Select Committee on Constitutional Affairs Minutes of Evidence


Written evidence submitted by the Department for Constitutional Affairs and the Legal Services Commission

Q6-13  Figures for the rise in total spend that was expected to follow from the introduction of CLR and how much the actual rise in total spend has exceeded that expectation

WHAT IS THE ESTIMATED COST TO THE LEGAL AID FUND OF THE INTRODUCTION OF FUNDING FOR APPEALS UNDER CONTROLLED LEGAL REPRESENTATION? Controlled Legal Representation (CLR) was introduced from January 2000 for appeals to the Immigration Adjudicator and Immigration Appeals Tribunal. Table 1 below shows the total costs of immigration and asylum work funded by the LSC since April 2000. It includes an estimate of the breakdown of work between Legal Help and Controlled Legal Representation.

TABLE 1: COSTS SUMMARY
Type of Expenditure 2000-01
£m
2001-02
£m
2002-03
£m


Legal Help 39.0063.20 84.22
CLR37.40 60.8080.88
Controlled Work ContractsTotal 76.40124.00 165.10
Certified work (primarily judicial review) 5.005.705.70
Total81.40 129.70170.80

These are cash spend figures

However, not all of the costs attributed to CLR in table 1 are additional costs arising from the introduction of CLR. Prior to the introduction of CLR, solicitors were able to undertake the preparation of appeals to the adjudicator and Tribunal under advice and assistance (which was subsequently replaced by Legal Help from January 2000). The only aspects of work that were not funded under advice and assistance were the costs of providing representation at the hearing itself. Additional costs attributable to the introduction of CLR can be divided into two main areas:

    a.  the costs associated with attendance and representation at appeal hearing; and,

    b.  the increased remuneration rates for the preparation of appeals under CLR, which are about 8% higher than the equivalent Legal Help rates.

We have estimated an average cost for the appeal hearing of about £300+VAT for solicitors (or counsel), and £100+VAT for interpreters. It is difficult to estimate with accuracy the overall additional cost to the Community Legal Service Fund as a result of the introduction of CLR. However the additional costs (resource) in respect of hearings before the adjudicator or Immigration Appeal Tribunal incurred for 2000, 2001, and 2002 is estimated to be £40 million.

There is also some anecdotal evidence that experts' reports are becoming more common leading to increased costs in the preparation of appeals. It is also common practice to use counsel to represent at the appeal hearing, and although they are paid at the same rate as solicitors conducting advocacy, there may be additional costs for example for a conference prior to the hearing. Adjournments will of course also result in additional costs, as will any directions such as to obtain a further medical report.

WERE THERE ANY FORECASTS AS TO WHAT THE COSTS WOULD BE OF BRINGING REPRESENTATION AT THESE APPEALS INTO SCOPE? In May 1999 we set out a limited forecast of the cost of advocacy before the Immigration Appellate Authority as being up to £5.35 million for the first year. We estimate that it was actually about £6 million in the first year.

Since then there have been a number of changes, which have meant that costs have increased above our original forecast, including:

    a.  The volume of appeals increased significantly beyond the original forecast from 2001 onwards. The reason for the number of appeals going up is because the number of applicants for asylum has gone up and because the rate of processing of appeals has also gone up to deal with the backlog.

    b.  The original forecast was limited to covering just the costs of representation at the hearing, whereas our current estimates include the costs of travel to and waiting at the hearing, as well as the costs of an interpreter attending the hearing.

    c.  By April 2001 the hourly remuneration rates for advocacy had increased by 20% since the original forecast was made (May 1999). Solicitors' hourly rates for the preparation of appeals had increased by about 8%.

There is also evidence that the costs of preparation of appeals have increased, for several reasons, including more onerous requirements from the Immigration Appellate Authority.

Q13 Breakdown of the total spend figures, for example, what proportion of the rise in total spend is attributable to:

    (a)  the introduction of funding for representation

    (b)  the increased complexity of asylum work following the introduction of the Human Rights Act 1998

    (c)  dispersal

    (d)  the increase in cost of disbursements as opposed to profit costs?

