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1.47 pm
Mr. Elfyn Llwyd (Meirionnydd Nant Conwy): I speak as a slightly overweight rather than a fat-cat lawyer, who has had some experience in personal injury litigation. I also speak as one of the vice chairs of the all-party head injury group that meets regularly in the House. One of the valid concerns of that group is that firms of solicitors will not be able to carry the huge disbursements that are necessary to pursue medical negligence or personal injury cases. Typically, lawyers are reliant on medical reports and specialist reports, such as engineers' reports. They will also refer matters back and forth to counsel, all of which costs money.
Smaller firms will not be able to carry those disbursements. The people most at risk are those at the bottom of the pile, and they need to have their cases brought to court. My great fear is that, even with the best will in the world, no firm will be able to take up the cudgels on their behalf.
The Parliamentary Secretary, Lord Chancellor's Department (Mr. Geoffrey Hoon):
I am grateful to my hon. Friend the Member for Great Grimsby (Mr. Mitchell) for raising such an important issue--even if he did appear to be playing a new role as the lawyer's friend.
From its creation in 1949, the legal aid scheme in England and Wales was vital in enabling people of limited means to enforce their legal rights, and in many ways it was one of the great successes of the welfare state; but, over the years, the scheme has become less and less able to fulfil its original ambitions. I hardly need rehearse the
problems, as they are well known to all of us as constituency Members. Eligibility has fallen from 70 per cent. of households to fewer than 50 per cent., spending has outstripped inflation, although fewer people are being helped, and the average cost of cases has been rising and rising, with no way of stopping it or even slowing it down. That is why this Government will fundamentally reform legal aid.
Sadly, the legal profession has proved deeply conservative in the face of previous attempts at control or reform. I understand why it does not want an end to the present system of payment, as it delivers a healthy income, often largely from the taxpayer, irrespective of value for money. The trouble is that, despite huge expense, legal aid is costing more to do less. Civil legal aid has tripled in six years, to £671 million. Broadly, that means that the income from legal aid going to the legal profession has risen by 20 per cent. a year on average over the same period. While civil legal aid continued to rise last year, there were about 13,500 fewer acts of help. We simply cannot go on like that. I want to help more people, not fewer; I want legal aid to be directed to those with unmet legal needs. I hope that my hon. Friend agrees with that.
My right hon. and noble Friend the Lord Chancellor and I have concluded that--as the first step on the path of reform--because there are areas of unmet legal need but no extra money, legal aid should not be used where alternatives are as good or better. That is why we have decided that those claiming damages or making claims for money should generally use no-win, no-fee arrangements rather than legal aid.
My hon. Friend said that the measure had been introduced overnight. The change will be made, but, obviously, on the first day following it lawyers will continue to obtain their income from all the legal aid cases that they previously had. On the first day of the system, they will perhaps have one conditional-fee case; as the system develops, they will have more and more such cases and, clearly, lower income from legal aid. It will take some time: it is a process of transition. We will not make savings on the first day. Obviously, lawyers will subsequently have no legal aid cases, but the process will not happen overnight. The savings will take many years to work through into the system.
Unfortunately, the lawyers' response has been rapid and all too predictable. They say that the poor cannot use no-win, no-fee arrangements because they cannot afford either the up-front costs of investigating the merits of a case or the insurance against having to pay the other side's costs if they lose--an argument which my hon. Friend repeated. But are the current arrangements, under which the client is expected to meet those up-front costs, the only way of working? Let us go a step further and ask whether they are fair. I have some doubts, and as a result I shall invite the lawyers to consider the following proposition. Why should not lawyers absorb the up-front costs of investigating the merits, bear the risk of the other side's costs and simply factor those into the pricing structure of their overall business?
There have always been lawyers who have taken on cases on the informal understanding that they will not be paid for their work if they do not win. Since 1995, lawyers have also been able to charge their clients a "success fee" on top of their normal prices if they do win. There are few areas of commerce or business in which some money
is not put at risk to realise an overall positive return. Why should lawyers in business in the private sector be any different? It may mean that only efficient, professionally competent and busy firms will be able to offer the agreements that we are discussing, but is that not a good thing? Is it not precisely what my hon. Friend's conveyancing reforms achieved, for the benefit of the consumer? His proposals fundamentally changed the way in which conveyancing operated, because he was not afraid to consider alternatives to the existing traditional arrangements. I hope that he will approach our proposals for reform in the same spirit.
It is claimed that conditional fees will not cover some cases that legal aid currently supports, particularly those with a poor prospect of success. I do not consider it fair to help the less well off to sue under legal aid provisions in cases in which the great majority--whose taxes help to pay for legal aid--could not themselves sue. I also cannot see why it is objectionable to keep weak cases out of the courts.
It has been deeply disappointing to observe the speed with which, in the last three weeks, leading lawyers have rushed to use the example of children who were brain damaged at birth to demonstrate that our plans are wrong. They argue that those children, who would receive legal aid now, would not be able to arrange a conditional fee agreement because of the difficulty of their cases. I find it distressing that they need to use those cases in their arguments, or to adopt a moral high ground as if the Government had no regard for the children or their parents.
