Select Committee on Constitutional Affairs Written Evidence


Further supplementary evidence submitted by the Legal Services Commission (LAR 230a)

1.  INTRODUCTION

  1.1  The Department for Constitutional Affairs and the Legal Services Commission are leading a radical reform of legal aid over the next three years. These reforms will bring significant changes to the way the LSC administers legal aid and to its relationships with providers of legal aid services.

  1.2  The reforms support our ongoing drive to improve the delivery of legal services to vulnerable and low-income people throughout England and Wales. In 2005-06 more than 2 million people were provided with legal advice, assistance and representation—more than at any point since 2000. This included over 700,000 new cases of early legal advice through the Community Legal Service and more than 1.6 million new criminal cases through the Criminal Defence Service. (Note: these figures exclude immigration cases, which are covered by a separate budget.)

  1.3  We know these results make a very real difference to people's lives and are only possible with the hard work and dedication of the solicitors' firms and advice agencies who advise and represent clients.

  1.4  However, the growing expectations and pressures on the legal aid system mean that fundamental reform is essential if the system is to remain sustainable. We support the move to a best value market for legal aid as recommended by Lord Carter and believe that moving to fixed fee mechanisms is a desirable and necessary step to achieve this.

  1.5  We and the DCA listened carefully to the views expressed during last summer's consultation on Lord Carter's recommendations and have made a number of changes to the timing and content of the schemes as a result. The reforms that the Lord Chancellor and the Legal Services Commission announced in "Legal Aid Reform: the Way Ahead" on 28 November 2006 included these changes (see Appendix 1 for a summary). We are continuing to engage with our providers, for example by holding further consultations on family fee schemes and the new boundary areas for police station work, which are under way.

  1.6  The changes included in "the Way Ahead" should also be seen in the context of the other changes that are taking place in criminal and civil legal aid. These include the Community Legal Service strategy, the Family Legal Aid strategy (published on 1 March), the roll-out of the LSC's Preferred Supplier scheme and the recent introduction of means testing in magistrates' courts.

  1.7  Taken together, these reforms are aimed at securing high quality and specialist advice and representation to meet clients' needs at a price that represents good value for the taxpayer and reasonable rates for providers. Legal aid, like any public service, has to live within the budget set by government and deliver value for money.

  1.8  The recent introduction of means testing has already made an important step in this direction, ensuring that those who can pay, will pay. This will save the taxpayer an estimated £35 million a year. Early indications show that we are on course to achieve this. Since 2 October 2006, over 221,000 applications have been received and processed. 86% have received funding. We have received 996 hardship appeals (less than 0.5% of applications) of which 15% have been granted. In the first 21 weeks, HMCS processed more than 83% of applications within two days and work is ongoing to improve this. Some adjustments have already been made to respond to early concerns expressed about the way the system was operating. These have extended Early Cover, relaxed partners' signature requirements, simplified application forms, revised custody evidence requirements and enhanced the IT system. A post implementation review will be undertaken in May 2007.

  1.9  We are committed to working with our stakeholders and partners to improve efficiency across the wider justice system. It is important that potential pressures and risks which could affect the effective delivery and cost-effectiveness of legal aid are identified and addressed, and to help the process the DCA and the LSC have just held their first quarterly stakeholders meeting. The Legal Aid Impact Test has built upon and formalised previous arrangements to ensure that the impact on the legal aid budget is consistently taken into account when collective agreement is sought for introducing new government policies and legislation. It is also Important that the costs associated with particular aspects and needs of judicial processes are correctly attributed to the bodies involved (who have their own budgets) and not charged to legal aid by default.

2.  TIMING OF REFORMS

2.1  Written Committee question 12 dated 8 February: Will the LSC be able to comply with the timetable published in Legal Aid Reform: the Way Ahead?

  We are able to implement the timetable as outlined in Legal Aid Reform: the way ahead. This timetable was subject to careful consideration during consultation to ensure that it reflected as accurately as possible the concerns of practitioners, whilst remaining achievable for the LSC. We made crucial changes to the proposed implementation of reforms to reflect providers concerns and give as much time as possible for them to adapt, such as pushing back the introduction of fixed fees for police station work and moving forward the date suggested by Lord Carter for the introduction of Best Value Tendering in this area.

  However, the current timetable is not set in stone. We are yet to consult on the detail of crucial aspects of the reform programme including, for example, the process for tendering legal aid work in the police station. We will only take the final decision on each stage of implementation of the reforms once the necessary consultation has been undertaken and the views of consultees fully considered.

2.2  Question raised in evidence sessions: Why doesn't the LSC delay the implementation of the civil proposals until after the crime proposals have been implemented?

  Fundamental change is required in civil as well as in crime. Delaying civil reforms for several years whilst crime changes are implemented would do nothing for sustainability in the interim. In civil, unlike in crime, we are not seeking to reduce expenditure. But we do need to contain expenditure and prevent the current trend of growth, which poses a threat to future services. For example, there was an overall increase in expenditure on public law children cases of nearly £37.5 million between 2004-05 and 2005-06. Counsel's fees accounted for £12.4 million of this (an increase of 20.4%) and solicitors' fees £18.5 million (an increase of nearly 11%).

  Best value tendering in civil is essential for securing consistent access to the full range of quality-assured services, so there is good reason to move towards this with fixed and graduated fees as swiftly as possible as a precursor to best value tendering.

  The current schemes need to be changed in the short term in any event. For example, in social welfare law, solicitor providers already operate under a fixed fee scheme (Tailored Fixed Fees). This scheme, introduced in 2004, was explicitly intended as a stepping-stone to more standard fees. It would be difficult to justify maintaining the Tailored Fixed Fee scheme—based as it is on individual firms' performance in 2003-04—without radical overhaul. 22% of mental health providers have also been working under this scheme (see paragraph 5.2)

  In family private help work, a pilot has already been carried out for the introduction of fixed fees and the new scheme will build on this work.

  In immigration, it is important that the payment system is changed to match the developments occurring in the wider system, such as the roll out of the New Asylum Model. The fee scheme will also provide opportunities to reduce bureaucracy for providers by, for example, reducing their need to apply to the LSC for extensions.

3.  ACCESS TO CIVIL LEGAL AID

  3.1  Clearly, there must be sufficient skilled practitioners to provide civil legal aid services where clients need them. However access is about the numbers of people helped, and the way in which they use those services, rather than the number of provider organisations.

  3.2  The CLS helped more people last year than at any time since its inception despite falls in the total number of providers with contracts from 5,461 in 2000 to 4,000 in 2006. This growth has continued in 2006-07.

  3.3  There has been a small decline in the number of certificates issued in non-family civil. However we have also seen rising numbers of people helped overall:

NUMBER OF NEW CIVIL LEGAL HELP MATTER STARTS ACHIEVED THROUGH FACE-TO-FACE AND DIRECT SERVICES (EXCLUDING IMMIGRATION) 2000-01 TO 2005-06

Year 2003-04 2004-05 2005-06 2006-07 forecast
Number of new matter starts (face-to-face) 589,329 568,091 634,885 679,900
Number of new matter starts (CLS Direct) (CLS Direct founded in July 2004)   20,000   73,625 100,000
Total 589,329 588,091 708,510 779,900

Figures 2003-06 taken from LSC Annual Reports, 2006/7 based on LSC contracting data

NUMBER OF CERTIFICATES ISSUED 2003-04 TO 2005-06 (ALL CATEGORIES)
Year2003-04 2004-052005-06 2006-07 forecast
Certificates issued160,930 154,648155,065153,737

Data from LSC Annual Reports, 2006-07 based on LSC management information

3.4  Written Committee question 1b dated 21 February: The Committee was warned by some witnesses that there might have been instances of double counting of acts of assistance where an act of assistance by means of CLS Direct has led to a subsequent provision of face-to-face advice. Would these technically two acts of assistance in the same case be counted as two rather than a single act? In the latter case, what is the proportion of "double-counted" acts of assistance?

