terms of that preparation I alluded to earlier, we now have a new policy lead 950 so that we can actually stay on top of this. Because it was a standing item in the Department, a standing item for the executive agencies and we have a lot of cross-Government work, we need to make sure we have got somebody who is absolutely on point and we have got a very experienced individual who has taken up that role.

955 Q91. Mr Robertshaw: Thank you for that, but let me ask the question in a slightly different way. Is there anybody in executive Government aware of the position from a legislative point of view right across the landscape, rather than departmentally?

Mr Lewin: The Attorney General attends the Chief Secretary’s EU Advisory Group as a place 960 to bring that together. And if you pick up on the Minister, the four things of particular interest to us around employment law, intellectual property, maritime and aviation, for each of those – take maritime and aviation – we are quite familiar with bringing legislation forward, orders, all the time really, in terms of latest standards, and all four of those tend to draw not just from an EU perspective but more from an international perspective. So even as this pans out there is a 965 good recognition and many of those standards will still survive or be re-ensconced in whatever that new world looks like. The Withdrawal Bill that is now out for consultation was, from my perspective, a good example of how that has come together into one place to make sure it first of all provides the mechanism we need but also has some enabling functions in there, just in case there are things 970 that come to light further down the line.

Q92. Mr Robertshaw: Thank you very much for that. Going back to my question, should we be approaching the AG to ask him whether there is across-the-piece understanding of the volume that is going to come from all the Departments?

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975 Q93. The Chairman: And I think as well we have heard from DEFA that for their 92 pieces of legislation at their next political meeting they will have their prioritisation, some of which they are clear will probably need to happen ahead of Brexit Exit Day, whenever that is, but some of which will be later. Does the Department for Enterprise have a similar prioritisation of what needs to be done and when? 980 The Minister: Will – it has not come forward yet.

Mr Lewin: Yes, as I said, a lot of it comes from international standards – or watching them, more of the case at the moment, as to … We have not got a predetermined list of ‘this is going 985 to change’, but we know the principal mechanisms, the orders that will need to be looked at as and when that comes out. But it is on a completely different scale for us compared to DEFA. There is a significant amount of legislation that is relevant to them that they are having to work through.

990 Q94. The Chairman: To Mr Robertshaw’s point, I think it is helpful to see across Government what needs to be done and how it is going to be managed and progressed.

Mr Lewin: Again, on our four we already have policy people who, because they move already on a regular basis – so in our Aircraft Registry there is an individual who understands the 995 legislation, the orders; the same in maritime and the same in employment law and intellectual property – we have that lined up. So, from our perspective it will not be a case of having to do a prioritised list that we can only deal with and then cut it off.

Q95. Thank you. You have touched on, a couple of times, WTO and the UK’s increasing 1000 engagement there and our position. To guide us on this one, could you talk to us about the Isle of Man’s position in relation to WTO compared to the other Crown Dependencies? A little bit of advice would be appreciated there.

Mr Lewin: The Isle of Man joined as a member through the UK – in, I think, 1997 the option 1005 came forward. It is not something that we have used or particularly looked at in the past, but it certainly came to light last year as a decision that clearly was fortuitous. We do not want to end up in a hard Brexit where WTO rules are applying, but it is the ultimate safety net as to how countries would trade. We have a benefit as being a signatory to that through the UK. At the time, the other Crown Dependencies did not, so they are now in a position of looking for … That 1010 bottom level actually is not in place, so from their perspective one of their priorities will be to make sure that is in place. From our perspective, as I said before, the UK is going through a process of really relooking at that. There is a whole series of commitments around all the schedules to make sure that they are fully understood, because under the single market they have not been as relevant in the EU 1015 context and we have been working with the Department for International Trade to understand and make sure for each of all of those schedules – it is one of the things the Department has gone through to look at – is there anything in here that would give us concern if there was a commitment made, or conversely is there something we wish to declare by way of a different situation for us? That has been a process that we have been doing over the last four months or 1020 so.

Q96. Mr Robertshaw: Has anything significant emerged from that?

Mr Lewin: No, not at this stage. The work is still ongoing, but there are areas that we would 1025 want to draw attention to – for example, things like the work permit regime, where we have a

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process that allows free movement of people but from an employment perspective we have an additional control mechanism on top of that.

Q97. Mr Robertshaw: If then, Chair, we can move on to the staffing issues, you touched on 1030 availability of expertise in a whole range of areas and industries and the way our work permit and immigration rules work. Are you comfortable with where we stand, that we can exercise ourselves sufficiently to access those services and technical capacities that we need in the future? Or do you think that we will need to look again at our immigration rules and our relationship in that area with the UK? 1035 The Minister: I think it is a very good point because this is all about access to skills ultimately, and yes, we want that access and we need to maintain that access. Whether that be from the EU or elsewhere is another matter, of course. With regard to immigration, that is an issue that we raised some time ago and of course we just had the Order laid last month that will give us more 1040 opportunity in this particular space, because it may not just be the EU. Our businesses look globally for business, and that is what is interesting. When you go through these reports and you start to drill down to industry specifics you will see that the Isle of Man deals an awful lot with the UK, 80% to 90%, but some of them are very globally facing, these industries and specific businesses. So, equally I think we do, as an Island, need to look at the skills rather than where 1045 they are coming from. But we are alive to this. The free movement of those skills was a very early issue, obviously, for the UK and clearly our opportunity on the back of that stands to benefit at the same time.

Mr Lewin: I think those reforms that have just streamlined the worker route clearly today are 1050 very helpful in an international context, but going forward from an EU perspective will be hugely important as well to make sure that employers have a well-understood and easy path to navigate where they are unable to find skilled labour in the local market.

Q98. Mr Robertshaw: So would it be or could it be in our gift as a jurisdiction to adjust our 1055 immigration rules from the EU so that they are different from the UK but serve our purpose? Or is that just howling at the moon?

The Minister: No, I would not say so.

1060 Mr Lewin: It is probably one more for the Chief Secretary, where immigration sits. We support the employment side of that. We are a Crown Dependency, so there is a limit on how much we can interpret those rules, but that is why we can make … From our perspective now, going forward we can control our own shortage occupation list, so we can determine what are the skills that are needed in our economy and we can therefore help the path that is relevant to 1065 that, which might be different to the UK’s path. We might be looking for a different type of skill and in the UK they have determined that is no longer a critical skill that is in shortage. The actual process will still be very much linked to manage this part of the UK process. So there is a limit on how far we can go, but what we can do is make it really relevant for our businesses here. So if our key sectors … the digital economy, hugely and competitively fought 1070 for, but how do we make sure our businesses here can determine, right across a whole range of skills, those jobs are listed as shortage of occupations?

Q99. Mr Robertshaw: And are you comfortable that the necessary level of co-operation with the UK would be accessible? 1075 Mr Lewin: Yes.

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The Minister: Yes, we do, and in very much a general sense the Government priority of growing the economically active, from our point of view, is looking at that, where those 1080 shortages are. The shortage occupation list is quite critical and if we can align our immigration laws to what other nations use, the points-based system, that would allow us hopefully to be able to fulfil those roles in the immediate term. Obviously, mid to longer term we need wider strategies with our education to build upon. It is something we are very alive to. We have contributed to the Cabinet Office with regard to 1085 their changes in the new immigration law and so far, as far as I am aware, the feedback from the UK has been being receptive.

Q100. Mr Robertshaw: How does the EU Advisory Group actually work in relation to all of this? 1090 Mr Lewin: It considers, I guess, things that come up. So we as a Department will bring up either an issue or latest thinking or sentiment from our perspective and it will bring things down. It will bring feedback from the likes of the roundtables, feedback from what is happening in the political environment in the UK or EU, further afield, and is a forum to consider what ultimately 1095 we need to go forward by way of policy papers, decision papers, briefing notes. So it is a real conduit. From my perspective it is usually useful because I sit with the Chief Executive of DEFA, sit with the Attorney General, sit with the Chief Secretary, External Relations, Customs. It is the forum where we can all come together not just to talk but actually to make decisions about the next set of decisions we will ultimately need to make – policy papers, briefing papers. 1100 Q101. The Chairman: Can I ask on that, to what extent do the decisions that are made then at that EU Advisory Group level then inform all of the separate roundtables that you go away and have with the UK? Is the policy then for the Isle of Man being driven out of that EU Advisory Group, as opposed to individual Departments? 1105 Mr Lewin: At the EU Advisory Group the policy will flow up in terms of the Council of Ministers if it is a national decision to make. The roundtables, of which there are a number … The Cabinet Office, External Relations in particular through the Brussels side, will represent at most of, in fact all of those roundtables and that is where we get some of the joining up to make 1110 sure that we hear from financial services, the Common Travel Area, fisheries. So there is always a common representative flows through all of those and there will be different experts at each of them to make sure that the people at the coalface understand what we are talking about.

Mr Robertshaw: I suppose this has to be my last question, Chairman. 1115 The Chairman: Yes, I think so. Time is running out.

Q102. Mr Robertshaw: We have been enjoying ourselves so much! We are obviously talking to the Crown Dependencies. Do we talk to Gibraltar at all about the 1120 circumstances they are in and examine their pressures and tensions, just out of an interest?

Mr Lewin: At an industry level we are competitors on a number of fronts and we do discuss. From a regulatory perspective, our regulators will meet up and will discuss at a perspective as to what opportunities we might be presented with or the challenges we face. We have not, 1125 certainly at our level in our Department, reached out to our equivalents. I do not think it would be particularly appropriate and they are in a completely different situation.

Q103. Mr Robertshaw: I suppose I ask the question from the standpoint that elements of turmoil may very well come out of where we end up. We are finishing off where we started on

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1130 the opaque bit, and I think it has already been touched on by the Chairman, and by Mr Hooper before with DEFA, and that is examining where opportunities may emerge in the future.

Mr Lewin: We have already seen that in the … Again, it goes through peaks and troughs but in some of the areas where there has been some uncertainty in Gibraltar we have seen 1135 businesses that have a foot in both, there and here, move here. We have seen some businesses start to test the water here. I think on the e-gaming, where the licence allows them to have disaster recovery mechanisms here, then they have taken that as an early, tentative step to prepare themselves. But others, we have absolutely seen people and equipment move from that jurisdiction because of the uncertainty they face. 1140 The Minister: Industry intel has been very valuable to us, I have to say, especially because we have international businesses here that could have a foot in different jurisdictions. It comes back to the opportunity issue: what may be a threat to one jurisdiction might be an opportunity to another jurisdiction. So yes, we are very alive to that and our liaison groups through the 1145 agencies going forward will be the area where we will pick that up and then feed that into the EU Advisory Group, and if we do need to consider legislation changes or any other changes, that is where we would make those recommendations and bring it forward in the appropriate manner.

1150 Mr Robertshaw: Thank you.

Q104. The Chairman: Just to close, as time is against us now, there is a huge amount of work going on and a huge amount of work to be done. I suppose my last question is really just that sense of prioritisation, because an opportunity in the way you have just described coming to the 1155 EU Advisory Group … that reassurance, I suppose, that from a cross-governmental perspective, where a real opportunity is there, we channel our resource and our strategic planning to … For example, if legislative changes need to be made or other steps taken, how that is managed – just interested in your final thoughts on that.

1160 The Minister: From my perspective, any support that we have asked for or has been requested has been given across Government, so I think it is recognised from the Government, from the top down, that we do need to treat this as a priority. We have it as a standing item in our Department but if there are any resources that are needed for this, to date they have always been given. So we would prioritise that as necessary. We are very alive to it and what we are 1165 trying to do is to be able to seize on those opportunities that do present themselves. And from an executive level?

Mr Lewin: Yes, that is essentially what the Department does each and every day. We listen and we speak to industry for ideas. Some are Brexit, some are not, but our ability then to take 1170 that forward and say, ‘How can we help? Is it policy? Is it legislation? Is it resources? Is it research?’ We do that, and we are doing it in some cases directly relating it to what we are hearing on this topic, but in others if we see an economic opportunity or we see a business opportunity that we can support that is right for us, then we will move quickly to try and support that. 1175 The Chairman: Thank you both very much for your time today. The Committee will now sit in private.

The Committee sat in private at 12.32 p.m.

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15th October 2018: Evidence of Ms Jane O'Rourke, Former Chief Executive of the Isle of Man Law Society

65 66

S T A N D I N G C O M M I T T E E O F T Y N W A L D C O U R T O F F I C I A L R E P O R T

R E C O R T Y S O I K O I L B I N G V E A Y N T I N V A A L

P R O C E E D I N G S D A A L T Y N

Constitutional and Legal Affairs and Justice Committee

Legal Services

HANSARD

Douglas, Monday, 15th October 2018

PP2018/0146 CLAJ-LS, No. 2/2018

All published Official Reports can be found on the Tynwald website:

www.tynwald.org.im/business/hansard

Published by the Office of the Clerk of Tynwald, Legislative Buildings, Finch Road, Douglas, Isle of Man, IM1 3PW. © High Court of Tynwald, 2018 67 STANDING COMMITTEE, MONDAY, 15th OCTOBER 2018

Members Present:

Chairman: Mrs J P Mrs Poole-Wilson MLC Mr L L Hooper MHK Mr C R Robertshaw MHK

Clerk: Mr R I S Phillips

Assistant Clerk: Miss F Gale

Contents Procedural ...... 39 EVIDENCE OF Ms Jane O’Rourke, Former Chief Executive of the Isle of Man Law Society ...... 39 The Committee sat in private at 12.33 p.m...... 57

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Standing Committee of Tynwald on Constitutional and Legal Affairs and Justice

Legal Services

The Committee sat in public at 11.15 a.m. in the Legislative Council Chamber, Legislative Buildings, Douglas

[MRS POOLE-WILSON in the Chair]

Procedural

The Chairman (Mrs Poole-Wilson): Good morning and welcome to this public meeting of the 5 Constitutional and Legal Affairs and Justice Committee. I am Jane Poole Wilson MLC and I chair this Committee. With me, are the other members of the Committee, Mr Lawrie Hooper MHK and Mr Chris Robertshaw MHK. The Constitutional and Legal Affairs and Justice Committee is a Standing Committee of Tynwald with a wide scrutiny remit. Today we will be hearing evidence on the topic of legal 10 services in the Isle of Man. This inquiry is an amalgam of our previously announced inquiry into the regulation of legal services in the Isle of Man, with reference to the role of the Law Society and the Advocates’ Disciplinary Tribunal, and our more recently announced inquiry into the process of becoming a Manx advocate. This inquiry will also include consideration of the proposed Public Defenders’ 15 Unit. Before we begin, could I please ask everyone to ensure that any mobile phones are switched off or on silent so that we do not have any interruptions. For the purposes of Hansard I will also be ensuring that we do not have two people speaking at once.

EVIDENCE OF Ms Jane O’Rourke, Former Chief Executive of the Isle of Man Law Society

Q128. The Chairman: Thank you for attending today. For the record, could you please state 20 your name and the capacity in which you are appearing here today.

Ms O’Rourke: My name is Jane O’Rourke. I am appearing in a personal capacity but I am a former Chief Executive Officer of the Isle of Man Law Society.

25 Q129. The Chairman: Thank you. We have a number of areas that we thought it would be very useful to hear from you today. Thank you very much for your submission that you sent to us.

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Without further ado, I wonder if we could start off please with the area of rights of audience and the idea … well, we currently do have a standalone Manx Bar. I wonder whether we could 30 hear more from you about your experience of being a registered legal practitioner and some of the differences between the position of registered legal practitioners and Manx advocates.

Ms O’Rourke: Okay. A registered legal practitioner does not have rights of audience in court. The sort of work that I did was employment tribunal work. In fact, I did not go before a tribunal; 35 it was never my intention to appear in court or in a tribunal. So I think it is probably fair to say that for most people, certainly for most consumers of legal services, there is not really even an apparent difference. I do not think most people are aware that such a thing exists as a registered legal practitioner. I think that for the most part firms would want to employ registered legal practitioners because of their foreign law expertise. So 40 when I came to the Island, the employment law of the Island was some years behind that of the UK and so some of the things that were being debated or brought into force here had already become well established law in the UK. So that was an area where it is a good opportunity to harness the skills and expertise of a foreign lawyer who has come to the Isle of Man and can bring into play the experience that they 45 have got. Some practices do work the way the solicitors and chambers of barristers would work in the UK, so that in some Manx advocate practices, advocates never intend to go into court, they always do the role of a solicitor and other advocates within the practice would always do the role of the barrister. So even within a firm, some advocates may take the matter from the initial client interview straight through to court and others may hand over to the barrister within 50 the practice. So it is not necessarily unusual to have a registered legal practitioner that does not go into court because there are some Manx advocates who do not go into court.

Q130. The Chairman: You say from the consumer’s perspective you do not think the 55 consumer really would notice any difference or be aware of that difference.

Ms O’Rourke: Not really, no, and I am not sure that it actually matters to many consumers. I think the whole issue of regulation, of any service, not just legal service, in any professional service, is quite interesting. Why do you regulate services? Very often it is because you want to 60 protect the consumer’s interests. But I think I have heard people talk about, ‘I’m going to see my lawyer’, and they are going to see a conveyancing clerk. They are not a lawyer at all in the sense that you would understand, and the consumer is perfectly happy to have a house conveyed by a conveyancing lawyer or for all the work to be done by a conveyancing lawyer because if the work is done properly and in 65 time and to budget they really do not care. They just want the end result. Do consumers care about the way in which a profession is regulated? Only really when things go wrong and they are seeking redress.

Q131. The Chairman: On that issue of when things go wrong, could you talk to us a little bit 70 more about what the differences are between the regulation of registered legal practitioners and Manx advocates on the Isle of Man?

