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12 July 2007 : Column 524WH—continued
The overall cost of legal aid has risen sharply since the late 1990s, although more recently the budget has fallen back slightly. The Committee stresses in its report, as I want to do today, that the Government do not know and the Committee could not find out why that has happened. We know what is not a problem. The community legal service is not a problem, because it is rising by only around 0.7 per cent. a year. We know that it has nothing to do with the lower criminal court defence services because payments in that area and the magistrates courts are falling. There is an increase in payments for police station attendances, but almost all of that is explained by the increase in the number of people arrested.
The problem seems to be in three places: first, in the higher criminal courts—the Crown court and above—where the cost per case is indeed rising; secondly in child care proceedings, as many hon. Members said; and thirdly, in the administrative costs of the Legal Services Commission. Little is understood about any of those three. There is speculation about the place of expert witness fees in child care proceedings, delays caused by other organisations in the system, and ideas in the system about degrees of certainty that cannot be achieved.
No one knows for sure the causes of the increases, and it is reckless—the Committee used that word—to go forward with the changes without understanding the real reasons for the budgetary problem. The Government’s solution is that if they cannot do anything about the case load, they can only reduce the spend per case. Everyone recognises that the danger of reducing the spend per case without understanding the causes is that quality of advice and representation will be reduced. The essence of the Committee’s criticism and my criticism is that the Government have not gone about the task rationally. They have not tried to discover the cause of the budgetary problem and to deal with it; they have simply adopted an across-the-board solution as a quick fix.
That quick fix is the average fixed fee system, and the idea is that firms and providers will absorb all the risks of variation in costs. There are two big variations in the cost of cases. One is the complexity of the case and lawyers’ ability to deal with it. The other is the needs and requirements of the clients: their need for interpretation and translation, and so on. All the variations in those complexities, both legal and concerning the client, are borne by the providers under the fixed-fee system. The Government say that that does not matter because the fees will average out, but firms must bear the risk of that averaging out.
There are three big problems. One is cherry-picking. Providers may take on only the cases that they can deal with within the fixed fee and let the others go. We know from other attempts at out-sourcing that that happens. The Government say that they will deal with that with the contract, and that the contract will provide a sign, but how will they know when there is cherry-picking? They will have no way of knowing. If they threaten to take contracts away, they will have to give them to another firm, or the threat will be empty. If, as we suspect, an effect of the system will be to wipe out vast swathes of other providers, there will be no alternative provider to give the contract to.
The second problem with fixed fees is that they undermine the possibility of firms specialising by the complexity of the case or special needs of the clients. That is precisely what lies behind the problem of black and minority ethnic firms and the problem of clients with disabilities.
The third problem is that fixed fees undermine choice. A fundamental question for people who are represented is, “Can I trust this lawyer?” What happens if someone has been represented by a lawyer previously, had a bad experience, and wants to go to a different lawyer? The system undermines the possibility of finding a different lawyer.
We have been told that the fixed fee system is necessary as a precursor to best-value contracting, but that argument does not work in its own terms. The benchmark applies only to the Government because they need to know what price they will offer. It does not help bidders, except as a general guide to what prices might be, but the Government can tell them that without setting up fixed fees. It is entirely unclear how the best-value contracting system will work, and that was the basis for the comments by the hon. Member for Southampton, Test (Dr. Whitehead). The Government should think about that.
The real problem is that if the contracting system is just an average, fixed fee with a bit of competition, which is what I think is intended, it will have exactly the same problems as the average fixed fee. It will cause cherry-picking, undermine choice and make it impossible for firms to specialise by the complexity of the case or the complexity of their clients’ needs.
What is the way forward? I think it is to do nothing until the exact nature of the problem has been grasped. It might lie in the Treasury, not in the Department or the world, because of the way in which the Treasury deals with this budget. The Government should abandon the average-fixed-fee system at this stage. It is not needed as an interim measure and will be deeply damaging. Finally, they should rethink the best-value contracting system so that it does not merely reproduce the problems of the average fixed fee with a bit of competition added in.
There is no ultimate solution to the problem of guaranteeing quality in public services; we can try different solutions at different times. The solution with the widest degree of support, however, is the idea of graduated fees, although it must be combined with a sophisticated system of quality assurance. One of the problems in the way that the Government have set about their task is in trying to simplify and make savings in the quality assurance system. The Chairman of the Committee said that that resulted in a minimum requirement, rather than a guide to the complexity of an individual case or of client needs. A graduated fee system with sophisticated quality control, on the other hand, could work.
There is even a way of combining graduated fees with competition, which, as a former council leader, the hon. Member for Southampton, Test will probably recall. It was the method that was in use at the time of the schedule of rates contracts. For the reasons that he mentioned, that is probably not the way to go, but it would still be better than anything that the Government are suggesting.
My impression is that, in the minds of the press and of some Ministers, legal aid has been seen as an obstacle to be swept aside using press releases about fat cat lawyers and so on. In reality, it is about modestly paid lawyers trying to vindicate the rights of their even more modestly paid clients. I urge the Government to think again.
