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Lord Phillips of Sudbury: I was hoping to intervene before the noble and learned Lord sat down because I wished to ask whether his amendment had the effect, not of removing capping but of simply removing capping to another place. If his amendment were carried, would it not mean that those categories of case would receive certainty of funding and that that would mean potentially a great deal less funding for the areas that are not enumerated here?

Lord Archer of Sandwell: I am grateful to the noble Lord for giving way. What he says is absolutely right. We cannot have it both ways. If one says that there are certain situations which ought to be guaranteed funding, that means that certain other very worthy situations might be short on funding. I am putting the amendment forward for discussion. I can see the difficulties. I still think there may be a case for saying that some things should be sacrosanct.

Baroness Goudie: I feel that it would be wrong to restrict ourselves in this way. I would rather have the

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funding and not restrict ourselves. As the noble Lord, Lord Phillips, said, there are a number of other issues to which perhaps we would like to give priority, so I think it would be wrong to go down this road. I understand why the noble and learned Lord is doing it but I think it is totally the wrong way to do it. I think it should be left to the local committees.

Lord Thomas of Gresford: In the spirit of discussion to which the noble and learned Lord, Lord Archer, referred, I wonder whether I might inquire of the noble and learned Lord the Lord Chancellor what exactly is intended by Clause 7(1). Is it that the priorities that the commission shall set will always be set in accordance with any directions given by the Lord Chancellor? Or is it intended that the commission will have a wide discretion of its own and that the Lord Chancellor will give directions only in limited areas? We ought to know precisely what the clause is intended to convey.

The Lord Chancellor: I shall confine myself to the amendment before the Committee, which is Amendment No. 71. We can have a useful debate on other matters when we come to Amendment No. 72, which is in the next grouping. In the interests of order, I shall confine myself to Amendment No. 71.

The noble and learned Lord's amendment would have the effect of setting out on the face of the Bill a set of priorities for funding cases. The commission would then have a duty to have particular regard to those.

I am unwilling to accept this amendment, not because I fundamentally disagree with the list of priorities in itself--in fact, many represent the kind of priorities I have already outlined in the White Paper, Modernising Justice, and elsewhere. I do not accept the amendment because I do not believe it is appropriate for general priorities, which will influence the overall deployment of resources, to be set in legislation.

I am already accountable to Parliament for the use of resources voted by my department. Legislation determining my priorities would be an unnecessary and unusual burden and would lead to inflexibility, in that the precise meaning of each priority and its relative importance could be open to challenge.

As I said earlier, I am perfectly willing to consider subjecting to parliamentary approval the funding code and future changes to the funding criteria in the code. We shall then have every opportunity to scrutinise the priorities set out in the code when Parliament is invited to approve it. On that basis, I invite the noble and learned Lord to withdraw the amendment.

Lord Archer of Sandwell: I was not taken by surprise when my noble and learned friend said that he could not accept the amendment. I should have been somewhat surprised had he said that he could. It was a probing amendment. I can see the arguments on both sides about the approach. When I tabled the amendment I was not aware of the generous offer that my noble and learned friend would make to subject the code to parliamentary approval. We have made a great deal of progress during the course of the evening. If we are wise, perhaps we should all quit while we are ahead.

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For the moment, I am content to reflect on the situation that we have now reached and I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Goodhart moved Amendment No. 72:

Page 4, line 27, after ("set") insert (", and may from time to time vary,").

The noble Lord said: If it is the case, as I believe it may be, that the priorities set under Clause 7 by the commission will be set out in a document approved by Parliament, either under Clause 7 or as part of the funding code under Clause 9, I shall be happy to take the matter no further. I should, however, be anxious if the priorities could be established without any form of parliamentary control through approval by statutory instrument. I believe that that is not the intention. If there is to be a statutory instrument, I need take the matter no further.

The Lord Chancellor: I am indicating to the noble Lord that I am minded to subject to parliamentary approval the funding code and future changes to the funding criteria in the code.

Lord Goodhart: That does not entirely cover my point. The commission is required to set priorities in accordance with any directions to be given by the Lord Chancellor. Those priorities might or might not form part of the code. I do not think it is possible to take this matter any further now. However, if the amendments do not make it adequately clear that the code will cover priorities, I shall almost certainly wish to revisit this matter on Report. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

The Deputy Chairman of Committees: I should inform the Committee that if Amendment No. 73 is agreed to, I cannot call Amendments Nos. 74 and 75.

[Amendments Nos. 73 to 76 not moved.]

9.45 p.m.

