Examination of Witnesses (Questions 340-359)
RT HON
LORD FALCONER
OF THOROTON
QC, SIR MICHAEL
BICHARD AND
CAROLYN REGAN
20 FEBRUARY 2007
Q340 Mr Tyrie: Somebody coming to
this afresh would have to conclude you have commissioned a report
without telling the public about it, you did not like the conclusions
and you have either set the wrong Terms of Reference or you had
not thought through what it might say in advance. You have spent
quite a bit of public money on it and now you are apologising
for not having put it out in the public domain earlier while at
the same time rubbishing it?
Lord Falconer of Thoroton: No,
I would not agree with that as an assessment.
Mr Tyrie: Oh, that was just my own reaction
listening to what you have said. I am sure you might disagree.
I have no further questions.
Q341 Jeremy Wright: Lord Chancellor,
can we look at the underlying assumptions that are behind what
Lord Carter has done and what the Government has subsequently
said. It seems pretty clear, does it not, that the underlying
assumption is that the taxpayer is not getting value for money
from Legal Aid firms as a class?
Lord Falconer of Thoroton: Yes.
Q342 Jeremy Wright: First of all,
in general terms, can you tell us what led you to that conclusion?
Lord Falconer of Thoroton: It
was the view that Carter formed. What Carter is saying, I think—and
I do not mean any disrespect to call him Carter but for the sake
of convenience I call him Carter—is although many firms
are profitable looked at within their own rights, if you have
fixed fees you can get a more efficient way of paying for Legal
Aid, both criminal and civil, and if you have a market process
where people can bid on price, then you can fix what would be
both a fair price and, he believes, in some areas a cheaper price,
for the cost of those legal services without destroying the provider
market. You will certainly reduce the number of firms, you will
probably reduce the number of fee earners, though probably by
not nearly as much as you reduce the number of firms, but you
end up with a procurement system which drives efficiency, costs
less and has a more efficiently organised provider market. That
is his thesis, that is what he spent over a year looking at, and
we accept his premise.
Q343 Jeremy Wright: I am sure you
would not put it like this, but the conclusion clearly is that
it is the lawyers' fault. What I am really interested to know
is what work have the Government done to find out what other pressures
and what other influences there are on the increase in spending,
particularly in the two areas that you have identified as being
the problem: Crown Court work and children work?
Lord Falconer of Thoroton: Genuinely,
I would not dream of suggesting it is the lawyers' fault, but
if the payment for civil, family and criminal Legal Aid is structured
in the way that it is at the moment, though it has been changing
over a period of time, then that is how the market will respond.
It has been changing in two respects. There has been a gradual
introduction of fixed fees and there has been a much greater reliance
on contracting with individual firms. So, what you have seen as
time has gone on is a reduction in the number of firms that have
been contracted with because the system of payment has changed,
but I am not blaming the lawyers. If you stop paying and stop
choosing on the basis that we are currently doing, then you will
change the market.
Q344 Jeremy Wright: It is a more
general question that I am asking. If there has been an increase,
which there undoubtedly has, in Crown Court work and criminal
work and in—
Lord Falconer of Thoroton: There
has not been an increase in the numbers of Crown Court cases.
Q345 Jeremy Wright: No, there has
been an increase in the amount spent on those cases?
Lord Falconer of Thoroton: Absolutely.
That is right.
Q346 Jeremy Wright: That is what
has been identified as being the primary problem here.
Lord Falconer of Thoroton: No,
what has been identified is that in the last year or two the main
drivers for increases are public law children, because there are
more children who are the subject of care proceedings and each
individual case costs more, and there is more expenditure on the
Crown Court cases. In the years before that there were considerable
increases in all Legal Aid expenditure.
Sir Michael Bichard: We do need
to remind ourselves that there are a large number of people out
there who need assistance who are not getting it at the moment.
It is not just a question of getting the expenditure, the plateau,
to come down a bit, it is making room to enable us to help more
people. The things that the Legal Services Commission have done
over the last few years, which have never been particularly popular,
long before I arrived, have actually had an impact. If you look
at the introduction of tailored fixed fees, if you look at the
way in which we have contracted with not-for-profits and improved
productivity, what you will find, as a result, is that in 2004-05
some 600,000 people were helped, and that was at a cost of £294,
each act of assistance. In 2006-07 750,000 people were helped
at a cost of £258 per person. Every increase in the cost
per hour means that we cannot help someone, and I think what the
Commission has done over the last three or four years has shown
that if you properly manage and control this market through fixed
fees and contracts, graduated fees, then you can have an impact
on value for money. We must also, secondly, not give the impression
that somehow we are starting this process with Carter. What we
are actually doing is developing the journey, if you like, which
is going to be learning from tailored fixed fees in these other
innovations, and we believe that that will enable us to manage
to control the expenditure, to improve access, and actually we
have not talked a great deal about it today, but drive up quality
too.