5.31 pm
Mr. Henry Bellingham (North-West Norfolk) (Con): I too declare an interest, although it is registered. I am a non-practising barrister. I congratulate the right hon. Member for Berwick-upon-Tweed (Mr. Beith) on his superb report, and I agree with him that it is a pity that this debate is taking place in Westminster Hall, especially as it is the second occasion on which we have had a debate on this subject here instead of in the House. Many people take a huge interest in the subject, and they would have liked to have seen the debate take place in the main Chamber and to have had better seating. Had that been the case, everyone would have been able to get into the Gallery. That should be considered in future.
The report was extremely full, and the Committee went to a great deal of trouble to take evidence from every possible affected organisation. The Committee produced some compelling and damning quotes, remarks and suggestions. On the need to take action, page 86 of the report says:
“Not to do so would be reckless.”
Paragraph 38 on page 87 is headed “The impact of the reforms on BME firms and clients.” Underneath, the report says:
“This may limit access to justice for members of ethnic minorities.”
“There has been a catastrophic deterioration in the relationship between suppliers, their representative organisations, and the LSC.”
I found the Government’s response to a very impressive report to be wholly inadequate, and that has been brought out in the speeches of other hon. Members. There were some excellent contributions. The hon. Member for Vauxhall (Kate Hoey) spoke with great passion. She is my local MP, so I suppose that I am biased, but I agreed with her entirely, as I do on virtually every issue. So much is that the case that I shall have a dilemma at the next election—I shall either vote for myself in North-West Norfolk or I shall support her in Vauxhall. I shall look to the opinion polls nearer the time to guide me in that choice.
I shall briefly mention the contribution of the hon. Member for City of York (Hugh Bayley), who, because he was looking towards you, Mr. Martlew, could not see the gnashing of teeth going on behind him. Some of his logic was flawed, I think, because he suggested that if one is a rich crook one can afford the best legal advice but that a poor crook has to make do with second best, and he implied that the best lawyers should not get legal aid work and support in order to represent people in their hour of need.
Hugh Bayley: Will the hon. Gentleman give way?
Mr. Bellingham: I am short of time, but I shall give way very quickly.
Hugh Bayley: I made no such suggestion. The hon. Gentleman’s own implication that the 99 per cent. of lawyers who do not take hundreds of thousands of pounds in legal aid fees in a single year are somehow inadequate and not up to the job is wrong, and I hope that that he will withdraw it.
Mr. Bellingham: I shall not, because the hon. Gentleman said that the very top Queen’s counsel should not be available to represent the poorest in the community, which is flawed logic. He spoke about contracting out to non-profit-making organisations that have the interests of their clients at heart, but I can tell him that every single law firm, citizens advice bureau and individual who has been involved in the debate on this topic has that interest at heart.
We all recognise that, with the legal aid budget rising very quickly, action was needed. However, the Government should be targeting the areas in which costs actually are rising. Spending on civil legal aid has fallen by 24 per cent. in real terms since 1997, and there are many other areas of legal aid in which costs are either under control or falling. The budget for criminal legal aid has indeed increased but, as my hon. and learned Friend the Member for Torridge and West Devon (Mr. Cox) said, with all the extra offences that have been created, and with court procedures becoming more complicated, that is not surprising. There are a number of problems within the court system itself as well.
One should think carefully about the argument put forward by people in some circles that solicitors are causing the problem by taking too much money. Legal aid payments to solicitors have been static for quite some time. The last pay increase for criminal legal aid was in 2001. Civil practitioners received just one rise—of 2.5 per cent.—in 2004, and there were no increases in 1993, 1994, 1997, 1998, 1999 or 2000. Even before the changes are introduced, the number of offices with civil legal aid contracts has already fallen from 4,301 in March 2004 to 3,500 in March 2006.
The debate needs to be seen in context. The hon. Member for Islington, North (Jeremy Corbyn) observed that there is a sense of déjà vu about it, and I agree. I welcome the new Minister to her post. However, the last time we had a debate on this subject, on 11 January, I thought that the then Minister, the hon. and learned Member for Redcar (Vera Baird), was very complacent. We debated the consequences that we predicted would flow from the changes, and we were told that we were scaremongering and over-egging the pudding.
In fact, very serious patterns have emerged since that debate. The previous Minister said that everything was okay because a lot of firms had signed the contract and therefore everything was rosy. However, I have received dozens of letters from solicitors’ firms that signed the contract under what they felt to be duress. I shall quote just one example from a firm in SE20, which is probably in the constituency of Bromley and Chislehurst. It says:
“As a firm, we did not want to sign the new Civil Legal Aid Contract. It is manifestly unfair in as much as the Legal Services Commission can change it on very little notice and even put us out of business on six months’ notice without committing any offence.
At the last moment we signed the Contract when it was apparent that our brethren were not going to hold their nerve and refuse to sign. We could not commit suicide then and there without a further review of our options.”
“I anticipate that, having made alternative arrangements for the structuring of our firm, this firm will be withdrawing from publicly funded family work later this year”.
