I am pleased to share this moment of history with my hon. Friend the Minister. It is perhaps appropriate that you should be in the Chair, Madam Deputy Speaker, because you are a former history teacher. It is also a pleasure to follow the debate initiated by the hon. Member for Leicester, South (Mr. Marshall). When I was elected to this place I feared that I would get his mess bills and that he would get all my dinner invitations. The hon. Gentleman has obviously gone for his coffee break. I wonder what the odds are of two Members by the name of J. Marshall initiating these first two historic debates?
This is not the first time that I have shared a moment of history with the Minister because we were both elected to the European Parliament in 1979. However, the greatest moment of history that he and I shared was on 19 August 1953, when on our respective birthdays Mr. Dennis Compton swept England to victory in the fifth test match and we regained the Ashes. I have one advantage over the Minister because not only was I at the match to see Mr. Dennis Compton do that, but he was born in my constituency; and a week or two ago I took him back to see his old home and his old school.
I pay tribute to the noble Lord Mackay, the Lord Chancellor. The dream of every American is to move from the log cabin to the White House. Lord Mackay made just as distinguished a journey, from a railwayman's cottage in Sutherland to the job of a Law Officer and then Lord Chancellor. There are two kinds of Law Officers—distinguished politicians who happen to be lawyers and distinguished lawyers who happen to be supporters of a political party. Lord Mackay is very much a distinguished lawyer.
It was said in Scotland that, no matter which party had won the 1979 election, it would have asked him to be Lord Advocate. It is a tribute to him as an emigré Scot that when he was appointed Lord Chancellor of England in 1987 the appointment was greeted with a mere murmur of approval. One wonders how Scotland would have reacted if an Englishman had been appointed Lord Advocate in 1988. I suspect that there would not have been a murmur of approval: the Scottish advocates would have had something to say.
I join in the hon. Gentleman's fulsome tribute to Lord Mackay, who is one of my constituents. However, to put the matter in another contemporary context, although he may well have been appointed by a Labour or a Conservative Government in 1979, his subsequent conversion seems to have been complete, because at the last two general elections he spoke against me at Conservative campaign meetings in the constituency.
It is appropriate that the task of reforming the legal aid system should fall to Lord Mackay who has a fine legal mind, the analytical mind of a mathematician, and who has the sense of compassion to be found in those with a deep religious background.
The legal aid system was designed on the simple premise that no one should be denied justice because he is poor. That is an excellent and noble sentiment but, unfortunately, the system no longer achieves its basic objective despite being the most generous system of legal aid in the western world. Its cost has risen dramatically. In 1979–80, the system cost £99 million. In 1984–85, the cost was £263.1 million and by 1993–94, it had risen to £1,210 million. In the current financial year, it is estimated that it will cost £1,333 million.
Since 1979–80, the cost of legal aid has more than quadrupled in real terms and has gone up by 1,248 per cent. in cash terms. No wonder the noble Lord Mackay said:
We must look to new solutions. I am open to new ideas on how we can meet our objectives more efficiently, more effectively and more cheaply.
Of course some people will cavil about the phrase "more cheaply" but I remind the House of two points. First, if we can produce a cheaper system it will be to the benefit of all litigants, not only to the benefit of the legal aid fund. Secondly, the resources devoted to legal aid could be better employed elsewhere. It is a chilling fact that the amount devoted to such aid would be sufficient to provide nursery school places for all three and four-year-olds.
Does my hon. Friend agree that one of the most important reforms that the Lord Chancellor has said he will carry into effect is the withdrawal of legal aid which has scandalously been made available to extremely wealthy people? The only reason for those overseas nationals litigating in British courts is that our courts are convenient forums. Those people have vast assets and clearly should not qualify for British legal aid to the detriment of the British taxpayer. It is right that our noble Friend intends to correct that abuse.
My hon. Friend anticipates my speech. Like him, I have read the consultation document "Legal Aid for the Apparently Wealthy". It is a valuable document, to which I shall turn later in the debate.
Does my hon. Friend agree that legal aid for the apparently wealthy is a mere pinprick compared with the amount of legal aid that has been granted? Was he present in the 1980s and 1990s when we enacted one piece of legislation after another, doubling the number of offences, the number of courts and the amount of legal aid that has to be granted as a result? Does he agree that a large part of the legal aid budget is our fault? We are responsible for it.
I am afraid that I must disagree with my hon. Friend. When one examines the growth of the fund—[Interruption.] I wonder how those who are following our proceedings at this historic moment regard the attitude of Opposition Front-Bench speakers who make sedentary and unintelligible interruptions.
The biggest item of growth in the legal aid fund is civil legal aid rather than criminal legal aid, so I must disagree with my hon. Friend. He may regard it as a mere pinprick that Mr. Ernest Saunders received £1.3 million in legal aid and that the Levitt case cost the taxpayer £2 million, but when people see Mr. Levitt quaffing champagne at Tottenham Hotspur and living in a home worth £750,000, they regard it not as a pinprick but as an obscenity. They believe that those sums are the resources of the taxpayer and that they could be used more efficiently and more sensibly elsewhere.
I thank my hon. Friend for his agreement. I think that, for a Wednesday morning, the House is indulging in far too many sedentary interruptions and I shall now proceed with my speech.
The National Consumer Council has suggested various ways in which legal aid could be dealt with more cheaply. It suggests that greater use could be made of binding arbitration. That would be especially useful in matrimonial cases, which have been one of the causes of the great mushrooming in legal aid. The council also suggests the development of no win, no fee, legal services. Our noble Friend Lord Mackay suggested that idea during the recent reform of the legal profession.
The council suggests that no-fault compensation under the Road Traffic Acts would be a means of reducing the legal aid burden, and that we should promote low-cost legal services. As a consumer, one would like legal services to become less expensive not only for the legal aid fund but for the many other consumers of legal services.
My hon. Friend mentioned the explosion in matrimonial legal aid. I practised at the Bar for a number of years before I came to this place, and I did a lot of work as a family law barrister in particular. I noticed that there was large legal aid expenditure for people who would frequently come to court for domestic violence injunctions.
