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

Lord McNally Excerpts

Wednesday 26th October 2011 Lords Chamber

[Lord Martin of Springburn]

My Lords, I have enjoyed listening to the experts in law and legal aid. It is deeply unfair that a 10 per cent cut should be put on one section, and one section alone, of a service that is paid for by the taxpayer.

The Law Society was here today to talk about the future legislation that will come before this House. I asked how much lawyers earn in the field of legal aid. I was told that young lawyers earn £25,000, as has been mentioned. They rightly deserve it, but there are many manual workers, tradesmen and semi-skilled people who earn that kind of money and work hard for it. However, we are making a 10 per cent cut.

As the noble Baroness, Lady Deech, said, many of those who work in the legal aid service are women. I know that there is not much sympathy for Members of Parliament at the moment but I met a former colleague, a lady Member, who said that a substantial part of her salary goes on childcare. There is no doubt that the cost of childcare has gone up. It has gone up for those young mothers who work as solicitors. Any of us who drive a car will know that prices are going up every time we go to a forecourt. Lawyers need to travel to get to court. They are not just based in London. Therefore, this cut is extremely unfair.

I am surprised by the Minister, who was at one time a member of a trade union. I do not know whether he still is; it would have been the T&G that he was in, would it not? I do not think that any organiser in the Transport and General Workers’ Union would want a cut of 10 per cent in the workforce, or take it lightly, so why should we do this?

In the constituency that I previously served and the place that I was raised in, a great many men and women who were asylum seekers came, as a result of a decision of the Home Office, to live in my community. More often than not, they came and received advice from legal aid practitioners. While those asylum seekers were coming to me, they were also going to the legal aid practitioners. I was able to form a good working relationship with those practitioners and found that they were doing things over and above their duties as solicitors—working outside office hours and going to people’s homes to try to help them. These practitioners are the people on whom we are going to impose cuts.

As the noble Lord said, cuts have to be made, but we have to look at how we implement them. It is the easiest thing in the world to say, “Right—10 per cent across the board”. However, it is not necessarily the right thing to do. I urge the Minister to reconsider this matter. At a time when many young people in this profession cannot even get mortgages, because that is difficult, they have to go into the rented sector, and their overheads are far more than they used to be. I can recall times when people did not have access to legal aid solicitors, and the difficulties and hardship that that caused for their families lasted for years. I hope that the Minister reconsiders this matter.

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

My Lords, this is the point in the evening when I thank everyone for contributing to a wide-ranging debate—so wide, in fact, that it would probably take me at least 40 minutes to reply. I will try to do justice to the debate in a shorter time because the House has more business to consider. I remind the House that this was supposed to be dinner hour business—a matter that the usual channels might look at in future when they do their planning.

The debate was indeed a trailer for the Legal Aid, Sentencing and Punishment of Offenders Bill—now known to its friends as LASPO—that will come to this House. I do not object to colleagues using the opportunity to widen the debate to cover some of those areas. The noble Lord, Lord Beecham, said that it was a “tawdry harbinger” of a long hard winter for legal aid. I say to the House—to the right reverend Prelate, my noble friend Lord Newton, and others—that there would be a long hard winter if this Government did not face up to the spending cuts that are needed. It is all very well, as the noble Lord, Lord Martin, said, to say that this 10 per cent cut was the easy way. I put it to him that the easy way, which we have heard time and again tonight, would be to say, “Not this cut. Not that cut. We would do it in a different way”. We have had to face up to the fact that we have to make some hard decisions.

