Previous Section Back to Table of Contents Lords Hansard Home Page

The revised funding code before the Committee introduces a number of changes to the operation of civil legal aid. We devote very significant resources to civil legal aid-around £1 billion annually-so it is important that we review regularly how that money is being spent, and the cases and matters on which it is being targeted, to ensure we are achieving value for money. Following a review of the funding code by the Ministry of Justice and the Legal Services Commission, we published a range of proposals to refocus and target resources on to more meritorious cases. These changes have not been driven primarily by financial considerations. Indeed, the savings from these changes of £5 million per year are relatively modest, compared with the overall expenditure on civil legal aid.

Rather, we have looked critically at the existing funding rules to identify areas where they can be strengthened to ensure that funds are being properly targeted. These changes were the subject of a full consultation last year, and we have had further useful discussions with interested parties following the consultation. As a result of the representations we received, we have very substantially revised our original proposals. For example, we are no longer pursuing proposals to withdraw solicitors' authority to self-grant funding for judicial review challenges to the Government, and we have dropped plans to restrict funding for individual damages claims against public authorities.

In addition to discontinuing some proposals, we have substantially modified many of our other proposals in the light of suggestions from stakeholders. For example, we are acting to restrict legal aid for low-value multi-party action damages claims, but we are retaining

23 Mar 2010 : Column GC329

funding for multi-party claims for discrimination, child abuse claims and cases of wider public interest, as suggested by consultees. Stakeholders have expressed gratitude for being fully engaged in the process.

This is a series of somewhat technical changes, and it may assist your Lordships if I summarise the key changes we are making. In section 2 of the code criteria, we have tightened the definition of the wider public interest test so that not only must the case have the potential to produce real benefits for individuals other than the client, but the case must also be considered on its particular facts to be an appropriate case to realise those benefits. This change is to ensure that when funding is sought for a weaker case-one with borderline prospects of success-on the basis that the case could benefit others, it receives funding only if the outcome has a realistic prospect of delivering benefits to others, rather than just a theoretical possibility.

Section 5 of the code criteria sets out the criteria of general application. Here we are withdrawing funding for claims that are part of a multi-party action where the likely damages, as assessed by the Legal Services Commission, are £5,000 or less. However, we have retained funding for lead claims as we consider that this will allow legal aid to fund the initial determination of the issue, and further cases can then proceed on a private or conditional fee basis. We are imposing an identical restriction, through the Lord Chancellor's direction on the scope of the Community Legal Service, for out-of-scope cases that are funded on the basis of wider public interest, such as some personal injury claims. The direction is not subject to parliamentary approval, but has been provided to noble Lords for information.

Section 7 of the code criteria covers funding for judicial review. Here we have made two changes. The first is to ensure that funding is available only to individuals seeking a benefit for themselves or their family. Legal aid is intended to assist individuals with their personal legal problems. It should not be used as a tool for those who wish to campaign about matters with which they have no personal connection. It is important that we focus our resources on our priorities, such as debt, employment and housing advice in the current economic climate, and that resources should not be diverted. Of course, campaigning organisations are free to seek judicial reviews, although they are not eligible for legal aid, which is only provided to individuals.

The second change is to remove the existing presumption of funding. The presumption applies to cases of wider public interest, overwhelming importance to the client, or raising serious human rights issues. In practice, the presumption means that where a judge has granted permission for a judicial review, legal aid funding follows without any consideration by the Legal Services Commission of the likely costs or benefits of the case or the prospects of success.

While a judicial decision will always carry very great weight indeed, it is the proper role of the Legal Services Commission to decide whether the use of public funds is justified, and we want to ensure that it is able to carry out this role. While we want these roles to be clear, we anticipate that funding would be withheld in only a handful of cases.



23 Mar 2010 : Column GC330

Section 8 of the code criteria sets out the criteria for damages claims against public authorities. Here we have included an additional prompt by referring to the prison and probation complaints schemes. There is already a general requirement to this effect, but this is intended to highlight the need to consider alternative forms of dispute resolution before commencing litigation.

Sections 12 and 13 of the code criteria relate to mental health and immigration matters respectively. Here we have taken the opportunity to update the references to the tribunals to recognise the reformed Tribunals Service implemented under the Tribunals, Courts and Enforcement Act 2007. This is not a substantive change to legal aid for these cases, but simply a change in terminology.

The code procedures set out the operational procedures for civil legal aid. Here I shall confine my remarks to the two main changes we are making. Section C15A of the procedures sets out the new process we are introducing to fight fraud. Before legal aid is granted in an ancillary relief or a private law children case, the Legal Services Commission will notify the other party to invite it to provide evidence if it believes that the applicant is financially ineligible for funding. The other party will have 14 days to put forward any evidence, after which funding will commence in the usual way. This notification requirement does not apply to domestic violence cases or to urgent cases, where it can be waived. If the commission receives any evidence that the applicant may not be eligible, it will pass it to its fraud team to investigate or will contact the Department for Work and Pensions if the allegations concern benefits entitlement.

