The
Committee consisted of the following
Members:
Bellingham,
Mr. Henry
(North-West Norfolk)
(Con)
Borrow,
Mr. David S.
(South Ribble)
(Lab)
Clwyd,
Ann
(Cynon Valley)
(Lab)
Curry,
Mr. David
(Skipton and Ripon)
(Con)
Dunne,
Mr. Philip
(Ludlow)
(Con)
Eagle,
Maria
(Parliamentary Under-Secretary of State for
Justice)
Field,
Mr. Mark
(Cities of London and Westminster)
(Con)
Fisher,
Mark
(Stoke-on-Trent, Central)
(Lab)
Havard,
Mr. Dai
(Merthyr Tydfil and Rhymney)
(Lab)
Heath,
Mr. David
(Somerton and Frome)
(LD)
Hesford,
Stephen
(Wirral, West)
(Lab)
Howarth,
David
(Cambridge)
(LD)
Hurd,
Mr. Nick
(Ruislip-Northwood)
(Con)
Ingram,
Mr. Adam
(East Kilbride, Strathaven and Lesmahagow)
(Lab)
Khan,
Mr. Sadiq
(Tooting)
(Lab)
Pound,
Stephen
(Ealing, North)
(Lab)
Thornberry,
Emily
(Islington, South and Finsbury)
(Lab)
Glenn McKee, Committee
Clerk
attended the
Committee
First
Delegated Legislation
Committee
Monday 3
December
2007
[John
Bercow
in the
Chair]
Draft Criminal Defence Service (Very High Cost Cases) Regulations 2007
4.30
pm
The
Parliamentary Under-Secretary of State for Justice (Maria
Eagle):
I beg to
move,
That the
Committee has considered the draft Criminal Defence Service (Very High
Cost Cases) Regulations
2007.
It is a pleasure
to serve under your chairmanship, Mr. Bercow. Hopefully, we
shall not be here for too long but, obviously, I shall deal with
whatever issues members of the Committee
raise.
The
regulations have been made by the Lord Chancellor under section 15(5)
of the Access to Justice Act 1999 and are subject to the affirmative
resolution procedure. The instrument will bring into effect part of the
changes to the very high cost case (crime) panel recommended by Lord
Carter of Coles in his independent review of legal aid procurement.
Defendants who receive publicly funded legal representation in criminal
cases can generally have a representative of their choice. In very high
cost cases, the choice of representative will be limited to membership
of a panel set up by the Legal Services Commission. Very high cost
cases have been managed under individual case contracts since 2001, and
the contracting arrangements will remain largely unchanged under the
instrument when the panel comes into operation on 14 January
2008.
The instrument
provides that, when an individual has chosen a representative who is
not a member of the panel and the case is classified by the Legal
Services Commission as a very high cost case, the commission will not
be under an obligation to continue funding representation. The
instrument also provides that the individual may choose a new
representative from the panel membership. However, the commission will
have discretion to carry on funding a representative who is not a
member of the panel. That is important in certain circumstances; for
example, when a case falls within the scope of the regulations only at
a relatively late stage in the proceedings, it would seem nonsensical
to have to change the arrangements just to finish something that is
largely completed. There would be no benefit in taking it under a very
high cost cases
contract.
Very
high cost cases account for about £100 million of criminal legal
aid expenditure each year in the longest and most complex cases in the
Crown court. In order to exercise control over increasing costs, choice
of representation for defendants involved in very high cost cases will
be restricted to those defence teams that have had to meet quality
criteria and have been able to demonstrate experience of handling such
cases. It is in the best interests of all concernedincluding
defendants, the wider criminal justice system and the
taxpayerif the most experienced representatives conduct the
cases.
The management of very high cost
cases by the Legal Services Commission will not be changed in essence
by the regulations, and those who successfully become panel members
will work with the commission in the same way as they do now. The
Governments strategy for legal aid as set out in A
Fairer Deal for Legal Aid is being implemented. The first panel
will run for 18 months from 14 January, and its membership will be
sorted out by the Legal Services Commission, which will set the
criteria. The commission is currently in discussion with both the Bar
Council and the Law Society about the criteria to be set for the second
and subsequent panels, because such details will not remain the
same.
