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
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