Legal Aid, Sentencing and Punishment of Offenders Bill

Lord Stevenson of Balmacara Excerpts

Wednesday 18th January 2012 Lords Chamber

Moved by

[Lord Stevenson of Balmacara]

72: Schedule 1, page 131, line 7, at end insert—
“( ) situations where a person’s financial difficulties could lead to loss of home.”

[Lord Stevenson of Balmacara]

My Lords, I shall also speak to Amendments 82ZC and 82D in the name of my noble friends Lord Bach and Lord Beecham. In so doing, I declare an interest as chair of the Consumer Credit Counselling Service, the country's leading debt advice and solutions charity.

Under the proposals in the Bill all legal aid for debt issues, including advice, is excluded from the scope of legal aid except for legal services provided in relation to a bankruptcy order against individuals under Part IX of the Insolvency Act 1986, where the individual’s estate includes their home. As I understand it, the Government's view is that debt advice is not strictly legal work and that financial matters are a far lesser priority than matters such as homelessness or loss of liberty.

We disagree. All debt problems are underpinned by complex contractual obligations, and debt advisers typically need to advise debtors on issues of liability, consumer credit contracts, creditors’ enforcement powers, statutory debt remedies and enforcement processes within the court system and beyond. While some debt advice may appear to be primarily negotiation over repayment terms and schedules, it is important to note that in fact such negotiations take place within a legal framework such as protections under the Consumer Credit Act. It is also true that the experience of my charity, the CCCS, and others in this field, such as Citizens Advice, is that most if not all of those who contact us for debt advice have other issues, such as illness, employment problems or relationship problems, which have either caused the problem or contributed to it. It is this compounding effect which makes the withdrawal of legal aid for all debt issues seem such a simplistic proposal.

Other areas where we consider that there is a good case for retaining legal aid are the important debtor protections under consumer credit legislation, which allows unfair or mis-sold consumer credit agreements to be legally challenged and ensures that citizens can challenge enforcement actions. However, I mainly want to focus on a clear lacuna that will be left from the withdrawal of legal aid for debt in relation to statutory debt relief remedies. Debt relief orders, or DROs, were introduced by Part 5 of the Tribunals, Courts and Enforcement Act 2007 as a quicker and cheaper alternative to bankruptcy for those with no income and no assets. They require application via an approved intermediary working for organisations which are approved by the Insolvency Service. Approved intermediaries are experienced debt advisers who are often legal aid-funded debt caseworkers.

--- Later in debate ---

[Lord McNally]

No, of course I cannot give that assurance, but neither do I assume the absolute worst case in everything that we discuss, as the noble Lord seems to do in each of his interventions.

[Lord Stevenson of Balmacara]

My Lords, I thank the noble Lord, Lord Best, for trying to come to my aid. I am sorry that he was not able to continue with that. I am sure that he would have been able to include debt into the case that he was making, skilled orator that he is. However, this is a dialogue and I would like to respond to a few of the points that the Minister made.

We have heard the rhetoric about tough choices a number of times in these debates and no doubt we will hear it again. I wonder whether we might get a second script. Perhaps we could work together on that and enjoy a variation on the theme. We on this side of the House accept that legal aid costs have to go down, and have said so. We understand what the Minister is saying but we think that we have other ways of doing that. However, the same question emerges whichever way you approach this: namely, in saving a cost on an annual basis are the Government providing value for money in the long run? We have severe doubts that that is happening.

As my noble friend Lord Howarth mentioned, debts are increasing although perhaps not quite in the way that he indicated. CCCS, the charity which I chair, receives approximately 500,000 inquiries a year. Our average client owes more than £25,000 to more than eight different lenders. These people have a debt problem. The debts are not necessarily related to housing, to which a different contractual basis often applies, but arise because people overstretch themselves. As I tried to say in my opening address, they also arise because other things happen to these people; for example, they lose their jobs, suffer bereavement or become ill. This is not an easy area to talk about. It is not helpful to be overly simplistic and talk about owner-occupiers whose mortgages are at risk when many of these people will be in rented accommodation. However, the problems arising from losing their homes will be just as bad. I do not see any solution coming forward for those people.

The main point that I was trying to get across in my address concerned the DRO effect. I am afraid that the Minister did not answer the question that I posed: namely, what fee will be necessary to enable this service to be continued? It is presently £90. It seems to me that it will go up to nearer the fee that is charged for a full bankruptcy of £900. What will happen to debt advisers? Will funds be available to keep that generic debt advice going, particularly in the citizens advice area? As we explained, the only reason that the DRO system has continued is that the debt advisers are largely paid for by legal aid funds. If that goes, are we saying that those people who are in severe difficulty with their debts will have to rely on a website, which they probably cannot access because they do not have the necessary equipment, or guidance in leaflets? I do not think that that is a satisfactory solution to what is clearly a very serious problem.

These are very difficult issues that are part of a broader context of social welfare law. We shall probably have to come back to them but in the interim I beg leave to withdraw the amendment.

Amendment 72 withdrawn.