Civil Justice and Legal Aid

HC Deb 21 November 1997 vol 301 cc531-606

[Relevant document: The Report to the Lord Chancellor by Sir Peter Middleton GCB on the Review of Civil Justice and Legal Aid.]

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

9.34 am

The Parliamentary Secretary, Lord Chancellor's Department (Mr. Geoffrey Hoon)

This debate concerns two interrelated issues: the Government's plans for modernising the civil justice system and taking control of the cost of legal aid. Those plans were outlined by my noble and learned Friend the Lord Chancellor in Cardiff a month ago. I am delighted that the House will have the chance today to debate their implications, giving all hon. Members the opportunity of setting out their views. This is an important part of a listening Government's consultation process.

It is a great mistake to look at the civil justice reforms and the legal aid reforms as separate questions. They are two sides of the same coin—two halves of the single package of ensuring that our legal system is reformed to face the challenges of the 21st century. It would be misleading, therefore, to look at one without the other. I ask hon. Members, therefore, to look at the whole picture, not simply individual elements, and to consider the effects of the entire package rather than merely focus on individual pieces.

The overall effect of the Government's proposals for reform will be to create a faster, cheaper and more open civil justice system that is available to everyone who needs it. It will be a civil justice system in which there is fairness between the very poor, the very rich and the very great majority in the middle. The Government's aim is to make access to justice a reality, not simply a slogan.

At the same time, we shall transform the legal aid scheme and allow it to bring help where it is most needed and can do most good. The present scheme is costing more and delivering less. Eligibility has steadily fallen because costs have risen. Over the past seven years, the cost of civil and family legal aid has tripled to £671 million. The average cost for proceedings that received full civil legal aid in 1990–91 was £1,442. If that cost had grown in line with inflation, that would represent £1,760 at today's prices. The actual average cost was £2,684. That represents an increase of 53 per cent. above inflation or an average increase of 8 per cent. per year. While civil and family legal aid continued to rise last year, the number of acts of help that it funded fell by 39,000. That cannot be allowed to go on; we are paying more and getting less from the lawyers.

How are we going to bring about those changes? In his speech to the Labour party conference, my right hon. Friend the Prime Minister spoke of the choices that will confront us in modernising this country to make it fit to face a changing world. Forging a new relationship between the state and the citizen is the key to that process of modernisation. The Government are bringing about constitutional change to ensure that our democracy is up to date. The protection of civil and human rights will be critical in a country where people will see themselves less as subjects of the state, and will want to be more able to assert their responsibilities as free citizens in a democratic country. At the same time, our policies to help the socially and economically excluded aim at giving people opportunities, not making them dependent.

At the heart of the Government's programme for democratic renewal is the concept of the active citizen, and the freedom and choice that come with greater self-reliance. To give those ideas substance, people need to be able to guarantee that their rights are observed. They need to know that in the last resort, they can assert their rights if the law is broken. They need to know, for example, that if they work hard and make provision for their old age, they can enforce their employment and pension rights.

People can be active citizens and can take on real responsibility for themselves, their families and their communities only if there is an effective legal framework on which they know they can rely. That is why access to justice is so high on the Government's agenda and so high on the agenda of anyone who understands and wants to address effectively the future of this country.

Civil justice today is too expensive and too exclusive. The very rich have access because they do not need to worry about the costs of litigation. The very poor have access because they are financed by the legal aid fund paid for by the taxpayer. However, the vast majority of people who go out to work and fund legal aid through their taxes dare not risk pursuing their rights through the courts. Those people cannot litigate because lawyers' fees are so high and because they cannot afford the risk of losing and having to pay their opponent's costs as well as their own. Every right hon. and hon. Member has experience of disgruntled constituents unable to secure legal aid because they are not financially eligible, even though they have paid their fair share of taxes.

There are many people in Britain who should be able to go to law. We all know from our constituency surgeries and postbags that people suffer because they need legal help but cannot afford it. If we are to oversee a renewal of civil society, so that citizenship, self-help and individual freedom develop as ideas rooted in reality, we must face up to the challenges posed by a civil justice system that seems to serve only a privileged minority because the doors of the civil justice system are barred to most ordinary working people. That is wrong. It is not just. The Government will not let those barriers stand. We plan to break them down in two ways.

First, we plan to make radical changes to the culture of civil justice, to its procedures and its structures. Since the Lord Chancellor's speech on 18 October, debate has been concentrated on our proposals for reform of the legal aid scheme. Our plans to modernise civil justice have been sadly neglected. Yet in his two historic reports, Lord Woolf identified five fundamental weaknesses in civil justice: excessive delay, excessive cost, undue complexity, uncertainty over the amount of time and money likely to be involved in bringing a case and, perhaps worst of all, unfairness, where a financially stronger party can exploit all the other failings of the system to defeat an opponent.

Who could realistically dispute the assertion that there is something wrong with a system that allows 40 per cent, of the lowest-value claims to be subject to costs that come close to or exceed the total value of the claim—and that is the costs of one side only—or that there is a need to consider change to a system with an average case length of 28 months when there are no interlocutory applications to the court, rising to 50 months when there are seven or more such applications—almost two years more? Both examples come from Professor Hazel Genn's survey of litigation costs in the High Court, which helped to inform Lord Woolf s recommendations. Those recommendations, on which the Government's plans are based, are well known and widely supported.

The Government embrace Lord Woolf s vision of a more efficient civil justice system: a modern civil justice system designed for the 21st century, in which all citizens have equal access to simpler, faster procedures for securing their rights. Reducing delay and complexity in the courts, and fixing costs at the outset of cases, will reduce expense for the individual and ultimately for the taxpayer. It will promote certainty and restore confidence.

Civil justice today is a bureaucratic labyrinth in which it is all too easy to lose one's way. The Government are committed to simplifying and streamlining the justice system. In essence, we propose to create three paths to civil justice: an expanded small claims procedure, a fast track and a multi-track. The choice of which path a case will take will depend in part on its value and in part on its complexity.

