The Minister of State, Ministry of Justice (Lord McNally)
My Lords, it is important that I put on the record the Government’s point of view in this important debate, so I will not be able to follow the usual courtesy of a detailed response to the many individual points and questions raised. However, I will treat the Hansard of this debate as an input into the consultation under way, and I will see whether I can cover some of the specific points raised in an omnibus letter that we will circulate to noble Lords.
First, I, too, congratulate the noble Baroness, Lady Deech, on securing a debate on this important subject. It has attracted a speakers list of great experience and expertise, and the debate as a whole has been a major contribution to what I emphasise is a consultation still in progress. This debate and the consultation that has initiated it take place against a background of two inescapable realities. The first was stated by the noble Baroness, Lady Deech, herself when she spoke in the debate on the gracious Speech on 9 May. She was also quoted today by the noble and learned Lord, Lord Hope. She said:
“It is self-evident that there cannot be a bottomless fund for legal aid”.—[Official Report, 9/3/13; col. 101.]
The second reality was made clear by the noble Lord, Lord Carter, in his review of the procurement of legal aid conducted in 2006. He said:
“A healthy legal services market should be driven by best value competition based on quality, capacity and price. All three of these factors should lead to the restructuring of the supply market”.
Of his own proposals, he said:
“The emphasis of the proposals has been upon providing incentives for firms to structure their businesses in such a way that legal aid services can be procured more effectively, and that the service is delivered more efficiently”.
It is therefore no surprise that previous Governments wrestled with this issue.
The establishment of the Legal Services Commission in 1999 reformed the part of the system which funds legal aid services but not the part which delivers them. Costs continued to increase, giving rise to several series of fee cuts. The case for reform was certainly enough to persuade the Opposition to include a commitment to find greater savings from the legal aid scheme in their 2010 manifesto. Their consultation document, Restructuring the Delivery of Criminal Defence Services, published earlier that year—this was quoted by the noble Lord, Lord Faulks—said:
“Currently the criminal defence service is highly fragmented, with a large number of small suppliers and relatively few large suppliers”.
The need for reform of legal aid-funded services in order to deliver a cost-effective, sustainable legal aid scheme is well established, but it is not the only driver for reform of the legal professions. Changes in technology and its increasingly fundamental role in the functioning of the criminal justice system demand the kinds of changes to working practices and business models seen throughout the public and private sectors. The introduction of alternative business structures, Jackson reforms and an increasingly well informed customer base are all examples of changes which present their own challenges that the legal professions must meet. Those changes are accompanied by the brutal fact that the number of businesses providing criminal legal aid services now vastly outstrips demand for such services.
The realities have been gathering force and relevance for decades, so it is absurd for the professions to claim that they have been bounced by a short and ill considered consultation. When I first came into this office in 2010, the Bar Council was starting to consider ways to restructure the way that it delivers its services. It was looking at what it called procure co-type organisations. I had a very interesting discussion with the then chair of the Bar Council about its vision for the future of the Bar. I understand that work to explore such arrangements ceased at the request of senior members of the Bar due to concerns that it would aid the Government in introducing competitive tendering. We want the Law Society and the Bar Council to engage with changes which are in many cases inevitable.
The Government recognise that the services the professions deliver are a vital component of our legal system and ensure access to justice and equality before the law. We recognise that the independent judiciary—perhaps the most critical element of our justice system—could not survive without drawing from the pool of talent that the professions create.
However, alongside the need to ensure access to justice and a healthy, sustainable legal sector, the professions must also recognise that the Government are entitled to seek the best possible value for money from the legal aid budget. The coalition’s programme for government made a commitment to review the legal aid scheme with the aim of finding savings, culminating in the Legal Aid, Sentencing and Punishment of Offenders Act 2012. This will have removed around £320 million from the legal aid budget by 2014-15—largely, as has been explained, from the civil legal aid budget—as well as strengthening accountability and introducing a more rigorous approach to financial management by creating the Legal Aid Agency.
However, the current financial climate means that it is necessary to look again at everything that the Ministry of Justice is doing, including in relation to legal aid, in order to make further savings, particularly in respect of criminal legal aid. This was the focus of the consultation, which has recently concluded, and the aim is to further reduce the legal aid spend by around £220 million by 2018-19.
The consultation, published in April, included a proposal to move to a model of price-competitive tendering in the criminal legal aid market. Conscious of the professions’ objections to the principle of “one case, one fee”, we proposed to exclude criminal advocacy from the competition model, instead proposing to restructure the Crown Court advocacy scheme. Being mindful of the great disparity in the level of fee income received by advocates for Crown Court work, our proposals would rebalance fee income so that those at the top end took the greatest reduction and the lower earners the least. Indeed, some lower earners may see a small increase in their fee income.
Alongside this, we sought to further increase efficiency by proposing a sensible reduction in the use of multiple counsel. To ensure public confidence in the level of expenditure on the longest and most expensive cases, as well as delivering the necessary savings for the legal aid scheme, we propose to reduce the rates paid for criminal, very high-cost cases by 30%. We have also included some small but important reforms to civil legal aid and expert fees to ensure that these, too, are fair and proportionate, and consistent with those paid for similar work elsewhere.
