Mr Christopher Leslie (Parliamentary Under-Secretary, Department for Constitutional Affairs; Shipley, Labour)

I beg to move amendment No. 146, in

clause 92, page 44, line 30, leave out subsection (2).

Mr Bill O'Brien (Normanton, Labour)

With this it will be convenient to discuss the following:

Government amendments Nos. 147 and 148.

Mr Christopher Leslie (Parliamentary Under-Secretary, Department for Constitutional Affairs; Shipley, Labour)

First, I will address amendments Nos. 146 and 147. Clause 92(2) was added in another place, and it has the effect of making it a statutory requirement that

''the Lord Chancellor shall have regard to the need to facilitate access to justice''

when prescribing fees in a civil court.

After very careful consideration, the Government have come to the conclusion that although subsection (2) is not strictly necessary as it simply confirms what is already the position, its effect should be included in the Bill. The Lord Chancellor's fee policy principles, announced to Parliament in 1998, enshrine the Government's assurance that fees should not prevent access to justice and that litigants of modest means should be protected.

In addition, in the Witham case, the Court of Appeal has already confirmed that a citizen has a constitutional right of access—although not a right of free access—to the courts. A system of exemptions, remissions and reductions already exists under the current fee-setting powers to achieve that for less well-off litigants. Automatic exemption is available for litigants on specified means-tested benefits or tax credits. Those who do not qualify for exemption but who would suffer hardship if required to pay fees—or pay them in full—may be granted discretionary remission in full or in part. In addition, a public subsidy has already been introduced for certain types of family proceedings.

Clause 92 includes, for the first time, an express power to exempt or remit fees. That, along with any new fees orders, will be subject to wide consultation with heads of division and, for the first time, the head and deputy head of civil justice and, for civil proceedings, the Civil Justice Council. It will also, for the first time, be subject to parliamentary scrutiny by way of the negative resolution procedure.

In recognition of the importance of ensuring that the less well-off in our society can obtain access to justice, we wish to concede and go along with the spirit of the amendment that was tabled in the other place. However, we are still worried about the wording of subsection (2). As currently drafted, it is deficient in that it is in the wrong place in the clause and too narrow in scope. We want to ensure access to justice for the less well-off through the system of exemptions and remissions under subsection (3).

However, subsection (2) as drafted requires the Lord Chancellor to have regard to the need to facilitate access to justice only when prescribing fees under subsection (1). He is not required to have such regard when providing for exemptions or remissions by virtue of subsection (3). That deals with problem of the subsection that was added in another place being in the wrong place.

The amendment will ensure that the Lord Chancellor must have regard to the principle that access to the courts must not be denied, when including a provision in an order under the clause. That will, for the first time, place the common law position established by the Witham case in the Court of Appeal on a statutory footing. That was urged on us, not least by the Select Committee on the Lord Chancellor's Department when it considered the Bill. I am glad that we have been able to respond to some of its worries. It is the Government's view that those who can afford to meet the cost of the part of the civil justice system that they are using should be expected to do so. Those who cannot will be supported by a system of exemption, remission and reductions.

Amendment No. 148 is a consequence of subsection (11), which was added in another place and will prevent judicial salaries from being taken into account when setting fees. A statutory provision stopping the recovery of the costs of judicial salaries when prescribing fees would be an undesirable obstacle to the Lord Chancellor's powers in exercising his ministerial responsibilities. The Government's policy is to recover the full cost of services provided, including judicial salaries, based on the general principle that parties are expected to pay the full cost of the part of the civil justice system that they are using to resolve their disputes. The general policy of recovering most of the costs of the courts through fees ensures the best targeting of scarce public resources. These are public expenditure decisions for the Government.

The Government's policy of setting fees and charges is set out in the Treasury's fees and charges guide. The guide explains that fees should be set to recover the full cost of the individual services provided, subject to any agreed subsidies. The existing subsection (11) would provide a subsidy for all types of cases, including business cases brought by large corporations. The Government consider that an approach that closely targets those in need by way of the system of exemptions, remissions and subsidies is a more cost-effective way to ensure access to justice than excluding whole categories of costs from what should be payable by litigants.

