Government's proposed reform of legal aid - Justice Committee Contents


4  Other means of reducing costs

Measures in the consultation paper

43.  Before examining the likely impact of the Government's proposals relating to scope we turn now to other measures suggested for reducing the cost of legal aid, including those outlined in the consultation paper, and others put to us by witnesses. We have not had the opportunity in this brief inquiry to examine in detail the remaining proposals in the consultation paper aimed at reducing costs, namely those which would: reduce the level of fees paid to providers; tighten the financial eligibility rules for certain categories of people; make more clients contribute to the cost of proceedings and increase the level of contributions required; take greater account of the capital people have when determining their eligibility for legal aid; introduce alternative sources of funding; and improve efficiency and reduce bureaucracy in the administration of legal aid. However, one aspect of the changes which has been commented upon in evidence are the proposals regarding fees in civil and family matters.

44.  It was put to us by a number of witnesses that the 10% reduction proposed for all fees paid in civil and family matters would be an important contributory factor in the decision of providers to withdraw from the market, with a consequent adverse impact on clients. For example, the Legal Aid Practitioners Group told us that

Profit margins are very low at present. The hourly rate in legal aid work varies depending on the area of law and the type of case. Rates of pay in some areas of law have remained static for over 10 years or have decreased. Practitioners who would be allowed rates of over £200 per hour by their local county courts for privately paying work will be paid rates starting at £50 - £70 per hour for many legal aid cases. The proposed reduction across the board in civil fees of 10% will make it extremely difficult for many providers to continue.[52]

The Advice Services Alliance made a similar point:

the proposed 10% reduction in all fees, expected to be introduced in October 2011, is likely to result in some insolvencies. Some organisations are already struggling with increasing costs whilst incomes have not increased with inflation. [53]

45.  The Government's impact assessment makes it clear that there are risks associated with this policy, namely that:

  • service quality may decline, possibly affecting case outcomes and/or the client experience
  • customer choice might be adversely affected
  • there might be shortages in the supply of legally aided services in the event of market exit

The potential savings accruing from this policy are estimated to be £72 million annually.[54]

46.  By far the largest area of savings in the Government's proposed reforms is the removal from scope of various categories of law, and it is on this area that much of our evidence has focused and on which we concentrate in this Report. However, a further important saving — £72 million annually — would be realised from the Government's proposed 10% reduction in fees for civil and family legal aid. We do not underestimate the difficult situation faced by many legal aid providers. In some cases they have been subject to a fees standstill for ten years. The ability of smaller firms, particularly in rural areas, to provide services has been significantly reduced by tests and procedures implemented by the Legal Services Commission. We are aware that the other proposed changes, such as those to scope, will exacerbate those difficulties. However, given the extent of savings which the Ministry of Justice is having to make, we think in principle that it is correct that fees are reduced rather than, for example, further changes made to scope. We expect the Department to monitor closely the impact this change, combined with others, has on the supply of legal aid providers. It should be prepared to respond quickly — and potentially explore whether the pool of providers can be expanded, particularly by allowing smaller firms to provide services — if supply threatens to diminish to a critical level. We shall scrutinise the performance of the Department in this respect throughout the remainder of this Parliament.

47.  We also welcome the steps the Government is taking to reduce bureaucracy and costs in the administration of legal aid but we are concerned that such steps are carried out in such a way as to ensure that real administrative savings are made.

Other means of reducing costs

CRIMINAL CASES

48.  The main focus of the Government's proposed reforms is on legal aid in civil and family cases, and we reflect that focus in this Report. However, in the context of reducing costs in criminal cases more generally, we wish to highlight comments put to us in January 2011 by Keir Starmer QC, the Director of Public Prosecutions. In particular, Mr Starmer noted that 75% of cases are resolved by guilty pleas, but alluded to the fact that these cases require resource-heavy preparation and, sometimes, numerous hearings. He told us that "what we think ought to happen... is that we ought to aim for the speediest fair disposal of guilty pleas.... We think there should be, if at all possible, one hearing before the court to deal with the guilty plea and get it disposed of. There will be some cases where more is necessary, but the vast majority should be dealt with much more swiftly and without preparing by default as if it is a trial until the point at which it is clear it is a guilty plea." In that context, Mr Starmer welcomed the early guilty plea scheme which has been running in Liverpool, where, "working with our prosecutors, the court does identify the cases that go into that early guilty plea list and they can be disposed of very swiftly". Mr Starmer emphasised that the scheme in Liverpool has been successful because "people went in with the right attitude. They went in prepared to adjust the model month on month where they found problems with it and they worked really hard at it in the 18 months or so that the scheme has been up and running. That was about a mindset. It was about clarity about the outcome and a real determination. That needs to be replicated across as many courts as possible."[55]

49.  While we welcome the Government's recognition that reductions in scope cannot readily be made in the field of criminal legal aid, we were struck by the evidence of the Director of Public Prosecutions that cost savings could be achieved by greater efficiency in the courts, which in turn depends on all the agencies concerned working together more effectively. We expect the Ministry of Justice to take a lead in pushing this work forward.

