Legal Aid, Sentencing and Punishment of Offenders Bill

Jonathan Djanogly Excerpts

Wednesday 2nd November 2011 Commons Chamber

[The Parliamentary Under-Secretary of State for Justice (Mr Jonathan Djanogly)]

I beg to move, That the clause be read a Second time.

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

With this it will be convenient to discuss the following:

Government new clause 9—Northern Ireland: information about financial resources.

New clause 17—Extension of scope of legal aid in complex cases—

‘(1) Civil legal services other than services described in Part 1 of Schedule 1 are to be available to an individual under this Part if subsection (2) is satisfied.

(2) This subsection is satisfied where the Director—

(a) has made a complex case determination in relation to the individual and the services, and

(b) has determined that the individual qualifies for the services in accordance with this Part,

(and has not withdrawn either determination).

(3) For the purposes of subsection (2), a complex case determination is a determination—

(a) that the individual has complex, interconnected needs in relation to which the individual requires comprehensive civil legal services, and

(b) not all of those civil legal services would otherwise be available to the individual because they do not all fall within the scope of Schedule 1.’.

New clause 43—Funding for civil legal advice—

‘(1) The Lord Chancellor may make funding available for the promotion of civil legal advice on matters not included in Schedule 1, Part 1 where it appears to the Lord Chancellor that the provision of such services would be consistent with the purpose of the civil legal services provided for under that schedule.

(2) The Lord Chancellor may make arrangements by—

(a) entering into funding arrangements with other Government departments and public bodies to facilitate the provision of services,

(b) making arrangements to support the delivery of civil legal advice through the provision of grant in aid to providers of legal services, including any consortia or partnership arrangements into which providers of legal services may choose to enter, and

(c) any additional arrangements which the Lord Chancellor considers appropriate to ensure the provision of services as set out in subsection (1).

(3) In making any such arrangements the Lord Chancellor shall ensure that value for money is achieved.

(4) Welsh Ministers shall be consulted upon the funding and provision of civil legal advice in Wales.

(5) “Civil legal advice” means the types of services given in section 7(1) and includes advice and assistance which is usually given by any representative in the steps preliminary or incidental to proceedings and as to any appeal, mediation and other forms of dispute resolution, but does not include representation for the purposes of proceedings.’.

Government new schedule 3—‘Northern Ireland: information about financial resources.

Amendment 162, in clause 1, page 2, line 7, at end insert—

‘(c) funding for the promotion of civil legal services, not including representation, on matters not included in Schedule 1, Part 1 where it appears to the Lord Chancellor that the provision of such services would be consistent with the purpose of the civil legal services provided for under that schedule.’.

Amendment 123, in clause 4, page 3, line 25, leave out subsection (4) and insert—

‘(4A) The Director must, except to the extent that section (4B) applies, act under the direction of the Lord Chancellor.

(4B) The Director must act independently when performing any functions or duties under this Part.’.

Amendment 116, page 8, line 29, leave out clause 12.

Amendment 104, in clause 12, page 8, line 31, leave out from ‘station’ to end of line 20 on page 9.

Amendment 125, page 8, line 35, leave out subsections (2) to (7).

Amendment 90, page 9, line 27, leave out subsection (9) and insert—

‘(9) Sections 20 and 26(2) do not apply in relation to this section’.

Amendment 148, page 21, line 7, leave out clause 26.

Government amendments 1, 2 and 25 to 27.

Amendment 69, in schedule 4, page 130, line 36, at end insert—

‘(3A) A transfer scheme shall make pension provision and compensation provision for and in respect of persons who become employed in the civil service of the State under paragraph 1 which is at least as favourable as the pension provision and compensation provision applicable to them immediately before they ceased to be employees of the Legal Services Commission.’.

Government amendment 64.

Amendment 71, page 131, line 9, at end insert—

‘“compensation provision” means the provision of compensation under a compensation scheme;’.

Amendment 70, page 131, line 14, at end insert—

‘“pension provision” means the provision of pension and other benefits under an occupational pension scheme;’.

Government amendments 65, 137, 66 to 68, 138, 19 and 54.