Although it is proper that legal aid should be available in such cases, the problem often was that the battered wife would obtain legal aid to bring a case, to obtain an injunction, perfectly properly, and to protect herself, but she would then allow the man responsible for the violence back into her house. The relationship would resume. There would then be another violent incident. I see that the hon. Member for Swansea, East (Mr. Anderson) nodding. He is familiar with the problem. The woman would return to court and there would be further legal aid expenditure.
Does my hon. Friend agree that it is important for legal aid to be limited to, at the most, no more than two applications to court, because so often, legal aid is wasted by repeated applications by the same parties in the same court?
Order. Before the hon. Member for Hendon, South (Mr. Marshall) resumes his speech, may I point out, as I have already said once this morning, that interventions should be brief.
There is obviously merit in what my hon. Friend the Member for Blackpool, South (Mr. Hawkins) says.
The National Consumer Council suggested that there might be a development of the salaried sector. It pointed out that in Holland, 15 per cent. of legal aid is through the salaried sector rather than through private practice solicitors.
In the legal aid system, we must consider the need to make greater checks on applications. In a written answer on 24 October 1994, my hon. Friend the Parliamentary Secretary, Lord Chancellor's Department told me that, in 1993–94, there were 413,728 claims for civil legal aid and 606,041 applications for criminal legal aid. In that financial year, the legal aid assessment office referred 15 cases for alleged fraudulent claims.
We are being asked to believe that, of the 606,041 rather benign individuals who made applications for criminal legal aid, only 15 would dare to give misleading, inaccurate information to the legal aid fund. I do not believe that, out of 1 million applicants, only 15 might have told the odd fib or two. It beggars belief.
A written answer given on 26 October 1994 by my hon. Friend the Parliamentary Secretary shows that there has been a growth in the number of high-cost trials. In 1990–91, there were only 94 legal aid cases costing the taxpayer more than £100,000. By 1993–94, there were 226 such cases. In the first half of the current financial year, there were 153 cases. Those include some of the cases that have caused the greatest concern to the taxpayer.
The fact that some cases can cost more than £100,000, and that some other cases may cost only £1,000 or £2,000, underlines the absurdity of a standard assessment of means under the legal aid system. Although one individual might be able to afford a case costing him £5,000, he might find it much more difficult to produce the readies for a case costing him £100,000.
Despite, or perhaps because of, the cost of the legal aid system, it is expensive, capricious and unfair to individuals. That is why the Lord Chancellor's attempts to reform the system have been widely welcomed. Nothing has received a greater welcome than the consultative document "Legal Aid for the Apparently Wealthy".
I referred earlier to the case of Mr. Roger Levitt, who enjoys a life style that was the envy of many people. He has a home in St. John's Wood. He quaffs champagne. [Interruption.] He is still very well represented in St John's Wood by my right hon. Friend the Member for Westminster, North (Sir J. Wheeler). Mr. Levitt's life style is an insult to the investors who lost all their money in his organisation.
The hon. Gentleman was only too anxious to share with us his judgment as to how the noble Lord Mackay voted at the previous election. Would he like to hazard a guess as to how Mr. Levitt voted?
I was just going to say that I would not speculate as to how someone who did not live in my constituency voted, because I would not have any access to canvass returns that could give me any accurate information on the matter.
It is equally offensive to taxpayers and citizens when they see Mr. Ernest Saunders skiing with his wife in Switzerland and hopping across the Atlantic on Concorde, no doubt ready to patent the cause that managed to cure him of Alzheimer's disease. He enjoys a lifestyle that is far superior to that of the vast majority of taxpayers and hon. Members, yet he received £1.3 million in legal aid.
There is the case of Mr. Gordon Foxley, who is guilty of massive corruption at the Ministry of Defence. He netted a tidy sum, has a house worth £500,000 and a fleet of cars. He has managed to sting the taxpayer twice, first as a civil servant and then as a defendant in a case. We also have the case of Mr. Hashim, who received £4 million in legal aid, despite being a multi-millionaire.
Legal aid was designed to help the indigent defend themselves. Instead, it is being misused by a number of asset-rich individuals, who have been able to cover up the source of their luxurious life style and to sponge off the taxpayer. I am sure that all hon. Members would like to congratulate our noble Friend Lord Mackay on his determination to remove that scandal.
Lord Mackay's consultation paper contained five questions. First, should there be a limit to the amount of equity ignored for means-testing purposes and should that limit be set at £100,000 for private houses? Secondly, should there be a ceiling on the amount that can be ignored as the subject of dispute and, if so, would a figure of £100,000 be appropriate? Thirdly, should the legal aid rules be changed to allow the existence of a Mareva injunction to be ignored? Fourthly, should more be done to develop the concept of legal aid as a loan when the applicant is unsuccessful in his litigation? Finally, should there be an affluent life style provision in the civil legal aid scheme?
Most people believe that there should be a limit on the amount of equity to be ignored when it involves a private home. Most ordinary taxpayers do not enjoy an equity of £100,000 in their homes, so why should they pay taxes to finance the legal costs of those who live in very much better homes? I also believe that there should be a similar disregard in respect of the assets which are the subject of debate. I suppose that a Mareva injunction would be known as the Hashim clause. It is applied only when someone leads a wealthy life style and has substantial assets. It gives great offence to people that Mr. Jawad Hashim should have receive £4 million in legal aid when he was a multi-millionaire, had seven homes and expensive cars, and managed to employ servants.
Does my hon. Friend agree that it is not only the very rich who should be considered in the review but the poor? If the poor receive legal aid as a matter of right, it could distort the outcome of a case for the defendant.
With that very short question, my hon. Friend has curtailed my speech by about four minutes, which will no doubt please the House.
I agree that, in civil legal aid, which is the most expensive aspect of legal aid at the moment, the existence of a legal aid certificate is the strongest weapon that a litigant can have because those against whom he is litigating know that, whether they win or lose the argument, they will pay the costs.
