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

Written evidence from Citizens Advice (AJ 30)

1.  Citizens Advice is the national body for Citizens Advice Bureaux in England and Wales. The CAB service is the largest independent network of free advice centres in Europe, with nearly 400 member bureaux providing advice from over 3,300 outlets, including health settings, high street outlets, community centres, health settings, courts and prisons.

2.  The Citizens Advice service provides free, independent, confidential and impartial advice to everyone on their rights and responsibilities. It values diversity, promotes equality and challenges discrimination. The service aims:

  • To provide the advice people need for the problems they face; and
  • To improve the policies and practices that affect people's lives.

3.  In 2009-10 Citizens Advice Bureaux in England and Wales advised 2.1 million people with seven million problems in total.

4.  We welcome the opportunity to inform this inquiry, against a backdrop of proposed major reforms to the justice system and changes to the scope of legal aid funding. The Ministry of Justice, through the Legal Services Commission (LSC), is the most significant funder of Citizens Advice specialist services from its civil legal aid budget. In 2009-10, it provided £25.7 million for specialist advice delivered by the Citizens Advice service. This has enabled over 450 CAB specialist advisers to deal with 43,234 welfare benefit problems, 56,990 debt problems, 9,129 housing and 2,954 employment problems under contracts with the LSC. It accounts for over 20% of all publicly funded cases in these topic areas, and 10% of civil funding.

What impact will the proposed changes have on the number and quality of practitioners, in all areas of law, who offer services funded by legal aid?

5.  We will focus our answer on Citizens Advice Bureaux and not for profit providers, although we consider that the proposed changes will have a detrimental impact on the supplier base of all legal aid practitioners, including the ability of non-legal aid agencies to refer their clients to practitioners when legal advice is needed. In respect of not for profit providers, it is alarming that the Ministry estimates that suppliers in this sector will loose up to 97% of their legal aid funding, depending on the type of specialist work they do. The table below shows the estimated impact of funding cuts to Citizens Advice Bureaux following scope changes.
Category of law Current annual fundingProjected funding Projected loss
Debt£12,813,400 £3,203,350£9,610,050
Welfare benefits£8,789,711 £0£8,789,711
Housing£2,733,540 £1,749,465£984,075
Employment£769,580 £0£769,580
Community care£460,576 £460,576£0
Immigration£181,480 £74,407£107,073
Total £25,748,287 £5,487,798£20,260,489

6.  Losses of this level would be very destabilising, and could present a critical situation for the CAB network. Legal aid funding contributes significantly to the overall funding of the CAB service and the loss of such a considerable funding stream will have a significant impact on the ability of the service to deliver not only legal aid, but also other client services. We surveyed our members shortly after the Green Paper's publication, asking them what impact would the reductions in legal aid scope would have on the CAB service. Around 100 bureaux responded as below.
NumberPer cent
No difference00%
Withdrawal of specialist services85 80%
Reduced capacity to meet client need90 85%
Risk to continuation of the local CAB as a whole 5451%
Loss/reduction in capacity of key agencies to refer clients to 7571%
Increased referrals to other sources of help 5249%
Unable to represent clients at court or tribunal 6460%

7.  It is important that legal aid funding should not treated in isolation from what is occurring with other sources of funding for advice, especially given the Green Paper's assumption that people unable to access legal aid as a result of policy changes may be able to access other sources of free advice. The free advice sector is suffering disproportionately from public funding reductions. For example, funding for free face-to-face debt advice via the Government's Financial Inclusion Fund will not continue beyond March 2011. We are aware that many local authorities are reducing their budgets for voluntary sector support substantially. The financial stability of Citizens Advice Bureaux relies on a funding mix, and increasingly many projects which provide services which are complementary to legal aid ceasing be financially viable.

The Government predicts that there will be 500,000 fewer cases in the civil courts as a result of its proposed reforms. Which cases will these be and how will the issues they involve be resolved?

8.  These cases will be in the areas of law taken out of scope, namely welfare benefits, debt issues, housing cases not involving homelessness, employment, immigration and family issues. It should however be noted that that the "500,000 fewer cases" referred to in the Impact Assessment does not mean cases in the civil courts, but rather cases which might no longer fall within the scope of legal aid funding.[6] Civil legal aid funding covers both advice ("Legal Help") and representation ("Certificated cases"); however in many case categories such as debt, cases rarely lead to a full legal aid certificate where the client's case will be presented in a civil court by a solicitor. Indeed, early advice from Legal Help can help resolve problems long before they ever get to court. We have summarized the Ministry of Justice's estimates on caseload reductions overleaf:
Category Legal Help Cases (advice) As % of current cases volumeCertificated cases (representation) As % of current cases volume
Family211,000 83% 53,800 48%
Debt 75,000 75% 220 57%
Employment 13,300 100% 70 94%
Housing 38,000 36% 2,400 22%
Immigration 37,300 41% 6,400 29%
Welfare benefits113,100 100% 10 27%
Others14,90085% 4,23045%
Total502,000 68% 67,13044%

