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Lord Carlisle of Bucklow: My Lords, I intervene to ask the noble and learned Lord, Lord Falconer, whether he will be good enough to answer certain questions. I say this with great diffidence because I did not take part in the debates in Committee, although I have attempted to read them.

There is one point I do not understand. The noble and learned Lord the Lord Chancellor said on many occasions in Committee that he was anxious that the Bar should contract with the commission for its services. How will that work? If I have raised this matter at the wrong time, I apologise, but this seems to be the appropriate group of amendments on which to mention it.

I understand that the commission will contract with a solicitor to do a certain volume of work. I declare an interest as a member of the criminal Bar practising in chambers which do a great deal of criminal work. When the noble and learned Lord the Lord Chancellor says that he hopes that the Bar will contract directly with the commission, how does he envisage that will occur as regards criminal work? Are the chambers to which I belong, or a group in that chambers, to agree to do so many cases during the year for a lump sum? If so, how will they get them? Presumably they will still come through solicitors, or will they not?

I accept that I ask these questions in ignorance. I hope that they are not so basic as to mean that I have not understood the principles of the Bill. I am not sure that I appreciate how contracting will work given that the noble and learned Lord the Lord Chancellor says that it should be direct with the Bar. I do not see how that will work in criminal practice. I should be grateful for an explanation.

Lord Falconer of Thoroton: My Lords, the noble Lord is certainly not misplaced in terms of timing. This seems to me to be the right place to raise the matter. The question of how the legal services commission will contract with the Bar is plainly, to a large extent, in the hands of the Bar. There have been discussions about

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how it might be done. The groupings might be chambers, people within chambers, or other groupings, including, for example, circuits. It has been suggested in some quarters that circuits could contract with the legal services commission.

As a matter of principle, we are prepared to discuss with the Bar what it sees as the most convenient way to contract. Thus, having identified with whom the contracts could be made--I make it clear that that could also be with individuals--one might contract for a type of case, an individual case or certain aspects of cases. The most obvious would be, "You will do a certain number of pleas from a set of chambers", or something of that nature. I am not ruling out anything. It seems to us to be possible that with goodwill on both sides--there is certainly goodwill on the side of the Lord Chancellor's Department--structures could be worked out that were acceptable to the Bar whereby there would be direct contracting with the Bar. The Bar would thus avoid the problem of being dependent upon what had been negotiated with the solicitor, given that there would be great pressure on the solicitor to negotiate as low a price as possible. It takes two to come to sensible arrangements.

Lord Renton: My Lords, I am grateful to the noble and learned Lord for giving way. This is an important matter. I refer to the word "groupings" in relation to a set of chambers. We must be careful to bear in mind that, not only by long tradition, but also by continuous professional standards, the Bar does not form partnerships. It does not contract "globally" as a set of chambers. Before the noble and learned Lord sits down, can he give an assurance that in the system he has described the individual responsibility of barristers will be retained?

Lord Falconer of Thoroton: My Lords, with the greatest respect to the noble Lord, it is not for me to set out how the Bar organises itself in relation to the sort of issue to which he has referred. I said groupings within chambers because I know, from my own experience, that in certain chambers some people do only criminal work while others do only civil work. It might well be that it would be inappropriate for the whole set of chambers to contract; perhaps only part of it would do so.

I do not think it appropriate for me to start talking about how the legal aspects of the matter should be dealt with. I believe that to a large extent it is for the Bar to work out the most convenient way to proceed and to come forward with ideas as to how this may be effected, having regard to its traditions, ethos and rules of conduct.

All that we can say is that we are willing in principle, and keen, for some arrangements to be entered into which would permit the payment of direct sums to advocates. In speaking about "the Bar", I appreciate that solicitors may be instructed by other solicitors, but for the purposes of the debate, it is easier to talk about "the Bar".

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Lord Renton: My Lords, I know that we are not in Committee, but this is such an important matter that I am grateful for being allowed to intervene again. Surely, it is not good enough for us to leave it to the Bar when the Bill may make it possible to change the whole system.

Lord Falconer of Thoroton: My Lords, the Bill makes it possible for direct payments to be made to the Bar. It would be wholly inappropriate for the Bill to specify the arrangements to be made by the Bar. I hope that that answers the noble Lord's question.

Lord Carlisle of Bucklow: My Lords, I am grateful to the noble and learned Lord, Lord Falconer, for what he said. However, I am still perplexed. I declare an interest again. I am a member of what I suppose is probably the largest set of criminal chambers in the Temple.

