Criminal Defence Service (Very High Cost Cases) (Funding) Order 2013

Lord McNally Excerpts

Wednesday 11th December 2013 Lords Chamber

I have referred before to the book The Pursuit of Justice by the noble and learned Lord, Lord Woolf. The pursuit of justice is what those of us who have participated in tonight’s debate—and the Minister—are interested in. The pursuit of justice will be made more difficult if the Government press on relentlessly with the changes we are debating tonight. There is still time for them to think again before they inflict great damage on the system in which all of us have, hitherto, taken such pride.

[The Minister of State, Ministry of Justice (Lord McNally) (LD)]

My Lords, like the noble Lord, Lord Bach, I have, on a number of occasions, been promoted above my abilities in terms of legal qualifications. I have been referred to this evening as “learned” and I was recently introduced, at a conference, as “Lord Justice McNally”. My more mundane task this evening is to set out the Government’s position on the Criminal Legal Aid (Remuneration) (Amendment) Regulations 2013 and the Criminal Defence Service (Very High Cost Cases) (Funding) Order 2013. Both these instruments were laid before the House on 1 November 2013.

Before I get into the detail of the two instruments, I want to set the legal aid transformation in context, as was requested by the noble and learned Lord, Lord Hope of Craighead. The need for reform of legal aid-funded services to ensure a cost-effective, sustainable legal aid system is recognised by all the major political parties and has been the subject of debate for a decade or more. It was the Labour Party that instituted the Carter review. It was the Labour Party that made cuts in legal aid prior to 2010 and promised further cuts in its 2010 manifesto. During the passage of LASPO, it said that it would not cut civil legal aid but would cut criminal legal aid. Now, it does not like the legal aid cuts. I still wait to hear whether the Labour Party would restore the legal aid cuts if it were to come into office in 18 months’ time.

The fact is that changes in technology and its increasingly fundamental role in the functioning of the criminal justice system demand the kind of changes to working practice and business models seen throughout the public and private sectors in recent years. The introduction of alternative business structures and an increasingly well informed customer base are examples of changes that present their own challenges, and which the legal professions must meet. Those changes are accompanied by the fact that the number of businesses providing criminal legal aid services now exceeds demand for such services. To put it bluntly, there are too many lawyers seeking the work available. New entrants to the market, new technologies, new working methods and oversupply in relation to demand are all factors that force change in any industry, sector or profession. I urge the Bar to recognise that the change is necessary to deliver efficient and effective legal services in new and innovative ways.

For our part, the Government recognise that the services the profession delivers are a vital component of our legal system and, where necessary, ensure access to justice and equality before the law. That is why, looking more widely, the Lord Chancellor has asked Sir Bill Jeffrey to review the provision of independent criminal advocacy in the courts of England and Wales, as just referred to. That review is intended to consider the experience, skills and future structures that might best support the continuing provision of quality, independent advocacy services. However, alongside the need to ensure access to justice and a healthy, sustainable legal sector, the profession must also recognise that the Government are obliged to seek the best possible value for money from the legal aid budget.

I turn now to the instruments that are the subject of this debate. They apply a reduction of 30% to the legal aid fees paid to litigators and advocates in what are known as very high cost criminal cases, although I will accept the description of them by the noble Lord, Lord Carlile, as being very high complexity cases as well. This will save £19 million per annum in a steady state. The noble Lord, Lord Carlile, will be familiar with these cases; as he told us, he has undertaken this sort of work in the past. For the benefit of others, I should explain briefly that VHCCs are the longest and most expensive Crown Court trials funded by legal aid. Under the current system, they are those cases which are expected to last more than 60 days at trial; the overwhelming majority of them relate to fraud offences of one type or another.

These cases are managed by the Legal Aid Agency under contracts with service providers, with work being agreed in three-month stages in advance as the case progresses. Typically, these cases are complex and run for a number of years; the amount of preparation involved can be enormous. Although the debate today has concentrated on fees in VHCCs, I should also mention, for completeness, that the remuneration regulations also make two other changes to the criminal legal aid scheme. As the noble Lord, Lord Beecham, indicated, they reduce fees paid to most expert witnesses involved in legally aided criminal cases by 20%. They also amend the category of work in which a provider of legal aid services can claim a fee. This is a consequence of the changes in the scope of criminal legal aid for prison law, which is being implemented through separate secondary legislation.

--- Later in debate ---

[Lord Carlile of Berriew]

My Lords—

[Lord McNally]

It is very late and noble Lords have all had a very good time.

[Lord Carlile of Berriew]

It is very late, but this is an important debate, as has been made clear. I have one question to ask. If my noble friend thought it right that there should be an extensive consultation on the generality of legal aid, why was there no consultation on VHCC cases?

