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One effect of the order will be to allow the harmonised fee scheme to take effect from next October, putting in place the same remuneration for barristers and solicitors and, we are told, rewarding case complexity. Currently, solicitors are paid on a different remuneration basis, focused around an hourly rate. We know from correspondence with the Law Society that it is broadly supportive of these proposals, which it sees as a first step towards a harmonised advocacy scheme, levelling out the rates payable to barristers and solicitors for the same work.

It is hard to deny the fairness of that, although there is more than one outcome as a result of the changes wrought by this order. It will not surprise the noble Lord-particularly having heard these very telling speeches-that the Bar Council has been somewhat less enthusiastic in its response. The noble Lord may say that it is not possible to please all of the people all of the time, especially when budgets are under strain. However, the Bar Council has raised a number of very salient concerns, which ought to be considered carefully. As the noble and learned Baroness and the noble Lords, Lord Lester of Herne Hill, Lord Carlile and Lord Thomas of Gresford, have now raised some compelling arguments, I can hardly wait to hear the Minister's response.

Of course, we start with the premise of the need to make savings. The noble and learned Baroness stressed that throughout her speech; she acknowledged the importance of making savings, but the figures that she used were fascinating. Can the Minister confirm that the existing payment regime-the FGFS, which came into being in 2001-has resulted in the savings of 5 per cent that it was expected to make, resulting in the Government agreeing to put money back into the scheme in 2005? Can the Minister please tell the Grand Committee in very clear terms what the financial implications of the order are? Does it mean that £2 million per annum is being removed from fees paid to barristers in public law cases?

I note, as has the noble and learned Baroness, that the consultation paper published in June 2008 relied on data which had to be revised in a letter from the MoJ in May this year. It showed that the FGFS had largely succeeded in controlling costs. Can the Minister explain why the Government continued with the cuts proposed in the order, even though the underlying rationale had been shown to be mistaken? There are, of course, quite legitimate reasons to seek to trim government expenditure, but it is also useful, particularly for noble Lords, to have them properly justified. The noble and learned Baroness has asked the Government to consider the effect of these cuts in the real world. I found very compelling some of the cases which have been instanced in this, sadly all too short, debate.

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Family legal aid is, as I think all noble Lords would agree, a very sensitive area. The service is indispensable for families and crucial in the role that it plays in protecting children from circumstances of sometimes appalling abuse. Sadly, the role of the state in intervening in the care of children has had very high-profile coverage in recent months, and not for the happiest of reasons. Does the Minister accept that the changes to the funding of public law cases to be brought about by the order increase the risk that effective representation may suffer? I am now very concerned that the number of family barristers willing to undertake difficult and complex cases may fall because taking on such cases may simply be uneconomical. I was persuaded that it is not just a case of excess demand or supply; it is a case of looking at what the effect of the order will be in the real world. Can the Minister tell noble Lords what work the Government are now doing with the Bar Council, the Family Law Bar Association and the other interested parties that have been mentioned to ameliorate this concern?

I was very impressed by the arguments adduced by the noble and learned Baroness in referring to the Merits Committee, on which the noble and learned Baroness sits. Its 25th report quotes the Justice Committee, as the noble Lord, Lord Thomas of Gresford, rightly said. I quote it now because it is a very worrying message:

"The consistent message from evidence received on legal aid reform is that the Commission is proceeding at speed with inconsistent data, a weak evidence-base and a poor understanding of the shape, the cost drivers, other motivating factors, and the structure of its supplier market. In addition, as Lord Carter himself emphasised strongly, this fundamental reform of legal aid provision-for 60 years the pride of the justice system in this country-requires the cooperation of those who deliver the services".

Finally, will the Minister explain how he hopes to implement successful reforms if he does not have the good will of the profession which must put those reforms into practice and live by their results? Of course, there is pressure on all budgets all around government-all departments are, or ought to be, looking for savings where possible-but we look forward to hearing what the Minister has to say in defence of the order and the changes to funding that it makes, and exactly what his department is doing to work with the legal professions to effect changes in the smoothest manner possible.

6.30 pm

The Parliamentary Under-Secretary of State, Ministry of Justice (Lord Bach): My Lords, I thank all noble Lords for today's lively and interesting debate and, in particular, the noble and learned Baroness, Lady Butler-Sloss, for bringing the Committee's attention to the important issue of legal aid. We should debate it as a House more often than we do. No one who has listened to the debate could fail to be impressed by the expertise not only of the noble and learned Baroness but also of all those who have spoken so far.

Legal aid funds help all kinds of people in all kinds of situations: the young man suspected of burglary, the elderly woman threatened with eviction, the looked-after child being offered a new life through adoption and the overburdened mother struggling with debts.

