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Carter Review (Legal Aid)

This has been a remarkably powerful debate—I include the previous speech in that comment—which has had a clear message. The hon. Member for City of York (Hugh Bayley) is perhaps the exception in that regard, but it was noticeable that even he was not agreeing with the Government’s proposal. He was putting forward a different set of proposals which, admittedly, would not go far. I doubt whether he has worked out how much money would be raised by his cap, but I suspect that it would be only 1 to 2 per cent. of the budget. Nevertheless, he was not supporting the Government’s ideas. I served on the Select Committee during the writing of this report. Technically, I still serve on it, although I am in the process of extricating myself. I voted for the report and agree with every word of the speech made by my right hon. Friend the Member for Berwick-upon-Tweed (Mr. Beith). Many hon. Members have mentioned the key thing: going back to the purposes of legal aid. Its main purpose is to allow people to vindicate their rights. I am talking about those who would otherwise not be able to do so because of their lack of funds. I believe that that is central to the whole idea of legal aid; otherwise we would spend our time in this place passing laws that would be meaningless. I think that one hon. Member said that civil liberties and all the welfare rights that we can think of would be illusory if people could not enforce those rights in the courts. The second theme of legal aid is equality and to ensure that people are not put at serious disadvantage in the courts because they are poor. That is a fundamental principle that we should fight for. It applies in housing law, social welfare law, immigration law and, above all, criminal law where criminal defendants face the states’ might and resources. Criminal defendants are perhaps the most unpopular group of people, and the civilisation of society can be measured by the extent to which it sticks up for the principle that criminal defendants, no matter how unpopular, deserve a fair trial. The Government’s concerns are budgetary. There is no doubt about that. One of the odd background facts is that the budget would seem to most people to be demand-led—the number of people who need legal aid, especially in the criminal law, is the number of people who are brought before the courts. That is completely outside the control of those in the legal aid sector. A budget that is largely demand-led is counted by the Treasury as not being demand-led, but as part of the departmental expenditure limits, so unlike other demand-led budgets—for example, benefits—the Department must keep within annual spending limits even when it has no control over the calls on that budget. The overall cost of legal aid has risen sharply since the late 1990s, although more recently the budget has fallen back slightly. The Committee stresses in its report, as I want to do today, that the Government do not know and the Committee could not find out why that has happened. We know what is not a problem. The community legal service is not a problem, because it is rising by only around 0.7 per cent. a year. We know that it has nothing to do with the lower criminal court defence services because payments in that area and the magistrates courts are falling. There is an increase in payments for police station attendances, but almost all of that is explained by the increase in the number of people arrested. The problem seems to be in three places: first, in the higher criminal courts—the Crown court and above—where the cost per case is indeed rising; secondly in child care proceedings, as many hon. Members said; and thirdly, in the administrative costs of the Legal Services Commission. Little is understood about any of those three. There is speculation about the place of expert witness fees in child care proceedings, delays caused by other organisations in the system, and ideas in the system about degrees of certainty that cannot be achieved. No one knows for sure the causes of the increases, and it is reckless—the Committee used that word—to go forward with the changes without understanding the real reasons for the budgetary problem. The Government’s solution is that if they cannot do anything about the case load, they can only reduce the spend per case. Everyone recognises that the danger of reducing the spend per case without understanding the causes is that quality of advice and representation will be reduced. The essence of the Committee’s criticism and my criticism is that the Government have not gone about the task rationally. They have not tried to discover the cause of the budgetary problem and to deal with it; they have simply adopted an across-the-board solution as a quick fix. That quick fix is the average fixed fee system, and the idea is that firms and providers will absorb all the risks of variation in costs. There are two big variations in the cost of cases. One is the complexity of the case and lawyers’ ability to deal with it. The other is the needs and requirements of the clients: their need for interpretation and translation, and so on. All the variations in those complexities, both legal and concerning the client, are borne by the providers under the fixed-fee system. The Government say that that does not matter because the fees will average out, but firms must bear the risk of that averaging out. There are three big problems. One is cherry-picking. Providers may take on only the cases that they can deal with within the fixed fee and let the others go. We know from other attempts at out-sourcing that that happens. The Government say that they will deal with that with the contract, and that the contract will provide a sign, but how will they know when there is cherry-picking? They will have no way of knowing. If they threaten to take contracts away, they will have to give them to another firm, or the threat will be empty. If, as we suspect, an effect of the system will be to wipe out vast swathes of other providers, there will be no alternative provider to give the contract to. The second problem with fixed fees is that it undermines the possibility of firms specialising by the complexity of the case or special needs of the clients. That is precisely what lies behind the problem of black and minority ethnic firms and the problem of clients with disabilities. The third problem is that fixed fees undermine choice. A fundamental question for people who are represented is, ““Can I trust this lawyer?”” What happens if someone has been represented by a lawyer previously, had a bad experience, and wants to go to a different lawyer? The system undermines the possibility of finding a different lawyer. We have been told that the fixed fee system is necessary as a precursor to best-value contracting, but that argument does not work in its own terms. The benchmark applies only to the Government because they need to know what price they will offer. It does not help bidders, except as a general guide to what prices might be, but the Government can tell them that without setting up fixed fees. It is entirely unclear how the best-value contracting system will work, and that was the basis for the comments by the hon. Member for Southampton, Test (Dr. Whitehead). The Government should think about that. The real problem is that if the contracting system is just an average, fixed fee with a bit of competition, which is what I think is intended, it will have exactly the same problems as the average fixed fee. It will cause cherry-picking, will undermine choice and make it impossible for firms to specialise by the complexity of the case or the complexity of their clients’ needs. What is the way forward? I think it is to do nothing until the exact nature of the problem has been grasped. It might lie in the Treasury, not in the Department or the world, because of the way in which the Treasury deals with this budget. The Government should abandon the average-fixed-fee system at this stage. It is not needed as an interim measure and will be deeply damaging. Finally, they should rethink the best-value contracting system so that it does not merely reproduce the problems of the average fixed fee with a bit of competition added in. There is no ultimate solution to the problem of guaranteeing quality in public services; we can try different solutions at different times. The solution with the widest degree of support, however, is the idea of graduated fees, although it must be combined with a sophisticated system of quality assurance. One of the problems in the way that the Government have set about their task is in trying to simplify and make savings in the quality assurance system. The Chairman of the Committee said that that resulted in a minimum requirement, rather than a guide to the complexity of an individual case or of client needs. A graduated fee system with sophisticated quality control, on the other hand, could work. There is even a way of combining graduated fees with competition, which, as a former council leader, the hon. Member for Southampton, Test will probably recall. It was the method that was in use at the time of the schedule of rates contracts. For the reasons that he mentioned, that is probably not the way to go, but it would still be better than anything that the Government are suggesting. My impression is that, in the minds of the press and of some Ministers, legal aid has been seen as an obstacle to be swept aside using press releases about fat cat lawyers and so on. In reality, it is about modestly paid lawyers trying to vindicate the rights of their even more modestly paid clients. I urge the Government to think again.