Courts and Tribunals Fees

Marie Rimmer Excerpts

Monday 4th July 2016 Commons Chamber

[Marie Rimmer (St Helens South and Whiston) (Lab)]

May I first agree with the deserved compliments to the Chair of the Justice Committee, the hon. Member for Bromley and Chislehurst (Robert Neill), made by my hon. Friends the Members for Kingston upon Hull East (Karl Turner) and for Hammersmith (Andy Slaughter)? It has been a pleasure to serve on the Committee, which has been bipartisan and united in its conclusions.

The Government’s case for introducing fees was cost recovery, but with spend at £71.4 million and income at £9 million that has failed, and the goal was to reduce the number of vexatious claims, which I will address in more detail later. The issue for the Committee was whether fees have had an unacceptable impact on access to justice. The introduction of fees has led to an enormous and undisputed drop—approaching 70%—in the number of cases brought. It is well worth repeating what my right hon. Friend the Member for Delyn (Mr Hanson) said about single individual tribunal cases declining by some 67%, but I will not repeat all the figures. Cases brought by more than one person, or multiple claims, declined by 72%.

The Under-Secretary of State for Justice, the hon. Member for North West Cambridgeshire (Mr Vara), told the Committee that 83,000 early conciliation cases had been dealt with by ACAS in the year beginning April 2014 and that other factors may account for part of the reduction in the number of cases being brought. The evidence submitted to the Committee was that of the 60,800 early conciliation notifications made in the period from April to December 2014, 15% were settled and only 22% progressed to an employment tribunal. Some 63% of notifications—38,304—dropped off the radar. I put it to the Chamber that that was down to affordability.

Comparing the cases in the first three months of 2013 with those in the same period in 2015, the TUC and Unison, as referred to by my hon. Friend the Member for Ellesmere Port and Neston (Justin Madders), found that the most common types of cases where access has been restricted since the introduction of fees were those relating to the working time directive, down 78%; unauthorised deductions from wages, down 56%; unfair dismissal, down 72%; equal pay, down 58%; breach of contract, down 75%; sex discrimination, down 68%; and pregnancy-related detriment or dismissal, down 40%. That is quite shameful in a democracy.

In an ACAS survey, 26% of claimants who did not progress their cases said they did not do so simply because they found the fees off-putting. Tribunal fees have the opposite effect to what the Government are saying. They do not encourage early conciliation because the employer has no incentive to settle in cases in which the claimant may have difficulty raising the tribunal fee. The Senior President of Tribunals said:

“The Council of Employment Judges and the leadership judges would all say that there is clear behavioural material as to the way in which respondents”—

employers—

“are behaving. They are avoiding engagement in conciliation processes and waiting for the next fee to be paid, which means that settlement opportunities are lost.”

Kate Booth, from Eaton Smith LLP, legal representatives of both employers and employees, asked why would employers engage in early conciliation? She said:

“You wait for the employee to pay a fee. Ultimately you want to call their bluff—are they prepared to put their money where their mouth is?—so you sit back and see whether they do it.”

In other words, they want cases to drop off.

The Law Society and the Police Action Lawyers Group claim that there is emerging evidence of people and employers hanging back, waiting to see whether a claim progresses before settling. There is little evidence to suggest that such claims are vexatious. In evidence to the Committee, the charity Working Families said that vexatious claims

“may be less than 5%, even less than 2%”.

The Senior President of Tribunals said that if the aim was to remove vexatious claims, one would have expected the success rate of claims to go up, but, in so far as there is any material available at the moment, the evidence is to the contrary. Not only have the success rate and the appeal rate not significantly changed, but the policy has failed to reduce the number of unmeritorious claims. The timing and scale of the immediate reduction following the introduction of fees leave us in no doubt that the clear majority of the decline is attributable to fees. The drop in tribunals was not predicted by the Government. Even when employment law changes are taken into account, as the Minister said in Committee, the drop was down to tribunal fees putting people off exercising their right. Again, affordability is the main issue. A limit is being placed on access to justice in employment cases for those who are most vulnerable in the system.

In evidence to the Committee, the chief executive of Thompsons Employment Solicitors said that Ministers are not clear about the purpose of the fees. Are they intended to fund the tribunal system? If the tribunal system is to be funded by users, it should be taken into account that employers are also users. If it is to deter claims, fees are not effective. The costs system present in other civil cases is a better method. If someone brings a claim that has no merit and is unsuccessful, the employer can apply for costs. There is simply no evidence that there are loads of vexatious claims in the system. If employers face vexatious claims and are properly advised, they will oppose them. If they succeed, they will apply for costs. That is the appropriate deterrent and it already exists.

