Courts and tribunals fees Contents

3The fee reform programme: policy objectives and evidence

Policy objectives

Employment tribunal fees

35.The series of consultation documents produced by the Ministry of Justice in its programme of fee reform set out, with varying emphases, the objectives and principles of the Government’s approach. The Ministerial foreword to the 2011 consultation on the introduction of employment tribunal fees referred to the need to identify elements in the civil justice system which presented barriers to the promotion of growth. Describing employment tribunals and employment appeal tribunals as particularly in need of reform, it went on to say that requiring those who used the system to make a financial contribution would contribute to the goal

to relieve pressure on the taxpayer and encourage parties to think through whether disputes might be settled earlier and faster by other means.29

The Impact Assessment accompanying the consultation noted that employment tribunal claims had risen to a total of 218,100 in 2010/11, over double the number in 2004/05, almost entirely due to a rise in the number of multiple claims.30 Multiple claims are claims filed by more than one person as part of a group action, and are heard together. The Impact Assessment also noted that the cost of administering employment tribunals was £83.6 million in 2009/10, met from the public purse.31 In that context, the Impact Assessment said

The fundamental policy aim is to transfer a proportion of the cost of running the ET and EAT from taxpayers to users. The policy objective is to require those users to pay an appropriate fee where they can afford to do so in order to have their workplace dispute resolved through the ET and EAT process.32

36.The Government’s stated objectives for the introduction of ET fees were threefold: financial, behavioural (encouraging parties to find alternative ways of resolving disputes), and maintaining access to justice. There was no explicit and declared objective of deterring weak or vexatious claims, although this has been part of Government thinking for some time. The 2011 Resolving Workplace Disputes consultation issued by the Department of Business, Innovation and Skills and the Tribunals Service, for example, said, in relation to employment tribunal fees:

a price mechanism could help to incentivise earlier settlements, and to disincentivise unreasonable behaviour, like pursuing weak or vexatious claims.33

The Ministry of Justice’s own December 2011 consultation stated:

Whilst there is considerable disagreement about the number of weak and vexatious claims that are made, it is expected that the introduction of fees will encourage parties to resolve disputes earlier and to think more carefully about alternative options before making a claim or taking a case to final hearing.34

Ministers have also claimed that the introduction of fees has had that effect.35

Other court and tribunal fees

37.In its December 2013 consultation document Court Fees: proposals for reform the MoJ states that

Providing access to justice remains the critical objective, underpinned by legislation, of the government’s approach to the reform of HM Courts & Tribunals Service generally, and to the reform of fees specifically.36

But it also argues that the fact that the courts had not been operating on the basis of full cost-recovery meant that resources had been diverted from “other areas of operations”, and that, with reducing the fiscal deficit a top priority for the Government,

those using the civil court system would, in future, be expected to meet the cost of the service where they can afford to do so, and for certain types of proceeding would be expected to contribute more than the cost. Fee remissions will continue to be provided for those who qualify, so that access to justice is not denied.37

38.The Ministry of Justice’s December 2013 consultation document on court fees said that there was a deficit of £110 million in the civil court system, the difference between the cost to the public purse of the courts and receipts from fees following remissions.38 The MoJ’s written evidence to this inquiry claimed there was still a “gap” of £214 million in the funding of the civil courts, family courts and tribunals.

39.In its original memorandum to our inquiry, the MoJ says that it is necessary to make sure that courts and tribunals are properly funded, and that the Government’s plans for reform of courts and tribunals are intended to deliver a more modern, efficient and user-focused system. The Ministry further claims that its fee charging reforms have been in pursuit of the objective of protecting access to justice.39 That claim found scarcely any supporters in the evidence submitted to us. One organisation which did express support, in the context of employment tribunal fees, was Peninsula Business Services Limited, which said that fees had “improved access to justice for all by helping to ensure that the tribunal’s resources are allocated effectively”.40

The principle of fees

40.Some oppose the charging of any fees to litigants on principle. The Odysseus Trust described fees as a “tax on justice imposed to enable HM Treasury to profit from people seeking to enforce their legal rights”.41 In the context of employment tribunals, many argued that it was simply wrong to impose any fee on claimants. Sybille Raphael of Working Families said “these fees imperil the rule of law”;42 and Rosalind Bragg of Maternity Action said there were broader social and economic benefits from enforcement of employment law, including promotion of gender equality and protection of the health and wellbeing of new mothers and their babies.43