BRIEFING ON LEGAL AID EXPENDITURE ON ASYLUM AND IMMIGRATION

1.  INTRODUCTION

Table 1 below provides an indication of Legal Aid Costs for Asylum and Immigration cases.

TABLE 1: SUMMARY COSTS
Type of Expenditure 2000-01
£m
2001-02
£m
2002-03
£m


Legal Help 39.0063.20 84.22
CLR37.40 60.8080.88
Controlled Work ContractsTotal 76.40124.00 165.10
Certified work (primarily judicial review) 5.005.705.70
Total81.40 129.70170.80

All figures are in cash accounting terms. We have estimated the breakdown between Legal Help and CLR. Most of the Legal Help costs will be for advice on the initial application. In 2002-03 £3.0 million was spent on administration, and £2.4 million on grants for special projects taking the total cost of Immigration and Asylum spend to £176.2 million. Our current estimate of total cash expenditure for 2003-04 is £194 million

One of the key reasons behind the planned introduction of a Unique File Number for immigration and asylum cases is to improve the quality of management information that the LSC can provide. We know that clients often move around between solicitors, and at the moment we cannot track this. The UFN will enable us to track the work that is being conducted for individual clients, and tackle any duplication of work.

2.  THE INTRODUCTION OF CONTROLLED LEGAL REPRESENTATION (CLR) In January 2000 CLR was made available for preparation and representation of appeals before the Immigration Appellate Authority (the Immigration Adjudicator and the Immigration Appeals Tribunal).

The LSC estimates that in 2002-03 the cost of providing CLR was approximately £80 million. However, all of this is not additional cost, as prior to the introduction of CLR much of the preparation work for an appeal would have been conducted as Legal Help (advice and assistance). Previously only the costs relating to the hearing itself would have been excluded (such as travel, waiting, and advocacy).

3.  THE INTRODUCTION OF THE HUMAN RIGHTS ACT (HRA) We do not have separate data on the effect of the introduction of the HRA. Human rights issues often arise as an integral part of an asylum claim and it is not feasible to ask suppliers to break down their costs between different issues.

4.  THE POLICY OF DISPERSAL OF ASYLUM SEEKERSWe can demonstrate the increase in cases being taken on in regions rather than London. Table 2 below shows the numbers of asylum & immigration matters started in London, and in other regions since 2000-01. Whilst the number of cases commenced in London has only increased by 2% since 2000-01, there has been growth of 39% in the number of matters started outside London over the same period.

TABLE 2: THE IMPACT OF DISPERSAL
RegionPeriodNo of Case Starts
LondonYear 2000-01101,646
Year 2001-0296,650
Year 2002-03103,872
Outside LondonYear 2000-01 37,747
Year 2001-0244,548
Year 2002-0352,360
All RegionsYear 2000-01 139,211
Year 2001-02141,198
Year 2002-03156,232

It is not possible to determine the impact on costs of the policy of dispersal of asylum seekers. Clearly, the asylum seekers would still have been entitled to advice and representation had they not been dispersed, and this would have been payable at higher London rates. However there will be some additional costs as a result of increased travel and as a result of work being duplicated as some asylum seekers return to the London region and change their solicitors.

5.  THE IMPACT OF DISBURSEMENTS AND COUNSEL COSTS

Table 3 below shows the division of Solicitors' costs claimed between profit costs, disbursements, and counsel costs. The cost of disbursements as a proportion of total cost has not increased significantly from 2000-01 to 2002-03. The use of counsel has increased significantly, which is likely to be due to the introduction of Controlled Legal Representation (see paragraph 2 above). As explained above, an increase in the costs of counsel was expected, due to the introduction in January 2000 of Controlled Legal Representation (CLR) before the Immigration Appellate Authority. Costs have been higher than expected largely due to the increased number of appeals.

The apparently significant increase in the amount spent on counsel is due in most part to the use of counsel for advocacy at appeal hearings. Before CLR was introduced there was no legal aid for advocacy at appeal hearings. Under CLR solicitors can undertake advocacy themselves or they can instruct counsel to conduct the representation. Solicitors and counsel are paid at the same hourly rate for advocacy before the adjudicator or tribunal, and generally the solicitor cannot claim for advocacy at the hearing in addition to counsel.

