HC Deb 18 May 1972 vol 837 cc794-807

8.26 p.m.

Mr. John Fraser (Norwood)

I beg to move Amendment No. 2, in page 1, line 11, after 'income', insert: 'other than the rent of the dwellinghouse in which he ordinarily resides'.

Mr. Deputy Speaker(Miss Harvie Anderson)

With this Amendment we shall take Amendment No. 4, in line 13, after 'capital', insert: 'other than the dwellinghouse in which he ordinarily resides where it has a rateable value of less than £400 and is situated in the area of the Greater London Council or it has a rateable value of less than £200 elsewhere'.

Mr. Fraser

The purpose of the Amendments is to add to the disregards in calculating the disposable income and disposable capital of those applying for legal advice and assistance under the Bill. First, an applicant's rent would be disregarded in calculating his income. The Bill provides for a limit of disposable capital of £125. Under our Amendment, the value of dwellings owned by those likely to use the scheme would be exempt. We have chosen as a capital disregard all houses which have a rateable value of under £400 in London and under £200 elsewhere, the same test as is applied under the Rent Acts and the Leasehold Reform Act. I assume that that would exempt the dwelling house of almost everyone who would apply for legal aid under this scheme. Both these proposals have the merit of simplicity for the solicitor who has to calculate the resources of his client.

On the question of income, the Lord Advocate told us in Committee that there would be no contribution for a person applying for legal advice and assistance whose gross income was below about £730 per annum and that a person would pay a contribution whose gross income was up to about £1,450 per annum, above which a client would no longer be eligible for advice under this scheme. The right hon. and learned Gentleman explained that the deductions from disposable income would be, first of all, deductions which are at present deductible at source in any case, such as income tax and national insurance contributions, and, secondly, deductions in respect of dependants on a fixed scale.

We say that rent is a substantial, regular and easily ascertainable deduction from a person's income, but it varies enormously. It would not be unusual to find a regulated rent in some parts of London of £8.50 per week, and indeed many council tenants find that they are having to pay rents of that size. If rents are left out of account in assessing disposable income, despite their variations, it could frustrate the right hon. and learned Gentleman's objective, which is to bring the legal aid scheme and the legal advice and assistance scheme broadly into line. More justice would be done if rent were treated as a disregard. Rent is ascertainable by the solicitor. There is usually the evidence of the rent book or some other written evidence. There should be no difficulty about using this element in assessing a person's disposable income.

8.30 p.m.

Under the present legal aid scheme, the value of the dwelling house up to £5,000 is left out of account in calculating capital available. As I understood it from the right hon. and learned Gentleman in Committee, under the £25 scheme—which is this scheme—the same disregard will apply. There may be difficulties, however. I want to quote a few words he used in Committee in speaking about disregard of the dwelling house: Here again one has to accept that a more rough and ready calculation has to be made for the purposes of this scheme than that made by the Supplementary Benefits Commission for the purposes of the legal aid scheme. For example, it is the practice of the Commission to make a valuation of property if there is any doubt. In this instance the solicitor will proceed on the bona fide estimate of the value of the property which he is given by his client."—[OFFICIAL REPORT, Standing Committee A, 20th April, 1972; c. 32] But it is difficult now to make bona fide estimates of the value of a dwelling house. I have examples in my constituency where people started to sell their houses in February at a price of £7,000 to find that the value has risen to £12,000 already. Under this Government, gazumping has become one of the few growth industries.

I am sure that the experience in my constituency is shared by many others in London and other conurbations. Few houses in any London constituency are worth under £5,000. Indeed, it is our experience that practically everyone on the average wage in London cannot now afford to buy a house at all. The effect of keeping the £5,000 disregard for a dwelling house will be to exclude practically every owner-occupier in the greater London area from the advantages of this scheme. Some owner-occupiers will be earning wages which will take them outside the scheme in any case, but there are people like pensioners who have paid for their house and have only their old-age pension as income but will still be left out if there is a £5,000 disregard. This will pose serious problems for the legal aid scheme as well.