The principle whereby, when a case is lost, the legal fund pays nothing towards the costs of the person being sued needs to be re-examined. That is unfair and leads to delays. I am told that the best way to win a civil case is to have a legal aid certificate and that the second-best way of winning is to have a good argument. We have read recently that Mr. Winston Silcott is to receive £100,000 of legal aid to sue the Metropolitan police. Many people, including the Metropolitan police, regard that as thoroughly offensive.
The Lord Chancellor's fourth question was whether legal aid should sometimes be regarded as a loan. Mr. Ernest Saunders told the press that he is shortly to receive a £70,000 pension from Guinness. He also receives substantial fees for lecturing and giving marketing advice but chooses not to pay anything towards his legal aid costs which, I remind the House, were £1,342,465—not a penny more, not a penny less. In such cases, the unsuccessful criminal who then comes into money should be expected to pay something towards his past legal aid fees.
I deal now with the question of an affluent life style and what could in future be called the Roger Levitt clause in legal aid. Everyone believes that those who enjoy an affluent life style should not receive legal aid.
Does not my hon. Friend believe that someone acquitted on appeal should receive costs, or does he believe that people who are wrongly convicted should always pay into the legal aid fund and always lose out? I am thinking about Roger Levitt in particular.
It is up to the courts to decide whether someone who has been acquitted should receive costs. It is not right to say that everyone who is acquitted should receive costs, because there might have been good reason for the prosecution. It may well be that the old Scottish verdict of "not proven" should be introduced in some cases. Were that to happen, the person involved might not receive costs. It would be wrong to say automatically that people who are prosecuted should not pay anything towards their defence.
I am grateful to my hon. Friends the Members for Hendon, South (Mr. Marshall) and for South Hams (Mr. Steen) for their courtesy. In his admirable speech, my hon. Friend the Member for Hendon, South has already dealt with the five questions set out on page 35 of the document entitled "Legal Aid for the Apparently Wealthy". Would he be good enough to consider—not necessarily this morning but when he has had time to reflect further—the many other questions contained elsewhere in the document, because I would value his opinion on them, too?
My hon. Friend .the Member for Hendon, South (Mr. Marshall) has touched on legal aid in criminal cases. Does he agree that, too often, legal aid is offered as of right to people charged with criminal offences? Does he agree that that should not be so and that the most stringent means test should be applied to those who have been charged with such offences, as happens with civil matters? Does he further agree that too much money is being spent on legal aid and that the problem needs to be dealt with?
I thought that I dealt with the latter point at the beginning of my speech when I said that there had been a huge increase in the legal aid bill from under £100 million in 1979–80 to £1.3 billion in the current financial year. On my hon. Friend's first point, he is right to say that legal aid should not be given as a right. The merit of the case should be examined.
Having spoken to various lawyers over the past few weeks, I have learnt that many believe that legal aid is given in cases which are not as legally meritorious as others in which it is not given. I could cite a number of such cases involving people who come to my constituency surgery—their adversary has been awarded legal aid but they feel that the case did not merit it. I shall cite only two examples because this issue is taking my speech out of sequence, although that will reduce its length.
One constituent told me that he had been given planning permission by Barnet council to build a garage. He had bought the bricks and wood but then a neighbour said that such a garage would interfere with his light. The neighbour approached the legal aid fund and received backing. This created inequality, because the person who had received planning permission could not get legal aid and could not afford to fight his case. The legal aid fund, in effect, determined the outcome by backing one individual when the other could not afford to fight the case.
On another occasion, representatives of a Hindu temple came to see me. They had expelled someone who had broken an agreement. Had he apologised, they would have taken him back. However, he decided not to apologise but to go to court with help from the legal aid fund. It was not a meritorious case—an apology, which would have cost nothing but the loss of face, was not offered so expensive legal action was taken with only one side benefiting from legal aid. It is unfair, and a waste of taxpayers' money that could have been used elsewhere.
There are so many people in the category that my hon. Friend has just mentioned that they now have their own acronym—MINELA: modest income, not eligible for legal aid. Those people are now in the weakest position in the whole legal service.
My hon. Friend is quite right. On one occasion, I was described by one of the chaps who compiles the parliamentary profiles, Mr. Andrew Roth, as a man of patience. I hope that I have demonstrated that patience by the number of times that I have given way this morning.
The Lord Chancellor said in his document that an affluent life style was difficult to define. It may be difficult to define, but we can certainly recognise it in the life style of Mr. Hashim with his seven houses, in Mr. Foxley with his £500,000 mansion, in Mr. Levitt with his £750,000 home, and in Mr. Kenneth Sinar—with his yacht Enendine, which had six berths, three cabins and four occasional berths—who lived in millionaires' row in Hove.
Those life styles are the envy of the ordinary citizen, who cannot afford luxury yachts, champagne in boxes at White Hart lane or a fleet of motor cars. It is quite wrong that the ordinary citizen, who cannot afford that life style, should have to pay taxes so that someone else can continue to afford it. Our noble Friend Lord Mackay is to be congratulated on seeking to release those resources so that they can be used to help those in real need. I shall not speak at great length about civil legal aid because I dealt, in various answers to my hon. Friend the Member for South Hams (Mr. Steen), with the issues that concern me, concern him and concern the House.
The objective of legal aid, when it was set up in 1948, was that no one should be denied justice because of their income. That is no longer true because those who can afford justice in the courts today are the very wealthy and those who are legally aided. A huge swathe of middle England cannot afford justice.
And middle Scotland.
That is due not to a defect in the legal aid system but to the cost of the legal system in general. That is why I welcome the appointment of Lord Woolf, whom the Government have asked to try to reduce the cost of the legal system. Lord Woolf has to look at three points: the costs involved in legal action, the delays involved in legal action, because justice delayed is justice denied, and whether some cases could be removed from the legal system altogether.
There is one more point to mention, if my hon. Friend would allow me. We should also consider the fees charged by lawyers. If the fees that lawyers charge were pegged, the legal aid fund would not have to pay out so much money. It is similar with doctors, who charge whatever they like, knowing that private insurance will pay.
.I see that I am equidistant between my hon. and learned Friend the Member for Leicestershire, North-West (Mr. Ashby) and my hon. Friend the Member for South Hams. One is obviously a consumer and the other a provider of legal services. I shall not dare to decide who gets the better deal.
