Orders of the Day — Legal Aid Bill [Lords] – in the House of Commons at 11:45 pm on 4th July 1988.

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Photo of Mr John Fraser Mr John Fraser , Norwood 11:45 pm, 4th July 1988

I beg to move amendment No. 18, in page 26, line 31, leave out clause 34.

This amendment brings us back to familiar arguments which took place in another place and in Committee. Although they are familiar, it is worth raising them again now.

The amendment would enable us to challenge two major changes in the legal aid system of remuneration which are regarded with great apprehension by legal aid practitioners, I believe with good cause.

The Government propose that the principle of fair remuneration for work reasonably and actually done is removed. At the moment, the principle of fair remuneration for criminal legal aid is written into legislation. The Bill takes it out. The taxing masters, who vet the bills put in by lawyers, are bound to have regard to the principle of fair remuneration, so for civil legal aid work the principle is incorporated in our law by implication, the taxation rules and the practice of courts. There is no getting round the fact that the Bill removes that principle. The Government cannot pretend otherwise.

The second major change is a new criterion which is being put in by the Bill. One of the factors that will determine the remuneration of legal aid practitioners is the cost to public funds. Together, the two changes mean that there could be a significant change in how legal aid practitioners are remunerated. Considerations of public expenditure are likely to have a much more severe effect on payments than the principle of fair remuneration.

We all recognise that there are not unlimited public funds with which to carry out a social or public service. It is a legitimate area of public debate how much public expenditure there ought to be, but we all recognise that there is bound to be some limit to the amount of public expenditure available. If less money is made available for schools or house building, we will have fewer schools and, as has happened under this Government, fewer publicly provided homes.

Although it may have been done surreptitiously, Parliament has never approved the idea that when we restrict expenditure on homes, schools or hospitals, we reduce the pay of building workers, architects or teachers. We have never said that those who provide the service which is subsidised by the state should personally have to bear the brunt of public expenditure restraints.

Hitherto, we have said that a certain amount of money is available for a service, but as far as possible we have accepted the principle of paying the rate for the job. Here, for the first time, the legal aid practitioner is expected to bear and accept a factor in his or her pay which relates to public expenditure restraints. [Interruption.] It is difficult, Mr. Deputy Speaker, to put an argument when there is loud conversation at the far end of the Chamber.

Photo of Mr Paul Dean Mr Paul Dean , Woodspring

Order. I hope that hon. Members who are not taking part in the debate or listening to it will not disturb those who are.

Photo of Mr John Fraser Mr John Fraser , Norwood

Although the principle of fair remuneration is built into the present system, there is evidence that more firms are giving away legal aid work than accepting it and that access to legal services is being denied as fewer people are prepared to take on lower-paid and less remunerative work.

If clause 34 is retained and the new criteria for remuneration regulations are written in, the position could become much worse. Clause 34 does not allow the Lord Chancellor to control and regulate legal aid remuneration. The Chancellor of the Exchequer is substituted for the Lord Chancellor and he determines the rate of remuneration for those who undertake legal aid work. As a result it would be possible for the Chancellor of the Exchequer or, more likely, the Treasury to starve the legal aid system so that it falls below a proper level of viability. Once that happens the legal aid system may collapse.

Presently the legal aid system faces a crisis for a number of reasons. First, legal aid rates, even under the present system, are regarded as too low. In addition, payment is delayed for far too long. Presently the system pays badly and slowly, even though the principle of fair remuneration is written into the system. The problem is especially acute with larger cases that involve High Court claims for the recovery of damages for personal injury and such like. It is true that remuneration for advice, for assistance and for the duty solicitor scheme is, on the whole, paid fairly promptly, and that is welcome.

Presently, remuneration for more expensive litigation is not very generous and the delays in payment place legal aid practitioners at a double disadvantage. In criminal work, where fees are fixed by the Lord Chancellor, the legal aid practitioners will get less than the comparable rate for private work. In civil cases, legal aid practitioners suffer long delays in payment for work.