There are two arguments. The first and perhaps the main argument is that unless we have a more generous disregard for dwelling houses many people will be excluded. Secondly, it is extremely difficult now even to estimate value. Prices are going up so rapidly that it is difficult for the client, let alone the solicitor. to make a bona fide valuation.

Moreover, a house is not a realisable asset. It may be that the client is seeking advice about a compulsory purchase order which affects it or about the behaviour of his neighbour or about a nuisance he has suffered. He wants rapid advice under the scheme. If his house is worth over £5,000 he is debarred from advice under the scheme. But he cannot realise the house rapidly. He cannot realise £25 on his house. It would be impracticable. One needs another test.

The final argument for the Amendment, which would base the calculation on rateable value, is that values vary enormously from one part of the country to another. If we took rateable value as the basis, it would make the scheme much simpler to operate and the disregard easier to ascertain. The value of the disregard would not be eroded by inflation—and the same argument is true of using rent as a disregard. For reasons of common sense and equity, the Amendment should be accepted.

The Lord Advocate (Mr. Norman Wylie)

The hon. Member for Norwood (Mr. John Fraser) has predictably and fairly set out the effects of both Amendments. We had in Committee a series of discussions on this aspect of the scheme in general. I endeavoured to point out then that there were two characteristics of the scheme which we were seeking to promote. One was by and large to keep it in line on the financial structure with the legal aid scheme itself. The other was in the interests of economy—this is, after all, a £25 scheme that we are dealing with—to simplify the process by which the scheme was operated. We are imposing on the solicitor the function presently performed by the Supplementary Benefits Commission under the principal scheme.

In dealing with disregard of rent, I said in Committee that it is a question of judgment. Where does one draw the line? The Government in promoting the scheme on the recommendation of the advisory committee, which lies behind the scheme, and in the interests of simplicity have greatly narrowed down the disregards which can be taken into account in assessing needs. They are narrowed down to what one might call "take home" pay with allowances for dependants. But, to compensate for the narrowing of the disregards in the interests of simplicity, the financial structure of the scheme has been modified in relation to the legal aid scheme itself.

As I pointed out in Committee, the disposable income limits in this scheme are different from the disposable income limits in the primary scheme, and the effect overall is, broadly speaking, to bring the operation of the two schemes in their financial aspects into line. If we were to accept the Amendment, alterations would have to be made to the Schedule and to the Bill generally in relation to the financial structure of the scheme.

Mr. S. C. Silkin (Dulwich)

The right hon. and learned Gentleman referred to the proposal of the advisory committee. The proposal, on page 14 of the report, was: Anyone would be eligible whose net weekly income after deductions (which would include an element for rent) was £15 or less. Later, the Committee said: Where the net weekly income is £8 or less no contributions will be payable". Under the Bill we have a disposable income of £20 as a comparable figure to the £15, and a starting point of contribution of £11 as against £8. Would the Lord Advocate explain the relationship between those figures and the figures in the Bill, particularly the reference to the reduction which includes an element for rent, which is not included in the Bill? Here the Bill seems to differ from the scheme and differ from what we are proposing in the Amendment.

The Lord Advocate

This was canvassed in Committee, as the hon. and learned Gentleman will remember. I endeavoured to explain in the course of the Committee proceedings that because the financial arrangements in this scheme were different from the legal aid scheme, insofar as liability to make a contribution, for example, did not arise as early in this scheme as it would in the legal aid scheme, the overall effect was to bring the two schemes into line. I accept that there is a reference to an element of rent in the report to which the hon. and learned Gentleman has referred, but the financial structure of this scheme has been carefully examined and prepared. As I said, the overall effect is to bring eligibility for legal advice and assistance under the scheme broadly into line with eligibility for legal aid under the principal scheme.

