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11 Jan 2007 : Column 158WH—continued

It has been said over the months that we are not addressing all the cost drivers in the justice system, but that is not correct. The proposals that we are discussing deal with legal aid procurement; other reforms that are taking place across the justice system deal with other
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cost drivers. Part and parcel of the way ahead is a commitment to new stakeholder representation to help to see the reforms through, to head off any emerging problems at the pass, and to monitor progress. For the first time, legal aid lawyers will have a say on problems caused to them by other agencies in the justice system. The first meeting, to set the framework of the stakeholder body, will be on 1 February.

Let me deal with some specifics of the scheme. On crime, it was always clear, but it became much clearer in the consultation, that there are differences in the way that criminal advice works in urban and rural areas, so for magistrates court work we will initially introduce the new standard fees only in 16 urban areas. We will consider spreading the system to rural areas when we have seen how it works in the urban areas, where the market is different.

Some practitioners were concerned about the level of police station fees proposed in the Carter reforms. They were based on averages in criminal justice areas. In discussions with me and in the consultation responses, lawyers rightly pointed to differences between particular spots in the criminal justice areas and the consequent differences in the costs of attending at a police station. We have therefore delayed the introduction of fixed fees for police station advice until October to allow the LSC to consult on the detailed police station duty rotas—again, only in the 16 urban areas. We shall fix the police station duty rotas best for the advice needs of the locality. We will then fix the fees very locally and very specifically, based on those duty rota areas and on where the current claims are clustered. They will therefore be based on true averages for the specific area. We should be as sensitive as possible to local issues.

Mr. Jonathan Djanogly (Huntingdon) (Con): Will the Minister give way?

Vera Baird: Let me just finish the point. We shall leave in all travel costs in areas where that is the right course of action. We acknowledge that in rural areas savings probably cannot be made on travel, so we will leave the travel element as it is at present.

Mr. Djanogly: I declare any interest that I may have as a solicitor. There seems to be a big difference between what Carter says and what criminal practitioners say the implications of the proposals will be in terms of the number of criminal law firms that will have to close down. What is the Government’s view on the number of solicitors who are predicted to leave the profession, or the number of criminal law firms that will have to close down, as a result of the proposals?

Vera Baird: I believe that the hon. Gentleman is talking about some research by LECG for the Law Society that estimated the number of firms that would either close down or merge; it dealt not with people going out of the profession but with merger or change. However, its work was based on a course that has never been pursued—that there would be a minimum contract size of £150,000. As I said, there is no minimum contract size, but the only one that was ever
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countenanced was £50,000. Carter thought that, overall, there would be some fall-out, but he too was countenancing a minimum contract. However, there is no fixed view on that. As I said, we have localised the way that we hope to be able to configure the changes, to try to fit what is already there.

During the consultation, solicitors asked for competitive tendering to start as quickly as possible after they had moved over to fixed fees, so that they could adjust their businesses to fixed fees and then quickly seek to set the fees themselves by making a bid. Consequently, we have narrowed the time between introducing fixed fees and introducing bidding by one year—there is now only one year between the two processes—to take account of that. It is better that firms make competitive bids for work that take account of their actual running costs and required profit margins, rather than requiring the LSC to second-guess fair fee rates in the absence of hard information on the true costs that firms incur in providing services, which is what happens now.

Jeremy Corbyn (Islington, North) (Lab): Clearly, the running costs of solicitors’ practices vary enormously around the country. Perversely, in inner London, there are areas of extreme deprivation and poverty but incredibly high running costs—higher staff costs and so on—for any sort of business. Many of us fear that we will end up with far fewer legal aid practitioners in precisely the areas where they are the most needed.

Vera Baird: But that does not follow in the slightest. Solicitors who enter the bidding process and bid at a price that returns them a profit—that is exactly what they will do—will be in a much better position than if they were on the receiving end of an estimate produced by the LSC on the basis of historical claims. It is much better that they reveal their costs and make a bid that will accommodate those costs and produce a profit. It is a much more sensible way of proceeding.

I am talking about crime, but my hon. Friend may not be. However, one third of London advisers in civil law—perhaps that is the kind of work that he is concerned about—already deliver advice at below the proposed fixed-fee levels. The fixed-fee system is intended to drive efficiencies, and such advisers have already gone a long way.

It is much better to allow solicitors to bid than to get the LSC to second-guess.

Mr. Djanogly: Will the Minister give way?

Vera Baird: Let me finish the point. Competition between local firms will ensure best-value practices for the taxpayer. Significant savings should occur, and firms that adapt will be made more profitable. Many firms are already gearing up for that win-win situation.

Mr. Djanogly: I believe that the hon. Member for Islington, North (Jeremy Corbyn) was talking not about the money side of things but about the number of solicitors. He made an important point. Surely the net result of contracting will be fewer firms, because only so many firms can win contracts. I believe that hon. Members are trying to ascertain the extent to which the high street solicitor will be extinguished, which the legal profession maintains will happen.

