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Lord Phillips of Sudbury: My Lords, I have put my name to Amendment No.84. If a Bill can be said to have a sentiment I give the Government credit that in the Access to Justice Bill they try to concentrate scarce resources where they are most needed. It appears bizarre to my noble friend Lord Goodhart, to me, and to others who have tabled amendments relating to this aspect of the Bill that the damage done by the previous government in reducing the disregard for the family home to £100,000 should now be added to by the proposal that will follow if the Bill is passed unamended. This is a very important matter that affects a very large number of would-be legal aid applicants. I

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very much hope that the Government will remain true to the spirit of their own Bill.

Lord Falconer of Thoroton: My Lords, the amendments raise effectively two entirely separate questions. The first is the question raised by the noble and learned Lord, Lord Archer or Sandwell; namely, should there be passporting straight through if one receives jobseeker's allowance, income support or family credit? The second and entirely separate question is whether or not there should be a disregard of the first £100,000 of the equity in people's houses when considering not eligibility but contribution to legal aid.

Noble Lords have set out the background in fulsome detail, so I need not go into that. I deal, first, with Amendment No. 78 in which my noble and learned friend Lord Archer raises the question of passporting if one is on certain benefits. The three benefits are income support, income-based jobseeker's allowance and family credit. I consider the amendment unnecessary in relation to the first two benefits listed, income support and income-based jobseeker's allowance, and undesirable in relation to the third which is family credit. The noble and learned Lord the Lord Chancellor intends to preserve the existing system of what is called passporting--automatic eligibility for free legal aid--for recipients of income support and income-based jobseeker's allowance subject only to the possibility about which he will consult of a capital contribution from equity only payable at a later stage once the assisted person was no longer receiving benefits. In relation to those first two benefits, I respectfully submit the amendment is unnecessary.

In relation to family credit, I respectfully submit that the amendment is undesirable. Income support and jobseeker's allowance are basic benefits intended to guarantee a minimum level of income. Family credit is not. Family credit supplements the income of parents in relatively low paid employment. It is calculated on a tapering scale--that is to say, unlike income support, the benefit payable is not reduced pound-for-pound as earnings increase. As a consequence of this, a person receiving family credit can have a disposable income which makes them liable for substantial contributions; or even, in certain circumstances, ineligible for legal aid altogether. It cannot be right for people with the same disposable income--that is, disposable income having made allowance for the extra cost of looking after children--to be treated differently for legal aid purposes, which is the consequence of including family credit.

I hope that the noble and learned Lord will revert to his first impression of my argument on the last occasion namely, that it was unnecessary in relation to the other two benefits and that it is not appropriate in relation to this benefit--and that he will withdraw the amendment.

I turn to the homes issue. This revisits an area which was covered in Committee. The noble Lords who moved the amendment seek a provision under which the first £100,000 of equity in a house would be disregarded in

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calculating contributions from capital. In the case of Amendment No. 84 there would be power to increase the figure of £100,000 but not to reduce it. In the case of Amendment No. 80, there would be a general power to change the protected figure by affirmative procedure regulations. Unless the noble and learned Lord the Lord Chancellor used the power provided by Amendment No. 80 to reduce the protected figure close to zero, both amendments would prevent the Government from implementing the proposal about equity to which all noble Lords referred.

I respectfully submit that the proposal about the £100,000 equity is to do with greater fairness. At present those who have, say, £25,000 saved, perhaps as a result of redundancy, cannot receive legal aid. Those who have the same amount of equity in a house, but no savings, can receive legal aid and benefit from cost protection. Their equity is, moreover, not subject to any subsequent change if they lose, unless their home was a subject of the dispute. We propose to go some way to putting both classes of litigant on a more even footing by making the equity in the property subject to a charge in relation to contribution. It still does not apply in relation to eligibility. Of course we recognise that the house is more than an investment and that assets in that form are not readily realisable. That is why people with less than £100,000 equity will continue to be eligible for legal aid, and why the Lord Chancellor also intends to ensure that any charge on a house would not be realised unless and until the house was sold; and not even then if that would result in hardship.

