Legal Aid, Sentencing and Punishment of Offenders Bill

Lord Best Excerpts

Wednesday 18th January 2012 Lords Chamber

The obvious solution to this problem is to retain legal aid in debt cases for remedies under Part 5 of the Tribunals, Courts and Enforcement Act 2007. Citizens Advice has established from its data that approximately 13 per cent of the Legal Services Commission-funded debt casework involves DROs—in other words, about £3 million of what the LSC currently spends on debt advice. We also think that there is a case for keeping within scope advice around other debtor protections and contractual rights under the Consumer Credit Act, unsecured lending, advice around remedies for creditor harassment, disputing liability for debts and court enforcement of debts by bailiffs who, it is alleged, often exceed their legal powers. We estimate that this would be between 20 per cent and 30 per cent of current work—that is, around £5 million of what is currently funded by the LSC on debt advice. We think that this is justified and ask the Government to think again about removing all debt from legal aid. I beg to move.

[Lord Best]

I shall speak to Amendment 72 and make the case for legal aid in housing cases beyond those where someone faces imminent loss of their home.

The private rented sector has no regulator, in stark contrast to the social housing sector, nor is there an ombudsman to consider complaints against private landlords as there is for complaints against housing associations and council landlords. There is a voluntary ombudsman scheme for complaints about managing and letting agents, and I declare my interest as chair of the independent council of the Property Ombudsman. However, that redress scheme—

[Lord Beecham]

Is the noble Lord speaking to Amendment 72 or Amendment 72A? Amendment 72 is about debt.

[Lord Best]

I shall return to this later.

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

I do not think the noble Lord should worry. At this time of night it becomes a bit of a blur for us all.

Amendments 72 and 82ZC would bring into scope debt matters that are not covered in Schedule 1 and which we intend no longer to fund. We are faced, as we have said before, with tough choices in this current fiscal climate, but this has allowed us to focus resources on those who need them most in the most serious cases where legal advice and representation are justified. We estimate that we will continue to spend around £50 million on social welfare law overall.

Amendment 72 relates to paragraph 28 of Part 1 of Schedule 1 and appears to be aimed at making legally aided advice, assistance and representation available where a person’s financial difficulties, such as debt problems, could potentially lead to the individual losing their home.

Amendment 82ZC would bring into scope all debt matters not covered in Schedule 1. In our consultation on legal aid reform, we proposed that funding should be prioritised on cases where the individual’s home is at immediate risk. We are therefore retaining legal aid in relation to court orders for possession or sale of the home and in relation to eviction. We generally consider that other debt matters are a lower priority and therefore do not justify public funding for legal advice and representation.

We recognise that early advice can be helpful in a range of contexts. However, what people often need is general advice, for example on welfare benefits, debt or housing, rather than legal advice. There are many alternative sources of help with debt issues, including Credit Action, the National Debtline, the Consumer Credit Counselling Service and local authorities, which also direct people to local sources of advice and assistance on debt matters. In addition, the Money Advice Trust has recently launched My Money Steps, an online tool for providing advice for people with debt problems. The Consumer Credit Counselling Service also offers a free online debt remedy service.

We also recognise the argument that withdrawal of legal aid for any issue could lead, by a chain of events, to serious consequences. We considered this point carefully when formulating our final proposals. However, our view is that the limited public funds for legal advice and representation should be focused on those cases where the client faces serious direct consequences. Therefore, we do not propose to devote these limited public funds to less important cases on the basis that they could indirectly lead to more serious consequences for that person.

It is also important to recognise that the Bill does not require legal proceedings to have been issued before legal aid can be made available. Legal aid will be available where action for repossession or eviction is contemplated—for example, where a person receives a letter threatening repossession action in the absence of payment. Therefore, legal aid will be available to a person threatened with repossession action for mortgage or rent arrears, for example to negotiate with the mortgage lenders. It should also be noted that we will retain funding for the housing possession court duty scheme. It offers free legal advice and representation to anyone in danger of eviction or having property repossessed, on the day of the hearing, regardless of their means. Research shows that 77 per cent of clients who receive this last-minute advice avoid the immediate loss of their home. Under the circumstances, I hope the noble Lord will consider withdrawing his amendment.

Amendment 82D appears to be aimed at bringing into scope debt relief remedies under Part 5 of the Tribunals, Courts and Enforcement Act 2007 and, in particular, as the noble Lord said, debt relief orders. As I have already said, we consider certain debt matters to be a high priority for funding. That is why we are retaining legal aid for debt cases where the individual’s home is at immediate risk of repossession because of rent or mortgage arrears or involuntary bankruptcy. We recognise that debt problems can be difficult for the individuals concerned. Nevertheless, we strongly believe that what is often required is practical advice to resolve issues, rather than advice of a legal nature.