  If the same client made a call to CLS Direct and then went for face-to-face advice, there would be two acts of assistance recorded—one telephone and one face-to-face. Our records do not link up the two acts so we do not know how many such cases there are. We have, however, provided separate figures for both types of case and it is noteworthy that during the period of growth of CLS Direct the number of face-to-face acts of assistance has also grown from 560,031 in 2004-05 to 634,885 in 2005-06, with about 680,000 expected this year.

  The LSC has succeeded in increasing the number of acts of assistance within the same budget by favouring value for money bids.

3.5  Written Committee question 1a dated 21 February: Could you provide the Committee with information about the geographical spread, and the spread by contract category, of the legal help acts of assistance and their increase?

  The analysis for face-to-face acts of assistance is shown in Appendix 2.

  Clients require access to services in categories of law that reflect the multiple problems that they face. Evidence shows that current services are not organised in the best way to respond to those multiple problems.

  Fewer but larger providers can actually increase access by offering more categories of law and by increasing access points through flexible services such as outreach—both of which become more sustainable with larger contract sizes.

  Taking forward the approach to access set out in the CLS Strategy will involve dividing England and Wales into fixed areas (mainly at county/metropolitan level), setting quality and access standards and commissioning volumes within that framework.

  As the CLS Strategy envisages, competition could be a way of improving access. Consider a typical historical pattern of seven or eight family firms, based in the same two streets in the centre of town, providing legal aid in family and one or two other categories of law between them, and dealing with other questions that come up as best they can through the present "tolerance" rules. From the client's perspective this can provide less real access and choice than five larger providers, linked up so that client can access all social welfare categories as well as family, with each provider running outreach sessions or maintaining offices in the areas of town where the clients live. Managed competition will facilitate these changes over time.

  The LSC is developing corporate targets for 2007-08 that will improve access. We will also publish transparent data on access annually. These will enable the effect of the reforms to be measured.

4.  BEST VALUE TENDERING

  4.1  We are committed to the principle of best value tendering and will be consulting on detailed proposals later this year. Final decisions on the shape of the tendering process will be made following consultation.

  4.2  Best value tendering will set sustainable prices and achieve the best possible value for money, maximising the services we can deliver within the legal aid budget. This will benefit clients and reassure the taxpayer. From the provider's point of view there will be the advantage of an agreed price which they have offered, and which they know they can meet while making a profit. Anyone running a business finds uncertainty one of the most difficult factors to deal with. This will be eliminated to a very considerable extent.

  4.3  For providers, best value tendering will also solve some of the issues which most concern them, enabling them to factor the costs of local conditions (eg waiting at court or the police station) and national policies (eg new legislation) into their bids.

  4.4  By allowing the market to set the rates for legal aid work, through transparent tendering processes, we will be sure that we arrive at the best prices for the services we purchase. It is possible that prices could increase in some, limited, areas as a result of tendering, but where that were the case we would be forced to increase prices administratively (or lose services) in any event. We believe it is most unlikely that there will be a general price increase. We will be extremely vigilant to avoid the possibility of cartels forming and manipulating prices upwards. If best value tendering were nevertheless to lead to overall significant increases, we would have to pay these rates. That would inevitably give rise to offsetting cuts elsewhere, but we should stress that this is extremely unlikely.

4.5  Written Committee question 8a dated 8 February: The Committee was told of considerable concerns about the effect of Best Value Tendering on the legal aid supplier base. What market management measures is the LSC considering to put in place to ensure that once competitive tendering takes place, a sufficiently high level of competition for future bid rounds can be maintained and that new suppliers can and will enter the steady state market?

(i)  Crime

  Best value tendering will be introduced from October 2008. We are committed to actively engaging with providers, as well as with economists, procurement specialists, academics and other government departments to shape our proposals for cases at Police Station, Magistrates Court and Crown Court. This will help to ensure that we create a scheme that delivers a sustainable criminal legal aid system.

  One of our design parameters will be to ensure that healthy competition is achieved which incorporates new market entrants in all roll out areas both in the first round and future rounds of BVT.

(ii)  Civil

  We believe that the proposed flexibility in contracting arrangements will enable competition to be maintained. We will be able to address demand for services through competition—ie in areas with few services the volume may be lower and the price per case could be higher, thus leading to a more coherent and consistent pattern of access.

  In some urban areas there are many providers, very close together. Full service for all clients could be maintained with fewer providers in those areas, taking account of the requirements of particular client groups. This would give scope for enhancing service in areas where there are currently fewer providers, thus benefiting access overall.

  Because providers will be bidding to meet a service specification, competition can improve services to priority groups. For example, it can ensure that providers commit to deliver more accessible services into the heart of excluded communities.

(iii)  Future bid rounds

  The LSC recognises the need to ensure there is healthy competition for work in the initial and subsequent tendering rounds and that new entrants can come through and participate in subsequent rounds.

  We will ensure that we tender in a way which ensures firms are keen to compete for attractive packages of work. Tender rules can also be used to maintain effective competition, for example:

    —  by ensuring that firms cannot abuse dominant positions in the market or engage in collusive practices; and

    —  in civil, allowing smaller providers to come together under a "lead provider" to bid for a block of work. Transaction costs would be reduced for all concerned, because the LSC would be dealing with and managing one contract, and having sub contractors would help maintain diversity of supply and leave a pool of providers ready to bid in the next bid round.

  In subsequent bid rounds, competition might therefore include bids from:

    —  those who had won contracts in the previous round;

    —  the pool of sub contractors;

    —  practitioners that propose to split off from current contract holders;

    —  current legal aid providers from outside the area. They could be in a neighbouring area or a national organisation used to flexible working. For example, the Immigration Advisory Service and the Refugee Legal Centre, two national organisations providing immigration and asylum advice, have opened up new offices to address supply shortages in areas that previously had limited advice provision; and

    —  other providers of legal services. For example, solicitor providers with a private family law department could bid to carry out legal aid family work. Larger contracts with greater certainty of income will be needed to make the process attractive to such providers.

  The LSC will be working up detailed arrangements for best value tendering with economic advisers, and one of the principal design aims will be the delivery and maintenance of competitive markets. We will be publishing proposals on how to take forward best value tendering later in the year.

4.6  Written Committee question 8b dated 8 February: With the LSC having to produce detailed operational plans for implementing the reforms and delivering administrative changes, what are your working assumptions for the number of suppliers likely to a) bid for BVT contracts and b) get BVT contracts?

  There are no working assumptions yet regarding the number of crime firms that may bid or the optimum number of firms that will receive contracts after bidding. Again, much will depend on our work over the coming months with design specialists. We want the optimum number to produce healthy competition, and do not want to be constrained by setting a specific number of firms ahead of this scoping work.

  Detailed plans, criteria or a timetable have not yet been produced for the roll out of best value tendering for civil work. It is therefore too early to set out expected numbers of bids and contracts as this will depend on the criteria adopted.

5.  FIXED FEES

  5.1  Throughout this section we use the term "fixed fees" as shorthand for a range of fee mechanisms: simple fixed fees with an escape for more complex cases (eg fixed fees for civil legal advice); graduated fees which are determined by objective criteria related to the case (eg criminal graduated fee scheme for advocates); and standard fees where payments are fixed in bands related to the work actually done on the case (eg standard fees for magistrates' court cases).