Mr Nick Hawkins (Surrey Heath, Conservative)

With his usual courtesy, the Minister may have written to other members of the Committee too, but I am certainly grateful to him for having written to me explaining the background to the amendments that the Government tabled last week. His letter was dated 3 July, and it is fair to say that we received earlier advice about the Government's thinking on such matters. I am pleased that they have accepted the spirit of what my noble Friends, led by Baroness Anelay of St. Johns, did in another place

by inserting the requirement to facilitate access to justice.

The Government have been right to acknowledge the strong view held both by the Select Committee and by those in another place that we needed a reference to access to justice in clause 92. We do not object to the way in which the Government have chosen to approach the matter.

They have acknowledged both what my noble Friend said in another place and the report of the Select Committee. Government amendment No. 147 would re-insert—if I may put it that way—the same kind of obligation in the clause in a slightly different way, and No. 146 would replace what was previously there. That is acceptable.

Government amendment No. 148 is different. The Lords inserted a specific requirement, which the Government are seeking to remove. There is a good reason why judicial salaries should not be taken into account. Those are in a different category from all the other expenditure that we are talking about. I understand that the Government are trying to make the system self-funding, but to incorporate judicial salaries as part and parcel of their balance sheet is wrong in principle. To do so would confuse the independent position of the judiciary with a potential cost-cutting, book-balancing exercise.

The official Opposition in both Houses feel passionately that judicial salaries should not form part of the equation. There is a great danger in that. It is reasonable for the Government to say that they want to balance the rest of the system, but the salaries of the judiciary should not be included in that account, because they are not to do with the fees levied in relation to the use of the courts. A mature democracy takes on the public expenditure obligation of judicial salaries, and says, ''We shall have a legal system in which the most highly qualified people we can find will sit as members of the professional judiciary.'' The Government should treat that obligation as separate from the costs of running the system.

I detect in the Minister's briefing a little of the politics of envy, which seems to run as follows: ''We can't have commercial cases on behalf of big companies. They're getting the benefit of the quality of our judiciary, so they ought to pay for it. They shouldn't have any kind of hidden benefit.'' I do not blame him for that—he is new to his responsibilities. Judges and the salaries they are paid are in a different category from everything else that we are discussing, and I urge my hon. Friends to vote against Government amendment. No. 148.

Mr Norman Lamb (North Norfolk, Liberal Democrat)

I agree with the hon. Gentleman's argument. Subsection (11) was introduced in the House of Lords and it should stay.

Mrs Angela Watkinson (Upminster, Conservative)

I shall speak briefly to Government amendment No. 147, in so far as it relates to access to justice. I shall also refer to the letter from the Minister to my hon. Friend the Member for Surrey Heath, which says

''those who can pay should be expected to pay the full cost of that part of the civil justice system that they are using to resolve their dispute.''

There are two groups of people who have ready access to justice. First, there are the wealthy, who can afford to risk personal loss should their action be unsuccessful. Secondly, there are people who are entitled to full exemption, either by a fees exemption or through legal aid, because they are benefit-dependent, or for another reason. Because those people make no personal contribution, no personal risk is involved. They do not face the prospect of financial loss and are more likely to seek legal remedy. They have greater access to the law than the vast majority of people—the average taxpayers—who cannot afford the personal risk of financial loss involved in seeking legal action.

May I press the Minister to say a little bit more about how widely fees exemptions might be used, and how the ability to pay would be assessed?

Mr Christopher Leslie (Parliamentary Under-Secretary, Department for Constitutional Affairs; Shipley, Labour)

First I shall answer the hon. Member for Upminster (Angela Watkinson), who implied that if certain people were exempt from fees, they might not have the personal motivation to stave off litigation, which might encourage them to become more litigious because there would be no financial discouragement from going to court. That has been debated for many years, and in particular since the Opposition considered the question of legal aid. I am not convinced that the hon. Lady would be getting the balance right by not having a system of full exemptions. Fees are only one part of the overall cost of litigation; solicitors' fees are far higher than court fees, are a burden on those entering the litigation process, and can be a financial disincentive from taking a case forward.

