House of Commons - Constitutional Affairs

Select Committee on Constitutional Affairs Fifth Report

3 The rising cost of the Criminal Defence Service

20. Although the Minister has acknowledged that "legal aid is a vital public service", he has commented that "we need to ensure that we put spending levels on a sustainable footing."[10]

Rising cost

21. The Consultation Paper explains that the volume of grants of legal representation has grown significantly since 2001.[11] This rise is illustrated in Figure 1 below (Volume of representation orders) which shows the volume, per quarter, of applications for and grants of representation orders.

22. The Consultation Paper also explains that spending on legal aid has risen rapidly from about £1.5 billion in 1997/98 to over £2 billion in 2003/04. This is an increase of over £500 million or 37% since 1997/98.[12] The DCA's 2003/04 Annual Report shows that over half of this total expenditure is on the CDS.[13] Since 2000/01 there has been a significant rise in the cost to the CDS of criminal legal representation in the magistrates' courts, illustrated in Figure 2 below (Total Cost to CDS of representation orders). Figure 2 does, however, indicate that expenditure on representation in the magistrates' courts has been relatively stable over the past three years.

The Law Society has also provided evidence that the cost of legal aid, in particular CDS expenditure and Crown Court and Higher Court representation, has risen significantly since 1999/2000 (Table A: Rising Cost of CDS).Table A: Rising cost of CDS

Year CDS Payments Net £m (1) Crown Court and Higher Representation Net £m (2) Total Net spend on Criminal Legal Aid £m Total net spend on legal aid £m (1) + (2) as a % of total payments

1999/2000 411.0 374.0 785.0 1,552.00 50.6

2000/2001 450.1 422.0 872.4 1,664.40 52.4

2001/2002 508.3 474.1 982.4 1,716.90 57.2

2002/2003 526.4 569.3 1,095.7 1,908.60 57.4

Source: Law Society evidence

Difficulties

23. The Bar Council warned us of the difficulties in using the available statistical information to demonstrate, with precision, the increasing demands on the CDS budget:

"You have to be careful with these figures all the time … these figures leave out the fact that civil proceedings have diminished within legal aid. If you treat it as a proportion, it is not only a growth in crime and a growth in top crime, all personal injury has come out over the same period, clinical negligence has diminished greatly because of the rationalisation and narrowing, so the proportions do not always tell you very much…The absolute growth also does not tell you as easily what you might want to know because during the relevant period we have gone from entirely ex post facto payment, payment after the event, to a position where some of these big cases have been paid before they begin. So you are having a cashflow clump come into it, the older cases paid two years late and the newer cases paid before they begin or as you go along, so even in terms of the raw growth it is probably overstated."[14]

We ask the Legal Services Commission to estimate the effects of changes in times of payments and the introduction of a system of payments on account on the figures for the cost of Very High Cost Criminal Cases.

24. We have been told of a number of factors which could have created an exaggerated impression of rising legal aid demand and costs. Roy Morgan of the Legal Aid Practitioners' Group explained that the apparent rise in the volume of representation orders could be partly explained by a change in magistrates' court practice.[15] The LSC also acknowledged that the rise in CDS expenditure on representation in the magistrates' courts (shown in Figure 2: Total Cost to CDS of representation orders, above) could be due, in part, to: (A) the fact that post-charge advice and assistance, which would previously have been claimed separately, was included as part of the magistrates' court claim; and (B) an increase in rates of pay.

Consensus

25. Despite such difficulties, none of our witnesses questioned the Department's underlying assertion that the cost of criminal legal aid has risen and many expressly acknowledged that this rise must be addressed. Lord Justice Judge described this as follows:

"we simply cannot work on the basis … that there is a tree at the bottom of the garden full of ten pound notes. There is not, and therefore there has to be some control exercised."[16]

The Magistrates' Association similarly acknowledged that "there is a large and continuing increase in the amount of money spent on legal aid, and we accept that the amount available is not infinite."[17]

26. The Consultation Paper states that "it is worth emphasising that the impetus behind the Bill is not only the need to halt the rising costs associated with criminal legal aid, but also to prevent further erosion into the civil legal aid budget. Any cuts that may have to be made into the civil budget will have serious implications for the wider fight against social exclusion."[18] This statement echoes what we found during our civil legal aid inquiry. In our recently published report, Civil legal aid: adequacy of provision, we concluded that:

"Increases in spending on criminal legal aid reduce the availability of money for civil help and representation. Provision for civil legal aid has been squeezed by the twin pressures of the Government's reluctance to devote more money to legal aid and the growth in criminal legal aid, as well as the cost of asylum cases. Whatever action the Government may take to reduce the financial impact of asylum cases on the legal aid system, it is likely that the growth in criminal legal aid will continue to be a burden. There may be scope for bearing down on the cost of criminal legal aid by better case management and a new criminal procedure code."[19]

Why has CDS expenditure risen?

27. Although the fact of rising CDS expenditure is not disputed, the reasons for the rise are. In our call for written evidence, we specifically sought responses to the question "Why has there been such a large increase in spending on criminal legal aid?" Understanding this is vital to ascertaining whether the Department is focusing its efforts on the right areas. A number of our witnesses commented on the importance of identifying the drivers of rising costs. The Law Society, for example, wrote that it is: "important that the major cost drivers in the Criminal Justice system overall are identified, as it is these that will continue to lead to significant budget overspending on criminal legal aid."[20]

28. A number of reasons have been cited for the growing demands on the CDS budget. These include a combination of internal and external factors which are discussed below.

Internal factors

29. The Department has identified the following internal factors as major causes of rising expenditure:

Abolition of the means test: The Department argues that: "Since the abolition of the means test many who previously would have been privately represented or who chose to represent themselves have applied for public funding";[21] and
Role of magistrates: The Consultation Paper comments that "one of the reasons for the increase has been the apparent willingness of the courts, especially magistrates' courts, to grant representation orders."[22]

When asked about the cost drivers of the CDS, the Minister reiterated the Department's view that the current proposals are targeting the major causes:

"We have got a good analysis of what is driving the cost because we know that there has been a 50% rise, and that has happened since we moved away from means testing and moved to a court-based representation order system. That is clear."[23]

External factors

30. A number of our witnesses have questioned the extent to which these internal factors have driven CDS expenditure. The Legal Aid Practitioners' Group, for example, has argued that "the causes of the increases in the CDS budget are almost exclusively external, not internal."[24] Robert Brown of the Criminal Law Solicitors' Association also told us:

"… are we concerned about the budget always going up, of course we are concerned about it but that is a consequence of the society in which we live and other decisions that are taken. The Government sets targets to increase arrest rates. As we know there are more and more new criminal offences created all the time; very budget-rich policing; the creation of the National Criminal Intelligence Service; the creation of the new Organised Crime Squads. If society wants to tackle crime—and of course we support society doing that—there will be a knock-on effect, there will be more cases. The technologies in the methods of investigating crime are far more sophisticated now than they used to be. We cannot just look at the budget 10 years ago and say, 'What has changed? Why has it gone up?' It is because the police are more active; it is because they use methods of detection in terms of getting access to computer records, mobile telephone records and so on which just did not exist 10 years ago. It is partly a consequence of drivers which are actually beyond the control of those who are responsible for the budget."[25]

31. The Department has denied the significance of such external factors, commenting that "it is likely that the impact of any of these other factors is not that large and do not account for the overall increase in the number of grants."[26] The external factors which have been cited as driving the growth of CDS expenditure are discussed in more detail below.

Narrowing the justice gap

32. The policy of bringing more offenders to justice was cited as one of the most significant drivers of rising criminal legal aid costs by a number of our witnesses.[27] The Legal Aid Practitioners' Group explained:

"If any initiative is going to increase the numbers of defendants that appear before the courts, where they meet the interests of justice test, it will inevitably increase the requirement for representation and the requirement for representation orders, hence the costs will inevitably go up."[28]

33. The Department has acknowledged that "narrowing the justice gap has led to more cases being brought before the courts".[29] The Legal Services Commission has also acknowledged that the "number of arrests and charges, which is influenced by e.g. crime initiatives [and] new offences created by legislation" has been a cost driver.[30] In oral evidence to us, however, the Minister denied that this policy was a significant cost driver, telling us that:

"certainly narrowing the justice gap and the work that is emanating from the Home Office is one [driver], but that amounts to perhaps 2% of the overall volume when you consider that the numbers of cases have only risen by 2% ... I am afraid it is too easy to say that because we are bringing more people to justice that by definition has led to rising expenditure on legal aid when you look at the number of cases. It just has not gone up sufficiently to account for that; the volume has only gone up by 2%."[31]

This surprising statistic does not, however, tell us anything about the relative seriousness of the extra 2% of cases. Neither does it indicate how many of the additional defendants would qualify for legal aid.