I understand the noble and learned Lord to say that the commission might contract with a certain number, juniors in those chambers, to do a certain number of cases in a year at a fixed price. But how will it get them? Does it mean that access will be direct from the Bar without going through a solicitor? Are we changing other principles of the profession at the same time or will those barristers get such cases only through a contracted solicitor choosing to come to that member of the Bar? I am genuinely mystified about how the system will work.

Lord Falconer of Thoroton: My Lords, I am sorry to repeat the answer. We are prepared to do it. However, in a sense, it is for the Bar to work out precisely how it wants the provision to work. It is not for me to comment on questions of direct access, for example. That seems entirely a matter for the Bar. Therefore, I do not think I can elaborate further on the position.

Lord Kingsland: My Lords, I thank the noble and learned Lord for his extremely full and most helpful explanation of the amendments in the name of the noble and learned Lord the Lord Chancellor. I shall read carefully what he said, but the impression I have is a positive one.

I have just one reflection on the latter exchanges between the noble and learned Lord, Lord Falconer, and the noble Lords, Lord Carlisle of Bucklow and Lord Renton. I entirely accept that the relationships between the legal services commission and the Bar are, in the first place, matters for the two parties. But the noble and learned Lord will bear in mind that the Lord Chancellor has taken substantial powers under Schedule 5 to deal with certain matters connected with competition in the provision of legal services which can, in certain circumstances, touch on the rules of the profession relating to etiquette, and so forth. Although the noble and learned Lord, Lord Falconer, said that contracting was really a matter for the Bar, it could become a matter for the Lord Chancellor if it touches on some of the very substantial powers that he has in Schedule 5.

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In the period of deep reflection that I know will be going on between Report stage and Third Reading, it might be helpful for the noble and learned Lord to reflect on that fact to see whether, after due consideration, he might like to provide one or two suggestions about how this contractual relationship could develop. I am most grateful to the noble and learned Lord for the way in which he has responded to this amendment. I beg leave to withdraw my amendment.

Amendment, by leave, withdrawn.

Clause 7 [Services which may be funded]:

[Amendment No. 41 not moved.>

The Lord Chancellor moved Amendment No. 42:

Page 4, line 29, leave out ("under section 4").

On Question, amendment agreed to.

The Lord Chancellor moved Amendment No. 43:

Page 4, line 30, at end insert (", and
(b) after taking into account the need for services of the descriptions specified in section 5(1A).").

On Question, amendment agreed to.

9 p.m.

Lord Phillips of Sudbury moved Amendment No. 44:

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 contract or by regulations.").

The noble Lord said: My Lords, this amendment confronts a central financial instrument behind the Government's proposed reforms; namely, competitive tenders for block contracts to supply legal services. As it has been made clear, that is the ultimate destination for legal aid financing. Unless this amendment is successful or its sister Amendment No. 57, in future the public may only choose solicitors, and possibly barristers, who have won the competitive tenders. I make it clear that that will exclude many thousands of firms of solicitors of the requisite quality standards which are currently doing legal aid. No solicitor or barrister is looking for what the noble and learned Lord the Lord Chancellor sometimes mis-describes as "guaranteed contracts". No solicitor today can do legal aid work unless he or she has a client who wants him or her to do it. There is nothing guaranteed about it. Indeed, it is odd to find a spokesman of New Labour in this House proposing the replacement of free consumer choice in a free legal market by a restricted, highly bureaucratic regime. I can assure the noble and learned Lord the Lord Chancellor that local solicitors are highly sensitive to local demand; they have to be.

The only guarantee that legal aid lawyers currently get is that, subject to the means test, the merits test, the rules of court and the rigours of taxation, the solicitor who undertakes legal aid work is entitled to be paid,

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rather like NHS doctors. At the heart of the Government's case are three main issues and they are access, quality and cost. As regards access, the noble and learned Lord the Lord Chancellor said in his letter to The Times of 25th January,

    "The point of my reforms is to give people on legal aid a choice from among about 3,000 quality assured firms".
However, that compares with over 10,600 solicitors' offices doing legal aid work today. It is surely perverse to pretend that access will not be damaged even if many of the 7,000 or so excluded solicitors' offices currently do only a modest amount of legal aid work. Often they are the best. A fact well known to legal aid solicitors is that very many people still will not seek legal aid help when they need it, and that those who do are very often reassured by what someone has told them of the individual solicitor or firm to which they eventually go.