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Too often, legal aid is seen as being just about courts; it is not. It is also about getting the advice that you need at as early a stage as possible, so that your case does not necessarily end up in court. It is about making sure that court is the last resort-this is particularly true in family law-and not the first port of call.

At the risk of incurring the wrath of the noble Lord, Lord Carlile, early on in my speech, I draw to the Committee's attention a recent independent report, hot off the press, on international comparisons of legal aid spend in England and Wales. It is a proper academic report and does not all go one way. While it is not something that I intend to boast about, particularly before this group of noble Lords gathered today, it shows something that is undoubtedly true: that England and Wales has one of the highest per capita legal aid spends in the world. The report confirms that, as a result of higher case volumes and higher average costs per case, legal aid expenditure per head of population in England and Wales is infinitely higher than in other countries, including France, the Netherlands, Germany, Sweden-which all have different systems from ours-and Australia and Canada.

Lord Carlile of Berriew: Perhaps I may ask the Minister a fundamental question about that report, of which I am well aware. Where does he find in it a measurement of the activity in other countries that takes place out of courts through, for example, their social services systems? The report seems not to make any comparison of like with like, just as, by way of analogy, reports with foreign comparisons of terrorism custody periods do not compare like with like. It is a totally misleading picture.

Lord Lester of Herne Hill: One has to compare common law legal systems, not common law with civil law. They are entirely different. If one, for example, deals with costs in Strasbourg and cost orders, it is always the case that English practitioners' costs are much higher than those in continental countries, but if one compares the costs with Canada, Australia, South Africa, the United States or any common law countries, one sees that it is a totally different picture. One is comparing apples with cement.

Lord Bach: Of course, and I started this part of my speech by saying that comparisons are very difficult to do. It is undoubtedly true that the cost of courts in this country is much lower than in other countries, but the cost of legal aid in this country is much higher than in other countries. We have an adversarial system, so any comparison with civil legal systems is bound to be particularly difficult. However, you can make better comparisons with other common law countries than you can with civil systems. It would be hard to argue that, for various reasons, some good and some bad, we do not spend much more than other countries per head on legal aid across the field.

We, as a Government, think that that is an excellent thing. We continue to provide a vital link to justice for many people, particularly the most vulnerable in our communities. I remind the Committee that every year legal aid provides around 2.5 million acts of assistance

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to people with their legal problems. With regard to the social welfare element of the budget, which is much too small and has been the poor relation of legal aid for 60 years, we are committed to helping people with the problems that can bedevil their lives. Our commitment to that is evident, with an increase in funding of £80 million for legal services delivered by the not-for-profit sector on civil matters, compared with around £24 million in 2000-01. At a time of recession, it is particularly important that we do not slow down our spend at all in that field, and that is why we have provided more money for debt, housing and employment cases. I particularly mention the housing possession court duty scheme, which helped nearly 34,000 people last year.

Under our reform programme, which has been mentioned, steps are being taken to sustain that commitment but also to prioritise the legal aid budget effectively to ensure that it goes as far as possible in favour of civil help for those who need it most. Surely any Government would have to try to remove duplication or inefficiency and secure value for money. Doing so would mean that as many people as possible would continue to benefit by getting the legal help that they need, and we are committed to ensuring that that happens.

The challenge today and in the future is to help as many people as possible with a large but limited budget. We spend around £2.1 billion on legal aid. Spending on legal aid in the past 20 years has increased from £835 million in today's prices, which is an average annual real-terms growth of about 5 per cent and one of the fastest growing areas of public expenditure.

Of our budget of £2.1 billion, about £1.2 billion goes on crime-that is far too much; the balance is wrong-and only about £900 million on civil, which includes family, asylum and immigration, and social welfare law. In 1983-84, the total spend on legal aid in real terms was about £572 million, which, interestingly, is just less than what we have spent on family legal aid alone this year.

Last month, my department announced a review to be conducted by Sir Ian Magee into the delivery of legal aid to ensure that the £2.1 billion budget is delivering best value for money, that it provides a healthy and sustainable future for social welfare law and that it effectively integrates the criminal defence service within the criminal justice system. The review, whose importance it is difficult to exaggerate, will assess the delivery and governance arrangements of the legal aid system and make recommendations to explore the separation of the criminal defence service and the Community Legal Service-which has been argued for for a long time by people across the political spectrum-and options for doing so effectively and efficiently, should that be the recommended way forward. It will also provide for effective and transparent financial management of both funds and their administration.