Our intention is to consider this process for all areas of civil legal aid, but the changes before the Committee are confined to private law children and finance cases. We currently receive the highest proportion of genuine representations about client eligibility in these areas and 50 to 60 per cent of representations about client eligibility in these areas are of substance. We have therefore chosen to start the new process in these areas because we are conscious of the risk that the new process may increase the number of vexatious representations made. The new power is drafted as a discretion, so that the Legal Services Commission can roll out the new process gradually. If we were to find that it was not as effective as anticipated, the process could stop and we could reconsider.

Section D of the procedures sets out the new special controls regime. This brings together the existing oversight panels for public interest and multi-party action cases and expands their remit to cover individual weaker cases-those with borderline prospects of success-which depend on the case being of public interest or raising human rights issues to merit funding. Cases subject to the new special controls regime can be referred to the new special controls review panel for advice on their merits, or, where funding is refused, cases will be referred to the panel for reconsideration. The panel will then report and the Legal Services Commission will make the final decision, taking into account the panel's findings.

Some noble Lords have asked why we are making changes to legal aid now, in advance of the transformation of the Legal Services Commission into an executive

23 Mar 2010 : Column GC331

agency. Transforming the commission into an agency will require primary legislation. It will inevitably be some time before any changes can take effect, so the current system continues in place for the time being. Clearly, any changes we implement will need to ensure that decision-making in individual cases is independent of Ministers.

In conclusion, I hope that the Committee has found this explanation of the revised funding code of help. These are technical but important changes that will help to ensure that funding is directed towards cases of the highest merit. I commend the revised funding code to the Committee.

Lord Henley: My Lords, I thank the Minister for that clear exposition of what is in this order-except it is not quite an order-on the funding code criteria. It includes some rather wonderful lines. I particularly liked the bit about stakeholders expressing gratitude for being included in the consultation process. We then noticed in paragraph 8.2 of the Explanatory Memorandum:

"The vast majority of responses were opposed to most of our original proposals".

That is rather a good way of expressing their gratitude.

I have a number of fairly straightforward questions which I should be grateful if the noble Lord could address. First, I think it would have been better if the Minister himself could have come to introduce the code-I would have been perfectly flexible about finding a date. The noble Lord, Lord Bach, is, after all, the Minister responsible for these matters and it was he who signed the impact assessment. Therefore, although the noble Lord has done the job very well, I think that the Committee would have been better served if the Minister had appeared before us.

Secondly-here I have some praise for the department; it is always worth offering praise where it is due-I wish to say how impressed I was with the Explanatory Memorandum. I refer in particular to Annexe A, where we are taken through all the changes that have been made in a fairly straightforward manner that is relatively easy to understand, and therefore the number of questions that we might have put are reduced. I also thank the noble Lord's department for sending me a copy of the Lord Chancellor's authorisation with the appropriate amendments. Again, that made life considerably easier when I was examining the document.

My major line of questioning relates to the fact that we presume these changes were designed to make savings. I appreciate that the Minister says that they were not driven primarily by the need to make financial savings but, as he knows, there is considerable pressure on the legal aid budget, and the civil side of the legal aid budget probably seems a much easier target than many. We also know that the department will have to find very large sums of money to meet a number of commitments that have recently been made by the Secretary of State and the Lord Chancellor. I think, for example, of the offer of some £200 million or thereabouts-the figure varied from £50 million to £200 million-to those who have developed pleural plaques. Again, I should be very grateful if the Minister could comment on this when he comes to respond but

23 Mar 2010 : Column GC332

I have heard odd whisperings that that will not all come out of the department's own budget and that other departments might be made to contribute. For example we have heard that, perhaps at a time when the Ministry of Defence is engaged in a war, the Ministry of Justice will be looking to the Ministry of Defence to make sacrifices to meet that commitment. I should be very grateful for the noble Lord's response to that.

The noble Lord says that this code is not designed to make savings. The figure for the net impact is given in paragraph 3.8 of the cost-benefit analysis section of the Explanatory Memorandum. It gives a figure for savings of £5.5 million a year, which represents a reduction in the civil legal aid expenditure of just 0.5 per cent after all the work that the Government have put into this. As we see, every possible form of assessment has been undertaken. We have had a competition assessment, a small firms impact assessment, a race equality assessment, a disability assessment, a gender equality assessment and a human rights assessment. It has even been rural-proofed. After all that straining, the Government are delivering a net saving of £5.5 million, or 0.5 per cent of the civil legal aid budget. We are very grateful for that reduction but I think that they will have to do somewhat better if they are to get to grips with these costs and with the whole legal aid budget. I refer not just to the civil legal aid budget, which is what we are dealing with here, but to other parts of the budget as well. Therefore, I should be grateful if the noble Lord could tell us whether any more assessments will be done in due course that might lead the Government to find greater savings in that budget.