The
criteria for future membership will have to be reviewed, and the Legal
Services Commission has undertaken to ensure that providers not
currently engaged in that type of work can enter the market in the
future; otherwise, we will just end up with a cartel of people who
cannot be challenged or replaced. The Legal Aid Commission intends to
give an opportunity to those firms that can demonstrate appropriate
experience and expertise in cases that were not taken under the very
high cost cases
contract.
We believe
that it is right for the new arrangements to be brought into effect.
They offer a much-needed guarantee of experience and expertise in the
conduct of such cases, to the benefit of those involved and to the
taxpayer, who is rightly concerned about obtaining value for money in
extensive and expensive proceedings. On that basis, I commend the
statutory instrument to the
Committee.
4.34
pm
Mr.
Henry Bellingham (North-West Norfolk) (Con): It is a great
pleasure to serve under your chairmanship, Mr. Bercow. I
thank the Minister for her clear and erudite explanation of the
instrument, which the Opposition support in principle. We certainly
support the thrust of the Governments legal aid changes, but we
are concerned about some of the detail. Obviously, the Committee is not
the right forum in which to discuss those worries because we are
discussing something very narrow.
I
have a number of short questions to put to the
Minister. She said that when a case migrates category at a fairly late
stage, it does not make sense for the client to change counsel or legal
representation because they have got used to them. What happens if a
case starts out as routine, but then migrates category at a much
earlier stage? Very often, any work done by a barrister on a case or
any contact he has made with a client is all about building up a close
relationship. If there is a change of personnel at an early stage,
that, too, could be damaging. Will the Minister give us more detail
about the discretion of the Legal Services Commission to enable the
continuation of representation in those
circumstances?
The
Minister alluded to the concern that was expressed in the other place
about cartels being put in place. Lord Thomas of Gresford said very
succinctly
that
the
danger is that one can create a cartel; so unless it is easy to join
the panelor at least not too difficult to join itthose
on the panel will draw up the drawbridge and charge whatever they think
is appropriate. If they are in competition only within a specialist
panel themselves, the danger is that fees will
rise.[Official Report, House of Lords, 23
October 2007; Vol. 695, c. GC22.]
We are concerned about that. We need to
have in place a system in which it is not too difficult for firms that
are consolidating or expanding to join the panel. We are concerned that
one of the thrusts of the proposals is to drive the consolidation of
legal practices. Any firm that is expanding through consolidation with
other firms should be able to join the panel if they feel that they can
put in place the necessary training, expertise and IT investment. Will
the Minister comment on that because Lord Hunt of Kings Heath did not
deal with that in much detail in the other
place?
I
told the Whip that I would not be more than four
minutes, so I have about 40 seconds left. We are concerned about the
very high cost cases. Basically, 1 per cent. of all cases, including
the VHCCs, takes up 49 per cent. of the entire Legal Aid budget. On
examination of the handling of those cases, we feel that the Government
should try to provide better value for money for the taxpayer. We
should be looking not just at case managementthe changes in the
instrument are all about better case managementbut at better
pre-trial discovery between the prosecution and the defence. In
addition, we should be looking at better enforcement of orders for the
exchange of documents or exhibits. I am drawing here on my experience
as a criminal barrister, which took place when you, Mr.
Bercow were still a student at university. Will the Minister tell the
Committee how the managing of cases can be further improved with
particular reference to those two areas that I flagged
up?
With those few
comments, I hope that the Minister will be able to
answer our questions. We are broadly supportive of the instrument and
thank the Minister for her very clear explanation. We wish the measure
well.
4.39
pm
David
Howarth (Cambridge) (LD): It is a pleasure to be sitting
under your chairmanship yet again, Mr. Bercow. I hope that
this encounter will be shorter than our first one on the Companies
Bill.
The hon. Member
for North-West Norfolk said that there was a possibility of the panel
system creating a cartel. In exchange for that, the offer is that
quality standards be put in place, which will ensure the quality of
work being carried out for the public purse. The main problem with the
proposals is the balance between the two. I want to make three points:
first, on how the panel is chosen and whether the method used
effectively drives the quality down rather than up; secondly, on
whether the proposals are worth it in cost-benefit terms; and thirdly,
on the specific method chosen to judge quality.