Ms O’Rourke: So the ADT does actually have jurisdiction of registered legal practitioners, which I think is something that is not widely known. I think it is thought that because of the 75 name, it only relates to advocates. That is quite interesting because I do not think the ADT have ever heard a case against a registered legal practitioner. The Law Society’s website does state very clearly that if work is being done by a foreign lawyer there may be cause to have redress through the agencies in the foreign jurisdictions. So I know that the Isle of Man Law Society website does direct people to the SRA, which regulates

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80 solicitors, and also to the BSB, the Bar Standards Board, Bar Standards council, which regulates barristers. I think there is also a reference direct through to the Legal Ombudsman, which deals with any legal services that are being provided in the UK. So if you had a registered legal practitioner over here, it is possible, if you wanted to make a complaint against them, you could go to the home jurisdiction and use the complaints 85 procedures there. We have had instances where complaints have been made about a registered legal practitioner operating in the Isle of Man to the home jurisdiction regulator where they have thought that there was a greater level of regulation on the Isle of Man of that person’s services and professional life. I think that it was felt at the time that actually there was a bit of a gap there, and I do not think that gap has now been addressed, but certainly complaints can be 90 heard by the ADT here on the Isle of Man.

Q132. The Chairman: Just in terms of gaps, in the whole area of registered legal practitioners, there seems to be some inconsistency about whether people register at all. So there seems to be a situation on the Island where you can be a qualified foreign lawyer, you can come and work 95 in a firm on the Isle of Man and there is some inconsistency to do with the language in the relevant legislation.

Ms O’Rourke: I think the language is very much ambiguous. It is not always very clear the capacity in which people are operating and whether they are providing subordinate services to 100 an advocate who is themselves, so maybe they are sort of acting as a research assistant. They may never have any client facing profile and so in that case, does it matter because the person who is liable at the end of the day, both in law in terms of negligence claim and from a regulatory a disciplinary point of view, is the advocate that is actually signing off the advice? So it is true to say that there is a deal of ambiguity. I think there is also a bigger area over the 105 registration provisions in terms of what are we looking at when we say somebody is fit and proper to be registered? What do we mean by that? Are we looking at a certain level of professionalism or a certain level of experience? It is really pretty much an administrative process and I think that I have heard one president of the Law Society say that really when it was begun, the system was about acting as a warning to people. It was about warning people that 110 ‘this is a lesser legal professional – this is just a registered legal practitioner; this is not a Manx advocate’. But now it tends to be used as a bit of a badge of honour: ‘I am a registered legal practitioner.’ I suppose because there is such different consumer awareness about the difference between the two, it does not really mean much to the people you might expect it to 115 mean something to.

Q133. The Clerk: Just to underline this, it seems that the legal system here is very much bolstered by people from off-Island, whether as temporary judges or as lawyers working in firms. It does call into question whether the Bar itself is fit for purpose at the moment because it 120 is not providing the services as you would expect a Bar to provide. All jurisdictions have foreign people working in them, but there seems to be quite a large number of registered legal practitioners who support the work of advocates’ firms here.

Ms O’Rourke: I do not have any idea how many registered legal practitioners there are at the 125 moment. When I was at the Law Society that was not the case. I think there were about 230 Manx advocates and the number of registered legal practitioners was considerably smaller than that. Again, I do not have the figures to say whether or not your statement is true. I think it is certainly true to say that in certain areas we do rely on expertise from other jurisdictions. I do 130 not think that is at all unusual, given the way the Isle of Man economy is going and the fact that

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what we are often being asked to provide is niche areas of expertise and that is not always easy to provide just if you have home-grown advocates. When you think back to some of the people who are now our senior partners, there was no requirement for them to even go to university. They may never have been off-Island and their 135 whole experience as a lawyer may have been on-Island as what we would call an apprentice now. So I think you would have to question whether that was ever going to be a right fit for an international and really very modern economic landscape.

Q134. The Clerk: So what proportions of advocates are qualified in England and Wales or 140 elsewhere? Quite a lot of them are, aren’t they?

Ms O’Rourke: They would have to be qualified to become a Manx advocate so they ought to qualify as a solicitor or a barrister. We have a few people I think who in my day were qualified in Northern Ireland and I think we have even got a couple who had their initial law degrees from 145 Scotland; but for the most part they have all got some sort of professional qualification from England and Wales as a solicitor or barrister. That is in the rules.

Q135. The Clerk: Right, so there is nobody who qualifies any more just as an advocate here?

150 Ms O’Rourke: No. It is interesting because that was the way that the legal profession went, not just here, but in the UK as well. They are looking now, I think they have already started to introduce apprenticeship schemes in the UK, where they are saying that, ‘Actually we don’t necessarily just want university graduates; what we want is people that we can train on the job.’ Again, in the UK the legal landscape is changing so incredibly quickly and in so many areas, so 155 that things like education and training, there is quite a strong movement for saying that … and it is partly driven by I think a consumer need. You have barristers who can be directly instructed by members of the public, which was never previously the case – instructions always had to go through solicitors beforehand; and you have got solicitors who have got rights of audience in courts; you have got solicitors who are judges. I think many people are saying, is it really still 160 right to say that we have two very distinct branches to the professions: solicitors and barristers? Why do we have all these overlapping requirements in terms of education and training? In fact, would it not be better to bring the two together and would it not be easier for consumers to understand; and for whose benefit are those distinctions? So the Legal Services Board, who is responsible for the overall regulation of legal services in 165 the UK, introduced a little while ago a consumer panel. The consumer panel is made up of some pretty formidable people who are there simply to represent the interests of consumers of legal services. They have had a massive impact on channelling into the Legal Services Board how the profession should be regulated, how training should be undertaken and so you have got all sorts of things now being put forward in the UK which are becoming pretty standard, which back in 170 the day would have been thought to be outrageous – such as, you must be told absolutely ambiguously how much the case is going to cost you when you take it on and if they cannot tell you unambiguously, then there are going to be pinch points throughout the matter where you will be told; and there will be references online, so when you go to look for your legal provider, much in the way you would for lots of other services, you will be able to see very clearly the sort 175 of experience of that lawyer, the indicative costs of that lawyer, in the way that doctors are being pushed to publish how many operations of a certain type they have done and success rates and that sort of thing. The whole push and thrust coming through the Legal Services Board from the consumer panel is all about saying, ‘What is the purpose of your regulation? If the purpose of your regulation is to have a better qualified legal profession providing services that 180 people actually want in a way that they actually want them, at a price that they can afford, then you need to restructure what you are doing.’

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Q136. The Clerk: So what is the point of having a Manx Bar if everybody is qualified in England and Wales and are competent lawyers and are regulated by their home jurisdiction? 185 What is the point in having a Bar at all?

Ms O’Rourke: Well, that is a very big question in the sense of what is the point of having a Manx anything, isn’t it? Certainly in my time at the Law Society, one of the things I did constantly query was what is the point in having a Manx legal services regulator? 190 I think the point in having a Manx Bar is that our laws are different. I think that is important. They are not significantly different in some areas, but they are different. I think that local consumers would want to talk to local professionals. So yes, it is true you might have, say, Liverpool solicitors setting up here, it might be easier for them to do, but I think there are various arguments to be said about independence and resilience. Should we have home-grown 195 professionals? I am of the view that we should and I think lawyers are amongst that. I think that if you look at any of the First Deemster’s decisions, he would very much make the case for saying that what happens in the UK is of great persuasive authority, but you are a separate jurisdiction and the cases that are made here are peculiar to the Isle of Man. So to that extent, I think there is a very distinct identity to the Manx Bar, but whether or not we should 200 have a separate regulator or whether all the regulatory functions need to be done here … So for instance, I know that you have heard from the Law Society and there was much talk about conciliation. In my time, we had quite extensive discussions with the Legal Ombudsman as then was, and we signed a memorandum of understanding with the Legal Ombudsman. Our objective at the time was to try to introduce into the Isle of Man the Legal Ombudsman Services. It is a 205 call-centre operation out of Birmingham. It would not make any difference to them, frankly, whether they were getting calls from Douglas or from Birkenhead, and we felt that there was quite a lot of synergy. The Law Society at the time felt there was quite a lot of synergy in doing that. Unfortunately, there were political reasons in the UK that it was felt that it was a bit too 210 domineering to proffer that service in the UK for a legal service which was not UK based, and it never happened. But we did have a very close working relationship with the Legal Ombudsman. One of the things that our memorandum of understanding did was to say, ‘If you ever get complaints about people who are practising in the Isle of Man, it would be great to have some information about that so we can pick up on some trends.’ So I think there are things that are 215 done in the UK that could very usefully be easily applied over here. We also had a very close dialogue with the Scottish Law Society. They have quite a significant executive. I was constantly looking for ways that the regulation could be more effective without having to reinvent the wheel, because we are such a small jurisdiction and the costs of administration are so high. It has to be a balance between what is realistic and what is effective 220 and what you are trying to achieve.

Q137. The Clerk: So the obstacle to having the Ombudsman in Birmingham look at Manx advocates came from the UK, not from here?

225 Ms O’Rourke: From the UK, not from here. So we did execute a memorandum of understanding, in the hope that the next step would be that we would be able to offer Legal Ombudsman Services, so that we would be able to roll that out and in fact what we did at the time was we strengthened the conciliation scheme that the Law Society was running. Realistically, we just could not really afford to set up a Legal Ombudsman scheme for the Isle 230 of Man to run on its own, but we strengthened the conciliation scheme by employing somebody, who was not employed as an employee, but engaging the services of a completely independent conciliator who had a long tradition of being a conciliator on the Isle of Man, who had a very credible track record.

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235 Q138. Mr Robertshaw: Given that it was the UK’s discomfort with regard to applying the Ombudsman to the Isle of Man, would you see any purpose or reason in trying to revisit that and get a review of it?

Ms O’Rourke: Yes. The Legal Ombudsman has changed a lot since then. They have got a new 240 chief executive and they have got a new team in place. As I say, it is really difficult to understand the pace of change in the UK, unless you are in that world, because it is every day something new is coming forward. I know that it was always on their agenda that they would be able to extend their range to other jurisdictions. Whether or not that is still on the agenda or it has been pushed out by something else, I do not know but I think certainly for all I know that dialogue is 245 still maintained, I do not know.

Q139. Mr Robertshaw: Would there be any way that we could look at a summary of the pace and activity of change, without trying to look at the whole landscape in the UK? Is there some point of reference that we could find that would guide us and say, ‘This is what’s happening and 250 this is the pace of what’s happening.’

Ms O’Rourke: Yes, I think if you or maybe your Clerk could sign up to any of the publications that come out on a very regular basis. There is normally an executive summary of things that are hitting the headlines. I think in terms of just an ongoing flavour, the professional bodies will 255 produce annual reports. They are very useful.

Q140. Mr Robertshaw: From my perspective and understanding, which might be very limited, there seem to be significant barriers to moving into the Manx Bar as a Manx advocate, that perhaps are perhaps artificially high. Is that interpretation or understanding unreasonable, 260 or is it fair?

Ms O’Rourke: There is certainly a barrier in the sense that it is a training programme that is not that easy to understand. A lot of work was done by the Education Committee when I was at the Law Society and I have no reason to doubt that that has stopped. Basically, it goes back to 265 the way in which people used to learn their law. So the Inns of Court in the UK were established – there were four Inns of Court in the UK. If you want to be a barrister you have to be a member of one of the Inns of Court and you have to have dinner a certain number of times in the Inns of Court before you can be called to the bar. The reason for having dinner was not just to eat; that was how you acquired your law. You 270 chattered about people’s cases and you spent time on an unpaid basis doing pupillage with a barrister and you would accompany him with cases. Bit by bit you would acquire your law and much the same way here, when Manx advocates started out as apprentices, they would be acquiring their law in an informal manner. So we have very few Manx law textbooks. Thanks to Deemster Doyle we have a book about 275 criminal law. Putting together a tome that is ‘Manx Law’ has not happened. There are various bit and pieces that have been reduced to writing. So there has come into existence a system within the Law Society and it has been formalised quite considerably, but back in the day it was a set of notes that got passed around that contained the information that you would need to pass the Manx Bar. Over the years, this 280 became codified to a certain extent and that was then supported by a whole range of classes that were done by the Law Society where existing practising advocates would do lectures. Then past papers became available so it is possible to see what exams had looked like previously. There has been, as I say, a very big push at the Law Society, or certainly in my day, to try to make that training and that education process much more transparent – much more ‘codified’, 285 really is the word that I want to use. So that you can say if you want to pass the Manx Bar and you want to understand Manx law, you need to read those books. We have got a very significant

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body of case precedent which is now available online, which is very helpful. Anybody sitting the Manx Bar that did not read those cases would be foolish because they obviously have a lot of the information. 290 But part of the difficulty is of course that the Manx Bar is not set by the Law Society. The Manx Bar is outwith the control of the Law Society and because of what I said to you before about the pace of change in the UK, and the push in the UK to combine the training for lawyers, there was always a feeling that it would be silly to revamp the examination part of the education in the Isle of Man until it was known what was going to happen in the UK. 295 The difficulty with that is that I do not think you are ever going to get to a final point in the UK. I think the UK is always going to keep on changing and changing. So at some point somebody here has got to say, ‘We’re going to plunge in at this point and we’re going to change the exams at this point.’ But certainly that is a barrier – there is no doubt about it. 300 Q141. The Chairman: Can I just build on that, in terms of the nature of the Manx Bar and the education at the moment, and going back to what we were talking about earlier on, about the fact that there are people, there are members of the Manx Bar who never go into court because they choose not to, they choose to practise in a different way, and then there are registered 305 legal practitioners who never pass the Manx Bar, who are in the Isle of Man providing legal advice on Manx law. So I am interested in your view on whether the Manx Bar as it exists or that education programme and those hurdles are fit for purpose for a modern economy with the range of legal services that are on offer or whether you would suggest developments and changes that would 310 better fit a modern legal economy.

Ms O’Rourke: Well, I think it is two things really. I think the registration of legal practitioners is something that does need to be addressed and has been raised for a considerable number of years. I am trying to think of the date of my registration. I am guessing it must have been over 20 315 years ago when I was a registered legal practitioner, and I remember having the discussion with the Registrar about whether or not I should register. I felt I absolutely should register because I did not want to be caught out, but it was far from clear at the time that I should register. I remember arguing the toss about why I should register and having a discussion about it and there was a real lack of certainty on both of our parts about whether or not it was really 320 necessary or was I just doing a belt-and-braces job? I think there has been some development since then. I think there has been some clarity since then, not least because, at the Law Society, they have been quite keen to try and get some clarity about it. I think that the regulation of foreign lawyers in this jurisdiction is an important matter but I am not sure it is one that is necessarily linked up with the education of Manx 325 advocates. Although, if you had a clearer education programme, what you might find is that RLPs would convert to Manx advocates more readily because it is an easier, more obvious thing to do. So if I come across, say, as an experienced solicitor and I have been a partner maybe in a firm, the last thing I want to do is really to start scrabbling around and relying on student notes, and 330 do I really want to put my credibility on the line to take an exam that I am not so sure about? Supposing I have only ever done commercial law, but to be a Manx advocate I have got to do family law and suppose I am not very good at family law. So those issues are quite interesting and I know that you have talked to the Law Society about practice certificates, which again is another issue that is not a new issue. It has been 335 around for a long time and one of the issues that we had discussed at the Law Society was whether or not you should have a limited practice certificate. If you know you only ever want to do commercial law, and particularly in the context of a converting RLP – I come across as a commercial partner, I am only ever going to do commercial law. There is no way I am ever going

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to want to step into a family court. Should I not be able to get a Manx advocate’s practising 340 certificate which confines me to just doing commercial law – much as the way, I think you had explained by Mrs Unsworth, that if you are in the AG’s Chambers you can have a certain restriction on how you practise. So you can become a Manx advocate, you can only ever do that prosecution work, you cannot do anything else. So it is kind of a precedent that has been set. I think that is an area that would reap further work, but hand on heart the Law Society have 345 not only put a lot of time but they put a lot of money into this. They have commissioned a consultant who works in the UK doing legal exams and a programme was really ready to fly, but as I say the education programme is not, in terms of examinations, within the control of the Law Society. So to set up an education programme without having any control over how that would meet an examination would be foolhardy. 350 So it really does need either the exams to be brought in-house to the Law Society, but you know straight away what is going to happen then: the allegations are going to come thick and fast that ‘Well, of course you want to examine your own people!’ So then you say, ‘Okay, so it has to stay out of the Law Society.’ Do you actually need a more independent Law Society or an independent regulator or do you need an education programme 355 to be devised by the people who were devising the examination – their academics in the UK and the First Deemster here? It is a big programme of work. A lot of the groundwork has been done. It is just a question of getting things over the final hurdle, I think.

Q142. The Clerk: Is it such a necessary thing to have exams at all, given that they are all 360 qualified lawyers already?

Ms O’Rourke: Well, I think certainly there is an argument you could make to say, do they need to be examined on anything other than the Manx differences? (The Clerk: Yes.) (Mr Robertshaw: Exactly.) I would be a very strong advocate, no pun intended, for having very 365 clear advocacy … not necessarily exams in a sense, but assessments. Again, this is a very big bone of contention in the UK, where they are introducing advocacy assessments for people at the bar and it is kind of just accepted now that if you want to deliver legal services, you will have to have some sort of advocacy training, you will have to demonstrate that you can do it. It is fairly obvious. 370 Again, back in the day, when you did your pupillage as a barrister at the end of the first six months, you were allowed to go to court and you were a guinea pig for somebody, some poor person, and you were usually given some relatively minor, to you or your chambers, offence but for a person maybe something quite serious. But that was how you found your feet and certainly the benefits of being in court, in a real court situation with a real client and real consequences, 375 are very important. I know that the Law Society did introduce a shadowing system for legal aid work, to get on the legal aid panel. So yes, the actual practice of standing on your feet is really important, but I think also some academic assessment of that. Again, I think credit has to be given where it is due: a lot of work has been put in to bringing across barristers from the UK to do specific training sessions and 380 there have been moots. The judiciary have been very co-operative in presiding over moots, which are mock trials basically. I know that a huge amount of work has been done on a completely voluntary basis for that by members of the Education Committee – really staggering amounts of work. But I agree with you that maybe a full set of exams covering all of the legal education that 385 might already have be done are not so necessary, but something really focused on what we want as a Manx market. So for instance, I have always felt there should be a very strong paper on regulation, as regulation and compliance is a big element of what we do in the Isle of Man. We have a significant e-gaming sector, we have got e-businesses and regulation of data protection and that sort of thing, to me, is really … If I was setting an education programme now, 390 regulation and compliance would be very much to the fore of what we did.