The first path—small claims—has been the major success story of the civil justice system. It is simple, fast and cheap. In a study published in 1996, the National Audit Office found widespread satisfaction among users: 82 per cent. of claimants surveyed found the small claims procedure very or fairly cheap and 68 per cent. of claims were heard within 12 weeks of the defence being filed. The speed, simplicity and modest cost of the small claims procedure make it a model of its kind.

The previous Government raised the small claims limit from £1,000 to £3,000 in January 1996. The effects of that change have been monitored, as Lord Woolf proposed. It has proved a success. Therefore, the Government now propose to raise the small claims limit to £5,000 as part of the overall package of reform.

We have, however, recognised in one particular area the need for caution. Personal injury claims up to a value of £1,000 will continue to be dealt with under the small claims procedure. I recognise that that will be controversial with some solicitors who have pressed for personal injury to be taken out of small claims altogether. There is provision for cases that are too complex to be dealt with as small claims to be transferred out of the procedure. However, many of the cases that fall within that boundary are relatively straightforward, involving very minor injuries. It would be wrong, therefore, to deprive litigants pursuing claims for damages for such injuries of the speedy, cheap access to justice that they enjoy at present. Conversely, the Government recognise that damages claims above £1,000 are likely to arise from more serious injuries, when the litigant may need professional assistance in pursuit of a just outcome. That is why we have rejected the suggestion that we should standardise the limit for all small claims.

As I said, the small claims procedure has been very successful, but I recognise that it is not suitable for every case. The Government have therefore decided to adopt Lord Woolf's proposals for more hands-on management of cases by judges, through the creation of the second and third paths—the fast-track and multi-track procedures. Power will be transferred from lawyers to judges. Judges will allocate cases to the appropriate track. The courts will have greater control over the progress, cost and length of cases as they move to trial. It will replace the present system where the lawyers decide those issues—running up costs and encouraging delay in the process.

Cases allocated to the fast track will be subject to a fixed timetable, requiring the case to be heard generally within 30 weeks of allocation. Lord Woolf recommended that the fast-track procedure should deal with all cases up to £10,000. If it had been in place last year, 11,000 cases across the country would have been disposed of in the fast track. Although 11,000 is a significant number, my view is that the benefits of the fast track should be available to as many litigants as possible. We propose, therefore, that the fast-track limit should initially be set at £15,000, and we shall shortly be issuing a consultation paper seeking views on that proposal.

The strength of the fast track will be the tough judicial control imposed on the progress of cases. However, tough judicial control may not be enough on its own to ensure that the fast track works well. We believe that judicial management must go hand in hand with a fixed-costs regime if the Government's objectives for cheaper, faster and more certain justice are to be achieved.

Mr. Austin Mitchell (Great Grimsby)

How will the Woolf proposals for the control and limitation of costs be compatible with conditional fees, which are also increasing, when conditional fees have to have costs if they are to be justified?

Mr. Hoon

My hon. Friend makes a good point from his considerable knowledge of the way in which the system works; we are consulting on the issue that he raised. Clearly, there has to be a relationship between the amount of costs in the fast track and an encouragement to lawyers to take on cases on conditional fees. We are addressing precisely that issue. We have received a considerable number of representations and we are looking at them carefully. However, I must emphasise that the fixing of costs—the knowledge in advance to the litigant of how much a case will cost—is a crucial feature of our proposals.

As I was about to say, one of the great barriers to access to justice is the unpredictability of costs. The fixed-costs regime removes that unpredictability. Litigants will know at the start of the action what their potential liability for an opponent's costs will be, and they will be able to compare the maximum that they can recover with the price that their own lawyer is quoting them for taking their case. The fixed-costs regime is a major step towards breaking down the barrier of unpredictable costs and opening the doors of the justice system to the majority of people.

The key is for the costs to be fixed at a level that encourages efficient and effective management of cases by lawyers. If the level is too high, there will be little incentive to improve working methods. If it is set too low, the quality of service that lawyers can provide to litigants—and, consequentially, justice—could suffer. To help us develop the right answers, on which we intend to consult widely in the spring, we have commissioned research from the Institute of Advanced Legal Studies. Its task is to identify the amount of work that a fast-track case requires at each stage of its life if managed tightly through the new procedures. The work is overseen by a steering group, which includes representatives of the professions and consumers. Lawyers and judges are playing an integral part in the work that is being conducted.

Cases allocated to the multi-track—the third path through the reformed system—will offer a greater level of judicial intervention, tailored to the special features of each dispute. As the most sophisticated system available, it will be suitable for cases of higher value or greater complexity. The legal work conducted by both sides will be directed and controlled by a judge, who will monitor costs to ensure that they are proportionate to the amount of work that properly needs to be done, and to the complexity and value of the case.

The Government intend to bring the fast track and the multi-track into operation by April 1999. Although that is six months later than originally planned, it was always clear that October 1998 was not an achievable implementation date. April 1999 will give us the extra time that we need to ensure that we get the reforms right first time.

The new procedures will require a new supporting court fee structure. As my noble Friend the Lord Chancellor said in July, there is nothing wrong with a general principle that those who can afford to do so should pay a fair fee for the use of the courts to resolve their disputes."—[Official Report, House of Lords, 14 July 1997; Vol. 581, c. 880.] However, the amount that they should pay should reflect the cost of the various components in litigation as it is carried forward to the conclusion of the trial. We shall be consulting on the principles that should underlie the new fee structure and in particular on how to ensure fairness.

In the meantime, the Lord Chancellor has taken steps to shield the very poorest from the impact of civil fees. From 1 December, we shall extend the exemption from the requirement to pay fees not only to those in receipt of income support but to those receiving income-based jobseeker's allowance, disability working allowance and family credit.

The reforms will achieve the objective of a modern civil justice system that is faster, cheaper, simpler and fairer than now. It will be a civil justice system in which cases are dealt with at the appropriate level and in which litigants know when their case will be heard, how long it will take and broadly how much it will cost to secure their rights. Such certainty is perhaps the greatest prize of all. Civil justice will no longer be the preserve of the privileged minority. It will be a justice system for all our people.