Factors that need to be taken into account include: the effectiveness of fee remission, as mentioned by the hon. Member for Banbury (Victoria Prentis); the vulnerability of claimants and their means by comparison with respondents, which may pose particularly problems in respect of inequality of arms when individuals or small businesses are seeking to uphold their rights against the state or major companies; and the degree of choice litigants have in whether to use the courts to resolve their cases and achieve justice. There should be a clear and justifiable relationship in the fee system between those factors and the degree of financial risk litigants are asked to bear.

Where there is conflict between the objectives of achieving full cost recovery and preserving access to justice, access to justice must prevail. The Select Committee report recommendations are clear. First, the Government should publish the factual information collated as part of their post-implementation review. The goalposts have been moved four times and they should publish now, without further hesitation. Why has this information not been published? Secondly, the overall cost of tribunals must come down. Thirdly, the financial thresholds for fee remission must be increased, and only one application should be required, thereby aiding access to justice. Fourthly, the binary type A/type B distinction should be replaced by a fee system that is fair and does not preclude vulnerable people. Fifthly, further special consideration must be given to the position of women alleging maternity discrimination or pregnancy discrimination. Their savings to support their new born child or soon-to-be-born child might be being used as collateral towards industrial tribunal fees, thus affecting any remission, and that is off-putting.

I recognise that the Committee’s recommendations, put simply by me, would have cost implications for the Ministry of Justice, but we should note that an increase in the number of legitimate claims would in itself bring in additional fee income. I stress again that if there was a choice between income from fees and the preservation of access to justice, the latter must prevail. Indeed, as the Master of the Rolls reminded us in his evidence, the Lord Chancellor is required by statute to have regard to the necessity of maintaining access to justice.

--- Later in debate ---

[Mr Raab]

I thank the Select Committee Chairman, who is being as tenacious and assiduous as ever. We are in a position to make the announcement in the near future. I do not think it is right to split the evidence and our response to it. Hon. Members in this House and the public expect us, when we produce the evidence, to be able to say what we think about it. If he is patient with us, he will get both in reasonably short order. On top of the apology that I have already given, I want to make it clear that it will be coming as soon as is practicable.

[Marie Rimmer]

Will the Minister give way?

[Mr Raab]

I am going to make a bit more progress. I have been given some time, and I have given way to hon. Members from across the House. If towards the end I have got time, I would be happy to take the hon. Lady’s intervention.

I turn to divorce fees, about which hon. Members have made some important points. The Justice Committee criticised the recent increase in the fee for divorce to £550, primarily because of the risk to vulnerable women. The Government have sought to make sure that vulnerable women are protected within the divorce fees scheme. Although it is true—this point has been made—that more women than men petition for divorce, it is also true, although it was rather neglected in this debate, that women are more likely to qualify for a fee remission. In the circumstances of a divorce or any other matter where the parties have conflicting interests in proceedings, the applicant is assessed on his or her own means, rather than on those of the household. For victims of domestic violence, the first priority is to ensure the victim’s safety. There is no court fee for an application for a non-molestation order or any applications in relation to one.

I turn to money claims. There has been criticism of the introduction of enhanced fees for money claims in March 2015, and some criticism of the quality of the research that supported those increases. We have said all along that we took the decisions that we did based on the best evidence available at the time. As things have turned out, the impact of those fee increases on the volume of claims has been greater than we thought. It is easy to be wise in hindsight, and we are investigating the reasons, but in the meantime we have decided not to implement the further increases we proposed. But given the very challenging financial circumstances, we have been clear—I want to be honest with the Chair of the Select Committee and hon. Members—that we may need to come back to those and look at them again when we have got a better understanding of the specific impacts.

There have been criticisms of our proposals to raise the fee in immigration tribunals to full cost levels. We estimate that those proposals would generate about £35 million a year in additional income. The normal policy over many years has been to charge fees at full cost unless there are good reasons not to. I do not see, given the remissions and the other flexibility, why the taxpayer should foot the bill in this case. We are currently considering in detail the responses to the consultation. Under our proposals, certain types of appeal would continue to be exempt from fees; we are talking about vulnerable people who need such flexibility the most. People receiving means-tested benefits, such as asylum support, would continue to have fees waived. We sought views on further exemptions, and specifically on whether we should exempt people in receipt of a Home Office destitution waiver. We are making sure that, notwithstanding the difficulty of the decisions, the most vulnerable are protected.

Meeting the challenges ahead cannot just be about increasing fees. That is why we recognise the need to invest in the courts and tribunals so that they are lean, efficient and fit to serve a modern, digital society. In the spending review, we announced that we would be investing, as I have said, more than £700 million to transform our courts and tribunals system. The scale of that investment and the ambition of our reform plans will enable us to build a justice system that is simpler, swifter and more efficient, because it takes better advantage of modern technology.

Other points and criticisms have been made. We take them on board, and we will respond to them fully in due course. We also need to have a sense of realism. Given the financial situation that we are still grappling with, fees are a critical part of the Ministry of Justice’s plans to meet our spending review challenges.