In the 10 years since the Legal Services Commission was established, there have been considerable changes in the type of legal advice services that the public need, and we believe now is the right time seriously to

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review the channels through which legal aid is delivered, together with our wider reform programme, to ensure that we are getting the best value for taxpayers' money. That is even more important at a time of economic difficulty.

I shall not move into the criminal legal aid debate at the moment, but will go straight to family. We are keen to ensure that we support the provision of help to people with the housing, debt and employment problems that so often trigger not only family breakdowns but the descent into crime. However, the need to secure value for money and to prioritise our resources in everything we do means that we must look at reform on the civil and family side too.

In this debate, there is a danger of confusing two orders. There is the order that has been in force since 3 August and prompted the noble and learned Baroness's debate. There is also a pending order to do with the new contracts to be signed to come into operation from 1 October 2010. One cannot look at one proposal without looking at the other. The second order is the now-published harmonised family advocacy scheme. The family graduated fees scheme order that came into operation in August is before us this evening.

Spending across all levels of family legal aid has increased fairly dramatically in the past seven years from £399 million in 2001-02 to £582 million in 2007-08, which is an increase in real terms of 24 per cent. The new harmonised schemes-and who could be against harmonised schemes?-will direct more money into public law cases to ensure that children and adults at risk of abuse take the highest priority for legal services. The fee schemes do not represent cuts to the family legal aid budget or to the services received by children and families. They have been designed to be cost-neutral against 2007-08 average case costs and for the first time-not before time-the fees will fairly reward barristers and solicitors with the same fees for the same work. I trust that there is no opposition to that principle.

We have closely involved family lawyers in developing our policy on these changes and, as a result, we made substantive changes to our original proposals to ensure that the new structure would better reflect the variety of cases that advocates deal with and, particularly, their complexity. It has been generally accepted, whether grudgingly or less grudgingly, that the new scheme, which was published last month, does a great deal more service to the complexity argument than the original consultation.

6.45 pm

Lord Lester of Herne Hill: The Minister looked questioningly when he said, "I trust there will be no dissent from the same fee for barristers and solicitors for the same work". What I am about to say is sensitive. The justification for having an independent Bar and barristers is their special skill in advocacy. Some solicitors are perfectly capable of achieving the same level of skill in advocacy, but the problem I have tried to address is of very skilled barristers dealing with complicated cases for private law work being deterred. Does the Minister agree that the whole justification

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for the side of the profession to which he and I belong is the very special skilled advocacy provided by the senior practitioners at the Bar, with some solicitors being able to do so as well?

Lord Bach: There will always be a place for an independent Bar with highly specialist, skilled barristers. However, I do not agree with the noble Lord in making this distinction between solicitors and barristers. In serious family law work now, in public law and in private law-the most serious, in my view, is always public law-solicitors play a much greater and important role in these difficult and sensitive cases. It is absurd that they should be paid less than barristers for the same work. There is not much between the noble Lord and me, but it is an important principle that should have been brought in many years ago. I hope the noble Lord, Lord Hunt of Wirral, agrees with me on this matter at least. The changes were welcomed by the Association of Lawyers for Children, about which we heard earlier.

We are acutely aware that legal aid lawyers will be feeling the effects of the recession in the same way as everyone else, but the final scheme that we published in October will allow us to achieve a reasonable balance between complexity and value for money which will help sustain access to quality legal services for the most vulnerable in our society.

On family matters, we dispute strongly that vulnerable children will not get the representation they need and that people will go unrepresented. The fee scheme proposals do not involve cuts to the services received by children and families. Clients will of course continue to receive legal assistance through the legal aid scheme as they do now. The majority of this work is conducted by solicitors, who will see significantly increased fees. Under the new scheme, we would expect more solicitors to start doing their own advocacy or to increase the amount of advocacy they already do so well. We are confident that the fees we are offering are fair and will ensure that people will be able to receive the legal advice and assistance they need.

The new fee scheme moves directly more money into public law cases to ensure that children and adults at risk of abuse take the highest priority for legal services. The fee schemes do not represent cuts to the family legal budget or to the services received by children and families.

As I say, spending across all levels of family legal aid has increased dramatically. During that same period, the number of funding certificates issued in family proceedings decreased. Of course I accept the argument about complexity; there may be fewer cases but some of them are certainly more complex than the ones that went before. The cost increases were unsustainable within a limited budget and our fee scheme will help to control future increases. Pressure on the legal aid budget is severe and is likely to increase in the current economic climate as more people require advice on housing, debt, welfare benefit and family breakdown. If we do not control family advocacy costs then we will be forced to cut services to clients, either through cutting the scope of the services that are funded or by reducing the financial eligibility for services.