The figures that were issued by the Law Society in January mentioned its survey of members. The figures indicated that 82 per cent. of family practitioners believed that their firm would be less likely to undertake publicly funded work in future, 78 per cent. of mental health practitioners were considering whether to continue to represent publicly funded clients, and 74 per cent. of immigration practitioners said that their firms were less likely to undertake legal aid work. The staggering figure of 95 per cent. of civil legal aid practitioners believed that the proposed fixed fees would make their work non-viable.
Events have moved on. The Housing Law Practitioners Association survey, which is far more recent, says that 82 per cent. of respondents were opposed to the introduction of a national fixed fee, 65 per cent. expected their income to decrease by more than 10 per cent., 38 per cent. expected their income to decrease by more than 25 per cent., and 96 per cent. said that the proposals would produce a disincentive to undertake more complex cases or assist the most vulnerable. That is obviously what is happening now, and the Minister ought to recognise it and consider events as they are now.
I went to see a firm in East Anglia the other day, and I sat down with its practitioners, who told me about the dilemma that they face. Some of the partners in the firm were doing a substantial amount of commercial work, and they were making a great deal of money. The other partners were doing legal aid, criminal and civil work, and they were being heavily cross-subsidised by the partners who were earning substantial amounts of money. Those other partners told me that, in all consciousness, they could not consider going on and on with the publicly funded legal aid work, because of the contrast in partners’ earnings. The firm said that it would carry on for the time being until those other partners retired, but that it would almost certainly not take on any new legal aid lawyers. As we know, many other firms are pulling out, and there will be a great deal of consolidation.
In the Otterburn report, which the Department commissioned, Mr. Otterburn made it quite clear that big does not necessarily mean more efficient. In some sectors of the economy, big may be more efficient, but he came up with some valuable and compelling evidence to show that, with the extra overheads that large firms must carry, they do not necessarily offer the Department better value for money in publicly funded work.
The comments made by my hon. and learned Friend were pertinent. There will be legal aid deserts. There is no question but that in the small market towns in East Anglia, there will be a significant contraction in the number of firms supplying legal aid to my constituents and to those of my numerous neighbours in such sparsely populated parts of the country. People will have to travel much further; that is the pattern emerging in many places.
My hon. Friend the Member for Beverley and Holderness (Mr. Stuart) once again went through the
extraordinary example that affects his constituency. I hope very much that the Minister will respond adequately to his points, because the previous Minister did not respond properly to the concerns that the firms in my hon. Friend’s constituency expressed. The time has come for the Minister to get a grip of that situation and give my hon. Friend a proper answer.
The hon. Member for Hackney, North and Stoke Newington (Ms Abbott) spoke passionately about black and minority ethnic practices. There is no question but that they will be disproportionately disadvantaged by the Government’s proposals. It is well known that in many large cities, small firms and black and minority ethnic firms are over-represented among criminal legal aid contractors, and the hon. Lady is right that many people from ethnic minorities feel more comfortable going to a business that is run by people from their community. I thought that the Government were in favour of trying to further social mobility and to help young people who want to set up in business and serve their community. I have seen people from the black and minority ethnic communities who have gone into business against considerable odds and with little support from their families. They have struggled to finance their way through college, often setting up set as single practitioners or as partners in a small business.
Jeremy Corbyn: I endorse the points that the hon. Gentleman and my hon. Friend the Member for Hackney, North and Stoke Newington (Ms Abbott) have made. Although I do not minimise the effect of the loss of legal aid anywhere in the country, does the hon. Gentleman acknowledge that the problem is at its worst in the big cities, and particularly in London? All indices show that the biggest loss of legal aid practitioners and support, and the biggest gain in need is in London, which reflects the lack of minority ethnic firms that are able to survive the current crisis.
Mr. Bellingham: The hon. Gentleman’s point is absolutely spot on, and I agree 100 per cent. that, of course, that is the situation. My hon. and learned Friend pointed out that it is the clients who matter most. The people in the community who rely on publicly funded legal advice will suffer most. There is no question but that many such clients have complex cases, and that without legal aid and access to local solicitors, those cases will not be solved.
I have considered various individual cases; in fact, my hon. Friend the Member for Mid-Sussex (Mr. Soames) brought some complex child and family cases to my attention. They included one extremely complex case that involved care proceedings, which went on and on. That case would never fit easily into a fixed-fee system, but it would probably not be complex enough to fit into the next category.
Citizens Advice wrote to all Members with a brief, giving us many examples of people who come in with one particular case, but for whom after about 10 minutes, it becomes apparent that the case is far more complex. Again, such cases just do not lend themselves easily or tidily to a fixed-fee system. Cherry-picking will take place: there is no question but that fixed fees will actively encourage many firms to cherry-pick the easier, simpler cases. Of course, they could resort to
exceptional status cases, but very few cases will qualify for that status. There will be a few such complex cases, but the vast majority will fall into the fixed-fee category. What will happen is very simple: many firms will have to cherry-pick cases and ignore more complicated cases. Richard Miller of the Legal Aid Practitioners Group said that
“as well as penalising firms doing more complex work, the scheme”—
will actually encourage providers to look at the more—
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