41.Others accepted, with varying degrees of reluctance, that fees for litigants were a legitimate tool for the Government to use, and took the view that debate should focus on ways to structure the system, through appropriate fee levels and fee remission arrangements, to protect access to justice. Some, while accepting the notion that users of the justice system should pay something towards the cost of the system, baulked at fees being set at full cost-recovery level or at an enhanced level. The Judicial Executive Board explained the general position of the judiciary as being that it had “never accepted the policy principle that courts and the justice system should be self-financing”. The JEB continued:

While the judiciary would agree and support part of the costs of the justice system being borne by users of the system, the justice system is a public good that all society benefits from, and it warrants and requires the support of public funding.44

42.The Judicial Executive Board’s response to the Government’s December 2013 consultation made the additional point that the civil courts were already self-financing, and that the cost-recovery proposals were in effect using fees in civil courts to seek to meet a financing deficit in the family courts. The JEB posed the question:

If, as all agree, it is essential in the public interest to provide a family justice system, and it cannot be fully self-financing, should the cost be found from society at large or from a charge, essentially by way of taxation, on those who need to bring claims in the civil courts?45

43.In oral evidence, Lord Dyson, Master of the Rolls, emphasised that the real area of debate was the “critical point” of access to justice. On enhanced fees and cross-subsidisation between different parts of the court system, Lord Dyson said that, although this was ultimately a policy decision for Parliament and the Government, the risk of denying justice to a lot of people was intense.46 His access to justice concern was not so much about people entitled to fee remission - although with the remission threshold set so low it only captured “really poor people” - but with “ordinary people on modest incomes”, who, he said, will “inevitably be deterred from litigating”.47 In their written evidence the Family Division of the High Court gave a more sonorous denunciation of the principle of enhanced fees:

In this octocentenial year of Magna Carta, it is important to recall one of the fundamental principles articulated by that seminal instrument, namely that “To no one will we sell, to no one deny or delay right or justice”. The principle that the State will provide access to democracy without profit is one of the fundamental pillars of a democratic society.48

44.Legal practitioners also expressed considerable concern about the impact of the level of fees on access to justice, and about the principle of enhanced fees. Jonathan Smithers, the President of the Law Society, said that any increase in fees would tend towards a two-tier justice system for the rich and the poor, and that cross-subsidy in the justice system was not the right way to proceed.49 Chantal-Aimée Doerries, Chairman of the Bar Council of England and Wales, said that the Bar Council accepted an element of contribution towards costs, but they did not support cross-subsidy.50

45.In this Report we are concerned with the principles behind the Government’s policies as well as the practical effects of those policies. Before we look in more detail at those practical effects, we set out here the broad position from which we approach the main questions of principle. First, although it is a legitimate position to object to any court fees being charged to litigants, that is not a position we share. Some degree of financial risk is an important discipline for those contemplating legal action, and a contribution by users of the courts to the costs of operating those courts is not objectionable in principle: the question is what is an acceptable amount to charge taking into account the need to preserve access to justice. The answer to that question will vary from jurisdiction to jurisdiction, and between different types of case. Factors which need to be taken into account include the effectiveness of fee remission, the vulnerability of claimants and their means in comparison with respondents—which may pose particular problems of inequality of arms when individuals or small businesses are seeking to uphold their rights against the state or major companies—and the degree of choice which litigants have in whether to use the courts to resolve their cases and achieve justice. There should be a clear and justifiable relationship in the courts and tribunal fee system between these factors and the degree of financial risk, through the size of fee, that litigants should be asked to bear.

46.We recognize that the principles of cost-recovery and of enhanced fees have been accorded statutory authority by Parliament. There is no doubt that Ministers are empowered, subject to parliamentary approval of the necessary delegated legislation, and subject to other provisions in the relevant primary legislation, to introduce such fees for litigants. However, the introduction of fees set at a level to recover or exceed the full cost of operation of the court requires particular care and strong justification. Where there is conflict between the objectives of achieving cost-recovery and preserving access to justice, the latter objective must prevail.

Evidence base

47.Much of the discussion about the merits of the Government’s policy on courts and tribunals fees revolves around the extent to which in practice it is affecting access to justice, so a central question to be addressed is the evidence which there is about those impacts or likely impacts. Evaluation of that evidence will be bound up with assessment of whether the impacts are bearing out the Government’s predictions in the research and impact assessments which they conducted as part of the process of policy formulation, encompassing the degree to which the policy is meeting its objectives of raising projected revenue, encouraging alternative means of resolving disputes, and maintaining access to justice. We are conscious that although there is a considerable amount of information already on the public record about the impact of the introduction of employment tribunal fees, for the fees and fee changes introduced in 2014 and 2015 the picture is not so clear. We are also aware that fee increases are taking place alongside other changes in the justice system, such as changes to employment law and changes in eligibility for legal aid, which make it an uncertain business in many cases to disentangle impacts attributable to fees alone.