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Q143. Mrs Poole-Wilson: Can I ask about that idea of regulation and education? It seems to me there is a hurdle to become a member of the Manx Bar, which is your right to practise, and then that is it. If you are in another jurisdiction, your qualification is in another jurisdiction, quite often you are required to submit and renew your practising certificate and so on. So I suppose 395 there is the question of what do we want in the Manx legal economy, in terms of admission to even start practising. I think what I am hearing you say is we might not need a full set of Manx Bar educational exams for everybody, because it is perfectly possible that somebody is qualified and very experienced in another jurisdiction and in moving to the Isle of Man wants to only practise in certain restricted areas and therefore they should be able to access that; and the 400 other benefits of being in this market, such as being able to own a firm or be a director or partner, provided they demonstrate competence in the area they are going to practise. The secondary element is: for all of our practitioners, what do you think we should see in terms of ongoing standards, education, regulation? How much do you think that should be prescribed, regulated, more done about that? 405 Ms O’Rourke: I am a fan of regulation if it is effective and I am a fan of regulation if there is a clear purpose and objective, which you can then measure as to whether or not it has been met. I know that one of the difficulties in the UK, with their enforced CPD programme, is you might have a certain number of units to make up. You might be a commercial practitioner, but because 410 you have got x many units still to make up, you do book yourself on to a family conference or something that is not really related to your area of work. You have got your CPD units, but it is not really effective, it is not making you a better lawyer, in the sense that your commercial clients are going to benefit from. Although, there is the bigger argument to say that actually all of those training courses will bring particular benefits and skills and understanding of clients. 415 So I think I am against the traditional and you must do x many hours. I think the Law Society really tried to say that you must do appropriate CPD and you will know what the appropriate CPD is, and there was always an argument about saying that we should make this compulsory; but then it is how you police it and how you enforce it. Training opportunities are not as widespread here on the Island as they are elsewhere, but lots of people do travel across and 420 there isn’t any reason why you could not use Skype or any of the webinars that are available. So I think probably we do need to do more here, but what would be quite interesting and obviously I have been away from the Law Society for some time, most professionals now see the need to be current for their own sake and for the sake of their practices, not because they are trying to tick a box and it may well be that an audit of CPD would demonstrate that actually 425 sufficient is being done, or maybe it is something that actually would bear scrutiny in an ADT report. If they were able to demonstrate trends and things maybe they could say something like, ‘It’s become apparent to us that really regardless of the sort of work you do, there’s an issue here that people will benefit from ongoing training,’ whether that is communication or timely correspondence or clarity of expression, whatever. And that might be something that could 430 inform the CPD programme, possibly.

Q144. The Clerk: Rather than have everybody having to go through this particular hoop, whatever they do, would it be possible to organise CPDs that were occasional, on the basis of legislative change? 435 So, if you have the Equalities Act a certain range of practitioners would be expected to do CPD on that Act (Ms O’Rourke: Yes.) because you have rewritten employment law, and you have written a lot of other things. So instead of focusing on hours, which is a box-ticking exercise, you would actually have the Law Society or an authority say, ‘If you wish to continue to practise you must demonstrate familiarity with this change.’ (Ms O’Rourke: Yes.) Is that possible to organise? 440 Ms O’Rourke: Yes, I think it is not only possible, I think it is done to a certain extent and I do not know how widespread it is now, but certainly when I was at the Law Society, there were

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regular sessions which were called ‘Lunch and Learns’. Basically, if there had been any significant changes in any particular areas, speakers would be invited in to talk about them. If there were 445 particular projects – I remember when we were talking, before the Equality Act was even really significantly on the books, we started to talk about how people access justice and how you would access support if you were in a police station, if you had been detained in a police station and we would bring mental health experts in to talk about that, experts in autism. There is regular training in mediation, there is regular training in family law, there is regular training in 450 the courts’ procedures. So there is already a programme of regular training and I agree that, as I say, I am not up to speed with what the current programme looks like, but I am sure that it is on the Education Committee’s agenda that they would look at what training was needed. On the legal aid side of things, I know that there is a regular dialogue between the certifying 455 officer. But yes, I agree that more useful ways of CPD than simply hours could be done and that could just be an extension of the existing education programme.

Q145. Mr Hooper: The challenge you have at the moment, though, is that that CPD, that education programme is not enforceable. So if I am a Manx advocate and I choose not to attend 460 regular updates and training, there is no sanction; I can still be out there giving legal advice and practising in a way that may not be current and the Law Society itself has no way of enforcing that. (Ms O’Rourke: No.) Even less so, if that is possible, over the registered legal practitioner approach, because they are not even regulated over here. I know you have mentioned that the ADT covers both sides, 465 but my understanding is that the ADT is restricted only to professional misconduct; it cannot deal with service quality, for example. When you are talking about the conciliation service the Law Society offers, again that will be focused, I suspect, more toward member firms and members of the Law Society – Manx advocates – rather than registered legal practitioners, because again you cannot …. I know you cannot force someone to access that programme but it 470 is probably more difficult to force or to encourage someone who is not even registered here, who is regulated by the SRA across, to participate in local regulation, if that makes sense. Something you said right at the start really interested me, when you talked about confusion in the mind of the consumer; about actually when you are trying to consume legal services you do not really know whether your lawyer is an advocate, a legal practitioner, a clerk and actually 475 at the end of the day it makes very little difference to you as the consumer, provided everything works. In your experience, did you find that people were often surprised to find that their legal practitioner, their lawyer was not regulated by the Law Society? So if they came up against a hurdle or had a complaint or an issue and they were told, ‘Actually, they are not regulated locally; please refer your complaint to the UK Solicitors’ Regulation Authority or in Scotland …’ 480 Did that happen regularly?

Ms O’Rourke: It did not happen regularly, as far as I was aware. There was just one instance that I can think of that was a fairly serious matter: it related to client monies going missing and there was a very clear belief in the UK that there would be a regulator here looking at that and 485 obviously there was not. I think, when you say ‘when people found out’, generally they did not, and I think that is also quite interesting. People would normally say ‘my lawyers are …’ and then they would name a firm. Some criminal practitioners would say that they had a specific client list and they would be asked for in particular, not their firm. But I think that for most people they would say that it was 490 a firm and I think the thing that was a bit confusing there was that if you wanted to then take the firm to the ADT, you could not. I think that was a bit surprising for some people. I think that, given that the way regulation really is pushing out, it is a little bit odd really that we’re saying that we are regulating individuals rather than firms, when so many practices now have compliance departments which are not advocates, but advocates will be held responsible

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495 for the work of other people within the organisation that it is perhaps unreasonable … You would expect the firm, you would expect decisions to be made at board level or partnership level and that the firm would be held accountable, the practice would be held accountable. I think that, personally, would be a stronger way to go. I think it would be a stronger regulatory model. I think it would really push home the fact that everybody in the practice is at 500 risk, as opposed to an individual being at risk. It takes away the danger of operating in silos – ‘It’s not me that’s going to go to the ADT; it’s you.’ I think that you have that shared sense of moving forward, and I think that probably most practices would operate like that in any event, and so therefore it is quite difficult then that someone has got to fall on their sword when it comes to the ADT that it is one person. 505 Q146. Mr Hooper: So do you think there is a case for expanding or splitting the regulation to say we regulate firms in this way to cover these risks and we regulate individuals in this way to cover slightly different risks?

510 Ms O’Rourke: Yes, again you have got to look at the whole business model really for the way in which legal services are delivered. In the UK, you do not have to be a lawyer to be in a firm that is delivering legal services and there is a very strong sense that that one-stop shop is quite important in a commercial sense – there is the consumer sense as well, but in a commercial sense it is quite important. So if you look at how business comes to the Isle of Man, I think 515 accountants and lawyers are recognised to be important gateways to business and one-stop shopping is quite attractive to some people. If you look at the financial crisis some years ago in Iceland, they decided that the absence of women on a board meant that boards were actually quite keen on taking risk that was inappropriate and they introduced quota elements for women on boards. What they discovered 520 was that the risk appetite in banks changed quite considerably and that better lending decisions were being made. I think there is a lot to be said actually for having people who are not lawyers in a legal firm and people who are lawyers in, say, an accountancy firm. I think that there is a real robustness that comes and a resilience that comes from having a mix of disciplines making business decisions. Not giving the legal advice but making the business decisions and so looking 525 at things like, ‘What is it the consumer needs; what are our future training needs; where do we see our positioning in the economy?’ I think that we are really missing a trick in not having that ability to bring those strengths together at the moment.

Q147. Mr Hooper: One last question on this then: do you see that the regulation of the 530 firms – not the individual lawyers, but the firm as a whole – could possibly be undertaken in the same way that regulation of other financial services firms is undertaken by the FSA, for example? It does not necessarily have to be lawyers.

Ms O’Rourke: I think that is a possibility. 535 Q148. The Clerk: So would you favour all people delivering legal services to have the same regulatory supervision? It would not matter what your qualification was; you are actually delivering a service. So if you are somebody in a firm delivering legal services, then regulation should apply to you, with the same standards. 540 Ms O’Rourke: You take that one step further. As I said before, although I have been a regulator in various roles, I have always felt that regulation only had a purpose if you were clear about what your objective is and you were effective in doing that, and that if you were not really sure why you were regulating, then it was pretty pointless and it was a hindrance to a 545 commercial endeavour.

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I have always thought that with an island like the Isle of Man, it is a really difficult case to sustain that we have many regulators, when for me the purpose of regulation is two- or maybe threefold. One of the primary purposes in regulating is to make sure that the person that is doing 550 whatever the service is, or business they are providing, is fit and proper. What do we mean by fit and proper? Really we mean they are honest. Why do we want people to be honest? It is because we do not want them to be a risk to the reputation of the Isle of Man, and because we want them to treat consumers fairly. Now, that is a very simple regulatory framework, but really everything else to my mind hangs 555 off those things. If you have somebody who is fit and proper then they are going to make sure that client monies are properly accounted for. They are going to make sure that people are treated fairly. They are going to make sure they have got an appropriate complaints procedure. If we want the reputation of the Isle of Man to be protected they are going to do all they need to do in terms of due diligence of clients. They are going to make sure that all their money- 560 laundering procedures are going to be in place and if they are really concerned about consumers, then they are going to make sure that they do the CPD that their clients need them to do to make sure they understand the issues, to make sure that they write and speak clearly, to make sure that any complaints that come through, maybe about perception not about reality but they are as valid as though they were reality. So to me, those very simple regulatory 565 principles could easily be applied to all professions by one regulator. Now, you may need some expertise within the administration, so that if you were going into an accountants’ firm, you would need to have somebody who had specific financial services experience. But we have already seen that there has been an amalgamation of regulators with regard to pensions and financial services and we have already seen that with regard to the non- 570 designated businesses. The FSA have assumed responsibility for some other professions, and indeed advocates were offered the choice whether they want to be regulated in that regard by the FSA or the Law Society, and I am not sure, but I think some people did opt to be regulated by the FSA. So again, in terms of precedent we already have a couple of examples where a single 575 regulator has proven itself able to regulate across a range of professional services.

Q149. Mr Robertshaw: Just expanding Lawrie’s questioning just a little bit further, with regard to outcomes. If it was that the practice as a whole was responsible, rather than the individual practitioner, would that result in further specialisation and firms migrating away from 580 areas they were uncomfortable to deal with or is that specialisation happening anyway?

Ms O’Rourke: I think there is an element of specialisation. I think there are still some very general practitioners. Again, if you look at the history the Manx Bar, we did not need specialist advocates when we were looking at setting up the Law Society, because we did not have 585 international business. We did not have niche markets of commerce. It was people that just had regular legal problems that needed dealing with. So it might have been that today you go to see your lawyer about buying a house and tomorrow you go to see a lawyer about a will, and then the next day you go to see a lawyer about getting divorced, or maybe you have set up a small business and you want some help in setting up a partnership agreement, something like that. I 590 think they tended to be much more domestic, so that the reason that you had this general, if you like, GP-type status for Manx advocates was because it reflected what consumers needed at the time. I think that as our economy has become more sophisticated, so the response from legal practitioners – some legal practitioners – has been that they operate in those niche markets. 595 Whether or not setting up a regime where you regulated the firm, in fact I think is quite interesting actually, because I suspect lots of practices believe they are regulated as firms, and of

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course you do have incorporated practices and there are specific rules about incorporated practices where they do operate as legal entities. And so I suppose it is the word ‘regulation’, really. Are you talking about day-to-day how-you- 600 do-your-business regulation or are you talking about disciplinary enforcement? If it is the latter, then maybe it is always going to be appropriate to retain an element of personal responsibility, so that if one person goes rogue in the firm and steals all the client money, is it ever going to be appropriate to say that he or she should not be on the hook, that it is the firm that is on the board because the process allowed that to happen? I think people would generally say no, you 605 would want some way of really getting that person out of the profession.

Q150. Mr Hooper: But then comparing that to say the way that CSPs are regulated or accountancy – I am regulated on accounts myself. I am regulated as an individual and if I was in a firm they would be regulated, so if there was a breakdown in client money procedures there the 610 firm would be taken to task over any failings on the firm’s part and I would be taken to task over any failings on my individual part. So that model works elsewhere. (Ms O’Rourke: Yes.) It should work for lawyers as well.

Ms O’Rourke: Yes, I agree. 615 Q151. Mr Hooper: One other question I was going to pick up on actually was you said that when the Law Society was set up, obviously it was a different age, a different world back then. As we have seen the legal profession evolve, we have not really seen the Law Society itself evolve. It is still run by volunteer members. It still acts both as a regulator and as a trade body. 620 Do you say that now then, because … I don’t want to say the world has moved on, but essentially that is where we are at, that it is time now that really the Law Society itself needs to look at the way it is structured and say, ‘Right, there are some inherent problems with the model that we currently have’? And if there are some inherent problems, what would you say the key ones are that we 625 probably need to be teasing and trying to address?

Ms O’Rourke: Well again, I would say that they did look at that and they did say they wanted change. So I think that my appointment back in 2010 was really very radical, and for many in the profession that was a very difficult pill to swallow – the fact that somebody who was not a Manx 630 advocate was effectively in a position of some authority in respect to the Society. That, I think, should not be underestimated: that that was the Law Society of itself deciding on a change agenda. One of the difficulties is that change agendas are very useful if they are sustainable, and because the president changes every two years in the Law Society then it is very difficult to have 635 a long-term strategy that necessarily will get buy-in from all subsequent councils and presidents. So I think, I would not underestimate how radical a step that was when it was taken. I think very clear areas were identified for making changes, but of course the ability to actually deliver the change lies outwith the Society. One of the jobs that I had was to really consult regularly with politicians and regulators in other jurisdictions. I went to the European 640 regulators conferences every year. I visited Scotland probably twice a year; Northern Ireland; the UK. I was regularly in the UK talking to regulators. That was all being paid for by the profession who were keen to see what was happening in other jurisdictions and to take those changes on board. So we just take the one we have talked about, education for instance, and that I think feeds 645 into your questions about how you become a Manx advocate: education sometimes is dismissed but actually education is a gateway here – the training programme and the exams. As I say, a lot of time and money was expended there, and I think that the Law Society went as far as it could go and was powerless really to do any more. I know that I myself made many representations

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about the way in which the ADT operated and the transparency with which it operated and how 650 unhelpful it was for us as a regulator not to have information that would help us regulate more effectively. We were limited in our ability to do anything other than make those representations to try to have the discussions. It was not always very successful to try and have the discussions. So, I think that there really is a genuine understanding in the Society that change needs to happen. But I think that maybe appetite became less strong when the time and effort that had 655 been put in did not really yield any results. So that ability to be self-determining to a certain extent hit a brick wall really.

Q152. The Chairman: Just to build on that, obviously we are looking at is this whole process now and your evidence is part of that. What do you see are the things that would help the Law 660 Society? Can you give us some specific pointers as to what would enable the sorts of changes that you think would be helpful?

Ms O’Rourke: I do not feel very confident about talking to that, because I suspect there has been a lot of change since I was there and there may be conversations that are ongoing that 665 were begun a long time ago. But I think certainly an exercise like this is very useful, because it makes plain to people, or to some people, just the limit of the Law Society’s powers. So yes, there are things that they could do internally differently, but actually the big things that people want them to do are not things that they have power over. So I think just that, first of all, it is opening up the discussion about what they can and cannot do, before you get to what 670 they should do, and I think a more open dialogue, a more open understanding based on the facts, with Tynwald, the guys in charge. The legislation is you, and it is the legislation that really controls what happens. But I think maybe there also needs to be a clearer understanding of what is required of the legal profession. What is it that people want the legal profession to be? There could be a great 675 deal of thought and effort goes into RLP regulation, but does that matter? I am not sure as a consumer … Well, I am fairly sure that actually it does not matter. It does not matter, as a consumer of legal services, whether somebody is qualified here or somewhere else, as long as they are competent to deliver to me, honestly, at a fair price, the service that I need within a reasonable timescale that will help me resolve my difficulties, and I do not really care what they 680 are called. So is that the conversation that needs to be had and is it an organisation like the OFT, for instance, who already has a role in legal profession in that it nominates two people to sit on ADT? Should the OFT become the consumers’ champion? Should we have a consumer panel of the sort that they have got in the United Kingdom? Should there be some sort of committee or 685 forum set up to have a look at, ‘Well, actually, what do people need in the Isle of Man in the way of legal service?’ I suspect you will find that there are some very disparate groups. So you will find that there are some international businesses that may need some very niche services and there will be domestic needs, which are never going to be met by those niche services and need to be met by your home-grown Manx advocates. 690 But really trying to formulate what changes are needed and what new regulation is needed is impossible until we say, first of all as a Society, ‘Tynwald, this is what we think our community needs.’ How will you find that information out? You are going to have to discover that from the consumers. And how do we best protect those consumers? Regulation is really about consumer protection at the end of the day – how we best protect those consumers in line with other 695 regulatory principles that we have got going in the Isle of Man.

Q153. Mr Hooper: Just to pick up on that, you reference ‘the guys in charge’ as being Tynwald. Tynwald obviously sets the policy direction, but it is the executive that deals with the day-to-day operational. 700

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Ms O’Rourke: It was really the legislation I was thinking of.

