Criminal Defence Service (Funding) (Amendment) Order 2005

– in the House of Lords at 1:36 pm on 18 November 2005.

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Photo of Lord Goodhart Lord Goodhart Shadow Lord Chancellor, Law Officers (Constitutional Affairs), Advisory Team On Legal Matters, Non-Departmental & Cross Departmental Responsibilities 1:36, 18 November 2005

rose to move, That an humble Address be presented to Her Majesty praying that the order, laid before the House on 21 September, be annulled (S.I. 2005/2621) [9th Report from the Merits Committee].

Photo of Lord Goodhart Lord Goodhart Shadow Lord Chancellor, Law Officers (Constitutional Affairs), Advisory Team On Legal Matters, Non-Departmental & Cross Departmental Responsibilities

My Lords, it is clear from the response to the Question asked by the noble Lord, Lord Clinton-Davis, on Wednesday that the protection of the earnings of lawyers is not exactly a popular cause, particularly perhaps on the government Benches. However, in moving this Motion, we are not making what I might describe as a trade union case for the benefit of lawyers; we do not see fees as a sacrosanct issue. We accept that the very high cost cases—or VHCCs—are out of control and we agree that it is wholly unacceptable that 1 per cent of cases accounts for 50 per cent of the cost of criminal legal aid.

We do not object to across-the-board cuts in fees paid to Queen's Counsel, and we have made it clear that we would oppose legislation, which was at one time proposed, to give judges a specific exemption from pension boards. But we are concerned about cuts in fees to the less affluent, and in particular young, lawyers. I am very pleased to see that the noble and learned Lord the Lord Chancellor is here to speak for the Government on this issue and that he has not left it to anyone of lower status.

The Government made it clear in their Explanatory Memorandum attached to the order that the problem arises from the fact that the DCA is in the course of overspending its funds on criminal legal aid by about £130 million and that it is being forced to find savings. It is also clear that the overspend is due not to the rapacity of defence lawyers but to a number of causes. Those include the increase in the number of possible offences as a result of legislation over the past few years—for example, the annual criminal justice Acts and the annual immigration and asylum Acts; the increased cost of cases as a result of new rules which increase the amount of work, such as the need to argue whether hearsay evidence is admissible; the need to argue whether a previous record should be put in evidence; and the increased requirement of disclosure of documents.

Most fee rates have in fact been frozen for the past eight years, resulting, on the basis of computations made by the General Council of the Bar, in a reduction in fees over that period in real terms of no less than 24 per cent before we take into account the further cuts. Lawyers now find that their fees are being cut by an additional £28 million a year. The Government regarded dealing with that shortfall as so urgent that the order was brought into force on 3 October, when under the normal rules it should not have been brought into force until 12 October.

In answering the question put by the noble Lord, Lord Clinton-Davis, the noble and learned Lord, in his initial answer, referred only to the intent to reduce the costs of the VHCCs. That is, of course, not the whole truth. The order reduces the fees payable in VHCCs, but it goes far beyond that. In particular, it cuts fees in graduated fee cases—that is the medium-length criminal trials—as well. I do not propose to go into the details of the order, which is exceedingly technical and very detailed, but it is clear what has happened. The fees for some cases have not been altered—for example, the fees for junior counsel in trials lasting up to 10 days—but some have been altered very substantially. That is so for barristers dealing with cases that last from 11 to 40 days which are the graduated fee cases.

Considering the cases where no QC is instructed—cases that are most likely to involve younger barristers—according to tables produced by the General Council of the Bar, for some 25-day cases, for example, fees may be reduced by as much as 50 per cent; for 26 to 40-day cases the daily fees are reduced depending on the type of case by amounts ranging from £280 to £400 per day. Those are massive cuts. The figures before the cuts were made—let us say £20,000 for a 25-day, five-week trial—look, at first glance, high, but the graduated fund cases involve a great deal of preliminary work, paid at a lower rate or not paid at all. Barristers' fees are not all income; some 20 to 25 per cent goes on rent, travel and other expenses; and barristers do not step from one 25-day case to another. On many days, they are not in court at all or they deal with shorter and less well paid matters.

