Courts and Tribunals Fees

Andy Slaughter Excerpts

Monday 4th July 2016 Commons Chamber

[Robert Neill (Bromley and Chislehurst) (Con)]

It is a great pleasure and a privilege to speak to the motion and raise the issue arising from the report by our Select Committee. This is the first time that one of our Committee’s reports has been debated on the Floor of the House in this way.

I begin by expressing my appreciation to all the members of the Committee for the constructive and diligent way in which they have approached the work of the Committee and this report in particular. It was undertaken in an entirely collaborative and non-partisan spirit. As is perhaps appropriate for anything that touches upon the law and justice, we have endeavoured throughout to base our conclusions on the evidence that has come before us. I am grateful for that. The report was agreed unanimously, and I hope that that will weigh with the House and with Ministers when they consider it.

We had significant assistance from the evidence, both written and oral, that we received from witnesses. It is particularly worth noting that in this case we were assisted by the evidence of very senior members of the judiciary—the Master of the Rolls, the president of the family division, and the senior president of tribunals. When they speak, their views ought to carry very considerable weight indeed.

There is no doubt that over the past few years, fees for litigants bringing cases have spread and increased across our civil courts, the family courts and tribunals, and there have been a number of proposals for further increases. When we set up the inquiry, we identified four objectives to be looked into. First, how have the increased court fees and the introduction of employment tribunal fees affected access to justice? How have they affected the volume and the quality of cases brought? Secondly, how has the court fee regime affected the competitiveness of the legal services market in England and Wales, particularly in an international context? Thirdly, we particularly wanted to look at the effect on defendants of the introduction of the criminal courts charge, about which I shall say more. Fourthly, we wanted to examine the impact of the increases in courts and tribunals fees announced in “Court and Tribunal Fees”, Cm 9123, published on 22 July 2015, and subsequent proposals.

I am grateful to the Government for moving swiftly on the criminal courts charge. The evidence was clear that it did not work and was, if anything, counterproductive, arguably costing as much to administer as it would ever bring in. We therefore decoupled the issue from the main part of the report and brought it forward swiftly. I am grateful to the Government for their prompt response and for moving to accept our recommendation and abolish the charge.

In fairness, the Secretary of State for Justice and his ministerial team deserve great credit for that. We should not criticise politicians when they are prepared to change their minds. I think it was John Maynard Keynes who famously said, “When the facts change, I change my opinion.” The Government listened to the evidence and removed the criminal courts charge. I hope they will be as expeditious and responsive on a number of the other matters we raise in the report—as a West Ham supporter, I am always an optimist.

[Andy Slaughter (Hammersmith) (Lab)]

I compliment the hon. Gentleman on an excellent report, but would it not be fairer to say that the Secretary of State changed? I do not know whether that is one of Keynes’s principles. The facts did not change at all; some light was suddenly shone on what was always a mad scheme, and a change came about. However, I do not want to detract from the credit that is owed to the hon. Gentleman’s Committee.

[Robert Neill]

I am grateful to the hon. Gentleman for the spirit in which he made his contribution. I am a friend of the current and the former Secretary of State, and giving credit to those who responded to the evidence is perhaps the appropriate and balanced way to deal with the issue.

It is worth looking at a little of the chronology of one of the matters I am going to turn to. As well as having significant witnesses from the judiciary, we heard evidence from the trade unions, the business community, the Bar Council, the Law Society and a number of individuals and interest groups. We had four oral evidence sessions between November 2015 and February 2016, the last of which was on 9 February, when we heard from the legal profession and then from the Under-Secretary of State for Justice, my hon. Friend the Member for North West Cambridgeshire (Mr Vara).

We then waited, because we were anticipating the promised post-implementation review of the impact of employment tribunal fees, which had formed an important part of the evidence that was put before us. We knew that the review had been commissioned some time back, so we waited—and nothing came forward. In the end, on 25 April, the Under-Secretary of State for Justice, my hon. Friend the Member for Esher and Walton (Mr Raab), who is on the Front Bench and who had taken over responsibility, courteously responded, but he was unable to give any indication of a publication date. I have to say that we do not regard that as satisfactory.

It was against that background that, rather than waiting for the two months the Government normally have to reply to a Select Committee report to lapse, we thought it right to bring our report to the House today in this estimates day debate.