  5.2  There is clear evidence that fixed fees help prevent the upward drift of costs per case. In the tailored fixed fee scheme 22% of mental health providers, dealing with over 40% of cases, have been working under fixed fees, while others opted out. In 2005-06 average case costs for those in the scheme stayed flat while those outside the scheme rose by 5%.

  5.3  Increases in average case costs directly threaten services to clients. Within a fixed budget, the more we pay per case, the fewer people we can help.

5.4  Written Committee question 3 dated 8 February: In relation to national fixed fees, a significant concern is that these fixed fees do not take account of very good reasons why average costs between firms may differ significantly. Your reforms work on the assumption that these differences are only attributable to differences in efficiencies between firms. What research has the DCA or the LSC done to establish whether factors other than efficiency may account for differences in average costs?

  The "true" price of publicly funded services cannot be established by reference to historical hourly rates, or the cost of private work, or even payments made by other areas in government. It can only be achieved by competitive bid rounds, which establish the price at which providers are prepared to provide the access and quality required.

  There are many factors driving differential prices in legal aid. Whilst one can look at predictors, there would be too many factors (including behaviour of the individual practitioner or court) to identify them all in a simple way.

  The LSC's analysis of costs claimed by child care providers in 2004-05 (see Appendix 3) shows that factors such as local authority area, client profile (by ethnic grouping and gender) or use of counsel, do not on the face of it explain the large differences in costs between providers.

  Similarly the work carried out by Professors Cape and Moorhead for the LSC shows the difficulty in tying down exactly what the cost drivers are and, more important, their relative impact.

  No amount of research will mean that we would arrive at the "right" price for legal aid. If provider A is able to compete and provide the same service to the same quality as provider B at a lower price, then the right price for the tax payer and the legal aid system as a whole is that of provider A.

5.5  Written Committee question 5 dated 8 February: In his evidence, Richard Collins indicated that there had been an evaluation of whether cherry picking was a risk through looking at data for TFF.

 (a)   Could you provide the Committee with that evaluation? Is that evaluation confined to matrimonial cases?

  There is no evidence that the introduction of fixed and standard fees results in cherry picking. As part of the preparation for the replacement TFF scheme announced in "Legal Aid Reform: the Way Ahead", the LSC carried out an evaluation of case matter types, end points and client ethnicity/gender pre and post the introduction of TFF.

  This analysis is attached as Appendix 4, The Impact of Tailored Fixed Fees on Case Mix. It relates to categories covered by the TFF replacement scheme: housing, debt, welfare benefits, actions against the police, clinical negligence, community care, consumer, education, employment and personal injury. The evaluation showed no significant changes after the introduction of TFF. (The evaluation does not cover matrimonial cases, which will be the subject of separate proposals.)

  Similarly, the introduction of two standard fees and one non-standard fee in magistrates' courts in 1993 did not result in any evidence of cherry picking. This is not surprising as fee structures have been designed with an element of graduation, including bands and escapes which balance the benefits of fixed pricing with the need to reward providers fairly for the work they have done. Even where a single fixed fee is proposed, as for police station work, the escape coupled with a contractual obligation for Duty Solicitors to take all dispatched cases, are designed to reduce the risk of cherry picking.

 (b)   Does the LSC generally monitor the case mix of under the current TFF scheme and react to sudden significant changes in a firms case mix? If so, how does the case mix monitoring work? Has the move to mandatory TFF in 2005 led to a noticeable change in case mix/remuneration levels of firms?

  As part of ongoing management of the TFF scheme, the history of a provider's case mix is actively monitored and any trend towards cherry picking is addressed. For example, firms that reduced their claimed costs to more than 20% below the fixed fee levels had those fees reduced, unless they could show that the reduction was for good reason. Reductions would therefore be made to the fees of firms that changed their profile to cherry pick only shorter cases.

  The analysis of case-mix in Legal Help in The Impact of Tailored Fixed Fees on Case Mix shows that in fact there have been no significant changes since the introduction of Tailored Fixed Fees. The recent LSC family help pilot has also shown no evidence of cherry picking.

 (c)   What does the LSC estimate to be the running costs of a permanent case mix control system for the LSC?

  Monitoring of case mix is just part of the contract management process. It is therefore extremely difficult to estimate the cost of running a case mix control separately, as in practice it will be operated as part of a system of reports and other tools. This system is intended to reduce expenditure and bureaucracy for both providers and the LSC, concentrating on trends rather than intervention in individual cases.

  Any such system will therefore be significantly cheaper to the LSC and less intrusive to providers than the alternatives of individual cost assessment or sample based cost compliance auditing for cases on hourly rates.

5.6  Written Committee Question 6 dated 8 February: Will the unified contract contain anti cherry picking provisions? Will it stipulate (a) a certain case mix for the holder of the contract or (b) a percentage limit on the derogation from an individual supplier's case mix in the previous year?

  We have published the Standard Terms for the new Unified Contracts this week. From April, we will monitor case mix and average inputs (time spent). Providers that cherry pick only simple cases will face contract sanctions, for example by amending the number of cases that the contract authorises.

  There is a specific prohibition against ceasing to act for the client just because the fixed fee "limit" has been reached. The provider is not required to refund the difference if the case costs less than the fee. The fixed fee is an average, based on the costs of the work that providers currently carry out and overall, payment should be a reasonable reflection of work done.

  The Specification accompanying the fee schemes in October will contain further provisions. There will be additional rules preventing cases being refused on discriminatory grounds, or on the basis that the costs in carrying out the work would exceed the standard fee.

  Within the new scheme, we would recognise that certain providers will need to alter their case mix, where currently the majority of their cases are "larger" than average, albeit that this would be through accepting the smaller cases that present themselves rather than refusing larger ones. That is partly for these providers to remain financially viable under the new regime, partly because clients should not be turned away just because their problem is at an early stage and therefore capable of resolution at less expense, and partly because we will expect other providers to start taking on their proper share of the available larger cases.

  As the schemes become established we would tend to look for deviation from a benchmark objective case mix profile (as opposed to an individual supplier's previous profile) as being a signal that further investigation of their behaviour is called for. One of our contract management tools will be to restrict the number of cases. This means that for example, firms that are found to cherry pick simpler cases could find their schedules reduced to 80% of their previous year's level until they could be shown to have changed behaviour.

5.7  Written Committee question 7 dated 8 February: Can the LSC provide the Committee with information on how other jurisdictions address the issue of case mix monitoring in a system of fixed or graduated fees (eg in Scotland and some Canadian provinces)? Has the LSC undertaken comparative research in this area?

  We have not conducted detailed comparative research. However, we have examined the Scottish scheme for the Sheriff's court and taken the lessons there are to be learned.

5.8  Written Committee question 2 dated 21 February: The new TFF Replacement Scheme has attracted criticism from legal aid suppliers for its rigidity:

 (a)   While the new police station fixed fee scheme envisages the introduction of locally sensitive fees, the TFF Replacement Scheme fees are national and uniform. Why has the LSC decided not to introduce regionally sensitive TFF replacement fees?

  Existing differentials in cost per case largely reflect the length of time a provider spends on the case and not different overheads in different parts of the country. The rationale for the structures of the various civil fee schemes, including the TFF replacement scheme, is explained in Appendix 5, Civil Fee Schemes—National and Regional fees.

 (b)   While the revised magistrates' courts standard fee scheme, which will cover travel and waiting costs, is intended to be introduced in urban areas only, the TFF Replacement Scheme fees will include travel and waiting costs nationally. Why this difference in treatment where the social welfare law supplier base appears to be much more precarious than the crime supplier base?

  Comparing magistrate's courts standard fees and TFF replacement fees is not comparing like with like. In the former, the cases by definition involve travelling to the court. In the TFF replacement categories, in the overwhelming majority of cases the client will travel to see the adviser. Further, our analysis shows no significant difference between the costs in rural areas and urban areas in the TFF replacement categories.