Young lawyers are, of course, paying off debts incurred such as university tuition fees and fees for vocational training. Notoriously, the first few years in practice are, as they always have been, very difficult for many. I doubt whether young lawyers, dependent on criminal legal aid, are doing nearly as well as young general practitioners. The cuts have led to such discontent that in October there was even a tentative attempt at a strike which fizzled out. A barristers' strike is not something that we on these Benches would encourage or glorify, but it is not surprising that there was great disquiet. Most members of the criminal Bar are, in effect, public servants. What other public servants would have had large cuts imposed on them after eight years of a pay freeze and, if such cuts were made, what would be their reaction? I believe that there is a real danger that able young law students will avoid criminal work altogether and if they go into it, they will leave for better paid sections of the legal profession or will leave the profession altogether.

About three weeks ago, Vera Baird, a Queen's Counsel and a Member of the House of Commons, and someone for whom I have a very high regard indeed, made a very powerful speech in a Westminster Hall debate which she introduced on the subject of criminal legal aid. Some of the points that I have already made were borrowed from her speech. As she said in that debate, she comes from a modest background, and she is concerned to ensure that the Bar, which was her branch of the profession, will continue to be open to people such as her. The cuts will make it more difficult for young lawyers with no money behind them to survive. The Government should listen. Some people say that defence lawyers are there in order to get guilty people off. That is, of course, not true. They are there to ensure that people charged with crimes get a fair trial. That is the principle that lies at the heart of the legal system. These cuts threaten that principle, if not today, plainly in the longer term.

As I told the Government some time ago, it is not my intention to press the Motion to annul the order. It is only in very special cases that your Lordships' House should annul an order, and I do not see this case as falling within that band. But I instigated this debate because this order is damaging. It raises important issues that should not pass without debate. I hope that when, in due course, the Government receive the Carter report, they will reconsider the cuts in fees and will find other, less damaging, ways in which to recoup their overspend.

Moved, That an humble Address be presented to Her Majesty praying that the Order laid before the House on 21 September be annulled (S.I. 2005/2621) [9th Report from the Merits Committee].—(Lord Goodhart.)

Photo of Lord Cope of Berkeley Lord Cope of Berkeley Chief Whip, Whips

My Lords, this is clearly a long-running saga in which I hesitate to intervene, but I am stepping in on behalf of my noble friend Lord Kingsland. This part of the saga was supposed to be covered by the May review, but it never appeared. It seems to have been suppressed. It has certainly been overtaken by the new review by the noble Lord, Lord Carter, which is ongoing. But the Government have not waited for Carter review to be completed; they have simply suppressed the earlier review and plunged in with this order.

During Starred Questions on Wednesday, the noble and learned Lord the Lord Chancellor—who I am glad to see in his place today—said that the problem was that the amount of money had gone up a lot. He said that over eight years it had gone up from £750 million to £1.2 billion a year. He also said that the money was going to the wrong people—those were not his actual words but that is what they amounted to—to practitioners in big cases, rather than those in small cases. He did not spell out how the difference between £750 million and £1.2 billion had come about, and £450 million over eight years is a lot of money. Clearly, some of it is inflation, and some of it is presumably the increased complexity of cases, which therefore take longer, as the noble Lord, Lord Goodhart, mentioned. Some of it, no doubt, is the amount of money going to big cases. It would help the House to understand the noble and learned Lord's point—that the money is going to the wrong people—if we knew the breakdown of where the extra money has gone over the past eight years. I understand that there was not time to do that in Starred Questions, which move quickly, but thanks to the noble Lord, Lord Goodhart, we now have a little more time to investigate the matter and hear about it.