Our view—and I accept that the hon. and learned Gentleman puts the opposite view—is that insofar as there was no variation at all, and one can never get it exact if one is trying to operate this on a simple basis, the alternative is to go to the elaborate structure of the legal aid scheme. One can never get mathematical exactness. In so far as there is any variation between the two, our view is that it would be desirable that the advice and assistance scheme should be slightly more stringent than the legal aid scheme. I believe that if somebody is going to give assistance in the nature of legal aid it is advisable that it should be carried right through. The hon. and learned Gentleman tended to take the opposite view and expressed the view that this scheme should be more generous on eligibility than the legal aid scheme. That is a question of impression and there is very little in it indeed.

On the other matter which the hon. Member for Norwood raised, the capital assets of the scheme, the hon. Gentleman has in Amendment No. 4 altered the basis on which the value of a house is taken into account. This scheme and the legal aid scheme would completely part company if the Amendment were accepted. I can understand the degree of validity in the arguments that the hon. Gentleman has adduced, that in some instances it would be easier to assess the contribution of the capital value of a house under his proposal than on an estimate made by the client. If we are proposing to keep these two schemes in line it would not be appropriate to have one basis of calculation, annual value in this case, for advice and assistance, and capital value for the principal scheme.

I have noted what the hon. Gentleman has said. The advisory committee which is looking into these matters has a continuing remit, and I can give the undertaking that his proposal, which is embodied in Amendment No. 4, will be drawn to the attention of the advisory committee. It will be invited to consider it on the basis that it should be applied if the change is to be made in both schemes. There is some merit in the proposal, and it will be drawn to the attention of the advisory committee.

I mentioned in Committee that the advisory committee was in the process of investigating the capital element in the legal aid scheme. I am now able to say that that Committee has made its report to the Lord Chancellor. The report was submitted only last week, and it has to be considered. There has not been time to consider it in sufficient detail to make any positive recommendations.

8.45 p.m.

I will tell the House the effect of the advisory committee's recommendations as they stand. The committee has suggested that in the legal aid scheme the figure of £125, referred to in Clause 1(b), should be raised to £325. That is in line with the capital disregards presently operating in the supplementary benefit system.

I did not know that the committee was to make this recommendation when, at col. 41, I said: There may be an argument for bringing this into line with the supplementary benefits, where the first £325 is disregarded."—[OFFICIAL REPORT,Standing Committee A,20th April, 1972; c. 41.]

That is what the advisory committee has, in fact, recommended on this matter. It may be that that recommendation will be accepted. If so, the necessary changes in both schemes can, and will, be made by regulation.

The House may also be interested in the views of the advisory committee on the value of property. Its recommendation is that the £5,000 figure which pertains now should be increased to £7,500 in the light of changes. On the interesting point embodied in Amendment No. 4, I have given the House an undertaking that that approach to the assessment of the value of house property, when assessing means for legal aid and legal advice, will be drawn to the attention of the advisory committee. If the committee made a recommendation that the whole basis of calculation regarding house property should be altered in this way, it could be done for both schemes by regulation.

In the light of that information, I hope that the hon. Member for Norwood may feel disposed to withdraw the Amendment.

Mr. Emlyn Hooson (Montgomery)

I was not a member of the Committee which discussed the Bill, but I read the debates with interest.

It is a pity that the Lord Advocate and those advising him are unable to accept the Amendments. I believe that it is highly desirable to keep the scheme simple—after all, we are dealing with the £25 scheme—and in line with the principal legal aid scheme. The principal scheme leaves much to be desired in an inflationary society. This is really what the Bill is all about.

I believe that the element of rent which is included in the Bill should be replaced by the suggestion made in the Amendment. The assessment of the value of a house by relation to its rateable value is so much better than any arbitrary figure such as £5,000 or £7,500 now suggested by the advisory committee.

I note what the Lord Advocate said about the matter being put right by regulation, if necessary. However, it is highly desirable that something should be done urgently. For example, why should a person in the London area whose house may be worth £9,000 be at a disadvantage with a person living in my area, where house values are smaller, whose house may be assessed at £3,000? It is still the house in which he lives. Therefore, it seems wrong that this kind of arbitrary figure should be taken as a guide.