5.9  Written Committee question 3 dated 21 February: On 12 February, the LSC published consultation papers on the Police Station Fixed Fee scheme. While outside the urban areas fees are designed to be cost-neutral, the LSC intends to make savings of £8 million in urban areas.

 (a)   How have the London police station fixed fees been calculated to achieve the £3.2 million projected savings? What will be the average reduction in fees for the boundary areas listed in annexes B and C to the police station consultations?

  A reduction of 8.3% has been applied to the average costs of claims for 2005-06 in each boundary area; the resulting figures, with an adjustment for escapes, provide the fixed fee for each boundary area. The calculation assumes that volumes remain relatively static and that the number of escape cases year on year do not differ significantly.

  The reduction in annex B is 12.2%. The reduction in annex C is 8.3%, the London reduction mentioned above.

 (b)   What research has the LSC done to ensure that the rate cuts can be absorbed by crime legal aid suppliers in London and other major urban areas?

  The reductions were recommended by Lord Carter as a result of a year's intensive research, consideration and engagement with legal aid providers and their representative bodies. These proposals were then the subject of further extensive consultation by both the LSC and the DCA. All these inputs were available to the LSC and DCA when decisions were made following the consultation.

 (c)   Why does the LSC not propose to introduce a police station fee scheme with fixed fees per attendance rather than for a whole case, during which several attendances might be warranted (eg for bail backs)?

  The Commission currently pays for police station advice on the basis of whole cases rather than separate attendances. The Carter Review did not recommend any change from this. The average costs of police station cases fall within a very narrow band and therefore there is no rational reason to move to what would be a more complex fee structure. In addition, basing the fee on the whole case creates an incentive for all concerned to minimise the number of attendances.

5.10  Written Committee question 5 dated 21 February: In times where overall savings to the criminal legal aid budget are considered to be inevitable, does not the rise in legal aid fee levels even for the junior Bar sit uneasily with the proposals for significant reductions of criminal legal aid pay for solicitors? Why has it been proposed?

  Changes made to the Advocates Graduated Fee Scheme stem from the need to simplify the scheme and also to better remunerate large cases better. In the Crown Court, advocates have been paid by graduated fee in most cases for the last 10 years. This has controlled spending, with a more significant impact on larger cases than smaller ones. Advocates' payments were cut in October 2005, and Lord Carter took this into account when making his recommendations, which were accepted by the DCA and the LSC.

6.  QUALITY

  6.1  The improvement in the quality of legal aid advice and representation has been one of the biggest achievements of the CLS and contracting over recent years. The introduction of franchising, the Specialist Quality Mark (SQM) and initiatives such as the immigration accreditation scheme are generally agreed to have raised standards significantly.

  6.2  The development of the independent peer review process, managed by the Institute of Advanced Legal Studies, builds on these achievements by providing a direct measure of the quality of legal advice and legal work.

  6.3  Quality is at the heart of the reform proposals. Contracts will only be awarded to providers that meet a strict quality threshold. The LSC will use peer review to set a minimum standard below which services will not be allowed to fall.

  6.4  In civil we are raising the quality standard over the next few years from peer review 3 (threshold competence) to peer review 2 (competence plus), thus increasing the quality of advice as we move into competition.

  6.5  Criminal providers will be required to attain level 3 in order to take part in best value tendering from October 2008. They are already required to demonstrate this level of competence in order to retain a contract with the LSC, as part of our ongoing drive towards quality. Crime providers will be required to demonstrate level 2 (competence plus) to bid for the second round of best value tendering.

  6.6  It is not correct to say that high cost automatically guarantees high quality or that high quality can only be achieved by high cost. The data that the LSC has collected so far shows that firms achieving peer review scores of 1 or 2 are on average no more expensive than those scoring 3 (see Appendix 6, Peer Review Quality and Cost Data).

  6.7  There has been some concern expressed to the Committee that peer review standards might be unachievable at the rates paid for criminal legal aid work. This view is not supported by the LSC's evidence. Level 3 is currently required of every provider and in practice 80 to 85% of providers attain this level either at first peer review or at a second peer review. Best value tendering will in any event allow providers to factor in the cost of working to a certain level of quality into the tender price.

7.  DIVERSITY

  7.1  The Legal Services Commission is very alive to its statutory responsibilities to promote equality and diversity.

  7.2  We have introduced changes recently to improve the quality of the data that we are collecting on clients.

  7.3  The new civil Unified Contract to be introduced from April 2007 gives significantly greater emphasis to diversity issuesAs well as including a requirement for providers to comply with equalities legislation, it also makes direct discrimination (for example by turning away BME clients) a fundamental breach of contract.

  7.4  From October 2007, we are introducing new requirements in the General Criminal Contract which will require all providers not to discriminate unlawfully and to put in place an effective equality and diversity policy, training and communication plan. In addition we are looking at ways to enable small providers to come into the system, which will also benefit BME-owned providers.

  7.5  We have also established a Provider Diversity Reference Group that includes a wide range of practitioner representatives. This group plays an important advisory role in the development of LSC policy.

  7.6  We conduct and publish comprehensive impact assessments on all of our proposals as soon as they are developed.

7.7  Written Committee question 4 dated 21 February: The planned procurement and remuneration reforms may have a disproportionate impact on BME legal aid providers and clients.

 (a)   Lord Carter considers that such disproportionate effect would be justified by the need to control legal aid spending. The Bar Council tends to disagree. What is the legal advice you have been given on that issue?

  We are currently consulting on our proposals for the introduction of fixed fees, including the level of fee for each area based on revised boundary areas. This consultation also considers, as suggested by Lord Carter, whether we should introduce a minimum threshold to access to legal aid work in the police station, which is where it has been claimed that the impact on BME providers could be considered disproportionate. Our draft RIA, which accompanies the consultation, measures the impact of such a threshold both nationally and for London, which represents the highest volume of legal aid work and the largest number of BME providers.

  Whether a particular policy is justified depends on the aim of the policy being legitimate and on whether the means used to achieve it are proportionate. Lord Carter's terms of reference clearly set out a legitimate aim. Relevant factors in considering proportionality are the size of the impact and the strength of the public policy gains. Following our consultation on this issue we will take a view on whether such a threshold is justifiable against these criteria.

 (b)   The LSC concedes that it lacks the data to carry out a robust assessment of the impact of a lot of the Carter reforms on BME clients. How can the LSC than carry out an adequate race impact assessment and comply with its race equality duty?

  We conduct regular diversity research and publish an annual diversity report. We also ask for ethnic origin on our "matter report forms", using categories agreed with the Commission for Racial Equality. Whilst we acknowledge that there has been a shortfall in data on BME criminal clients we are requiring providers to submit client data from December 2006. We will use that data to improve our understanding of BME issues. As the LSC continues to collect this data and takes forward the various schemes, we are confident of being able to conduct adequate race impact assessments and complying with our statutory obligations in this respect.

 (c)   Will the DCA/LSC undertake to conduct a comprehensive race impact assessment of all the proposed legal aid procurement reforms "as a package" prior to their implementation?

  We have clearly outlined our direction of travel and are analysing the impacts as the detail of the specific reforms is developed. It would not be possible to assess the overall impact accurately before the detail of each reform is known. For example, the current consultation on police station schemes is accompanied by a very detailed RIA, which would not have been possible when we set out the direction of travel last year.

  Where proposals could have a combined impact, wherever possible we will provide an assessment their impact both separately and together. For example, we will do this across the range of civil fees to be introduced from October 2007. We doubt that an all-encompassing study would be practicable or useful, or would add value beyond individual studies.