Lord Phillips of Sudbury moved Amendment No. 77:

Page 4, line 30, at end insert--
("( ) In funding services as part of the Community Legal Service, the Commission shall aim to obtain the best long term value for money on the basis that all persons and bodies applying for funding who meet the standards set by the Commission shall be able to provide services for individuals under this Part of this Act on terms as to remuneration and otherwise, set by the Commission after consultation with the applicants, which are broadly fair.").

The noble Lord said: I have spoken at length on two occasions in this House concerning the purport of Amendment No. 77, first, in the debate on the Queen's Speech and, secondly, on Second Reading. I hope Members will be patient if I spend some time trying to sketch the backdrop to the pressing need for the amendment, as we on these Benches see it.

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I am in something of a lonely position in that I believe that I am the only practising solicitor in the Chamber tonight.

Noble Lords: No.

Lord Phillips of Sudbury: I did not realise that the noble Lord, Lord Clinton-Davis, was still in the saddle; I am delighted to know that he is. I beg his pardon. In the House generally the presence of practising solicitors, particularly ones with legal aid franchises, is not common. I feel a heavy load on my shoulders as a voice for the practising solicitor, in particular the high-street practitioner, in an age in which they get short shrift in terms of public opinion and public esteem, it being the corporate and specialist lawyers who are the cynosure of young law graduates.

None the less the high-street practitioners comprise much the greater part of the practising profession. In dealing with this debate, and in particular this amendment, which goes to the question of how exclusive contracts are awarded, I endeavoured to consult two groups of practising solicitors to find out what they thought of the Government's proposals, particularly vis-a-vis competitive tendering for exclusive contracts. I had the co-operation, which I greatly valued, of the Suffolk and North Essex Law Society, which is a typical county law society, and of the Legal Aid Practitioners Group, comprising 500 front-line legal aid practice firms. I shall refer to some of the findings of the questionnaire which those bodies put to their members. It was needed because there seems to have been an extraordinary dearth of consultation with practising lawyers in the course of putting together these far-reaching proposals.

At the back of the last of the guidance findings produced by the Legal Aid Board last October, the document entitled Exclusive Contracting, (upon which many, if not most, of the propositions in the Bill are based) there is a list of those who were consulted, which comprises rather fewer than 30 firms of solicitors. The Committee may think, as I do, that in a profession of 78,000 members that is grossly inadequate. I believe that the lack of consultation shows in this proposal more than in any other.

In saying all this, I wish to make clear to the noble and learned Lord the Lord Chancellor that I am not here in any sense as an advocate for practising solicitors, to excuse their shortcomings or to plead especially for their predicament. I fully accept that in this Bill we are not considering the benefit of solicitors as such. However, I put it to the Committee that to disregard the needs of the practising profession would undermine the very purposes to which we are all wedded; namely, to increase quality access by ordinary people to good legal services.

If the practising profession is unhappy, if its morale is low, if it does not feel a spirit of co-operation with the proposals that we in this Parliament may thrust upon them, it will be ill for the outcome. We must not pretend that we can do away with practising solicitors in large numbers. From some of the comments made in this Chamber and beyond sometimes I gain the impression

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that there is a suggestion that the voluntary sector (if I may so describe it) can somehow take on large swathes of work currently carried out by high street solicitors. That is not so. I believe that at the moment there are only 53 law centres--rather less than the number 10 or 20 years ago--and 700-plus CABs. God bless them. For many years I have had the privilege of acting for the National Association of Citizens Advice Bureaux. No one need tell me what a wonderful job those bureaux do. Equally no one should try to tell me that they can do the job of high street practising solicitors. They cannot, and they do not want to.

I sometimes get the feeling that the Legal Aid Board believes that with all of these volunteers and charities, tax and rates exemptions and all the rest of it, it will be able to foist services which are currently undertaken by solicitors onto those organisations. If anybody thinks that, they should think again. Most of them would say that they depend upon vibrant and effective local practising solicitors to do the dirty work and handle the cases that they cannot cope with and the conflicts with which they are unable to contend. There are also over 1,000 advice centres but most of them are part-time and manned by volunteers. Nothing has been said in any of the documentation about indemnity or insurance cover for the voluntary sector if and when it takes over much larger swathes of legal aid work.

The question of cost control, which rightly concerns the Lord Chancellor and the Government, can be exaggerated. The brute figures that we have been given in debates thus far disguise the fact that over the past two years the budget has come under control. The out-turn shows that the expenditure is within budget against an increase in the number of cases handled. It is not true to suggest that the budget is beyond control and soaring out of sight.