The current arrangements strike the right balance of making sure that we do not deny individuals access to justice because of their means. We need a system of exemptions. There is a detailed process by which exemptions and omissions are related to the number of state benefits, and that informs the court of whether certain fees should be remitted. I could find out some of those details if the hon. Lady would like me to. In 1997, the Lord Chancellor extended the exemption criteria to include income-based jobseeker's allowance, family credit and disability working allowance. In 1999 that was updated to include recipients of working family tax credit, disabled persons tax credit and so forth. There have been further revisions to reflect the new working tax credits, child tax credits and pension credits. By the end of this year, more than 5 million people will be eligible for automatic exemption from court fees.

I believe that that strikes the right balance and ensures that people are not discouraged from bringing proper cases. It is up to the courts to make a judgment on whether a case is reasonable. Whether a fee is a barrier, an incentive or disincentive, the other approach is nevertheless wrong.

Mrs Angela Watkinson (Upminster, Conservative)

May I press the Minister a little further? My point was that average people—those in between those two extreme groups that I described—are deterred from access to the law because of the costs. However justified their cases might be, a lot of

people do not seek remedy in law. They are not eligible for legal aid or exemptions, and they are not wealthy enough to be able to sustain the cost if things do not go their way.

Mr Christopher Leslie (Parliamentary Under-Secretary, Department for Constitutional Affairs; Shipley, Labour)

The hon. Lady is focusing in particular on some of the legal aspects in relation to solicitor's costs and so forth. I do not know of many cases where the court fees themselves were a disincentive to coming forward with a case. However, I understand the hon. Lady's point. The system reflects the levels of assistance that those above a certain threshold can get as one goes up the income scale. That balance has been correctly struck.

I am pleased that the hon. Member for Surrey Heath acknowledged the Government change to the Bill in that respect, and accepted the principle that access should not be denied, which we have enshrined in amendment No. 146. However, he was especially critical of amendment No. 148, which would remove subsection (11), which was added in the other place. That subsection would prevent cost recovery of judicial salaries. Judicial salaries were excluded from the definition of recoverable costs until 1992 on the basis that the majority of judicial salaries were not required to be included in the estimates of expenditure that the former Lord Chancellor's Department presented to the House of Commons each year.

That was because they were traditionally drawn from the Consolidated Fund.

The point that I seek to push is that that money, whether drawn from the Consolidated Fund or from estimates, is still a charge on the taxpayer, and it would be wrong to make a distinction simply according to whether the money comes from the Consolidated Fund or from estimates. In line with that, the previous Administration took the view that those costs, like others, should be borne by litigants rather than the taxpayer. In 1994, the then Lord Chancellor, when setting out his expenditure plans, announced that he had decided to phase out the judicial subsidy and move closer to full cost recovery for civil business. Fees were then restructured to incorporate judicial costs.

As I said in response to the hon. Member for Upminster, although fees obviously recover a certain amount of the cost, they do not account for the biggest part of the expense of civil litigation; there are other costs involved, too. However, I feel that it is a fair principle for the Government to seek to recover some of those costs, including judicial salaries, not least as that principle was established by the previous Administration. I think that the hon. Member for North Norfolk (Norman Lamb) wishes to intervene. [Interruption.] No, he does not—although he was listening intently in a manner that suggested that he would intervene at any moment. Clearly, I interpreted that wrongly.

I hope that with those comments, I have answered the points raised by the hon. Member for Surrey Heath.

Mr Nick Hawkins (Surrey Heath, Conservative)

I repeat that although we are quite happy with what the Minister says about Government amendments Nos. 146 and 147, we will seek to divide the Committee on Government amendment No. 148.

Amendment agreed to.

Amendment made: No. 147, in

clause 92, page 44, line 35, at end insert—

'( ) When including any provision in an order under this section, the Lord Chancellor must have regard to the principle that access to the courts must not be denied.'.—[Mr. Leslie.]

Amendment proposed: No. 148, in

clause 92, page 45, line 16, leave out subsection (11).—[Mr. Leslie.]

Question put, That the amendment be made:—

The Committee divided: Ayes 7, Noes 5.