Mr. Hoon:
I shall go on to deal with that.
Those cases are emotive: they engage strong emotions in all of us. The fact that issues are painful, however, is no excuse for refusing to think the issues through; indeed, it emphasises our duty to do that. Whose interest is served if cases proceed on the slim hope that some benefit may accrue? Not, I suspect, that of the parents, for whom the trauma of unsuccessful and pointless litigation will be added to the trauma of the original damage to the child. Nor will such action serve the interests of the health authority, which has to divert effort and resources to meet the claims, or that of sick people whose care may suffer because of the money diverted to fight cases. Meanwhile, the taxpayer is asked to fund the child's lawyers, and when--as most often happens--the litigation fails, the only people who have profited are the lawyers. They do not do so out of malice or malevolence; nevertheless, they alone stand to gain regardless of the outcome. Is that in the interests of the sick and the injured? Is that the best use that we can make of scarce public money?
The issues are difficult and painful, and I would prefer not to face them; but they must be faced. It must be said that we can no longer allow weak cases to be taken up by lawyers and paid for by the taxpayer irrespective of the cost, and the Government have the right and the duty to say so.
My hon. Friend the Member for Wyre Forest (Mr. Lock) raised the important question of insurance. We will certainly look at the ways in which insurance may be available in such circumstances. As I have said,
however, I think that in the first place it is a responsibility of lawyers in business and private practice to consider bearing the costs for themselves.
Mr. John Burnett (Torridge and West Devon):
If conditional fees are introduced, will the insurance premiums of those who currently qualify for legal aid be paid by the legal aid fund, and will the fund pay the costs of investigating a case and its merits?
Mr. Hoon:
It is for the lawyers to consider whether they should absorb those costs up front as a cost of doing business. If we receive persuasive evidence that that is totally impossible, we may take other considerations into account; in the first place, however, I want lawyers to consider their businesses, and this is a business that they are in.
My hon. Friend the Member for Great Grimsby raised the question whether our action was motivated solely by the need to cut legal aid expenditure, and driven by the Treasury. I emphasise that that is not the case. We will not spend less than is currently contained in the published expenditure plans covering the next three years, but we shall not continue to pay millions more to lawyers to provide ever fewer people with help. The poor can rest safe in the knowledge that they will be able to benefit from conditional fees in money recovery cases while benefiting from the existing legal aid budget for other cases such as those involving family law.
In the longer term, we intend to reform the legal aid scheme further by buying legal services under contract. We will transform the way in which legal aid operates. For too long it has been simply a bill-paying machine, paying lawyers on demand for the work that they choose to do. Instead, it should become a positive system for buying the services that people need. We will establish a system of contracting whereby the Legal Aid Board will buy services from people other than lawyers, such as advice agencies and mediators, and will make suppliers compete in terms of quality and price. That will allow us to help more people pound for pound.
Contracting will give us power to direct services to those in most need, taking account of local demand and the best way of meeting it. That is already a developing reality. The Legal Aid Board is already contracting with agencies such as the citizens advice bureaux and lawyers for legal advice and assistance. The first regional legal services committee has been set up to liaise with local people on local priorities. Here is the beginning of the development of community legal services, and we will move quickly to make it a reality. As elsewhere in Government, we are maintaining our manifesto promises.
I know that my hon. Friend would like a national legal service to be established. Obviously, we want everyone to have access to legal advice, but our preferred approach of delivering services through contracts offers us the flexibility to purchase services in ways that best take account of local conditions. It may well be that when contracting takes place with a firm with high volumes of work--in Grimsby, say--it will be possible in some fields to buy services under a block contract with a unit price per case while in a market town, perhaps in rural Lincolnshire, where there is less volume, cases may have to be paid for on a different and more individual basis. Again, in some areas of legal practice--or in some local
circumstances--it may be better to pay for a salaried service, or to buy the time of a supplier rather than a volume of cases. What is more, as the world changes and demand on legal aid and ways of meeting it also change, contracting will allow us to keep the delivery systems up to date. Our proposals will allow for a wide range of flexible services.
The proposals also allow us to refocus legal aid on the problems of the less well off--on the problems of those who need the law to help them to struggle out of social or economic exclusion. I want legal aid to be aimed at social welfare issues and matters of public interest. The diversion of most money claims to conditional fees will help, because we can then use the money that would have
been used up in providing traditional legal aid for civil litigation to tackle more effectively issues such as housing, debt, employment, welfare benefits and immigration, and matters of broad public interest.
With legal aid delivered through contracts, we can decide how much to spend each year. For the first time, Ministers will be properly accountable to the House for how much they spend and on what services. The Government will be accountable for how much they spend on legal aid, and how much they spend on other public services such as health and education. As my hon. Friend said, at present legal aid is demand led--
It being Two o'clock, the motion for the Adjournment of the House lapsed, without Question put.
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