I regard my hon. Friend the Member for South Hams as learned in many matters.
I also welcome the fact that Lord Justice Taylor is reported in the press this morning as trying to make lawyers less wordy. He says that cases would be determined more quickly and less expensively for all litigants and the legal aid fund if that were so.
Legal aid was designed to ensure that no one was denied justice because of their income. That was an excellent concept in 1948. It was an inexpensive concept in 1979, but today it is a very expensive concept, which is being abused by some individuals. However, the misuse by a minority is not an excuse for destroying the system, but an argument for reforming the system. That is why I welcome the consultative document and the Lord Chancellor's positive and penetrative proposals.
The original objective of legal aid has been destroyed because many people today are denied justice. As I said earlier, only the wealthy and the legally aided can afford to enjoy justice in our courts. That is why I welcome the determination of the Lord Chancellor to reduce the cost of our legal services, why I welcome the appointment of Lord Woolf and why I welcome the reported comments of Lord Justice Taylors.
I am grateful to have an opportunity to speak in a Wednesday morning debate in the House. I have often spoken elsewhere at such a time, but I never had the pleasure of speaking here. I shall begin by congratulating my hon. Friend the Member for Hendon, South (Mr. Marshall) on an extremely lucid description of his concerns, with which I identify. There are, of course, many people who would see things differently. I have spoken to those outside this House who have complained that far from it being the case that the amount being spent on legal aid is generous, a great deal more should be spent. I add that those people—normally—are practising in law and perhaps, therefore, are personally involved.
In answer to such people, a strong case could be made for the success of legal aid based on the amount of funding that has been made available. If one considers the latest available figures—I obtained them from the House of Commons Library yesterday—it is immediately apparent that, for example, civil legal aid in general has increased by a huge percentage; about 1,000 per cent. since 1979. The total increase, comparing last year with 1979, is in the order of 400 per cent. after adjusting for inflation. Without that adjustment, that 400 per cent. figure becomes 1,122 per cent.
The increases are apparent not only over the period between 1979 and 1993, but over the most recent years. My hon. Friend the Member for Hendon, South quoted more figures which support that charge. In addition, the number of bills paid for legal aid show a huge increase. Civil legal aid bills increased from 104,804 in 1979–80 to 359,188 in 1993–94. For magistrates, the number of bills paid for criminal cases rose from just over 243,000 to 432,000. All those figures show that there has been a massive increase in public funding for legal aid.
I said that those figures could be used as an argument for the success of legal aid over that period, but I would not take that view. I would use those figures to illustrate that something has gone seriously wrong. There has been an excessive increase in the funding of legal aid and it should be curtailed. I do not in any sense question that it is true that many individuals have been helped over that period, and rightly so, but to concede that there should be continued increases in legal aid is effectively to concede an argument in favour of an entirely socialised legal system; it would be to say that one should increase funding of the system by a ratchet effect until everybody effectively had the right to claim some money if they wished to take legal action. I would totally oppose that.
I agree with my hon. Friend the Member for South Hams (Mr. Steen) that legal aid, in itself, is a distortion of the system and that, by giving grants to people to litigate, we are giving them a potential advantage over others. I, too, have had constituency cases which clearly demonstrate that. People were persuaded to create litigation because they knew that there would be no possible loss to themselves as the funding would be provided by the state. Others have faced either serious delays or considerable distortions to their legal cases because of the intervention of the legal aid fund on behalf of the other party. Some of those cases have involved people who, earlier in their lives, could very well have afforded to fund their own legal action. I shall return to that point later.
Clearly it is fundamentally wrong for the taxpayer to be expected to write a blank cheque to fund unlimited private action, and especially to subsidise people with a wealthy lifestyle. There is ample evidence that that happens, and although I do not want to go over again the ground so ably covered by my hon. Friend the Member for Hendon, South, I shall refer to two cases that my hon. Friend mentioned.
Dr. Jawad Hashim received £4 million in legal aid—an outrageous payment. A former president of the Arab Monetary Fund, he was being sued for £33 million, which he had allegedly siphoned into private Swiss bank accounts, and he owned six luxury homes around the world. Eventually he was ordered to pay £132 million in compensation. There was no question, at any stage, of that man being poor or even remotely understanding what poverty is, yet he could claim from the British legal aid fund. That is so unacceptable that action must be taken as a matter of urgency to prevent any recurrence of such a case.
My hon. Friend raises an interesting point. Has he considered whether legal aid will be available to all European Union citizens? Will any Frenchman or Dutchman who comes here be entitled to legal aid, too, and if so, will inquiries be made about the circumstances of such people in their own countries? Might that not be another way in which Europeans can take money from the British taxpayer?
That is an important consideration. In his consultation document "Legal Aid for the Apparently Wealthy", the Lord Chancellor asked to what extent nationality should be taken into account in deciding whether to grant legal aid. That is an important topic to examine, and there is a strong argument that the taxpayers of this country should not be expected to fund the legal bills of those who are not British nationals yet who might for one reason or another appear in the British courts. Such people may have chosen to appear there, and be taking action themselves. In a number of such cases—perhaps in all of them—it is no longer suitable, right or fair that people should receive support from the taxpayer.
The other case that I wish to mention is that of Mr. Roger Levitt—another glaring example of misuse of the legal aid fund. Mr. Levitt received £3.7 million to fight fraud charges, yet continued to live what was clearly a luxurious life style. I accept that those are unusual cases—they are by no means run-of-the-mill uses of the legal aid fund, and thank goodness for that—but that does not make them any more justifiable, nor reduce the need to correct the abuse.
In the light of such cases and of other information, the Lord Chancellor last month produced a Green Paper, in which he asked some excellent questions and made some excellent suggestions. I draw the attention of the House especially to what he says about the affluent life style. That may be a difficult concept to define, but it is an important one because it has to do with equity and credibility, and with another more important factor that we are here to act upon—the views of ordinary members of the public, who feel outraged when they see their taxes siphoned off to support people who live a special life style, out of the reach of their world.