On how the panel is to be set
up, the LSC sets three different rising price levels. It asks the legal
profession whether it can fulfil its expected number of cases given the
first price; if not, given the second price; and if not, given the
third price. Within each price band, the LSC starts by asking those
firms that propose to undertake cases at an excellent level of quality.
If it cannot fulfil its capacity at that level, it moves down to the
next level of quality and continues to go downwards until it realises
that it cannot fulfil its requirements at that price band. As people
will understand, the problem with that method is that it drives down
the quality within each price band. Rather than setting a standard
of quality at the start and asking for bids to obtain the most
cost-effective solution possible at that desired standard, it seems to
look for the lowest level of quality that we can get away with at that
price band. I would be interested in the Ministers comments on
that point.
In
its report on the implementation of the Carter review
of legal aid, the then Constitutional Affairs Committee commented on
that method of setting up the
panel:
We are
therefore disappointed with the LSCs proposals for the
tendering process for entry to the panel of legal aid suppliers for
Very High Cost Crime Cases. Despite the Governments assurances
to the contrary, we believe that this model does not bode well for the
general introduction of competitive tendering across all areas of legal
aid. Quality must be assured when the procurement of publicly funded
legal services moves to competitive
tendering.
My
second point concerns whether the proposals are worth it. In the
regulatory impact assessment, the Government say that in the first
instance there will be costs due to the method of implementation. It
will cost approximately £500,000 more to pay the non-panel firms
for their work when cases are transferredas this provision
envisagesfrom a non-panel firm to a panel firm. There is also a
potential extra cost of £200,000 due to extra travel costs as
the number of firms available is
reduced.
Let
us compare that with the benefits in terms of cost savings. The
Government say that the savings are about £1 million to
£1.5 million. However, in addition to the direct cost to the
Government, there is also the cost to the legal profession that
includes the costs of organising teams for the purposes of putting in a
bid. The regulatory impact assessment says that the Government have not
assessed those costs. It is not a good argument to say that because we
do not know what the costs are, we are therefore going to ignore
them.
On looking at
the figures, it seems that if the annualised cost of the set-up
expenditure for lawyers were to exceed £500,000, the chances
arelooking at the middle estimate of the savingsthat
the proposal is not worth it in cost-benefit terms. I would be
interested to hear the Ministers estimation of the robustness
of the regulatory impact assessment figures.
My final point
is about how quality is judged. The proposal is to introduce quality
assessments based largely on a firms performance in general
criminal law, rather than setting specific quality standards for very
high cost casesspecialised cases that are often to do with
fraud or terrorism, and which are a very particular area of legal
practice. The regulatory impact assessment says that a quality
assurance system could be set up that would put more emphasis on
quality in those cases, rather than in general, but that that would
take a long time and might cost something. If it is being said that
quality ought to be about very high cost cases, but that we do not want
to spend the time doing that, the danger is that we will end up judging
quality by the wrong criteria, which will be more costly in the long
term. The suspicion must be that because the system is being set up
very quickly, the timetable will be governed mainly by the short-term
budgetary constraints of this years and next years
expenditure projections, rather than by the long-term needs of the
system.
4.45
pm
Maria
Eagle:
Although the speeches from the Opposition spokesmen
may have been short, they raised a number of points that I will seek to
deal with as succinctly but fully as I can. The hon. Member for
North-West Norfolk set out some of his concerns about cases that
migrate to very high cost level at an earlier stage than just before
trial. At present, it is perfectly possible for the individuals who
will be defendants to change their legal teams; it is possible for
non-panel firms to act as subcontractors to panel firms. If it is
important, the LSC can make a decision that enables an individual to
retain a legal team that he
trusts.
The hon.
Gentleman will be aware that cases that are likely to become very high
cost are flagged up, and it ought to be possible to tell what they are
at a relatively early stage. For example, it will become apparent at a
fairly early stage that multi-defendant cases such as terrorism cases,
Serious Fraud Office cases and those involving 10,000 pages or more of
prosecution evidence will be complicated and are likely to fall within
these arrangements. So although there is a certain amount of
flexibility, it should be possible to reach that conclusion at a stage
that is sufficiently early for this issue not to be too much of a
concern to the defendant. That is certainly the
intention.