Secondly, there is massive competition between those who take up legal aid work and those who are involved in the commercial and financial sectors of the law. Salaries in the private sector, even for new entrants, are high. There is a particular problem when the inner city, whether it is London or elsewhere, is next to the financial centre. Recruitment of legal aid lawyers in such circumstances is now extremely difficult.

The third problem that faces the legal aid service is that solicitors are not being recruited in large enough numbers. The present rate of admissions to the solicitors' profession is 3,000 a year, but that will not be enough to staff it. Many of those who may apply for legal aid work will certainly drift into financial and commercial work. The universities and the polytechnics are not producing enough graduates to enter the profession. About 75 per cent. of those who become solicitors after Law Society examinations come from universities, but there is an acute shortage in the numbers recruited. The greater the recruitment problem, the fewer the people who will take up legal aid work. Given the demands placed upon the profession, there is shortage of entrants and, because of the difference in remuneration between private and legal aid work, there is double pressure on those who accept such work.

Photo of Mr Ivan Lawrence Mr Ivan Lawrence , Burton

Is the hon. Gentleman's fear that the legal aid system will be wound down one reason why some solicitors are so anxious to extend their rights of audience in legal aid work in criminal trials?

Photo of Mr John Fraser Mr John Fraser , Norwood

That may be so, but I shall not be tempted into that argument this evening. This is a debate not about the organisation of the profession, but about the remuneration of barristers and solicitors. Although I am rather better acquainted with solicitors than I am with barristers, I understand that almost exactly the same arguments apply to barristers as to solicitors. This is not the time to open a gulf between the the two branches of the profession. They have a common interest in proper remuneration for legal aid work.

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The case for remunerating lawyers is not popular, but I am not arguing on behalf of lawyers; I am arguing on behalf of those for whom the service is provided. The worst thing that could happen is that, because of the changes in the regulations for remuneration of legal aid work, we shall finish up—there is a serious danger of this even now—with a first and second-class service. The changes proposed in the Bill will emphasise the trend and institutionalise a first and second-class service. That would abolish the principle that we all hold dear—that there should be equality before the law.

If the Government wish to assuage the anxieties of both branches of the profession, the least that the Solicitor-General could do tonight—of course, I hope that he will accept the amendment—is to reaffirm that the Lord Chancellor will stick to the principle of fair remuneration and resist as hard as he can the introduction of a principle that the remuneration of legal aid lawyers should be determined by public expenditure considerations. Even if the amendment is not accepted, such an assurance would go a long way towards assuaging the fears that have been expressed by members of both branches of the profession and by many commentators. There is a serious fear that the number of people undertaking legal aid work will diminish and that the pay differentials between legal aid and private work will become greater.

The Government must recognise the dangers that will be exacerbated by the fundamental changes in the Bill. I hope that, even at this late stage, they will give us a policy statement and reassure those who are observing our proceedings that the principle of fair remuneration, which has existed since 1948, will continue.

Photo of Sir Nicholas Lyell Sir Nicholas Lyell Solicitor General (Law Officers)

I am tempted to say, He that hath ears to hear, let him hear. We have debated fair remuneration at every stage of the Bill here and in another place. In Committee I was bold enough to say that I was confident that the Government and the Lord Chancellor were winning the argument. I remain absolutely confident of it, and may I state it again briefly?

Before I do so, I must say that we cannot accept the amendment, as the hon. Member for Norwood (Mr. Fraser) will understand. Technically, it would cut clause 34, and therefore all the regulation-making powers, out of the Bill. As this is an enabling Bill, that makes it a wrecking amendment. The hon. Gentleman did not move it as a wrecking amendment, and would not expect me to respond to it as such, but I shall answer the points made in debate, because they give us an opportunity to probe this important point which has caused much misplaced and unnecessary worry in the profession and which I hope I can assuage.

The legal aid legislation provides for fair remuneration for work properly and reasonably done. The words "fair remuneration" do not find a place in the Bill. What is in the Bill is a careful analysis of the ingredients that should be considered when one is deciding what is fair. My noble and learned Friend the Lord Chancellor has made it perfectly clear that he has every intention of being fair in the application of those principles, which are now set down, and those requirements, which are now enumerated in clause 34(9).