9.  What this table very clearly shows is that the proposals, as well as reducing the volume of publicly funded cases overall, will shift the balance of public funding away from early advice. Without access to early advice, many cases may not be able to get resolved at all. Some may revert to other public services, such as health or adult social services, or arrive at the surgeries of local politicians. Currently, well over 60% of legal help cases report positive outcomes; these outcomes can both save the costs of adverse consequences for clients such as homelessness and health problems but also save resources for other public authorities.[7] For example:

A 59 year old woman sought advice from a Lancashire CAB about a benefits and debt problem. Her right leg had been partially amputated in an operation to save her life, and her husband had gave up work to look after her. The care and mobility components of her disability living allowance (DLA) were reduced when DWP reviewed her claim. Consequently her husband lost his right to carers allowance. This meant a significant drop in their household income and they were unable to afford essental expenditure like heating. She asked for the decision to be reconsidered but it was not changed. She began to feel unwell and was treated for depression. A legal aid funded caseworker gave her advice on the relevance of the Contributions and Benefits Act 1992 for the various rates of the care component of DLA and lodged an appeal under the Decision Making and Appeals Act 1998, supported by medical evidence from her GP. The client's DLA was then restored without her needing to have a tribunal hearing. This early intervention saved substantial costs for both the DWP and the Tribunals Service and reduced the costs to the NHS of the client's treatment for depression. The cost of the help to the legal aid fund was £221 in total.

10.  Consequently we consider that there is a very poor business case for pursuing the proposals to take social welfare law out of scope. Using data from the Civil and Social Justice Survey on the adverse consequence costs of legal problems, and the Legal Services Commission's outcomes data from legal advice work, Citizens Advice have developed a cost benefit analysis which sets off legal aid expenditure against the savings achieved from early advice (Legal Help) interventions.[8] This analysis estimates that:

  • For every £1 of legal aid expenditure on housing advice, the state potentially saves £2.34.
  • For every £1 of legal aid expenditure on debt advice, the state potentially saves £2.98.
  • For every £1 of legal aid expenditure on benefits advice, the state potentially saves £8.80.
  • For every £1 of legal aid expenditure on employment advice, the state potentially saves £7.13.

11.  The Government's proposals assert that for those unable to obtain legal aid under the new criteria, they may use private services, other sources of free advice, or pursue self help strategies. The first option is usually unrealistic and affordable for clients—the Ministry estimates that 85% of legal representation and 80% of legal help cases are from individuals within the bottom income quintile. Other sources of advice may be unavailable as under current arrangements, most specialist casework undertaken by voluntary sector organisations is funded through the legal aid system. Many of the alternative sources of help identified in the Green Paper are either not advice services at all, or just provide information rather than independent, quality assured advice. Whilst there is also a range of volunteer and pro-bono services, there is no evidence that these can provide an adequate substitute to publicly funded specialist casework services. We provide more evidence on these issues in our response to the Ministry of Justice and will forward a copy to the Committee.

12.  Consequently, people with out of scope cases will have no or limited access to advice and will either have to whether their problems or pursue "self help" strategies, such as self-representation before tribunals. Those who seek to resolve problems without advice often fare poorly in dealing with complex systems. For example:

A CAB in the West Midlands saw a 29 year old lone parent. She was receiving child tax credit, child benefit and industrial injuries benefit and had made a claim for employment and support allowance (ESA) after suffering back injuries at work. At the work capability assessment, she was awarded 12 points and therefore was not entitled to ESA. Without getting advice, the client appealed this decision and opted for a paper hearing because she was scared and unaware of what would happen at an oral hearing and did not know that it would have been better for her to have attended. She was under the impression that it was a very formal affair like a court of law which worried her a lot. Her appeal was then sent back to her stating that the 12 points awarded "seemed appropriate" and that she would not be entitled to ESA. If the client had received advice from the CAB, they would have advised her to apply for an oral hearing as she would have had a better chance of success.

What action could the Government be taking on legal aid that is not included in the proposals (for example, on high cost cases)?

13.  In our response to the Green Paper and submissions to the Ministry of Justice for the Comprehensive Spending Review, we recognised the need for significant savings in the legal aid system. However, the surest route to achieving savings is to reduce demand on the legal system through early intervention and advice, tackle the cost drivers of legal aid, and reduce the costly bureaucracy in the systems for resolving legal disputes—including legal aid. We agree with the Green Paper that less costly alternatives need to be found to using lawyers and the court system for resolving many civil problems, whilst maintaining equal access to the legal system as a backstop.

14.  However, so far Government have not proposed developing the alternative options they mention in the Green Paper, or taken action to simplify procedures and make it any easier to seek redress without recourse to legal aid. Other options for savings have not been explored, for example, action to reduce high cost cases. The potential for administrative savings has not been explored, whilst the impact assessments suggest that there will be significant implementation costs to their proposals which will require more bureaucratic procedures to assess eligibility for funding. Overall administrative and procurement costs of the legal aid system have continued to rise in recent years disproportionately to the amount of funding available for delivering frontline legal advice and representation services.[9] The funding scheme for Legal Help in particular could be far more straightforward, for example using the block funding method used in the Legal Aid Board pilot in the 1990s.