It is not just this part of legal aid that is taking the hit. The Ministry of Justice is a relatively small department with a budget, when we came into office, of £10 billion. We made a commitment for the spending review to cut that by £2 billion. As the noble Lord, Lord Bach, knows, we have only four major areas of responsibility—prisons, the Probation Service, legal aid and court services. They have all taken their cut and it is simply not true to suggest that we have taken a particularly easy view in terms of legal aid. As my noble friend Lord Marks said—and, to be fair, the noble Lord, Lord Bach, echoed it—the previous Labour Government were looking at legal aid. I went to the Commonwealth Law Conference. I have never used the comparison with continental legal aid because I know that there is a different system there, but I particularly sought out the Canadian, Australian and New Zealand law officers to talk about legal aid and they confirmed what the noble Lord, Lord Bach, knows full well—they all consider our legal aid system to be, in their terms, “absurdly generous”. It is also untrue that we have not made comparable cuts in criminal legal aid. In fact, the parallel order will, over the period, save some £80 million in criminal legal aid spending.

The noble Lord, Lord Bach, particularly mentioned Law For All. That is interesting because it very much echoes what was said when the Immigration Advisory Service closed. Let us be fair: Law For All has closed before any of these legal aid cuts have come in, so the legal aid cuts have not caused its collapse. However, it is interesting that the Legal Services Commission was able to make provision from other providers, and I shall return to that in a few minutes. We have recognised the problem relating to CABs and law centres, and I shall try to cover that in my main remarks.

The noble Baroness, Lady Deech, made an interesting point. I am proud to be the Minister responsible for promoting diversity in the legal profession. I put it to the noble Baroness that it is not a matter of diversity to suggest that women and black and ethnic minority lawyers should be corralled in one part of the legal profession. Indeed, my drive in terms of diversity—the noble Baroness is quite right and I have talked to both the Bar Council and the Law Society about this—is that the profession as a whole has a responsibility to promote diversity, not in the narrow area of legal aid but across the profession. To be fair, I think that they are responding to pressure in that area. We are taking diversity extremely seriously.

The noble Baroness and a number of other noble Lords also mentioned the Family Justice Review, which is a separate and independent programme of work looking at the entire family justice system. Our proposals are not dependent on the outcome of that review and are focused on legal aid; they go in the same direction as, and in support of, the aims of the Family Justice Review, which I am assured will be published very shortly.

The noble Baroness, Lady Deech, and a number of others talked about the fee levels reducing access to good-quality experts. The benchmark rates for experts have been applied by the Legal Services Commission for some time. The truth is that there are only limited anecdotal reports of problems with access to experts.

The noble and learned Lord, Lord Scott, accused us of weasel words in the Explanatory Memorandum, and I hope that my opening remarks have removed those weasel words. Of course, much of this has been driven by the need for cuts in public expenditure, but we have tried to do so in a way that focuses legal aid on the most needy.

We go back to the issue of the level of spending. What is so sacrosanct about £2.2 billion? It certainly was not sacrosanct for the previous Labour Government because they were planning to cut it anyway. The system is not being dismantled. It does not help when the noble Lord, Lord Beecham, makes that kind of comment. I could make a point about the earnings of barristers in family legal aid work, but let us not go down that route.

--- Later in debate ---

[Lord Beecham]

The lack of consultation to which I referred and on which I quoted the legal aid lawyers was in relation to this fees order, not the Green Paper.

[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.

[Lord Bach]

My Lords, I thank all noble Lords who have taken part in this debate, and especially the Minister for his winding up. I will give the House the good news, which is that I certainly do not intend to divide the House. I would very much like to, particularly given the degree of support for my Motion from around the House tonight—I am most grateful to noble Lords who have supported me—but it is too late to call a vote tonight, and in any event I am not certain that it would be the right thing to do, given that the Bill is due to come to this House next month. I will not be calling a vote, so anyone who wants to go now, please feel free.

I am afraid, though, that it was not the Minister’s arguments that persuaded me not to call the vote—indeed, if he had gone on much longer I might have been tempted to call it in any event. I shall make a few points and then the House can move on. Some very good speeches were made, if I may so. The noble Baroness, Lady Deech, talked about the Bar with great experience and knowledge. The noble and learned Lord, Lord Scott of Foscote, made some very important points, one of which I will come back to at the end of what I have to say. The noble Earl, Lord Listowel, and the right reverend Prelate the Bishop of Ripon and Leeds were both right on the spot with their concern for children law, if I may call it that. My noble friend Lord Beecham, with his experience, made very telling points as always. Last, but certainly not least, the noble Lord, Lord Newton of Braintree, made a very telling contribution, and one to which I think the Government side should listen with some concern.