The other question that arises is whether the order before us does what the noble and learned Lord the Lord Chancellor says it does; that is, whether it diverts money from large practitioners in big cases to those involved at the bottom end of the scale. I must say that, on looking at the order, complicated as it is—I entirely agree with the noble Lord, Lord Goodhart, about that—I cannot see that that is what it actually does. It certainly seems to penalise, to some degree, the small-time practitioners as well as those at the other end. On the other hand, it is a modest measure. The overspend is said to be £130 million per year. I am not quite sure what that is measured against. Whereas the savings claimed from this order are £20 million per year, which is quite a lot less than that. So there is a considerable increase in the amount that is going to be spent on all this over the next year or two.

I was interested that at the end of the order it says that no regulatory impact assessment has been produced because there is no effect on costs for businesses. But barristers and solicitors are in business, and it certainly affects their income and the way in which they conduct their business. Of course it is the impact on solicitors' and barristers' business, and whether they are going to continue to undertake this criminal defence type of work, which is crucial. It is suggested by the Bar Council, the Law Society, the noble Lord, Lord Goodhart, and so on, that it will seriously affect the future business of lawyers concerned in this way. That is a matter that should worry us.

I certainly think and hope that the issue will be crucial to the report from the noble Lord, Lord Carter. That is where, assuming this order goes through—and the noble Lord, Lord Goodhart, has made it clear that it will—the next stage in this saga will appear. We need to know from the noble Lord, Lord Carter, in his report whether in his opinion, having been able to go into the complex matter very carefully, barristers and solicitors will still be able to undertake this work on a reasonable basis without their incomes being not only frozen, as they have been for eight years, but suffering from other cuts, either from inflation or from deliberate acts in orders such as this.

Photo of Lord Falconer of Thoroton Lord Falconer of Thoroton Secretary of State, Department for Constitutional Affairs, Secretary of State for Constitutional Affairs and Lord Chancellor

My Lords, I very much welcome the noble Lord, Lord Goodhart, giving us the opportunity to have a short debate on what I agree with him is a very important measure. I welcome the noble Lord's involvement; he has been a persistent advocate on behalf of Access to Justice over a long period of time. I also welcome very much the involvement of the noble Lord, Lord Cope, although not a lawyer. I do not know why I say "although not a lawyer"—particularly because he is not a lawyer he brings a welcome new perspective to this issue.

Perhaps I may put the position into perspective. I, like the noble Lord, Lord Goodhart, am a strong supporter of an independent Bar. The crucial areas in which there needs to be an independent Bar are where people cannot afford representation themselves. So, state-funded work is of great importance.

So far as concerns the criminal Bar, the absence of proper representation leads to miscarriages of justice; and it would be accepted beyond argument that in any criminal case of significance a person is entitled to proper representation in court. That is the underlying basis on which we look at the issues of criminal legal aid.

As regards criminal legal aid in general—before coming to the points made by the noble Lord, Lord Cope—since 1997, the amount of money going to criminal legal aid has risen by £450 million. A significant proportion of that has gone to advocates in higher court, which means Crown Court cases, which means, primarily, the Bar.

I am very concerned at what the noble Lord says; that, despite the increases in the amount of money overall going to the Bar, the Bar regards itself as in danger of not getting adequate people at the bottom because of people not coming to the Bar any more. The only way to ensure that is for a proper distribution of that money. Everybody agrees that too much of that money is going to the top, by which I mean going to a small number of cases, which means a small number of barristers. In order to remedy that, there needs to be better distribution.

I should say, however, that I do not regard it as only the Government's obligation to ensure that that happens. The Bar itself plainly has an obligation to ensure proper arrangements for new entrants at the bottom. The noble Lord, Lord Goodhart, will know as well as I do that many sets of chambers make arrangements for guaranteed fees or payments for people who start at the Bar, which is an extraordinarily good way to ensure that there is an attractive entrance point. That is possible in the context of the earnings of the Bar overall from criminal legal aid having risen substantially during the period that I have referred to. So the overall picture is of criminal legal aid to the Bar rising. Everyone agrees that the distribution is wrong.