Do the proposals to implement the Jackson report recommendations on civil court funding and costs adequately reflect the contents of that report?

15.  It is welcome that the Government is looking to address the problem of high and disproportionate costs in the civil courts, taking the recommendations of Lord Justice Jackson as a starting point. We also welcome the package of proposals from the Jackson review, including a 10% uplift in general damages, which might reduce the costs of after the event insurance and lawyers success fees (CFAs), although the proposals also mean claimants accepting more risk of unrecoverable costs.

16.  Lord Justice Jackson's report specifically recommended that there needs to be a new pre-action costs regime including sanctions and enforcement for the protocols. However the Government needs to consider the many low value claims that never get to court and will continue to incur disproportionate costs. Indeed, as the Jackson report notes, costs are increasingly "frontloaded" at this stage, and pre-action protocols are frequently ignored leading to unnecessary litigation. Bureaux often see evidence of this, especially in housing possession claims. For example:

A West Midland CAB reported that a social landlord had issued possession proceedings against a client even when he had an agreement to pay £26 per week towards the rent and the arrears. He was liable to pay court fees of £100 for these proceedings, and was concerned that additional legal costs would be added to his rent account even though it was clearly the landlords who were in breach of the pre-action protocol as they entered in a payment plan with the client and the client kept to the payment arrangement.

17.  Lord Justice Jackson also recommended that legal aid should be retained at current levels, and that other cost barriers to using the legal system such as court fees should not be pushed up. Recommendations to improve efficiency in the court system such greater electronic working and a more effective IT system should also be pursued. We would urge that the Government should study these aspects of the Jackson report far more closely.

What are the other implications of the Government's proposals?

18.  In withdrawing funding for social welfare law advice, the Ministry of Justice is taking away a key route to redress. The Justice Committee needs to look not just at the short term impact in terms of loss of legal aid providers, but rather the long term social policy impact of withdrawing such a vital publicly funded service. The proposition that the proposals will lead to "behavioural changes" in the way people address their disputes needs to be tested. The research and analysis undertaken by LSRC and others suggests that people give up trying to obtain help where this is hard to access. Clients in the social welfare categories are amongst the most vulnerable in society, they are affected by changes in the economy, labour markets, public services reform and policy initiatives impacting on rights and entitlements (eg welfare reform). We predict a significant increase in advice demand in coming years, but with far fewer advice services available.

19.  Another impact is an significant risk that, for problems taken out of the scope of legal aid, advice seekers could be taken in by commercial services that do not provide an adequate or appropriate service to the client.[10], For example:

A Surrey CAB saw a woman who had left work because of changes made by her employer in her terms and conditions of employment, which were unacceptable to her. The client had contacted a company who offered to help with an application to the employment tribunal. She paid £247, but seemed to have received little and inadequate help from this company. All the company had done was a letter to her former employer and an incomplete ET1 form, which did not indicate what financial compensation she wanted.

A CAB in North-West Wales reported that a 32 year old woman was cold called by a claims management company offering to check the enforceability of her credit agreements taken out before April 2007 then dispute liability if the agreements are unenforceable. When the woman told the claims management company that she had one credit card debt, the company said that they had a 100% success rate with that credit card company. She was then asked to pay a fee of £475 to have her credit agreement checked and she paid the sum. However, the client was not advised that a second fee of £400 would be payable to make a claim against the credit card company after the agreement had been reviewed. The company's literature only referred to a "small fee" and not specific sums. The CAB noted that if the claims manager had made the client fully aware of the full cost of making a claim against the credit card company, she would not have proceeded with the complaint as she could not afford it. The client had therefore lost £475 to simply have her credit agreement reviewed.

A CAB in Kent saw a woman who recently had to stop work because of health problems, and was claiming employment and support allowance. She had multiple debts including rent arrears of £555.87, council tax arrears of around £1,400 (which she was paying off at £150 a month and for which she was also paying the council's bailiffs £81 a month) and water and sewerage arrears of £800 (which she was paying off at £10 a week on a card). In addition, she was paying a debt management company £28 a month to manage other debts (mainly credit cards). The debt management company would not deal with the client's rent and council tax arrears. The client had now received a notice from the bailiffs collecting council tax that they would visit her home to levy goods for unpaid council tax. The CAB commented that as a result of the advice given by the debt management company, the client was paying money to non-priority creditors which should be going to her priority creditors.

20.  Policy lessons need to be learnt from the past; the Access to Justice Act removed legal aid funding for personal injury cases in favour of a new conditional fee (CFA) regime funded through recoverable after the event (ATE) insurance premiums. This resulted in widespread misselling of conditional fee agreements for low value claims and the development of a new predatory claims management sector. To assess this risk we would suggest that policymakers have regard to the findings of the Claims Management Regulator on sector activity in relation to unenforceable consumer credit debts.

January 2011

6   See Impact Assessment: Scope Changes Back

7   See Towards a business case on legal aid, Citizens Advice, 2010  Back

8   ibid Back

9   In 2008-09 the figure for the LSC's administrative costs was £124.4 million. Back

10   For example, see Debt management compliance review (OFT, September 2010) Back

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