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"( ) For the purposes of subsection (1), "financial resources" shall include all the realisable property of the individual subject to a restraint order under section 41 of the Proceeds of Crime Act 2002 (restraint orders).
"(4)(a) A restraint order may be made subject to an exception for the provision of reasonable legal expenses in criminal proceedings in the Crown Court, whether or not they relate to an offence mentioned in Section 40(2) or (3), subject to conditions-
(i) an application for the release of such expenses shall be made by the alleged offender to the Court where the offence for which they are required is to be tried,
(ii) notice shall be given of the application to the prosecutor or the Director,
(iii) the application shall be supported by a costs budget verified by the solicitor to the alleged offender,
(iv) the budget shall be calculated on the basis of current legal aid rates,
(b) The Court shall not make an order prejudicial to a co-defendant.
(5) The Court shall supervise the course of an order made under subsection (4) above and may from time to time review the order on the application by the prosecutor or the Director, or by or on behalf of the alleged offender.""
Lord Thomas of Gresford: My Lords, Amendment 105A is in substitution for Amendment 105, which was drafted in identical terms to the amendment that I moved in Committee. As your Lordships will recall, my concern is that a person who has had his assets frozen should have those assets counted as financial resources when his application for legal aid is considered. At this time of night I do not think that a large exposition of that concept is needed, but I point to the differences between this amendment and the amendment moved in Committee. It was suggested by the Minister that you cannot easily unfreeze the assets of a person who is a criminal. I decided that I would do my best to show how simply it could be done by including in the Bill the conditions that could be applied. Amendment 105A states:
I am not referring to the magistrates' court-whether or not they relate to the offence for which the person has been arrested, subject to certain conditions. Those conditions are an application to be made to the court,
We are not suggesting that frozen assets should be released so that a locked-up defendant's lawyer can drive around in a Rolls-Royce. He should receive remuneration as if it was a legal aid case but it would not come out of public funds-it would come out of the restrained assets. If such an order were made, it is very important that it should not be prejudicial to a co-defendant. One would not wish to see a defendant gaining an advantage by employing the leading Silk in the field of fraud in which he may have been engaged whereas his co-defendant was not able to do so.
It seems to me that this is a straightforward, simple code that could be introduced to permit the frozen assets of an alleged offender to be unfrozen for the purposes of his defence. I hope that the Government will accept this or something like it. I beg to move.
Lord Bach: My Lords, we give our total support to the amendment moved by the noble Lord, Lord Thomas of Gresford. The principle behind it was set out clearly in Committee. That principle remains. It has not been answered satisfactorily. The Government are rightly looking for ways of saving legal aid funds. This is an area of criminal legal aid where considerable savings could be made. The Government should take advantage of this amendment and make sure something like it happens very soon.
Lord McNally: I cannot remember whether the noble Lord was a Minister in the department responsible in 2002, because it was the then Government who decided that it was better to allow access to legal aid than to allow an individual to draw down restrained funds to pay for their defence.
Lord Bach: My Lords, I have déjà vu. We had this same exchange in Committee and I repeat what I think I said then: no, I was not a part of whatever department it was in 2002. I hope that the noble Lord will take my word for it this time.
Lord McNally: Yes, but there is some kind of responsibility for past acts. It is all right for the noble Lord to get to the Dispatch Box and say what a wonderful idea this is, which he has been doing throughout the Bill as regards £20 million here, £18 million there and £4 million there. He now of course wants to change something that the previous Government did.
Lord Bach: Again, I have déjà vu. I think I ate enough sackcloth and ashes, or whatever the expression is, on the previous occasion about what my role may or may not have been towards the end of the previous Government. We do not need to go through that again, unless the noble Lord insists. I should like to know why he does not accept the amendment.
Lord McNally: Excellent; that was good for the record. Amendment 105A would amend the Proceeds of Crime Act 2002 to allow courts to release restrained assets to fund legal expenses in criminal proceedings. POCA currently prevents restrained funds from being released to a defendant for legal expenses in relation to the offences to which the restraint order relates.
The Government recognise that there is a public perception that rich people are being given free legal aid because their assets are restrained. There are good policy reasons behind the current regime, but I can assure noble Lords that my department is currently working with the Home Office and the Attorney-General's Office to explore options that might allow the Government to recover legal aid costs wherever possible.
My noble friend-and this I welcome-has stimulated activity and cross-departmental examination of this issue in a constructive way. I cannot accept the amendment tonight, and I am not likely to within the context of the Bill. However, he can claim credit for stimulating active working with my department, the Home Office and the Attorney-General's Office, and we will see where this initiative takes us. In the mean time, I hope that my noble friend will withdraw his amendment.
Lord Thomas of Gresford: My Lords, I am very grateful to my noble friend for saying that, and I am pleased that there are investigations. That is nothing to do with me but perhaps more to do with a person who was named in the Evening Standard the week before last as having received £5 million in legal aid. When one considers the sort of concessions that we and certainly the Opposition have been looking for for civil legal aid, providing £5 million to one person in a criminal case, when he is living in his wife's seven-bedroom Mayfair mansion, surely stimulates the Ministry of Justice far more than anything that I might say. I look forward to the work that the noble Lord referred to and, for the moment, I beg leave to withdraw the amendment.