Modernising the procedures and structures of civil justice cannot by itself break down the barriers that prevent the vast majority of people from having confidence that the justice system is there to guarantee their rights. That brings me to the second leg of the Government's plan of attack. We are determined to make justice affordable, so we must modernise the ways in which legal services are purchased and provided, both for people who are currently helped by legal aid and for those who are not.

The great majority of the population are not eligible for legal aid. They are effectively excluded from obtaining access to justice in our courts. That cannot be right and it must change. In future, legal actions brought by ordinary working people will usually be paid for by way of one of two routes: conditional fees and legal expenses insurance. The Government are proposing to extend conditional fee—or no-win, no-fee—arrangements to most money recovery civil proceedings, except family cases. Clients will be put in a stronger position to negotiate with their lawyers the fees that they are willing to pay to bring a case. At a stroke, legal help will become affordable to deal with disputes with insurance companies, banks, builders, mortgage lenders and pension funds—provided, of course, that the lawyer has sufficient confidence in his or her legal judgment of the case to enter a no-win, no-fee agreement. At last, the vast majority of people will be able to afford to uphold their rights in court if they need to.

Conditional fees are not the whole answer. We must encourage people to plan more carefully for their own needs. We must encourage them to look after themselves instead of assuming that others, including the taxpayer, will be there to bail them out if they run into trouble. We all know and agree that people should save for their old age and insure their houses and cars, but what about insurance for legal expenses? Too often, that seems to fall into the category of things that people do not want to think about. It is too difficult or too unpleasant to contemplate. People convince themselves that they will never need to settle a dispute in court or protect their rights by taking legal action. They believe that legal problems are always someone else's problems. We need to foster a more realistic attitude to legal insurance.

It is not as if legal expenses insurance does not exist. In fact, it is widespread, and provided at a low cost to millions of insurance policy holders. Many people have legal expenses insurance added on to their home or motor insurance. The premiums are often so low that policy holders are hardly aware that they are already enjoying insurance that would allow them to pursue legal action. Legal expenses insurance provides a means for working people to pay for legal actions.

Mr. Tony Baldry (Banbury)

I am sure that the whole House is grateful to the Minister for his explanation, but will he help us with this? As I understand, under the proposals, the legal aid fund will continue. How much does the Treasury expect to spend on legal aid in the first year of the scheme, and what anticipated savings is his Department having to make from the present amount being spent on legal aid?

Mr. Hoon

I shall be indicating in due course that we shall spend precisely the amounts that were previously allocated for legal aid for each of the two years. Part of the difficulty that any Minister has in answering precisely that question arises from the fact that the change will not occur overnight. If Parliament approves the changes to the regulations to allow the extension of conditional fees and the replacement of legal aid in money recovery cases, solicitors who already have a number of cases funded by legal aid will still have them on the first day after the changes, because they will still be being paid for as they go through the legal process.

The changes will only gradually affect solicitors' ways of working as they negotiate conditional fee agreements rather than rely on legal aid. The process will therefore take some time. The savings to the Exchequer will appreciate only over time. That in itself is advantageous to lawyers, because it will allow them a considerable period in which to adjust their ways of working to take account of the new arrangements; it will also allow them to plan sensibly for the changeover. It means that savings to the Exchequer in the short term are likely to be modest.

Mr. Edward Garnier (Harborough)

Nobody could possibly plan on the basis of the answer that the hon. Gentleman has just given. Could he give a little more detail about his strategic overview of future spending plans, following the question asked by my hon. Friend the Member for Banbury (Mr. Baldry)?

Mr. Hoon

I am disappointed to hear the hon. and learned Gentleman say that nobody could possibly plan. Today is an opportunity for lawyers to think about the proposals that we have in mind. They can begin the process of adjustment whenever—if Parliament agrees— they are introduced.

Perhaps I could be practical. Let us deal with an example of a solicitor who, on 1 April—if that is the date—has 100 cases that are all funded by legal aid. Those 100 cases will still be funded by legal aid and will continue to be funded until each one has been resolved. For the sake of illustration, a new case may arise on 1 May that is funded by conditional fee. As time passes, more and more cases will be funded by conditional fees and fewer and fewer, as they are settled or decided in court, will be funded by legal aid. The likelihood is that there will be months if not years of changeover in a solicitor's practice. I should have thought that that would allow solicitors to plan precisely for the future. They are being told now what we have in mind. Clearly, the changes are subject to the will of Parliament, but announcing them now will allow a number of years of changeover before the new system comes fully into effect.

Mr. Dominic Grieve (Beaconsfield)

The hon. Gentleman may have misunderstood the question. What is of interest to me and my hon. Friends is that presumably somebody in the Lord Chancellor's Department has estimated the cost of legal aid after the process is completed in, say, five or 10 years, so that some matching with the eventual saving from the introduction of the new system can be appreciated. I appreciate that it may be difficult to put a precise figure on that, but it would be interesting to hear what the Department thinks will be the cost to the taxpayer and the Government in five or 10 years after the changes have been introduced.

Mr. Hoon

I should make it clear that we shall spend precisely the same amount on legal aid and on supporting legal advice and the systems across the country. If the hon. Gentleman will bear with me, I shall say later how we intend to refocus the savings that we anticipate on other areas of advice and assistance. Essentially, we shall be dealing with precisely the same amount of money, but intend to spend it in different ways and rather more effectively.

Mr. John Burnett (Torridge and West Devon)

I understand that Departments give departmental estimates for three years ahead. I heard what the Minister said this morning on "Today" about legal aid expenditure not being reduced over the next two years. What is the original departmental estimate for expenditure on legal aid for the third year?