Were counsel not permitted under CLR, then most of the costs attributed to counsel in Table 3 would have been claimed as profit costs by solicitors instead.

TABLE 3: SOLICITORS CLAIMS FOR COSTS BREAKDOWN
YearDisbursementsProfit Costs CounselTotal
2000-018,100,000
15%
44,600,000
82%
1,800,000
3%
54,500,000
2002-0328,500,000
17%
122,200,000
73%
16,400,000
10%
167,100,000
Increase352%274% 911%307%

Q39-40  Note on the merits test and appeals

APPEALS & CONTROLLED LEGAL REPRESENTATION

Data for March—August 2003 shows that 76% of all asylum appeals before the adjudicator were unsuccessful. The percentage for organisations that hold LSC immigration contracts was 72%. This breaks down across CCA categories as follows:
Category of Organisation% of Appeals Dismissed
173
271
377

As can be seen there is little variation between the average for the 3 categories and the range of dismissal rates within each category is also very wide. However a detailed analysis of the organisations involved shows that category 3 organisations dismissal rates range from 53% to 100%, which is a far poorer performance than category 1 and 2 organisations.

Given that the success rate before the adjudicator is so low, the LSC believes that many organisations are pursuing appeals that have little or no merit. At present suppliers may self-grant funding (Controlled Legal Representation) to represent clients before the adjudicator. Last December the LSC issued revised guidance on the merits test to be applied before granting funding. Recent file audits show however that many organisations are failing to apply the test at all or are not applying it fully.

The LSC is therefore proposing to remove the devolved power allowing suppliers to self-grant CLR and bring that decision in-house. All suppliers—except those few that we are confident have a high success rate at appeal—will be required to apply to the LSC for funding to appeal to the adjudicator. A specialist team will decide applications within the deadlines for lodging appeals so as not to cause delay to the Home Office or IAA.

The LSC believes that bringing the grant of CLR in-house will reduce the number of unmeritorious appeals pursued with public funding. Since April this year all suppliers wishing to pursue judicial reviews have had to apply to the LSC for funding to do so. Since that date funding has been granted for only 34% of applications compared to 83% previously when suppliers were permitted to grant their own emergency funding.

Supplementary Question—Would not the total spend fall over the next few years without these measures, as a result of the reduction in the number of asylum applications, the expanded categories of non-suspensive appeals and the recent proposals for a single tier of appeal?

WHAT WOULD BE THE COSTS OF TAKING NO ACTION TO LIMIT WORK ON ASYLUM AND IMMIGRATION CASES?

The costs (in resource) if further measures (as proposed in the consultation papers) were not taken are estimated to be:
2003-04£194 million
2004-05£186 million
2005-06£192 million

These estimates of costs if no action were taken are based on several un-tested assumptions, see below, and are subject to external risks, so should be treated as indicative.

FORECAST ASSUMPTIONS

We have used a number of assumptions in forecasting likely costs, both for our forecasts of the costs of implementing the consultation proposals, and the likely costs if no action were taken.

The chief untested assumption is the number of cases, both at the pre-decision stage, and the relevant appeals stages. We have used a consistent set of planning assumptions shared with the Home Office and IAA, which forecast a reduction in the number of asylum applications. Obviously if there is a major shift away from these assumptions in the number of applications or appeals, then the costs will likewise vary. Indeed there is already evidence that the number of asylum applications is reducing faster than was anticipated in the planning assumptions, which would result in a consequential reduction in costs below the current forecasts.

We have estimated the proportion of cases funded by the LSC, in asylum and non-asylum immigration cases, both at the pre-decision stage and appeals stages. For example was have assumed that the LSC funds 90% of asylum adjudicator appeals and 20% of non-asylum adjudicator appeals. Although these assumptions were based on a provisional analysis of IAA data, we now have more up-to-date information that indicates the proportion of publicly-funded asylum appeals is more likely to be around 75%.

In the forecast of costs were no action taken, we have assumed that average cost of claims continues to increase by 12% per annum. This increase would include the costs of duplication of work.

