HC Deb 28 November 1995 vol 267 cc1143-50

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Burns.]

9.32 pm
Mr. John Marshall (Hendon, South)

It has been an interesting few minutes when, instead of thinking about legal aid, I have listened to the authentic voice of the Labour party. I hope that Conservative central office will fillet that speech and use it for the next election campaign.

I should like to congratulate my hon. Friend the Minister on his powers of prophecy because, when we last had questions to his Department, he said that I returned with consistency to this subject."—[Official Report, 20 November 1995; Vol. 267, c. 331.] That was almost an incitement to call for an Adjournment debate, which I did with pleasure. I make another prophesy: whatever he and I say tonight will somehow not be reported in any of the national papers tomorrow morning, but, who knows, we may make the legal journals.

Mr. Peter Bottomley (Eltham)

Should one notice that our hon. Friend the Minister is moonlighting and that, with his promotion to the Department for Trade and Industry, as soon as he has finished speaking, he is certain to get in the news pages as well as into legal journals?

Mr. Marshall

I gather from that that congratulations must be in order. I did not know what the moonlighting was; perhaps we can have elucidation as the evening progresses.

Everyone would agree that widespread public concern exists about the operation of the legal aid scheme. That is confirmed by an editorial in The Daily Telegraph on 12 January 1995, which said: It has been clear for some years that the traditional system of legal aid is no longer sustainable … the Budget has been the fastest growing area of public spending … which is not surprising since nothing formally inhibits the consumption of public provision for the cost of legal services. We have to ask ourselves whether it is right that the legal aid budget should rise more quickly than spending on social security, the health service or any other Government expenditure.

I should like to pay tribute to one or two of our national newspapers which have done a wonderful job in pointing out to the public some of the difficulties inherent in the current legal aid system. I should like to pay tribute to the work of The Sunday Times for its articles on the legal aid lottery, and the Daily Mail, which has done a good job in pointing out some of the idiocies in the legal aid system.

The legal aid system has seen substantial increases in expenditure while, at the same time, the number of households eligible for it has decreased. In 1979–80, 77 per cent. of households were eligible, by 1989–90 it was 58 per cent. and today it is 48 per cent. We have seen those two conflicting trends—the substantial increase in expenditure and the substantial reduction in the number of families eligible.

There is one issue above all else which creates a vast amount of annoyance among the general public and that is the way in which the seemingly wealthy are able to exploit the legal aid system. There was the case of Mr. Hashim, the former head of the Arab Money Fund, who was involved in a civil claim for over £33 million. He received legal aid despite owning several mansions in Britain and abroad. The cost of that legal aid was not petty cash. According to written answers in Hansard, Mr. Colin Ross-Munro, his QC, received £671,111. Two other juniors and another QC received £646,891. The poor guys in all this were his solicitors, who received only £644,000. The experts, however defined, received £835,000.

We must ask ourselves why council tenants in constituencies such as mine and that of my hon. Friend the Member for Eltham (Mr. Bottomley) pay taxes which are then used to pay the legal aid bills of nasty shysters living in much better accommodation than they are. It is socially wrong that the seemingly rich, living in large mansions, should have their legal aid bills paid for by taxpayers living in worse conditions.

The case of Mr. Hashim is not an isolated incident. Mr. Ernest Saunders—his case was determined yesterday, so it is no longer sub judice—received legal aid which cost £1,342,465 in the original Guinness trial. Mr. Saunders is a remarkable man. He is the only person on this earth who has been cured of Alzheimer's disease—Guinness is good for you; it gets rid of Alzheimer's disease. Since then, he has been pictured skiing in Switzerland with his wife, he has been known to fly across the Atlantic on Concorde, and he gives lectures, no doubt for fat fees. He told the press that he will receive a pension of £70,000 per annum from Guinness. Despite all that, he recently received a second instalment from the legal aid fund to pay for his appeal.

I hope that he does not suffer from amnesia as well as Alzheimer's, because one of the things that surprises me about Mr. Ernest Saunders is that he has also had a case in the European Court. One does not receive legal aid for cases in the European Court, so he is obviously able to pay for that, but when it comes to the British courts, oh dearie me, he cannot fund it and goes off to the legal aid fund. Why should those enjoying a less affluent life style than Mr. Saunders pay for his legal bills?

Then there is Mr. Graham Foxley, who was guilty of massive corruption at the Ministry of Defence. He lived in a house worth £500,000 and owned a fleet of cars. Yes, you have guessed it, Mr. Deputy Speaker, he managed to get legal aid. He stung the taxpayers twice, first as a corrupt civil servant and then as a defendant on legal aid.