I do not have any further questions at the moment but I would certainly be very grateful if the noble Lord could address those points.

Lord Thomas of Gresford: My Lords, I am grateful to the Minister for presenting this statutory instrument for our consideration today. I really do not know why the Government are bothering at this stage, when they have every intention of abolishing the Legal Services Commission and replacing it with an executive agency whose responsibilities are not yet clear. I very much suspect that we will be going through all this again quite shortly, but one or two things need to be said.

First, if the legal aid budget in the sphere of civil actions is to be looked at, surely the very first thing is to ensure that the family Bar is properly provided for. There is a crisis at present in the family Bar, which we have been discussing throughout this year. Nothing in this code assists the family Bar at all. Indeed, I am amazed to discover that the first of the plums that the Minister pulled out of the duff was in relation to the new provisions to allow an opponent in family law proceedings, private law, family, children or finance cases to oppose the granting of legal aid. The Minister referred to vexatious representations. Certainly, in my experience the most challenging and difficult cases are those involving families and children, where the litigants are very much at each other's throats. Since the notice is to be given to the opponent by the legal aid authorities, I can see this giving rise to very considerable conflict and disquiet.



23 Mar 2010 : Column GC333

The savings that have come out of this enormous exercise are not great, as the noble Lord, Lord Henley, has said. Indeed, the Minister says that having come to the end of it and looked at everything, the code is not designed to make savings at all. The best way of making savings was described by Lord Justice Wall, in the Court of Appeal in the case of SW and KSW v Portsmouth City Council, reported at [2009] EWCA Civ 644. In that case, a stepfather had been accused of raping his stepdaughter. As a result of her accusations, his two children by the mother of all three children were taken into care and were living with foster-parents. That is the sort of issue arising in those proceedings. The stepfather was made a party to the care proceedings but was refused public funding and had to represent himself.

There was a finding-of-fact hearing to ascertain whether the rape allegation was true. Some 14 days were spent on that hearing alone. Lord Justice Wall said that,

He continued,

"I am in no doubt at all that if the appellant had been legally represented before the judge in the care proceedings; (a) the hearing would not have overrun so grossly; (b) the result would have been much more likely to be perceived by all to have been fair; and (c) the cost to the public and the parties in terms of both money and stress would have been substantially less".

The legal aid authorities can best save money by ensuring that the parties in family proceedings are properly represented. That is why I particularly deplore this, since it is in that area that opposition to the granting of legal aid is now to be allowed and considered by the legal aid authorities. I find that very much a retrograde step.

There are also other changes which juggle the Legal Aid Fund around without-quite deliberately-making any particular saving in cost. The whole problem with legal aid is that it has remained at a fairly constant level over many years, for both civil and criminal legal aid. Whereas billions are paid to bankers to keep banks on the road for a very limited period, the Legal Aid Fund has increased, I think, by £500 million to £2.1 billion, where the ceiling now exists, over the whole period that the Government have been in power-from 1997 to the present. It simply causes problems and expense. I hope that whatever Government may be in power will, in looking at the proposals for an executive agency in due course, look at this artificial cap on legal aid, which has caused the problems that I have outlined.

Lord Tunnicliffe: My Lords, I am sorry to the Committee and the noble Lord, Lord Henley, that I am not my noble friend Lord Bach. When I am not being him, I always wish he was here. I thank the noble Lord, Lord Henley, for commending the EM. They are extremely important documents. The whole process by which this House encourages improved quality of Explanatory Memorandums is a good thing. I am sorry that the quality of my speech and that of the Explanatory Memorandum means that I do not have any questions to answer on the procedure and criteria.

23 Mar 2010 : Column GC334

I note the noble Lord's concern about making savings overall; it is a concern that the Government share. However, we are here to look at a specific set of changes, which add up to an estimated £5.5 million. On their own grounds, they are good and worth while.

As I set out, we consulted over a whole series of ideas. They were considered- perhaps not consensually, but certainly by stakeholders-to be practical and sensible to introduce now. That is why we have done so. If we can usefully say anything further on either pleural plaques or the Ministry of Defence, I will write to the noble Lord.