The second point with which I should deal is that there has been a pay freeze during that period. I would like to know, but I do not have the information, what are the average earnings of typical members of the criminal Bar. Yes, particular rates have been frozen, but the average position of a barrister is not known. I think that we would find that some barristers' rates have been frozen over a long period, but equally, the earnings of significant numbers of criminal barristers have risen. No information is available as to what is the distribution. It is wrong to suggest, as the noble Lord, Lord Goodhart, did that with the exception of a handful of people who handle very high cost cases, everyone else's earnings have been frozen. That is not the position. We need to focus on how earnings are affected in determining value for money and fair remuneration. Indeed, it is suggested that there is quite a steep rise in the earnings of barristers at the criminal Bar until medium to senior junior level, at which there is a plateau and that it is the plateau that is causing difficulty. That needs further investigation.

Without boring the House, let me describe what the order does. It does two separate things. First, as the noble Lord, Lord Goodhart, accurately said, it deals with the £130 million overspend, not by seeking to reduce costs by £130 million this year but seeking only £7 million of that.

Photo of Lord Goodhart Lord Goodhart Shadow Lord Chancellor, Law Officers (Constitutional Affairs), Advisory Team On Legal Matters, Non-Departmental & Cross Departmental Responsibilities

My Lords, this is perhaps a small point, but the figure of £28 million that I cited was given in the Explanatory Memorandum. The figure of £7 million is because it is for only part of a year; it will be £20 million next year because some of the work will no doubt have begun under the old arrangements and will presumably continue to be paid under them.

Photo of Lord Falconer of Thoroton Lord Falconer of Thoroton Secretary of State, Department for Constitutional Affairs, Secretary of State for Constitutional Affairs and Lord Chancellor

My Lords, there are two separate things. The first is, as it were, the emergency package to deal with the £130 million overspend—although I make clear that it addresses only a proportion of the £130 million. The four things done there are: reducing QCs' rates in very high cost contract cases and in one to 10-day graduated fee cases; reducing the rates in 11 to 40-day graduated fee scheme cases for both QCs and juniors; reducing senior solicitor rates in very high cost contract cases; and removing the possibility of an uplift to the prescribed solicitor rates for some offences and, for the remaining offences, restricting the uplift to 100 per cent. Those four things were designed to target the very high cost cases, using that phrase in a non-technical sense to mean cases at the expensive end of the spectrum, which would be very high cost contract cases with a capital 'v' but also high cost cases with a small 'h' and a small 'c'.

We proposed those changes on 5 July and told the Bar and solicitors that we would consult them and if they thought that there was a better way to target them at the expensive end of the market, we would happily amend the proposals, but within the same financial envelope. Ultimately, both the Bar and the solicitors did not advance any other proposals. Indeed, the position of the Bar was exemplified by a letter dated 26 July 2005 to an official in my department from Mr Andrew Hall. It states:

"The leadership of the Bar is not prepared to assist the Department in imposing unjustified cuts on the profession".

It retained that position throughout. There were discussions but ultimately no alternative proposal was formally put.

The other category of cuts includes cases known as cracks and guiltys. The cracks and guiltys scheme involves moving cases where there is a "guilty" plea or those listed as a "not guilty" plea that turn out to be a "guilty" plea at or before trial. There is a move from assessment after the event on an hourly basis of what the barrister should be paid to something akin to a graduated fee scheme. That saves the balance of the money. That has been discussed in detail with the Bar from last year through to the beginning of this year. It is separate from the arrangements to deal with the £130 million overspend to which the noble Lord, Lord Goodhart, referred.

