Community Legal Service (Funding) (Amendment No. 2) Order 2011

Lord Higgins Excerpts

Wednesday 26th October 2011 Lords Chamber

[Lord McNally]

These were all foreshadowed in the Green Paper. The noble Lord, Lord Newton, is not a happy bunny but, as I said to the noble Lord, Lord Beecham, if we were not willing to take tough decisions, there would be a lot more unhappy bunnies around because we would be paying interest rates of two, three or four times what we are paying now, which would result in far greater cuts in public expenditure and services. The fact that our Government are not making headlines in relation to the economic situation in which they find themselves is because we had the courage to take tough decisions early. I have no doubt that when we ask colleagues and the Opposition to face up to that fact, we will always have the problem that these are tough decisions; we have never resiled from that.

[Lord Higgins]

Would my noble friend give way?

[Lord McNally]

It is very late.

[Lord Higgins]

Yes, I realise that, but my noble friend has just made a rather extraordinary statement. He said that we would be paying interest rates three or four times greater than we are now and I just do not understand what he means.

[Lord McNally]

At what rates is Ireland borrowing at the moment? I am suggesting that we would have lost control of our economy in the way that some parts of Europe have lost control of their economies. The consequences for public expenditure would have been much more severe. I would have thought that I would have had the support of my noble friend in that.

[Lord Higgins]

No one is more enthusiastic than I am that we should cut the deficit as fast as possible. I have made that clear, time and again. I just did not understand the quantitative statement that he made, but I do not wish to delay the House further.

[Lord McNally]

On the other points that the noble Lord, Lord Newton, made, legal aid is currently available for legal advice on any mental health matter and representation for mental health matters heard in the county court, such as charging a detained person’s nearest relative for mental health legislation purposes, for damages claims and for representation before the first tier mental health tribunal and onward. We propose retaining these changes within the scope of legal aid.

In 2010, tenders for legal aid contracts for mental health demonstrated a strong demand for mental health work, with nearly three times as many new cases bids than there were cases available.

I hope that answers the points that the noble Lord, Lord Newton, raises; namely, that there is the supply that he was concerned about and that we will continue this in scope.

The House will be aware that the Government have had to make some tough decisions. As I mentioned, the noble Lord, Lord Bach, accepted that when he had responsibilities for this matter the legal aid fund had to play a part in the often difficult exercise. To govern is to choose. It is a key role of Government on behalf of the taxpayer to ensure that the amount they pay for any service represents maximum value for money. In this context it is essential that the Government ensure that they only pay the rates that are necessary to secure the level of services that are required. While this may not be welcomed by those who provide services funded by legal aid, it is a reality that suppliers of other services across the country face on a daily basis. The Government recognise that some providers may choose not to continue to provide legally aided services in this environment, but it is not the purpose of the legal aid system to sustain the current legal market. Rather, we want to continue to have a sufficient supply of providers of satisfactory quality to provide an appropriate level of services for legally aided clients.

The order that we are debating this evening introduces a number of changes to the fees that the provider can currently receive for carrying out legally aided work. The main features were referred to by the noble Lord, Lord Bach. Justice is required to make savings in the year 2014-15 of about £50 million. My noble friend Lord Marks referred to the total savings of £120 million. With the exception of the family fee reforms which will take effect on 1 February 2012 when new contracts under the family re-tender exercise are expected to commence, the new fees took effect on 3 October 2011 and apply to all cases commenced after that date.

The reforms were subject to a full public consultation which ran from 15 November 2010 to 14 February 2011. I have already referred to that in reply to the noble Lord, Lord Beecham. With the exception of the Law Society, no respondents provided any form of detailed numerical analysis of the market. The Law Society did so through Mr Andrew Otterburn. His report indicated that while the fee reduction will inevitably reduce the income of solicitor firms, on the whole, they would still make a profit even before making any efficiencies in working practices.

Subsequent to his report, Mr Otterburn specifically confirmed to the MoJ that, in his view, an overall phased reduction in fees of around 10 per cent, with the reduced fees only applying to new cases commenced after the implementation date, would allow solicitor firms time to adjust to the new fee levels and would not, therefore, necessarily make supply unsustainable.

The Government accept that the proposed reforms may be particularly challenging to the not-for-profit sector. That was raised by a number of colleagues. However, it is also the case that the major issue for this sector, generally, is change to other sources of funding; for example, as was acknowledged by the noble Lord, Lord Bach, from local authority cuts, which may make supply in the areas they cover vulnerable in any event.

This is clearly a matter for concern for the Government as a whole, and the issue of the future of the voluntary advice sector will be considered as part of a cross-Government review on which an expected announcement will be made shortly. In the interim, the Government have already provided transition funding to assist the not-for-profit sector to adapt to the changing financial environment. I understand that overall 45 individual CABs and 17 law centres have taken advantage of this fund. As the noble Lord will be aware, the Government will also be providing a further £20 million of funding for the not-for-profit sector. Specific details of this fund will be made available shortly.

In the context of legal aid services, the issue is whether services will be available for clients rather than whether that service is provided by any particular provider. We assessed the likely impact of the reforms when considering the responses to the consultation and overall are satisfied that the reforms are sustainable and that, although individual providers may leave the legal aid scheme, there will be a sufficient supply of providers of satisfactory quality to provide an appropriate level of service in all areas of law. The Government therefore consider that the fee reductions will be sustainable and will ensure that clients can continue to access legally aided services.

As noble Lords will be aware, the Justice Committee report on legal aid concluded that, given the extent of the savings that the Ministry of Justice is having to make, in principle it is correct that fees should be reduced. We are willing to look at areas of isolation—the so-called legal aid deserts—and there are a number of actions that the Legal Services Commission can take to mitigate shortfalls if they develop. As I said earlier, it is also true that some of the fears that people would not come forward have not been borne out in areas where individual firms have collapsed. Indeed, in all the areas where we put forward contracts, there has been an oversupply in terms of those seeking that work.

In addition, there is a genuine alternative. The Community Legal Advice telephone helpline is an alternative for those involved in legal aid. I see the noble Lord, Lord Beecham, shaking his head. The other night, I went to a Law Society function giving prizes to successful law firms, and I was amazed by how many of the prize winners were offering online and distance advice. The old idea of face-to-face may not survive. There is no doubt in my mind that the legal profession is a profession in transition in many respects.

I am being told to shut up, and I will. The fact is that wherever we have been looking at new contracts, we have found that they have been oversubscribed, so I do not think that this is the issue that is suggested. It is not a 10 per cent cut per individual. It is a challenge to those firms and to the legal profession to find different methods of service, different structures and different efficiencies. That is a pattern that many professions and many industries have found over the years. We are confident that there are sufficient numbers of providers willing to remain in the legal aid market. I am well aware that a lot of what we have discussed today is a dress rehearsal for when the LASPO Bill comes, but I do not believe that it would be right to pass this Prayer this evening, and I sincerely hope that the noble Lord, Lord Bach, will resist putting the Motion to a vote.