One can imagine a situation where if the position were that both sides had small incomes and both sides had equity in their houses of some tens of thousands of pounds, but one of the two sides had £10,000 or £15,000 in savings, thereby depriving that person of the right to legal aid, when the person who did not obtain legal aid won he would be forced to sell his house. The other person would not be forced to sell his house at all and would gain a great advantage in the litigation. If the charge does not come into effect until the house is sold, and if it does not apply until it is established that there is no hardship, or it cannot be established that there is hardship, that is a much fairer situation than the current one. Indeed, the current situation was not dealt with by the noble Lords, Lord Goodhart and Lord Kingsland, in their eloquently expressed submissions which I felt I had heard during an earlier debate. In advancing the amendment, it is important for noble Lords to address the issue of fairness and not look at it from the point of view of only one party in the litigation, but of both parties.

We cannot accept a provision on the face of the Bill that would effectively preclude a change to the regulations which would make the financial conditions on which help is provided fairer; which would produce savings that could then be applied to improve other aspects of the system; and which, I might add, the noble and learned Lord the Lord Chancellor could implement

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tomorrow by negative regulations under the existing powers of the Legal Aid Act. On that basis, I invite my noble and learned friend to withdraw his amendment.


Lord Archer of Sandwell: My Lords, I am grateful to my noble and learned friend for expressing his argument so clearly. As regards Amendment No. 78, I agree that in respect of the first two benefits which are listed it is not necessary. Had it not been for the third benefit, family benefit, I would not have tabled the amendment.

In respect of that benefit, I am aware that it is proposed to continue the present position, which I believe is unfair and unjust. I was hoping to change it, but this is not the moment to continue that debate. I doubt whether I would enhance my popularity if I attempted to do so. For the moment, I ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

The Lord Chancellor moved Amendment No. 79:

Page 6, line 36, after ("conduct") insert ("such as is specified in section 9(2)(f)").

On Question, amendment agreed to.

[Amendment No. 80 not moved.]

Lord Falconer of Thoroton moved Amendment No. 81:

Page 7, line 27, after second ("or") insert ("in any compromise or settlement of any").

The noble and learned Lord said: My Lords, I will speak to Amendments Nos. 81 and 82 together. These are drafting amendments, intended simply to shorten the Bill. I am grateful to my noble and learned friend Lord Simon of Glaisdale for pointing out the opportunity to shorten the statute book by some eight lines. During Committee, the noble and learned Lord asked whether Clause 10(8) added in any material way to the tail of Clause 10(7).

The tail of Clause 10(7) and Clause 10(8) are, in substance, drawn from the current Legal Aid Act 1988. They define the scope of the legal aid statutory charge, which allows the Legal Aid Board to recover any outstanding costs from the property recovered or preserved as a result of their case by litigants who received legal aid. Let me make it clear, for the record, that the Government intend the charge created in this Bill in relation to funding provided by the community legal service fund to have exactly the same scope as the legal aid statutory charge has now. These amendments are aimed solely at brevity; they in no way represent a change of substance.

They are possible because of certain other differences in the drafting of the Bill and the 1988 Act. In the 1988 Act, the equivalent words to what is now Clause 10(8)(a) are necessary for two reasons. First, they make it clear that the statutory charge bites on cases settled before proceedings are issued. The appearance in Clause

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10(7) of the words "or dispute", which do not appear in the current Act, mean that Clause 10(8)(a) is no longer necessary for that purpose.

Secondly, Clause 10(8)(a) serves to make clear that the charge bites on any property contained in a compromise or settlement, regardless of whether that was the property originally at issue in the proceedings. This is necessary because case law has established that the words "recovered or preserved in proceedings" relate only to property formally at issue in the case. Amendment No. 81, which inserts additional words in Clause 10(7), is intended to preserve this position.

The equivalent words in the 1988 Act to Clause 10(8)(b) are necessary to ensure that the board can recover any outstanding liability to the legal aid fund from a successful litigant who was legally-aided at an earlier stage of the case, but not at the time when costs were awarded or agreed in his or her favour. This provision is no longer necessary because of the different way that costs are dealt with in the Bill.

Clause 11 gives power to make regulations about,

    "costs in cases in which services have been funded ... for any of the parties [including regulations] requiring the payment to the Commission ... of any sum awarded by way of costs".
In other words, these regulations can provide for situations where a litigant received services funded by the commission for any part of the case. Clause 10(8)(b) is therefore unnecessary. I beg to move.

On Question, amendment agreed to.

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