Mr. Hoon

Those figures are published in the Red Book. I apologise to the hon. Gentleman, but I do not carry them in my head. If he requires clarification, the figures can be secured for him, or I shall write to him. We do not plan to spend any less on legal aid this year or next as we develop the changes. I hope that it does not take five or 10 years, as suggested earlier, before we appreciate the benefits, in access to justice, that our proposals are designed to achieve. We hope that those benefits will be available more quickly. I recognise that the changeover will take longer, for the reasons that I have given, than other changes in Government funding.

We are aiming for civil justice reform that makes litigation more certain in terms of time, effort and cost, so the insurance market can refine the available insurance products as well as develop new products to meet particular needs.

I come now to the future of legal aid. In broad terms, our aim is to refocus legal aid on the problems of the less well-off and on those who need the law to help them struggle out from social or economic exclusion. We want to concentrate on social welfare issues, and on matters of public interest. The diversion of most money claims to conditional fees, to which I shall refer in a moment, will help, because we can then use the money that would have been used in traditional civil litigation to tackle more effectively areas such as housing, debt, employment, welfare benefits, immigration and matters of broad public interest.

One of Sir Peter Middleton's recommendations that we want to pursue is the idea of a separate fund for public interest cases. It is symptomatic of the new focus that the Lord Chancellor has rejected Sir Peter's recommendation that people should have to pay an up-front fee to get legally aided representation, no matter how poor they may be.

The legal aid scheme must be transformed. Rather than being a machine primarily for paying lawyers' bills, it needs to become a positive instrument for buying the services that people need. For that reason, the Government have accepted Sir Peter Middleton's recommendation that publicly funded legal services should be provided under contracts.

Contracting offers huge improvements. It will promote fair competition. For the first time, suppliers will have real incentives to look carefully at the quality of their services and the prices that they charge in order to secure a contract and be able to provide legally aided services.

On the quality front, the Legal Aid Board's franchising standards already provide a sound foundation, but in addition I would want to see the results of cases measured—especially against the prediction of success. If a lawyer predicted success but too often lost the case, the board would be able to draw the line and stop buying services from that particular lawyer. I have no doubt that, with the help of its suppliers, the board will be able to develop new ways of measuring and assuring the quality of the services that are provided.

Competition should also lead to improved efficiency. The Legal Aid Board will be able to buy the services that people want at competitive prices, which will be agreed in advance. In that way, we shall be able to make the money go much further, pound for pound, in giving help to those in most need.

Contracting will also provide the way for bringing new types of services into the legal aid scheme. A contracted scheme will allow the board to purchase alternatives to lawyers' services and those of the courts. We are already piloting contracts with advice agencies and mediators, and in the longer term I see no reason why legal aid should not pay for other alternatives to traditional legal advice and representation.

Finally, contracting—when harnessed to a planning mechanism—will allow us to ensure that the available resources are concentrated on cases with the highest priority. The Government could then give guidance on the categories of case that they regard as being of high priority. Obvious examples would be domestic violence, cases involving the protection of children or the maintenance of a roof over a family's head.

Mr. Jeremy Corbyn (Islington, North)

On the question of housing, will my hon. Friend's proposals allow legal aid only in cases in which a family is threatened with homelessness, but not in cases of disrepair that is the fault of a local authority or another landlord?

Mr. Hoon

That is not the case, and I shall deal with the point in a moment, if my hon. Friend will bear with me.

The regional legal services committees, which we are already putting in place, would advise on local needs and priorities and the best way of meeting them. It would then be for the Legal Aid Board to use the money allocated for civil and family legal aid to produce a plan showing the contracts that it would grant to reflect both national priorities and local considerations. Once agreed, the resulting contracts would be put in place.

I now come to the ingredient in our reform of legal aid that will have the most immediate effect and which perhaps has attracted most attention. Whatever our new power to use contracts to buy the right services at the right price for the right people and whatever the efficiencies that we achieve, we have to recognise that there is no new money. We have to recognise that resources are always likely to be scarce and to be exceeded by need, or at least by demand. It follows that we should not be spending legal aid on cases when there is an alternative that is just as good. For that reason, the Government have concluded that legal aid should not usually be available to people claiming damages or financial compensation.

We have reached that decision in the belief that conditional fees are a viable alternative even for poor people and that the money currently spent on such cases can be better spent in providing help where there is at present no viable alternative. The result will be that, overall, poor people will receive more, not less, help. Further, by a side wind, we shall have made litigation fairer, because under a conditional fee arrangement, opponents will get their costs back if they are successful. That is a piece of simple justice at present denied to the opponents of legally aided parties.

Given that win-win outcome, both for the poor and for the broader public, the reactions of the legal professions have been depressingly, but all too predictably, hostile. Over the past half-century, the professions have become heavily dependent on taxpayers' subsidies, which allow them to avoid shouldering risk, but which guarantee profit. Those subsidies allow them to profit by taking on cases that no private person in their right mind would pursue. The subsidies also support inefficiencies in the way in which lawyers conduct and structure their businesses.

Of course, many lawyers want the subsidies to continue alongside conditional fees, so that they will still be paid, win or lose, under legal aid and be able to charge mark-up profits for the sure-fire winners that they take on conditional fees. For many lawyers, that position is rational in its self-interest, but not, I suspect, for the rest of us.

Since the Lord Chancellor made it clear at the Law Society conference in October that conditional fees will be extended and substituted for legal aid in most money claims, the real world has been on the move. The insurance industry is speaking to the Government and also to lawyers. The talk is of new ways of doing business; of insurance to cover a wider span of proceedings; and of ways to enable people to use conditional fees without having to pay an insurance premium up front.