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[Robert Neill]

That is why we made the point that we need to have a much better evidence base before we go forward with like increases in other areas. We did not rule out the fact that a fee may be appropriate in some cases, but we need better evidence to know the proper level to pitch it at and whether there are any unintended consequences—whether it will deter not just unworthy claims, but, as we fear, meritorious claims as well. A particular concern raised was that the employer and the employee claimant would get into a war of attrition, depending on who has the deepest pockets. That is not really consistent with the “equality of arms” argument that we have always regarded as being central to our justice system. Funnily enough, it may tend to make cases more protracted than they need to be, when the swiftest and earliest possible settlement would, as a general rule, be in everybody’s interests. I am grateful to the hon. Gentleman for his point. We were much assisted in our inquiry by evidence on the matter from the Law Society of Scotland, and we are grateful for its assistance.

Against that background, we made all due allowance for the fact that there has been some change in the substantive law, for the improving economic situation, for the previous downward trend in tribunal cases and for the ACAS conciliation schemes. Those things could account for some of the drop, but we were looking at a drop of about 70%, and we found no evidence to suggest that it was accounted for entirely or substantially by those matters, so we were led to the conclusion that the clear majority of the decline was attributable to the level of fee. That is why the matter needs to be looked at seriously and we need the factual information immediately.

We set out certain indicative thoughts about the sorts of changes that might be made; they are indicative because we do not have the evidence to go further than that. We think that this is an important issue, which really cannot be kept back for much longer.

[Andy Slaughter]

I commend the hon. Gentleman on many of the recommendations in the report, but—as I would, I suppose—I want to highlight one that I think is slightly problematic. The Justice Committee went along with the decision of the independent commission on freedom of information to disallow appeals from the Information Commissioner to the first-tier tribunal, despite the fact that 20% of those appeals are successful. Would the hon. Gentleman like to look at that again? The Select Committee stated in its report:

“We see no reason to disagree with the Commission’s view.”

Has the hon. Gentleman simply gone along with the view of the commission? What is his reason for making that decision?

[Robert Neill]

Simply that there was no compelling evidence presented to us to the contrary. We followed the evidence, as we did in the other matters. It is not because we are afraid of pulling our punches; as the hon. Gentleman has seen, we have not pulled our punches in some areas. We simply did not find any evidence to suggest that that assessment by the independent body was wrong.

I will move on quickly to some other matters. There has been particular concern about the impact of employment tribunal fees, but certain other matters have also been brought forward. The April 2015 increase in fees for money claims should, in our judgment, be reviewed. That may seem rather remote and arcane, but it is very important, because it affects the international competitiveness of London and the UK as a jurisdiction of choice, especially for commercial litigation. That is a great strength of this country, and some figures released today by the Legal Services Board highlight its significance. Legal services and their related supply chain contribute something like £35 billion towards this country’s GDP. Legal services exports have increased by some 33% over the past eight years, and something like 10% of the legal profession have instructions from overseas clients.

At the same time, there are pressures on the British jurisdiction and threats to its exclusiveness. We have already seen, in places such as Singapore and Dubai, courts operating on the basis of English common law but outside our jurisdiction. It is worth observing that very recently in Amsterdam, in the Netherlands, an English-language court was established. We should be very wary of biting off the hand that feeds us—or, to use another metaphor, doing anything to kill the goose that lays the golden egg—by reducing the value of the British legal system and its attractiveness to litigants nationally and internationally.

We think that the Government should review the increase in fees for money claims, and they should certainly not resurrect the proposal to double the £10,000 cap or remove it altogether. They were right not to proceed with that when it was originally proposed, but they did not rule it out for the future. We are saying that they should not think about going anywhere near it, at least until they have had a proper review of what has been done.

Another point, which goes back to an issue that has been raised already, is about the increase in the divorce petition fee from £410 to £550. Given that the cost to the state of the average straightforward divorce petition is about £270, that is a mark-up of about 100%. We find it difficult to see how making a 100% profit out of divorce cases can be justified, when it is an entirely captive audience because there is no other way to get divorced than going to the courts. We say very clearly that the increase should be reversed.

Our view was fortified by the trenchant evidence from the president of the family division, the right hon. Sir James Munby. It is pretty unusual for a senior member of the judiciary to speak in such terms to a parliamentary Committee or any other body. Sir James said, rather tellingly, that he was concerned that the Ministry of Justice was

“battening on to the fact that there is a captive market”

and that it was

“putting up the fees until it becomes another poll tax on wheels”.

That is pretty strong language. I would put it slightly differently. We say that there is a risk that it will become a “divorce tax”. That cannot be just and we strongly urge Ministers to look at it again most urgently.

Immigration and asylum tribunals are another important issue. There are concerns over whether our immigration and asylum system and the appeals system are abused. There must be safeguards to ensure that proper cases are properly heard. Someone with a legitimate claim must have a decent chance of challenging the decisions of the state or of any Executive body. Equally, it is in everybody’s interests that weak and unmeritorious cases are weeded out. Nobody has a problem with that. Our concern is that fees have been brought in with remarkable swiftness, without a significant evidence base.