The litany of the seemingly wealthy who have been able to obtain legal aid is too long. Mr. Asil Nadir succeeded; Mr. Bryce Taylor, who was reputed to have made a substantial amount of money from taking sneak pictures of Princess Diana, had legal aid; Mr. Peter Clowes and Mr. Kenneth Sinar had it. It is wrong that apparently rich individuals—some of whom may have lied about the sources of their income, others of whom may have transferred their assets to their wives or trusts—should succeed in obtaining legal aid, paid for by the taxpayer.

The Lord Chancellor issued a consultative document about legal aid to the seemingly wealthy. Earlier this year, the Minister said that he was assessing the results. He said in response to a written question: There were 50 responses to the consultation exercise held earlier this year on the grant of legal aid to the apparently wealthy. Since that time there have been 14 inquiries on this issue from Members of Parliament or the public."—[Official Report, 20 November 1995; Vol. 267. c. 21.] We want to know when the exercise will come to end and when there will be a decision. Nothing causes greater aggravation among our electors than the fact that those who fail to get legal aid have to watch other people, who seem to be better off than them, milking the system.

The second issue of concern is that there are few prosecutions for fraudulent applications for legal aid. In 1993, there were 1 million applications, but I have been told by the Attorney-General that there were just three prosecutions for fraudulent applications. Many of the people applying for legal aid are in fact applying for criminal legal aid. They are not the good boys of society. They would have had to be dishonest at some stage in their lives or they would not be before the courts—yet just 0.003 per cent. of applicants are prosecuted for making fraudulent applications.

The third problem with legal aid is another about which I feel very strongly. A legal aid certificate in a civil case amounts to little short of blackmail. In a civil case it helps to have a good case, but it is even better to have a legal aid certificate. I recently received an answer from the Minister about the number of payments made by the legal aid fund to a successful unassisted party. In 1990–91 it was as low as 119. The greatest number was in 1993–94, when in 186 cases the legal aid fund had to pay costs to someone who had won his case.

The difficulties created by a legal aid certificate were highlighted in two cases this year. One was the case of Green v. the Ministry of Defence. The MOD paid a sum into court, but the legal aid fund continued with the case. The court decided that the MOD was right, but the legal costs of £80,000 that it suffered will never be reimbursed.

The other high-profile case involved Kevin Taylor v. Manchester Corporation and Sir James Anderton. One of the issues that led to a settlement in that case was the pace at which legal costs were escalating. It became clear that it was probably cheaper to settle the case than to engage in a fight to the death.

There can be a real problem for ordinary individuals. Someone who came to see me at my constituency surgery had been sued by a business partner. His lawyer told him that he had a strong case; his accountant told him that he had a very strong case; so he decided to fight it. He won the case, but was hopelessly out of pocket because of his expensive legal costs. Of course, his legally aided opponent did not have any costs awarded against him. Although he won the case, it would have been cheaper for him to give way and to give money to someone who was not entitled to it.

In another case, a constituent who came to my surgery had been given planning permission to build a garage and had bought all the materials for it. That constituent's next-door neighbour, however, said that the garage interfered with his right of light. His neighbour applied and received legal aid. My poor constituent, who did not qualify for legal aid, realised that he was on a hiding to nothing because, if he fought the case and won, he would have to pay his own legal costs and, if he lost the case, he would still have to pay his own legal costs.

People in the legal profession have said that there is a fear that, under the legal aid scheme, certificates are perhaps given more easily than they should be. I have heard barristers say that the legal aid fund will occasionally support a case which they recommend the client not to contest.

It is significant that the Bar Council, which one would not think of as an organisation that would seek to suppress the level of legal activity, has said: the Legal Aid Scheme should be focused on cases of real merit with prospects of a worthwhile recovery. Both limbs of the merits test in civil cases should be tightened, focusing attention on real prospects of success and on whether the proceedings are reasonable". If that is what the Bar Council is saying, we ought to listen because, when lawyers tell us that there should be less litigation, they are sending us a message.

The legal aid fund is part of a much wider problem, which is that the costs of litigation are too high. As The Daily Telegraph said in its editorial: The inflation has been caused not merely by the unrestricted influx of taxpayers' money. The large and increasing fees charged by lawyers are mainly a function of the chronic wastage of the system. Until the legal profession tackles its own indefensible costs, the tax payer will be fleeced". I believe that there are three sorts of litigants: the very wealthy who can afford to go to court; those who are legally aided; and the large number of people in middle England, middle Scotland, middle Wales who may be celebrating tonight—

Mr. Peter Bottomley

And middle Northern Ireland.