Lord McNally: My Lords, it takes a certain amount of, as the noble Lord, Lord Beecham, said, chutzpah-although I do not know whether that word is allowed in Hansard-to ask the House at any time to accept a grouping of 14 government amendments, but I can absolutely assure the House that I have written to noble Lords and that these are technical amendments. I recommend them to the House. I beg to move.
Lord Thomas of Gresford: My Lords, I move the amendment in a probing manner. I am concerned about a statement made by the noble Lord, Lord McNally, in Committee that involves setting up a supplementary legal aid scheme with a proposed deduction of 25 per cent from the damages of people who are supported by legal aid.
So much time has been spent in the course of the Bill in fighting to get areas of litigation back into scope that it is ironic that if those efforts were to succeed and damages awarded in any particular case, they would be immediately subject to a 25 per cent deduction for the purposes of setting up a fund from which other people would receive legal aid. It is a tax on their damages.
The noble Lord, Lord McNally, said in Committee that that was in order to make it no more attractive to have legal aid than to have damages subject to a success fee payable by a successful claimant limited to 25 per cent of his damages to date of trial. There is a difference. The whole purpose of changing the success fee, the burden of payment in conditional fee agreements, from the defendant to the claimant, and for it to be a charge on his damages, was so that there would be competition between solicitors for the business of the claimant at the outset. A solicitor might say, "There will be no success fee payable with me", or, "My success fee will be limited to 12.5 per cent of the damages, not 25 per cent". That is a better position than that of a legally aided person, who will have a whole 25 per cent taken out of his damages in any event. When is the supplementary legal aid scheme likely to come into being? I know that there was similar provision in the Access to Justice Act 1999, but under the previous Government it was never brought into effect.
The other matter that concerns me is that the provision could be brought in by secondary legislation under the negative procedure. That would mean that it would be subject to no or very little debate in Parliament and imposed on us. My second concern is to ensure that if such a scheme is to be introduced in future, it should properly be brought under the affirmative procedure so that we have a chance to debate and consider it before it comes before the House for approval.
Lord Beecham: My Lords, this is another case of déjà vu. In Committee, I congratulated the noble Lord, Lord Thomas, on his amendment. He was absolutely right then; he is absolutely right tonight. I hope that, having heard the noble Lord again, the Minister will acknowledge that he has made a very powerful case on both limbs-the principle and the procedure to which his amendments are addressed. I hope that the Minister can give a satisfactory reply that will not lead to those deductions being made, still less by the defective procedure, which, as the noble Lord has amply demonstrated, would be quite inappropriate.
Lord McNally: Yet again the Opposition, with a completely straight face, agree with my noble friend, although, as the noble Lord himself pointed out, we are making use of a provision in the Access to Justice Act 1999 which was brought in by the previous Government. He is now against it, as he was against the previous one. It seems that things are only good ideas when the Opposition are in government.
Lord Beecham: My noble friend will confirm that from time to time I, in particular, was extremely critical of some of the actions taken by the previous Government in the field of justice. I am not bound by a 1999 Act at all.
Lord Bach: Not at all. It is late at night, so I think we can forgive the Minister what he considers to be his bit of fun. However, Governments do make mistakes from time to time and people do change their minds. Even the noble Lord-never mind his party-has been known to change his mind on a few occasions.
Lord McNally: Very good. On the specific issue at hand, we hope to bring in the scheme with the rest of the Bill in 2013 and it will be subject to the affirmative order, so my noble friend will have other opportunities to discuss this matter. As he has now acknowledged, the Explanatory Notes to the Bill make it clear that we intend to use the power in subsection (3) to establish a supplementary legal aid scheme. The scheme will apply to damages cases where the successful party has been legally aided.
As we also said in our response to the consultation on legal aid reform, under the regulations that we will make, 25 per cent of certain damages successfully claimed by legally aided parties will be recovered by the Legal Aid Fund. The relevant damages are all those other than damages for future care and loss. I had better stop there and say that I have just had a message that the procedure will be negative, not affirmative.
The power at subsection (3) is not new. Section 10(2)(c) of the Access to Justice Act 1999 explicitly allows for regulations to provide that a legally aided person can make a payment exceeding the cost of the services received. When we consulted on the legal aid reforms, we specifically consulted on introducing such a supplementary legal aid scheme.
As well as creating an additional source of funding for civil legal aid, the supplementary legal aid scheme will address the interrelationship between legal aid and the proposed reforms to the costs of civil litigation put forward by Lord Justice Jackson, which are reflected in Part 2 of the Bill. We want to ensure that as far possible the recovery level of damages by the supplementary legal aid scheme complements the Jackson reforms so that conditional fee agreements are no less attractive than legal aid. The recovery level of 25 per cent of all damages, other than those for future care and loss, is therefore based on the success fee cap for a conditional fee agreement in a personal injury case.