Judicial review

50.  A further possible means of reducing legal aid expenditure was put to us by Sir Anthony May, President of the Queen's Bench Division. Sir Anthony noted that asylum and judicial review cases are to remain within scope and thought that, while it might be appropriate for such cases to attract legal aid without a rigorous merits test for the initial claim for judicial review or first asylum appeal, "a view could be taken... that legal aid should not automatically be available for a second attempt within the court system, where the first has failed, unless the court is persuaded that the second attempt has merit."[56] He pointed out that almost all emergency applications in the Administrative Court in asylum cases are "a kind of surrogate version of the [previously refused] reconsideration application" and in oral evidence he said that the Court sometimes had to deal with 20 or more such applications daily, "a large number of which have no merit".[57] He told us "that it could be regarded as proportionate and sensible if these did not attract automatic legal aid, but only if the initial (unsupported) application was successful, so that the case proceeded to a full merits hearing. The judge could then order legal aid funding for the permitted proceedings. The merits judgment for legal aid purposes would reside in the judge's decision to permit the case to proceed."[58]

51.  Sir Anthony drew an analogy between such a process and what happens already in appeals in criminal cases to the Court of Appeal Criminal Division, where legal aid extends to advice on appeal and the drafting of grounds on appeal but, if leave to appeal is refused, legal aid is not provided for a subsequent renewal of the leave application (unless that application succeeds). Sir Anthony said that this "has the salutary effect of reducing the number of meritless renewed applications." He also thought that consideration could be given to extending the principle to renewed applications for permission to bring judicial appeal proceedings or any renewed application for permission to appeal in civil proceedings.[59]

52.  While we support the Government's retention within scope of judicial review and asylum matters, we were interested in Sir Anthony May's suggestion that consideration be given to removing automatic legal aid for those judicial review applications which are, in effect, seeking reconsideration of previously dismissed appeals, an example being emergency applications within the Administrative Court in asylum cases. We recommend that the Government assesses the potential cost savings which might be made from this change and consult on its merits. The Government should also consult on whether the principle could be applied to other areas of judicial review.

Reducing the number of cases prompted by poor decision-making

53.  One option for driving down costs in the system is to reduce the number of cases which reach tribunals where the appellant seeks to overturn a decision made by a public authority. The most obvious example relates to the work of the Social Entitlement Chamber which deals, amongst other things, with Social Security and Child Support (SSCS) appeals.

54.  There has been a recent dramatic increase in the number of social security appeals, from 242,800 appeals received in 2008-09 to 339,000 appeals in 2009-10. The volume of appeals is expected to increase further, rising to an estimated 370,000 in 2010-11 and 436,000 in 2011-12, before falling to 409,000 in 2013-14.[60] Of the 67,600 cases cleared at hearing in the latest quarter for which figures are available (Quarter 2, 2010-11), a decision in favour of the appellant was made in 23,100 (34%) of cases.[61] While it is beyond our remit to look into the various contributory factors behind these statistics, it is clear that they represent a significant volume of incorrect decision-making on behalf of those tasked by the Department for Work and Pensions (DWP) to make decisions about benefits.

55.  Action is being taken to address poor-decision making. In October 2010 the Government announced its Fraud and Error Strategy, designed to cut the £5.2 billion of taxpayers' money which is lost through fraud and error in benefits and tax credits each year. The Strategy includes steps to drive down levels of official error by providing further support for staff, including enhanced IT and a system of accreditation for those attaining a certain standard of processing accuracy.[62]

56.  Within the SSCS jurisdiction, appeals are lodged with the decision-making agency or department, at which point there is an opportunity for that body to reconsider its decision. The President of the Social Entitlement Chamber — who has previously said that many appeals reaching tribunals should have been resolved at the reconsideration stage — reports that the DWP "has begun to make more effective use of reconsideration" and that, supported by a joint exercise with the Tribunals Service and the development of new methods of judicial feedback, "early results show up to 24% of Employment and Support Allowance decisions under appeal being revised in the appellant's favour without a tribunal hearing."[63]

57.  While we welcome the steps being taken to resolve meritorious appeals at an early stage, we think more could be done to encourage correct decision-making in the first place, and so we were interested in the possibility of charging public authorities for poor-decision making which leads to costs for the courts and tribunals. The Law Society, for example, told us that "public authorities whose administrative decisions are overturned by courts and tribunals should be required to pay the costs of the claimant to the legal aid fund, together with a surcharge."[64] (In this section we are focusing on the decisions of the DWP although we believe the principles are applicable across the public sector.)