[Mr Djanogly]

We now move on, or perhaps I should say back to, legal aid. When we discussed legal aid on our first day on Report, we had two very constructive, albeit lengthy, debates in which I took more than three dozen interventions. That was partly the reason, along with the many valuable contributions that were made, why we were unable to cover all the groupings—[Interruption.] I know that that disappointed a number of hon. Members in all parts of the House.

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

Order. Let us not start where we left off the other day. Let us see if we can make progress. We do not want to run out of time, and I am sure that those on both Front Benches want to make good time.

[Mr Djanogly]

I want to try to avoid delay today, so I shall speak to Government amendments now and respond to the points made in debate later, rather than pre-empting in my opening remarks what hon. Members may have to say about their amendments.

Government new clause 4, which is a technical amendment, has two purposes. First, it seeks to provide clarity about the role of the director of legal aid casework, by ensuring that the exercise of the functions of the office is on behalf of the Crown, and that service as the director is service in the civil service of the state. The second purpose of new clause 4 is to ensure that the Lord Chancellor is treated as a corporation sole for the purposes of part 1 of the Bill.

The new clause is necessary in order to clarify the position in relation to the Lord Chancellor’s ability to hold an interest in land for those purposes, and so applies to charges that transfer from the Legal Services Commission to the Lord Chancellor at the point when the LSC is abolished, and for future charges to be taken over property under clause 24. The statutory charge is the charge that arises under clause 24 on any property recovered or preserved, including costs, by a legally aided person in respect of the amounts spent by the Lord Chancellor in securing their legal aid services and any other amounts payable by them under clauses 22 and 23. The amendment is essential, as the current value of charges held by the LSC is £212 million.

Government new clause 9 and new schedule 3 make provision on information sharing in relation to checking a person’s financial eligibility for legal aid in Northern Ireland. They replicate for Northern Ireland the information gateway for England and Wales created by clause 21 and further provided for in clause 32. Government amendments 26 and 27 are technical amendments that make it clear that regulations made under new schedule 3 will be prescribed not by the Lord Chancellor but by the Northern Ireland Assembly. Government amendment 54 is also a technical amendment that makes it clear that the Bill extends to Northern Ireland for the purposes of new clause 9 and new schedule 3, which create the information gateway, and for the purposes of clauses 38 to 40. I should point out that under paragraph 2(4) of new schedule 3, it will be a criminal offence to use or disclose information contrary to the provisions of paragraph 2.

Government amendments 25 and 64 to 68 relate to the transfer of LSC employees to the civil service when the LSC is abolished. The powers currently set out in the Bill include a power, in schedule 4, for the Lord Chancellor to make transfer schemes to transfer to the Lord Chancellor or the Secretary of State the LSC’s rights, powers, duties and liabilities under or in connection with an LSC occupational pension scheme, of which there are currently two, or compensation scheme. The occupational pension and compensation scheme arrangements for LSC employees are different from those for existing civil servants. When the employees transfer to the civil service and become civil servants, they will join the principal civil service pension scheme.

Amendment 64 confers new powers upon the Lord Chancellor that can be exercised as part of any transfer scheme. Proposed new sub-paragraph (6A), set out in amendment 64, allows for the Lord Chancellor to apply legislation with modifications as far as it is necessary to give effect to any transfer scheme. That is appropriate when transfer schemes are of an administrative nature relating to the specific issues in question. For example, it will allow the Lord Chancellor to provide that an aspect of pensions legislation applies in a particular way to that particular scheme. It will assist, as appropriate, in enabling the continuation of the LSC pension scheme or schemes after the abolition of the LSC so that they can continue for the benefit of their pensioner and preserved members. Those are members who have contributed to the schemes before leaving LSC employment and either draw a pension from the scheme or will be entitled to do so in future.

For compensation scheme arrangements, as well as allowing the modification of legislation, proposed new sub-paragraph (6B), set out in amendment 64, provides that the transfer scheme may amend or otherwise modify the existing LSC compensation scheme. That will allow compensation arrangements for LSC employees transferring to the civil service to be brought into line with those of other civil servants over a transitional period.

Amendment 65 reflects the fact that when LSC employees transfer to the civil service there will no longer be any active members of the two current LSC occupational pension schemes, known as the No. 3 and No. 4 pension schemes. The amendment provides the Lord Chancellor with the power to make a scheme to merge the two residual pension schemes. It is explicit that a scheme exercising this power must not result in members of the pension schemes, or other beneficiaries under the schemes, being deprived of any rights accrued prior to the merger.