Under the Jackson proposals, there will also be an increase of 10 per cent in non-pecuniary general damages, such as damages for pain and suffering and loss of amenity in tort cases. This will help claimants to pay their conditional fee agreement success fee or a 25 per cent portion of the relevant damages, if legally aided.
There has been a suggestion that it is unfair for successful claimants to be asked to help to underwrite the cost of the legal aid scheme in the way proposed. We do not see it as unfair. A claimant who wishes to proceed in a civil action with the aid of public funding is asking the taxpayer to take a risk on his or her behalf. Where that risk bears fruit in the form of what may be a very substantial sum of money, it is perfectly reasonable for a share of that to go back into the public pot so that the continued taking of such risks can more easily be sustained.
In sum, the power to make a supplementary legal aid scheme has now been sought by successive Governments. It has previously been approved by Parliament. Financial constraints are now such that we believe that it would be wrong not to exercise it in the way that we have clearly proposed and consulted on. Omitting to do so would also be out of step with the wider reforms to civil litigation that we are making. In light of my explanation, I hope that the noble Lord will agree to withdraw the amendment.
I now turn to Amendment 130, which would make any regulations made under Clause 22 subject to the affirmative resolution procedure, necessitating a debate and approval of a resolution by both Houses before the regulations could be made. We believe that this amendment is specifically related to Clause 22(3), although it goes much wider. As I have explained, we intend to use the power in Clause 22(3) to make regulations to establish a supplementary legal aid scheme. We believe that this amendment is aimed at ensuring that the details of the supplementary legal aid scheme are subject to the affirmative resolution procedure. An equivalent regulation-making power is contained at Section 10(2)(c) of the Access to Justice Act 1999. That power is subject to the negative resolution procedure. Our starting point is therefore, why should that change?
I am aware that there has been some suggestion that the Government have not been sufficiently clear about their intentions with regard to the use to which they intend to put the power in Clause 22(3). Nothing could be further from the truth. The proposal to introduce a supplementary legal aid scheme was clearly stated in the,
contained in Reform of Legal Aid in England and Wales: The Government Response. That paper also contained a five-page annex explaining the proposal in the light of the response to the preceding consultation.
Paragraph 168 of the Explanatory Notes to the Bill also made our intended use of the Clause 22(3) power perfectly clear. Both Houses have now had an opportunity to debate the clause in the light of explanations that we have given. Clause 22(3) was specifically debated both in Committee in the other place and in Committee in your Lordships' House. We believe that all that, combined with the negative resolution procedure in respect of the regulations, allows adequate public and parliamentary scrutiny in relation to the supplementary legal aid scheme.
The Delegated Powers Committee of the House considered the delegated powers of this Bill and did not comment on the application of the negative resolution
12 Mar 2012 : Column 147
I should also point out that the amendment goes much wider than just Clause 22(3) and would require the affirmative resolution procedure for any regulations under Clause 22. That would be undesirable and disproportionate. The powers under Clause 22 are those that will be used to set out the detailed rules regarding payment of contributions and case costs in respect of both criminal and civil legal aid. The negative resolution procedure is clearly the most appropriate for the type of highly detailed and technical provisions envisaged here, which will require variation from time to time. In those circumstances, I invite my noble friend to withdraw his amendment. I regret the confusion in my note reading halfway through that explanation.
Lord Thomas of Gresford: I think it was Champerty rather than maintenance where a third party takes a chunk of the damages that a litigant obtains in court. It is curious how far we have come to defeat these very ancient principles of English law. You can see the Magna Carta barons around the Chamber looking down on us; you can see them trembling as they listen to my noble friend putting forward this proposition. It is true that it was in the Access to Justice Act, but I do not believe that it was ever brought into force. It is also true that it was mentioned in the consultation document, which I read. In a document of some 150 pages, it covered one-third of a page; one paragraph related to it. It certainly was not highlighted either in the House of Commons or in this House that there should be such a deduction from the damages that are obtained by a legally aided person. I regret that.
A supplementary legal aid scheme could have been an alternative to support for conditional fee agreements-an argument that was made a long time ago-and it is true that a supplementary legal aid scheme has been adopted successfully in Hong Kong for people who do not qualify for legal aid. However, to have it in addition to the other provisions of the Bill is regrettable. For the moment-well, for all time-I beg leave to withdraw the amendment.
"( ) provision modifying the charge for the purposes of its application in prescribed cases or circumstances,"
"(6A) Regulations may provide that an individual is to be treated, for the purposes of subsection (1) or regulations under subsection (3) or (5), as having or not having financial resources of a prescribed description (but such regulations have effect subject to subsection (4)).
Lord McNally: My Lords, for the last time I make a solemn promise to the House that I covered the amendment in a letter that is lodged in the Library of the House, and that it is a technical amendment. I beg to move.
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