As to the speech of the noble Lord, Lord Marks, of course I admired his loyalty, perhaps rather more his loyalty to the Government and to the Minister than to his party, which as I understand it has already made it clear at conferences twice this year that it does not like the way in which the Government are behaving towards legal aid. He asked me to state which cuts my party would have made in Government. I am not sure that he was listening with his usual care to what I said in my opening remarks, which was that the Labour Lord Chancellor and myself put out a White Paper called Restructuring the Delivery of Criminal Defence Services, which we would almost certainly have put into effect had we been elected—which we were not—and which would have saved a great deal of money. It would have been controversial and I have no doubt that there would have been debates in this House too in that event.

I did notice that in his interesting speech there was nothing at all about social welfare law and nothing about whether he felt it was right to attack social welfare law. What I had to say earlier was very much based around that part of the order. He said very little about criminal law, either, and about whether savings might be made in that field. He quoted figures and speeches that I had made, in which I, like legal aid Ministers down the years—as they no doubt will in the future—had said how generous our legal aid system was compared to the ghastly rest of the world. I did use those phrases, and there is some justification in them, but to be honest, not perhaps quite as much as I used to think when I spouted those words. For example, we compare ourselves with New Zealand, another common law country, and say, “My gosh, New Zealand gives a much smaller amount for legal aid than we do”. However, the situation in New Zealand is quite different. There, for example, there is no liability compensation, which costs a great deal in this country. There are other considerations as well.

Let me be frank: when we were in Government, I have no doubt that we made mistakes in this field. I am sure we did. There is no doubt in my mind that his Government are making mistakes now as well. Perhaps the noble Lord, Lord Marks, will remember next time he speaks to the House on these matters that we are dealing with what his Government are intending to do, not with what my Government did or did not do when they were in office.

The Law Society has suggested savings of up to £350 million as an alternative to the legal aid cuts that the Government are putting forward. As we did not hear it tonight, we look forward very much to hearing what is wrong with the Law Society’s—

[Lord McNally]

What is wrong with the Law Society’s figure is that it does not save public expenditure to shuffle costs around Whitehall to other departments or to propose extra taxation on alcohol. That is not saving public expenditure; it is shuffling the pack.

[Lord Bach]

If the noble Lord is right, perhaps he will explain this decimation of social welfare law, with its few savings for the Ministry of Justice, and how it will cost infinitely more to the state as a whole when problems are not solved, people are chucked out of their houses, debts grow bigger, families break down and children commit crime. Other departments will have to pick up the pieces for the paltry savings that the Ministry of Justice will make. Please do not give us that stuff about public spending. The truth is that these Ministry of Justice savings—we have said that we accept that the MoJ has to find a number of savings—will cost the state and the community much, much more.

As the noble and learned Lord, Lord Scott of Foscote, said, civil legal aid is not an optional extra. The concern is that this Government are treating it just as an optional extra and the cost will be much greater. We could see which way the Government were going on legal aid way back in June or July 2010 when out of the blue they removed the grants that were given by the Legal Services Commission for young legal aid lawyers to get legal contracts with legal aid firms. It cost a few million pounds a year, if that. But the Government abolished them at the start and we should have been wise as to what they were planning to do now. There was absolutely no reason for doing that and there cannot be any reason for doing what they are intending to do now to social welfare law.

Legal aid in the civil field is well worth protecting. I shall end with a quote from Supreme Court Justice Lewis F Powell who spoke about the American system but it could just as easily be applied to the British system. He said:

“Equal justice under law is not merely a caption on the facade of the Supreme Court building, it is perhaps the most inspiring ideal of our society. It is one of the ends for which our entire legal system exists … it is fundamental that justice should be the same, in substance and availability, without regard to economic status”.

He was right. I hope only that the Government change their mind. I beg leave to withdraw the Motion.