Sentencing

34. The DCA acknowledges that "changes to the sentencing guidelines meant that there is a greater risk of imprisonment for a range of cases".[32] It follows from this that the interests of justice test, one limb of which is the likelihood of imprisonment, will be satisfied in more cases and, accordingly, that representation will be granted more frequently:[33]

"Another reason cited for the increase in representation orders (beyond an increase in the number of defendants) is that sentencing has been becoming harsher in recent years, and therefore even within a static profile of cases, the proportion of cases that meets the interests of justice test for representation will have increased."[34]

In 2002 the average prison population was 70,861, an increase of 59% (or over 26,000) since 1993. More recent monthly data shows the population has continued to rise in 2003 and at the end of November 2003 stood at 74,055 people. It is predicted that by March 2005, the total prison population will increase to between 80,600 and 82,300.[35]

Complexity

35. The increasing complexity of criminal conduct, criminal offences and criminal procedures has also been cited as contributing to the rising costs of criminal legal aid. The Bar Council wrote that:

"The firm practitioner view is that the central driver is increased complexity and trial length. We live in an age of rapidly changing criminal justice policy with annual Criminal Justice Bills, and the last decade has produced major legislative changes in almost every area of law, practice and procedure of which the Human Rights Act, and Proceeds of Crime Act are but two important examples."[36]

The Legal Aid Practitioners' Group also cited the examples of anti-social behaviour orders and the Proceeds of Crime Act which, it explained, have "added complexity to existing cases so that they take longer and are more expensive."[37]

Very High Cost Criminal Cases

36. A number of witnesses commented on the fact that the most expensive cases are consuming a growing proportion of the CDS budget.[38] This is discussed in more detail in paragraphs 171 to 175 below.

Further research

37. A number of our witnesses complained of a paucity of research into the factors which have driven the rising cost of criminal legal aid. The Bar Council, for example, wrote that:

"The reality is that no systematic work has been done on what the real cost drivers are and the Department appears to concede that the answer is simply not known."[39]

The Justices' Clerks' Society also commented that the "reasons for the increase in the costs in the criminal legal aid budget merit further research before conclusions are drawn."[40]

Legal Aid Review

38. The publication of the draft CDS Bill was accompanied by the announcement of "a far-reaching study into the underlying legal aid system, which will focus on how best to provide legal help to those who need it in the longer term".[41] The Review is expected to report to Ministers early next year.[42] The Law Society has written that:

"The recently announced Fundamental Legal Aid Review offers an opportunity for a thorough analysis of cost drivers and the Law Society cautions against any hasty and ill thought out measures being introduced until that review is completed."[43]

The Judges' Council has also told us that it is surprised by the timing of the current proposals, "having regard to other matters currently in progress", giving as one example the fact that "the Department has recently set up a Review Board to undertake a fundamental review of legal aid."[44] It also commented that "the Consultation Paper gives no explanation of how the draft Bill ties in with that fundamental review."[45]

39. When we put the Judges' Council's comments to the Minister, he said:

"it is a fair question, but, with the greatest of respect to the Justices that spoke to you, at the end of the day it is the ministers and the financial officer, in terms of Clare's job, that do have to ensure that the public is getting value for money in terms of the legal aid spend; and that is why I said it would be extraordinary if I just sat here and did nothing for a year because there was a Fundamental Legal Aid Review going on. You have got to act."[46]

The Minister explained that the Fundamental Legal Aid Review is one of the Department's long-term strategies for addressing the rising cost of the CDS but that this must also be combined with short-term and medium-term initiatives, such as the current proposals.[47]

40. We hope that the Fundamental Legal Aid Review will enable the Department to identify the major factors which have caused the increase in Criminal Defence Service expenditure. The financial savings sought by the draft Bill will only be achieved if initiatives target these major cost drivers. We are concerned that the current proposals have not been integrated with the Review.