I also hear, for example, that since the announcement, courses offering solicitors training in risk and project management have been heavily subscribed. What I hear is of go-ahead lawyers, insurers and others talking about a new world that is opening up and how they will meet the challenges and seize the opportunities. Dare I suggest that the dilemma facing the Law Society is that some of its more forward-thinking members may welcome all, or most, of the proposed changes? I note, for example, that— while the opening comments of the Solicitors Journal of 7 November bewailed the changes—on the back pages, a practising lawyer, who teaches on the master of business administration course at Nottingham law school, was claiming that it is "Time Gentlemen Please" for the legal professions. He said that the Government's proposals should be applauded and that the legal professions have been rumbled … for the intrepid, the future holds enormous opportunities". Let us come down to some hard detail. Those who oppose substituting conditional fees for legal aid do so on three grounds. The first is that some cases by their very nature are not suitable for a conditional fee. Most commonly cited are landlord and tenant cases and dependants. The answer is that those cases will continue to receive legal aid unless someone can convince us that they could attract a conditional fee or should be excluded for some other reason. I hope that that satisfies my hon. Friend the Member for Islington, North (Mr. Corbyn).

The second concern is that conditional fees will not be available for some cases that receive legal aid now, especially not those with a low chance of success. That is true, but I cannot see how it is fair to help people who are less well-off to sue under legal aid in cases in which working people, whose taxes help pay for legal aid, cannot sue. I also cannot see why it is a criticism that our changes will keep weak cases out of the courts.

Finally, it is alleged that the less well-off will not be able to afford the up-front costs of investigating cases and of insuring against the risk of having to pay the other side's costs if their lawyers lose the case. That is an insurmountable obstacle only if it is assumed that the current arrangements are set in concrete, but they are not.

The question that I believe needs answering is why it is assumed that it is the client who has to pay those costs up front. Why should not they be borne by the solicitors and included as part of the no-win, no-fee arrangement? I am told that some solicitors already meet the insurance cost. Provided such solicitors are part of busy firms that are efficient and competent at risk assessment and management, I do not see why they should not pay and manage that extra cost and risk by adjusting their prices or even purchasing insurance themselves.

Mr. Robert Marshall-Andrews (Medway)

While my hon. Friend is on the subject of insurance, will he tell us in detail what discussions have taken place between the Lord Chancellor's Department and the insurers about the premium burden? I apologise for this early intervention if he had already intended to do so.

Mr. Hoon

There have been meetings between the Lord Chancellor and representatives of the insurance industry. More significantly, we have had a series of meetings between my officials and the insurance industry, and the industry showed considerable interest in the prospects on offer.

In particular, I refer my hon. and learned Friend to what I said about streamlining the civil justice system. The biggest single difficulty facing the insurance industry in providing cost-effective insurance is the fact that it cannot predict with any accuracy how long cases will take or how much they will cost. When we streamline the system and add predictability, when we suggest to potential litigants, and therefore to their insurers, the likely costs involved in cases, insurance becomes practical and possible for most people. That is the virtuous circle at which we aim.

Mr. Marshall-Andrews

Is that all the information that my hon. Friend intends to give us on the subject?

Mr. Hoon

That is all the information that I intend to give at the moment. The discussions are continuing; I have said that we are consulting on the subject with the legal profession and the insurance industry.

I want to make it clear that the changes will not benefit the poor alone. Without the requirement to meet up-front costs, conditional fees will make the law more easily accessible to everyone. That is why officials are pressing ahead with further analysis of the business case to see how, in the absence of legal aid, lawyers will have to change the way in which they do business so as to be able profitably to take on cases on behalf of the less well-off.

The House may think that the real obstacle to access to justice here is not the long-suffering taxpayers' unwillingness to continue to subsidise the lawyers, but rather the way in which lawyers choose to conduct and structure their businesses so that their clients—or in legally aided cases, the taxpayers—bear all the risk, while the lawyers take the profit.

Mr. Mitchell

I do not want to spring to the defence of the legal profession, but, despite my hon. Friend's criticism of legal aid work, many small firms are devoted defenders of the rights and claims of the people, and so devote themselves to legal aid work. Those firms will be badly hit by a conditional fee system, because such a system demands scale, so that the risk can be spread over more cases. It demands fat firms, whose fat will enable them to sit out the waiting periods, so it will penalise the very firms that now do the most devoted and effective work for the people.

Mr. Hoon

I do not entirely accept the way in which my hon. Friend makes his case. If a firm is competent and specialises in a particular area, nothing in our proposals will interfere with that. Indeed, our proposals will encourage specialisation. If my hon. Friend seeks to defend the kind of firm that does a bit of this and a bit of that, and tries to be competent across a wide range of what have now become complex areas of law, I do not agree with him; I do not think that that is sensible. What is sensible for lawyers is to develop specialisation, and that can be done by small firms as well as by large ones.

Mr. Garnier

What study has the Lord Chancellor's Department, or the Minister personally, made of the financial worth of firms of solicitors that practise predominantly legal aid work, outside the big firms in the City of London and in the other conurbations? Has he any idea of the financial standing and ability to borrow of small firms of provincial solicitors?

Mr. Hoon

As I have said, we are considering such issues in our consultation. I am sure that we shall receive representations from the Law Society and others on the subject. As I have also said, the proposals will be introduced over quite a long period, which will allow solicitors the opportunity to adjust their business management to a new reality.

I am surprised to have to remind the hon. and learned Gentleman of the fact that firms of solicitors are in business; they are in private practice as commercial operations. We are offering them the opportunity to extend those commercial operations to new categories of work that have not previously been economic. I am surprised that the hon. and learned Gentleman does not welcome that.

Mr. Graham Brady (Altrincham and Sale, West)

Is the Minister saying that he does not believe that the small general practice in a small town has an important role to play in providing a service for that community? Surely specialisation is not always possible or appropriate.

Mr. Hoon

I am not saying that at all. Small firms in small towns, as the hon. Gentleman says, make a considerable contribution to the community. However, when we seek to allocate scarce taxpayers' resources in the form of legal aid, they should be allocated to specialists—to those who are competent to practise in particular areas. That is how we intend to develop legal aid through contracting.

I shall set out for the benefit of the House some figures for the main area of litigation about which concerns involving investigative costs and insurance are most commonly voiced—medical negligence cases. Let us look at cases concluded in 1996–97 and funded by legal aid. May I remind the House that lawyers, supported by legal aid, were paid in every single such case that finished in that year, whether it was won or lost?