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Vera Baird: As we are talking about legal aid, I shall not go into the community legal service strategy in great depth, but of course the idea will be to engage people who are delivering different individual types of advice in consortiums, so that they can deliver it all of a piece. I believe that my hon. Friend the Member for Islington, North was talking about civil advice. We now have in Gateshead the first model of a community legal advice centre. The idea is that somebody who walks through a door can have literally all the advice that they need across the range of issues that confront them—or virtually so, by being carried forward. There are many structural issues, and the question that the hon. Member for Huntingdon (Mr. Djanogly) asks is slightly begged by the future of those structural issues.

Meg Hillier (Hackney, South and Shoreditch) (Lab/Co-op): In my constituency, many people go to small advice agencies that are specifically geared to their cultural and linguistic needs. Does my hon. and learned Friend envisage that those organisations will come together in a consortium? I can tell her that that will not happen.

Vera Baird: I am sorry to hear that negative approach, because the answer is that there is indeed scope for subcontracting to the kind of niche provider that my hon. Friend mentions. That is the case in Gateshead, where the main contractor has enlisted a number of major suppliers and it is open to them to engage a number of niche providers. Indeed, where there is a danger of a community going unadvised, they will be required to ensure that they supply services to all those communities.

Mr. Elfyn Llwyd (Meirionnydd Nant Conwy) (PC): Does the Minister not realise what concern there is outside this Chamber about the bidding process? Criminal legal aid solicitors’ fees were last increased in 2001, and civil practitioners were last given a 2.5 per cent. increase in 2004, which was meant to reflect increases for the previous four years. I may be being simplistic, but it seems to me that in any bidding process the cheapest bid normally succeeds and that will often be at variance with securing the best-quality advice.

Vera Baird: The process is a best-value bidding process. The auction process is being designed with input from the Treasury. No doubt in due course we can discuss its finer points, but the hon. Gentleman is not necessarily correct. It is clear in the Carter report that there will be alertness to any suggestion of loss-leader-type bidding to undercut others so that a firm can come in, take over a good deal and do a lot of damage to a local market. The auction will have to be reasonably sophisticated and it is our intention that it should be. It is important to remember that the point is to deliver good service at a fair price, and we will plan the auction in that way.

Mr. David Burrowes (Enfield, Southgate) (Con): Does not the Minister recognise that some firms already see the writing on the wall? High street practitioners in Hertford and Enfield who provide good service are already leaving publicly funded work, raising the prospect of deserts in legal aid work in the
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vulnerable areas of mental health, crime or child care. Does the Minister recognise that that is happening already?

Vera Baird: No, I do not. The resources going into the civil side have increased by 20 per cent. over the past couple of years, and the supply has increased significantly, too. The hon. Gentleman is in a happy position in his constituency, where 63 per cent. of the providers already provide services to the public at less than the fixed price. His supplier base will benefit enormously from the changes to the fixed fee and is therefore bound to be able to extend its range and to provide more advice to more people. His local suppliers will be able to spread their influence, and that is entirely right. That is what the bidding process is capable of doing, enormously to the public benefit.

Ms Keeble: May I underpin how important the networking of advice agencies is? Where a network has not been established, a lot of people who access legal aid have difficulty in maintaining a relationship and they end up in a revolving door, going from one firm to another over a period of time. The support and signposting that the advice agencies, the networks and community law centres provide are essential in making best use of the legal aid budget.

Vera Baird: My hon. Friend is entirely right, but there is no perfect picture at present. Law centres and citizens advice bureaux do not fit the model of providing advice across the range of social welfare law. Most citizens advice bureaux offer one or two—three at the most—types of social welfare advice. We need to ensure that the networks are established.

An interesting fairly recent piece of research was carried out by Richard Moorhead, who is an esteemed academic. He considered the way in which advice was delivered in the not-for-profit sector as well as by solicitors. He found that half of the people in his sample who had gone to get advice on civil law, and were interviewed by his researchers a month later, disclosed that they had another problem, or more than one, that they had not been able to disclose to their original adviser. That is a condemnation of the current approach. That research and previous research points towards the fact that people who get information and are empowered to deal with their own problems do well, as do people who get advice, while the people who do worst are those who look for advice but do not get it. We are not delivering across the board, and we must encourage such delivery. The proposals will help.

Mr. Andrew Slaughter (Ealing, Acton and Shepherd's Bush) (Lab): I was a member of the management committee of Hammersmith and Fulham community law centre for some 15 years, and I should perhaps declare that interest as well as my interest as a practising barrister. The centre provides a full range of law; it is rare in doing so across many fields. There is one other private practice, White Ryland, which provides a comprehensive service in Shepherd’s Bush, but is practically the only provider. It is opening outreach offices to try to serve the community there. We suffer from the exact problem mentioned by my hon. Friend the Member for Islington, North (Jeremy Corbyn)—high costs, but extraordinarily great and
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complex needs. This only an intervention, and I think that other hon. Members will indicate what they are—

Sir Nicholas Winterton (in the Chair): Order. That is becoming an extremely long intervention.

