Motion made, and Question proposed, That this House do now adjourn.—(Jeremy Wright.)

[Relevant documents: The Third Report from the Justice Committee on the Government’s proposed reform of legal aid, HC 681, and the Government response, Cm 8111.]

5:58 pm
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Karl Turner (Kingston upon Hull East, Labour)

I am pleased to have secured this very important debate on the effect of the reductions in legal aid on legal aid providers. I refer Members to the Register of Members’ Financial Interests, as I was a practising lawyer before my election to this House. As a criminal lawyer, I relied on the public purse for much of my income.

The Lord Chancellor offered up 23% cuts without any fight and blindly conceded to the Treasury’s demands without looking at the real impact on justice and legal aid providers. The Government’s own impact assessment states:

“The lack of a robust evidence base means that we are unable to draw conclusions as to whether wider economic and social costs are likely to result from the programme of reform or to estimate their size.”

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Diana Johnson (Shadow Minister (Home Affairs); Kingston upon Hull North, Labour)

I congratulate my hon. Friend on securing this important debate. As a fellow Hull MP, he will know the importance of citizens advice bureaux and community legal advice centres in providing legal help and advice and of the genuine concern out there that people will not have access to good-quality legal advice. I am sure that he shares the concerns of many people in Hull.

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Karl Turner (Kingston upon Hull East, Labour)

Absolutely. My hon. Friend makes an important point. As I understand it, 97% of funding to the—

Motion lapsed (Standing Order No. 9( 3 )).

Motion made, and Question proposed, That this House do now adjourn.—(Jeremy Wright .)

6:00 pm
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Karl Turner (Kingston upon Hull East, Labour)

Some 97% of funding to Citizens Advice will go as a result of the Government’s plans, so my hon. Friend makes a valid point.

I am not just talking about the for-profit providers. The non-profit providers also provide important legal advice to people in our constituencies. I want to attempt to bust a myth that the Government are perpetuating. There seems to be the suggestion that publicly funded lawyers are fat cat lawyers earning fat cat salaries. In reality, publicly funded lawyers, whether solicitors or barristers, earn very modest incomes if funded by legal aid. The Lord Chancellor says that he does not want to hit women and children, but he does want to target fat cat lawyers. Why, then, is he making 53% cuts to social welfare legal aid?

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Keith Vaz (Leicester East, Labour)

I declare an interest as a non-practising barrister. I worked for a number of years as a solicitor at a law centre. These cuts will affect some very poorly paid solicitors who work in law centres and who were previously doing work such as immigration

before that was taken away. The profession will suffer because we will not be able to attract people and give them the expertise to do this kind of work.

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Karl Turner (Kingston upon Hull East, Labour)

My right hon. Friend makes a very important point and one that solicitors and barristers have raised with me in recent days. There is certainly concern about attracting people into training contracts and even attracting people to study law as a result of the Government’s plans.

As I understand it, £350 million will be removed from legal aid as a result of the Government’s plans. The vast majority of that will be in social welfare law. In an attempt to bust the myth that publicly funded lawyers are fat cat lawyers, I spoke to some legal aid providers in my area today. I spoke with Keith Lomax, the senior managing partner of Davies Gore Lomax, which is based in Leeds. He represents the most vulnerable clients on such issues as housing, debt, welfare benefits and education, particularly special educational needs, and he told me that the Government’s 10% reduction in fees across the board was difficult for his firm to cope with. I was staggered when he told me that his hourly charging rate was £48.24. He charges the Legal Services Commission £3.78 per letter—hardly fat cat lawyers rates. The people who work for him earn very modest incomes—between £18,000 and £24,000 a year for fully qualified solicitors, he tells me.

Tim Durkin, the managing partner of Myer Wolff solicitors in Hull, runs a long-standing firm reliant on legal aid. Mr Durkin estimates that the cuts to his business in relation to child contact and residence applications will amount to about £300,000 per year. He describes that as simply unsustainable.

Max Gold, from the Max Gold partnership in Hull, reports to me that he has not been in a position to pay himself or his solicitors and staff an increase in salary for some six years. He says:

“the Government are not living in the real world to describe legally aided lawyers as fat cats”.