Mr Hooper: Yes, but my question really is who within the executive do you see as being responsible for actually delivering that change? So from the Law Society, when you were 705 lobbying, who was it within Government, not within Tynwald necessarily, were you liaising with?

Ms O’Rourke: Anybody who would listen to me! (Laughter)

Q154. Mr Hooper: There was not one overriding … in charge? 710 Ms O’Rourke: No, I regularly spoke to the Chief Ministers; and Treasury obviously were very important because of the legal aid implications; the Cabinet Office. We regularly did round- robins to all MHKs and MLCs. We would invite them to any events that we had going, just really to enable them to understand. We would have a regular speaking slot at the State of the Nation. 715 It really was about trying to get the message across. It is not a very easy message to understand, because if you have a constituency where maybe the only issue you know about the legal profession is somebody who feels they have been ill- served by a legal aid case, then that is your focus and so understanding the barriers to becoming a Manx advocate really is not going to hit your headline. But if you have got somebody who says, 720 ‘I’m finding it very difficult – I have got my businesses in America and in Germany and in the Isle of Man, and I’m having to go all over the place. Wouldn’t it be great if I could just have one internationally recognised lawyer?’ – that is a very different issue. So yes, I spoke to many.

725 Q155. Mr Robertshaw: You have eloquently expressed your frustration with us, and we were listening very carefully. But you did say one thing which I would like to pick up on, in terms of being frustrated about change, in the sense that during your term of office you were trying to engender accelerated change, but then you said there was a change of president. (Ms O’Rourke: Yes.) Is the process of the elections within the organisation something that should be looked at 730 and is that completely within the remit of the Society itself?

Ms O’Rourke: Yes, and again, it was being looked at and so what happens is that the vice- president generally becomes the president and Council agreed that they would try and have a rolling agenda that was not set in stone, but the direction of travel was agreed – I do not know 735 whether that is still the case or not – so we felt that we could, whilst somebody was on Council and not in the position of president, agree the direction of travel. A lot of change was made and I think that the primary change when I was there was to try to … My job, I used to explain to Council, was to keep them clean so that I would deal with the stuff that would otherwise make them conflicted in any situation, and we were trying to 740 establish processes and procedures that would really keep them clean so they can make decisions in principle and decisions on policy, and that I would be involved in the decisions relating to individuals, to try to get around some of the conflict. It was not always possible but it was an understanding that that was the way. So I am answering your question in a round-about way – I think it is possible to do something 745 about it, and I think the internal constitution of the Society is up for review. There is no doubt that that is the case, and maybe you could do that in a way where you said, ‘Okay, you can carry on having a two-year elected president to do, I think … somebody described it as a trade union- type activity, so that your term as the president but there would be another mechanism whereby you would have the regulatory function maybe split out, either within the Society or 750 externally.

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Q156. The Chairman: We have mentioned the Advocates’ Disciplinary Tribunal a couple of times and I suppose, just focusing on that for a minute, what changes do you think would be helpful to the Advocates’ Disciplinary Tribunal? 755 Ms O’Rourke: I used to say the success of the conciliation scheme could be measured by the fact that in my day nobody who had been through conciliation went to the ADT. I think people go to the ADT generally as a last resort, because they are so frustrated. They cannot go for financial gain because there is no ability to award compensation, and it is a very scary process to 760 go to, because you are complaining about an experience you have found difficult and unpleasant and you are being forced to revisit it sometime after the event – sometimes quite a long time after the event – and in the intervening time, you cannot forget about it. It has got to be with you, ever present. There have been attempts made by the ADT to make their process more transparent and 765 more easily understood. I think the difficulty is that it may be capable of being understood easily by a lawyer but not so capable of being understood by a person who is not only not familiar with legal terms, but also in a state of some distress about the legal services, so they will be having preconceptions about the legal service that they have had delivered to them and that will colour the way in which they absorb information. 770 So I think I was looking at the Guidance Notes, which refer to their rules of 2012 but in fact the rules were updated in 2017. Now, that might not matter – the change might be quite small, but if you are talking about not only trusting this legal profession and then I do that and then I get in and suddenly refer to the rules of 2017, and I thought, ‘Well, where are those rules? Well, I don’t know about those rules. I am confused,’ and I think that it is very important, whenever 775 you’re dealing with consumers, to make things very plain and very transparent, so that you know what you are getting into. When I was at the Law Society, we involved the conciliation service so that at one point it was done by Council members and then I said I would do the conciliation service, because it removed it from the ambit of a Manx advocate, it made it more impartial. But people still 780 identified me with advocates, so then we moved it on again. But when I was doing the conciliation service, people were very confused about where they went about what, and I know you had some discussion when you were talking to the Law Society about negligence and poor service and professional misconduct, and even in the answers you were given it was very plain that this is not an easy distinction to make, so it could arguably be poor service but actually 785 could fall into the category of negligence, which could be professional misconduct as well. I always wanted to be able to say to them, ‘Go and have a look at the decisions and see whether you feel your sort of complaint falls within the categories that they would regard as professional misconduct.’ I could not really point to any rules, because there is such an ambiguity about which professional rules apply. The UK rules have changed very substantially 790 since our practice rules were brought into place. Which practice rules would apply? So that always sounded like it was a little bit of a fudge, really, saying to somebody, ‘Yes, you could look at the practice rules – I’m not quite sure which ones would apply. Yes, you can go and look at the cases’ – except actually, you can’t because I think at the time …. They have only recently gone online, and when I was trying to find, I was trying to build up a catalogue of the previous 795 decisions so I could say to people in the conciliation, ‘This is the information that I could make available to you’, because any information of the Law Society was provided by the ADT was provided in confidence; it was not to be distributed. And then I discovered that the IOM Newspapers where these decisions were published did not keep a record of them, they treated them as adverts and so they were disposed of when they had been in for a week or whatever it 800 was. So there was no body of information that I could give to anybody and that sounded like a bit of a fudge as well: ‘I can’t really tell you what the decisions are. I can’t really tell you what the penalties are. I can’t tell you how long it’s going to take.’

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So getting it online was quite useful – except not because when you actually see there was a breach of the rules, you obviously want to know, which rule was it? And then if you compare it 805 to what you can get online in the United Kingdom, where there are very clear judgements, basically, which outline exactly what had happened, who did what, when they did it, why this was breached, which rule was breached, the extent to which it was breached, why this was a bad thing, how this might impact on the trust that somebody might put in the profession – a very clear exposition so that anybody getting into a complaint like that would say, ‘Well, that’s 810 on all fours with my case, I’m probably going to win or there’s a good chance I’ll win. I’ll put myself through all that pain, but there’s a good chance I’ll win.’ Whereas here it was really not possible to do that. So that transparency was, I felt, not very helpful to consumers and it certainly was not very helpful to the profession either. As the Law Society, we could not get any learning trends from it. 815 We could not say to people, ‘This is something that keeps cropping up.’ I knew because I was receiving the information but it was being received in confidence. So transparency and greater openness: I am delighted to hear that the ADT were resounding in saying that they were themselves very keen to have public hearings. I think that is a wonderful thing. 820 I think better reporting of the cases. I completely understand that some cases may be sensitive and where cases themselves cannot be reported because of the content relating to children or families, I think that some sort of executive-type summary – there are lots of family law cases that are reported without disclosing their identities, so that the principles that are applied are really important. 825 And just consistency really: how do you appeal, if you do not know what you are appealing about. ‘You say that I can’t demonstrate that I’ve got a case but how do I know that that’s consistent with what you said in the past?’ Standard of proof is a big one that is being looked at in the UK. The Bar has already reduced its standard of proof. There is a big consultation out amongst solicitors at the moment where it 830 looks, if the press is right, that it is pretty likely to be brought down to the same standard as the civil standard that is employed for barristers. There is an argument that for somebody to lose their profession, to lose their livelihood, it should be a criminal standard; but equally the ADT cannot actually take away somebody’s ability to practice. So maybe their standards should be of the lower standard and the higher court have 835 the higher standard. So I think that is something else I would look at. I think if I was Government, I would want to know from the point of view of value for money, were cases taking about the right length of time; were they costing about the right amount of time? I think I would want to understand how daunting it was to be a lay person going into that 840 room and seeing that you have got two lawyers on the panel. You are facing the lawyer that you have complained about and their lawyer, and lawyers’ representation is covered under the master policy so they are almost invariably represented. I do not have a sense of how often consumers are represented or not. Although legal aid is available, to the best of my knowledge it has not been taken up. 845 So it can be a very daunting place. It is a very legalistic tribunal – some would say because of the severity of some of the consequences, that is right. There is no indication of how often the regulator is bringing a case, as opposed to a consumer. That might be quite important in informing whether the regulator is doing enough to bring cases. If a regulator does not bring a case for a year, does that say to you that the regulator is not doing their job or does it say to you 850 that the profession has learnt lessons and does not need to be reported to the ADT? It would be quite useful to have that information to inform an inquiry along those lines. I think the appointment – I know that you discussed with them whether appointments should be limited. I think the ADT’s feeling was that the appointment should be unlimited in time. I think that is a mistake. I agree that some cases take a long time and I agree that it can be a

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855 difficult tribunal. But I am against the idea that it is more difficult than other tribunals, the employment tribunal or any of the other tribunals which are dealing with difficult matters. Frankly, if the practice rules and the legislation are so difficult to decipher then that tells you more about the practice rules and the legislation than it does about the composition of the tribunal. In a service that is primarily – well, exclusively – consumer-focused, if consumers 860 cannot understand the basis for delivery of those services, then I think you have to question.

Q157. Mr Robertshaw: You have touched on the matter that I am focused on for the moment in your commentary there, but the 2000-01 Commission was very robust indeed in its analysis of the position and condition of the ADT. It was very specific about the membership and 865 I think the barrister referred to the chairman being a lay person. I wonder whether you could just expand on how you think the ADT should be constructed in its membership, rather than you mentioned earlier it was legalistic, it was facing a group of legally trained people. But how would you see the ADT put together?

870 Ms O’Rourke: I am sure better minds than mine have thought about this and I think that it really depends on the outcome you are trying to achieve. Maybe you could have a lay person who is a chair but you would be assisted by a clerk who is familiar with the legal nuances of practice rules and the legislation. It really depends on whether or not you are trying to convince people that this is an impartial and fair body that they are going before, that both parties – both 875 the advocate and the complainant – feel that the result that will be delivered is fair and it will not be necessarily skewed. As soon as the credibility of the tribunal is undermined, there is really little point in having it because neither side will feel well served by it. I think having a legally qualified clerk might be one way of giving it credibility in terms of ‘This is an organisation that understands we’re dealing 880 with professional rules’, but it would also give the consumer, the complainant, the confidence that their needs were being understood, I think.

Mr Robertshaw: Thank you.

885 Q158. The Chairman: Okay, I am conscious of time and appreciate your time being here this morning. Before we finish, I wondered if we could just touch on one other area, which is that of the idea of a public defender unit in the Isle of Man. I just wondered if you would be prepared to share your views of proposals for a public defender unit.

890 Ms O’Rourke: I think as you know I am a member of the Legal Aid Committee. The Legal Aid Committee started to look at the possibility of a public defender unit some time ago. That idea, that concept was looked at by the Attorney General’s Chambers, and I understand that they are doing further work on that and have appointed somebody to look more closely at those proposals. 895 I think it is inappropriate for me to speak on behalf of the Legal Aid Committee whilst I am here today, but I think what I can say is that for my part it was never intended that the public defender unit be set up to have a cheaper service for those who would otherwise be eligible for legal aid, but for it to be set up so that they have a better service. Our quest was to understand whether or not it would improve access to legal services. That was our initiative in setting our 900 programme running. As regards the Attorney General’s agenda, in terms of looking at this project, I know it was submitted as part of the SAVE initiative. We have made representations at the Legal Aid Committee – and I am personally very keen that this voice be heard, and I believe it has been heard – that it was not our intention to have a cheaper service, if it was going to be a worse 905 service. I think that work is going to be ongoing and we have been assured that the Legal Aid

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Committee is an important stakeholder, as have the Law Society, I think, been assured that they are an important stakeholder and we wait to be consulted further.

Q159. The Chairman: Can I ask a follow-on question to that, which is the current system, the 910 legal aid system, what is your view on challenges with that? Particularly you were talking about access to justice and that the public defender unit might have some merit, potentially, in enabling better access to justice. So could you talk for a minute about what you see as the problems with the current set-up?

915 Ms O’Rourke: Yes. That is a bit like ‘When did you stop beating your wife?’ It is assuming there are problems. I think you can always improve things, that is for sure, and one of the problems that was identified many years ago was that when Legal Aid was first established, it was available to a much larger group of people than it is now available to, and it was regarded much in the way 920 that education and health services would be regarded – that nobody says you cannot send your child to school unless you are very, very poor; nobody says you are not able to go to a GP unless you are very, very poor, you have to pay for it yourself. And yet legal services, which in some areas of people’s lives are just as important as education and health, they are not able to access it and the squeezed middle people I think for whom getting legal advice is terrifying, because of 925 the potential costs which they are not able to ascertain. I think that there are many people who would previously have been entitled to it who are no longer entitled to it. But we live in a world where resources are scarce and part of the Legal Aid Committee’s remit is to ensure that we are financially responsible. I think our aim is to make sure that we provide the most efficient service possible and it may be that by reducing funds in one area we 930 can provide services in other areas. So part of the Legal Aid Committee’s remit is to look at reform across the piece, not just at a public defence unit. They are looking at other things too. I think that is our challenge in an environment of limited resources, where legal services like many other professional services are increasingly prohibitively expensive for the average person: how do you make sure that people 935 do have fair access to justice?

The Chairman: Okay, thank you.

Mr Robertshaw: I am just pleased that your voice has held out – well done! 940 Ms O’Rourke: So am I!

The Chairman: Any other questions? (Mr Robertshaw: No.) No? Can we thank you very much indeed for your time today. (Ms O’Rourke: Definitely.) 945 The Committee will now sit in private.

The Committee sat in private at 12.33 p.m.

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WRITTEN EVIDENCE

89 90

Appendix 1: February 2001 - Report of the Legal Services Commission 2000

91 92 For Reference

Not to be taken from this room

REPORT OF THE

LEGAL SERVICES COMMISSION 2000

published by the Council of Ministers February, 2001

Price: £2.00 January 2001

93

To: The Council of Ministers

1. At a sitting held on 14th December, 1999, Tynwald resolved that:

"The Council of Ministers appoint a Commission under the chairmanship of a person with legal qualifications, who does not practise, and has not practised, in the Island, to -

(a) investigate and report on the regulatory and disciplinary procedures which apply to those practising law in the Island; and

(b) advise on whether and with what frequency there should be a regular review of the law and practice relating to the provision of legal services in the Island."

2. On 1st June 2000 the Council of Ministers appointed the following to be a Commission for the aforesaid purpose:

Sir David Calcutt, QC Mrs E Christian, JP Mrs A Craine, JP Mr B Moffatt

3. The Commission now presents its Report.

4. The Commissioners would wish to record their appreciation of the outstanding service which they have received from their Secretary, Mrs Anne Webster.

Sir David Calcutt QC (Chairman)

Mrs E Christian JP

Mrs A Craine JP

Mr B Moffatt

January, 2001

94

EXECUTIVE SUMMARY

BACKGROUND TO THE ESTABLISHMENT OF THIS COMMISSION

1. The Clothier Commission reported on legal services in 1990. Since then statements have been made and questions asked in the Legislature which indicated public concern about the procedures for the regulation and discipline of advocates. S (Paras. 1.1 to 1.5) TERMS OF REFERENCE

2. Our terms of reference are much narrower than those of the Clothier Commission. Consequently we have not been concerned with fees or allowed ourselves to become a forum for the airing of individual complaints. (Paras. 2.1 to 2.2) METHODOLOGY • 3. We advertised in the press and on the Radio for written evidence giving ample time for submissions to be made. We then invited certain people to give oral evidence at public hearings. (Paras. 3.1 to 3.4)

PRESENT REGULATORY AND DISCIPLINARY PROCEDURES

4. The number of advocates has increased fourfold over the last 35 years. Manx advocates require entry_qualifications similar to those of English i

95 barristers or solicitors and, in addition, they must serve two years' articles and pass examinations in Manx law. They are subject to regulatory and disciplinary procedures laid down by statute and by the Isle of Man Law Society. (Paras. 4.1 to 4.5) INITIAL IMPRESSIONS

5. Our initial impression was that the disciplinary and regulatory procedures were capable of improvement in certain areas. (Paras. 5.1 to 5.2)

THE ADVOCATES DISCIPLINARY TRIBUNAL

6. We considered that the constitution of the Advocates Disciplinary Tribunal (ADT) (which comprises a legally qualified chairman, two persons nominated by the Law Society and two persons by the Office of Fair Trading) may not comply with Article 6(1) of the European Convention on Human Rights and we recommend a change in its constitution. (Paras. 6.1 to 6.4)

7. It appeared to us that the procedures of the ADT may not comply with Article 6(1) and we recommend changes to those procedures. (Paras. 6.5 to 6.6)

8. We considered that the remit of the ADT should be widened to allow it to consider complaints of negligence and delay in addition to those of professional misconduct, to award compensation and costs against complainants. We recommend accordingly. (Paras.6.7 to 6.10)

96 9. Appeals against ADT decisions are made to the Governor sitting in the presence of the Deemsters, as are references by the ADT of matters where it considers its powers are inadequate. In our opinion the procedures for these appeals and references may not comply with Article 6(1) and we recommend changes. (Paras.6.11 to 6.16)

10. We found a lack of public awareness of the procedures and decisions of the ADT and confusion on the question of the availability of legal aid for those wishing to make a complaint to the ADT. We make recommendations for giving adequate information and publicity to the public in these areas. (Paras. 6.17 to 6.19)

11. It was unclear who was responsible for enforcing decisions of the ADT and the Governor. We recommend that the ADT be responsible. (Paras. 6.2 to 6.22)

LEGAL SERVICES OMBUDSMAN/COMMISSIONER

12. In England, where there is no independent external tribunal to hear complaints against lawyers, there is a Legal Services Ombudsman. She investigates the way a complaint against a lawyer has been handled by the lawyer's professional body. We considered that the effectiveness of an Ombudsman may be over-rated and would be unlikely to meet the public's expectations. (Paras. 7.1 to 7.3)

REGISTERED LEGAL PRACTITIONERS

13. Persons who qualify to register as Legal Practitioners may practise only in

97 certain areas of Manx law. If a Legal Practitioner wishes to qualify as a Manx advocate he must serve two years' articles and pass the Manx Advocates Examination. We are content with this situation even as it applies to English lawyers, despite Manx advocates with two years practical legal experience being deemed qualified to practise in England, because Manx law differs from English law in many respects. The effect of reciprocity on the Isle of Man would be disproportionate to the effect on the much larger jurisdiction of England and Wales. (Paras. 8.1 to 8.4)

14. We did, however, consider that in all other respects Legal Practitioners should be treated equally to Manx advocates and we make recommendations to achieve this. (Paras.8.4 to 8.5)

THE ISLE OF MAN LAW SOCIETY AND THE MANX LEGAL PROFESSION

15. The Law Society is taking steps to improve its disciplinary procedures. We welcome these developments (Paras.9.1 to 9.2) LEGAL AID

16. Although not within our remit, concerns we have heard about the availability of legal aid and the quality of delivery of legal aid services have led us to recommend that there be an independent review into the matter. (Paras.10.1 to 10.2) FUTURE REVIEWS OF LEGAL SERVICES

17. We recommend a thorough review at intervals of no more than ten years. (Paras.11.1 to 11.2)

98 REPORT

CONTENTS

Page No.