However, in only 17 per cent, of cases did the client receive damages of more than £50; 83 per cent, of clients got either nothing or next to nothing. Moreover, when we talk about legal aid, it is important to remember that many clients have to pay substantial contributions towards the cost of the legal aid certificate—and among those who paid contributions towards their legal aid, 70 per cent. failed to recover all or part of those contributions.

In addition to the uncertainty and anxiety associated with litigation, people were required to contribute an average of about £420 towards the legal aid, and that money was not recovered. At the end of the day, people were therefore receiving nothing at all from those cases; instead, in 70 per cent. of them, they had to pay an average of £420 towards the costs.

Mr. Grieve

rose—

Mr. Hoon

First let me finish my statistics, but I shall give way in a moment.

If we exclude the top 32 cases, which recovered £500,000 or more, the average damages awarded are £4,107, at a cost to the taxpayer of £4,122. In other words, for every pound the client receives, the lawyers get a pound, too. The total cost of medical negligence cases to the taxpayer was £54 million, of which only half was recovered.

Mr. Grieve

First, the Minister says that legal aid encourages people to litigate irresponsibly, then he starts to criticise the fact that clients who have made their own contributions to legal aid do not get their money back when the case fails. Is he suggesting that those people have not been properly advised by their lawyers?

Mr. Hoon

Yes, I am suggesting precisely that. As the hon. Gentleman knows, before legal aid is granted, a lawyer is required to certify that the case has a reasonable prospect of success. There cannot be a reasonable prospect of success when 83 per cent. of cases produce less than £50 for those who have been so advised. Furthermore—this seems to me deeply disturbing for those in receipt of legal aid certificates—clients are paying an average of about £400 for the privilege of losing their cases. That does not sound to me like great protection for some of the poorest people in our society.

Mr. Garnier

Perhaps some lawyers are giving bad advice; that idea is not controversial—but has the Minister analysed the reasons behind the figures that he has given us? I do not deny that those figures are accurate, but the Minister has given us no analysis of the reasoning behind them.

Mr. Hoon

I am sorry if I am being slow this morning, but I would not have thought it necessary to give those figures much analysis. The analysis is clear: lawyers are encouraging people to take cases that have no reasonable prospect of success. Otherwise the statistics would be better, would they not?

Mr. Garnier

Does the Minister know that for a fact as a result of research, or is he simply making an assertion?

Mr. Hoon

It may be that I got up too early this morning, but, to me, the facts speak for themselves. If it is necessary before a legal aid certificate is granted for a lawyer to assert that the case has a reasonable prospect of success and if, in 83 per cent. of those cases, £50 or less is recovered, it would seem that lawyers are not exercising their professional judgment responsibly. If there had been privately paying clients in those cases, I suspect that the statistics would have been different.

Mr. David Lock (Wyre Forest)

Does my hon. Friend agree that society pays a much higher price for three reasons? First, the strain on unsuccessful litigants is appalling—their hopes are raised, then dashed. Secondly, sparse NHS resources are tied up in defending unmeritorious claims. Thirdly, doctors pursued by such unmeritorious claims are developing defensive medicine, involving unnecessary tests and investigations, to avoid such litigation—thereby wasting further sparse NHS resources, which could be better used on treating the next patient in the queue.

Mr. Hoon

My hon. Friend makes the point much better than I have laboured to do, and I entirely agree with his observation.

Mr. Brady

The Minister clearly feels that a 17 per cent. chance of success is not reasonable. What percentage would he regard as reasonable?

Mr. Hoon

I assume that the hon. Gentleman does not agree with my analysis, which disappoints me. I should have thought that a reasonable prospect of success was at least 50 per cent., but, as he will know, the Lord Chancellor has indicated that we should have a still stricter test. I am perfectly willing to concede that, had the existing test been operated successfully and had legal aid supported only cases with a reasonable prospect of success, the proposed changes would not have been necessary. We could then have relied more on the judgment of lawyers than we are able to, and that is why we are proposing a stricter merit test for the granting of legal aid.

Mr. Grieve

I am most grateful for the Minister's willingness to follow this line and to have a dialogue. By their very nature, medical negligence claims have always proved to be exceptionally difficult, and that is why the proportion of success is so low. I should be interested to hear how the generality of personal injury litigation has operated under the legal aid system, as I think I am right in saying that it pays for itself.

Mr. Hoon

The generality of personal injury litigation is clearly a success story with regard to legal aid. Nevertheless, its cost to the taxpayer is still about £75 million, so work could still be done to reduce the costs of that success story.

Mr. Corbyn

May I take my hon. Friend back to the question of medical negligence cases? In my experience, many people who go through terrible pain after an alleged failure by a hospital and who seek legal aid to get redress are challenged by the Legal Aid Board and do not get it. Therefore, they cannot pursue the case. In many legal aid cases, there is almost a conspiracy, as medical superiors get together to stop any real pressure on the health service or on doctors in negligence cases. The very threat of legal action can improve hospital procedures, and militating against it—as my hon. Friend appears to be doing—will lead to the covering up of medical neglect in hospitals.

Mr. Hoon

My hon. Friend makes a good point about the operation of the legal system, and clearly the threat of litigation ensures that agencies in society behave properly. However, I am not sure that his case is assisted by the statistics that I have set out. With so many cases producing no return for plaintiffs, it is clear that the taxpayer is supporting a considerable number of unmeritorious actions.

Mr. Corbyn

My hon. Friend has been most kind in giving way. What studies has his Department done on medical negligence and the ways of resolving these problems? In various disputes around the country, poor people do not seem to get a hearing—if one is rich, one gets a hearing; if one is poor, one does not.