In his view, the Labour Government were far from profligate when it came to legal aid. He says that the previous Government were not particularly generous in relation to publicly funded lawyers. However, he says that the previous Government at least understood the requirement to offer legal advice in areas such as social welfare law. Indeed, he also mentions immigration, which is particularly important, given that the other place almost accepted an amendment—it was defeated by, I think, 19 votes—a couple of days ago.

In 2000, there were 10,000 legal providers. There are now 2,000—a reduction of 8,000 firms in the last 12 years. Many closed their doors in the last 12 months. The impact of the cuts on legal aid providers is clear for anybody to see. Many firms that provide help mainly in family and social welfare law will have to withdraw from the market. The Law Society says:

“firms already operate on the margins of viability…specialist firms and advice agencies…providing social welfare law services…are likely to be wiped out with catastrophic consequences for people in need”

of legal help. The Law Society says that it

“does not see how many firms can continue to operate in this environment.”

The current changes could reduce firms offering family law by as much as 60%.

The Government’s impact assessment, which accompanies the Green Paper, estimated a 67% decrease in income for law firms in rural areas and a 59% decrease in urban areas. That is simply unsustainable. It will not be economically viable for those firms to continue offering services on such tight margins. The Legal Action Group believes that legal aid will cease to be viable as a nationwide public service, with an overall decrease in civil legal aid to 900 firms, down from 2,000. My concern is about the potential for advice deserts to emerge as a result of those reductions. The impact on access to justice is therefore clear. If no service is available, our constituents will be left to paddle their own canoe. Some 75,000 children and young people are set to lose legal aid. Some 6,000 children under the age of 18 and 69,000 vulnerable young adults aged 18 to 23 will lose access to legal aid in their own right as a result of the Legal Aid, Sentencing and Punishment of Offenders Bill.

The Government claim that advice will be available elsewhere, from places such as the Free Representation Unit, jobcentres and Age UK. That claim has been disputed by the Advice Services Alliance. The Free Representation Unit represents clients in tribunals, but it does not cover the initial advice stages of, say, a welfare claim. The Child Poverty Action Group has stated:

“Unfortunately we do not have the resources to provide direct advice to people who are claiming benefits”.

Age UK has said:

“Our concern is that while it is true that both Age UK nationally and our partners in local Age UKs and Age Concerns do provide some help and advice with welfare benefits it is most often not at a level comparative to that provided through legal aid.”

The Government’s defence until now has been to talk about the telephone advice service. However, that is not the answer to advice deserts. Face-to-face legal advice is crucial. Fortunately, the Government suffered a defeat on this issue in the other place yesterday evening. I would respectfully urge the Government to take that on board. The Ministry of Justice predicts between only 4,000 and 10,000 additional mediation starts, despite withdrawing legal aid from 255,000 cases. It has simply not made a proper assessment.

The impact on for-profit and non-profit providers will be substantial, but it will be most keenly felt by those who rely on their services. The Government’s own impact assessment states that the proposals

“have the potential to disproportionately affect female clients, BAME clients”—

that is, black and minority ethnic clients—

“and ill or disabled people, when compared with the population as a whole”.

Despite that evidence and advice, the Government seem to want to plough on regardless. At a time when unemployment is rising and pressure is increasing on squeezed families, it is wrong for the Government to withdraw support for legal advice.

Opposing the legal aid cuts is not done due to narrow interest or to ensure that lawyers’ bank balances stay buoyant. It is about ensuring that people have not only these important rights but the means with which to

exercise them. The Government must listen to the experts and base their cuts on the evidence. The Justice Select Committee, on which I serve, has said that the full cost implications of the Government’s proposals cannot be predicted. I therefore ask the Government to reconsider these cuts and not to take a gamble with justice.

Many eminent judges—not least Lord Hope, Lord Justice Dyson and Lady Hale—have also voiced their concern, along with academics and professionals, telling the Government time and again that there will be an increase in court administration due to the increased number of litigants in person, but that advice has been completely ignored. The Lord Chief Justice has echoed those concerns.

The opposition to the cuts in social welfare legal aid is, for me, about protecting the vulnerable and allowing access to justice. Of course, we are living in a time of austerity, and this must also be about saving money to the taxpayer, but there are alternatives. The early intervention provided for debt, employment, education, housing and family law matters through a mixture of voluntary and private sector organisations offers value for money. I shall not bore the Minister with the statistics produced by Citizens Advice, but it has provided Members with a helpful report that shows, pound for pound, the advantages of providing early advice. Unfortunately, however, the Tory-led Government have ignored crucial advice from, among others, the Lord Chief Justice, the Bar Council of England and Wales, and the Law Society.

