Legal Aid Consultation – no financial case

This is an extract from our firm’s response to the Consultation document: Transforming Legal Aid The Next Steps. It argues that there is no financial case for the proposed changes.

We are constantly told that we live in times of austerity and no-one can be immune from it. The Lord Chancellor has specifically said that the legal sector cannot be immune from cuts. As stated above criminal legal aid has been cut constantly for the last 15 or more years so we are well aware that the “sector” is not immune from cuts. The problem is that the cuts have been so deep that the supplier base has become increasingly fragile. These cuts will be the nudge in the back that sends many over the edge never to return.

Throughout the last consultation and during this one the Government has displayed a worrying unfamiliarity with the actual evidence available in this area. The Government has set out that it wants to save £220 million by 2018-19 and believes that these radical changes are required to do that. This is simply not the case.

One would imagine that someone within the MOJ would have made a reasoned calculation to come up with a figure as precise as £220 million. It can only have been calculated by reference to a percentage saving or a fixed sum saving either from a known base or to reach a set goal by 2018. The only other option is that it has been plucked out of the air at random and we are sure that the Government would not base policy on such a whim.

The FAQs for the last consultation paper stated that saving was to be made on the figures for the financial year 2011/12 at which time the criminal legal aid spend was £1.08 billion. The sum to be saved is neatly 20% of that figure. This is further backed up by comments at some of the MOJ road shows around the country when it was said that if not enough firms were to bid for PCT contracts an administrative cut of 20% would be imposed. Knee jerk rhetoric though this must have been, it does shed a bit of light on the likely calculations for the required savings. Knee jerk rhetoric it must have been because the MOJ seems to accept in the paper that continued administrative cuts would be unsustainable for the profession in the long term. This was also apparent view of the MOJ representatives at one of the London road show presentations on the last consultation. We had perhaps naively considered that the Government could hardly go on to make such a cut in the light of their own belief in its likely consequences. However, here we are facing cuts which are claimed to be of 17.5%. This again is misleading as many of the cuts are considerably more than that and reach 35% and more.

Therefore the MOJ wants to save £220 million from the 2011/12 figures by 2018. At some road shows this was confirmed by the MOJ panel as correct (e.g. Birmingham). So where are we with savings since 2011/12?

The figures for 2011/12 do not reflect some of the cuts that had been introduced from 2010 to 2012. There have been so many that it is difficult to keep up. Four spring to mind: a 10% reduction in police station fixed fees, the abolition of the committal fee, the introduction of a tiny fixed fee for litigation and advocacy combined for elected cases that crack in the Crown Court and the further reduction in the advocacy fees.

The figures for 2012/13 came in significantly under the expected figure (£1.025 billion) at £975 million. The projected spend for criminal legal aid in this financial year 2013/14 is £941 million, a reduction on 2011/12 of £139 million (£1.08 billion – 941 million = 139 million). On the available evidence it seems that the projected spend for 2013/14 will be pessimistic in Government terms and it is likely that the actual costs will be significantly less than the projected figure.

The most recent cuts will continue to affect the amount spent as will the continued reduction in the number of cases coming before the courts. Legal aid spending is reactive and when the level of prosecutions drops significantly, the spend will go down.

As mentioned above the fact that these figures include VAT seems to have been ignored. A spend of £975 million for the last financial year and the huge reduction on the previous year takes into account the fact that VAT increased from 17.5% to 20% on 4th January 2011. The rise in VAT should have led to an increase in the costs for that financial year probably in the region of £25 million but despite this hidden increase in cost, the actual spend has fallen by £125 million and is £50 million below what was forecast.

Has the MOJ considered what the effect of zero rating legally aided legal services for VAT might have on the profession, the criminal justice system or the Treasury? It would certainly reduce the MOJ budget by 20% in one fell swoop. We accept that it will not result in such a saving to the Government as a whole.

We would have expected the Government to be overjoyed at the effectiveness of their cuts in the criminal legal aid system to date and especially those in the last two years. We would have expected the Government to step back and take stock of the system as a whole and to consider from a reasoned perspective whether further cuts were necessary when they are well on target to reach the figures promised by Mr Grayling.

To be clear and using precise figures, a deduction of £220 million from the figure of £1.08 billion (the precise figure in the paper for 2011/12) means that the target figure including VAT for 2018/19 is £860 million.

It was reported in the Law Society Gazette on 17th May 2013 that, having been made aware that significant savings have already been made, the MOJ stated that the £220 million must be saved on top of what has already been saved: in effect £370 million on the 2011/12 figures – more than a third of the entire budget. This runs contrary to what was said by the MOJ at some of the road shows. Mr Grayling seemed unsure about the figures when interviewed by Catherine Baksi for the Law Society Gazette on 20th May 2013 when he was still quoting the 2011/12 rounded up figure of £1.1 billion as the criminal legal aid spend. He was also quoted as saying that the fall in volume had not been matched by a fall in the cost of legal aid. He stated that “What we have is becoming more expensive” and in “very tough financial circumstances” introducing price competitive tendering “is not an ideological choice; it is a financial necessity.”

In this interview he sounded like a man badly briefed. The above comments are nonsense and are not supported by any of the evidence. As demonstrated above the cost of criminal legal aid is reducing year on year and in the last year or so has fallen dramatically.

The Minister has always seemed to be off the pace on the figures. If the conservative target of £941 million is reached for 2013/14, the Government only needs to save a further £81 million in the four year period 2014-2018, which equates to £20 million per year. This is achievable but making no cuts at all as the down turn in volume is most likely to account for these savings in due course.

The whole criminal justice system may well need a review and may well be receiving such a review. However, legal aid does not need urgent cutting as that work has been done and been done effectively.

The Lord Chancellor lost the confidence and trust of the profession by not coming to them initially to engage in a constructive debate and to discuss the possibility of savings within the system. Bringing out the original paper based not on evidence but misconceptions and allowing 8 weeks for responses was unhelpful. It resulted in 16000 responses and we would venture to suggest that very few, if any, of them were positive to the Government’s plans.

He asked for alternative proposals from the profession and he received them in those consultation responses. It would appear that they have been ignored and with breath-taking arrogance the Minister is to press ahead with a large number of the changes that he originally proposed or to press ahead subject to minor modification. This begs the question as to whether the consultation process is anything more than a sham. Client choice had to be restored and with that PCT becomes unworkable. Very little has been given by Government and the insistence that cuts of this nature can provide a sustainable system are frankly absurd.

The actual savings required are miniscule in the scheme of Government budgets. It is notable that the Government was able to spend £750 million on a scheme to make it easier for people to switch their bank accounts. How is this a good use of public funds when the same Government is willing to risk the criminal justice system for a mere £220 million (or in fact now for a mere £115 million which is the difference between the figure for 2012/13 of £975 million and the 2018/19 target of £860 million)? With much of the saving already made, very little else needs to be done unless it is decided that goalposts will be moved to demand the £220 million on top of savings already made. This would be dishonesty of the highest order and not something that the integrity of the Lord Chancellor would allow to happen.

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