The hon. Member for Norwood suggested that it is difficult at present to recruit enough solicitors and barristers to do the work that is available to be done, particularly in criminal legal aid. There is a problem with criminal legal aid and it is recognised by the Lord Chancellor. It is being approached precisely in accordance with the principles set down in clause 34(9). The point being made on behalf of the solicitors—a study is about to be carried out to see whether it is a fair one—is that the general levels of criminal legal aid remuneration are not sufficient to meet their overheads. Paragraphs (a), (b) and (c) of clause 34(9) show that overheads are the very matters that the Lord Chancellor must take into account when he seeks to set proper levels of remuneration. Paragraph (a) deals with the time and skill that particular work requires; (b) deals with the general level of fee income arising in relation to that work; and (c) deals with the general level of expenses of barristers and solicitors that is attributable to that work. That constitutes overheads.

In accordance with the new principles set out in the Bill, the Law Society, together with the Lord Chancellor, has commissioned a well-known firm of chartered accountants, Touche Ross, to carry out a detailed study of the fee income and overheads of the firms of solicitors that have a substantial involvement in criminal legal aid. If I remember the details of the study correctly, about one in 10 of all such solicitors are to be visited and studied in detail to determine what their fee incomes and overheads are, and how the two match. I do not believe that anyone could devise a more sensible way for the Government and professions to inform themselves about the real problem that must be met.

There is at the moment a problem of demand exceeding supply in the legal profession. I am sure that all hon. Members could make their own analyses of the reasons for that, but there has, in any case, been a great expansion in demand for commercial lawyers. It probably has something to do with the flourishing economy of the country and the new requirements for regulation of the City and other activities. Because such work is highly paid, it is perhaps more attractive to young lawyers than criminal legal aid. But those who look to the future of criminal and civil legal aid in other areas, as the Government do, and want not a second class but a first class service to be provided for those who lack the means to pay for litigation themselves, can take heart from the provisions of the Bill——

Photo of Mr Alex Carlile Mr Alex Carlile , Montgomery

Does the Solicitor-General accept that one of the practical tests that the profession will apply to the Government's earnest in this matter will be the speed with which fees are paid? Does he accept that there are unconscionable delays in paying counsel for civil and criminal legal aid and that they must come to an end? Some young barristers are virtually starving because they are not being paid for work that they have done.

Photo of Sir Nicholas Lyell Sir Nicholas Lyell Solicitor General (Law Officers)

The hon. and learned Gentleman slightly spoilt his case with his last few words. We are conscious that legal aid fees should be paid within a reasonable time. The hon. and learned Gentleman will know that steps have been taken, particularly in relation to matrimonial work—such cases drag on for years—to improve the rate at which legal aid fees are paid and to provide for interim payments. A new scheme was agreed with the Bar many months ago and is now up and running, which is making a considerable difference to the income and well-being of those who carry out that important work. There is nothing to divide us in principle, but I should not like the world to get the impression in practice that matters are in a parlous state, because I genuinely believe that that is an exaggeration. I have just made inquiries of those who advise me in the House, and, with regard to criminal legal aid, I could not accept that delay was grave. Delay is probably slightly more of a problem in civil rather than criminal work, but we shall monitor and keep a careful eye on the matter, as I said in answer to an earlier debate.

I commend the enormous improvement that the carefully set out criteria to be found in clause 34(9) provide for the discovery and approval by the Lord Chancellor of proper levels of remuneration for legally aided work. It has been recognised by the hon. Member for Norwood (Mr. Fraser) that cost to public funds must be part of those criteria. No Government can responsibly fail to take account of the overall cost of the service that they provide, but, as I said in Committee, the legal aid service is demand-led. Those who read the Bill carefully will recognise, first, that the Government have a duty to provide that service, and, secondly, that they must take into account those criteria, including the overhead costs of fulfilling and providing the service. That is a great improvement on the present vague provision for fair remuneration, which has been said in the debate by the hon. Member for Norwood himself not to be providing a particularly satisfactory outcome over the years.

I commend the clause to the House as an improvement, not merely a change, on the present position. I hope that both halves of the profession will soon come to recognise it as such.

Amendment negatived.