  We will monitor implementation very carefully and make rapid adjustments where necessary, using the flexibility in our ability to amend contracts.

7.8  Written Committee question 4 dated 8 February: The TFF Replacement Scheme RIA appears to indicate that average costs per case of BME clients are higher than costs per case of non-BME clients. Can you confirm this? If not, what research has been done to establish average case costs for BME and non-BME clients?

  The RIA states that cases involving BME clients in the main social welfare law categories in London are no more expensive than those involving clients of white origin in London. A national examination of cost distributions for the categories of housing, debt and welfare benefits shows that there is no significant difference according to whether a client is from a BME background.

  However, our analysis of predictors of costs—also included in the RIA—indicates that it is not as simple as making a distinction between BME clients and non-BME clients. Based on the dataset used for the analysis, some ethnic groups' average case costs are lower than White British clients while others are higher.

  For example, excluding the more expensive cases, cases advising a Chinese client have significantly lower average costs—£53 less—than cases involving White British clients. An analysis of client ethnicity case costs, excluding cases over £1,500, shows that the more expensive groups are Mixed White Black African (higher average costs of £38), Indian (higher average costs of £30), Mixed White Asian (higher average costs of £25), Mixed White Black Caribbean (higher average costs of £22) and White Irish (higher average costs of £18). However, there is little variation in costs compared to White British clients for other groups—Black British African clients' costs are on average £5 less, Black British Caribbean clients' costs are on average £5 more and Asian British other clients' average costs are £5 lower.

  7.9  The move towards a commissioned service will allow the LSC to better focus services on communities such as some BME clients. For example a jointly commissioned Community Legal Advice Centre in Gateshead specifies clients from BME and faith communities as one of the priority groups for whom services must be delivered.

  7.10  Elsewhere, as we develop more jointly commissioned services with local authorities, we will develop priorities that best fit the needs of the local community and the variations between different areas. For example, an increasing use of technology such as web cam and video conferencing, outreach, peripatetic services etc will ensure increasingly focused access for BME clients that reflects the different needs of different groups.

  7.11  Our commitment to improving access for clients can be best met by working in partnership with BME-led providers. We have committed to allow contract holders to sub contract work. This will allow small agencies, including BME-led providers, to continue to play an important role in serving BME clients.

  7.12  Equally, small agencies may come together to form larger agencies either through formal merger, consortia or other partnerships. A flexible approach to how providers develop is possible as long as clarity is maintained about the principles of commissioning against quality, access and value.

  7.13  It has been noted that many small agencies, including BME-led providers, can be as efficient and therefore profitable as larger providers. Under market competition those providers will be given the opportunity to grow. The combination of their efficiency (and thus lower bids) and their ability to meet the needs of excluded clients will mean they will be well placed to win contracts.

  7.14  Not-for-profit agencies that focus on BME groups that can match the efficiency of the best providers elsewhere, will win contracts. This will enable them to retain a surplus equal to the profits generated in a business environment or win additional contracts through their ability to deliver at lower costs. Either way, these agencies will have the opportunity to expand and better deliver their own objectives.

  7.15  It is therefore our view that through providers competing to deliver a clearly specified service we can actually improve access for BME clients.

8.  EFFICIENCY

  8.1  The LSC appreciates that its existing administrative processes can place a burden on publicly funded organisations in the administration of legal aid cases. As part of the reform programme we are transforming our operational and business management processes in order to deliver efficiency for both the provider and the LSC.

  8.2  The LSC is currently designing new processes to reduce the administrative burden whilst protecting the Legal Aid budget. As part of this work we are looking at how we manage client administration and provider contracts. There is a strong emphasis on electronic working, as this allows processing to be automated and will reduce time spent on manual procedures.

  8.3  Wherever possible decisions will be devolved to the provider. This will reduce bureaucracy and empower providers to make the required decisions about their provision of legal aid services. We are confident that the combination of electronic working and devolved decisions will result in a more streamlined and more efficient service for both providers and clients. As a result our resources will be focused on the most complex areas of work and those which pose the greatest risk to the legal aid budget.

  8.4  We will work with a group of providers to define how the new processes should work, and to understand what electronic working means in terms of helping providers increase their efficiency when running legal aid cases.

  8.5  The LSC will ensure that the processes are robust, protect the client and taxpayer, and allow providers to realise administrative savings under their legal aid contract. This will involve a full consultation and a pilot of the new processes. We expect to publish the timetable for developing and consulting on the new ways of working later in Spring 2007.

  8.6  As a result of this greater efficiency, our aim is to reduce our own administrative costs by 30% over the next four years, reducing our headcount from 1,600 to 1,000.

9.  ENGAGING WITH PROVIDERS

9.1  Written Committee questions 9 and 10 dated 8 February: How many consultations are the LSC running in association with these proposals contained in the DCA/LSC paper Legal Aid Reform: the Way Ahead? How many consultations remain to be carried out?

  The following list includes all consultations that have taken place since the publication of Legal Aid Reform: the Way Ahead, those currently taking place and those planned.

Crime

  Market Stability Measures for duty solicitor arrangements from April 2007 (completed)

  1.  Amendments to General Criminal Contract in April 2007 (completed).

  2.  Fixed fees, boundary areas and new working arrangements for police station work from October 2007 (current).

  3.  New Very High Cost Criminal Case contract, panel and Best Value Protocol (current).

  4.  Expansion of Criminal Defence Service Direct (to come).

  5.  New Very High Cost Criminal Case regulations (to come).

  6.  New Very High Cost Criminal Case contract, panel and Best Value Protocol (current).

  7.  Expansion of Criminal Defence Service Direct (to come).

  8.  New Litigators Fee Scheme for Crown Court work (to come).

  9.  Single Graduated Fee (combining advocates and litigators) for Crown Court work (to come).

  10.  Best Value Tendering (to come).

Civil

  11.  LSC Unified Contract specifications for civil categories.

  12.  Revised fee scheme for child care work (current).

  13.  Revised fee scheme for family help—private work (current).

  14.  Funding code amendments for residential assessments and merits testing for child care.

  15.  Fees for advocacy for solicitors and counsel in family cases, including full representation in family—private (to come).

  16.  Best Value Tendering (to come).

  17.  Standard fees for experts (to come).

General

  18.  New electronic ways of working and devolving decision making to providers.

9.2  Written Committee question 11 dated 8 February: Since the publication of the report, which elements of the implementation plans have the DCA/LSC had to revise/withdraw?

  We have listened carefully to the views expressed during the consultations that have taken place so far and have adjusted the timing and content of the reforms to reflect these. Appendix 1 provides a list of the reforms and the changes that have been made since Lord Carter's original recommendations and those consulted on by the LSC and DCA in Legal aid: a sustainable future.

9.3  Written Committee question 1 dated 8 February: The Committee repeatedly received evidence suggesting that legal aid firms are currently giving up legal aid work in anticipation of the Carter reforms.

 (a)   Are the LSC collating evidence of the current intentions of firms? If no, why not?

 (b)   If yes, what levels of withdrawal from legal aid are being signalled by firms? How firm are those signals? How many firms have given notice of contract termination?

  The LSC is carefully monitoring the intentions of firms through its regional offices.

  Only a very small number of providers have withdrawn from legal aid, or indicated that they will, as a result of the reforms. Some of these have been as a result of mergers, so are not true withdrawals. Overall, the rate of withdrawal has not changed significantly in recent months. There is also clear evidence of demand from other providers to take on more legal aid work.

  Experience shows that the introduction of significant new systems can influence providers who have already been considering whether or not they wish to remain in legal aid work to leave the market. However, experience also shows that many providers who say they will withdraw, in practice choose to remain in the legal aid system.

