New Clause 3 - Wasted cost orders in civil proceedings
Legal Aid, Sentencing and Punishment of Offenders bill
4:30 pm

Elfyn Llwyd (Dwyfor Meirionnydd, Plaid Cymru)

I beg to move, That the clause be read a Second time.

Although this is a rather substantial new clause and the hour is late, I am not going to leave it unmoved. It would be inserted at page 20. It is in the nature of a probing amendment, but it would oblige courts and tribunals that deal with cases funded by legal aid to make these orders against public authorities where acts of the latter have led to wasted expenditure, whether that be costs relating to the legal aid fund or costs incurred by courts or the tribunals system.

It appears to me that the financial objectives being pursued by the Government will not be well served by the scheme as currently set out in the Bill. Many of the cost-cutting claims made by the Ministry of Justice are inadequately reasoned and pay very little regard to the wider savings that an effective system of early legal help can provide. Findings by Citizens Advice indicate that for every £1 spent on legal aid, £10 will be saved in costs to the welfare system.

Without early interventions, manageable problems can become expensive and complex to resolve. In the context of social welfare law or debt advice, for example, what begins as a small issue, which could have been resolved with the early assistance of a lawyer, can become extremely costly further down the line. The court’s time and resources and the legal fees involved in a possession hearing far outstrip the small sum necessary to secure legal help from a debt caseworker. Further expenditure may include the significant cost of re-housing a homeless family in bed-and-breakfast accommodation. The risk of resorting to crime for those in financial crisis will contribute to a great social ill and will frequently mean that the state must incur all the costs involved in bringing a defendant to trial, not to mention the wider financial and grave social implications.

The Government’s case for the financial eligibility of reforms to the legal aid system is based on flawed assumptions. As a starting point, the Ministry of Justice claims that the legal aid system in this country is far more expensive than systems in the EU. That is not the case. Other outside bodies have said that that is an over-simplification and that it does not account for the increased litigation costs in an adversarial system of justice. Further, while litigation costs in England and Wales are higher than those in some European countries, our spending on sustaining and managing the court system is lower than that in other EU jurisdictions. Those assertions are borne out by research commissioned by the Ministry of Justice and render the claim that our legal aid system is significantly more expensive than those operating in comparable democracies somewhat misleading. In that context, it is easy to see the folly of creating a system in which many more people will be forced to represent themselves, thus consuming more of the court’s resources and shifting costs to another area of the MOJ’s budget.

In giving evidence to the Justice Committee, the Minister expressed his view on that. However, with  respect to him, several senior judges from the very top gave evidence, and they are convinced that litigants in person will be flocking into the courts. We may well have a very short-term saving but, in the medium term, it will be anything but that. The measure may turn out to be a huge false economy, not only in terms of the costs involved in court staff time and clogging up the judges list, but in terms of those people who have not been accorded a fair trial, whether it is a civil issue or whatever. That is concerning.

Andy Slaughter (Hammersmith, Labour)

Lord Judge, the head of the judiciary, has said that the Government’s proposals:

“would lead to a huge increase in the incidence of unrepresented litigants, with serious implications for the quality of justice… at a time when courts are having to cope in any event with closures, budgetary cut-backs and reductions in staff numbers…There is a real question whether the cost savings arising from the proposed cutbacks in the scope of civil and family legal aid would be offset by the additional costs imposed on the system by dealing with the increase in litigants in person.”

Elfyn Llwyd (Dwyfor Meirionnydd, Plaid Cymru)

The hon. Gentleman is right and I am grateful for that quotation from Lord Chief Justice Judge. The measure is, I am afraid, short-termism in extremis.

Limiting legal advice in the manner proposed in the Bill will undoubtedly cost the UK more in the long term. In addition to ensuring that costly litigation is a measure of last resort, legal aid helps to ensure that public services operate effectively and that errors are corrected. Without the checks currently provided by legal interventions, public services will not be called to account and standards may well diminish, resulting in poorer services and greater expenditure in the medium and longer term.