One of the interesting results of the questionnaire circulated to practising solicitors in Suffolk and North Essex is the reasons they give for the increase in legal aid costs in recent times. They refer to the following: the increasing complexity of cases; the increasing complexity of law; the impact of the Children's Act, which is a vast new legal aid burden with an immense cost consequence; increasing client expectations; concern about negligence claims and threats from clients; increased specialisation among the firms which do legal aid work, which ironically leads not only to higher quality but higher cost; and increased overheads consequent upon the bureaucratisation and demands of the Legal Aid Board itself. While one does not blame the Legal Aid Board, no one should pretend that the vast paper chase that legal aid franchising involves comes at no cost.

Another reason is low levels of legal aid remuneration. One should make no bones about it. It leads to many solicitors having to delegate legal aid work as far down the pyramid within their offices as they can in order to do the work at any kind of profit. Ironically, that leads to higher legal aid costs because invariably the work is done less quickly and the costs increase. Another reason is the increased cost of disbursements, particularly expert witness fees, which have reached a stratospheric level. A further reason is

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the increased cost of interlocutory proceedings and all the rest of it. I mention those matters because unless the Committee understands that we are not dealing here with a runaway train it may arrive at the wrong conclusion. I am desperately concerned that it should not do so.

I mention en route that the Lord Chancellor has made reference several times both here and abroad to fat cats. I wish that he would stop it. It gives a misleading impression to the great British public. Barristers earning £1 million a year from legal aid work are exceptional. Far from earning £1 million a year, many solicitors who have undertaken legal aid are shutting up shop and going over entirely to private work. A respondent to the Suffolk questionnaire, a three-partner firm in Clacton doing a lot of legal aid work, says that it has had enough; it is putting up the shutters on legal aid and getting on with work for private clients. Getting on with work for private clients means earning on average 100 per cent. more per hour worked. Again, I have collected the data from the respondents from Suffolk and north Essex. We need to bear that figure in mind. Unless we do so, we shall come to the wrong conclusion.

The Government's scheme is based upon upholding or enabling a capped budget. I think I am right in saying that it is the first time the legal aid scheme has been operated on this basis. Towards the end of the year people will not be able to have legal aid services because there will be no money available regardless of how important the case is to the poor person involved. That can only be achieved by extraordinary controls. It is dirigisme par excellence. It is a little worrying.

We are all grateful for the important accommodation by the noble and learned Lord the Lord Chancellor at the start of the debate. Nonetheless, the means by which the capped budget will be achieved involves total control of the legal aid spend, the regional legal aid spend, the categories of cases which may be within legal aid, the merits test--we have had a recent update on that--the means test and, lastly, contracting by means of competitive exclusive tendering.

I presume the proposition is this. As with any business--such as groceries or the manufacture of shoes--there are two aspects. First, one creates a demand--a plum. The plum in this case is many more legal aid cases for the lucky winners. In the tendering process, plainly one wins and the remainder lose. It is a kind of conditional fee arrangement for solicitors. The one who wins will have to handle perhaps twice or three times as many cases as last year. For those who lose, it is goodbye--there is no more legal aid for them. It is assumed, according to normal business practice, that the profession will be flocking to put in low bids for that increased legal aid work. I have news for the Legal Aid Board. It may have had only 29 responses to its national, extremely glossy, consultation attempt. The Legal Aid Practitioners Group has circularised its 500 member firms and 169 had replied by lunchtime today. The replies make interesting reading, especially when one realises that these are the shock troops of legal aid. They say clearly by three to two that they do not welcome an increase in legal aid work. Why do they not welcome

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it? It is because they are doing as much as they can to make a living. If they do more, ironically they earn less because the time spent on legal aid work will not be spent on private client work. As I indicated, if one earns twice as much for private client work, why does one wish to do more legal aid?

It is true that a few firms will be dying to put in low bids to win the tender in their town, district or city. They are few and far between. They may not be the firms that one wants if one is looking for quality to win the tender. It is also predictable--indeed, it is a result shown by the Legal Aid Practitioners Group survey--that the few firms which welcome this new state of affairs are already big in legal aid.

I put one other truism to the Committee. Survival in the field of private client work is at least as competitive--I would say much more competitive--than survival in the field of legal aid work. Therefore, it follows as night follows day that the many firms which undertake a modicum of legal aid work, which might amount to 5, 10 or 15 per cent. of their turnover, will be able to bring to that work, if they are allowed to continue with it, the expertise and skills which they will have to hone in the competitive market of their private client work.