  Some providers will undoubtedly be awaiting the outcome of the various consultations before making their decisions. We are currently consulting on revised proposals for family and we believe we have addressed many of the concerns raised during the original consultation last year. Similarly the immigration fixed fee scheme published this week has been adjusted to reflect the views expressed. We expect that the changes to the proposals will significantly reduce the likelihood of providers feeling that the fixed fee schemes may be unworkable for them.

  In crime, we have seen a reasonably consistent pattern of the number of providers delivering legal aid over the past three years.

  The LSC takes its responsibilities seriously and will continue to monitor providers' intentions. However, based on current evidence, we are confident that providers will remain in the legal aid system in sufficient numbers to provide the level and quality of service we need.

APPENDIX 1

THE KEY CHANGES OUTLINED IN LEGAL AID REFORM: THE WAY AHEAD

  These include:

    —  Introducing best value competitive tendering for criminal legal aid services (consultation will take place in summer 2007) from October 2008 (initially proposed for 2009).

    —  Introducing a "unified contract" for civil legal services in April 2007, starting with standard terms to bring law firms and NfP agencies under the same contract conditions.

    —  Revised standard fees for magistrates' court work, which include an element of travel and waiting, will be introduced in main urban areas from April 2007 (initially proposed for all areas from this date).

    —  Introducing a revised graduated fees scheme for Crown Court advocates from April 2007. Crown Court litigators graduated fees to be introduced in October 2007 (initially proposed for April 2007).

    —  Introducing a single graduated fees scheme in the Crown Court for both litigators and advocates, that will be subject to best value competitive tendering, by October 2008 (initially proposed for 2009).

    —  Fixed fees for police station work to be introduced in October 2007 (initially proposed for April 2007) and these to be set according to new boundary areas to allow for sensitivity to local conditions (initial proposal was to set fees by Criminal Justice System area).

    —  Implementing revised Care Proceedings Graduated Fees (consultation will take place in early 2007) in October 2007 (initially proposed for April 2007).

    —  Implementing revised graduated fees for Family Law—Private work (consultation will take place in early 2007) in October 2007 (graduated fees initially proposed for April 2007).

    —  The replacement for Tailored Fixed Fees for civil legal services will be implemented from October 2007 for both solicitors and for the not-for-profit sector (initially proposed for April 2007).

    —  Introducing graduated fee schemes for immigration and asylum and mental health work in October 2007 (initially proposed for April 2007). Revised fees will be published in early 2007.

APPENDIX 2

APPENDIX 2
CIVIL LEGAL HELP MATTER STARTS (NON-IMMIGRATION) 2005-04 TO 2006-07 - FACE-TO-FACE
2004-05 2005-06 2006-07 (April-December Only) 2006-07 Projected
West Midlands 50,356 West Midlands 57,192 West Midlands 41,185 West Midlands 56,835
South East 51,630 South East 56,448 South East 43,152 South East 59,550
South West 49,751 South West 54,427 South West 41,043 South West 56,639
Eastern 40,597 Eastern 43,840 Eastern 34,243 Eastern 47,255
Wales 43,787 Wales 48,722 Wales 35,939 Wales 49,596
Yorkshire & Humberside 55,244 Yorkshire & Humberside 59,546 Yorkshire & Humberside 44,365 Yorkshire & Humberside 61,224
Merseyside 32,580 Merseyside 34,770 Merseyside 27,050 Merseyside 37,329
London 90,988 London 102,324 London 82,206 London 113,444
North West 64,296 North West 67,517 North West 53,285 North West 73,533
North East 43,958 North East 47,342 North East 36,259 North East 50,037
East Midlands 44,904 East Midlands 45,893 East Midlands 34,043 East Midlands 46,979
Total 568,091 Total 618,021 Total 472,770 Total 652,423
CLS Direct Total 20,000 CLS Direct Total 73,625     CLS Direct Total* 100,000
    Other cases*** 4,833
Court Duty Houseing N/A** Court Duty Houseing 12,031     Court Duty Housing 27,500
Possession Scheme   Possession Scheme       Possession Scheme*
Total NMS 2004-05 588,091 Total NMS 2005-06 708,510     Total NMS 2005-06 779,923

* Projected
** During 2004-05 there were only a small number of schemes in operation, matter start numbers were negigable and have therefore not been included here.
*** eg Partnership Initiative Budget, FAINS
Note: This data has been provided to representative bodies.

CIVIL LEGAL HELP MATTER STARS (NON-IMMIGRATION) 2004-05

Solicitors Starts
  West Midlands South East South West Eastern Wales Yorkshire & Humberside Merseyside London North West North East East Midlands Totals
  393 188 187 47 166 477 506 1,068 480 658 411 4,581
COM 302 179 147 32 161 196 347 1,471 117 52 96 3,100
CON 231 492 537 272 397 274 56 263 48 384 384 3,338
DEB 1,092 871 975 652 1,954 983 1,675 1,142 1,477 2,041 1,576 14,438
EDU 162 107 323 41 179 190 122 733 105 98 182 2,242
EMP 286 608 579 484 464 565 42 1,044 307 451 469 5,299
HOU 2,674 5,301 2,860 1,507 2,540 3,767 2,792 22,009 3,710 2,713 1,905 51,778
MAT 27,480 28,974 27,109 24,951 20,737 33,201 8,361 27,280 31,683 21,410 24,550 275,736
MHE 1,430 2,512 1,898 1,520 1,098 2,294 1,967 12,243 2,453 1,341 2,017 20,773
MSC 786 1,041 1,146 874 1,519 636 169 611 158 1,702 1,001 9,643
PUB 260 40 177 17 21 264 126 410 12 29 276 1,632
WB 1,756 820 938 471 1,861 1,476 6,630 5,029 2,281 1,630 1,026 23,918
PI 208 192 210 138 438 550 129 328 132 571 256 3,152
MED 331 269 503 224 333 518 246 353 282 356 277 3,692
Total 37,391 41,594 37,589 31,230 31,868 45,391 23,168 73,984 43,245 33,436 34,426 433,322


NfP Starts
  West Midlands South East South West Eastern Wales Yorkshire & Humberside Merseyside London North West North East East Midlands Totals
  0 0 0 0 0 0 0 0 0 0 0 0
COM 133 0 46 5 0 1 0 42 60 65 7 359
CON 32 8 18 41 2 4 62 162 120 148 4 601
DEB 5,990 2,785 4,388 3,429 3,767 3,185 2,804 3,425 7,523 4,160 3,433 44,889
EDU 0 0 31 219 0 0 4 101 65 1 0 421
EMP 422 216 129 413 26 315 451 858 1,000 371 158 4,359
HOU 1,440 3,515 3,462 2,323 3,788 3,225 1,272 4,666 4,331 1,600 2,817 32,439
MAT 27 49 108 68 10 23 399 395 58 29 60 1,226
MHE 0 1 0 0 0 15 0 115 99 0 0 230
MSC 0 74 18 2 1 1 0 143 10 3 0 252
PUB 0 0 0 0 0 0 0 6 11 0 0 17
WB 4,921 3,388 3,962 2,867 4,324 3,084 4,420 7,090 7,773 4,145 3,999 49,973
PI 0 0 0 0 1 0 0 1 1 0 0 3
MED 0 0 0 0 0 0 0 0 0 0 0 0
Total 12,965 10,036 12,162 9,367 11,919 9,853 9,412 17,004 21,051 10,522 10,478 134,769
Combined Total 50,356 51,630 49,751 40,597 43,787 55,244 32,580 90,988 64,296 43,958 44,904 568,091