The LSC’s No. 3 pension scheme has fewer than 100 pensioner and preserved members, and no current LSC staff members. The No. 4 scheme is for current staff and also has a number of pensioner and preserved members. At present there is much duplication in the administration of the No. 3 and No. 4 schemes, such as producing two sets of accounts and actuarial valuations. Merging the schemes would allow us to cut significantly the administration costs of running two trust-based schemes. The amendment will also give the power to wind up an LSC occupational pension scheme.

Amendment 25 corrects a slip in clause 38(7)(j). The intention was not to make regulations that contain free-standing provision that modifies an Act either directly or indirectly, subject to the affirmative procedure. Amendments 66 to 68 clarify the fact that the regulation-making power provided to the Lord Chancellor under paragraph 10 of schedule 4 can be used in connection not only with transfers affected by schedule 4, but with schemes under schedule 4, meaning schemes dealing with something other than a transfer.

Government amendments 137 and 138 concern schedule 4 to the Bill, which governs transfers of employees and assets following the abolition of the LSC. They are purely technical amendments that simplify existing provisions. Paragraph 10(1) of schedule 4 currently allows the Lord Chancellor to make consequential supplementary, incidental or transitional provision by regulation, and paragraph 10(2)(b) specifies separately that such regulations may include transitory or savings provision. Rather than continue to separate these related provisions, for the purposes of simplification amendment 137 brings them together in a revised paragraph 10(1) and amendment 138 amends paragraph 10(2) to reflect that simplification. That mirrors an identical amendment to clause 115.

Finally, Government amendments 1, 2 and 19 are minor and technical amendments to clause 32 and schedule 5, consequential on the removal in Committee of what was then clause 71.

[Mr Andy Slaughter (Hammersmith) (Lab)]

If the Minister was sincere when he said in his opening remarks that we will make good progress and deal with as many of the groups of amendments as we can today, I applaud him for it, but it is a challenging task. There has been a statement so we have barely four hours left to debate huge chunks of the Bill, which is impractical. It will no doubt be assisted by the fact that, with the exception of the Minister’s Parliamentary Private Secretary, who has just appeared, there is not a single Conservative Back Bencher here. [Interruption.] I apologise to the hon. Member for Hendon (Mr Offord); I thought he was a Liberal Democrat. I withdraw that slur on his character immediately.

There is a serious point. We had a disgraceful situation in the House on Monday when the Minister called in Conservative Back Benchers, one by one, to speak on domestic violence and clinical negligence, particularly as they affect the most severe injuries and brain-damaged children, and to waste time. By wasting time and then voting against amendments that would deal with those issues, the Government prevented us from moving on to a substantive discussion on legal aid. I will not dwell on that point, because I wanted to move on, but I hope that in discussing these amendments, of which there are a broad range, we will be able to do justice to that important subject.

I will speak principally to amendment 123, which stands in my name. I will get my contributions out of the way in one go by speaking to new clause 17, tabled by my hon. Friend the Member for Makerfield (Yvonne Fovargue), amendment 148, tabled by Liberal Democrat Members, who for some reason rejected a similar amendment I tabled, and new clause 43, tabled by the hon. Member for Carmarthen East and Dinefwr (Jonathan Edwards), which is a very good one. I will say at the outset that we support all those amendments. I will not deal with amendment 116, which stands in my name, because my hon. Friend the Member for Darlington (Mrs Chapman) will make a contribution on that later. For the avoidance of doubt, I will say at the outset that the Opposition will press amendment 116 to a vote, and other hon. Members may wish to press their amendments to a vote.

Amendment 123 deals with a fairly straightforward point, but an important one, which is in no way party political. The independence of the new director has raised considerable alarm and concern across the professions and the voluntary sector, and indeed with anyone who deals regularly with legal aid. We attempted many times in Committee, with a variety of amendments, to try to push at this and get the Government to give a little. We asked for an appeals process, a vetting process before appointment, which would give some independence, and for assurances in relation to the civil service, which will be working in this area. Every amendment, as was the case throughout the Committee’s proceedings, was rejected. I hope—this is the case in other common law jurisdictions which have moved to a similar system—that the Minister is listening to these proposals. This is not an issue that divides the parties on the abolition of the Legal Services Commission, but it is an issue that strongly divides the parties on the adverse influence, be it perceived or real, that the Government will bring to bear on to the director post once it is firmly ensconced within the Department.