Vera Baird: If my hon. Friend writes to me, I shall try to answer the point that he was trying to make.

In family and civil law, it is our intention in the longer term to increase the proportion of overall spending from the legal aid budget. There are no cuts to be made to those budgets. This year, civil and family legal aid expenditure will be more than 20 per cent. higher than it was two years ago. More than 700,000 people have been given legal help in the past year—50,000 more than we expected and more than ever since the community legal service began in 2000. Contrary to claims about advice deserts, face-to-face advice increased by 13 per cent. on the previous year and advice by telephone from Community Legal Service Direct nearly trebled—research showed that that was done to great satisfaction, too, in only its second year of service. This year we intend to increase acts of assistance by a further 5 per cent., or another 50,000. It is to the great credit of suppliers that that can be done, but it also happens because we ensure that the services are initiated and resourced.

Having painted a growing picture of the supply in civil cases, I want to consider family cases. Profit costs in care proceedings have increased from £109 million in 2004-05 to £129 million in 2005-06—an increase of 10.8 per cent. per certificate issued. If we consider civil and family cases together in that context, we see that the climate is hardly one in which we would expect huge numbers of civil or family practitioners to go out of business. That nostrum has been given much ventilation over the summer, but it comes from the dark ages to suggest that improving efficiency, as we intend to do, will undermine quality or impede the personal touch. Efficiency undermines neither. The taxpayer requires all three.

The fees proposed for family work caused concern back in July. We realised quickly that they were not sufficiently sensitive and we agreed to take them back. They need change before they are right for that field and we have engaged with the professions in negotiating the changes. In the case of civil help, solicitors are already paid a fixed fee per case for the help that they give. Such tailored fixed fees are based on firms’ average claims and were introduced in 2003-04 as a stepping stone to a single fixed fee system for all suppliers. However, not-for-profit advice agencies, such as citizens advice bureaux, are paid on a contract to provide hours of work. We cannot justify using a different basis to pay for the same work, according to who supplies it; the right way to pay for both is fixed fees. The tailored fixed fee system, which has helped to give rise to the increased productivity that I mentioned, has shown that fixed fees work for civil help.

The fees proposed in the consultation document in July, which were based on solicitors’ pay rates, also caused concern. We listened carefully to the concerns of the not-for-profit sector, whose representatives told
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me that they see different clients from solicitors. They told me that they see more vulnerable people, who have multiple difficulties, who often have mental health issues and who often do not have English as their first language. However, solicitors who do such work disagree that they do not see equally vulnerable people with equal difficulties.

We have therefore based the fixed fees on data from both sides—the not-for-profit sector and solicitors—to try to get over the problem. Average not-for-profit costs are significantly higher than solicitors’ costs for debt, slightly higher for welfare benefits cases and lower in other categories, such as housing, so the fees to be set for civil advice have changed quite markedly since July. The fixed fee for a debt case is £70 a case higher than it was in July and the fee for a welfare benefits case is £20 a case higher than it was in July. Despite the assertion that not-for-profit agencies see more difficult and more complex cases, their costs were about the same as solicitors’ in other categories. Most of the fees have therefore stayed roughly the same, even though we have incorporated data from not-for-profit providers.

Jeremy Corbyn: I am interested in the Minister’s discussion of the fixed fee. When the Government or other public authorities, acting as a prosecutor or in their own defence, retain solicitors, do they also operate on a fixed fee basis?

Vera Baird: I think so. I think that most payment for legal work is done on a fixed fee basis.

Jeremy Corbyn: At the same rate?

Vera Baird: No, I doubt very much that it is at the same rate. There has always been a huge difference between publicly and privately funded work, has there not? I wish that there were some way of changing that, but I am afraid that that is just the way of the world—it certainly was the way of the world when I started at the Bar, and it continues to be the way of the world now.

Jeremy Corbyn: The Minister misunderstood my point. She was talking about fixed fees for legal aid solicitors doing representation work, but I am asking about what happens when public authorities or the Government retain a solicitor to undertake defence or prosecution work. If a fixed fee is involved, is it the same as the fixed fee that a legal aid client would have funded from public funds, or is it much higher? We could have a scenario in which the public prosecute somebody who receives less funding than they do.

Vera Baird: As far as I know, the public authorities pay fixed fees in such situations, although they are unlikely to be the same fixed fees.

Mr. Llwyd: As someone who prosecutes and defends, let me say that the rate at which prosecution briefs are normally remunerated is about a third less than that for defence briefs.

Vera Baird: I thank the hon. Gentleman. We will not talk about other publicly funded cases, but I hope that that explanation was helpful.

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