In July 2015, the Government consulted on doubling the fees in the first-tier tribunal from £80 to £160 for an application for a paper determination and from £140 to £280 for an application for an oral hearing. In December 2015, after the consultation, it was confirmed that that would go ahead. Only a few months later, in April this year, a further consultation was brought out, without any review of the impact of the last set of increases, proposing a sixfold increase in the fees in those jurisdictions, so that there was full cost recovery. It was proposed that an application for a paper decision would cost £490 and an application for an oral hearing would cost £800.

We have the same concern that I have raised more than once: there is no apparent evidence base to support that increase. If there were, we might have taken a different approach to it. Making that increase does not seem justified when the people involved are, by the nature of these cases, vulnerable. That is why we express considerable concern over the proposals.

I am surprised that the Government have adopted that approach, given their experience with employment tribunal fees and the criminal courts charge. The idea is to have full cost recovery. The problem is that we are dealing with people who are by their nature—particularly those in the asylum system, but also those in the immigration system—very unlikely ever to have any means to recover even a decent percentage of the cost against, let alone the full cost. The Government will end up in exactly the same position as with the criminal courts charge. They are setting themselves an objective to raise money that they have no hope of raising because the people they are trying to get it from do not have the means—it is getting blood out of a stone. We think that it is pointless to pursue an unachievable objective. That is why we urge the Government to think again.

I have endeavoured to outline what is a detailed report. I hope that it is useful to the House. Given the nature of its technical but important topic, we make no apology for its detail. These are issues that impact not just on our system, but on individuals, because every piece of litigation involves an individual somewhere. The Government have had ample time to consider the report, so I hope that we will have a substantive response from the Minister in which he says when the information will be published, what they will do about the increase in divorce fees, what they will do about the realism or otherwise of moving to full cost recovery in the immigration and asylum chamber, and what they will do about the other significant pieces of evidence that we have detailed in the report. I am grateful for the House’s indulgence.

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[Mr Jonathan Djanogly (Huntingdon) (Con)]

Much of the preliminary work on court and tribunal fee reviews was carried out in the early days of the coalition Government, when I had the pleasure of minding those issues at the Ministry of Justice. I acknowledge the point made by my hon. Friend the Member for Bromley and Chislehurst (Robert Neill): the issues are complex and dependent on the differing circumstances. I think, however, there is now a level of understanding that was not generally prevalent back then—first, that it costs money to have, as we do, a decent court service, decent quality courts and an excellent quality of judges; and, secondly, that this cost should not just be for the taxpayer to shoulder.

We invested £300 million in the state-of-the-art Rolls building to hear large international and money cases. This gave the UK the quality of courts required to retain our premier status as the place to seek justice, using English and Welsh jurisdiction clauses, and thereby added greatly to the offering and income of UK plc. I have to ask, however, whether very high-value cases should be subject to a £10,000 fee cap. The first case to be heard in the Rolls building involved two Russian oligarchs and would have cost them hundreds of thousands of pounds per week in lawyers’ costs but, relatively, peanuts to hire the court and judge. I appreciate concerns that fees should not be so high as to impact on international competiveness, but I would appreciate hearing from the Minister whether he feels that we have the balance right.

On employment tribunals, the claim figures may be smaller—most of the time—but the principle remains that the service has to be paid for. Given that an employment contract is a private contract that does not involve the state, except when the state is the employer, why should the taxpayer subsidise the private claim? I think we now have the right formula: so far as possible, and as the starting point, the fees paid by the applicant should cover the cost of the application, but following that, where it is in the interests of justice, people who need help should be individually assisted via a remission scheme.

In that context, I do not agree with the Justice Committee’s suggestion that the overall quantum of fees should be reduced, and I do not believe that its report justifies that in any event, although I accept that the Chairman has just acknowledged that more data are required to make the assessment.

The figures for employment tribunals are material. There were 67% fewer single cases from October 2013 to June 2015, although that still represents tens of thousands of claims per year. The fall in multiple cases by 72% was more expected, as lots of public sector equal pay claims were working their way through the system. There seems to be some debate, however, about the extent to which fees have put people off claiming, and this will always be a hard figure to tie down. The Committee speculated that it could be 13,000 a year, based on 26% of ACAS claimants saying they would not progress their claim because they found the fees off-putting. Of course, a significant proportion might have believed this, but possibly only or mainly because they had weak claims. We would need more research.