58.  The Ministry of Justice told us that the DWP does provide funding for the tribunals system if it creates burdens for it and that this funding derives from its responsibility to fund the additional cost of any policy change rather than being consequent upon the success rate of the Department at the tribunal. Currently the DWP is funding additional costs resulting from the introduction of Employment Support Allowance (the successor to Incapacity Benefit), appeals against which have been the principal reason for the large increase in SSCS appeals described above. £1.3million in 2008-09, £9million in 2009-10 and an expected £21.1million for 2010/11 has been transferred from DWP in relation to Employment Support Allowance for training costs and the cost of increased appeal hearings. There has also been a small transfer of funds as a result of changes to the child maintenance system to the value of £0.2m for each of the years 2008-09 and 2009-10.[65]

59.  The Minister, Mr Djanogly, said that the mechanism by which the DWP paid the amounts described above meant that there was already an element of "polluter pays" approach in the system. He also said that it was important that the DWP got decisions right at an early stage and that the MoJ has "a significant project" with the DWP on that issue. He was sceptical, however, about the benefits of charging the DWP (or other publicly-funded bodies) for the effects of their poor decision-making and said that having one Department pay another would be "like robbing Peter to pay Paul".[66]

60.  We welcome the steps being taken by the Department for Work and Pensions to increase the quality of decision-making, and the work undertaken by that Department and the Tribunals Service to ensure that cases which do not need to be dealt with at tribunal are resolved earlier. We note that funds are transferred from the DWP as recompense for the expense caused to tribunals as a result of policy changes. However, we think there is potential for such a "polluter pays" principle to be extended considerably, with the DWP (and other public authorities whose decisions impact upon the courts and tribunals) required to pay a surcharge in relation to the number of cases in which their decision-making is shown to have been at fault. We think that in rejecting this idea as a "robbing Peter to pay Paul" transfer of funds around the public purse, the Minister is overlooking the potential benefit such a policy would have in providing a financial incentive to public authorities to get their decisions right first time. We accept that there would be bureaucratic hurdles to be jumped over in creating such a system, but we think the potential benefits merit further consideration and that, in the long-term, cost-savings could accrue from such a policy.

61.  In addition to the proposals for charges for poor decision-making by public authorities noted above, we also welcome the range of proposals put to us by the Law Society for looking at ways of reducing some of the other cost-drivers for legal aid, including:

Every consultation paper that introduces new rights or offences should identify the costs of enforcement and state how those are to be met.

Judges should be trained, and encouraged to use modern case management procedures for ensuring that cases progress efficiently and that unnecessary costs to the parties are eliminated....

Greater investment in new technology (e.g. video links with prisons, improved listing arrangements and greater use of electronic communications) would reduce the time wasted by solicitors and others in attending courts unnecessarily.

Courts should use their wasted costs powers to penalise public authorities and others who cause unnecessary costs to be incurred by practitioners and the Legal Aid Fund.

The CPS should review its charging policy in Very High Cost Cases (VHCCs). A more strategic approach is needed to reduce costs in complex VHCCs.

62.  The Law Society has also proposed that individual practitioners should not make significant sums of money out of legal aid, and suggests that this should be capped at £250,000 per year. In addition, the Society has put forward the following proposals for increasing the efficiency of the legal aid system:

Consideration should be given to granting powers to a local body to allocate funds, and identify local priorities and gaps in order to mitigate the disadvantages of a pure market approach.

The Defence Solicitor Call Centre should be abolished and replaced with local arrangements.

Firms should have greater choice and flexibility to determine how they take on and run cases.

Simplification of contractual requirements for firms and specifying an element of tolerance for unintentional non-compliance.

Streamlining of accreditation schemes to ensure that they are pitched at the correct level to ensure quality and to avoid duplication.

Rationalisation of hourly rates to make it easier to identify the relevant fee.[67]

63.  While we have not had time to assess these measures in detail, we recommend that the Government assesses the merits of the cost-saving proposals put forward by the Law Society. While we understand the need for short-term savings and support many of those set out in the consultation paper, we hope that the Government will now turn its mind to addressing some of the long-term cost drivers of legal aid, not least with a view to reducing the extent of some of the limitations to scope proposed in the consultation paper, the impacts of which we consider below.


52   AJ 41, para 3.3 Back

53   AJ 44, para 3.4 Back

54   Ministry of Justice, Legal Aid Reform: Legal Aid Remuneration -Civil and Family Fees, Impact Assessment, p2 Back

55   Uncorrected transcript of oral evidence taken on 18 January, 2011, QQ 12 and 29, HC 745-i Back

56   AJ 63  Back

57   Q 155 Back

58   AJ 63 Back

59   Ibid Back

60   Senior President of Tribunals' Annual Report, February 2011, p 39 Back

61   Ministry of Justice/Tribunals Service, Quarterly Statistics for the Tribunals Service, 2nd Quarter 2010-11, January 2011,
p 29 
Back

62   HM Revenue and Customs/DWP, Tackling fraud and error in the benefit and tax credits systems, October 2010, p8 Back

63   Senior President of Tribunals' Annual Report, February 2011, pp 40-41 Back

64   AJ 05, para 3.3.3 Back

65   AJ 60 Back

66   Qq 355-58 Back

67   AJ 05, para 3.5 Back


 
previous page contents next page

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

© Parliamentary copyright 2011
Prepared 30 March 2011