In the forecast of costs under the proposals we have estimated average costs based on current claims, and on the advice limits set by the consultation proposals. We have also assumed in the proposals forecast that the implementation of the unique reference number would prevent unnecessary duplication of work.

We think that all our estimates of average costs may be on the low side, but it is difficult to confirm this due to the current stage billing arrangements.

We have not taken into consideration any additional or reduced costs as a result of increased use of detention or fast-track procedures, or any possible changes to appeal procedures. Both models also assume that the duration of cases remains constant.

WHY, GIVEN THE CONTINUED REDUCTION IN THE NUMBERS OF ASYLUM APPLICATIONS, ARE THE COSTS OF TAKING NO ACTION SO HIGH?

One would assume that the costs of taking no action would decrease, in line with the reduction in the number of asylum applications. However there are several factors that would prevent our costs reducing in line with the reduction of asylum applications in the period covered by the estimates:

    a.  We have worked to a consistent set of planning assumptions (Home Office and IAA planning assumptions). Although the number of asylum applications is decreasing, there remains a higher level of decisions both at the initial decision level, and at the appeal stages. These decisions include longer running cases that also tend to be more complex and costly. So although the number of asylum applications is decreasing the number of disposals remains higher as the backlog is reduced. If the volume of decisions and appeal outcomes reduces more quickly than expected as a result of lower intake (and there is already evidence that this is happening), then costs will come down accordingly (both for the "do nothing" forecast costs, and the forecast of the proposals' costs).

    b.  We have assumed that average costs continue to rise at the current rate of 12% per annum. It is difficult to predict with accuracy what would happen to average costs if we were to take no action. Many of the determining factors are outside our control. For example, faster processing of cases and appeals could lead to reductions to average costs, but increased use of detention, or an increase in adjournments could increase average costs. The introduction of the UFN will provide us with better management information on average costs.

    c.  Although asylum applications are decreasing, and are forecast to continue decreasing, immigration and nationality cases are forecast to increase. We have factored this increase into our forecasts, although we fund a smaller proportion of these cases than asylum cases (as fewer clients are financially eligible) and so do not expect this will have a significant impact.

WOULD NOT THE TOTAL SPEND FALL OVER THE FEW YEARS WITHOUT THESE MEASURES, AS A RESULT OF THE REDUCTION IN THE NUMBER OF ASYLUM APPLICATIONS, THE EXPANDED CATEGORIES OF NON-SUSPENSIVE APPEALS AND THE RECENT PROPOSAL FOR A SINGLE TIER OF APPEAL?

See above—in terms of the reduction in the number of asylum applications.

In terms of non-suspensive appeals, we have used the planning assumptions of the Home Office & IAA in terms of volumes of cases, which should already take account of non-suspensive appeals.

The recent proposal for a single tier of appeal has not been taken into account in our calculations. It is unclear whether the single tier proposal will result in legal aid savings. The introduction of a single tier would not reduce costs if there were a commensurate rise in the amount of work undertaken at the single appeal stage. If there were to be savings then any reduction in cost as a result of the single tier would be limited to the current level of costs of the Tribunal appeals, which are estimated to be around £10-15 million (resource) per annum.

What is most likely to reduce costs is a fall in the number of cases beyond that forecast in Home Office & IAA planning assumptions. In particular costs will come down more quickly once the backlog of cases is cleared—both at the initial decision stage, and the appeals stages.

WHAT LEVEL OF SAVINGS DO THE CONSULTATION PROPOSALS OFFER?

Savings are measured by comparison between the consultation proposals and the forecast costs if no action were taken. Both forecasts use the same volumes taken from Home Office and IAA planning assumptions, and the reduction in costs as result of fewer asylum applications has already been taken into account.

If the consultation proposals were implemented then savings as a result of the proposals of at least £30-40 million could be achieved in 2004-05. This could increase to at least £50 million in 2005-06.

These savings assume that the proposals implemented include a level of flexibility to provide cost extensions in certain cases, for example where the client is in detention, or is an unaccompanied minor.

These figures are based on several un-tested assumptions, and are subject to external risks, so should be treated as indicative estimates.

Department for Constitutional Affairs

Legal Services Commission


 
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