Not only should current affluent life style be taken into account, but some means should be found to examine past affluent lifestyle. I know that that is a difficult subject, but there is a considerable difference between someone who has always had a limited life style and income, and someone else who has been financially successful throughout his life and has amassed a large fortune and lived in great style, probably operating in the business world, but who for one reason or another has now fallen on financial hard times. We all know of people who, according to their bank balance, have fallen on hard times, but who still have access to funds both at present and, more particularly, in the future—especially if they have the skills required to deal in the world of finance and business.
If such people apply to the legal aid fund, it should be asked whether it is reasonable to expect them to have made plans beforehand to protect themselves against the cost of future legal action. I am thinking of insurance, or perhaps organising of their finances, especially if they were operating in the world of business, to take account of possible future legal action. Such people may have worked in a business sector in which legal action was a common phenomenon, and a reasonable business man planning his future carefully in the business world should have put aside funds for possible litigation.
It is also relevant to consider whether the subject matter of a dispute should be taken into account, especially where capital is at stake in the legal action. At present that capital is excluded from the formula, but should it be taken into account? I feel strongly that it should, and I also support the idea of a cap to limit the allowable value of a property and size of a mortgage.
There is much more to be said on the subject, but this is a brief debate, so I do not want to delay the House further. I finish simply by drawing the attention of the House to the many possible alternative ways to help those who need to take legal action that obviate the need for the taxpayer to provide a subsidy through the legal aid fund. Such methods could help those who are, in the jargon, "apparently wealthy", as well as those in the middle income bracket who would not at present be entitled to legal aid, and those who, legitimately and understandably, are now entitled.
One such method is the no win, no fee, arrangement, which represents a positive step forward in our legal history and gives us hope for the future. It would enable individuals to sue and to take other action without any risk to them, yet with the possibility of gaining compensation or other redress at no cost to the taxpayer.
I strongly support the drive to achieve a cheaper legal system for the consumer, via the courts or via alternative means. I also support an extension of standard fees, which could help towards that objective, and the encouragement of other administrative processes—there are now many of those—as an alternative to legal action. Legal action should be a weapon of last resort, not of first resort, for the ordinary citizen. There should be, and are, other means by which redress can sensibly be achieved.
I should like strong action to be taken to make the appeals system cheaper. Many parts of that system can be very expensive, and we must try to ease the passage of those with a genuine cause for grievance against a lower court, without involving huge costs to them or to the taxpayer.
We need stricter targeting, further and better checks on applications, and the elimination of abuse and fraud, whether that be abuse that is permissible at present under some of the strange twists in the legislation, or fraud that is not permissible but is not being cracked down upon sufficiently. Specifically, I urge the development of alternative ways of obtaining redress. Those developments constitute the answer that should enable us not only to restrain the growth in the cost of legal aid but to reduce that cost. That, and not the reverse, is what I would regard as a success.
I too am glad to be taking part in the first of our Wednesday morning debates. In the great world outside it may be commented upon that our Chamber is a little sparsely attended, but we are here as Back Benchers to debate subjects of close personal interest to us. I therefore congratulate my hon. Friend the Member for Hendon, South (Mr. Marshall) for securing us a debate on legal aid today.
The workings of legal aid services, as they are at present, remain a mystery to the general public unless and until they find that they are forced to use them. The general perception—at least of constituents who visit me in my advice surgeries—is that the service has been underfunded and cut. Perhaps that is because people remember the publicity that was given in 1993 to the tightening of the eligibility conditions. That produced an outcry at the time, but it is worth reflecting on the reality of the costings today, as my hon. Friends said.
The legal aid scheme cost £685 million in 1990–91, as the Lord Chancellor noted recently, and this year the cost is increasing to £1,300 million, even with tightening of eligibility conditions—a doubling of expenditure in three financial years. That, by any standards, raises questions about good use of public money. We must ask ourselves how cost-effective that service is. If the general public knew the rate of escalating cost and what they receive in return, they would be much angrier and more stirred up about the subject than they are. What is more, unless we do something, the trend is likely to continue upward.
I was grateful for the chance to read the keynote speech about the future of legal aid given by the Lord Chancellor on Wednesday 11 January 1994, at a seminar organised by the Social Market Foundation. That was a fundamental think-piece and discussion of the way that we might consider trying to change the legal aid system.
The general public may believe that the number of people helped by legal aid is declining, but under the scheme it has actually increased from 3.5 million to 4.5 million. Nevertheless, it is not uncommon for Members of Parliament such as myself to be visited by constituents who have tried to take up a legal grievance—especially through the civil courts—and who find that they are unable to do so because they fall, sometimes just an inch, outside the eligibility criteria.
Those people become extremely cross when they hear about the examples that were quoted this morning. They do not understand how people of such great wealth can obtain access to the legal aid system with such enormous sums yet, when they themselves are fighting what to them are important cases but may appear to other people to be small matters, they are unable to obtain legal aid. All that adds up to a general opinion that the legal aid system is not serving the public as well as it should.
That forces one to ask how a service based on such fast-growing expenditure can be so poorly regarded. We should probably seek the answers in the inflexibility of the present court-based system, at least as it applies to civil cases, and the remorseless increase of the cost of each individual case, leading to a commonly held opinion that the cost of civil justice is climbing beyond the reach of individual people.
Has my hon. Friend considered that, in respect of civil justice, the responsibility for the increase lies fairly and squarely at the Lord Chancellor's door, and at the door of the Lord Chief Justice, who have introduced, as recently this year, rules that have increased the cost of court proceedings enormously? I have suffered. I have had to pay up as a result of stupid rules that have been inserted, requiring replies that previously were never necessary, which have increased the costs of cases enormously. The Lord Chancellor and the Lord Chief Justice are responsible for the increase themselves.
My hon. Friend makes a valuable argument, because there are two sides to the equation— the increasing costs of legal aid and the cost of the court system. The latter subject alone would be worthy of a debate on another occasion, but unfortunately I do not have the time to develop that theme this morning.