The Government’s proposals also perpetuate the myth that the legal aid budget has reached its current size as a result of unnecessary litigation instigated by unscrupulous lawyers. That is not the evidence that we have seen. In the Green Paper that preceded the Bill, the Government pointed to a culture in which individuals sought legal remedies unnecessarily and before exploring less expensive and combative ways of resolving their issues. Again, that is not accepted by a breadth of individuals and organisations. None of those trends are recognisable to those who know what is going on in the field.

The implication that there is widespread profiteering among legal aid professionals is an insult to those who work hard—indeed, tirelessly—for an extremely modest income to support those who cannot afford to pay for legal help.

Similarly, for the vast majority of individuals embroiled in litigation, participation in court proceedings provokes great anxiety and is a significant disruption to their lives. For them, as for many people, litigation is very much a last resort, only reached after protracted attempts to resolve a dispute by other means, including both formal and informal complaints.

Among the other organisations in this sector, Liberty believes that the most effective and just way of curtailing legal aid expenditure is to encourage a better quality of decision making by public bodies. It is to be hoped that imposing costs orders on the wasteful activities of those public bodies would encourage a better quality of decision making, which in turn would reduce the number of cases that are unreasonably pursued by public authorities.  Although that might initially seem like a simple shifting of costs from one area of the public sector to another, the belief is that the increased cost liability in this context will undoubtedly help to combat a culture of poor-quality decision making and an overt willingness on the part of some Government agencies to make decisions that are liable to be overturned by the judiciary.

I am sorry that I have spoken at length, but it was important that I did so. This new clause is important and I look forward to hearing what the Minister has to say about it.

Ben Gummer (Ipswich, Conservative)

I rise to comment briefly on the new clause that the right hon. Gentleman has tabled and also to set a challenge to the shadow Minister, the hon. Member for Hammersmith, who says that all of my interventions are spurious. I agree with the principle that the Law Society is proposing. The reason is that, as we agreed with the hon. Gentleman and with other Conservative colleagues in the Justice Committee, the principle of cross-charging within government is a sensible one, because it encourages better practice. The idea that robbing Peter to pay Paul is a false economy is not necessarily right if one can put together a scheme that properly encourages good practice while at the same time ensuring that claims and litigation are not put off when they need to be brought forward.

Having said that, I am afraid that I must say to the right hon. Gentleman that the new clause is not only poorly drafted but rather contradictory in parts and needs considerable improvement. I hope that the Minister will follow up on the evidence that he gave to the Justice Committee, when he seemed very open to the next stage of reform of legal aid, by looking at cross-charging, insurance systems and a series of other mechanisms for improving the funding of the legal system. I hope that at some point in the future the Government will be able to come back to this idea as a general idea.

Andy Slaughter (Hammersmith, Labour)

When the hon. Gentleman began to speak, I thought that we were all going to end the day in perfect harmony, like in a Mozart opera, but he strays slightly to criticise the new clause. It might not be perfect. It is, as the right hon. Member for Dwyfor Meirionnydd said, a probing measure, but it raises an important point, and one that underlies a great deal of this Bill. It is that blame is being attached to legally-aided litigants. That will become relevant as a useful introduction perhaps to part 2 of the Bill, which we will debate next Tuesday, when we will discuss claimants using conditional fee agreements. They are held up as the villains and the wasters of public money in both cases, but often the fault might lie with defendants, or tort visas, or others who, through their poor decision making or obstinacy in legal process, are the principal causes of additional costs to the public purse. Before the Minister responds, I only say that to show that, without wanting to go into the details of the clause or delay the Committee further, an important principle is established here. We should identify the villains and, even if we do not punish them, we should at least give them incentives to ensure that the public purse is not unduly dug into.

Robert Buckland (South Swindon, Conservative)

I rise to echo some of the points that have been made by Members on both sides of the Committee. My hon. Friend the Member for Ipswich  and the right hon. Member for Dwyfor Meirionnydd have quite rightly reminded the Committee of the work that has been done by the Justice Committee on the polluter pays principle, and on encouraging and incentivising Departments to get the decision making right in the first place rather than shifting the cost on to the Ministry of Justice and the administration of justice. Not to do so seems unfair to the Department and to the Ministers who represent it.

The principle of wasted costs is well known to the law. The Prosecution of Offences Act 1985 contains provisions that are fairly similar to those set out in the subsection (2) of new clause 3, in particular the phrase:

“improper, unreasonable or negligent act or omission”.