The Lord Chief Justice has stated that the proposed reforms of public funding for civil cases will damage access to justice and lead to a huge increase in people fighting their legal battles alone. It is obvious to anyone that litigants in person will delay court time. Mr Buckland is in his place. He sits as a recorder in the Crown Court, and he must know from experience the advantage of having a solicitor advocate or a barrister representing a client in court, as opposed to someone representing themselves.

The chairman of the Bar Council, Michael Todd QC, has told me today that

“legal aid barristers, working across a broad range of practice areas, are public servants, overwhelmingly operating in the public interest. Over a number of years, many members of the Bar and the junior Bar in particular, have found it increasingly difficult to sustain a financially viable career on legal aid work, which poses a grave threat to access to justice. Successive fee cuts and now the threatened removal of whole areas of law from the scope of legal aid means that many vulnerable people will be denied effective access to the Courts. It also means that many highly skilled and publicly spirited Barristers will be forced to leave the profession with a particularly heavy impact on female and BAME practitioners. That cannot be in the public interest”.

The Lord Chancellor needs urgently to take on board the defeats that the Government have suffered in the other place, and to look again at the real impact of these legal aid cuts before overturning those amendments in this place.

6:14 pm
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Jonathan Djanogly (The Parliamentary Under-Secretary of State for Justice; Huntingdon, Conservative)

I declare any interest I may have as a non-practising solicitor. First, let me congratulate Karl Turner on securing this debate. I recognise that this is a timely and important discussion to have at present.

Let me start by saying that measuring and understanding the effects of the Legal Aid, Sentencing and Punishment of Offenders Bill on the providers of publicly funded legal aid services is something to which the Department of Justice has been committed throughout the policy development process. I invite hon. Members to consider both the impact assessments and the equality impact assessments published alongside the Government’s consultation paper and our response to that consultation. These are extensive in their consideration of the impact of the reforms on legal aid providers, with the equality impact assessment providing very granular detail on the potential for differential impacts in respect of different provider types—whether for solicitors, not-for-profit organisations or barristers.

We recognise that such assessments have their limitations. They use a method analysts refer to as counter-factual assessment. This operates by taking a given set of assumptions—in this instance, a snapshot of income in the legal aid market in a given financial year—and applies a narrow set of changes to this snapshot, which here means the reduction in income implied by the changes in the Bill. What the assessment cannot do is measure things like how providers will respond to those changes in terms of the structure of their firms, the business model they employ, their employment profile or the areas of law covered by their organisations. This is a crucial point for me in this debate. In other words, one cannot say with any real certainty how individual providers will respond to the changes, and that will be major factor in the overall “effect” experienced by the providers of legal aid. However, following the commitment made in our consultation response, we have commissioned a study that we hope will provide a better understanding of the dynamics of legal aid providers.

It should also be recognised that our discussions today are not purely theoretical. I simply do not recognise the picture of a failing environment for providers that the hon. Gentleman portrayed. Almost half the savings being taken from legal aid for the spending review period are derived from the remuneration changes implemented last October, which have now been in operation for up to six months—and there have been no discernable negative impacts on the supply. In fact, there has been strong confirmation that the market is willing to work at the new rates. The most recent Legal Services Commission tenders for family work were conducted using the new reduced rates, and were over-subscribed. This suggests that the rates offered are sustainable, and that providers are able to absorb and respond to the impact of reduced fees.

Returning to the Bill, at the macro level there are, of course, some obvious realities. I have always been very open about these, as the hon. Gentleman will know, both in Parliament and in my extensive engagement with the sector. A contraction in the range of services funded under legal aid will most probably mean a contraction in the number of firms providing such services, as well as a reduction in the numbers of lawyers practising in legal aid. I disagree, however, that this will translate into widespread advice deserts; it is certainly not the case at the moment.

This is a natural corollary of the changes we are making to scope, and I make no apology for that. I agree with the hon. Gentleman that in most, but not all, cases, this is not a debate about so-called “fat-cat lawyers”.