CIVIL LEGAL HELP MATTER STARS (NON-IMMIGRATION) 2005-06

Solicitors Starts
  West Midlands South East South West Eastern Wales Yorkshire & Humberside Merseyside London North West North East East Midlands Totals
  355 212 212 66 203 449 384 1,130 406 652 485 4,,554
COM 303 234 207 21 157 343 466 1,475 138 81 275 3,700
CON 234 535 567 251 433 229 132 281 30 391 310 3,393
DEB 1,344 1,007 1,134 771 2,549 1,257 1,580 1,655 1,441 2,254 1,713 16,705
EDU 156 108 296 43 301 204 81 746 32 80 145 2,192
EMP 362 683 512 515 590 701 85 1,123 265 516 479 5,831
HOU 3,662 5,701 3,473 1,779 3,290 4,840 3,113 24,256 4,015 3,210 1,772 59,111
MAT 28,637 29,710 26,662 25,134 21,424 35,182 8,733 27,260 32,183 22,022 49,958 281,905
MHE 1,548 2,568 1,942 1,749 1,200 2,460 2,115 14,254 2,722 1,452 2,127 34,137
MSC 741 968 1,116 721 1,530 531 199 442 89 1,664 944 8,945
PUB 187 80 188 36 28 222 177 611 4 63 169 1,765
WB 1,940 600 934 499 1,948 1,327 6,463 5,832 2,293 1,460 638 23,934
PI 153 225 274 95 324 553 173 261 124 472 190 2,844
MED 334 285 470 181 350 497 249 421 263 274 228 3,552
Total 39,956 42,916 37,987 31,861 34,327 48,795 23,950 79,747 44,005 34,591 34,433 452,568

NfP Starts
  West Midlands South East South West Eastern Wales Yorkshire & Humberside Merseyside London North West North East East Midlands Totals
  0 0 1 0 3 0 0 3 0 0 0 7
COM 138 26 46 1 16 23 6 100 82 72 18 528
CON 2 39 45 57 91 3 6 196 3 12 1 455
DEB 8,112 3,686 6,689 4,113 4,619 3,653 3,192 4,625 8,403 5,267 3,924 56,283
EDU 7 0 24 165 6 1 0 176 68 9 0 456
EMP 482 209 772 559 56 324 489 1,231 992 404 149 5,667
HOU 2,389 5,172 3,855 2,735 4,125 2,936 1,588 6,159 5,085 2,266 2,556 38,866
MAT 31 59 23 398 0 0 710 292 28 3 42 1,586
MHE 0 0 13 1 0 20 0 35 89 9 0 167
MSC 1 15 3 4 39 3 1 377 6 3 0 452
PUB 0 0 0 0 17 0 0 11 7 0 0 35
WB 6,073 4,325 4,968 3,945 5,423 3,788 4,828 9,367 8,746 4,706 4,770 60,939
PI 1 1 1 1 0 0 0 5 1 0 0 10
MED 0 0 0 0 0 0 0 0 2 0 0 2
Total 17,236 13,532 16,440 11,979 14,395 10,751 10,820 22,577 23,512 12,751 11,460 165,453
Combined Total 57,192 56,448 54,427 43,840 48,722 59,546 34,770 102,324 67,517 47,342 45,893 618,021

CIVIL LEGAL HELP MATTER STARS (NON-IMMIGRATION) 2006-07 (APRIL-DECEMBER ONLY)

Solicitors Starts
  West Midlands South East South West Eastern Wales Yorkshire & Humberside Merseyside London North West North East East Midlands Totals
AAP 249 121 150 50 177 307 333 860 302 523 304 3,376
COM 226 110 63 70 118 277 299 1,217 100 83 163 2,726
CON 170 375 410 176 323 231 56 261 26 294 218 2,540
DEB 616 740 774 589 1,955 800 950 1,437 1,319 1,593 1,080 11,853
EDU 105 51 181 28 188 140 56 496 2 43 78 1,368
EMP 247 524 500 376 426 477 61 683 252 388 308 4,242
HOU 2,679 3,807 2,623 1,484 2,237 3,410 2,497 17,489 2,562 2,755 1,220 42,763
MAT 20,930 20,945 19,854 18,490 15,116 25,963 6,335 19,850 23,458 16,119 18,187 205,247
MHE 1,226 1,824 1,342 1,232 931 2,059 1,565 10,382 1,935 1,046 1,639 25,181
MSC 457 693 782 528 1,091 506 182 251 50 1,074 636 6,250
PUB 118 65 104 36 14 179 134 441 3 60 96 1,250
WB 1,100 447 648 420 1,366 988 4,865 4,634 1,460 1,105 356 17,389
PI 96 158 120 81 206 476 134 201 40 416 116 2,044
MED 343 198 231 93 276 440 139 286 187 216 185 2,594
Total 28,562 30,058 27,782 23,653 24,424 36,253 17,606 58,488 31,696 25,715 24,586 328,823

NfP Starts
  West Midlands South East South West Eastern Wales Yorkshire & Humberside Merseyside London North West North East East Midlands Totals
AAP 0 0 4 0 2 0 0 5 5 0 0 16
COM 127 32 46 2 4 15 2 153 98 42 8 529
CON 77 7 4 26 32 10 0 177 6 10 39 388
DEB 5,486 3,657 5,476 3,872 3,681 2,938 2,751 4,641 7,699 4,457 2,974 47,632
EDU 1 1 10 122 8 1 0 201 54 0 0 398
EMP 381 182 282 531 147 237 403 1,483 776 292 137 4,851
HOU 1,895 4,983 3,280 2,057 2,986 1,770 1,313 5,955 4,614 1,694 2,108 32,655
MAT 0 213 0 407 1 69 512 489 26 1 0 1,718
MHE 8 0 12 0 0 22 0 1 97 3 0 143
MSC 0 13 4 6 110 1 0 425 9 0 0 568
PUB 0 1 0 0 0 0 0 18 3 0 0 22
WB 4,646 4,005 4,143 3,567 4,544 3,049 4,463 10,102 8,200 4,045 4,191 54,955
PI 2 0 0 0 0 0 0 68 2 0 0 72
MED 0 0 0 0 0 0 0 0 0 0 0 0
Total 12,623 13,094 13,261 10,590 11,515 8,112 9,444 23,718 21,589 10,544 9,457 143,947
Combined Total 41,185 43,152 41,043 34,243 35,939 44,365 27,050 82,206 53,285 36,259 34,043 472,770

APPENDIX 3

CHILD CARE COSTS

FACTORS AFFECTING CHILD CARE COSTS

Notes on Data

  All of the information in the following report is based on details of 21,885 Public Law children cases from the financial year 2004-05. This data has been provided to representative bodies.

  High cost cases—those with total profit costs of more than £20,000, have not been included in the analysis. These would be excluded from fixed fees in any event.

  The information within the report has been displayed with reference to the medians, lower quartiles and upper quartiles of the data sets.

  The information displayed for lower quartiles pertains to all cases below the relevant lower quartile limit, that for upper quartiles pertains to those above relevant upper quartile limits, and that for medians to everything in between.

IMPACT OF LOCATION: BID ZONE

  The chart below display the average profit costs for public law children certificates, by quartile, against bid zone for London.

Average Profit Costs by BidZone - London

  While it can be seen than Kensington & Chelsea suppliers have slightly higher than average profit costs, and those for Sutton and Richmond Upon Thames are slightly lower than average, there is very little variation across bid zones.

IMPACT OF CLIENT TYPE: CLIENT ETHNICITY

  The charts below display the average profit costs for public law children cases, by quartile, against client ethnicity for London and Non-London cases.

  It can again be seen that, while there are variations, none of these are large enough to indicate that client ethnicity has a substantial impact on profit costs.