Carolyn Regan: I was going to
make the point that has not been mentioned around quality at the
moment. This is an on-going programme of work to peer review and
to effectively contract with those suppliers to reach a certain
level in the quality work.
Q347 Jeremy Wright: I do not doubt
that this is being done for the best of motives, but the question
I am really asking is about what work has been done to establish
that the actions which are being taken are being aimed at the
right targets? I will give you some specific examples. What I
am interested to know is what has been done to establish that
the increase in costs, for example, in Crown Court criminal work
is not substantially the result of failings of the court system
itself, failings of the Crown Prosecution Service, or other causes?
What has been done to quantify what those causes might contribute
to the increase in cost so that we can be sure that any reform
is necessary in the way in which lawyers are paid?
Lord Falconer of Thoroton: I am
absolutely sure that reform is needed in the way that lawyers
are paid. I am equally absolutely sure that you need to reform
other things as well. For example, we have got to be clear that
where there are law changes made the additional costs that that
has on the cost of doing cases, for example, in the Crown Court,
is reflected in the Legal Aid bill. Until comparatively recently,
until the last few years, every time there was a law change we
would not get extra money for Legal Aid. Now it is an absolutely
standard process that whenever there is a law change and we can
identify that it has an effect on Legal Aid, then we get a little
bit extra (depending on how much it is) for that, but that is
one example of change. Another example of change that we need
is that judges need to be more proactive in managing the big cases.
Another example of change that we need is that the CPS needs to
be much more focused on preparing cases properly and making sure
they are focusing on the real issue, but that does not excuse
or change the need to look as well at the procurement of defence
services very much for the reasons that Sir Michael was saying.
You put it as being "for the best of motives". We are
focusing all the time in relation to how we help more people.
We recognise we can only help more people with a thriving legal
profession, but we need to focus on the client, the person who
is getting the help.
Q348 Jeremy Wright: The question
remains: what has been done to establish what proportion is contributed
by each of the things that you have talked about? The reason I
ask you is that in 2003-04 the Committee asked the Government
to identify the major factors which had caused the increase in
criminal Legal Aid spending. Has there been any response to that?
Has there been a study done? If there has, what does it say? I
am still trying to get to the bottom of how we are able to estimate
what contribution these other things that we have talked about
might make to the increase in expenditure.
Lord Falconer of Thoroton: There
are very many studies around. I cannot remember the name of the
study the Legal Services Commission did and published about a
year ago of the extent to which law changes not properly reflected
in the Legal Aid budget had an effect on increased Legal Aid expenditure.
That study identified that particular problem, which I have just
identified in what I have just said. I cannot remember whether
it actually broke down the cost of increases into proportions.
I suspect it is incredibly difficult to do with any degree of
certainty, but the Legal Services Commission did address the particular
issues that you have raised, Mr Wright.
Q349 Jeremy Wright: Let me move on
to something else, and that is the potential for piloting some
of these proposals. At least one witness we have had before us
in the course of this inquiry has described the absence of a pilot
programme as reckless. Is the Government being reckless by not
piloting what Carter proposes?
Lord Falconer of Thoroton: I do
not think we are. There are two bits to Carter. The first is the
increase in fixed fees, and, as Sir Michael has just described,
fixed fees have been increasing in all areas of publicly funded
legal help and representation; and the idea that you should start
to pilot, for example, fixed fees for solicitors in the Crown
Court, which is one of the very substantial elements in relation
to it, does not seem either necessary or wise as far as we are
concerned. The second element of the Carter proposals is tendering.
The first auction is envisaged to take place in October 2008 and
we envisage there that we would start with certain parts of the
country and it would be rolled out to the rest of the country
later. It is not possible, I think, to divide the country in such
a way that some parts are piloted and some are not. We do not
think it would be wise either. So, yes, we have thought about
it, and we have thought about it again in the light of the evidence
of Professor Cape, who gave evidence to this Committee, saying,
to start with, it might be short of reckless to do it and then
he became even more reckless and said he thought it was reckless
not to do it. We have thought about it. We do not think it is
right. Sir Michael is right to say this is part of an on-going
process. So, no, we do not think it would be the right thing to
do and we do not think it would be in the interests of the profession,
let alone the clients they are going to serve.