I do not know whether any assessment has been made of what it would cost in computing income to allow the totality of the rent to be set against income and to allow the totality of the occupation of one's house to be disregarded in assessing capital value. I suspect that it would cost the State nothing. It is therefore regrettable that the Amendments should not have been accepted.

Mr. S. C. Silkin

I endorse what has been said by the hon. and learned Member for Montgomery (Mr. Hooson), who represents the Liberal Party in this debate, and in particular what he said about not waiting for regulations. Even if our Amendments are not acceptable for technical reasons—I acknowledge that the wording may need scrutiny—there is another place, and, so we understand, it will have to sit quite late into the summer dealing with the matters which we shall send to it. There seems no reason why, by the time the Bill reaches the other place, these matters should not have been dealt with by the advisory committee or why the outcome of any further scrutiny it may make of what we say in these debates should not be embodied in the Bill itself rather than in regulations. It is not satisfactory to put into an Act of Parliament a basis on which these matters will be worked out and then, perhaps within a month or two, alter it by regulation.

That point applies especially to the question of capital. The observations of the hon. and learned Member for Montgomery have great force in this connection. A single capital sum is referred to, yet there are enormous variations in house values between one part of the country and another, so that one is, in effect, adopting a totally different test in, say, Tyneside from the one adopted in London.

In reply to my intervention, the Lord Advocate did not address his mind entirely to my question about how the figures and the method adopted in the Bill compare not with the legal aid system but with the proposals in the advisory committee's report. The advisory committee was the author of the proposition that we should have a simplified system, which solicitors would work out and which, therefore, should not be as complicated as the method chosen for the legal aid scheme under which the Supplementary Benefits Commission has the task of working out the figures.

It was an inherent part of the advisory committee's scheme that there should be a deduction which would include an element for rent. As I understand it. that has not been carried into the Bill. We have entirely different figures—E15 in the advisory committee's report instead of £20, and £8 instead of £11. I was seeking to find out how those figures compare with what appears in the Bill.

Is the figure of £15, after deductions, including an element for rent, comparable with the £20? Has there been an up-rating of the £15? What was the figure of deduction for rent? Was it £3 or something like that? Similarly, as regards the net weekly income of £8 referred to in the report at which contributions would stop, has there been an up-rating to £11? In other words, do the figures in the Bill reflect the fall in the value of money since the advisory committee's report was issued, and in these respects has the Bill acknowledged that fall and adjusted the figures accordingly? It would be helpful in relation not only to this discussion but to future discussions if the Lord Advocate could answer that point.

Mr. Clinton Davis (Hackney, Central)

I listened to the Lord Advocate with great interest, but I cannot help feeling—and I say this with no disrespect—that it is difficult for a member of the Bar, perhaps particularly a member of the Scottish Bar, to understand what goes on within working-class practices run by solicitors in London, Manchester, Birmingham and other big cities who have to grapple daily with the difficulties imposed on ordinary people by the stringent limits of eligibility which apply to legal aid.

I shall not deal with the complex statistical arguments adduced tonight. Suffice it to say that, speaking from my experience as a partner in a firm of solicitors in a working-class area, we shall find within a very short time that because of the stringent limits imposed by the Bill the scheme, which originated with the most optimistic forecasts, will run into the ground very rapidly.

If we disregard the payments of rent which a man must take on the disposable limits prescribed in the Bill, with rapidly increasing rents the situation will become quite farcical. It is folly to disregard the likely effects of the Housing Finance Bill in this connection. That Bill is supposed to be enacted by October. There can be no denying that rents will substantially increase as a direct result of it. I do not propose to argue that legislation now; it would not be in order. But I think it is in order to comment on that fact in relation to the argument lying behind the Amendment.