Mr. Hoon

I entirely accept my hon. Friend's proposition, if not his conclusion. It is important that we work with our colleagues in the Department of Health to ensure that cases are conducted satisfactorily, but, as my hon. Friend the Member for Wyre Forest (Mr. Lock) said, it is not simply the costs that are a problem. The harsh fact is that injured people, sometimes children, are dragging their way through the courts and the misery of litigation—often for years—and, in the end, nothing is achieved for them. Meanwhile, money that could have been spent on the care of the sick and the injured is being gobbled up in legal aid. I am sure that my hon. Friend will agree with that analysis.

My officials are in contact with a large range of interests, covering consumers, the less well-off, lawyers, insurers and others. In due course, we shall issue a consultation paper, covering both the extension of conditional fees and their substitution for legal aid. We hope to be in a position to bring orders before the House in the first half of next year, giving effect to our policies on those points.

That is our vision of legal aid. Contrast that with the current scheme, in which the cost has tripled to £671 million in seven years, spending has outstripped inflation and the number of acts of help has gone down by 39,000. Legal aid should be helping more people, not fewer. Down that road there is no prospect of, say, extending legal aid to public interest cases, or of providing representation in the more complex benefits or employment cases.

Instead, we can create new and better ways to provide legal help. We can respond to local and community needs. We can ensure that the central objective will be to use the law to enable people to secure their place in society. We shall have a world where the law will play its proper part in providing the poor and the excluded with a hand up, so that they are better placed to look after themselves and their families, and to play a full part within their communities.

In my travels around the country to see what services could be made available to meet people's needs, I visited the Catholic housing aid service in Huddersfield and the Chesterfield law centre. While I was there, I met some of the dedicated people who are working to provide advice and assistance to those in most need. Despite their efforts, and those of many others working in this area throughout the country, it is clear that there is still a significant unmet need—that people with good causes and real problems are falling through the net, unable to enforce the rights to which we should all have access. The provision of advice and assistance is fragmented and, as a result, there is a lack of consistency or effective geographical coverage. Carlisle law centre tells us that it gets people coming in from Barrow, and even from Scotland, seeking help that it is unable to give.

It was as a result of our awareness of the problems that our manifesto made a commitment to develop a community legal service. I know that that is a subject which has aroused a great deal of interest, and many people both inside and outside the Chamber would welcome details of how we intend to fulfil this commitment—the creation of a community legal service.

I am sure that hon. Members will all have their own ideas of what such a service might provide—telephone helplines, education in rights and obligations, legal advice on the internet, referrals to alternative dispute resolution, legal representation in tribunals, access to a group of salaried lawyers, interactive kiosks in every high street giving information about the legal system and the law, training in dispute resolution skills and access to judges by video link. I could go on, but those are just some of the ideas that have been put to us. We know that there are more that are worth exploring.

We are determined to identify the ideas that offer the best opportunities to provide services more effectively to a wider group than can be helped by the current system. To do that, we have to start with an open mind—we have to start by listening. Among hon. Members here today, there is a wealth of experience from constituency surgeries of the kind of problems that a community legal service might attempt to resolve. I should welcome any ideas that hon. Members might have—however novel, however radical.

I am able to tell the House that a specific project team has been set up in my Department to help us take that work forward. It is already receiving letters every day from an enormous range of people and from large and small organisations throughout the country, expressing enthusiasm for the project and a desire to participate in it. We shall be meeting those people and organisations in the coming months, to hear what they have to tell us and to explore what they think a community legal service ought to do. We believe that that is the best way to achieve a community legal service that will truly meet the needs of the community.

As I said at the beginning of my speech, the Government's plans for legal aid and civil justice must be considered together. They are not separate programmes, but two interrelated halves of a single package. The civil justice reforms will produce faster, simpler and cheaper access to justice for everyone. The extension of no-win, no-fee agreements and the reform of legal aid must be considered against that background. We are talking about a new legal landscape for the future.

Together, the modernisation of civil justice and the reform of legal aid will complete a virtuous circle. The lower and more predictable the cost of litigation, the better, cheaper and more widely available will be legal expenses insurance, the more will conditional fee agreements and linked insurance flourish, and the more we shall get for the money that we spend on legal aid. At the same time, through the community legal service, more of our citizens will get the help that they need to solve their problems. Civil justice will, at long last, exist to support the rights of all the people—not just the very rich with deep pockets and the very poor receiving legal aid.

10.30 am

Mr. Edward Garnier (Harborough)

I must begin by declaring an interest as a practising member of the Bar.

Mr. Corbyn

And a fox hunter.

Mr. Garnier

And that as well. The Parliamentary Secretary, at least managed to keep the hon. Member for Islington, North (Mr. Corbyn) awake, even if he did not manage to keep him on message.

This debate on the review of civil justice and legal aid represents the first occasion since the Lord Chancellor's speech at the Law Society conference on 18 October in Cardiff to consider his proposals for the reform of legal aid. I will examine those in some detail shortly, but legal aid reform is not the only reform under discussion.

Perhaps the most obvious place to start is Lord Woolf's report on the civil justice system, "Access to Justice", which was published in 1996. That report, which was requested by the previous Government, produced a large number of recommendations and conclusions, all of which bear careful thought and many of which will, we hope, increase access to justice, reduce the cost of litigation and increase the speed at which justice is achieved. There is no good reason to suppose that speed and efficiency are inimical to justice.

What the public want—be they rich or poor, or part of that group that is now called middle England—is that the civil justice system should provide ways to resolve their civil disputes and get to the heart of the problem, dealing with them quickly, painlessly and cheaply. That is certainly what my clients want, be they plaintiffs or defendants, and just because the field in which I practise—defamation—is outside the ambit of legal aid, it does not follow that my clients are unrepresentative of other classes of litigant.

Clients want the same clear information that anyone would want when deciding to make a large commitment of their time, energy, emotion or money. They want to know how long a case will take, what it will cost, what will be required of them as the case progresses and what will be the likely result. They also want to be told the answers to their questions in language that they can readily understand and in a manner that understands them and the intense and unusual difficulties that they are faced with. For us lawyers, litigation is a common occurrence, but for the public it is something which, should they face it at all, they will face only once in their lifetime. They want to know that, at the end of the ordeal, they will have a reasonable chance of achieving what they set out to do and that the cost in time, money, energy and emotion will be proportionate to the achievement.