There is a trend in this Bill towards Government control and authoritarianism, and we will see it when we debate clause 12, whereby the same director of legal aid will get the power to decide whether legal aid is granted to those in extremis—in the worst circumstances—when they have been arrested. We also see the trend in relation to the constraints on the powers of the judiciary, and, although I doubt that we will get time to debate remand today, I note that the Government wish severely to tie the hands of magistrates and judges in relation to whom they can remand in custody. All the time, these measures restrict either citizens’ rights or the rights of independent parties, whether they be the director or the judiciary, to make decisions.

I heard quite a chilling statement from the Ministry on the radio this morning. I do not know whether other hon. Members heard the compelling interview with Christopher Jefferies on the “Today” programme, which I will not dwell on, because we hope to have time to debate no win, no fee later this afternoon. At the end of the interview no one from the Ministry of Justice—not the Minister, not anyone else—was prepared to come forward. There was simply a statement to this effect: “We believe that deserving cases will still be able to be brought by no win, no fee, but not cases which are too costly or undeserving.”

[Mr Djanogly]

We are talking about legal aid.

[Mr Slaughter]

The presenter made a mistake—I hope the Minister is not making the same one—in relation to talking about legal aid, as presenters often do, but I assure the House that Mr Jefferies was clearly talking about conditional fee agreements and no win, no fee. The answer is—

[Mr Djanogly]

Yes, but we are talking about legal aid.

[Mr Slaughter]

I know the Minister does not want to hear this, but in relation to the director the point is that the Government wish to decide who has merit and who does not. That is the charge that the Government have to answer, and in this case they will do so only by ensuring the independence of the director.

Let me move on, because we are in the midst of a radical reform of the social welfare system. The Secretary of State for Work and Pensions has embarked on restructuring the way benefits are assessed, calculated and provided, local authorities have had budgets radically reduced, and a housing benefit cap is being introduced. In short, the benefits system is in a period of turmoil, and as a consequence the system of checks and balances on state decision making through the first-tier tribunals is also significantly under pressure, such that more staff are being taken on daily to deal with a growing number of appeals against decisions taken by Jobcentre Plus.

When in October last year the coalition produced its Green Paper on the reform of legal aid in England and Wales, we were shocked to see that there were cuts of £450 million, as defined in the latest impact assessment, and that they overwhelmingly came from civil legal aid. Things such as education, employment, welfare benefits, debt, housing matters and clinical negligence were taken out of scope, either in their entirety, as in the case of employment, welfare benefits and clinical negligence, or substantially, as in the case of debt, housing and education.

Means-testing will also change. The Government have proposed the abolition of capital passporting, by which those receiving certain income-based benefits are automatically eligible for legal aid, and the introduction of a new minimum capital contribution, a personal financial contribution towards legal costs.

The philosophy behind the cuts is explained in the Government’s impact assessment, in which they state:

“Legal aid may be regarded as a redistributive transfer of resources from taxpayers to those who are most needy, in relation to both the nature and merits of their case and also to their financial position… The Government may consider intervening if there are strong enough failures in the way markets operate…or if there are strong enough failures in existing government interventions”.

The amendments under discussion simply seek to address the Government’s failure to abide by those principles as set down in their own impact assessment. We are in a period of great need and of great changes to the system, and many meritorious cases are being referred to tribunal. By definition, the financial position of those requiring help with welfare benefits, employment law, debt and housing is necessarily the most precarious of any in society, and £70 a week is often all that stands between some of my constituents and utter destitution. They are in a desperate place.

Let me give the House one example, in relation to eligibility for disability living allowance. There are so many problems with the private contractor Atos that many seriously ill people are being judged fit for work. I leave aside operational issues, such as the fact that, according to its own website, 20% of Atos’s 141 medical assessment centres do not have wheelchair access, because, according to a newspaper report, one third of those refused DLA by Atos have appealed to the first-tier tribunals, and 39% of decisions have been overturned. Furthermore, the report states:

“The tribunals service…has had to double its capacity in the social security section to deal with the large number of appeals, recruiting an extra 170 paid medical panel members.”