Nothing said by the Lord Advocate has persuaded me to the belief that all will be well, that we can look upon the scheme with bright optimism and that many people will be eligible. In a sense, he let the cat out of the bag when he said that the Government considered that the £25 scheme should be more stringent from the point of view of eligibility than the principal scheme. We take a totally different view, based upon extremely good evidence, the most persuasive evidence—namely, the evidence of the advisory committee—that the purpose of this scheme is to obviate litigation and to enable people to seek advice and assistance at the earliest possible moment so that it will not be necessary for people to go to court and the burden, not only on the individual but necessarily on the State, resulting from the operation of the legislation will be less onerous. But if we cut down on the eligibility provision available under the £25 scheme we shall deny that fundamental concept. That would be to misunderstand the whole purpose of the original scheme as adumbrated in 1967 and 1968.

Although I fear that this will not happen, I should like the Lord Advocate to be a little more flexible, to appreciate that our arguments have force, based upon experience of the advice scheme as it has operated and on the principal Act, and to recognise that the argument of my hon. and learned Friend the Member for Dulwich (Mr. S. C. Silkin) about the value of properties when it comes to capital eligibility has tremendous force. The Lord Advocate should be much less rigid. I hope that when the Bill reaches another place some reforms will be enacted.

9.0 p.m.

The Lord Advocate

The figures in the advisory committee's report have been upgraded in order to allow for the change in the value of money since that report was made. But rent has been excluded in the calculation in order to try to keep the financial arrangements of the scheme in line with the legal aid scheme.

The hon. and learned Member for Montgomery (Mr. Hooson) made a point which was made on more than one occasion in Committee, namely, that the legal aid scheme leaves something to be desired. It is not perfect and no one would suggest that it was. I can only give the hon. and learned Gentleman the answer which I gave those who raised the matter in Committee; that the proper way to go about solving the problem is to alter the legal aid scheme, if it has to be altered, and the advice and assistance scheme would then come into line.

This scheme is fundamentally intended to fill a gap in the legal aid scheme. The aim has been to confine the operation of the scheme to the gap in the principal legal aid scheme and to keep it financially in line with the principal scheme.

I will say a word on the effect of the scheme financially in relation to the legal aid scheme. Recognising that we have cut down on the disregards to achieve a simpler operation, a compensating factor has been built into the financial structure of the scheme. I can perhaps illustrate that by giving two examples which were given in Committee as reported at column 18 of the OFFICIAL REPORT. The level of disposable income below which no contribution would be required is £572 a year—that is £11 a week—whereas under the legal aid scheme it is £300. So the liability to start contributing arises only at a much later stage. The £20 a week which is the upper limit of the scheme is £1,040 a year, as against an upper limit of £950 under the legal aid scheme.

I am not suggesting that these balancing factors produce an exact result. What I am suggesting is that, looked at broadly, the effect of those calculations and the figures in the Schedule and in Clause 1 is to enable the legal advice and assistance scheme to proceed, broadly speaking, on the same financial test as the principal scheme. If we were to accept rent as a further deduction in the calculation, it would be mean altering the whole set of figures because the scheme would be more readily available than the legal aid scheme itself. Some hon. Members would like to see that done, but as a matter of policy it has always been the intention that the two schemes should rank pari passu.

Amendment negatived.

The Lord Advocate

I beg to move Amendment No. 3, in page 1, line 12, leave out 'and (b)' and insert: 'or (b) he is (directly or indirectly) in receipt of supplementary benefit under the Ministry of Social Security Act 1966 or of family income supplement under the Family Income Supplements Act 1970, and (in either case)'.

Mr. Deputy Speaker

It would be for the convenience of the Committee to take with Amendment No. 3 the following Amendments:

Amendment No. 5, in page 1, line 14, at end insert: (c) he is in receipt of supplementary benefit or family income supplement.

Amendment No. 15, in page 4, line 34, at end insert: Provided that if the client is in receipt of supplementary benefit or of family income supplement he shall not be required to pay any charge or fee.