The debate around employment tribunal fees often focuses on the questions raised by vexatious or highly risky claims and the impact on business and the economy. I shall come back to these important issues, but they did not form the starting point of our initial review, which was, first, to get those who could pay to do so; secondly, to encourage parties to seek alternative methods of dispute resolution, where possible; and, thirdly, to maintain access to justice. I still maintain that those were sound principles on which to proceed, and I think that this has been justified by the very many judicial reviews, brought mainly by the trade unions, that have to date consistently failed.

I strongly believe that when a claimant could issue a claims form at zero cost to themselves, he or she had every incentive to do so—but, most importantly, every incentive to do whatever the weakness of the claim itself. The Justice Committee report describes a witness who suggested that vexatious claims may be less than 5% of claims, but that still represents a significant number for the unfortunate companies that are subjected to them. Witnesses also stated that fees had deterred claimants who would otherwise have won as the proportion of successful claimants has not increased, despite a fall in the number of cases.

[Andy Slaughter]

The hon. Gentleman says that 5% is significant, but we are talking about falls of 70%. If he is genuinely concerned about discouraging unmeritorious or frivolous claims, a small charge—not one of £1,200—might be appropriate. Does he not think that that amount is disproportionate, even if he agrees with the principle?

[Mr Djanogly]

I am coming on to alternative ways of funding. The starting point is to get cost recovery and then to look at individual circumstances, where necessary. I would have liked hon. Members to spend a little more time talking about the remission system rather than fees—perhaps one of my hon. Friends is about to do so. More winnable cases leads to more of them being settled before going to tribunal, but even if this is an access-to-justice issue it should be dealt through the remissions system rather than the fee itself.

I certainly recall personally the significant numbers of businesses complaining that the threat of employment claims alone was enough to put them off employing more people. Interestingly, this was very much more prevalent among small businesses than large ones. Indeed, this is reflected in the Justice Committee’s report, as the Chairman said, which clearly shows the CBI to be more relaxed on the issue than the FSB. This is undoubtedly because it is the larger companies that have the large HR departments that can manage claims as part of their overall business. For small businesses, processing a claim, let alone taking time off to go to tribunal, can take up an impossible amount of the principal’s time.

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[Andy Slaughter (Hammersmith) (Lab)]

It is a pleasure to follow my hon. Friend the Member for Ellesmere Port and Neston (Justin Madders), who knows far more about the issue of employment tribunals than I do. For understandable reasons, that issue has dominated the debate. I practised in the civil and criminal courts before I came here, but that seems some time ago now.

Let me begin by complimenting the Justice Committee, its Chair—the hon. Member for Bromley and Chislehurst (Robert Neill), who spoke very persuasively today—and all its members, including my right hon. Friend the Member for Delyn (Mr Hanson). It has produced a good report, which makes our task easier because we can endorse it and agree with its recommendations, many of which do not pull their punches with the Government. I might go further in some respects, but I suspect that it will be sufficient to ask the Minister to respond to the points made by the Committee. I trust that he will not simply say that matters will be dealt with in due course; I have become rather used to his saying that.

I apologise to those on both Front Benches for the fact that I may not be able to stay for the closing speeches. If I cannot, I will of course read the Minister’s comments assiduously tomorrow, as I always do. He has made some interesting speeches recently.

I have another reason for not saying much about the substantive issue. During the five years for which I held the shadow brief—until last year—I probably said everything that I wanted to say about courts and tribunal fees. However, unusually, I want to correct something that was said earlier by my hon. Friend the Member for Kingston upon Hull East (Karl Turner). I did not take the view that fee increases should always be opposed. On the contrary, given the constraints on the public finances, and the particular pressures on the other parts of the Ministry of Justice budget—which are now coming to fruition in very unpleasant ways that affect the prison service and legal aid—I always took the view that fee increases were appropriate, and that full cost recovery, and in some cases more, could be justified on its merits, provided that it did not interfere detrimentally or substantially with access to justice.

That is where the Government have lost their way. In fact, they have lost their way rather more than that: they eventually began to introduce changes that were self-defeating, such as the criminal courts charge, and had to do a U-turn. The report criticises many elements of fees and charges, not just employment tribunal fees but civil fees, which have risen by up to 600%—that figure alone should have set alarm bells ringing—commercial fees, and the fees for divorce. Now there are proposals for an increase of up to 500% in immigration tribunal fees. Those increases will clearly not be affordable, especially in the light of a remission system that does not appear to function properly.