Personal "lawyering" is still about confidence and trust. Furthermore, where there is only one firm in a town with a block contract, the other side to the dispute will often have to travel to the nearest town to find a firm able and willing to do the work because the budget is capped and rationing may be operating. In my part of Suffolk that will mean very significant travel at considerable expense in terms of fares--if there is public transport--and in terms of time and inconvenience. That is sure to put off many needy people.

Great oaks from tiny acorns grow no less among law firms than any other form of business. In yesterday's letter to the President of the Law Society, of which the noble and learned Lord the Lord Chancellor kindly sent me a copy, he wrote,

    "The Board have made clear in their contracting material that in the longer term they may need to introduce minimum levels of work that firms are generally willing to contract for, otherwise there is a real risk that money that should be spent on services for the public would go in meeting the cost of administering large numbers of very small contracts".
In effect, the bureaucratic tail is starting to wag the legal aid dog.

I have been approached by several small firms during the course of the proceedings on this Bill. Some have said that they are contemplating jacking out of legal aid even now because of the bureaucratic over-burden and the impracticalities for them of the franchising regime. Others made clear that they see no prospect of competing when the Phase II block contracting comes in. The noble and learned Lord the Lord Chancellor's letter, which I have just quoted, seems to give that game away despite protestations to the contrary made by him and the noble and learned Lord, Lord Falconer of Thoroton, in previous debates.

As regards cost savings via the bulk purchase of legal services, that might make sense were it not for the fact that legal aid is already the worst paid legal work, typically earning half private client rates. Most solicitors are trying to control the amount of legal aid work that they do and not increase it, as is made abundantly clear in surveys recently done by the Legal Aid Practitioners' Group and the Suffolk and North Essex Law Society. There are few, if any, economies of scale in private client cases. One of the inexorable rules of law firms is

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that the bigger they get the bigger their overheads become, and fees likewise. Noble Lords should try shopping around for themselves.

Finally there is the Government claim that quality will be improved by competitive block tendering. That seems to me to be the most incredible of all their claims. Although in a few exceptional cases it will no doubt be so, the reality is crude and simple: you pay for what you get, even with solicitors. Quality follows remuneration. I should be very surprised if the noble and learned Lord the Lord Chancellor shopped around for a cheap surgeon if ever he needed one, as we devoutly hope he will not.

What will be the position if Amendment No. 44 is carried? It stipulates that only solicitors who meet the standards set by the commission will be able to offer legal aid services. It confirms that the commission has a duty to obtain the best long-term value for money and it enables it to remunerate on terms set by contract or regulation. Other powers in the Bill already give wide discretions to the commission and enable it fully to police the system, if it has the will and skill to do so. The main riposte of the Government is that this will not allow the hard Treasury cap on the budget to be observed. But, as I said in the debate just before the dinner break, many of the claims made in that regard in terms of the escalation of the legal aid budget are now old hat and irrelevant.

Many in the profession, and indeed in the Law Society, have been perplexed as to why the Legal Aid Board has not been much more effective in policing legal aid payments using the considerable powers given it under the Legal Aid Act 1988. Some of us get worried when failure effectively to exercise existing powers becomes an argument for legislating even more extensive ones. In effect, what we are suggesting is that this element of the Bill represents a sledgehammer to crack a nut, and that, as the image implies, the legal aid scheme will in the years to come be severely, irreparably damaged.

Just over a year ago the Secretary of State for Health, Mr. Frank Dobson, told the other House in relation to the NHS reforms that the Government would,

    "abolish the wasteful and bureaucratic competitive internal market introduced by the Tories".
It is because we believe that the competitive block tendering proposed by the Government vis-a-vis legal aid would indeed be wasteful and bureaucratic and unnecessary that so many of us are so anxious to persuade the Government to change their mind. Support for this amendment and its sister, Amendment No. 57, extends to all parts of the House and is also supported by the Law Society, the Bar Council, the Legal Action Group and the Legal Aid Practitioners Group. As the names of the noble and learned Lord, Lord Archer of Sandwell, and the noble Lord, Lord Clinton-Davis, on the amendments indicate, there is also distinguished support from the Government Benches.

I really do believe that to attempt to present to this House the choice between a Bill that serves the provider or a Bill that serves the user is a wholly false analysis. The two are inseparably connected and all the concerns

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emanating from these Benches go to the impact and the long-term health and success of the scheme which will be enacted under this Bill. I can only urge that however central the competitive block tendering system appears to be to the Government at this moment, they reconsider the effects that it will most surely have on their plans. I beg to move.

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