I turn to
the hon. Gentlemans point about pre-trial discovery and the
enforcement of orders to exchange documents, which was really about
proper case management and ensuring that procedures are properly
followed. I never specialised in criminal law, as he did, but it is
some time since either of us practised in the courts, and he might
realise if he had a close look at case management that it is done
rather better these days than when we were practising. Crown court
judges are encouraged more than presiding judges, particularly with
very high cost cases, to get to grips with and be very active in case
management at an early stage. I suspect that that factalong
with better communication between the Crown court and the Legal
Services Commission, earlier notification of the existence of very high
cost cases, and the ending of the ex post facto payment brought in by
the 2001 changeshas probably encouraged all to be more
efficient in the handling of case procedure than perhaps was so when
the hon. Gentleman and I were practising in the courts. At least, one
hopes that that is so, as it used to be somewhat hit and miss. I think
that that is no longer the
case.
The hon.
Gentleman also referred to the discussion in the other place about
whether we are simply legislating to establish a cartel. I do not
believe that that is so, partly because cartels pick themselves,
whereas in this case, the LSC clearly has a role in ensuring the
selection of panel members. I would have some sympathy for his concerns
if the panel were to be permanent, but there will be significant
turnover and capacity for change, in that there will be a second panel
after 18 months.
The
LSC is currently discussing with the professions, and others with an
interest, precisely how the selection criteria ought to change. That
discussion deals with many of the points made by the hon. Gentleman and
by the hon. Member for Cambridge about quality and how you measure it,
for example. It is not a static
arrangement whereby, if we do not get it right now, we will be stuck for
ever with a system that does not work. It is an ongoing arrangement
that will be reviewed constantly in debate and discussion with
interested partiesnot only the professions but other
stakeholdersto ensure that we develop a system that is as good
as it can be and that may well change over time.
The intention is to drive up
quality. Those who wish to be on the panel must already meet peer
review level 3 as a threshold competence for the first round. One of
the benefits to be gained by defendants from having a panel is a
certain guarantee of quality in what can be complicated, difficult
cases. It will ensure that defendants who choose a representative from
the panel can have some confidence that their solicitor and advocates
know what they are doing, and that the experts whom they go to will be
experienced. I hope that that deals with those
points.
On
value for money, the hon. Member for North-West Norfolk was right when
he said that about 1 per cent. of cases in the Crown court take up
almost half of criminal legal aid. While the budget has gone up in
monetary terms because of the increasing number of cases, litigants and
contracts signed, the LSC has estimated that, as a result of the
arrangements that have been in place since 2001, contracting high-cost
cases has reduced the spend on them by around £49 million a
year, compared with the previous methodology of ex post facto
assessment. I am not saying that the standard has gone down by that
amountit has not. The number of contracts signed and the amount
of litigation has gone up, but on the cost of these cases, the LSC has
managed to get more of a grip on the overall spend by way of
contracting
It is
anticipated that we should save between £6.2 million and
£12.5 million in a full year; I hope that that answers the point
made by the hon. Member for Cambridge regarding whether the changes are
worth it. Being able to get that much more of a grip on cost is
certainly worth while. These are difficult issues and there is no doubt
that when one looks at the trend over the last few years, overall costs
have been going up.
On
the first panel and the fees that it will charge, there is not free and
open competition; it is not yet a fully competitive tendering process.
We have opportunities over the next few years, as the second and third
panels come into play, to make inroads into having a proper competitive
process, but we do not want in doing that to put at risk the ability of
firms with expertise in these cases to undertake them. We need to
ensure that we do not proceed too swiftly; we must ensure that at the
end of the day, we can get a real grip on these cases.
Our view is that the proposals
are worth it, but they are not the end of the story. As more panels
come along under the second and third rounds, we will look at value for
money issues more extensively as we move to greater competition. I hope
that I have dealt with most of the points that were raised, and on that
basis I commend the statutory instrument to the Committee.
Question put and agreed
to.
Resolved,
That
the Committee has considered the draft Criminal Defence Service (Very
High Cost Cases) Regulations
2007.
Committee rose
at seven minutes to Five
oclock.