In a letter to The Guardian, leading mental health charities and a senior consultant from the Royal College of Psychiatrists say:

“We’ve found that the prospect of incapacity benefit reassessment is causing huge amounts of distress and tragically there have already been cases where people have taken their own life following problems with changes to their benefits.”

These are not just economic issues; they profoundly affect the most vulnerable individuals.

The Government’s proposals will seriously damage access to justice for the most vulnerable in society, and their own impact assessment shows that there will be a disproportionate impact on women. Similarly, there is the potential for the cuts to impact disproportionately on black and ethnic minority clients and on those with disabilities.

That is something the Minister himself acknowledges. When it was put to him that groups with protected characteristics would be affected, he dismissed it, as only a Conservative Minister can, although the Liberal Democrats are getting there, by saying, “Well, that’s because they are disproportionately represented among the most vulnerable.” That is the logic of the Government’s case—“Because vulnerable people get legal aid, and we are cutting it, what do you expect to happen?” Those principles show an absolute absence of moral guidance.

--- Later in debate ---

[Mrs Chapman]

I could not have put it better myself.

It is essential for people who are detained in police custody to have access to free, independent legal advice, not only because they are at their most vulnerable and because evidence obtained from people in custody may be inadmissible if they have not had access to independent legal advice, but because the presence of a solicitor makes a significant difference to the fairness of the investigation and the subsequent smooth progress of the case. It would therefore be utterly inappropriate to introduce a merit test that goes beyond the fact of arrest.

As for a means test, it would in practice deprive many people who failed it of their right to a lawyer, as they would not feel able to afford to pay privately. However, that is not the only reason for not introducing such a test. Applying it would inevitably introduce delay in the process and prevent the police from proceeding as quickly as they would wish. Clients who are in police custody will not have access to documents with which to verify their entitlements, and clients who do not pass the means test are in no position to instruct the solicitor of their choice on a private basis, because they cannot pick and choose and cannot argue about terms and conditions. In short, they will be completely disfranchised, and in the most terrifying position in which the average citizen can find himself.

It should be clear by now that we oppose the new clause. It is no good hoping and praying, as the Liberal Democrats keep doing, that it will be repealed in another place. I urge all Members to join us in the Lobby when we press it to a vote—unless, of course, the Minister has the sense to withdraw it.

[Mr Djanogly]

I welcome the hon. Member for Darlington (Mrs Chapman) on the occasion of her first outing at the Dispatch Box.

Most of what was said by the hon. Member for Hammersmith (Mr Slaughter) concerned the scope of civil legal aid, and was therefore not directly covered by the new clauses and amendments. It would have been good if he had discussed all the amendments that he had tabled, but he could not even do that. However, he certainly showed us once again that he knows how to spend taxpayers’ money, but not how to save it. He mentioned only one saving, when he said that he would have proceeded with criminal contract competition to save money rather than cutting social welfare law. Criminal competition in line with Labour’s model would have secured a very small reduction in the £180 million spent on police station advice—a reduction of only about 10%—which is not really enough. The hon. Gentleman will have to say where else he would make cuts. When Labour tried to address contracting, it failed, and it had to pull its contracting proposals in 2009.

Amendment 123, to which the hon. Member for Hammersmith spoke, is intended to alter the provisions in relation to the independence of the director of legal aid casework. That subject was debated substantially in Committee, but having heard the hon. Gentleman speak about it again, I still fail to understand the rationale behind the amendment, and, as I will explain, I consider it unnecessary. Let me briefly explain the role and key functions of the director, and also explain why I believe that independence is important and why it is already enshrined in the Bill.

Under the provisions, the Lord Chancellor is obliged to appoint a civil servant as a statutory office holder who will be responsible for making funding decisions in individual cases, as well as funding decisions in relation to exceptional case applications under the Bill. The statutory office holder is to be known as the director of legal aid casework. The Lord Chancellor is also obliged to provide civil servants to assist the director in carrying out their functions.