I think that many Members have concentrated on the issue of employment tribunal fees because we have had more time to experience it, and because there is something particularly insidious about the way in which the fees were introduced. They have led to a 70%—in some cases, an 80%—drop in the number of claims, which must have been the intention, because this does not represent a great saving of public finances. I think that the estimate is about £10 million a year, and although that is a substantial sum, it is not substantial in the context of the overall budget. The aim appears to be to restrict access in a way that some employers may find convenient, but people who are experiencing a time when they are vulnerable, have little money at their disposal, and face having to undergo what is, even at a tribunal, the intimidating process of putting their case forward will be easily put off. They do not need fees, and they certainly do not need fees at this level, to discourage them.

I do not want to take up too much time, so let me return to a point that I raised during the speech of the hon. Member for Bromley and Chislehurst. It is one of the few points on which I disagree with the Committee. It relates to Freedom of Information Act appeals from the Information Commissioner to the First-tier Tribunal. The Chair of the Committee was very kind in replying to my intervention. The Committee said that, according to the Independent Commission on Freedom of Information,

“'considerable resources and judicial time are being taken up by unmeritorious appeals’. It recommended that legislation should be introduced to remove the right of appeal to the First-tier Tribunal against an Information Commissioner decision”,

only allowing an appeal to the Upper Tribunal on a point of law. The report continues:

“This recommendation is under consideration by the Government. We see no reason to disagree with the Commission’s view.”

This is not really a criticism, but it appears that the Committee ticked a box because it had not received submissions. I accept, if that is what the Chair says, that it had not received submissions to the contrary, but the independent commission had certainly received many such submissions. It may well be that the Committee did not receive any because the impression given by the report was that it concerned levels of fees and charging rather than the existence of rights of appeal in themselves.

Let me return to what the commission said, and why the Committee may have been led into error. There appears to have been a simple confusion between unmeritorious appeals, which are weeded out—between January 2014 and March 2015, 10% cases were struck out for being unmeritorious—and unsuccessful appeals, which are very different. The Committee said that 79% of appeals to the First-tier Tribunal against the Information Commissioner were unsuccessful, but that means that more than 20% were successful.

In my experience—including my experience as a litigant: I have been a frequent user of the Freedom of Information Act, and have gone through all those stages, up to the First-tier Tribunal—it is an absolutely necessary safeguard. The Information Commissioner does a good job although he is under-resourced, and, generally speaking, the independent commission did not come up with the horrors that we all thought it was going to come up with, such as charging more, restricting access, or in other ways trying to discourage freedom of information requests. Nevertheless, the appeal to the First-tier Tribunal is an extremely important stage of the process.

Let me exemplify that by referring to some of the cases that have succeeded at that level in the past year. I am grateful to the News Media Association, a combination of the Newspaper Society and the Newspaper Publishers Association, which, understandably and for very good reasons, wishes to see this right of appeal. I am particularly grateful to the Campaign for Freedom of Information, led by the redoubtable Maurice Frankel, who has rung alarm bells on the issue.

Let me give half a dozen examples. The First-tier Tribunal ordered the Cabinet Office to release information about the adoption of the selection criteria for appointing members of the Chilcot inquiry. It told the Ministry of Defence that it was wrong to withhold information about its failure to warn soldiers that they will get a criminal record if convicted of minor disciplinary offences. It ordered the Department for Education to reveal payments to new sponsors taking over failing academy schools. It ordered the Cabinet Office to disclose documentation for the expenses, of up to £115,000 per annum each, claimed by four former Prime Ministers in connection with their public duties. It also ordered—the Minister will appreciate this one—the Ministry of Justice to identify landlords convicted of Housing Act 2004 offences for letting dangerous or grossly substandard accommodation. Those are just some examples from central Government; there are even more examples from the national health service and local government.

I ask the Chair of the Justice Committee, who is a fair and reasonable man, to reconsider the issue. I assure him that the bodies that I have mentioned will be delighted to supply him with a plethora of information, just as they provided such material to the Independent Commission on Freedom of Information, albeit in vain.

The Freedom of Information Act was one of the key pieces of legislation of the previous Labour Government. Like anything else, it can be open to abuse, but it is generally used well not only in individual instances, but in promoting good government. It is right that the Information Commissioner’s Office is independent, but the Information Commissioner does not always get everything right. A 20% success on appeal rate is good, and the role of the First-tier Tribunal is materially different from that of the Information Commissioner. It brings a judicial eye to proceedings and, from the results that we have seen, allows for fresh and fuller scrutiny.

I will end on that point so as not to take up any more time, but I hope that that single issue—I apologise for picking out what I think are the errors in the report and do not mean to obscure the many good things in it—will be reconsidered by both the Committee and the Government.