The legal aid system is there to provide advice, assistance and representation for those who need it most, not to maintain existing numbers of lawyers—but we do, of course, need a sustainable provider base, because without those who deliver services there would be no legal aid system. To this end, we are finalising our approach to the first round of contracting under the new scheme, which we expect will commence soon after Royal Assent.

There are, of course, two sides to this coin, and sustainability is not something that Government, as the purchasers of services, can or should provide purely on their own. No market is static, nor should it be. The legal aid market has historically shown itself to be adept at responding to changes and seeking out commercial opportunity—and I see no reason why it should not do so again.

If any business is to thrive, it must be flexible and adaptable—that is true of any sector—and the Government are creating the conditions that will allow legal aid providers to flourish. The Legal Services Act 2007, for instance, establishes a new licensing regime, which is now fully operational and which affords more flexibility, innovation and opportunity in terms of the type of business structures and providers that can offer legal services. The significance of that change, and the commercial opportunity that it represents, cannot be overstated.

That is not to suggest that the innovative models made possible by the 2007 Act are the only way in which providers can remain sustainable under the new scheme. The impact assessment figures published alongside the Government response to consultation suggest that even after the reforms have been implemented, approximately £1.7 billion a year will still be spent on publicly funded legal aid services. It is likely that, following the savings, we will still be spending more on legal aid than any other country, and it is undeniable that that level of expenditure represents a viable market. Given the range of services that will still attract funding, it will be open to providers to diversify and seek income across a range of areas of law, although for some providers the most prudent option will be to concentrate on their area of core expertise and expand their market share in that field.

It will also possible to bid for complementary services. The Government have made clear their commitment to alternative dispute resolution. They expect to fund an additional £10 million in mediation services within the new framework, and the Legal Services Commission will be tendering for additional mediation contracts to provide those services. The introduction of the mandatory telephone gateway—which the hon. Gentleman mentioned, and which we intend to reinstate in the Bill—also presents opportunities. Providers will still be able to run telephone-based contracts alongside face-to-face contracts in areas that will continue to attract funding.

The overall message that I wish to convey is that—while challenging and sometimes traumatic—the changes will not come without opportunity, provided that there is a willingness to engage with them and think constructively about how to respond to them. Although steeped in

great tradition, the legal profession has demonstrated resilience and fluidity throughout its history, and I would expect nothing less in response to these changes.

As the hon. Gentleman said, some people outside the private legal profession will be affected. Both he and Diana Johnson pointed out that the equality impact assessments also consider the likely impact of the proposals on not-for-profit organisations. Such organisations have traditionally had a significant presence in a number of the areas that the Bill removes from scope, and the Government fully recognise the cumulative effect that the changes could have when coupled with local authority reductions in funding for them. However, as I have consistently made clear to the House, the Government also recognise the benefits that early generalist advice can have in a range of contexts. We want to help the sector to continue to deliver such services, but not necessarily in the context of legal aid.

We have already seen the creation of the £107 million transition fund and the £20 million advice services fund to help the sector to deal with the legal aid changes and with what will happen after that. The Chief Secretary to the Treasury has now indicated that additional funding will be available after the current financial year to help the sector further, and will be announced in the forthcoming Budget statement. That underlines the Government’s commitment to the provision of advice services such as this, and it is expected to ameliorate the effects of other funding reductions.

However, that is not to say that everything will remain the same. Because of our current fiscal situation, savings must be made, and the not-for-profit sector will need to demonstrate the same adaptability and resilience that I have described in respect of the legal profession.

The Government understand, and are sympathetic to, concerns about the scale of the change that the Bill represents, but we stress that it is incumbent upon the providers of services to think constructively and creatively about how they will establish themselves in the new market. Change will, naturally, be a challenge to the sector, not least because the current system has operated for a significant time, and providers will have become accustomed to a particular way of working. However, for the reasons I have given, there will be real opportunities for those who wish to take them, and for those outside the scope of the new scheme additional funding is being made available to provide for the future.

May I conclude by returning to the topic of the—rather technical-sounding—counter-factual assessment, to which I referred at the outset? We must avoid falling into the trap of predicting the future on a basis that does not allow for the very human response of adapting to changing circumstances. There is a future for legal aid providers, and the market can thrive, but the willingness of providers to adapt will be key to achieving that. Given what I have seen to date—not least providers’ response to the fee reductions—I have every confidence that that will be achieved.

Question put and agreed to.

House adjourned.