The Government and the Legal Services Commission announced their plans for reforming the way legal aid practitioners are paid in the paper Legal Aid Reform: The Way Ahead, published in November 2006. This followed the review by the noble Lord, Lord Carter, of legal aid procurement. These reforms have helped to maintain spending at broadly the same level over the last few years. This has been achieved through a combination of measures, including an extension of solicitors' and advocates' fixed and graduated fee schemes. Spending has remained broadly level since 2003-04 through a combination of measures, including an extension of solicitors' and advocates' fixed and graduated fee schemes, and the introduction of means-testing in magistrates' courts so that those who can afford to pay for their defence do so. Without such reforms, the taxpayer would have been burdened with funding that was £250 million higher than the spend in 2007-08, and an increased spend of around £600 million more in total between 2004-05 and 2007-08. We are moving to improve management information to acquire a fuller understanding of price and volume pressures, and to support future policy developments to gain better control over cost and achieve greater efficiencies.

The Ministry of Justice will also be well placed to co-ordinate whole system improvements in the justice system. This is being taken forward in programmes such as the criminal justice "simple, speedy, summary" initiative. We recognise the importance of managing costs in all areas of government, but I do not in a sense want to end up apologising for the legal aid system, which is an important part not only of the justice system but of the fabric of our society. We know that in both criminal and civil cases the legal aid system stands behind people who cannot afford to be properly represented in cases in which they should be properly represented-and that is a good thing.

The noble Lord, Lord Thomas of Gresford, asks why now. I thought I had said why now. We take the view-in fact, it is an absolute fact of life-that moving to an agency will take time and require primary legislation, and no doubt there will be a great deal of discussion about it. I was asked whether we would discuss again all the items from today as part of that. I hope that we will not; I hope that the codes and practices that we have found work will be imported across to any new legislation en bloc and what we are doing today is worth while. I was asked, too, whether these reforms resolve the crisis in the family Bar. No, they do not, and I do not think that they were designed to. I understand that there are problems in the legal profession, and I understand that discussions are ongoing, but at

23 Mar 2010 : Column GC335

the end of the day these are narrow, technical proposals, which each on their merits, with the exception of one-as far as I can tell from the discussions on this issue-have received universal support.

The process of advising the other party formally 14 days before aid is granted is an extension of where we are now. I understand that it is a voluntary scheme now. It is an extension of a process that has been used in Scotland and been found to work very well. It will produce savings, although, once again, it is quite right to point out that they are modest. The noble Lord mentioned complicated cases; I think that I mentioned the exceptions in my speech but, if not, I shall write. We are introducing this measure in a permissive way, so that it can be rolled out area by area and we can consider whether its value is disproportionately outweighed by vexatious behaviour. The very high relevance rate that we have at the moment with the voluntary scheme, where 50 to 60 points are considered substantial, is a good thing.

While I am sure that everything we do in legal aid is not perfect, I do not think that any of us would demur from what Lord Justice Wall has said-that competent legal representation creates value in terms of both justice and the efficiency of the system. I would hope that the profession is working towards-and that, given the way in which we are commissioning legal aid and announcing various changes all the time, we are all trying to work towards-that concept of competent representation.

Motion agreed.

Charities (Disclosure of Revenue and Customs Information to the Charity Commission for Northern Ireland) Regulations 2010

Copy of the Regulations
Copy of the Report

Considered in Grand Committee

5.10 pm

Moved By Baroness Crawley

Baroness Crawley: My Lords, these regulations provide a statutory gateway for the sharing of information between Her Majesty's Revenue and Customs and the recently established Charity Commission for Northern Ireland, mirroring the information-sharing gateways that are already in place between HM Revenue and Customs and the other UK charity regulators.

The current position for organisations in Northern Ireland seeking recognition as a charity is that they can apply to HM Revenue and Customs to be recognised as a charity for tax purposes. Approximately 7,500 organisations in Northern Ireland are recognised by

23 Mar 2010 : Column GC336

HMRC as such. However, the regulatory landscape for charities in Northern Ireland is undergoing a major change under the Charities Act (Northern Ireland) 2008 passed by the Northern Ireland Assembly. One of this Act's main reforms is the establishment of the Charity Commission for Northern Ireland as the first independent registrar and regulator of charities in the Province.

Although the Charity Commission for Northern Ireland was formally established last year, it has yet to take on most of its functions, which are set out in the Charities Act (Northern Ireland) 2008. Two commencement orders have been made to date and these have provided for the establishment of the commission, consultation on public benefit guidance, the definition of charity and charitable purpose, and the establishment of the Charity Tribunal for Northern Ireland. A further commencement order is scheduled to be introduced in April 2010 to provide for registration of charities in Northern Ireland and to allow the commission to conduct investigations.


Next Section Back to Table of Contents Lords Hansard Home Page