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 funding | Projected 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.
| Number | Per cent
|
| No difference | 0 | 0%
|
| Withdrawal of specialist services | 85
| 80% |
| Reduced capacity to meet client need | 90
| 85% |
| Risk to continuation of the local CAB as a whole
| 54 | 51% |
| Loss/reduction in capacity of key agencies to refer clients to
| 75 | 71% |
| Increased referrals to other sources of help
| 52 | 49% |
| Unable to represent clients at court or tribunal
| 64 | 60% |
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 volume | Certificated cases (representation)
| As % of current cases volume |
| Family | 211,000 | 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 benefits | 113,100
| 100% | 10 | 27%
|
| Others | 14,900 | 85%
| 4,230 | 45% |
| Total | 502,000 | 68%
| 67,130 | 44% |
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
|