Our proposals also seek to address a number of issues where the savings may be small but we believe that the impact on public confidence in the legal aid scheme is significant. We propose to reduce the scope of prison law cases funded through legal aid, directing less serious matters to the internal prisoner complaints process. The prisoner complaints system was updated in 2012 and has recently been audited with a review of the adequacy, effectiveness and reliability of controls over prisoner complaints, with no significant concerns identified. Criminal legal aid will remain for a significant number of cases where liberty is at stake, such as parole hearings, or where there is a risk of extra days being added, such as in disciplinary cases.
By proposing a Crown Court eligibility threshold, we are ensuring that those who have the means to pay for their own defence do so. By setting it at twice the average household disposable income, we have ensured that it is fair.
In introducing a residence test, we seek to ensure that civil legal aid expenditure is targeted at those who have a strong connection to the UK. As with other public services, legal aid is paid for by UK taxpayers and we do not believe that it should be provided to those who have never set foot in this country or whose connection is tenuous.
We have already proposed an exception for asylum seekers in recognition of their particular vulnerability—
Lord McNally
No, I am not giving way. I am sorry. I have five minutes left. It is a time-limited debate and the noble Lord has had his time.
Lord McNally
I am answering the debate.
We have already proposed an exception for asylum seekers, in recognition of their particular vulnerability, and made clear that persons who did not meet the test would be entitled to apply for exceptional funding. We have heard the concerns raised during the consultation and in today’s debate in respect of the impact of the test on other groups of people or types of cases. We will reflect carefully on these points before making any further decisions.
We recognise judicial review as an important tool of redress which balances the power of the state. We continue to believe that it is important to make legal aid available for most judicial review cases. Under this proposal, legal aid for the earlier stages of a case would not be affected. Payment would continue as now for work to investigate the strength of a claim or to engage in correspondence as required by the pre-action protocol. This is important as many cases will settle or conclude at this point without issuing an application, avoiding further costs to the legal aid scheme, the courts and public authorities. However, we are concerned that legal aid is sometimes treated as a resource to further pursue weak cases that have little effect other than to waste taxpayers’ money. We do not think it is fair for taxpayers to pay the bills for weak cases that have little effect other than to incur costs for public authorities and the legal aid scheme. We set out our initial assessment of the impact of the proposals along with the consultation paper and invited consultees to comment on the extent and range of those impacts and set out any concerns that they had in this regard. We are now carefully considering all responses and the issues that they raised.
Much of what has been said about our proposals on price competition has quite simply been false. The debate has been dogged by a baffling conflation of the Government’s intention to manage the criminal legal aid scheme, through around a quarter of the current number of contracts, with a mythical intention to see only around a quarter of the present number of firms. Some of the rhetoric has risked misleading the public that legal aid would no longer be available. However, the professions have made clear their views on the importance of client choice both for the benefit of clients themselves and for the health of the market more generally. As the Justice Secretary told the Justice Select Committee last week, we have listened and will put forward revised proposals in the autumn. We have also listened on the proposed residence test and will consider the issues raised as well as the comments made across the proposals from nearly16,000 responses.
This House has much collective wisdom and experience about the issues that we have been discussing today. I want to make it clear that this is a real consultation and we are listening. The decision that Ministers have to take will be in the context of the economic realities from which the legal aid fund cannot escape. There will be cuts that will mean some tough choices. However, when the cuts have been made we will still be left with one of the most generous legal aid schemes in the world. I would make the point that although I have never compared it with continental legal aid schemes, I have compared it with common law legal aid schemes in Australia, Canada, New Zealand and elsewhere—and noble Lords will find that it is one of the most generous in the world. I am proud of that fact. I want us to have a generous legal aid scheme. Access to justice is important. I want us to work on ways and ideas, some of which have been thrown up by the consultation, which will give long-term sustainability to legal aid.
However, long-term sustainability means the legal professions facing up to some hard facts. There continues to be oversupply in both parts of the profession, with too many lawyers chasing a limited amount of publicly funded work. Lawyers themselves have to address the further issues of quality and consolidation which will remain long after this present argument has been settled. Alternative business structures, the Jackson reforms, no-win no-fee, damage-based agreements and conditional fee agreements, will all impact on the organisation and structure of the profession. There are wider issues, such as a lack of social mobility and diversity which cannot be solved simply by tweaking the legal aid scheme.
In some ways, I have been disappointed at the way in which those who have responsibilities in these areas have refused to engage with these fundamental issues. I agree with my noble friend Lord Marks that we have to seek a new settlement in this matter. There is still time to do so. Our legal system, our respect for the rule of law and the eminence and integrity of our judiciary are precious gifts passed down from one generation to another. We all have a duty to protect what is best while managing the change that is inevitable. That is the task before us now, and I again call on all those who care about the system of justice to join us in that task.