All that was done before the noble Lord, Lord Carter of Coles, reported because with the first category of cuts we were in considerable financial difficulty but it was agreed last year that the changes to the second category of cuts would be made last autumn or as soon thereafter as possible. They are both explicable. The critical issue is that we deal with the lack of control in legal aid generally coming from very high cost cases. It is swallowing not just legal aid for normal criminal cases but also civil legal aid. So although there has been an increase in criminal legal aid over the past few years, there has been a decrease in civil legal aid. Since 1997, criminal legal aid costs have risen by 37 per cent while civil legal aid costs, excluding asylum, have fallen by 24 per cent. We must address that just as much as the prices paid for more ordinary criminal cases. We cannot continue to deal with the matter piecemeal as we have done year on year for the past eight or nine years, myself included as Lord Chancellor. We need an authoritative look, particularly at criminal legal aid, that gets the confidence of the professions and ensures an independent Bar and fair remuneration for solicitors. That is why I have appointed the noble Lord, Lord Carter of Coles.

In the middle of last year, I promised that there would be a review of the graduated fee scheme and the very high cost cases scheme. The noble Lord, Lord Carter, must review those as part of his bigger review. Although I promised it by May this year, it was not set up until July. I regret that, but there has been no failure to deliver a review. It is now part of a much wider review.

The noble Lord, Lord Cope, is absolutely right that there has been a £450 million increase in criminal legal aid since 1997. He is also right that three reasons for the increase are inflation, increased complexity and a small increase in the number of cases dealt with. But a significant part of it—20 per cent or more—is simply an increase in rates. I will give the detailed figures to the noble Lord, Lord Cope, in a letter and I will put that letter in the Library of the House. There is no regulatory impact assessment in the order because the only figure that one would include would be the amount saved. We think that that is sufficient.

I am grateful for the opportunity to make those points. Legal aid, particularly in criminal cases, is a big problem. I very much hope that the proposals of the noble Lord, Lord Carter of Coles, will command respect right around the profession, and that this House will have the opportunity to debate them as soon as possible after he has delivered his report, which must be before 31 January 2006. I invite the House, in those circumstances, to accept the order.

Photo of Lord Goodhart Lord Goodhart Shadow Lord Chancellor, Law Officers (Constitutional Affairs), Advisory Team On Legal Matters, Non-Departmental & Cross Departmental Responsibilities 2:00, 18 November 2005

My Lords, I am very grateful to the noble and learned Lord the Lord Chancellor for his reply and for explaining in some detail—much more than it was possible to do last Wednesday—the reasoning behind his proposal. Of course, I am entirely convinced that it is his wish, as well as mine, to see a flourishing legal profession. But the noble and learned Lord has not removed my concerns about the order. He raised the point of criminal legal aid eating into civil legal aid, which many of us have been aware of for a long time. Indeed, it was raised in your Lordships' House on several occasions. It is our view that criminal legal aid, which is demand-led because it is essential that people who are charged with criminal offences must have proper representation, should be ring-fenced. Civil legal aid should have a regular amount. It should not be cut because of increases in criminal legal aid. Civil legal aid is essential for ordinary people's access to justice. We believe that increases in criminal legal aid should be borne out of general taxation rather than at the cost of civil legal aid.

However, there is no doubt that the total level of criminal legal aid spending has increased substantially, but a large proportion has been siphoned off into those very high cost cases. The position is quite different for the ordinary criminal law barrister who does routine work and not the complex fraud and other cases that eat up so much money. There is no doubt that individual barristers' earnings have gone up as he or she progresses, but that is natural progression for barristers during their careers. They start at a low level of earnings and progress higher.

I recognise that a number of chambers provide guaranteed income for new barristers, but that is not a substitute for paying proper fees. Indeed, cuts in fees may make it more difficult for chambers to finance that kind of guarantee. So I remain seriously concerned that this order—which quite plainly cuts fees, as is admitted on all sides, by what will be £28 million—will have a significant and damaging effect on the future of the criminal bar. For the reasons that I gave earlier, it is not my intention to press this Motion. I therefore beg leave to withdraw it.

Motion, by leave, withdrawn.