1. Background to the Establishment of this Commission 1

2. Terms of Reference 2

3. Methodology 3

4. Present Regulatory and Disciplinary Procedures 4

4.1 - 4.3 Regulation 4 4.4 - 4.5 Discipline 5

5. Initial Impressions 5 6. The Advocates Disciplinary Tribunal 6

6.1 - 6.4 Constitution 6 6.5 - 6.6 Procedure 7 6.7 - 6.10 Remit 8 6.11 - 6.16 Decisions and Appeals 9 6.17 - 6.19 Publicity for Procedures and Decisions 10 6.20 - 6.22 Enforcement of decisions 10

7. Legal Services Ombudsman/Commissioner 11

8. Registered Legal Practitioners 12

9. The Isle of Man Law Society and the Manx Profession 13

10. Legal Aid 14

11. Future Reviews of Legal Services 14

12. Summary of Recommendations 15

13. Conclusion 17

99 Appendices

1. Persons or bodies who submitted Written Evidence 19

2. Persons who gave Oral Evidence 20

100 1. BACKGROUND TO THE ESTABLISHMENT OF THIS COMMISSION

In 1989 a Commission of Inquiry into Legal Services was appointed with a wide remit. The Commission reported comprehensively in May 1990 and many of its recommendations have since been implemented; some by Government, some by the Law Society.

1.2. In 1998 Tynwald approval was sought to the Supply of Services (Exclusion of Implied Terms) Order 1998 made by the Board of Consumer Affairs (now the Office of Fair Trading (OFT)) under the Supply of Goods and Services Act 1996, granting immunity to advocates in respect of their appearances in court and associated preliminary work

1.3. During the debate objections to the Order were raised, resulting in the appointment of a Select Committee to consider and report upon the matter. The Committee, after taking evidence from the public and the profession, concluded that the Order should not be made. It went on to say that there was public concern in the Island over difficulties a client may experience in obtaining compensation for loss resulting from the action or inaction of an advocate falling short of professional standards. The Committee recommended that Government, in consultation with the Law Society, should consider the Society's proposal that the Advocates Disciplinary Tribunal (ADT) be empowered to make orders for compensation. The Order was subsequently withdrawn by the Board of Consumer Affairs. The Report of the Select Committee was finally submitted to Tynwald in November 2000 where it was received and its recommendations approved.

1.4. Since the Tynwald debate on the Order in 1998, there have been questions in the Legislature concerning proceedings before the ADT and

1

101 the enforcement of penalties ordered by the ADT, culminating in Tynwald's agreement in December 1999 to the appointment of this Commission.

1.5. During the debate on 14th December 1999 preceding this resolution it was claimed that a growing number of people in the Island were dissatisfied with the actions of their advocates and with the attitude and response of the ADT to their complaints. It was said that there was a perception that the ADT was not impartial, but biased towards the legal profession and that there was confusion as to who was responsible for ensuring that the decisions of the ADT were publicised and enforced. Whether the ADT complied with the European Convention on Human Rights (ECHR) was questioned. Also questioned was the exemption of advocates from section 2 of the Investment Business Act 1991 and their self-regulation in general, especially in view of a claimed lack of safeguards in the Isle of Man as compared to those in the UK, the examples given being the Office of Supervision of Solicitors and the Legal Services Ombudsman.

1.6. It was stated during the debate, but incorrectly, that legal aid did not extend to proceedings before the ADT: it has done since 1st December, 1996 (under the provisions of the Legal Aid Act 1986 Schedule 1 paragraph 5A) and we deal with this later in our report.

2. TERMS OF REFERENCE

2.1. In undertaking our task, we were mindful of the work of the 1990 Legal Services Commission under the chairmanship of Sir Cecil Clothier, KCB, QC (the Clothier Commission). Our terms of reference are, however, much narrower than those of the Clothier Commission. We have been concerned solely with regulatory and disciplinary matters and the

2

102 consideration of whether, and with what frequency, there should be a general review.

2.2. We have not been concerned with fees or any other related matter. An attempt to widen the terms of reference of this Commission in Tynwald was defeated. Neither have we allowed ourselves to become a forum for the airing of individual complaints, except insofar as they might reveal a systemic problem in .the regulatory or disciplinary procedures. ,

3. METHODOLOGY

3.1. We held our first meeting in July 2000 and agreed that the time-scale of six months mentioned in Tynwald in which to report to the Council of Ministers should be possible. We have held four meetings over seven days.

3.2. We considered whether we should commission a survey as the Clothier Commission did, but decided, on balance, that it would not advance our purposes.

3.3. We were anxious to give ample time for members of the public to submit written evidence. We therefore placed advertisements in the press and on Manx Radio in July inviting written submissions of evidence by 2nd October. We were disappointed by the lack of public interest. Of the 17 substantive responses received from the persons and bodies listed in Appendix 1, only eight were from members of the public and one from a Member of the Legislature. Having given due consideration to those written submissions we decided whom to invite to give oral evidence at public hearings on 14th and 15th November 2000. Those who gave oral evidence are listed in Appendix 2.

103 3.4. We did not consider that we were handicapped in any way by our lack of legal powers to compel the attendance of witnesses or the production of documents.

4. PRESENT REGULATORY AND DISCIPLINARY PROCEDURES

Regulation 4.1. The number of practising Manx advocates has increased from 25 in 1966 to 33 in 1985 and now, in 2000, to 102. A Manx advocate qualifying now and in recent times must hold a degree in law (or another qualifying degree together with an introductory law course) and have passed the vocational course for the Bar of England and Wales, or the Solicitors final course in England and Wales, or a similar vocational course approved by the Council of the Isle of Man Law Society. He (or she) must then complete two years' articles with a Manx advocate and pass the Manx Advocates Examination.

4.2. Manx advocates are required to be members of the Isle of Man Law Society, a body corporate first established by Act of Tynwald in 1859, and they are regulated by its rules regarding clients' accounts and money, the production of annual accountants' reports, practice, conduct and discipline.

4.3. The Law Society is also a recognised regulator in the conduct of investment business and has entered into a Mutual Assistance Agreement with the Financial Supervision Commission (FSC). Provided a firm of advocates has entered into a regulation agreement with the Law Society, it is exempt from obtaining a licence from the FSC under the Investment Business Act 1991 to conduct investment business if such business is only incidental to its legal work. If, however, the investment business

4

104 conducted is more than incidental, the firm requires to be licensed directly by the FSC.

Discipline 4.4. Advocates are subject to disciplinary rules and regulations made both under statute and by the Law Society. If a complaint cannot be resolved internally under the complaints procedure of the firm to which the advocate belongs, it may be referred to the Law Society for conciliation. If the complainant is still dissatisfied he may submit his complaint to the ADT (see paragraph 6.5 below).

4.5. The Law Society may intervene in an advocate's practice even where no complaint has been made, in certain circumstances, to protect clients' interests. The Society also has the power to initiate prosecutions against advocates for the breach of any Act relating to the practise of law.

5. INITIAL IMPRESSIONS

5.1. We formed a preliminary view, following consideration of the written submissions, that the disciplinary and regulatory procedures were capable of improvement in certain areas. The matters that we felt warranted specific attention were further explored in the taking of oral evidence together with any other matters that witnesses wished to raise.

5.2. The matters originally identified remained of concern after hearing oral evidence and they are considered in the following paragraphs.

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105 6. THE ADVOCATES DISCIPLINARY TRIBUNAL

Constitution 6.1. The ADT was established by the Advocates Act 1976 and comprises a chairman, who must be an advocate, barrister or solicitor of not less than 10 years' standing, appointed by the Governor, two persons nominated by the Council of the Isle of Man Law Society and two persons, not being members of Tynwald, nominated by the OFT.

6.2. Article 6(1) of the European Convention on Human Rights (ECHR) provides:

"In the determination of his civil rights and obligations or of any criminal charge against him, everyone is entitled to a fair and public hearing within a reasonable time by an independent and impartial tribunal established by law. Judgment shall be pronounced publicly but the press and public may be excluded from all or part of the trial in the interests of morals, public order or national security in a democratic society, where the interests of juveniles or the protection of the private life of the parties so require, or to the extent strictly necessary in the opinion of the court in special circumstances where publicity would prejudice the interests of justice"

6.3. It appeared to us that it could be contended that the ADT, as presently constituted, is not independent and impartial within the terms of Article 6(1). Although we have no reason to believe that the existing (and indeed previous) ADTs have not acted impartially, that may nevertheless not be how it appears.

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106 6.4. We are of the opinion that the ADT as presently constituted is "over- lawyered" and recommend a change in the constitution to a tribunal composed of three persons, each appointed for a term of five years by the Governor. The Chairman should not be a lawyer nor come from a legal background. He should sit with a practising lawyer and a with a lay person with no legal background. To avoid delay or possible conflict there should be a Deputy Chairman with similar qualification to the Chairman available in case the Chairman is unable to sit for any reason. In addition there should be alternates, similarly qualified to the other two members and we would recommend that there should be a panel of three in each case.

Procedure 6.5. Under the present arrangements any person wishing to make a complaint against an advocate in respect of the advocate's professional conduct must make his complaint in writing to the ADT (providing seven copies). The ADT then consider in private whether there is a prima facie case and, if they consider there is not, they may dismiss the complaint without a hearing. If a complaint is accepted, it is not, however, heard publicly.

6.6. It appears to us that these procedures may not comply with Article 6(1) of the ECHR. We would recommend that hearings should be held in public. We would also recommend that complainants should have to provide no more than one copy of their complaint. We consider, however, that a case can be made that the initial consideration of whether there is a prima facie complaint should be held in private. We recommend that this should be by way of a pre-hearing assessment, where an indication of the merits of the case could be given by the Tribunal, without prejudice to the complainant's right to a full hearing or to the outcome of that hearing. The pre-hearing assessment should be available on the application of a party.

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107 Remit 6.7. The ADT has no power to consider complaints of anything other than professional misconduct. It is unable to award compensation or to award costs against a complainant.

6.8. The proposal that compensation should be available appeared in several submissions, including that of the Isle of Man Law Society. The Law Society recommended that its Council should be permitted to award compensation up to £2000 and that the ADT should be given the power t( award up to £5000. The Government will now be considering the questior of compensation, in consultation with the Law Society, as a result of the Report of the Select Committee on the Supply of Services (Exclusion of Implied Terms) Order 1998 having been received by Tynwald (see paragraph 1.3 above).

6.9. We recommend that the remit of the ADT should be widened to enable it to consider complaints of negligence and delay and to award compensation (subject to a ceiling) where any complaint is proved and it is proved that the complainant has suffered consequential loss, distress of inconvenience. This would go some way to satisfying those who complain that the only way to obtain financial redress in such circumstances is through the court and the consequent involvement in further court proceedings. We would recommend that the ceiling be £20,000 and that this should be kept under review.

6.10. We further recommend, on grounds of fairness, that the ADT should be given power to award costs against a complainant as it may against a defendant advocate. We would anticipate this power being exercised only rarely.

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108 Decisions and Appeals 6.11. If a complaint is proved to the satisfaction of the ADT, it may presently reprimand the advocate, order him to pay a penalty to the Treasury not exceeding £5000 or, if it considers that its powers are inadequate in the circumstances of the complaint, refer the matter for hearing by the Governor in the presence of the Deemsters. These hearings are not held in public.

6.12. Where the complaint is proved to the satisfaction of the Governor he may order that the advocate be reprimanded, that he pay to the Treasury a penalty not exceeding £25,000, that he be suspended from practice for a specified period or that his commission be cancelled.

6.13. Where the complaint is not proved to the satisfaction of the ADT, the complainant has the right of appeal to the Governor sitting with the Deemsters.

6.14. It appears to us that there is a possible contravention of Article 6(1) of the ECHR. It could be contended that, as the Governor appoints the Chairman of the ADT, he should not sit as a member of the body charged with re-hearing the matter by way of reference or on appeal and also that the proceedings should be open to the public.

6.15. We recommend that references and appeals should be heard in public, by a Deemster sitting alone. We also consider that a review of the level of penalties would now be appropriate, and indeed is overdue. For the future we recommend that the levels be kept under regular review.

6.16. Further, where a decision is based on an undertaking given by a

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109 defendant, we would recommend that the decision should be conditional upon that undertaking being fulfilled. A failure by the defendant advocate to fulfil the undertaking would result in the matter being returned to the ADT for further consideration.

Publicity for Procedures and Decisions 6.17. There is a lack of public awareness of the procedures of the ADT and widespread confusion concerning the availability of legal aid for proceedings before the ADT. Although lately there has been an effort by the OFT and the Isle of Man Law Society to disseminate information in the form of leaflets, there has been disagreement with the ADT over the contents of the leaflets, so that they are not yet generally available to the public. We recommend that clear public information about how to complain to the ADT, about ADT procedures and about the availability of legal aid should be readily available from, amongst other places, advocates' offices, the OFT, and the Citizens Advice Service. We further recommend that legal aid should continue to be available for proceedings before the ADT.

6.18. There is also a lack of publicity of decisions of the ADT. The evidence we have received demonstrates that the present system is deficient.

6.19. We recommend that proven findings of guilt should be published in the press and copied to the FSC and that all findings should be entered into a public register to be kept in the Chief Secretary's Office with copies available to the public on request. Provision should also be made for full details of proven complaints to be available to the FSC on request.

Enforcement of decisions 6.20. Concern was expressed in certain submissions that it was unclear who, if

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110 anyone, was responsible for' seeing that decisions of the ADT or the Governor were carried through and that enforcement was falling in some instances between two stools.

6.21. We recommend that the ADT be responsible for the enforcement of all the decisions of the ADT and the Deemster, although we appreciate that enforcement may require the co-operation of others in some cases.

6.22. It was suggested to us by members of the ADT that the location of the ADT's Secretariat in the Chief Secretary's Office might compromise its independence, and that it would be better located in the General Registry. We do not agree. We consider the present arrangements to be satisfactory and sufficiently independent of the legal profession.

7. LEGAL SERVICES OMBUDSMAN/COMMISSIONER

7.1. Several respondents proposed that there should be appointed a Legal Services Ombudsman (LSO) or Legal Services Commissioner. The OFT suggested that the soon-to-be-appointed Financial Services Ombudsman might additionally fulfil such a role.

7.2. In England, where (unlike in the Isle of Man) there is no independent external tribunal to hear complaints against lawyers, the office of the LSO is funded by the Lord Chancellor's Department and her role is to investigate the way a complaint against a lawyer has been handled by the lawyer's own professional body. It is not her role to consider every case as if it were an appeal against the professional body's decision. She will check that a complaint was fully addressed within a reasonable time and will want to be satisfied that the decision reached was reasonable. She may award compensation for financial loss, distress and inconvenience. There is no maximum on the amount she may award. In recent years the

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111 average award has been £200.

7.3. We considered whether the appointment of a similar Legal Services Ombudsman (or Commissioner) for the Isle of Man would be appropriate. From the submissions made to us, we concluded that the usefulness of a Ombudsman may be over-estimated and would be unlikely to meet the public's expectations. An Ombudsman would check only that the complaints procedures of the profession had been properly carried out. We decided to make no recommendation in this respect.

8. REGISTERED LEGAL PRACTITIONERS

8.1. Registered Legal Practitioners are persons who are registered under the Legal Practitioners Act 1986. They must be legally qualified in one of the jurisdictions specified. They may practise only in certain areas of Manx law.

8.2. If a Legal Practitioner wishes to become an advocate, he must complete two years' articles and pass the Manx Advocates Examination. It has been contended by the English Law Society that its members should automatically qualify as Manx advocates on a reciprocal basis, given that Manx advocates with two years practical legal experience qualify as solicitors in England without the need to be articled or to pass an examination there.

8.3. We did not consider this contention for reciprocity was sustainable. Manx advocates must, before entering articles, already hold the qualifications necessary to train as a solicitor or barrister in England. Their articles and examinations in the Isle of Man teach and test them in Manx law which, contrary to the view of the English Law Society, differs in many areas from English law. The reputation of the Isle of Man, a small jurisdiction

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112 dependent to a great extent on financial services, could suffer damage to its reputation by persons without the necessary knowledge or experience holding themselves out as authorities on Manx law. The effect on the Isle of Man of such reciprocity would be disproportionate to that on the much larger jurisdiction of England and Wales.

8.4. Reciprocity aside, Legal Practitioners should be treated equally to Manx advocates. They should be subject to the same disciplinary procedures and, if found guilty, we would recommend that the decision should be notified to their home professional bodies. Legal Practitioners are required to have Professional Indemnity Insurance in a similar sum to that required of Manx advocates.