[Lord McNally]

This is the first time that VHCC cases have been cut by this Government. I do not think that they were cut by the previous Government. Were they? I stand corrected.

There was a consultation and this has not come out of the blue. I have been talking to the Bar for three and a half years about these cuts.

I hope we do not get an interruption from my noble friend Lord Phillips. He came in very late.

[Lord Phillips of Sudbury (LD)]

I was not going to.

[Lord McNally]

Okay, I am sorry—not guilty.

[Lord Phillips of Sudbury]

Does the Minister want me to?

[Lord McNally]

No. These matters have been discussed over a long period. We received 16,000 responses from representative bodies, practitioners and other organisations, individual members of the judiciary, Members of the House of Commons and the House of Lords, individual solicitors and barristers, and members of the public. The majority of responses did not support the Government’s original proposals for reform, although there was some support for particular measures. Some, including the Law Society, specifically acknowledged that VHCCs were an area where the Government might be able to make savings.

As we said in responding to consultation, the Legal Aid Agency analysis of fraud VHCCs shows that the average value of a contract is £1 million and such contracts run for three or four years on average. Even with a 30% reduction in fees VHCCs will remain high-value, long-duration cases that, because of the way these cases are managed with regular phased payments, bring certainty of income for providers for the extended period in which they are instructed in these matters. That is why the Government believe that a reduction in fees is sustainable in this area.

We believe it is right that our reductions should affect advocates who receive higher levels of legal aid fee income, rather than those who are on much lower fee income. In 2012-13, more than half of those with fee income of more than £200,000 worked on VHCCs, compared with just 20% of those with fee income of between £100,000 and £200,000. Just 4% of barristers who earned below £100,000 worked on a VHCC in 2012-13.

Concerns have been raised about the impact of this fee cut on existing contracts. It is precisely because these cases run over a number of years that we must ensure that the ongoing fees represent value for money. We are therefore reducing rates in existing contracts where cases are at a relatively early stage and where the ongoing costs are likely to be significant. I cannot give any assurances about changing the position that we have taken on this because we are under responsibilities to make these cuts.

We have taken a fair and balanced approach to applying the new rates to existing contracts. The new rates do not apply to contracts where cases were at trial on 2 December or those that, before 2 December, were set to come to trial on or before 31 March 2014. These include cases that had a date set at any point in the past for trial on or before 31 March 2014 but that date has been vacated and a new date fixed, even if that trial date is after 31 March 2014; where the trial has taken place but there remain outstanding proceedings, such as confiscation proceedings; and where the original trial has concluded but a retrial will take place, even if the retrial is after 31 March 2014.

A number of points have been raised but I am conscious of both my time limit and the House’s. I have referred to the fact that VHCCs represent a tiny number of total cases; fewer than 1% of the total Crown Court trials over the past year were VHCCs. I understand the points that the noble Lord, Lord Carlile, was making about the returning of cases, but we will just have to see how this works out. I do not want to bandy figures about.

I hope that the Bar itself thinks very carefully about how we navigate through these matters. I believe that when a very distinguished profession talks about going on strike, it crosses a Rubicon that is very difficult to re-cross.

As for the idea of funding legal aid from restrained assets, it may be that one or more parties might put that as a suggestion in their manifesto; maybe we will see that, although I remember the debates in this House about removing jury trial from High Court cases. We have had lots of suggestions but none with the immediacy with which we can address the issue.

I accept the point that was made about the present system being bureaucratic and the hourly rate-based system not being ideal. I cannot remember which noble Lord it was—was it the noble and learned Lord, Lord Woolf?—but one of them got very close to suggesting one case, one fee, which was one of the first things rejected by the Bar when we were having those negotiations that apparently have never taken place. The fact is that we have explored alternatives, and I have no doubt that ideas will continue to be floated.

I have said to my own party and I say to all three parties that, after what has been a very painful period, we should look at how we handle legal aid. As we have said so often, although to listen to some speeches you would not believe it, since 2010 to when this exercise is finished, which is some three or four years away, legal aid will have been cut from just over £2 billion to £1.5 billion. That leaves us with a legal aid expenditure about which I will not bandy words as to whether it is the most generous in the world, but it is an extremely generous allocation of money by the taxpayer. It is incumbent on all parties to see how we can look at that kind of sum and get a better and more efficient outcome from it. That requires a willingness to contemplate change and flexibility from all parts of the legal profession. I would hope that we can look at it in that way.

I hear what my noble and leaned friend Lord Mayhew said about the sacrifices that the high-cost barristers make in losing other business and being out of the loop. However, even with a 30% reduction in fees, VHCCs will remain of high volume and long duration, with regular payments that bring certainty of income to providers. We believe that it will continue to attract lawyers once they come to see the points that are on offer.

There is no sign of a lack of young people entering the profession. We all wish the daughter of the noble Lord, Lord Alton, well in it; she certainly knows where to come for advice.