However, for all the reasons that I have given, I warmly welcome the Lord Chancellor's decision to publish his consultation paper, and also to ask Lord Woolf to carry out a review of the procedures of the civil courts. I hope that Lord Woolf will bear in mind some of the arguments that were made by my hon. Friend the Member for Hendon, South. In addition, some interesting ideas for fundamental reform of the legal aid system were proposed in the speech that I mentioned.
The legal aid system as we know it today emerged from the Legal Aid and Advice Act 1949, which set up the civil legal aid scheme that is very much the basis for that which exists today. It has been rather like a train that starts with two carriages, to which carriage after carriage has been added, so that it becomes progressively slower.
Assistance was introduced under the green form scheme, which was introduced in the 1970s, and the duty solicitor schemes of the 1980s. However, the essential approach is on a case-by-case basis.
The Lord Chancellor rightly asked the question—I think a good one—whether there are more cost-effective ways of achieving results, at least in the early stages of civil cases, so that they do not necessarily have to come to court. Simplification is one example.
I find the six objectives that the speech spells out especially interesting. There is no time to discuss all of them this morning. There is a need to recognise and incorporate the contributions that can be made by legal agencies and advice services, such as local law centres. Citizens advice bureaux do valuable work, but many are short of funds. They could greatly expand their work if the opportunity came to them through the legal aid system.
Is not the hon. Gentleman aware of some contradiction between the wish to expand the work provided to the public by citizens advice bureaux and the financial difficulties of those bureaux throughout the country as a result of the pressures on local government?
I think that that is a different issue. I am discussing the suggestion that we give citizens advice bureaux a new and expanded role, which would need to be separately funded. The other funding issues should be tackled, but there are different ways to tackle them. That is why I shall follow with great interest the pilot project that the Legal Aid Board has established to encourage the delivery of legally aided services by non-solicitor agencies.
The other aspects of the Lord Chancellor's speech that interest me are, first, better targeting of those in greatest need and, secondly, improved quality and efficiency. I know that attempts have been made to achieve that by means of the courts charter, but a case has come to my attention in my constituency, Roxborough v. Poffley, in which there was almost unjustifiable and outrageous delay in the court proceedings—so much so that the judge involved wrote privately to criticise the way that the delay developed.
I have written to the Minister about that case, and he has had the courtesy to reply. However, I find it extraordinary that, after all the work that went into the courts charter, it does not cover listing, because it is considered judicial rather than administrative.
The Lord Chancellor has a chance to put his house in order. The courts provide a service to the public, and that service needs to be more responsive to the public to help cut delays. I should be interested to carry out an analysis of the cases that have been mentioned this morning to find out what proportion of the high costs in those cases was due to delay, whether reasonable or contrived.
We must use the opportunity to find ways to improve the legal aid system, so that it once again gives the taxpayer value for money and makes him feel that it provides a valuable service. That is not the case now, which is why I have given such a warm welcome to the Lord Chancellor's excellent speech earlier this month.
We owe the hon. Member for Hendon, South (Mr. Marshall) a debt of gratitude for enabling us to discuss legal aid and legal services this morning. It is right that the topic—all too often neglected in the Chamber—should find its place on the fist Wednesday morning sitting. For that, we owe the hon. Gentleman a debt of gratitude.
During the debate we have heard a litany—a veritable rogues' gallery has been paraded before us by Conservative Members—of people who have abused the legal aid system. We heard of Mr. Levitt, Mr. Hashim and Mr. Saunders. Strangely, given the litany of rogues, one name was missing: the name of Mr. Asil Nadir. I wonder how that name came to be missed—
I hear from one independent spirit on the Conservative Benches that, had he been given the opportunity, he would have mentioned Mr. Nadir. It is so often the case with Conservative Members that they are just about to mention Mr. Asil Nadir, that well-known contributor—
Order. I must caution the House that, if my recollection is correct, the case is not concluded. It may be in indefinite suspension, but I think that it is still around.
We shall be suitably cautioned, Madam Deputy Speaker, and will not pursue that matter further. Who knows—the legal aid cornucopia involving that individual may yet begin to flow.
But the serious point is that we would be most unwise to fashion a policy on legal aid and legal services based on those particular individuals, their experiences and abuse of the system. We need a more rational and coherent approach. I have listened to the contributions of hon. Members this morning and it may well be that, in fashioning that approach, it is possible to achieve some agreement on the basic principles.
There is one critical principle on which we must all agree if we are to fashion a legal aid system and legal services that are capable of meeting the interests of justice. It is vital that a system of legal aid and legal services for which the taxpayers of this country pay should be able to deliver legal aid, advice and assistance, and where necessary representation, to many more of those taxpayers than is currently the case.
The scandal of legal aid is the way in which, in civil matters, unless someone is in receipt of income support, he can forget public assistance when pursuing a just, reasonable and meritorious claim. It cannot be right that people who work, but are of modest means and contribute to the cost of the service through direct and indirect taxation, should effectively be excluded from access to justice.
I am sorry that both I and the hon. Gentleman—who would, I am sure, like to declare an interest—have been deprived of a fee this morning. The hon. Gentleman will have heard my interventions on the way in which we are responsible for the increase in legal aid. I am sure that he will agree with that in terms of both civil and criminal matters.
Does he also agree that we are having a debate on the increased cost of legal aid without considering one aspect—we have an extremely good form of justice and legal service, which is dirt cheap? It is not an expensive service when compared with those of other countries and what they deliver.
I am afraid that I must beg to differ. What the hon. Gentleman has to say smacks of complacency, which is unacceptable to the Opposition. I do not believe in doing down our system, but we must face the fact that it has become bloated and inadequate in terms of being able to meet the challenges of the end of the 20th century. We need to reform it in quite radical ways if it is to meet the needs of the times and deliver access to justice.
It is the fate of politicians to be misunderstood from time to time—I fear that that has affected the hon. Member for Leicestershire, North-West (Mr. Ashby) this morning.
We must recognise the importance of reforming the legal aid system in a way that is consistent with, and carried out at the same time as, our reform of the practices and procedures of the law. We must also reform the way in which the professions and their practices and procedures are structured. An element of restrictive practice remains in the organisation of the legal profession which requires reform.