Amendment No. 16, in line 35, at end insert: 'and he is not (directly or indirectly) in receipt of supplementary benefit under the Ministry of Social Security Act 1966 or of family income supplement under the Family Income Supplements Act 1970'.

Amendment No. 19, in page 7, line 14, at end insert: 'power to make provision as to the cases in which a person is for the purposes of this Part of this Act to be taken to be (directly or indirectly) in receipt of supplementary benefit under the Ministry of Social Security Act 1966 or of family income supplement under the Family Income Supplements Act 1970, and also to include'.

The Lord Advocate

Amendments Nos. 3, 16 and 19 are Government Amendments, and their object is to give the recipient of supplementary benefit or of family income supplement what has been described in Committee and elsewhere as a passport to legal advice and assistance under the scheme, unless his capital exceeds the capital limitations imposed by the scheme.

The Amendments are prompted by the recommendation of the hon. Member for Norwood (Mr. John Fraser) in Committee: I think it extremely unlikely that any person in receipt of supplementary benefit would have to make a contribution under the Bill as drafted. If so, surely the correct thing to do is to save the time and expense, and not require any assessment of the means of that applicant at all when he presents his Social Security Book."—[OFFICIAL REPORT,Standing Committee A, 20th April, 1972; c. 8.] Later in the proceedings I said: I should like to consider carefully whether we could embody in this legislation the kind of proposition which was made by the hon. Gentleman. There are obvious administrative advantages in being able to produce evidence of receipt of family income supplement or supplementary benefit, thereby automatically qualifying for assistance under the scheme. I added this qualification: It would have to be qualified by the possession of capital."—[OFFICIAL REPORT,Standing Committee A,20th April, 1972; c. 24.] That undertaking is honoured by the three Amendments.

Amendments Nos. 5 and 15 in one sense fall short of the Government Amendments and in another sense go beyond them. They fall short in so far as Amendment No. 5 is drafted to confine the benefit to the applicant who is in receipt of supplementary benefit or family income supplement. I understand that normally family income supplement is paid to the wife. I am sure that this restriction was not intended, but it is not embodied in the Government Amendments, which are drawn in wider terms.

The Opposition Amendments go wider than the Government Amendments in so far as the passport would extend to someone with capital. I have mentioned the recommendations of the advisory committee on the question of capital. I have all along maintained and indicated that it would not be possible to disregard the capital element. I have honoured the undertaking I made in Committee to look at the question of the passport scheme as such, and these Amendments embody the much simplified procedure. I think the legislation benefits from the changes, and I am obliged to the hon. Gentleman for raising these points.

Mr. S. C. Silkin

We are grateful to the Lord Advocate for having honoured his promise to look at the proposal made in Committee by my hon. Friend the Member for Norwood (Mr. John Fraser), who said that the object of the scheme in making the test of income simple for the solicitor would be furthered if what has been described as the passport of receipt of supplementary benefit or family income supplement were incorporated into the Bill. The Government Amendment goes rather further than ours, or at any rate may, subject to regulations, go further than ours, and that is to be welcomed.

It would be of assistance to the House if the Lord Advocate were able to give a little further explanation of what is intended by the words "directly or indirectly". What sort of case is it intended to encompass by the regulations which I gather will define how those words shall operate? We hope that they will be given as wide an interpretation as possible.

The Lord Advocate has correctly said that under the Bill as it stands the Government Amendment falls short of ours in that it leaves the capital limit, notwithstanding the passport provision, at a lower figure than the capital limit for the purposes of supplementary benefit. The Lord Advocate will recognise that that is an anomaly and a complicating factor which strengthens the case for the Government going at least as far as the advisory committee has proposed in relation to capital limits which we dealt with in the preceding Amendment.

With that question and that one qualification I welcome the Government-Amendment, and see no reason to pursue ours.

The Lord Advocate

The words "directly or indirectly" are intended to cover the situation where the applicant is the husband and the wife is the person who is in receipt of supplementary benefit.

Amendment agreed to.

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