It is important to note that debt relief orders are relatively informal procedures. Advisers act as approved intermediaries and assist debtors in applying to the Insolvency Service for a debt relief order. I reiterate that individuals who have debt issues are able to seek advice from alternative routes. For example, the Insolvency Service website provides guidance and leaflets, and information is available through the insolvency inquiry line. Importantly, it should be noted that debt relief orders are used by people who owe limited amounts of money and have no assets. Therefore, they do not involve a person’s home being at immediate risk. They are clearly not analogous to cases in which a home owner is at immediate risk of losing their home as a result of involuntary bankruptcy. I hope that noble Lords will be reassured by what I have said and will not press these amendments.

--- Later in debate ---

I hope that my noble friend will see the amendments as intended to help the administration of justice and make it more effective, rather than to hinder it. I beg to move.

[Lord Best]

My Lords, I shall speak to Amendment 72A and support the case made by the noble Lord, Lord Shipley, for legal aid in housing cases to go beyond those where someone faces imminent loss of their home. I have made the case that the private rented sector has no regulator and no ombudsman. Therefore, private rented tenants are in a different position from consumers of other necessities such as electricity, gas, water, telephone or even financial services. If tenants are in dispute with their landlords, the only way of obtaining redress may well be to go to court.

That being so, legal advice can be of enormous help, not least in explaining to some tenants that they do not have a case and that it would be a waste of the time of the tenant and the courts to go down the route of litigation. Thanks to the current legal aid system, a publicly funded solicitor can advise tenants at an early stage that they should not pursue a hopeless case. If legal advice is not available, more tenants will try to proceed through the courts with ill advised cases as litigants in person, causing the courts and landlords—both private and public—to incur irrecoverable legal costs for wasted time litigating nonsense. My barrister colleague, Peter Marcus, who specialises in housing, tells me that he handles cases where, even if the landlord makes a successful application to have the tenant’s case struck out, the landlord none the less incurs significant irrecoverable legal fees.

Of course, the case for legal aid for housing matters goes much deeper than that. Justifiable cases against landlords, regrettably, are only too common in this sector. There are some 1.2 million private landlords and some are ignorant of their responsibilities, while a minority are deliberately exploitative. However, while legal aid is currently available to even the poorest tenant, the threat of litigation has teeth. Landlords know that, despite the absence of regulation or dispute resolution by an ombudsman, tenants advised by law centres or citizens advice bureaux can pursue them through the courts, with the landlord facing considerable costs when they lose the case. Without Amendment 72A, however, the disreputable landlord would see that threats from landlords of legal action would be empty, as tenants would not be able to take the matter forward unless the case concerned the likelihood of the imminent loss of their home.

Informing bad landlords that, however awful their behaviour, they will not be taken to court is like telling Somali pirates that they will never be held to account if they board ships and demand fantastic ransoms. It seems bound to lead to an escalation of criminality. Removing recourse to legal aid removes the capacity of tenants credibly to threaten litigation, leaving them with no way out of the misery of living in a property where the heating system does not work, where there is no management of anti-social neighbours, where disrepair is a major issue and where landlords simply refuse to answer letters or phone calls. As we all know, acute shortages mean that tenants, unlike consumers in other areas, do not have the luxury of being able to shop around and find a better property elsewhere.

The other way in which housing differs from other services lies in the legal complexities that surround it. Quite apart from the extensive body of landlord/tenant legislation, the ever changing entitlements to benefits—for example, to local housing allowances—are fiendishly complicated. Social landlords very often provide expert welfare benefits advice but private landlords, of course, do not. The ordinary consumer—the tenant—cannot be expected to have full knowledge of the legal niceties to deploy in a tribunal hearing; hence the need for professional advice, for which legal aid provides the funding mechanism. Take this away and not only will landlords be able to break the law with impunity but tenants who are ignorant of their entitlements or who are victims of incompetence at the hands of bureaucrats will never see justice.

The noble Lord, Lord Shipley, has made the case for legal aid housing advice preventing problems escalating to homelessness, and legal aid help for housing cases has to go much wider than stepping in at the last minute when possession of the home is imminent. Of course, many cases are not about eviction. Moreover, some of the cases where eviction has occurred may be about ancillary aspects of the actions of the landlord—it is not uncommon for tenants who are unlawfully evicted to have all their possessions thrown out of the property. If the landlord has previously exercised violence or harassment, the tenant may have no wish to get back their former home but merely to get back their belongings or obtain compensation for belongings destroyed. It would be perverse if a tenant could not get legal aid in such cases unless they declared that they wanted to go back into a property to which it would be unreasonable, if not unsafe, to return.

Regrettably, although we now depend on the private rented sector to house many poorer households, it is fraught with conflict that often requires a legal input to get sorted. With benefits advice being taken out of scope and the likely closure of many citizens advice bureaux as a result, housing is badly affected by the Bill. This surely is one area of our national life where legal aid is essential. Its withdrawal will not only cause misery but will cost central and local government money in picking up the pieces. I support the amendment.