We welcome the work of Lord Justice Woolf, but there is an urgent need to reform the procedures of the civil justice system. We need to minimise delay and unnecessary replication of tasks. We must ensure that the focus is always on moving forward litigation when it is inevitable, but avoiding it when it can be avoided.
Inadequate attention is paid to mediation and alternatives to law, particularly family law, which swallows one third of the civil legal aid budget. That attention needs to be paid not, I hasten to add, as part of a Treasury-inspired cost-cutting exercise—although it is an effective way of reducing costs—but as a way of delivering a better, more cost-efficient and effective service to consumers of legal services. The time has come to put the consumer of legal services first and to recognise that consumers are losing at the moment.
I shall give one example of the way in which the legal aid system is currently failing to meet the needs of those who deserve advice, assistance and representation. Mr. Vincent Oliver came to see me. The Legal Aid board found that he had proper cause for action in a claim for compensation against St. Mary's hospital for an operation in which his voice box was mistakenly removed.
That is a terrible trauma in itself but, worse than that, this man has no savings or disposable capital and he does not enjoy a grand life style—there is nothing to mark him as being anything other than an ordinary bloke. He receives benefits to the sum of £343 per month, and he is being asked to contribute £44.80 towards the cost of his legal aid. He is incapable of paying that sum without considerably reducing what is already a very modest standard of living. That cannot be right.
What about those people who are denied legal aid altogether—those people who have saved a little extra, or pensioners who have worked hard and saved all their lives but are now denied access to legal aid advice and services? That cannot be right;. the system needs urgent attention.
That is why I ask the Minister, in the context of this short debate, to consider how he intends to address the issue of the under-spend in the current legal aid budget. The Minister will be aware of the Lord Chancellor's commitment to reviewing the issue of eligibility for legal aid if there is an underspend in the total legal aid budget. Last year, there was an underspend of some £70 million, and it is predicted that this year the sum will rise to more than £90 million.
We recognise the need to keep a tight control on the budget, but if that is the case we must find a way of utilising some of that money to meet the needs of the many deserving people who are currently legally unrepresented and unassisted. There is scope for using that money effectively and I urge the Minister to give an assurance that the underspend will be used to meet the needs of those deserving people who, because of the changes in legal aid eligibility, are currently denied access to legal services.
By all means, have a debate about the delivery of legal services, but that debate should not be led by what are essentially Treasury considerations rather than the interests of justice. Let us put justice and the consumer first and see how we can best deliver justice to people who are currently denied it.
Until a few moments ago, I thought that the adversarial approach which is always present in litigation had drained out of politics this morning. However, I am reassured that it is business as usual.
I thank my hon. Friend the Member for Hendon, South (Mr. Marshall) for not only securing this historic debate on our first Wednesday morning sitting but deploying his case in an extremely impressive manner, taking many hon. Members on this side of the House with him.
I congratulate my hon. Friend the Member for Somerton and Frome (Mr. Robinson) on his very thoughtful contribution to the debate. I particularly single out his remarks about the citizens advice bureau. I think that it plays a tremendously important and unheralded role, and I take humble pride in the fact that I helped to establish a citizens advice bureau some 22 years ago. I think that that organisation's worth in society is under-regarded.
My hon. Friend the Member for Beckenham (Mr. Merchant) made a very lucid and urgent speech, with periodic interventions from my hon. Friends the Members for Blackpool, South (Mr. Hawkins), for South Hams (Mr. Steen) and for Leicestershire, North-West (Mr. Ashby).
Most of what the hon. Member for Brent, South (Mr. Boateng) said was very convincing, and he made a valuable contribution to the debate. I turn to his last point with which he wanted me to deal. Legal aid is demand-led and, as such, it is almost impossible to plan for. However, we have endeavoured to forecast, as best we can, in one of the fastest growing and erratic areas of public expenditure.
What the hon. Gentleman calls an "underspend" is actually 7 per cent. more than we spent last year. I think that Government Members will urge me to be careful when discussing what temporarily appears to be an increase of 7 per cent over last year. I do not wish to get involved in an incautious, over-rapid response to performance over a relatively limited period of time.
In talking about a 7 per cent. increase in expenditure over last year, we should bear in mind that the recent changes in the rules of the High Court have meant an increase in the cost of litigation of about 30 per cent. The rules of the High Court need to be looked at.
The House will not be surprised to learn that by far the highest single component in the increasing cost of legal aid is lawyers' bills. My hon. Friend the Member for Leicestershire, North-West will know how long-winded lawyers can be. We should do everything we can to expedite litigation or find alternatives to it.
I turn now to some other points, not least the consultation paper issued by my noble and learned Friend the Lord Chancellor, which contains a chapter dealing with the subject of legal aid for foreign nationals. The Lord Chancellor and I recognise that this issue raises strong feelings. We would welcome views on whether the Government are correct in their present view that it would not be right to impose nationality restrictions on the availability of criminal or civil legal aid.
On the increasing cost of legal aid, it is useful to say that the number of people being helped is increasing. In 1993–94 therewere 3.5 million legal aid acts of assistance and just over £1.2 billion was spent. By 1997–98, we expect the number of people helped by the scheme to rise to about 4.5 million and the cost of the scheme to rise to more than £1.6 billion. We estimate that approximately half of households are currently eligible for civil legal aid on income grounds.
Does my hon. Friend agree that, as our hon. Friend the Member for Hendon, South said in opening the debate, there is scope for checking more carefully people's eligibility for legal aid? If those who are claiming legal aid fraudulently are weeded out of the system, it will ensure that more funds are available for those in genuine need.
I am not sure that that question needs an answer: it is self-evident that we should take care to check that people qualify for legal aid, not least in a world full of trickery—a point which my hon. Friend the Member for Hendon, South made rather well. He wondered whether the small proportion of people who were ultimately prosecuted represented all those who were putting their best foot forward, or perhaps doing something slightly more dishonest than that.
On the inequality between legally aided and non-legally aided parties, there are circumstances in which a successful non-legally aided defendant may seek costs against the Legal Aid Board or the legally aided opponent. The restrictions on those circumstances may seem harsh in some cases, but they establish a compromise between protecting those who would otherwise suffer financially and protecting public funds.