48.The December 2013 proposals for court fees were accompanied by—

This research base was later supplemented by Ipsos MORI with research consisting of interviews with 31 people who had issued proceedings in the civil courts, and a study commissioned from the British Institute for International Comparative Law on factors influencing international litigants with commercial claims.56

49.In its consultation response to Cm. 8751 the senior judiciary was scathing about the quality of the research used by the Ministry to inform its policy formulation, describing it as

clearly inadequate to assess the probable consequences of both the Costs Recovery and Enhanced Fees proposals on the ability of parties to afford access to the courts and on their willingness to do so.57

Lord Dyson amplified these criticisms in oral evidence, characterising the research which had been done as “lamentable”.58 In his turn the Minister, Shailesh Vara, robustly defended the research base. He argued that the Master of the Rolls had “completely ignored” four pieces of research beyond that conducted by Ipsos MORI, and said he did not accept Lord Dyson’s criticisms.59 In general other witnesses aligned themselves with a critique of the adequacy of the Ministry’s research. The Chairman of the Bar Council thought the research undertaken in relation to the domestic effects of fees was “insignificant”, and the President of the Law Society said it was “poor”.60

50.The Minister’s wish to defend the quality of the Ministry’s research is understandable, but we share the view expressed by the senior judiciary and some others who gave evidence to us that the research which was conducted as part of the formulation of the Ministry’s proposals in relation to courts and tribunals fees provides an insufficient basis to justify the Ministry’s proposals. That does not mean that those proposals are unjustifiable; nor does it mean that we are heedless of the financial pressures on Ministers in a Department with unprotected spending. We understand that the Ministry does not always have the luxury to be as rigorous and meticulous in preparing the ground for controversial policies as it might wish. But we do consider it important that in such circumstances the Ministry is frank about that fact and does not represent the quality of its evidence base to be higher than it is.

Pace of reform

51.A feature of the Government’s programme of reform of court fees has been that packages of proposed changes have followed on so swiftly from each other that there has been insufficient time to assess the impact of particular changes before further changes are advanced. This was particularly the case in relation to the Government’s proposal to lift the cap on the fee for money claims from £10,000 to £20,000 or more, put forward for consultation only a few months after the introduction of the fee set at 5% of the value of the claim allied to the £10,000 cap. In the end the Government did not proceed with the proposed doubling of the cap, citing in particular the argument made by consultees that there had not been sufficient time to understand the impact of the enhanced fees with the £10,000 cap. The Chairman of the Bar Council told us that, with contracts being written today, the impact of enhanced fees for money claims on the international competitiveness of London would only become clear in a few years’ time.61

52.The impression that the Ministry of Justice tends to see court and tribunal fees as a potential milch cow of income to which it can repeatedly return is enhanced by its recent proposals for a substantial hike in fees for immigration and asylum claims, aimed at achieving full cost-recovery, published in April 2016.62 The background to this fresh consultation is explained in paragraphs 24 and 25 above. The main reason cited in Cm. 9261 for the Ministry having to look again so soon at recently announced decisions is the “very challenging settlement” reached by the Ministry in the Spending Review announced in November 2015.63

Streamlining of court processes

53.Proceeds of court fees are intended to be applied to the operation of courts and, in the case of the proceeds of enhanced court fees, they are intended to contribute to provision of an efficient and effective system of courts and tribunals. The Ministry of Justice made no claim that the proceeds of enhanced fees had as yet contributed to a streamlined and improved service in courts, and witnesses to our inquiry saw no sign of such a development. That is not surprising as income from fees has in effect simply replaced funding previously provided from the public purse.

31 ibid para 1.27. The Employment Appeals Tribunal cost £2.5 million in the same year.

32 ibid para 2.4

33 Resolving Workplace Disputes: A consultation, DBIS and Tribunals Service, January 2011, p.50

35 See e.g. HC Deb 21 October 2013, c.43W; andMinister hails 80pc fall in employment tribunals, The Daily Telegraph, 26 April 2014, accessed 5 April 2016

37 Ibid para 7

38 ibid, para 31.

39 FEE0033 paras 1 and 3.

41 FEE0045 para 8

42 Q80

43 Q78

44 FEE0090 para 3

46 Qq 269 and 271

47 Q271

48 FEE0091 para 3.10

49 Qq333-334

50 Qq339-340

58 Q271

59 Qq417-429. As explained in supplementary evidence from the Ministry, FEE0117 , the other four pieces of research which Mr Vara was referring to were the two MoJ Analytical Services papers, the Queen Mary, London research and the BIICL study referred to in para 48.

60 Q358

61 Q371

63 Ibid, para 21

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16 June 2016