Q350 Jeremy Wright: Because if this
goes wrong the damage will be irreparable, will it not? If the
supplier base is damaged by what you suggest—quite contrary,
I accept, to what you hope will happen—it will not be possible
to repair that damage, will it?
Lord Falconer of Thoroton: There
are two aspects to that. First of all, fixed fees have not destroyed
the supplier base in the areas where they have already been introduced.
Secondly, what a market-based approach does is allow firms to
bid for work and the market will fix the price. The danger (which
I do not think is a real danger) is not the destruction of a provider
market, it is if the price is too high. We do not think that will
happen, but I think you are wrong to say that we will risk the
destruction of the market.
Q351 Keith Vaz: Lord Chancellor,
what has the DCA done to make the Legal Aid impact test a standard
for all legislation across government departments?
Lord Falconer of Thoroton: Every
piece of legislation that is considered within government we only
agree to if, where there is a prospect or a chance that that might
increase the burden on Legal Aid, there is agreement from the
relevant other government department to pay the additional cost
for Legal Aid; and that is now a standard process that is gone
through in government and it occurs now as a matter of course.
You cannot get approval in practice in government unless you can
satisfy any agreed additional Legal Aid for a particular law.
Q352 Keith Vaz: Will the idea of
joint budgets be pursued with the Home Office in the area of criminal
law?
Lord Falconer of Thoroton: I do
not think there are any really active proposals at the moment
for joint budgets in relation to criminal law. There was a joint
budget in relation to asylum applications, but I am not aware
of any detailed proposals in relation to single budgets for criminal
law.
Q353 Keith Vaz: You are not proposing
to ask the Home Office for a contribution to the DCA's budget
for the Legal Aid cost implications of the Serious Crime Bill?
Lord Falconer of Thoroton: Of
course we would, yes, and that will have only got through on the
basis that additional costs for Legal Aid will have been agreed;
and there will be additional costs for the Serious and Organised
Crime Bill because the Serious and Organised Crime Bill allows
for various applications to be made against individuals for which
some of those individuals will be entitled to Legal Aid. For example,
if that is a good example, an estimate will have been made about
how many applications they would expect to be made under that
bill when it becomes law. We will have got a slice of money equal
to the additional cost for Legal Aid.
Q354 Keith Vaz: Mindful of the forecasts
of increased numbers of child care proceedings and the rise in
the number of large scale terrorism trials, do you think that
Legal Aid is a priority in the forthcoming Spending Review? Have
you had any discussions with the Chancellor about this?
Lord Falconer of Thoroton: I have
not discussed Legal Aid specifically with the Chancellor. I do
not think Legal Aid itself will be a priority in the Spending
Review; I am quite sure that children and terrorism will be. As
far as children are concerned, you are right to identify an increase
in the number of public law children cases, though CAFCAS's estimates
indicate that they think that will plateau some time next year.
We have sought to deal with that in two ways: the review of child
care proceedings, which is trying to get local authorities to
agree to a series of protocols that will, where appropriate, reduce
the need for applications to court in relation to children, and
also trying to do a series of steps before the matter gets to
court so that the court case does not take too long. It is, for
example, frequently the case that a case will start, a particular
carer drops out and then a long process is gone into as another
potential carer in the family is looked at. If that can be dealt
with before proceedings are started, that reduces the Legal Aid
bill. In relation to terrorism, the Chancellor of the Exchequer
has made clear that he is looking at the costs of terrorism separately
from individual department's budgets. That will include additional
costs of terrorist trials, and we are looking at that separately
from the DCA's comprehensive spending round expenditure. It is
not specific to the DCA, it is right across the board in relation
to terrorism.
Q355 Keith Vaz: Sir Michael, since
your appointment, I assume you have visited a number of Legal
Aid firms?
Sir Michael Bichard: Not as many
as I would have liked, but, yes, I have.
Q356 Keith Vaz: How many have you
visited?
Sir Michael Bichard: I do not
recall. Probably four or five.
Q357 Keith Vaz: So you have spent
a day with a Legal Aid lawyer. You understand the pressure that
they are under?
Sir Michael Bichard: Absolutely.
Q358 Keith Vaz: These are not your
reforms, of course, but you have to implement them, do you not?
Sir Michael Bichard: They are
not my reforms.
Q359 Keith Vaz: The Carter Reforms
are not yours. This is something that the Government has initiated.
You have become the Chairman.
Sir Michael Bichard: No, the Commission
have discussed the Carter Reforms, the Carter Report, on a number
of occasions. We have had four meetings to discuss it, and the
Commission are totally behind the proposals which we are now consulting
on.
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