8.5. One area of inequality is the regulation under the Investment Business Act 1991. As described in paragraph 4.3 above, advocates engaging in investment business, incidental to their legal practice, are regulated by the Isle of Man Law Society under the terms of a Mutual Assistance Agreement with the FSC, as opposed to being required to be licensed directly by the FSC. Legal Practitioners who are English solicitors are regulated by the English Law Society for incidental investment business, even if carried out on the Isle of Man. Other Legal Practitioners, however, are required to be licensed directly by the FSC even for incidental investment business. We recommend that either all Legal Practitioners should be regulated under the Agreement or all lawyers should be directly licensed by the FSC.

9. THE ISLE OF MAN LAW SOCIETY AND THE MANX PROFESSION

9.1. The Commission was informed that there had been a change of attitude within the profession in recent times resulting in the Law Society taking steps to improve disciplinary procedures, for example by developing the

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113 codes of conduct, requiring firms to keep registers of complaints and detailing what should be contained in the terms of business letters provided to clients at the outset of their employment. The Law Society engaged a Secretary General who will act as compliance officer. We welcome these developments and consider that, if carried through, the will help avoid some of the difficulties of which we have learnt.

9.2. It was suggested to us that some post-qualification training in professic ethics might be desirable. We do not believe that this should be necessary, having regard to the contents of law degree courses and th legal training received prior to qualification. However we recommend tl. the Law Society should address what seem to be widespread concern; about conflicts of interest. The strengthening of complaints and disciplinary procedures should help overcome this issue.

10. LEGAL AID

10.1. We have referred (in paragraphs 1.6 and 6.17 above) to the confusion relating to availability of legal aid for proceedings before the ADT. Dunn the course of our investigation, it became apparent that there was cone about the operation of the legal aid system generally.

10.2. Although not within our remit, we noted discontent with the availability a quality of delivery of legal aid services. We are of the opinion that this i: subject which requires urgent investigation and would recommend that there be an independent inquiry into the matter.

11. FUTURE REVIEWS OF LEGAL SERVICES

11.1. The second part of our remit was to advise whether and with what frequency there should be a regular review of legal services. Prior to the

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114 appointment of the Clothier Commission there was appointed from time to I time, under the provisions of the Advocates Act 1874, a Select Committee of Tynwald for the purpose of revising the scale of advocates' fees. That Committee's terms of reference were extended in 1980 to allow it to consider other matters incidental to the provision of legal services to the public. The Sixth Interim Report of the Select Committee in 1988 recommended a comprehensive review of legal services and resulted in the Clothier Commission, the first and only major review.

11.2. Several suggestions were made in evidence, and most favoured a review every ten years. We agree and recommend that a thorough review be held at intervals of no more than ten years. Circumstances, which we cannot presently foresee, may require a more urgent review.

12. SUMMARY OF RECOMMENDATIONS

We recommend:

1. That the ADT be reconstituted to comprise a tribunal composed of three persons each appointed for a term of five years by the Governor. The Chairman should not be a lawyer or from a legal background. He should sit with a practising lawyer and a lay person with no legal background. There should be a deputy Chairman and two deputies for each of the other members (6.4);

2. That hearings of the ADT be held in public (6.6);

3. That complainants be required to supply only one copy of their complaint (6.6);

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115 4. That initial consideration by the ADT of whether there is a prima facie case be by way of a pre-hearing assessment held in private on the application of a party, without prejudice to the complainant's right to a full hearing (6.6);

5. That the remit of the ADT should be widened to enable it to consider complaints of negligence and delay and to award compensation up to £20,000 and that this figure be kept under review (6.9);

6. That the ADT be given the power to award costs against a complainant (6.10);

7. That references from and appeals against decisions of the ADT are heard in public by a Deemster sitting alone (6.15);

8. That levels of penalties and compensation are kept under regular review in the future (6.9 and 6.15);

9. That where a decision of the ADT is based on an undertaking given by a defendant, the decision should be conditional on the fulfilment of that undertaking; if not fulfilled the matter should be returned to the ADT for further consideration (6.16);

10. That clear public information about how to complain to the ADT and about ADT procedures and legal aid should be readily available at appropriate places (6.17);

11. That legal aid should continue to be available for proceedings before the ADT (6.17);

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116 12. That findings of guilt by the ADT should be published in the press and copied to the FSC; that all findings be entered into a public register in the Chief Secretary's Office with copies available on request; and that full details of proven complaints be available to the FSC on request (6.19);

13. That the ADT be responsible for the enforcement of all the decisions of the ADT and the Deemster (6.21);

14. That if a Legal Practitioner is found guilty by the ADT, the decision should be notified to his home professional body (8.4);

15. That either all Legal Practitioners be regulated under the Law Society's Mutual Assistance Agreement with the FSC or all lawyers practising in the Isle of Man be directly regulated by the FSC (8.5);

16. That the Law Society address concerns about conflicts of interest (9.2);

17. That there be an independent inquiry into the availability and quality of delivery of legal aid services (10.2);

18. That there be a thorough review of legal services at intervals of no more than ten years (11.2).

13. CONCLUSION

Our overall impression is that all is not as it should be. The regulatory and disciplinary procedures are not as defective as some of their detractors

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117 would have us believe; but neither are they incapable of significant improvement. The apparent lack of public interest in the work of this Commission has to be matched against the genuine concern which caused these matters to be raised in Tynwald in the first place, and the Council of Ministers to appoint this Commission. The international and commercial significance of the Isle of Man has, in recent years, developE at such a rapid pace, that the appropriate regulation of the legal profession has been apt to get left behind. It is important that those who practise law here should seek to work within a regime which keeps abreast of developments and, at the same time, fully retains public confidence. We believe that if our recommendations are now implemented, this will go a long way towards closing the gap.

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118 APPENDIX I

PERSONS OR BODIES WHO SUBMITTED WRITTEN EVIDENCE

Mr G J Cleator

Mr R H Costain

Mr W 0 Crossley, FCA

Their Honours the Deemsters

The Financial Supervision Commission

Mr E Foster

The (Isle of Man) Law Society

Mr W Johnson

Mr L Keenan

The Law Society of England and Wales

Mr J A Maddrell

Manx Citizens Advice Service

Mrs W Megson

Mr C R Oakley

The Office of Fair Trading

Mr R E Quine, MHK

Mr M Redmayne

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119 APPENDIX 2

PERSONS WHO GAVE ORAL EVIDENCE

His Honour Deemster T W Cain, Q C

Messrs A J Corlett, D Doyle, and J L M Quinn, Isle of Man Law Society

Mr W J H Corlett, HM Attorney General

Mr L Keenan, Advocate

Mr K Kinrade, Office of Fair Trading

Mr G R M Moore, Advocates Disciplinary Tribunal

Mrs W Megson

Mr R E Quine, MHK

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120

Appendix 2: 20th March 2001 - Hansard Extract of Debate – Legal Services Commission Report

121 122 TYNWALD COURT, TUESDAY, 20th MARCH 2001 T655

reasons, there may be other reasons and the short answer In December of 1999 Tynwald resolved that the Council is, yes, considerable discretion is exercised; quite often of Ministers appoint a commission under the chairmanship face to face discussion does take place; quite often, if it is of a person with legal qualifications who did not practice a question of progressing or not progressing, the actual and had not practised in the Island to (a) investigate and fees will be turned into a convertable loan so that if the report on the regulatory and disciplinary procedures which course is completed successfully - a student might have apply to those practising law in the Island, and (b) advise been failed for a particular reason - as long as the course on whether and with what frequency there should be a was completed, the loan would not be called in, for regular review of the law and practice relating to the example. In the event of requirement to repay, again provision of legal services in the Island. We sought advice discretion is used over the period of time in which through the Home Office from the Lord Chancellor’s repayment takes place having regard to the ex-student’s Office on possible chairmen, and this took rather longer income at the time. So we do look at these matters. than we had intended but the commission was appointed I thank Mr Braidwood for his contribution and Mr by the Council of Ministers in June of last year under the Henderson for bringing forward some of the statistics and distinguished chairmanship of Sir David Calcott. The rest the figures which, I think, do highlight the considerable of the commissioners were local: Mrs E Christian, Mrs A way in which this Court and the Isle of Man chooses to Craine, both justices of the peace, and Mr Bernard Moffatt, support its students. He quite rightly referred to all this as the local trade union official. ‘investing in students’ future’ and that is exactly what we The commission produced their report to the Council are doing: it is an investment of considerable sums of of Ministers towards the end of January, too late money which do, in time, benefit the Island. They certainly unfortunately for inclusion on the February Tynwald order benefit the student. There is no question of restricting paper and today, at the first available opportunity, we have unduly his or her access to higher education and it is their report before Tynwald. I take this opportunity of certainly a scheme, I think, we can all take great pride in. thanking the commission for their work in putting together I beg to move, sir. a concise and constructive document. The report sets out the process adopted by the The President: The motion, hon. members is that the commission and lists those who submitted written and/or oral evidence. The report concentrates particularly on the Student Award Scheme 2001 be approved. Those in favour please say aye; those against, no. The ayes have it. The Advocates Disciplinary Tribunal and suggests a number of proposals for modernising and making the tribunal more ayes have it. effective. The tribunal is, of course, appointed under statute Hon. members, I think it is an appropriate time in which and operates under statute. To implement the to have a short adjournment. We will recommence at 4.45 recommendations of the commission will therefore require p.m. Thank you, hon. members. new legislation, and this will need to be drafted and there The Court adjourned at 4.25 p.m. will need to be consultation on it. The main proposals made by the commission are to change the membership of the Advocates Disciplinary Tribunal, to reduce the proportion of legal professionals Announcement of Royal Assent on the tribunal so that it can be more readily seen as impartial and to give the tribunal and its business a higher The President: Hon. members, I have to announce that public profile through meeting in public and making public Royal Assent has been given to the Adoption (Amendment) announcements about their findings. These are significant Act 2001, the Criminal Justice Act 2001, Matrimonial changes and we will want to give those affected an Proceedings Act 2001, the Rehabilitation of Offenders Act opportunity of commenting on what has been 2001 and the Residence Act 2001. recommended. What the Council of Ministers is therefore proposing is to provide an opportunity for interested parties to offer Legal Services Commission - Report views on the commission’s report and by interested parties Received - Implementation of - 1 mean those who were witnesses and the deemsters and Recommendations - Motion Carried the Law Society, the Advocates Disciplinary Tribunal itself and the Financial Supervision Commission. Having The President: Hon. members, we have reached item received those views and given consideration to them, we 28 on the order paper and I call on the Chief Minister to will prepare new legislation based on the commission’s move. report. This legislation will come forward for further consideration and ultimately for introduction into the Mr Gelling: Mr President, I beg to move: branches, and we would expect the Bill to feature in next year’s legislative programme, so at this stage and subject That the Report of the Legal Services Commission to any representations which the Council of Ministers feel 2000 be received and the Council of Ministers be requested, should be taken into account, we would expect the report following consultation, to prepare legislative changes to before the Court today to be the blue-print for that give effect to the recommendations in the report. legislation.

Announcement of Royal Assent Legal Services Commission - Report Received - Implementation of Recommendations - Motion Carried

123 T656 TYNWALD COURT, TUESDAY, 20th MARCH 2001

There are two other unrelated matters dealt with by the Chief Minister. There is a reference, I think an expression commission: one is the frequency at which there should of regret in a way, conveyed in the report that there was be regular reviews of the law and practice relating to the such a limited response to it; one is left reading the report provision of legal services on the Island. This was a part thinking they were sorry they did not get a broader response of the commission’s remit and they have recommended a to their remit, but if you think back to what happened with frequency of no more than 10 years. We are happy to take this, it is not surprising. that on board. I believe there are three reasons why there was a limited Finally the commission has said, of legal aid, that, and response. Firstly, of course, the motion which was moved I quote, ‘Although not within our remit, concerns we have by Mr Speaker, hon. member for Michael at that time, was heard about availability of legal aid and the quality of amended, and if hon. members will look at the original delivery of legal aid services have led, us to recommend motion and the amendment you will see that it was that there be an independent review into the matter. We truncated to restrict the exercise and there is no doubt that take note of what the commission has said and what we this is one reason why there was perhaps not such a broader are doing in relation to this recommendation is consulting response to it as the commission had wished for. further with those with a particular involvement with the The second matter is another matter which was raised provision of legal aid to establish how general the view is in this hon. Court, sir, and that was the matter of immunity that there should be a review and whether there are from action and we tried - 1 tried, others tried - to get some particular aspects of legal aid which should be reviewed. clarity into the thinking on that so as the public could be We will arrive at a conclusion on how to respond to the provided with some reassurance. What we got - at least commission’s recommendations at the end of this further what I got eventually - was a letter dated 3rd August 2000 consultation. which was from the Legal Services Commission itself We are therefore proposing to take forward all the which said that the position of immunity for witnesses commission’s recommendations subject, of course, to more giving evidence, to take the commission, is that any witness ' detailed examination in the light of comments received. I sued for defamation would have the common law defence therefore beg to move the motion standing in my name at of qualified privilege. In other words, yes, you could be number 28 on our agenda today, sir. sued and you could try to get off by using the common law defence. Now, that provided a great deal of comfort to The President: Hon. member Mr Henderson. the man in the street to come forward and give evidence to the commission, so that is the second point which I think Mr Henderson: Thank you, Mr President. I beg to explains why there was such a limited response. second and reserve my remarks. The third item, of course, is the publicity. There was virtually no publicity to this. It reached a point where I did The President: Hon. member for Ayre, Mr Quine. a press release myself to try and get some publicity to it. I spoke to the secretary to the commission to try to get more Mr Quine: Yes, thank you, Mr President. I welcome publicity for it. Coincidentally, I bumped into a member the report, sir, and I am generally happy with the of the commission one day and the same issue was raised conclusions which the commission has reached. I think it by the member, disappointed there had been such limited is also nice to pick up a report which covers so much ground publicity on this, so I do not think we should be surprised in so few words; that is something that we do not normally that there was a limited response to this exercise. indulge ourselves in - and yes, I am probably the worst Turning to the recommendations, as I say I am broadly offender - but it is nice to pick up a report that is quite happy - indeed I am very happy - with most of the snappy in getting its message across. recommendations. According to my reckoning, I think they I think the issues which are dealt with in this report are have supported all but one of the issues which I put to the not new to us; in fact, I raised most of those when I appeared commission in both my written evidence and my oral before the previous commission, and I will revert to that a evidence, so I can hardly be dissatisfied with that response, little later, and myself and others have raised a number of but what I am sorry about is that these issues, which the these issues which we now have a recommendation on commission have now made a very positive response to, going back for several years, so it is perhaps timely to are issues which have been raised over several years in have the commission look at them and make a more this hon. Court and elsewhere, and it has taken this length positive recommendation. of time. The other parallel issue which I think is interesting But I think the current exercise came into focus at the here is the matter of whether or not the procedures currently end of 1999, in November 1999, hon. members will in use for the ADT and other aspects of the regulation are recollect, in another place I put down a series of five in breach of regulation 6. The commission concludes that questions on the same question sheet, questioning certain they may be, and all I would say there is, of course, that practices of the Law Society, for which I was immediately the same parallel that I drew when I suggested that to this labelled in the next edition of the Independent as being a Court and another place - we have in the last six months ‘tin-pot politician’ (Several Members: Hear, hear.) put through legislation carrying and using the same (Laughter) - so I hope he chokes on it when he reads this principles and consequently, as I raised at the time we were commission report! (Laughter) dealing with the legislation I will mention now, there must We then had the actual motion itself in December 1999 be a question mark over those provisions as well, and they and it is from that that I would make my first point to the have gone into new legislation.

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One point which I did raise with them and which going to lose sight of a number of these recommendations. remains unclear is the position in respect of advocates If this hon. Court approves a report, then the least I would engaging in investment business incidental to their legal expect is for all those matters to be reported back on, and practice. I am not quite sure what position the commission I believe that is not the case in respect of the earlier report. is adopting in this respect. In paragraph 4.3 they make a Mr President, I welcome this report. I would welcome statement as to what the position is and then it is left there, clarification on, I think there are, three issues in particular and then in 8.5, they make a proposition or suggestion that which I invited the Chief Minister to give me some all legal practitioners should be regulated under agreement clarification on, and I look forward to getting not just the - that is, an agreement with the FSC as exists for advocates, consultation done but getting some legislation before us I presume - or all lawyers be directly licensed, so this is so we can do something positive and constructive, although one very important issue which is left in the air. I cannot I note what the Chief Minister says and I suppose that is see a positive recommendation in respect of that matter the reality of the situation, that it is next year’s programme and my recommendation is quite clear - 1 have said it before that we are talking of at this late stage. Thank you, sir. - and that is that all lawyers individually should be licensed by the FSC. The President: The hon. member for Douglas East, Two other matters which I raised in my written evidence Mrs Cannell. and raised in the oral evidence: the first one is the matter of self-regulation and I put it to the commission that I felt Mrs Cannell: Thank you, Mr President. I think it is an that self-regulation is not a tenable philosophy or principle excellent report which is before us today and would concur upon which we could, in the Isle of Man setting, apply to with many of the comments made by the previous speaker. the regulation of the law, our legal practitioners. They have, There have been a number of us on occasions throughout I think, gone some way to address that because the the last 472 years who have raised questions in respect of procedures which they are now recommending in terms legal services and in particular, legal aid and also in of the ADT brings into it an independent element which I pursuing complaints, particularly if one is looking to pursue think will be beneficial and will, to some extent, address a complaint to the Advocates Disciplinary Tribunal and this question of conflict of interest, but hon. members will there have been, I have to say, a great many members of notice that in the report itself the commission express the the public who have approached myself and others in wish - and I fear it may remain a wish - that the legal respect of these issues over the last 4'/2 years, and so it is fraternity themselves should do something about this with a degree of gratification to receive this report and question. look upon it and see that it has recognised those areas of That, of course, ties in with the second matter which is concern that have been raised by members of the public conflict of interest. Again the wish is expressed that they through their members in this hon. place. will do something about conflict of interest, not an easy Looking through the report, I would like to make some matter given the size of the Isle of Man Law Society, but comment just on one or two items in it, and one is on page nonetheless an important matter. ■10, when it talks, 6.17 about publicity for procedures and Legal aid -1 think we seem to be unclear ourselves about decisions. I can remember only in 1998 a situation when the position in regard to legal aid. Whether or not legal aid we had quite a hefty debate in this hon. place and it was to applies to the Advocates Disciplinary Tribunal has been’ do with the desire by the advocates in the Isle of Man to raised in this hon. Court and the advice we got was that have a degree of immunity in terms of prosecution matters, legal aid did not apply to the Advocates Disciplinary and that was referred to a committee for consideration and Tribunal. Well, quite clearly this commission makes a quite there is quite a lengthy piece of Hansard on that particular different statement; they make the statement that it does subject. At that time there was criticism in this hon. place apply and we need to make the position abundantly clear, that if an advocate was found wanting by the Advocates even if that involves some changes to orders. Disciplinary Procedures and committee, the information The final point which I would make on this - and again, in respect of that finding would be illustrated somewhere I made this point to the commission when I gave them my for the public to see, and I distinctly remember that after oral evidence - is, where do we stand in relation to we debated the issue to some length in here promptly, about recommendations made in May 1990? In the earlier half an hour later, a form giving us notification of one commission report on page 17 there is a total, I think, of particular advocate who had been found wanting in several some 11 recommendations, and so far as I can check at different matters suddenly appeared on an information least four of those recommendations have not been pillar within the auspices of government offices, from the actioned. It may be, of course, that they had been public highway, and it was there for the best part of a week considered and they have been rejected and there may be before it was removed. It was greeted somewhat cynically good reasons why they were rejected but, so far as I can by members of the public and others in this hon. place find out on my inquiry, there are possibly four of those because it was the first time that we had seen anything to recommendations that remain somewhere in limbo. I do inform the public that an advocate or more had been found not know whether the Chief Minister can provide a wanting following complaints, but that was the only one response to that latter one but I think it is a matter we do that I ever witnessed being put in a public place for the need to have a reply on, because there is little point in people to see, although it had been agreed in previous proceeding with these commissions, valuable as they are, reports that such publicity would be afforded in such at considerable expense if at the end of the day we are circumstances.