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The phase 2 family fees consultation proposals represent the next phase of the reform programme to bring family advocacy costs under better control and offer a fair payment structure to advocates. We aim to contain inflationary costs on family advocacy and maintain legal aid expenditure at 2007-08 levels. This will be done through the introduction of two standard fee schemes and changes to the scope of funding. We spend more than £120 million a year on family advocacy and we will continue to spend this under the new scheme. Our proposed family advocacy scheme is about paying the same fee for the same work. We have not reduced barristers' rates to solicitors' rates but have set an intermediate rate which is fair to all advocates. I repeat: we are making no cuts to services for children and families. Clients will receive legal assistance through the legal aid scheme, as they do now. There are more than 3,000 family legal aid barristers and we are confident that access to their services will not be significantly affected by these necessary changes. We shall see whether there is a successful and lively family Bar in the years to come. My guess is that there clearly will be.

Lord Thomas of Gresford: What happens if there is not? What plans does the Minister have for reviewing the position over the next year or two?

Lord Bach: I remind the noble Lord that there are 3,000 family law barristers at present and many highly skilled solicitor practitioners, too. Of course, if the system was falling apart, any Government would have to act, but there is absolutely no evidence that that is so. That there are difficult cases, particularly in the public law field-more difficult now than there have been over the past 50 years-is undoubtedly true, but there is absolutely no reason to believe that the family Bar will disintegrate as a consequence of these reforms.

As to the effect that these reforms will have on BME providers, the Legal Services Commission has discussed the possible impacts of the family legal aid reforms on female and BME barristers with a number of different stakeholders, such as the Equality and Diversity Committee of the Bar Council. As a result of this and the detailed advice and suggestions that we received throughout the consultation, our original proposals have been substantially revisited, primarily to recognise complexity in cases. We were told that what was needed to assist female and BME barristers was to ensure that the scheme allowed for complexity to be properly rewarded. So the final fee scheme has more gradation to reward advocates who take on the more complex cases, who still are most likely to be barristers. We believe that will mitigate any adverse impact on female and BME barristers and is likely to result in a significant increase in the number of barristers who will benefit under the new scheme, rather than lose.

I was asked by the noble Lords, Lord Carlile and Lord Thomas, about discrimination against women and children and litigants with English as a second language. We do not think that our schemes lead to discrimination against those classes of persons. If clients cannot give instructions well, for example, there will be a bolt-on to the fee to be paid to the advocate.

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As to the point about discrimination and that BME women at the Bar are reliant on legal aid, I am not sure whether the Government and the LSC should be the ones held responsible for the fact that a large section of BME and female barristers do legal aid work. It is to some extent a responsibility of the Bar itself and of clerks in chambers, who have traditionally pushed legal aid work in that direction. I would like to see figures for how much private family work is given to BME female barristers, to see whether it explains the issue to some extent.

The noble Lord, Lord Lester, has a particular interest in the issue of forced marriages. He is quite right: forced marriage legislation is outside the scheme. The rates for domestic violence are based on historical costs. However, there are higher fees for such cases in the High Court. There is a bolt-on payment if the client has difficulty giving instructions and another where expert evidence is required. Finding-of-fact hearings, which are an important part of family proceedings, are to be paid as final hearings.

The Government very much value the commitment of all lawyers who work in the interests of the most vulnerable members of society involved in family legal proceedings. That work, which is paid for from the public purse, is never likely to be as financially rewarding as work for private clients, but it is a vital public service. We are using the limited money and best resources that we have to meet pressures created by the recession. It is not an easy matter at the moment to try to balance the legal aid budget. Criminal legal aid is demand-led. We are obliged, under the ECHR, to spend money on representing defendants who are charged with serious cases. That is as it should be.

What is not right is that extra money spent on criminal legal aid should come out of a civil legal aid budget. That is behind our policy all the way. We want to make sure that criminal legal aid does not eat up the civil legal aid budget. That is what has been happening over many years. That is why we asked Sir Ian Magee to look very carefully at whether it is necessary to have two quite separate funds to make sure that if the criminal legal aid budget is much more than is anticipated for various reasons, the balance should be paid from the criminal justice system, rather than the civil legal aid system. I hope that is a philosophy that might find some support among noble Lords present tonight.

As far as the orders and the changes we have made to them are concerned, I can do no better than to quote again from the Association of Lawyers for Children, a much respected organisation. It makes these points:

"The Government's original proposals were heavily criticised by family lawyers and judges who warned that they would lead to parents and children in complex cases being badly represented, or not even being represented at all ... But the scheme has been radically restructured and revised following input from the leading practitioner groups and an intervention by the President of the Family Division".

The Government's announcement was,

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