Mr. Marshall

And middle Northern Ireland who cannot afford the luxury of legal action.

Lord Woolf has been asked to reduce the costs of the legal system. I welcome anything that can reduce the costs of litigation, because there is no doubt that many people just cannot afford the risk of going to court. I think that he also needs to look at the delays and ask whether some issues would be better settled outside rather than in the courts.

The legal aid system in theory is wonderful because under it, no one should be denied justice because he is too poor. That was an excellent concept, but the tragedy is that the present system no longer meets that objective. That is why, during the past year, there have been 190 questions tabled on legal aid, mainly in this House with a few in the House of Lords.

Reform is long overdue. One must sometimes ask whether lawyers are the best people to institute that reform because they may see things in a slightly different way from the rest of us. There is also some concern about the fact that legal aid in Britain is open to everyone living here. The Minister has said many times that our system of legal aid is the most generous, by which we mean the most expensive, in the western world. There are people who receive legal assistance in the United Kingdom who would not have received it in their own country. I think that that is also a source of some concern.

Finally, although I am not usually kind to lawyers, I do think that one ought to make one point about the legal aid system that a number of practitioners in the profession would make: sometimes, there is a rather lengthy period between the case being heard in court and people being paid. The Government have asked that small business men should be paid quickly. Many of those who take part in the legal aid scheme are relatively small business men and one would hope that the legal aid fund might be able to settle bills slightly more quickly than they have sometimes been settled in the past.

I thank the Minister for his tolerance and congratulate him on the promotion to which my hon. Friend the Member for Eltham (Mr. Bottomley) referred. Perhaps my hon. Friend the Minister can elucidate on the matter in his speech, since my hon. Friend was slightly elliptical in his comments.

9.49 pm
The Parliamentary Secretary, Lord Chancellor's Department (Mr. John M. Taylor)

Nobody has ever accused me of being elliptical before.

Mr. John Marshall

I was referring to my hon. Friend the Member for Eltham (Mr. Bottomley).

Mr. Taylor

Oh, our hon. Friend, if you please. Perhaps, none the less, I may be forgiven for addressing that point last, if time permits, because my hon. Friend the Member for Hendon, South (Mr. Marshall) has raised a serious subject and he is entitled to a proper answer. A description of my circumstances can be postponed.

I congratulate my hon. Friend on securing the Adjournment debate and on giving me the opportunity to explain the reasons why reform of the legal aid scheme is needed and to outline the Government's proposals for change.

As the House will be aware, the Lord Chancellor published a Green Paper on the future of legal aid in May. I should like to emphasise that that Green Paper was intended to canvass views on the options that had been identified, and to encourage interested parties to put forward alternatives or additions to them.

The response has been impressive—more than 180 replies. Some were predictable, and some were negative, but others were constructive and innovative in proposing additional or alternative reforms. Hon. Members may rest assured that all the responses received by the Lord Chancellor's Department are being given full and serious consideration.

Before I move on to discuss the Government's proposals, I should like to remind the House of the problems that the Government and Parliament must face in the way in which legal aid operates. My hon. Friend has already touched on some of them. Legal aid has about quadrupled in 10 years. In a total bill of more than £1 billion a year, we are spending some £500 million on crime, £400 million on civil cases and £350 million on family matters. That is not just due to volume and inflation. Real costs have risen and the worrying conclusion is that we are spending more and getting less in real terms. It cannot be allowed to continue.

There is criticism from all sides that too many trivial or ill-founded cases are being litigated, which no sensible person who had to meet his own costs would pursue. That is not just bad for the taxpayer, but it is unfair to those who are threatened with being chased through the courts by legally assisted people who bear little or no risk themselves.

We are told that unaided opponents often cave in rather than face the cost of contesting a case, and that assisted persons receive too great a degree of protection against costs under the current scheme. That is said to place some unassisted persons at an unfair disadvantage, it removes any incentive to try to keep costs down, and once legal aid is granted, there is little incentive to consider non-court-based solutions to legal problems.

The Lord Chancellor and I share those concerns. The Green Paper seeks views on whether the existing protection against costs orders for assisted persons would be appropriate in a reformed scheme. I can assure the House that options for adjusting the costs balance in respect of liability for costs are receiving very close scrutiny as part of the reform process. If my hon. Friend wishes to write to me with any specific suggestions that he may have, they will certainly be taken into account.