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Looking at page 10 when dealing with this, it talks about It is a good report. What I would ask, though, in terms information for the public and it says that there has been of the motion that is on the agenda - it does say that an effort by the Office of Fair Trading and the Isle of Man following consultation that the Council of Ministers Law Society to disseminate information in the form of prepare legislative changes. Now, the hon. Chief Minister leaflets. There had been disagreement with the Advocates has said that it is hoped that such legislative changes will Disciplinary Tribunal over the contents of the leaflets so be programmed for 2002 following comment on the they are not yet generally available to the public. This was consultation process. I worry a little bit about this because back when the report was published, which was January obviously, when you get such a fundamental report such 2001, so I take my hat off to the Office of Fair Trading for as this, it is going to impact upon the legal services currently today producing for us (A Member: Hear, hear) some in the Isle of Man, and it is not unreasonable to imagine leaflets that will be going out to the public in terms of that those involved in this particular industry will want to information. They certainly seem to have jumped through comment on the contents of the commission’s report, but I the hoop since January to try and get something on paper sincerely hope that the recommendations contained within for members of the public. But I would ask that any future the report will not be watered down to the degree where literature is made a little bit more perhaps on the visual they will not be as effective as they could be if they are appearance and the ability for members of the public to be maintained as recommended. I dare say that the legal able to read, because the typeface is extremely small - this profession have probably already submitted comments on is only a small point but very important; if the public are this particular report and I wonder if, in replying, the hon. to not only be able to obtain this information, they ought Chief Minister could tell us when the consultation process to also be able to easily read the information contained will begin and when it will finish and whether or not hon. within it, so I think the print needs to be much larger than members will have any kind of opportunity to also be able it is currently and if it is going to stay at this size, then to comment, or to be notified of what the overall analysis there is a lot of excess paper here where the typeface could of the consultation process has brought in before legislation have been made bigger and more crystal clear, because in is prepared and comes forward. If we are going to consult, this particular observation on page 10 it does say, ‘We I believe we should consult, but I believe it should be open recommend that clear public information is produced’ and and I believe that hon. members of this particular place I would suggest it is not as clear as it could be, although I should also be privy to what that throws up and what it welcome the efforts that have been made today. brings forward but I welcome it. Thank you. Turning to the issue of legal aid, indeed the previous speaker was correct that during questions in this place and The President: The hon. member for Rushen, Mrs another, it was asked whether or not a person could claim, or be qualified to claim, an application for legal aid to Crowe. pursue a complaint against an advocate to the Advocates Disciplinary Tribunal and we were informed and it is in Mrs Crowe: Thank you, Mr President. Perhaps I could Hansard, that this is not the case, that legal aid is not clarify a couple of the points made by the previous speaker, available, and yet the commission have acknowledged the the hon. member for East Douglas. The matter of displaying fact that yes, it is available. But then of course they go on judgments for when there is a judgment made by the further than that because they talk about being able to award Disciplinary Committee does follow a set procedure. They compensation and costs, et cetera, on both sides I would are clearly displayed in government offices and the Office assume, bearing in mind that you could have spurious of Fair Trading and indeed we will explain to anyone that complaints which could waste a lot of time and not be enquires what any particular judgment is. Also, as a proven. But they did say, in terms of the legal aid, although comment was made about the leaflets, which indeed I have it was not within their original remit, they did consider it circulated to members today but are in the public domain and they said that it was in need of urgent investigation. already, I do recognise the point that the print is small. When the hon. Chief Minister moved the report he said These are only guidelines and we do have the technology that it is in need of independent investigation and in the office to print these off in large print for anyone consideration but I have underlined the word ‘urgent’ who so desires, but anyone that does have a problem we because that is what they have stated in the commission’s can accommodate them in that way. It is not a case that report, ‘urgent investigation’, and that is in 10.2 on page they were just published because this report was coming 14. up; in fact, they were actually published over eight months The summary of recommendations, I believe, is ago but we had to withdraw them because of a problem excellent, if they are to be followed through. They also that was highlighted by the Chairman of the Advocates suggest compensation and that the Advocates Disciplinary Disciplinary Committee at that time, which was much to Tribunal’s remit should be widened to enable them to the regret of the Office of Fair Trading and the Isle of Man consider complaints of negligence and delay and to award Law Society. However, that was just to clarify the points compensation up to £20,000. Now, that is quite a bold made by the previous speaker. recommendation to make but indeed a welcome one, I What I would like to comment on is what I consider to believe. be an error in the report, and I refer to paragraph 7 on page In terms of legal aid, what is paramount here is that if it 11, which states, ‘Several respondents propose that there is to be reviewed, and it must be reviewed, it is done should be appointed a Legal Services Ombudsman or Legal independently as this report was done, and it is also looked Services Commissioner’, and it goes on to say, ‘The Office upon with a degree of urgency. of Fair Trading suggested that the soon to be appointed

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Financial Services Ombudsman might additionally fulfil judgment made or whether it was an omission - was on such a role.’ As the Office of Fair Trading (Amendment) the law of probate and the administration of estates and Bill, which introduces the financial services ombudsman that no comment is made on that, and it was possibly put scheme has just completed its third reading in another place forward that legal practitioners should be able to operate and is about to commence its passage through the Council in that area of the law on the Isle of Man and that the law I must advise hon, members that there was never, never on such matters on the Isle of Man is quite similar to the any intention of our scheme taking on a legal services role law in the UK and is indeed even simpler as they do not and our submission, both written and oral, to the have to take on board tax issues. I just wonder if the Chief commission made this quite clear. Our written submission Minister could put that into his pot for further pointed out the proposed introduction of our scheme and consideration? cited it as an example or a model on which to base a future legal services ombudsman scheme if the Advocates The President: I call on the Chief Minister to reply. Disciplinary Tribunal was to be reviewed, and I do not understand how the commission could have construed our Mr Gelling: Yes, thank you, Mr President, and I thank remarks in a way that they have reported, but I am glad to the hon. members, first of all Mr Henderson for seconding have this opportunity to correct the matter for the record. the motion, and Mr Quine, Mrs Crowe, Mrs Cannell and The report contains a number of significant John Rimington for their support. recommendations, and my office is pleased that the I think I would like just to read one small part of the commission has accepted our proposal in recommending recommendation out of the conclusion, and of course it that the revised tribunal will have powers to award says ‘The international and commercial significance of the compensation of up to £20,000 and that its remit is Isle of Man has in recent years developed at such a rapid expanded to cover negligence and delays. I would also pace that the appropriate regulations of the legal profession like to mention the fact that the ADT has already decided have been apt to be left behind. It is important that those to remove the requirement for seven copies of a complaint who practise law here should seek to work within a regime to be submitted; that was something about which the Office which keeps abreast of developments and at the same time of Fair Trading felt very strongly and they have already fully retains public confidence. We believe that if our agreed and do not now require that, I believe, and I applaud recommendations are now implemented this will go a long them for taking such swift action. way towards closing the gap,’ and I think that is the The Office of Fair Trading has previously published summary of what they are saying. It probably is not the advice for consumers experiencing difficulties with legal end and it is not the absolute answer to everything that services and this is actually the latest edition of our leaflets was put forward, but certainly in their opinion it will be a that I have circulated. great help and I think that is reflected in - again I would Further detailed consideration of the other say to the hon. member for Ayre, Mr Quine - five out of recommendations is required and no doubt the Office of six is not too bad at all. However, I do find - and it has Fair Trading will be consulted as part of the consultation been illustrated to me here as I sit with the report - that the process prior to making the legislative changes necessary hon. member for Ayre was talking about his submission to give effect to the recommendations. and I have not got his submission, and also then the hon. Mr President, I fully support the motion and look Chair of Fair Trading has said, ‘This does not line up with forward to contributing again to the consultation process, what we said’ and I have not got what they said, they are which should provide a more open and consumer-friendly not appendices to this report, so it is a concise report, but mechanism for the handling of legal services complaints. when you have not got those appendices to know what I would just like to take this opportunity to thank the two people said, I do not honestly know, and I have to admit lay members of my board who worked so diligently as that, as to how much of this report has been taken on board. members of the Advocates Disciplinary Tribunal. Thank I can only assume that those knowing what they have said you, Mr President. and those that did contribute supporting the Bill feel that the greater majority has been taken on board. The President: The hon. member for Rushen, Mr Now, I have made a note of the points that have been Rimington. raised, and basically I said quite clearly that we were taking on all the recommendations of the report, so I would say Mr Rimington: Thank you, Mr President. Just a very to the hon. member Mrs Cannell, who hinted at ‘Well, I brief single point that I want to make, which was wonder what will happen at the end, some of these could representation made to me by a member of the legal- be dropped,’ we are saying we are taking on what the profession in respect of registered legal practitioners. Now, commission has said. However, we want to go back to obviously the Chief Minister may not be able to respond those who had given verbal, oral, written evidence to just fully at this moment, but if the comment could go into that check on whether or not these points have been made clear, process of consultation. . .? The situation is now that a because I think that is part of the consultation that we need legal practitioner can operate in terms of conveyancing to do before we bring the legislation forward. However, here in the Island and the law on conveyancing in the Island we know full well the timing is not on our side. We cannot is more complex or slightly more difficult than the law in get the legislation in this particular administrative year so the UK. Now, the question that was raised - and I do not therefore it is going to be next year, but that does not mean know if this was considered by the commission and any we should dawdle and not do anything; we should use that

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time to the good of consulting with those who had made than five other members, the Governor in Council shall submissions and then to get that legislation in front of the also have regard to the need for the commission to include new administration after November. members who are appropriately qualified by experience Now, Mr President, I think again, when I look at this or otherwise to participate in the exercise of the commission report, obviously they kept to the remit and I commission’s functions. take on board that the hon. member said the original motion The present term of appointment for the members of of our now Speaker was amended, but of course that is the commission is due for renewal on 1 st April this year. It exactly what the commission has done: they have strayed is recommended that Brigadier N A Butler, Mr R W a little bit, they went out beyond it a little in one or two Leonard, and Mr B Pover be appointed to the commission. places, but they have basically kept to a narrower remit, In view of the resignation of His Honour Henry Callow, it which in many ways has probably brought it back rather is further recommended that Mr N Cordwell be appointed more quickly than it might have done if it had been a to the commission for the first time. If approved by this broader one. So I think we are getting action in the places Court the appointments will be for a term of three years. Mr President, CVs of those nominated have been where certainly concern was expressed and I think, after circulated to all members so that I do not therefore propose our consultation with those who have made submissions, to repeat that information. However, I would like to place we will be able to come forward, or someone will, with on record our appreciation of the work of His Honour legislation to the next administration that will put an awful Henry Callow and also that of Mr Peter Sayer, who is lot of this into legislation and, as they say it will go a long similarly retiring from membership of the commission and way to closing the gap. we thank them for their invaluable service. So on the assurance that I have taken note of the points I hereby recommend that those persons nominated by raised from the hon. member Mr Rimington from Rushen, the Governor in Council be appointed as members of the on that particular point and these will be put forward for Communications Commission and I beg to move the that consultation period, and thanking the hon. members motion standing in my name at item number 29, Mr that have spoken and encouraging other members to President. support this particular motion, Mr President, I would like to move that the report of the Legal Services Commission The President: The hon. member for Ramsey, Mr Bell. 2000 be received and the Council of Ministers be requested, following consultation, to prepare legislative changes to Mr Bell: Thank you, Mr President, I beg to second the give effect to the recommendations in the report, sir resolution and just very briefly would like to add my sincere appreciation of the efforts and hard work put in by both The President: Hon. members, the motion before you His Honour Henry Callow and by Peter Sayer now for a is printed at 28 on your order paper. Will those in favour number of years. The commission has been and is still please say aye; against, no. The ayes have it. The ayes going through a period of transition and change. The have it. workload has increased enormously over the last two or three years and these two gentlemen have done a sterling job in working together with the rest of the commission to farther the policies of Tynwald. Communications Commission I would just point out, though, as the hon. Chief Minister - Members Appointed has said, the appointment to the membership of the Communications Commission shall not be not less than The President: Item 29, the Chief Minister to move. three and not more than five. We have recommended four at this stage, leaving an option for one more in the future, Mr Gelling: Thank you, Mr President. I beg to move: bearing in mind that the consultation process on the future of not only the telecommunications regulatory regime on That Tynwald approves the appointment of the the Island but also the future structure of the following persons as members of the Communications Communications Commission and its responsibilities itself Commission for a period of three years commencing on are currently under review as a result of this consultation the 1st April 2001: Brigadier N A Butler CBE, Mr R W process which is going on and we thought it appropriate to Leonard, Mr B Rover, Mr N Cordwell. leave one potential vacancy on the Communications Commission should anything radical be recommended as By virtue of the Communications Commission Order a result of the consultation process. So it has left us with of 1989 the membership of the Communications some flexibility, but I would urge support for the four Commission is appointed by the Governor in Council names put forward as I am sure they will do an extremely subject to the approval of Tynwald. It is a requirement of goodjob. the order that the Governor in Council shall have regard to the needs for the commission to include the Minister for The President: Hon. members, the motion before you Home Affairs, who shall be chairman of the commission. is printed at item 29 on the order paper. Those in favour In appointing members of the commission, which under please say aye; against, no. The ayes have it. The ayes the order should consist of not less than three and not more have it.

Communications Commission - Members Appointed

128

Appendix 3: 24th May 2018 - Extract from the Submission of Mr W Greenhow, Chief Secretary

129 130 Response to the Tynwald Constitutional and Legal affairs and Justice Committee.

1. Progress made with Recommendation 7 of the Select Committee on the Operation of the Jury System.

In its report dated June 2016, considered by Tynwald in November 2016, recommendation 7 of the Select Committee read:

Recruitment of jurors should be modernised so that the names are collected from a centrally held universal list of citizens, not based on Sheadings, but with safeguards to allow a mixture of jurors from various parts of the Island

In December 2016, the Council of Ministers presented a paper to Tynwald seeking approval to develop a ‘single resident record’ as per recommendation 9 of the Select Committee’s report which stated:

The Cabinet Office should lead a cross-Government working group to consider, investigate and propose the principles for a centralised Citizen Database as follows:

 To consider the whole of the Public Service and identify any services in addition to electoral roll and jury service that could benefit from such a central register;  To consider the method by which the database could be constructed automatically from existing systems to provide as accurate a record as possible;  To consider the legal framework required to facilitate the creation and maintenance of such a database;  To consider the costs and plan, together with the benefits, and report to Tynwald.

The Cabinet Office formally reported to Tynwald in December 2017, identifying a proposal for a ‘smart service framework’, upon which a juror selection system, as identified in recommendation 7 of the Select Committee’s report, could be built.

Tynwald agreed with the Cabinet Office’s recommendation that Tynwald:

Note the proposed technical solution and the use of it to create the following ‘smart services’, recognising that these may overlap with other programmes of work explicitly addressing the modernisation of these areas: a) automation of the electoral register b) automatic generation of a jury list c) automatically generated demographic information to better inform service planning, delivery and policy making

Since December a project board has been established for the smart service framework and a programme of work set out. In the first instance an outline business case is being developed for the smart service framework with a full business case to be delivered in December 2018.

131 It is our intention that Phase 1 of the project will create the technical framework and subscribe a small number of services to it. This includes the electoral register and jury list as well as exploring the automatic generation of demographic information.

A key part of the online generation of the Jury list would also be the removal of the majority of exemptions. There may be an option for the Cabinet Office to include these amending provisions to the Jury Act 1980 in any legislation drafted as a consequence of the electoral reform currently being consulted upon.

2. Advocates Disciplinary Tribunal—progress made with reforms recommended by the 2000 Report of the Legal Services Commission, and any other plans for reform

The above report was laid before and debated at Tynwald in March 2001. The motion ‘[t]hat the Report of the Legal Services Commission 2000 be received and the Council of Ministers be requested, following consultation, to prepare legislative changes to give effect to the recommendations in the Report’ was carried.

Some changes have taken place since the report was received by Tynwald:

The administration of the ADT has moved from Cabinet Office to the General Registry.

The previous Governor delegated his powers under of s18(3)(c) of the Advocates Act 1976 to the first Deemster, so any referral under this section is now dealt with by a panel of Deemsters. This goes some way to addressing recommendation 9 in the 2000 report.