Under the new structural arrangements, clause 4 is potentially the most important provision. It ensures that the director has independence in making funding decisions, and is free from any political interference in making those decisions. That independence is enshrined specifically by subsection (4), which the hon. Member for Hammersmith wishes to delete, and which prohibits the Lord Chancellor from giving guidance or directions in individual cases. There are provisions in the clause that oblige the director to comply with directions given by the Lord Chancellor and to have regard to guidance issued by the Lord Chancellor, but crucially they cannot relate to individual cases.

The protection of the director against interference in individual cases is an important safeguard. The Bill already establishes the director in a way that maintains and protects the director’s independence of decision making. The director is a separate office from the Lord Chancellor created by statute. I therefore believe that the Bill already establishes a proper role for the director, free from any political interference in individual cases. I therefore urge the hon. Gentleman to withdraw the amendment.

[Mr Llwyd]

Will the Minister give way?

[Mr Djanogly]

I am sorry, but I do not have time to take interventions.

[Mr Llwyd]

rose—

[Mr Djanogly]

No, I will not give way.

[Mr Llwyd]

On a point of order, Mr Deputy Speaker. I want to ask the Minister whether progress has been made on introducing a clause that would allow an appeal against the granting of bail. A concession was given in Committee, and several Members have tabled amendments, but we will not reach them today. Will the Minister update us?

[Mr Djanogly]

I would dearly have loved to reach the provisions relating to bail, and I think the right hon. Gentleman should ask the official Opposition why we have not done so.

[Mr Deputy Speaker (Mr Nigel Evans)]

Order. Clearly, that was not a point of order, and the Minister has now dealt with the point raised.

[Mr Djanogly]

I shall now turn to amendments 69, 70 and 71, tabled by the hon. Member for Stretford and Urmston (Kate Green), which address pensions and compensation.

Amendment 69 looks to ensure that Legal Services Commission employees transferring to the civil service are treated fairly. As drafted, the Bill and commitment between the Ministry of Justice and the LSC will achieve that. The Ministry is committed to ensuring that transferring staff are not put in a less favourable position than that of existing civil servants. The Bill protects LSC employees’ terms and conditions at the point of transfer, with the exception of those for pensions and compensation. The Bill also protects employees’ length of service.

When LSC employees transfer to the civil service, they will be enrolled as members of the premium section of the principal civil service pension scheme. The Government Actuary’s Department has determined that that scheme is “broadly comparable” to the existing LSC pension offer. Broad comparability is the standard defined by the Cabinet Office for the pension offer for staff transferred to organisations within the public sector. LSC staff will be able to choose whether to move any entitlement built up in the LSC scheme to the civil service pension scheme, or whether to leave it within the LSC scheme. Those arrangements have been communicated to LSC employees and their representatives. I will write to the hon. Lady on the TUPE point.

New clause 17 was moved by the hon. Member for Makerfield (Yvonne Fovargue). Her significant experience in the field became clear, as it also did in Committee. Many Members spoke to the new clause, including the hon. Members for Bolton South East (Yasmin Qureshi), for Islington North (Jeremy Corbyn) and for Walsall South (Valerie Vaz), the right hon. Member for Lewisham, Deptford (Joan Ruddock), my hon. Friends the Members for Eastbourne (Stephen Lloyd) and for Bradford East (Mr Ward) and my right hon. Friend the Member for Carshalton and Wallington (Tom Brake).

The new clause is very broad and would widen the scope of legal aid and increase its cost at a time when we are seeking to focus funding on the highest priority cases. It would have the effect of bringing into scope areas which are not covered in schedule 1—and which we intend no longer to fund—by virtue of their interconnected and complex nature. We have undertaken a comprehensive consultation on legal aid with published impact and equality assessments, and we have received almost 5,000 responses. As my right hon. Friend the Member for Carshalton and Wallington pointed out, cases will arise where it will be difficult to separate two or more legal issues in terms of funding. Under the current legal aid scheme, there are provisions in the funding code to cover mixed cases, where the case is partly in and partly out of scope. Those provisions allow funding of the whole case in certain circumstances, and in others they allow funding for aspects of the case. I am pleased to confirm to my right hon. Friend that paragraph 39 of schedule 1 ensures similar appropriate provision in the new scheme. We consider that that approach provides a more proportionate means of dealing with interconnected matters than the new clause proposed by the hon. Member for Makerfield.