Such provisions empower courts to impose orders against a prosecuting authority, particularly the Crown Prosecution Service, if there has been misconduct that falls short, in the court’s opinion, of the high standards that are expected. Wasted costs orders are administered on a regular, if not a daily, basis by Crown court judges up and down the land. I note that my hon. Friend the Member for Broxtowe nods assent. I hope that she has not been on the receiving end of a wasted costs order in her capacity as prosecuting counsel, in which I believe she worked less often than in her capacity as defence counsel. As somebody who prosecuted about as many times as he defended, I encountered mercifully few wasted costs orders.

The point remains that that sword of Damocles could be exercised or threatened by the court if they thought that the conduct of the Crown Prosecution Service was falling below the standard that we should reasonably expect. Often, the threat of a wasted costs order would be enough to get the authority to do its job correctly.

Before I sit down, I want to make the point that in the context of the Department for Work and Pensions, the scenario could be somewhat different. I imagine that the decision makers in the Department for Work and Pensions might be subject to a different budget from those who were responsible for conducting appeals in the tribunal. There may well be an element of distance between those two parts of the Department that possibly would not create as much of an incentive to carry out its decision making in a proper way, as for example within the Crown Prosecution Service. I am more familiar with the culture of the Crown Prosecution Service from my work with it.

None the less, the principle as adumbrated by the right hon. Member for Dwyfor Meirionnydd is important, and I know that the Government will give it anxious consideration. For the purposes of today’s debate, the probing new clause is welcome and it has allowed Members to look again at what some of us consider to be an important principle, namely that the polluter should start paying for their mistakes.

Jonathan Djanogly (Parliamentary Under Secretary of State (HM Courts Service and Legal Aid), Justice; Huntingdon, Conservative)

New clause 3 is probing, and it is intended to oblige courts and tribunals dealing with cases that are funded by legal aid to make wasted costs orders against public authorities where those public authorities’ acts have led to waste and expenditure, whether the costs relate to the legal aid fund or to costs incurred by the courts and tribunal system. We have had some debate about the extension of the so-called polluter pays principle. I was interested to hear the remarks of my colleagues who described their experience  on the Justice Select Committee on this matter and its report, to which I contributed. Under the polluter pays principle, public bodies that are party to a case and that are responsible for legal aid costs being incurred should bear that cost rather than the legal aid fund. That was suggested by a number of respondents to our consultation on legal aid reform as a possible alternative to our reform proposals. We analysed that carefully in our response to the consultation, setting out in detail our conclusion that there is no realistic scope to extend that principle further.

First, there would be no additional savings to Government overall if the legal aid fund was simply financed by a different part of Government. Secondly, we are also concerned that a stricter application of the polluter pays principle in cases involving legal aid funding may have unintended and undesirable consequences, as pointed out by my hon. Friend the Member for Ipswich. For example, public authorities could be discouraged from intervening in cases of suspected child abuse by concerns about costs.

Instead, our focus is to work with other Departments and public bodies to ensure better decision making at the outset and throughout the conduct of cases. For example, in the context of social security, the Government are working to deliver improvements in decision making and review processes, and to simplify appeal processes. My Department is also taking forward similar work jointly with other Departments. We are working, for example, with the UK Border Agency on the handling of asylum cases to improve customer service and ensure that resources are focused on the right cases.

Furthermore, different courts and tribunals have different costs regimes, which have been designed specifically for the forum in question. If the proposed new clause were accepted, it would affect legislative provisions beyond legal aid which determine the costs regimes in courts and tribunals.

Wasted costs orders ordinarily have a narrower application than the new clause proposes, relating to the conduct of legal representatives rather than the administrative errors which give rise to the proceedings. In many civil courts, however, judges already have the power to award costs in the circumstances set out in the proposed new clause, should they deem it appropriate to do so in the circumstances of the case and with regard to the behaviour of the parties. That currently results in costs from public authorities being paid to the legal aid fund in some cases where a costs order is made in favour of the legally aided client.