There has been some modification to the rules (the latest version is 2017) and the guidance notes were last updated in 2014.

The fundamental issues identified by the Committee regarding the constitution or the rules of the committee have not, it appears, been addressed. After review, it is clear that the responsibility for carrying out these changes was not clearly identified. I would welcome the chance for a discussion with the committee in respect of this matter in the first instance.

132

Appendix 4: 20th December 2017 - Submission of Mr J Lalor-Smith, Deputy Chief Executive, Department of Home Affairs

133 134 Archived: 24 November 2018 11:48:08 From: Lalor-Smith Julian Sent: 20 December 2017 10:41:14 To: Francisca Gale Subject: RE: Justice Committee - Follow-up on report on the Operation of the Jury System Response requested: Yes Importance: Normal

Dear Francisca

Please accept my apology for the delay in responding to the request of the Committee of Tynwald on Constitutional and Legal Affairs and Justice concerning the Operation of the Jury System.

A considerable amount of work has been undertaken in relation to the recommendations and as result it took longer that we had hoped to gather all the information together in order to provide a comprehensive response.

In this connection please find below a response to each of the recommendations that falls to the Department of Home Affairs to address:-

Recommendation Action taken 1. We recommend that the option of Provision to deliver against this recommendation a judge-only trial on information has been made within one of the Sentencing Bills be allowed to defendants as a which is in the process of being drafted. It is right. (Paragraph 35) intended to engage in full public consultation during 2018 on this matter. 2. We recommend that the option of Provision to deliver against this recommendation a judge-only trial be available has been made within one of the Sentencing Bills where, in the opinion of the court, which is in the process of being drafted on it is not practicable to empanel a application by prosecution where danger of jury jury. tampering. It is intended to engage in full public consultation during 2018 on this matter.

In respect of the precise terms of the Recommendation, careful and further consideration is to be given as to how this might be framed to ensure adequate safeguards and appropriate guidance is available to the judge to assist the judge in forming such an opinion. This may be considered for legislative provision in due course and in the event the very significant issues it raises are overcome. 3. The number of those serving on Provision to deliver against this recommendation juries should be increased to 12 has been made within one of the Sentencing Bills for all cases involving a maximum which is in the process of being drafted. sentence of over ten years. It is intended to engage in full public consultation during 2018 on this matter. 4. In cases where a twelve-member Provision to deliver against this recommendation jury sits, a majority verdict of ten has been made within one of the Sentencing Bills members should be allowed on the which is in the process of being drafted.

135 same basis as in England and Wales. It is intended to engage in full public consultation during 2018 on this matter. 5. We recommend that the right of Provision to deliver against this recommendation the prosecution or defence in has been made within one of the Sentencing Bills criminal trials to peremptory which is in the process of being drafted. challenges should be abolished. It is intended to engage in full public consultation during 2018 on this matter. 6. We recommend that specific This matter raises many complex issues that will provision be made to allow jurors require careful consideration and will be to obtain counselling in difficult considered once the legislation necessary to assist and emotionally draining cases in implementing the Criminal Justice Strategy has and that any necessary changes to been progressed. the law relating to non-disclosure be made to enable professional assistance to be given. 7 & These Recommendations are for the Cabinet 9 Office 8. Recruitment of jurors should be The recruitment of jurors is not a matter for the streamlined to allow early claims Department (it is a court function) and for deferral. consequently this is not a matter that can be addressed by the Department. 10. The maximum age for service on a Provision to deliver against this recommendation jury should be raised to 75, with has been made within one of the Sentencing Bills an option (as in Scotland) for which is in the process of being drafted. excusal for those aged 71 and over. It is intended to engage in full public consultation during 2018 on this matter. 11. Everyone should be eligible to Section 2 of the Jury Act 1980 empowers serve on a jury, except those the Council of Ministers to amend the eligibility involved in the administration of criteria (set out in Schedule 1) by Order (subject justice (including police officers) to Tynwald approval). This is a matter which will and Members of Tynwald. Other be considered when the other legislative priorities persons with public duties should re these recommendations have been progressed be allowed excusal for cause. further. 12. This is a matter for the Department for Enterprise. 13. We recommend that the This matter raises many complex issues that will Government engage in a require careful consideration and will be comprehensive overhaul of the considered once the legislation necessary to assist 1872 Criminal Code provisions in in implementing the Criminal Justice Strategy has relation to juries, which should been progressed. include outlawing conscious use of the internet and social media in a way which undermines the jury process.

I hope the above provides you with the update you require if you have any further questions please let me know.

Regards (Lhiats)

Julian

136 Julian C Lalor-Smith, Deputy Chief Executive, Administration and Legislation Section, Chief Executive's Office (Oik yn Ard-sheckter), Department of Home Affairs (Rheynn Cooishyn Sthie), Head Quarters Building, Tromode Road, Douglas (Doolish), Isle of Man (Ellan Vannin), IM2 5PA, British Isles

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From: Francisca Gale Sent: 18 December 2017 17:52 To: Kelly, Mark (DHA) Cc: Phillips, Roger (Tynwald) Subject: RE: Justice Committee - Follow-up on report on the Operation of the Jury System

Dear Mr Kelly,

Just following up on the email below, as I haven’t had any response.

Thanks and best wishes,

Francisca

From: Francisca Gale Sent: 28 November 2017 16:22 To: 'mark.kelly Cc: Roger Phillips Subject: Justice Committee - Follow-up on report on the Operation of the Jury System

Dear Mr Kelly,

I’m writing on behalf of the newly established Committee of Tynwald on Constitutional and Legal Affairs and Justice.

The Committee would like to follow up on any progress made with implementing the recommendations of the report of the Select Committee on the Operation of the Jury System (PP 2016/0100).

137 A response by 15th December would be appreciated.

Any questions, please feel free to ask me or Roger Phillips.

Best wishes,

Francisca

Francisca Gale Assistant Clerk to the Committee Office of the Clerk of Tynwald Legislative Buildings Finch Road, Douglas Isle of Man IM1 3PW

[Contact details redacted]

Website: www.tynwald.org.im

Isle of Man. Giving you freedom to flourish

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RAAUE: S’preevaadjagh yn çhaghteraght post-l shoh chammah’s coadanyn erbee currit marish as ta shoh coadit ec y leigh. Cha nhegin diu coipal ny cur eh da peiagh erbee elley ny ymmydey yn chooid t’ayn er aght erbee dyn kied leayr veih’n choyrtagh. Mannagh nee shiu yn enmyssagh kiarit jeh’n phost-l shoh, doll-shiu magh eh, my sailliu, as cur-shiu fys da’n choyrtagh cha leah as oddys shiu.

Cha nel kied currit da failleydagh ny jantagh erbee conaant y yannoo rish peiagh ny possan erbee lesh post-l er son Rheynn ny Boayrd Slattyssagh erbee jeh Reiltys Ellan Vannin dyn co-niartaghey scruit leayr veih Reireyder y Rheynn ny Boayrd Slattyssagh t’eh bentyn rish.

138

Appendix 5: Excerpt from the Programme for Government: Healthy and Safe Island

139 140 14

INCLUSIVE HEALTHY AND SAFE ISLAND u TOLERANT from crimeanddanger We live ourlives safe children, young peopleandfamilies at risk We have improved thequalityof life for We live longer, healthier lives OUTCOME u SUSTAINABLE 141 the financing of terrorism Maintain ourrobust, zero tolerance stance inrelation to moneylaunderingand Continue to supportthework of ouremergency services Respond to theincreasing threats to ournational security of theCriminal Justice Strategy Continue to moderniseourcriminaljustice system through theimplementation Provide safeguards for peoplewhocannot protect themselves Work to ensure that everyone receives goodvaluehealth andsocialcare services Improve services for peoplewhoreally needcare inhospital and residential care wherever possible Help peopleto stay well intheirown homesandcommunities, avoiding hospital good lifestyle choices Help everyone to take greater responsibility for theirown health, encouraging POLICY STATEMENT -WE WILL OUTCOME POLICY STATEMENT - WE WILL

Help everyone to take greater responsibility for their own health, encouraging good lifestyle choices

Help people to stay well in their own homes and communities, avoiding hospital We live longer, healthier lives and residential care wherever possible

Improve services for people who really need care in hospital

Work to ensure that everyone receives good value health and social care services We have improved the quality of life for Provide safeguards for people who cannot protect themselves children, young people and families at risk

Continue to modernise our criminal justice system through the implementation of the Criminal Justice Strategy We live our lives safe Respond to the increasing threats to our national security from crime and danger Continue to support the work of our emergency services

Maintain our robust, zero tolerance stance in relation to money laundering and the financing of terrorism

©Paul Marriott

INCLUSIVE u TOLERANT u SUSTAINABLE 15

142 HEALTHY AND SAFE ISLAND

ACTION BY OUTCOME

Continue the external peer review process of the hospital and implement the recommendations

Move more services from the hospital into the community so care is provided closer to people’s homes

Define the essential services always provided in health and social care and be clear about those that aren’t

Continue to digitally transform the hospital and health and care services more generally

Define the health services which will be provided on-Island and those that will be provided off-Island

Reduce waiting times for operations

Publish hospital waiting lists by April 2017

Implement the mental health services strategy

Consider and recommend funding options for residential and nursing care

Implement the recommendations in the Care Inspectorate 2014 report of an inspection of services for children and young people, and respond to the comments in the Care Inspectorate’s 2016 update report

Put the Safeguarding Children Board on a statutory footing through legislation, and consider introducing a statutory board for safeguarding adults

Investigate and make proposals for independent regulation of health and social care

Widen the scope of offences covered by cautions and fixed penalty notices

Develop new guidelines for our sentencing, parole and probation frameworks

Enhance early intervention, including extending our successful youth justice strategy to include those aged 18-25

Reduce reoffending through community rehabilitation and restorative justice programmes

Drive digital transformation of the criminal justice system, particularly in the Police and Courts, and widen the scope in which evidence can be heard and cross-examined

Amend jury arrangements taking into account the Tynwald resolution of November 2016

Increase our ability to respond to cyber attacks

Develop a border security policy by June 2017

Implement any improvements identified by the MONEYVAL assessment

20 INCLUSIVE u TOLERANT u SUSTAINABLE

143 144

Appendix 6: 8th March 2018 –

Submission from the Economic Affairs Division, Cabinet Office

145 146 Archived: 24 November 2018 11:50:52 From: Smith, Adam Sent: 08 March 2018 11:29:43 To: Francisca Gale Subject: [Contact details redacted] Importance: Normal

Dear Francisca,

Economic Affairs does not have, and has not had, any work streams in relation to Brexit.

Kind regards

Adam

From: Francisca Gale Sent: 08 March 2018 08:19 To: Smith, Adam Cc: Phillips, Roger (Tynwald) Subject: [email protected]

Dear Adam,

I’m writing on behalf of the Constitutional and Legal Affairs and Justice Committee of Tynwald.

The Committee is interested in finding out more about how various government departments and divisions are preparing for Brexit. Could you please give an overview of Economic Affairs’s current workstreams on Brexit? A response by next Friday 16th March would be appreciated.

I hope that’s clear; please let me know if you have any questions.

Best wishes,

Francisca

Francisca Gale Assistant Clerk to the Committee Office of the Clerk of Tynwald Legislative Buildings Finch Road, Douglas Isle of Man IM1 3PW

[Contact details redacted]

Website: www.tynwald.org.im

Isle of Man. Giving you freedom to flourish

147 148

Appendix 7: 14th March 2018 – Submission from the Treasury and Customs and Excise Division

149 150 Justice Committee – Brexit Preparations

Please give an overview of the Treasury’s current work streams on Brexit

Legislation work stream

Identify all relevant EU legislation having, or given, effect in, or as part of, customs, excise, VAT and related law in the Island and prepare to make any changes necessary ahead of the UK exiting the European Union.

Legislative priorities over the coming year will focus primarily on –

 Identify all relevant EU legislation having direct effect in the Island due to Protocol 3 of the UK’s Act of Accession, in relation to customs, excise and VAT and prepare and make any changes necessary ahead of the UK exiting the European Union.

 Complete a thorough analysis of the Customs & Excise Agreement 1979 and related legislation to identify and prepare for changes that may be required as a consequence of the UK exiting the European Union.

 Mirroring as necessary any changes in UK/HMRC legislation as required under the 1979 Agreement, including amendments as a result of any Finance Acts in 2018, in the principle customs acts, namely:

o The Customs and Excise Acts 1986, which are concerned with customs matters, and excise matters involving oils, tobacco and alcohol, one of which is the Customs and Excise Management Act 1986, which provides general powers, plus those specific to imports, exports, excise goods etc

o The Customs and Excise Act 1993, an Act allowing application in the Isle of Man of UK and EU customs, excise, VAT and related legislation

o The Value Added Tax Act 1996

Future Customs Relationship work stream

Working collaboratively with the IOM Government’s Cabinet Office, Department for Enterprise (DfE), Department of Environment, Food & Agriculture (DEFA) and HM Attorney General, maintaining regular engagement through roundtable meetings and customs technical workshops with the Department for Exiting the EU (DExEU), HM Treasury (HMT) and HM Revenue & Customs (HMRC) to bring influence to seek the best possible Brexit transition and outcome for the Isle of Man’s cross border traders, shoppers and travellers wherever those borders may be drawn.

Brexit may bring a hardening of our borders with the EU27. If this is the case there will be a necessity for businesses and consumers to treat EU purchases as ‘imports’. There is the potential for a five-fold increase in the number of import declarations /payments which would also be seen in fast freight movements and postal imports. Harder borders may also

151 mean increased and more visible border controls. The Division is watching for such potential outcomes and if realised must plan to meet increased demand which will require additional human resources and potentially additional infrastructure space at the ports and post/freight depots.

IT/IS work stream

Whilst in train prior to Brexit the Division is working with HMRC to retain access to the computer system used for the Customs Handling of Import and Export Freight (CHIEF) and its replacement the Customs Declaration System (CDS).

Brexit has increased the importance of retaining access to CHIEF/CDS. It is within this system that the IOM EPU (Entry Processing Unit) sits which is important for the IOM Government in terms of direct service provision to traders involved in importing or exporting goods who wish to deal with IOMC&E direct.

National Insurance

The Isle of Man is party to a number of Social Security Agreements that the UK has with European countries, the status of these agreements post Brexit has yet to be confirmed. In the meantime officers from ITD have been liaising with their UK counterparts in both the Department for Work and Pensions and HMRC to ensure that the Islands current position with these European countries is maintained after Brexit.

152

Appendix 8: 16th March 2018 - Submission from the Department of Environment, Food and Agriculture

153 154 [Contact details redacted]

155 156 157 158 159 [Signature redacted]

160

Appendix 9: 16th March 2018 – Submission from the Department for Enterprise

161 162 [Contact details redacted]

[Contact details redacted]

163 164 [Signature redacted]

165 166

Appendix 10: 14th May 2018 Oral Evidence Hearing - Opening Statement of Hon G Boot MHK, Minister for Department of the Environment, Food and Agriculture

167 168 Standing Committee of Tynwald on Constitutional and Legal Affairs and Justice Brexit 14 May 2018

DEFA Minister’s Opening Statement

BREXIT is a large and complex matter for DEFA, as we are responsible for the local implications of the Common Fisheries Policy and Common Agricultural Policy which are two of the most regulated and complex EU industry policies.

 The possible future common UK policy framework for Agriculture and Fisheries will impact on the UK market through which we trade.  The substantial devolution of these policies within the UK could create significant distortions in the jurisdiction’s competitive positions and the Management arrangements of the surrounding Fisheries – which we need to understand and take account of through evolving our own policies.

We are also responsible for Environmental Regulation which from an EU perspective are currently outside the Protocol 3 obligations however, there is a scenario where they could in future apply as part of a future Trade Agreement with the EU. There are other Regulations which are Trade related regulations such Food and waste Standards which already apply directly and are likely to continue.

Trade and Market access are key issues.

 Our food producers sell product into the UK where we could see market disruption, especially in the event of a Hard Brexit.  They sell product into the EU where market access without excessive import tariffs are crucial to our competitiveness.  They sell product into a range of worldwide markets, from the US, South Korea and South America and these markets are currently accessed under EU Trade Agreements.

Maintaining access to these markets is crucial, as is being able to access a skilled workforce for the range of local businesses.

 All of these aspects offer opportunities and threats, which we need to manage.

In preparation, we have worked closely with the local industry stakeholders and across government through the EU Advisory Group, to understand our Trade patterns, their value and the priority markets and to identify our trade related issues and objectives.

We have had regular meetings with DEFRA and DxEU to ensure we understand the issues and opportunities and we seek the best possible outcomes from the UK’s negotiations.

1

169 We have strengthened our legislation team and broadened our Policy team to help interpret and respond, with support from a successful application to the Treasury BREXIT Fund. The Legislative team have prioritised the legislation we need to update and are now commencing the production of the highest priority Regulations.

We have reviewed our support mechanisms and compliance with a likely WTO regime and are working closely with the UK to explore what, if any, areas of concern there are regarding trade under future WTO Free Trade Agreements.

Officers and I have attended many conferences and met a wide range of UK politicians and political Committees to ensure we understand each other’s respective positions, often working in tandem with the other Crown Dependencies.

All of these activities have been supported by the Cabinet Office and their External Affairs team, who are working hard to advise, facilitate and connect our efforts.

I believe that if there is a reasonable transition period, we are increasingly prepared to ensure our Policies and Regulations are consulted on and fit for purpose by the point of final separation. However, I have to acknowledge that in the event of a Hard Brexit, we may have to limit consultation to ensure we can introduce compliant Trade regulations, for example Animal Health and Food Safety, which could be required to meet possible EU expectations and hence enable trade. In this scenario, we may also face significant market disruption and we are now considering how this could be addressed in the short term.

There is a significant amount of work ahead, however, we now understand much of what is required and believe we are becoming resourced to deliver it. There will be opportunities, for example through improved fisheries management and our challenge will be to ensure that even as we deliver all the required work, we keep checking with industry, Isle of Man and UK government to ensure we create and seize every opportunity.

Unfortunately, we will only know with hindsight whether we are doing the right things!

Thank you.

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170

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