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

Lord Phillips of Sudbury Excerpts

Wednesday 11th December 2013 Lords Chamber

[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.