One of the bizarre outcomes of the road we are being led down by the Government is that competitive exclusive contracting means that, first, all the losers cannot undertake legal aid work and, secondly, all the firms which do not wish to undertake more legal aid work and will therefore not tender will be lost to the legal aid system. That is wholly inconsistent with, and counterproductive to, the very aim and purpose of the Access to Justice Bill. People will not get access to justice but exit from justice because good solicitors willing to undertake legal aid work and doing it well--I emphasise that one is not looking for anyone to undertake legal aid work who does not have the requisite quality standards--and who are lost to the legal aid system will be lost to justice itself.

If exclusive competitive tendering goes ahead the effect will be that many firms will no longer be able to undertake legal aid work. Although the Legal Aid Board has had to adjust its estimates, I understand that as many as 6,000 firms will be lost to the legal aid system. Instead of the current 10,500 to 11,000 offices which undertake legal aid work to some degree, there may be only 6,000.

I had some correspondence with the noble and learned Lord, Lord Falconer, on that very issue and he kindly replied to me at length just before Christmas. Taking the point I have just made, he stated his belief that any reduction of access is more than offset by the fact that all providers will in future meet assured quality standards. No one is asking for a continuance of legal aid work by firms which do not meet the required quality standards. It is not an alternative--access or quality. We want access and quality; but we do not want firms which have the necessary quality standards to be excluded from undertaking the legal aid work they are willing to do.

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In a cynical age, I must tell your Lordships that, thank God, many solicitors undertake legal aid work because they believe that it is their duty to do so. They believe that it is their public duty to do their fair share of legal aid work even though they earn a great deal less money than they earn from their private client work. They want to undertake legal aid work because they believe that it is part of justice. I know many solicitors who will weep strange tears come the day they are forced to get richer because they cannot do that which they would for justice.

The noble and learned Lord, Lord Falconer, asked why I should worry about the number of outlets because there are, for example, only 881 Jobcentres in England and Wales and only 546 benefit offices. I do not see the relevance of giving us those numbers. On the whole, people looking for jobs are fit and capable of getting on buses or walking or driving to the nearest Jobcentre. However, one of the problems of access points in terms of legal aid services is that the whole community needs ready access to solicitors; the old, the lame, single mothers and the disabled need geographical and psychological access.

Those who have laboured as long in the field as the noble and learned Lord, Lord Archer of Sandwell, the noble and learned Lord the Lord Chancellor and I know that there is a huge psychological barrier between the poor and poorer people in our community and the legal services which they often want and do not get. To look at the matter simply on the basis of the number of Jobcentres will not do. There are invariably two sides to a conflict and both parties need ready and easy access to legal services.

The noble and learned Lord went on to say:

    "Finally, as you acknowledge, many firms currently do very little legal aid work. Some of these will nevertheless win contracts".
As I believe I have indicated, the research that I have carried out, which can be made available after the debate, demonstrates that many of those firms will not apply. Several of the firms in the Suffolk and North-Essex Law Society which responded to the questionnaire--and that was 22 firms--indicated that not only would they not apply but if they did, given exclusive competitive tendering, they had no chance of winning because they did not wish to increase their throughput.

The effect on "access", which is after all in the title of the Bill, will be parlous. Under no circumstances should we allow this to come to pass.

Once a firm has opted out of legal aid, I do not believe that it will ever come back to it. That will be the case particularly in relation to those firms which tender for the exclusive contracts and lose. Legal aid requires a particular way of looking at work. It requires people with particular skills, although I would not exaggerate that. The Government must accept that those firms which are excluded from legal aid at the first round of tendering will never come back into it.

That has a fairly devastating consequence on the second round of tendering, because which firms then will tender? If there are one or two firms in a medium-sized town, at the second round who will be

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there to achieve the lower price at the tender which is hoped for, I put it no higher, by the Legal Aid Board? That is a disadvantage which must be faced and faced squarely.

Then there is the question of quality. Most solicitors view legal aid rates as unfair or very unfair. That was the opinion of 80 per cent. of the Suffolk and North-Essex practitioners who responded. If they will receive, for legal aid work, half as much remuneration as for private client work, how do the Government and the Legal Aid Board really think that it will be possible to maintain quality, let alone improve it, on the exclusive contractual basis? It simply does not add up. Cutting fees to win the tender will mean, in the medium and long term, cutting corners to do the work.

I am afraid to say that solicitors are able to fit the work to the price like anyone else. It will not be within the capacity of the Legal Aid Board to effect a satisfactory check on the real quality of work carried out. Another finding which may surprise the Committee is the low esteem in which the quality checks of the Legal Aid Board are held by the profession. Something like 80 per cent. do not consider that the quality checks exercised by the Legal Aid Board are in any way effective except as a check on management's handling of the work: for example, where bits of paper are; whether the right forms and attendance notes have been filled in; whether the diary has the right dates in and so on. I do not believe that the inexorability of low fees--

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