We are looking at the review under Sir Bill Jeffrey. We cannot accept all the existing contracts but we have, as my noble friend Lord Carlile knows, tried to widen that as far as possible. We had to bring in a cut-off point somewhere. Noble Lords will have heard in many other professions where they have had responsibility the suggestion, “Why don’t you put it off?”, or, “Why don’t you have a review or do it some other way?”. I wish that both the Treasury and the Government worked differently than they do. The noble Baroness, Lady Deech, has the idea that you can, as it were, go across the meadow picking flowers from here and there to finance things. The fact is that my department, as part of an overall spending review in response to a very real economic crisis, has had to take across the board cuts of 23% in 2010, a further 10% after a further review in 2012, and a further 1% in this review. We cannot go plundering other parts of Whitehall to make up the difference. We have to make hard, tough decisions about our expenditure at this moment, and try to make them in the fairest and broadest way that we can. Somebody asked whether we were also targeting other earners. The figures that I have, and I will confirm this, are that the cuts that we have consulted on were of about 7% on average. Of course we have targeted the higher earners.

Noble Lords made a number of points and I have tried to explain the context. We have had a very frank debate. I will close by saying to the noble and learned Baroness, Lady Scotland, that my right honourable friend the Lord Chancellor is well aware of his responsibilities and those of his office. I am sure that he will read the report of this debate in Hansard very carefully. I hope that in the mean time the noble Lord, Lord Carlile, will withdraw his Motion.

[Lord Carlile of Berriew]

My Lords, it is now 11 pm so I shall be very brief but I do want to reply to the debate. Twelve out of the 13 Members of your Lordships’ House who have spoken in this debate have spoken consistently with the same thread, criticising the Government for the introduction of these statutory instruments. As I listened to those contributions, I reminded myself of what a privilege it is to be a Member of your Lordships’ House. There were magnificent speeches, many of them from the Cross Benches, three from noble and learned Lords who have held very senior positions in the judiciary, and two from noble and learned Members of this House who have been Attorney-General on opposite sides, with very different types of practice in their experience.

I believe that your Lordships have provided my noble friend the Minster with the finest debating tutorial he could ever have had and that the Lord Chancellor could ever have had in how wrong the Government’s decision to introduce these statutory instruments has been.

[Lord McNally]

My noble friend interrupted me and I shall interrupt him just once. It is only for this reflection: yes, we have had a good debate and I do not doubt the eminence of those who contributed to it, but I have said it before: the legal profession must not exist in a bubble and congratulate or commiserate with itself. I sometimes wish that this House was full to the gunwales so that we could have a proper debate on these matters and see whether this unanimity of view about the sufferings of the legal profession was quite so evenly spread as a debate like this might sometimes indicate.

[Lord Carlile of Berriew]

My noble friend is a much liked, popular and witty Member of this House and I will not rise to the uncharacteristic and unjustified provocation of that intervention. I was about to say that I hope that the Lord Chancellor himself will read every word of this debate and will take note of what I think I described earlier as the finest debating tutorial one could have. If my noble friend is saying that all that has happened in this House in the past couple of hours has been a demonstration of self-interest by lawyers, one or two non-lawyers, judges and others who are acting in concert to defy the Government then, in my view, that demeans what has been a magnificent debate. I thank all those who have taken part for giving me the privilege that I described earlier.

I have some sympathy for my noble friend the Minister who sought to respond to the debate. He read out a familiar litany, but it was a litany without a message save the message of mistake. He allowed himself to stray into the suggestion that there had been consultation about the VHCC changes. He sought to elide into the VHCC changes consultation that had taken place on completely different legal issues. It is important to emphasise at the end of this debate that there was no—zero, zilch—consultation on these VHCC changes, and that is fundamental to the complaint that the Bar makes about the high-handed way in which this unilateral breach of contract has occurred.

My noble friend said that the Government were “under responsibilities to make these cuts”—those were his very words; I noted them as he said them. However, with great respect to my noble friend, that phrase is meaningless. The Government have the responsibility to get it right, not just to make cuts for the sake of making them. He said in relation to what is going to happen to these VHCC cases, in which there are now no advocates, that “we will just have to see how this works out”. That took my breath away. It is an acceptance that there are now cases with no advocates, that there is no plan B for these cases and that the promises that the Government made to everyone that it would all be all right on the day have simply been shown to be wrong. I would never accuse my noble friend of being incoherent but the brief that he had was full of incoherence, and we saw it displayed this evening.

At this late hour, I do not propose to divide the House but I believe that I do not need to do so. This debate has been well worth having because of its overwhelming effect of showing that the Government are wrong in what they have done with these cases and that the explanation which my noble friend sought to give just did not hold water at all. With the permission of the House, I beg leave to withdraw the Motion.