IMPACT OF CLIENT TYPE: GENDER

  The charts below display the average profit costs for public law children cases, by quartile, against gender of parent for London and Non-London cases. As can be seen, there is no significant variation in profit cost by gender.

USE OF COUNSEL

  The charts below display the average profit costs for public law children cases, by use of counsel for London and Non-London cases. While these charts show that there is a slight increase in profit costs in those cases where counsel is instructed, across all quartiles, the variation is not significant.

APPENDIX 4

THE IMPACT OF TAILORED FEES ON CASE MIX

CASE MATTER TYPES

  The following charts display the percentage mix of Pre and Post TFF matter types in Housing, Debt and Welfare Benefits.

  These charts clearly demonstrate that the introduction of fixed fees has had no discernable impact on the types of cases taken on by suppliers. For instance, in housing the largest variation occurs in Local authority landlord disrepair cases, where there were 2.8% more cases pre-TFF, but this amount is negligible.

CASE END POINTS

  The following charts display the percentage mix of Pre and Post TFF first and third stage endpoint codes in all categories covered under the proposed replacement for TFF schemes.


KEY

Client's Ethnic code Ethnic Origin
00 Other
01 White British
02 White Irish
03 Black / Black British African
04 Black / Black British Caribbean
05 Black / Black British Other
06 Asian / Asian British Indian
07 Asian / Asian British Pakistani
08 Asian / Asian British Bangladeshi
09 Chinese
10 Mixed White / Black Caribbean
11 Mixed White / Black African
12 Mixed White / Asian
13 Mixed Other
14 White Other
15 Asian / Asian British Other
99 Unknown

Client Gender Pre-TFF        Post TFF
Male 49.19%        48.25%
Female 50.81%        51.75%

  Again, variations are minimal, indicating that the introduction of fixed fees has had no impact on the end stages of suppliers' cases.

CLIENT ETHNICITY

  The following diagrams display the percentage mix of clients' ethnicities nd genders pre and post TFF.

  These diagrams show that the introduction of fixed fees has had no impact upon the types of clients that suppliers serve.

APPENDIX 5

CIVIL FEE SCHEMES—NATIONAL AND REGIONAL FEES

  This note has been published on 1 February in conjunction with details of the new fee schemes for Immigration and Family work.

GENERAL

  1.  Our starting point for the civil standard fee schemes is to impose national fees wherever feasible.

    —  It is our view that appropriate regional prices will be best set by competition. Existing differentials do not necessarily reflect a best value price. For example we would expect prices in some high cost areas where there are lots of suppliers to reduce after competition—this could include suppliers moving from other lower cost areas.

    —  We have the anomaly that prices tend to be higher at the moment in London—the very area where we will have most competition and expect prices to come down. On the other hand we may need to focus funding in other areas of the country where we find it more difficult to get suppliers to do the work.

    —  Current price differentials between London/non London or indeed between other regions cannot, under an hourly rates system, be said to reflect different overheads for suppliers in different parts of the country. This is because the differentials in cost per case are largely a feature of the length of time the provider claims on the case.

    —  When you look at the distribution within regions -this tends to be almost as wide as distribution between regions. In other words, there are very cheap and very expensive suppliers in every region but the proportions vary.

  2.  Given a national fee as a starting point, we have then reviewed each scheme to decide what the impact of this might be. Whilst we would not want to maintain current price differentials in the longer term, it is important that we maintain enough supply to provide sustainable access during the transition to competition.

  3.  We have looked at various factors:

    —  Longer term policy drivers -eg what is the right balance of work/funding between London and other regions.

    —  The possible impact of national rates on providers and through them on access to services by clients. This includes factors such as the number of cases dealt with providers those whose current average costs are above or below the fees.

  In some cases, this has led to us moving away from the desired model of a national fee in the interests of sustainability in the short term.

10.  TFF REPLACEMENT

  5.  Here we have stayed with a national fee -this leads a majority of suppliers gaining nationally—but it leads to lower standard fees for a majority of London suppliers. However:

    —  In the categories of law affected we have more providers in London than we do in other areas where it is more difficult to obtain supply. Our modelling shows that we currently spend significantly more in London than the allocation of the social welfare budget using data from means tested benefits would justify.

    —  The actual cash amounts involved for firms whose current average costs are above the fees are relatively small. Total national expenditure on solicitors for legal help cases covered by the fees is around £28 million—compared to over £570 million for family work. Even in the TFF replacement categories many firms rely on the income from legal representation rather than initial legal advice.

    —  For Not for Profit providers -we intend to put in transitional arrangements that will give them the opportunity to maintain their income.

    —  It is much easier for "swings and roundabouts" to apply at the initial advice level -as there are a lot more clients. Firms can easily become "winners" under the new scheme by taking on more Legal Help cases—not difficult given high levels of demand and the speed with which Legal Help cases conclude.

11.  IMMIGRATION

  6.  We have stayed with a national rate -clients move around the country in this category. Average costs are not significantly higher in London than in other regions and we have large numbers of suppliers in London. Detained clients are not covered by the new standard fees but will continue to be dealt with under separate duty schemes. These and other services excluded from the standard fee scheme will be based around process and location of client.

12.  MENTAL HEALTH

  7.  Mental health providers operate over wide areas not coinciding with our regional boundaries. Indeed many work on a national basis. For example 42% of cases dealt with by London suppliers are for clients outside of London. Current regional costs therefore reflect to some extent the high costs of firms travelling to see clients in different regions rather than the real cost of supply of advice. Paying a high element for travel represents an inefficient use of public funds and we see the future of mental health law services for detained clients as based around hospitals rather than the current geography of supply.

  8.  We expect to announce the final shape of the mental health fee scheme in the coming weeks.

13.  FAMILY

  9.  In family, as in other schemes, we have retained a national fee for initial advice in (level 1 in private, levels 1 and 2 in public).

  10.  However the impact of setting national fees at the legal representation level (ie beyond initial advice) could in our view, have an unacceptable effect on access in the short term because of the current profile of supply. Family firms would tend to be heavily reliant on their income from legal representation. Increasing a caseload to make up for any losses will also require more resource for firms than at the Legal Help level—and will be more difficult to do because of lower demand and eligibility. Nor do we have the same issues with family suppliers travelling to other regions as we do with mental health -or therefore quite the same need to encourage local supply outside of London.

  11.  We are therefore proposing that the fees at Level 3 (legal representation) should be based on four geographic regions merging the boundaries of existing LSC offices. This reduces the amount of variation of costs compared to a national fee. In addition to this, there is less deviation within the super regional distributions than there is in many equivalent regional distributions. The supra regions are:

    —  Southern: incorporating London, Brighton, Reading and Bristol.

    —  Midlands: incorporating Birmingham, Nottingham and Cambridge.

    —  Northern: incorporating Newcastle, Leeds, Liverpool and Manchester.

    —  Wales.

  12.  In public law, this produced an acceptable distribution of costs across all regions, including London.

  13.  The difference of average costs between London and non-London, and the variation of costs within London is however much greater in private than in public family law. Therefore in order to ensure that we maintain a reasonable balance of supply, after restructuring the fees based on the four supra regions, we have also proposed an added uplift of 16% to the fees for London suppliers at levels 2 and 3 in private family cases. We see this as a transitional measure to maintain supply: we do not consider the current high price of London cases as necessarily justifiable and we would expect London prices to come down either through competition or because of our drive to ensure that cases settle at an early stage.

Legal Services Commission

February 2007

APPENDIX 6

PEER REVIEW QUALITY AND COST DATA







 
previous page contents next page

House of Commons home page Parliament home page House of Lords home page search page enquiries index

© Parliamentary copyright 2007
Prepared 1 May 2007