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Mr. Richard Tracey (Surbiton): I, too, was privileged to participate in the Committee's visit to the Court of Auditors. I share my hon. Friend's feeling about the importance of its work. May I jog his memory in regard to the point raised by our hon. Friend the Member for Beaconsfield (Mr. Smith)? As I recollect, the court told us that only a small handful of Members of the European Parliament took an interest in the court's work. I was struck by that: it is a shocking fact, and the House should send a message to Members of the European Parliament that that is one of the most important pieces of work that they should be turning their hands to.
Sir Michael Shersby: I agree. In passing, let me make my annual observation that it would have been very nice if the House had been a little fuller this evening to hear a debate about the work of the Public Accounts Committee, which also has a vital role in ensuring that we are given value for money and economy, effectiveness and efficiency in the services provided by Departments of our own Government. But perhaps Members of all Parliaments find it easier to devote their energies to other things when matters such as this arise. At least some of us, who are present, care very much about such issues, and they may make up for that.
Let me now refer to a matter that interests me greatly, although it is not included in one of the reports to which we have drawn particular attention in the motion. I refer to the 25th report of the Session 1995-96, which deals with civil legal aid means testing. I want to discuss it because of the substantial increase in expenditure on legal aid, and the way in which that expenditure is being monitored and approved. We should remind ourselves that the civil legal aid scheme is there to enable people of small or moderate means to pursue or defend a civil case, and that to qualify for legal aid, an applicant must pass a
means test that examines his or her financial circumstances and the merits of the case, to ascertain whether there are reasonable grounds for taking or defending court action.
Unlike many funds that Members of Parliament must examine from time to time, the legal aid fund is not cash-limited; it is demand led. I raise the matter because the cost of the civil legal aid scheme increased from £255 million in 1990-91 to £601 million in 1994-95. The Lord Chancellor's Department told the Committee that it considered the increase to be due to the demand-led nature of the scheme, and to the fact that the legal cases for which assistance was given were now more complex, with more disputes relating to personal injuries.
As a Committee, we were worried about the verification of means, which is vital in determining whether a person is entitled to legal aid. We took the view that
We found:
I am sure that hon. Members will agree that £601 million is a lot of money. If that money is being spent on legal aid for people who do not qualify for it or who have taken steps to disguise their assets, every possible support should be given to the Lord Chancellor's Department and to the special investigations unit in ensuring that no one receives legal aid who is not entitled to it.
Sometimes, when I hear my right hon. and learned Friend the Chancellor of the Exchequer talking about the need to reduce public expenditure, my mind turns instinctively to reports that we have considered in the Public Accounts Committee, and one of the things to which it turns most often is expenditure on legal aid. I hope that my hon. Friend the Financial Secretary will say something about that when he replies.
Our 45th report is on the sale of County hall, a subject that arouses passions among political parties. I shall not get involved in the merits or otherwise of selling County hall, and I hope that other hon. Members will not do so. I simply want to draw attention to our report, with which we took considerable care.
The total proceeds of the sale of County Hall were about £92.3 million, compared with a valuation for the London Residuary Body, assuming planning permission and vacant possession, of between £90 million and £120 million in June 1987. The residuary body told the Committee that
One of the interesting things that happened during the saga of the sale of County hall was that the London School of Economics expressed an interest in purchasing it in March 1991. It was even given access to the buildings. The residuary body said that it did not pursue that bid because it was comparatively low, but the LSE's efforts to negotiate for the building continued through the national press.
More than a year later, on 29 June 1992, following an Adjournment debate in the House, the residuary body invited the LSE to submit a bid within 10 days. The residuary body acknowledged that
The eventual proceeds of £92.3 million come partly from the sale to Shirayama and partly from the initial sale to County Hall Development Group, which fell through in October 1990. That group forfeited its £20 million deposit and £4.8 million in accrued interest, which formed part of the proceeds of sale of the building.
"The Assessment Office should continue with its programme of seeking full verification of applicants' means in representative samples of cases, and that a stronger line will need to be taken with those applicants who do not co-operate".
We noted during our discussion of the matter that the Department is receiving
"an increasing number of allegations from third parties to the effect that applicants for legal aid have mis-stated their circumstances."
We therefore take the view that
"The Assessment Office will need to ensure that its investigation teams have sufficient resources to ensure that such allegations from third parties are thoroughly examined".
I am sure that most hon. Members whose constituents visit them at their constituency advice bureau will have heard the observation that someone who has been in receipt of legal aid should not be receiving it. Verifying means is therefore very important.
"Under the current system, the Assessment Office do not verify every item of income, outgoings or capital declared on the . . . application form . . . Outgoings, such as mortgage payments, council tax or loan repayments are not routinely verified. Verification of capital is usually sought only if the applicant declares more than £2,500, the relevant threshold being £3,000."
Our conclusions, as a Committee, are:
"We endorse the measures . . . being"
taken
"by the Lord Chancellor's Department and the Assessment Office to improve the arrangements for verifying the means of applicants for civil legal aid and to confirm, where appropriate, the income support status of applicants."
We also take the view that
"The Assessment Office should continue with its programme of seeking full verification of applicants' means in representative samples of cases".
It is important that that should happen, because the number of high-risk cases is increasing. We were told by the Department that
"a small but growing number of applicants . . . pose a high risk to the"
whole
"legal aid fund. Typically, their legal and financial affairs are complex, they may possess"
what was described to us as
"'an aura of wealth' not normally associated with"
16 Oct 1996 : Column 877
applicants
"for legal aid, and the litigation has tended to have a business flavour of some sort or another, such as disputes about business assets and contracts, sometimes with an overseas element, sometimes not."
The Lord Chancellor's Department became aware of that problem in 1994, when, as the House will recall, some well-publicised cases emerged, in which
"people received legal aid who, as it appeared, were not the sort of people for whom the legal aid scheme was intended."
Shortly afterwards, the Lord Chancellor announced that he would take every step necessary to ensure that legal aid was provided only to those for whom it was intended.
"the advice from its property consultant and marketing agents was that the Shirayama bid of £60 million was a very high offer, and that the £30 million valuation obtained in 1987 would"
possibly have
"been high in 1990."
The eventual sale of the Riverside building, with which we are all familiar,
"to Shirayama for a cash payment of £50 million, plus a deferred payment of £10 million payable over a period up to 2012, was estimated to be worth between £52.5 million and £57.5 million in net"
present-day terms.
"in retrospect, asking the LSE to produce a bid in 10 days was possibly too early; but the LSE had been expressing an interest in the building for a very long time. In the Residuary Body's view, the LSE were negotiating through the press, and it needed to get them to put a financial offer on the table . . .
It is important for the House to recognise that no offer was forthcoming from the LSE at the end of the 10 days, and it was very unlikely that it would ever have been able to make an offer to enable it to buy County hall.
The Residuary Body considered that the publicity surrounding the LSE interest in County Hall was damaging the prospects of the sale to Shirayama."
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