Legal aid is granted after both means and merits tests in civil cases. The merits test is designed to rule out cases deemed to be frivolous. I am unable to comment on individual cases, but we should not forget that what might appear relatively frivolous to someone who is not directly involved may be a matter of the first importance to the parties immediately concerned. The Legal Aid Board is responsible for deciding on the merits of the case in civil legal aid, and it takes its duties very seriously in that respect.
It may be helpful to the House in response to the points raised by my hon. Friends if I take a little time to describe the proposals on possible changes to legal aid that the Lord Chancellor set out in his speech to the Social Market Foundation on 11 January 1995 to which my hon. Friend the Member for Somerton and Frome referred in his excellent remarks.
The Lord Chancellor is considering a number of possible new initiatives. He has said that they are only the preliminary ideas. We appreciate that there is a lot of work to be done to put flesh on the bones of a reformed legal aid scheme. The Lord Chancellor and I would welcome views on the proposals.
The basis of the legal aid scheme as it exists today is that help should be provided to those falling within the qualifying limits. Up until now, that help has generally been provided in the same way since the inception of the scheme—by the private legal profession, funded on a case-by-case basis.
The legal aid scheme cost £685 million in 1990–91. In the current financial year, the cost will exceed £1.3 billion—an increase of more than 7 per cent. over 1993–94. That represents a rate of increase much faster than inflation. Unfortunately, the rise in the cost of the scheme is not only because of the greater numbers helped: far too much of the rise is attributable to an increase in the cost per case; at the same time, many people who need legal aid are excluded from it.
As has been made clear by the debate today and by previous discussions in the House and elsewhere, although the legal aid scheme is one of the fastest growing Government expenditure programmes, it is also increasingly under attack from a variety of directions. Therefore, the Lord Chancellor and I have concluded that radical change is needed. The hon. Member for Brent, South said as much as well.
The purpose of the Lord Chancellor's proposals is to establish a better, more efficient, more responsive and more flexible legal aid scheme. The overall cost of legal aid must be affordable and controllable. What is needed is a system which forces those who are providing advice and assistance to assess and reassess frequently whether what they are doing is providing value for money both for the client and for the taxpayer.
It is the Lord Chancellor's intention that a future legal aid scheme should operate under a cash limit. That will provide a discipline for the provision of a quality service, and will contain incentives for suppliers constantly to improve the quality of the service. Such a sense of discipline has been sadly lacking up to now.
It is true, as the Lord Chancellor has made clear, that some cases may not be brought under the new scheme that are being brought now. In practice, however, a cash limit is more likely to mean that more people are helped, in more deserving cases, as priority will be set on the basis of need and effectiveness.
The Lord Chancellor has made it clear that most of what he said about his ideas for future of legal aid on 11 January related to the advice and assistance and civil proceedings. In the light of the distinction between civil and criminal legal aid, we shall need to think carefully about how those ideas might apply to criminal legal aid.
We shall, of course, be considering carefully whether to consider the separation of budgets for different areas of legal aid—or ring fencing, as it is called—so that the risk of one area swallowing up another may be avoided.
The Lord Chancellor proposed that the future legal aid scheme should operate by a system of block contracts. The idea would be that the Legal Aid Board should contract for the provision of services with a range of suppliers. Each legal aid area would have a budget for the provision of a full range of publicly funded legal services. Suppliers would be contracted to supply advice, assistance and representation within their competence. Where it was necessary to refer a case on because the original supplier did not have the requisite skills, it would be to suppliers who had made arrangements with the Legal Aid Board to do such work.
The use of block contracting will enable the board to operate within a cash limit and to set priorities. It is a way to bring alternative suppliers into the provision of legal services. As the Lord Chancellor has said, very valuable work is being done by, for example, law centres, citizens advice bureaux and other advice agencies.
It has long been the Lord Chancellor's wish to see them brought into greater use within the legal aid scheme. The opportunity provided by a reformed scheme to build on the Legal Aid Board's non-solicitor agency franchising pilot project, and extend the involvement of advice agencies will be welcomed by us all.
As hon. Members will be aware, the current legal aid scheme is heavily biased towards certain proceedings and court-based solutions. The reform of the scheme should allow the Lord Chancellor to encourage different ways of resolving problems, using not only advice agencies but also mediation and arbitration, where appropriate.
It has been suggested in some quarters that a cash limit will lead to the money running out towards the end of the year. Frankly, that is scaremongering. Whatever contractual arrangements are devised, we shall need to ensure that there are mechanisms to guard against unreasonableness.
The elimination of waste in the system—that is, waste of time in court proceedings or in waiting for court proceedings—is a priority for the Lord Chancellor and myself. Lord Woolf's current review of the procedure of the civil courts, referred to by many hon. Members this morning, will help in that matter, but the problem of legal aid cannot be solved simply by tackling waste in the system.
The Lord Chancellor and I understand the concerns expressed about the current scheme. We intend to establish a system that enables to us set priorities for legal aid more effectively according to need, to weigh the benefits against the costs, to break down the present lawyer-led system in a way which encourages a variety of providers and different ways of doing the work and to encourage early advice and different ways of resolving problems, and thus reduce the need for litigation.
The points raised by hon. Members today will contribute to our thinking, and I thank my hon. Friend the Member for Hendon, South for initiating the debate.
On perhaps a slightly lighter note, in the context of an essentially very serious subject, not least to the many people involved, unwillingly and unenthusiastically perhaps, in appearing before law courts—I have met few litigants who have enjoyed the experience of appearing before a law court-1 dare say that, although there are challenges for advocates in the courts, and that challenge may be enjoyable in a way—from time to time, I have enjoyed it—to be a litigant and to be a party is daunting. To be involved in such proceedings with only limited resources is even more daunting. It is frightening wondering whether one has the means to meet the costs.
The first English statute providing for legal aid dates back to 1495—it did not all begin in the 1940s. In the reign of Henry VII, provision was made for the representation of poor people in courts of law. The only trouble was—here is an echo of the same problem we face today—that Act did not attempt to define a poor person.