Another problem with the current legal aid scheme is its rigidity in the services that it can provide. It is designed primarily to pay lawyers' bills and court costs. Thus, legal aid money cannot be used to fund alternative services, such as specialist advice agencies, mediation and other forms of alternative dispute resolution—despite the fact that those alternatives can be more effective and cheaper and, if recent research by the National Consumer Council is to be believed, are often preferred by the public over traditional legal services.

The rigidity of the scheme also means that there is no effective way in which to target help on priority areas. A consequence of that narrow and rigid focus is that areas of the law outside traditional legal practice are not well provided for. Therefore, inadequate attention is paid to problems in areas of what the Green Paper calls "social welfare law", such as housing, debt and social security. Yet such problems loom unusually large among those who qualify for legal aid, and who arguably are most in need of help.

Finally, I am concerned about quality. Advances have been made in the form of continuous training of lawyers, accreditation schemes, improved complaints procedures and the Legal Aid Board's progress in franchising solicitors firms that meet its quality standards. None the less, it remains a fact that any lawyer can take on any type of case under legal aid, even if he lacks experience or knowledge in the area concerned. In buying services the Government owe it to the taxpayer and the user to act as an intelligent purchaser, and to ensure that they buy services only from providers who are competent in their field.

The legal aid Green Paper proposes tackling those problems in a number of ways. First, the legal aid budget would be predetermined. Allocations would be made to meet national priorities and subsequently refined to meet local needs identified with the help of regional legal services committees made up of local representatives.

Secondly, the services to meet those needs would be provided through contracts under which potential suppliers would agree to provide a certain level of service for an agreed price and to a satisfactory standard.

Finally, there would be no artificial restraint on who could bid for contracts, provided that the potential supplier could show that the service that he could provide would meet the need, and would be cost-effective and of good quality. Advice agencies with special expertise in areas of social welfare law would be able to bid for block contracts, meeting a need that solicitors do not currently satisfy.

The overall aim of the legal aid Green Paper is to ensure that priorities for expenditure are set and assistance is given to those who have the greatest need. My hon. Friend raised a number of points about individual cases in which he feels that legal aid was inappropriately granted to those who did not have a real need for help, or who were apparently wealthy.

While it would not be proper for the Lord Chancellor to intervene in the way in which the Legal Aid Board handles any particular case, or for me to comment on the reasonableness of a grant of legal aid in individual cases, I shall say a few things about the granting of legal aid to the apparently wealthy. My hon. Friend has shown much dogged persistence in his concern about the subject; let me tell him at once that the Lord Chancellor and I share that concern, and are determined to take steps to ensure that legal aid is provided only to those who properly qualify for it.

In the medium term, we shall address that issue through our general strategy on legal aid. But our strategy for dealing with the problem is not confined to the Green Paper. A year ago, we issued a consultation paper entitled "Legal Aid for the Apparently Wealthy", and in April the Lord Chancellor announced the measures that he proposes to take. Let me remind my hon. Friend what they are.

First, a special investigations unit should be established to handle means assessment in both civil and criminal cases where the applicant's financial circumstances are unusually complex. The Lord Chancellor invited the Legal Aid Board to advise him on establishing such a unit, and on the practical arrangements necessary to run it.

Secondly, legal aid regulations should be amended to provide those assessing the means of applicants for legal aid with a discretionary power to include in the means assessment the assets of friends, relatives and children where those appear to be providing a significant material advantage to the applicant.

Thirdly, there should be further examination of the practical implications of regulations allowing the trial judge in criminal cases to release, in specific circumstances, details of the statement of means of an applicant for legal aid.

Fourthly, applicants for legal aid should be required to transfer ownership of any assets that they fail to declare in their application to the legal aid authorities, so that the money disbursed in legal aid can be recovered from those assets. Fifthly, there should be a limit of £100,000 on the equity value in a house that is ignored in the legal aid means assessment.

Setting up a special investigations unit will obviously take a little while, but its remit will be not only to handle means assessment in both civil and criminal cases where the applicant's financial circumstances are unusually complex, but to identify overseas assets of British nationals and of non-British nationals who apply for legal aid in this country. Cases referred to the unit will not be limited to applicants who appear to be wealthy, but there will also be people whose financial circumstances are so complex that it has proved difficult in the past to make a clear assessment for legal aid contribution purposes. That point is more important in respect of criminal legal aid, where there is no upper limit for financial eligibility levels.

This is my swan song as the Lord Chancellor's junior Minister, and it seems to me to be entirely appropriate that it is taking place on the Adjournment of the House on the subject of legal aid reform.

Question put and agreed to.

Adjourned accordingly at one minute to Ten o'clock.