--- Later in debate ---

[Mr Slaughter]

I was not talking about the Minister; I was talking about the Bill. I am not surprised that the Minister’s PPS is embarrassed by the Bill, after sitting through our proceedings in Committee.

The common link between parts 1 and 2 of the Bill is the destruction of access to justice in a way that we have not seen since the introduction of legal aid by a Labour Government after the second world war. The insurance industry is being given one of the biggest pay-offs in history which, as we know from experience, will go into the pockets of their directors and shareholders. While other aspects of this Bill display the startling incompetence of this Government, none shows their intent more truly than the provisions in part 2, which would give the whip hand to large public and private corporations, while taking rights away from ordinary people. What is the point in having rights if they cannot be enforced?

I ask the Liberal Democrats to look at amendment 21, which would deal with cases such as Trafigura and pleural plaques, and amendment 163, which would deal with cases such as that of Milly Dowler, and join us in the Lobby tonight.

[Mr Djanogly]

Amendments 21, 22, 72, 163, 164 and 165 all seek to undermine a fundamental element of the package of reform of civil litigation funding and costs based on the report prepared on behalf of the judiciary by Sir Rupert Jackson and now included in this Bill—the abolition of recoverability of success fees and after-the-event insurance premiums. I must say that I am rather perplexed by the amendments as in Committee the hon. Member for Hammersmith (Mr Slaughter) agreed that the intention of part 2 is

“perfectly sound, and it is one with which we have a great deal of sympathy.”––[Official Report, Legal Aid, Sentencing and Punishment of Offenders Public Bill Committee, 13 September 2011; c. 501.]

I will also deal with new clause 39, which is on the related but slightly separate matter of recoverable costs for low-value road traffic accident claims.

It is worth emphasising, as the Justice Secretary has just said, that we are not proposing to end conditional fee agreements or no win, no fee deals. What we are addressing is the substantial legal costs that go to lawyers under the current no win, no fee regime. Our reforms are designed to make these legal costs more proportionate, while enabling meritorious claims to be brought. This applies equally to defamation and privacy claims and multinational claims as to other categories of case, but it is worth reminding ourselves of some of the disproportionate costs that have arisen and that emphasise the need for our reforms across the board.

[Chris Bryant]

The Minister referred specifically to defamation and privacy cases. The problem is that in the vast majority of cases—and in every single instance in privacy cases—the awards are so small that if there is no success fee, it will be completely uneconomic for a lawyer to come forward with a CFA. That may not be the Minister’s intention—I take him at his word—but the effect will be to stop CFAs in libel, defamation and privacy cases.

[Mr Djanogly]

In some cases, where the balance is against, that perhaps should be the case. In Naomi Campbell’s defamation case against the Daily Mirror, she received damages of £3,500 but the total costs exceeded £1 million.

In relation to clinical negligence claims, which can of course include substantial damages in catastrophic injury cases, lawyers’ costs are about half of the total damages that are paid out. In 2009-10, for example, the NHS paid out £297 million in damages and £121 million in legal costs, over half of which were no win, no fee costs. One of the leading no win, no fee cases against a multinational company is that against Trafigura. In that case, the claimants’ legal costs were more than £100 million, but the damages recovered were only £30 million. As a result, 30,000 claimants in the Ivory Coast received damages of an average of only £1,000.

[Lisa Nandy (Wigan) (Lab)]

Will the Minister give way?

[Mr Djanogly]

I will not—[Hon. Members: “Go on!”] I am afraid that I do not have time to give way.

It is these high legal costs which led to Sir Rupert Jackson’s review. Specifically in relation to defamation and privacy, it is these high legal costs which led to the right hon. Member for Blackburn (Mr Straw), when he was Justice Secretary, seeking to introduce similar changes to those we are now proposing to reduce excessive legal costs, but he mistakenly limited them only to defamation and privacy cases. In effect, that is the exact opposite of what the hon. Member for Rhondda (Chris Bryant) proposes in his amendment. The sands seem to have been shifting dramatically in the Labour camp on this issue.