Finally, the proposals suggested would make it mandatory for the court to make a wasted costs order in the circumstances described in subsection (2) of the proposed new clause. It is therefore likely to encourage a significantly higher level of satellite litigation over wasted costs orders, while it is unlikely to result in a significant increase in orders for costs, compared with the existing systems of costs and wasted costs orders. That is likely to create a disproportionate burden on court and tribunal resources for little overall return.

The Government do not consider it appropriate for the Bill to alter radically or impose costs regimes on courts and tribunals, which are provided for elsewhere. I urge the right hon. Gentleman to withdraw the new clause.

Elfyn Llwyd (Dwyfor Meirionnydd, Plaid Cymru)

This has been a short but good debate. We have heard some useful views on both sides of the Committee. I take issue on a single point made by the Minister. He said that if the proposed new clause were to succeed, it would be a matter of shifting the legal aid budget on to another Department. That is really not the point. At the end of the day, there would be better decision making at first instance, and thereby, there would be fewer applications to courts and tribunals, which is the underlining ethos of the proposed new clause.

I will not press the new clause—that would be silly. We have had a useful debate, and there are different views on both sides of the Committee.

Robert Buckland (South Swindon, Conservative)

I think another point made by the Minister might be the Government’s strongest argument. There is perhaps a difference between the CPS being the subject of a wasted costs order, because of an error in its decision making and procedures relating to prosecuting a case, and an error made by a decision maker in the Department for Work and Pensions, which is then a different stage from the conduct of a case by the DWP before a court. A wasted costs order made against the CPS would be for misconduct with regard to the case before the court, as opposed to any original decision, or relating to the subject matter of the case. It is analogous, for example, to a wasted costs order being made against the CPS for something that the police did—if the police messed up their investigation. That might be the Government’s strongest point, and perhaps we should look at it again when we reconsider the whole issue.

Elfyn Llwyd (Dwyfor Meirionnydd, Plaid Cymru)

I take the hon. Gentleman’s views on board, but where does this brief example take him? Three or four months ago, I did a disability living allowance appeal before a panel, as I frequently do. I must have done 200 or 300 of them—obviously, as a Member of Parliament, not as a lawyer. We arrived at the hearing centre in Colwyn Bay, and we soon realised that no one on the panel spoke Welsh. The applicant wanted the matter dealt with in Welsh, and the hearing had to be scrapped. The chair of the tribunal said, “It’s a shame, but I can’t award you costs”—to avoid that nonsense happening again. Very fairly, he said, “If it does happen again, I will write to the Government, because I am desperately unhappy about it.” He was right to say that. I will turn up at the next—I do not want any costs for going to it—but the individual, who was appealing for a DLA payment, had to find his way 50 miles back home and then come back again. We are looking at that kind of bad or negligent decision, maladministration or whatever else we might call it.

Dave Watts (St Helens North, Labour)

My experience of the DWP is that most or all appeal cases are won by the applicants. There have been about four reviews—the present Government are just completing a review, and they are starting another—and we are still finding that decision makers are regularly making the wrong decision. I am convinced that, if the scheme were introduced, the DWP would start to get its act together and there would not be decisions that bear down on some of the poorest families and the poorest people in our community.

Elfyn Llwyd (Dwyfor Meirionnydd, Plaid Cymru)

And we would need fewer tribunal hearings. We would spend less, and there would be far less heartache for the individuals concerned. In my opinion, cases are regularly won because medical officers are always finding against the applicant. They are paid £140 for every form that they fill in, and I wonder how many applicants they will find in favour of before they stop getting that work. When I mentioned that in Parliament, I expected an avalanche of doctors to write to me calling me everything, but I received a dozen letters from doctors saying that I was right.

We might consider that, but I do not want to digress too far from the subject. We have had a useful debate, and I hope that we will return to it to see whether there is the gist of something that could be introduced in line with what is practicable. It is not a matter of tabling an amendment that is without any substance. As the hon.  Member for St Helens North said, we daily find bad decisions by some, although clearly not all, Departments. That is not the Government’s fault; it is the culture. I am sure that if a similar provision were introduced, there would be better initial decisions, thereby avoiding all the heartache and costs, and creating fewer tribunal hearings and a saving to the Government.

This is a probing amendment, and I beg to ask leave to withdraw the motion.