"Joined-up Government"

41. The external drivers of the CDS budget cited above are outside the control of the Department for Constitutional Affairs and the Legal Services Commission. This was highlighted by the LSC in its 2002/03 Annual Report:

"Other criminal justice agencies continue to make significant changes to law and procedure, the impact of which on CDS expenditure is not taken into account when proposals are developed and costed."[48]

In oral evidence to us, the previous Lord Chancellor acknowledged that this difficulty also exists at a Departmental level. When asked about his Department's overspend on legal aid and whether this was due to initiatives by other parts of government, the former Lord Chancellor told us that:

"It is absolutely critical when changes to the substantive law are being made, particularly in the criminal field, which have downstream consequences for the courts, that the thing should be looked at end to end and the downstream consequences should be funded and that is a position that I have consistently maintained… One of the problems is that criminal legal aid is demand-led. It is therefore, inherently difficult to predict and in times past we have had underspends and this time we had an overspend, but because something is inherently difficult to predict because it is demand-led, you cannot look for perfection in budgeting, but you must do as best you can and I agree with you that it is absolutely critical that changes are not made to the substantive law unless also you take on board the downstream consequences for the courts and fund that."[49]

42. A number of our witnesses have commented that the impact of government policies on the criminal legal aid budget is not taken into account. Rodney Warren of the Law Society gave us two examples of initiatives which would have an impact on the CDS budget, but in which this impact had not been accounted for: (A) the Community Justice Court Pilot, which is being run in North Liverpool; and (B) "Operation Payback", a scheme to chase fine defaulters.[50]

43. A number of witnesses also commented that the impact on other departments of changes to the availability of legal aid should be taken into account. Stephen Irwin QC of the Bar Council also told us:

"We have seen it again and again in the public funding of legal aid that you only look at this little segment of the budget. Before we make any changes we should be looking at Group 4, the prisons, the Home Office, the probation service, the cost of adjournments—all of it together."[51]

The Law Society also wrote that "the Government must recognise that criminal legal aid is an integral part of the criminal justice budget as a whole. It cannot be tackled in isolation from other aspects of the Criminal Justice System."[52]

44. This was echoed in the information we received during our civil legal aid inquiry. In particular, the Matrix Review of the Community Legal Service noted that there is a need for the DCA to:

"…undertake more robust legislative impact analysis and seek an undertaking either from the Treasury or other government departments that the DCA's budget will increase by the amount necessary to meet increased demand due to new legislation."[53]

In our recently published report on civil legal aid, we concluded that:

"It is vital for the Government to ensure that part of the cost calculation of policy initiatives includes an assessment of the impact on the legal aid budget and that there is adequate liaison between the Constitutional Affairs Department and departments such as the Home Office which legislate in relevant areas. This is a key recommendation; we expect the Government to be able to demonstrate that it has significantly improved its system for ensuring that legislative changes proposed by departments are costed to take into account the full impact on the legal aid budget."[54]

45. When we asked about steps which had been taken towards achieving a more joined-up approach to criminal legal aid, Clare Dodgson told us that "we are working much more closely with the Treasury and with the Home Office, and when we did our spending review for 2004 we had colleagues from the Home Office and the Treasury who worked with us on that to get a much more joined up picture."[55]

46. We recommend that the Department should ensure that initiatives rolled out by other Departments, especially the Home Office, are properly costed so that their impact on the Criminal Defence Service budget can be taken into account. This is an essential feature of 'joined up Government' and needs to be done so that the Government can consider the causes of rising costs, rather than merely relying on the Department to tackle the symptoms.

10 'Legal Aid Review to Target Funds Effectively', DCA News Release, 14 May 2004 Back

11 Draft CDS Bill, para 45 Back

12 Draft CDS Bill, para 23 Back

13 Departmental Report 2003/04, DCA, Cm 6210 Back

14 Q 174 (Stephen Irwin QC) Back

15 Q 144 Back

16 Q 76 Back

17 Ev 51, para 1 Back

18 Draft CDS Bill, para 12 Back

19 op cit, HC 391-I, para 13 Back

20 Ev 58 Back

21 Draft CDS Bill, para 47. The deterrence aspect of means testing was not appreciated when means testing was abolished in 2001 Back