New clause 39, tabled by the right hon. Member for Blackburn, would reduce the amount of fixed recoverable fees on the pre-action protocol for low-value road traffic accidents in the light of the impact of the ban on referral fees. The Department is now reviewing the situation, but to achieve this outcome does not require primary legislation. Instead, a reduction can be implemented through changes to the Civil Procedure Rules. I can give the commitment that we are looking at this. Indeed, my officials plan to consult on appropriate changes to the level of recoverable costs, and any changes will be placed before the Committee for approval. I can also tell him that I do not intend to go to all the trouble of stopping referral fees being paid to claims management companies, only to see those same fees staying with the lawyers rather than going back to consumers in lower insurance premiums or prices in the shops.

[Mr Jack Straw (Blackburn) (Lab)]

I am grateful to the Minister for those undertakings.

[Mr Djanogly]

I shall take each amendment in turn. Amendment 21 would remove clause 41, the effect of which is to amend the Courts and Legal Services Act 1990 so that success fees under a conditional fee agreement will no longer be recoverable from a losing party in any civil proceedings. Amendment 22 would remove clause 43. I should make it clear that we have listened carefully to specific concerns about the abolition of recoverability of after-the-event insurance premiums in clinical negligence claims and the impact it would have on funding expert reports. Such reports, which can be expensive, are often necessary in establishing whether there is a case for commencing proceedings, which raises particular issues if recoverability of ATE insurance is abolished. In responding to these concerns, clause 43 provides, by way of exception, for the recoverability of premiums in respect of ATE insurance taken out to cover the cost of expert reports in clinical negligence cases.

Amendment 72 would remove clause 44, which abolishes the recoverability of the costs incurred by membership organisations, such as trade unions, of insuring themselves against the risk of paying costs to another party in the event of losing a claim. I strongly believe that the abolition of recoverability should apply equally to the arrangements for membership organisations in order to maintain a level playing field. Amendments 150 and 151 seek to allow the recoverability of success fees and ATE insurance premiums from a losing party in certain claims for damages against a person who carries on business in more than one country or who owns one or more businesses carried on in more than one country or in different countries.

[Lisa Nandy]

Will the Minister give way?

[Mr Djanogly]

We understand that these amendments seek to protect the rights of individuals—[Hon. Members: “Go on. Give way.”] Oh, all right. How can I resist?

[Lisa Nandy]

I thank the Minister for finally recognising just how strongly so many of us on both sides of the House feel about this issue and how unfortunate it is that we have not been able to make the case today. Unfortunately, we have not had sufficient answers to make Members on both sides of the House feel that these cases will be able to continue. Will he therefore agree to meet a cross-party group of us before the Bill is sent to the other place, so that we can make at least make our case before the Bill becomes law?

[Mr Djanogly]

The hon. Lady will be pleased to hear that I have met the Corporate Responsibility Coalition—CORE—and the solicitors who acted for Trafigura. I have acted for a number of people, and of course I shall be prepared and happy to receive additional representations from her.

We understand that the amendments seek to protect the rights of individuals in developing countries to claim damages against large multinational companies, but the amendments go much wider than that, and would provide that a losing defendant should pay the success fee and ATE insurance premium based on whether it is a multinational company, regardless of the nature of the claim or status of the claimant.

Given the concerns that I have been raising in relation to cases brought by claimants in developing countries, I shall concentrate my response on those cases. The amendments are neither necessary nor appropriate. The Government believe that it will still be possible to bring claims against multinational companies, once our CFA reforms are implemented, but—this is one of the major reasons for our reforms overall—we believe that the costs involved will be more proportionate to the sums in issue. What the proposals in the Bill seek to address is not the validity of the claims, but the iniquity of a system that can allow such disproportionate costs. It is worth emphasising that the current system of recoverable success fees and recoverable ATE insurance premiums, with the consequences for high civil costs, is not seen in any other jurisdiction in the world. CFAs will continue to be available, but the Bill also extends the funding options. The Government seek to allow damages-based agreements to be used for the first time to fund such claims. Group actions in particular are suited to DBAs, as legal representatives may recover their fees as a percentage of the damages awarded to each successful claimant.

Amendments 163, 164 and 165 seek to ensure that success fees continue to be recoverable in defamation and privacy claims. The Government are aware of concerns about access to justice and the ability of those with modest means to pursue claims, often against powerful organisations. I am aware that there are slight definitional differences, which I will not go into. However, all hon. Members will be aware of one of the most high-profile cases, involving the Dowler family, who were successful in their claim against News International.