Irrespective of how people find their way into the civil justice system, they need to be able to understand it and to feel that it makes sense. They may need help to use it. They want that help to be local, accessible and affordable. They want it to be tailored to their needs and capabilities. They want a choice of ways in which to resolve their problems and to help to choose what will work best in their case. They want lawyers to be problem solvers and not mere purveyors of the law.

Some problems will need a strong dose of adversarial justice, but a good many will not. In short, people with civil disputes want information, choice, as much certainty as can humanly be provided, help and guidance, and a justice system that does not frighten them or treat them as inconveniences, interfering with the daily lives of courts, court staff, judges or lawyers.

One of the great strengths of Lord Woolf's report is that it expressly attempts to look at the civil justice system through the eyes of ordinary people. The theme running through the whole of his necessarily lengthy report is how we can make the civil justice system better for the public. What are we doing that makes it difficult for the public to understand or to achieve justice?

I welcome and applaud that, just as I agree with Lord Woolf's analysis of what a civil justice system should do. He said that it should be just in the results it delivers and fair in the way that it treats litigants. It should offer appropriate procedures at a reasonable cost, deal with cases with reasonable speed, be understandable to those who use it, be responsive to the needs of those who use it and provide as much certainty as the nature of particular cases allows. It should be effective, adequately resourced and organised.

Today, the House should consider how the Government's proposals largely to abolish civil legal aid square with those aims. In so far as the present civil justice system fails to achieve them, it should be changed so that it does achieve them. There is broad support for the thrust of Lord Woolf's report in the legal profession, the judiciary and the consumer protection and interest groups that are best able to articulate public opinion on the matter.

A period is now required to work up the Woolf proposals, to test them in the real world and to adjust them in the light of experience. If the Government take those proposals forward constructively and in a way that is conducive to the overall public good, they will have the Opposition's support. If they do not, they will not have our support, and they cannot expect to have it either.

The Government recently received the Middleton report, which reviews civil justice and legal aid. It appears that they are not prepared to accept Sir Peter Middleton's advice in every respect. Of course, Governments and their Ministers do not have to accept advice for which they have asked and which is a result of careful consideration of the issues, but when they do not do so they should explain why, and be prepared for the House to scrutinise their decision in public. Today is the first occasion on which a Minister from the Lord Chancellor's Department has condescended to do that.

Why have the Government decided not to allow conditional fee arrangements and legal aid to run alongside each other while they are monitored and the Government methodically create incentives to use CFAs in preference to legal aid, as Middleton recommended?

Why have the Government not accepted Middleton's recommendation that legal aid should be made more widely available for certain types of alternative dispute resolution? What about fixed costs and fast-track proposals? We are told that the unit cost per case in the civil justice system has been growing alarmingly. The Government cannot—or, at least, will not—tell us why. What are they doing to find out why?

Some of the most important aspects of the Woolf reforms come together in the fast track, including criteria for allocating cases to the correct track, earlier directions about how the case will proceed, a strict timetable, automatic sanctions for not keeping to the court's directions and fixed costs for various stages of the case. It is a lot to get right all at the same time. For ordinary people, a real concern is how clients' care will be affected by streamlined procedures. Will clients be consulted more or less? Will they be kept informed?

Mr. Hoon

If society is paying more for fewer cases, is it not obvious what is happening in court?

Mr. Garnier

The hon. Gentleman tried that line a moment ago. He gives an answer that he assumes provides the reasoning behind it; the background to that question demonstrates precisely the same problem. Unless he analyses what he is saying and unless he knows the reasons for his assertions, he will not be believed and he will become the incredible Minister.

Middleton advised that the Government should let the fast track bed down before imposing a fixed-cost regime on it. That seems logical, but that advice has been rejected in the rush to get the fast track up and running. This may be a case where speed is inimical to justice. It would be a shame if the fast track floundered because of unnecessary haste, or if it wound up not being as good as it could be for consumers. The fast track needs piloting, or at the very least, a period in which to develop a cost regime, as Middleton suggested.

Mr. Lock

I am waiting for an explanation of why the hon. and learned Gentleman is proposing, if indeed he is, that we run conditional fees alongside the existing legal aid scheme, and how he proposes to prevent lawyers from cherry picking so that they take the cases that they want with the add-up fees, but the cases that they do not want have to be financed by the taxpayer. Is that really what he is suggesting?

Mr. Garnier

The hon. Gentleman fails to understand that we are debating the Government's proposals. If he wants to support them, he will in due course no doubt make a wonderful speech giving the justification for his support.

Mr. Andrew Robathan (Blaby)

I am grateful to my hon. and extremely learned Friend for giving way. He is making some very good points. As he will know, I am not a lawyer, so I find spats between lawyers, such as we are witnessing today, slightly amusing. Was it only my impression that during the last Parliament we suffered Labour Members calling the whole time for more money for legal aid? Is it not bizarre, then, that we end up with these proposals, seemingly denying access to legal aid to the vast majority of people in this country?

Mr. Garnier

My hon. Friend may not be a lawyer, but he is a man of considerable perspicacity. The Government have been so overcome by U-turns that their whole policy machine has become strangulated. I fear that we will have to put up with more of this over the next few years.

The Government have rejected Middleton's advice on small claims. Middleton was clear that the present limits on small claims in the fast track should be raised only when the system had proved itself. There are two key elements to small claims: the soundness of the procedure itself, and the help and advice that people need to use it effectively. The higher the small claims limit, the better the procedure needs to be and the more help people will need to use it.

Because, at present, people have access to only very limited help with a small claim, it is hardly surprising that Professor Baldwin's research showed that, although satisfaction is high, the help goes mainly to middle-class individuals suing other middle-class individuals. He said that the genuinely poor made few appearances in small claims hearings.

Further research by Professor Baldwin, soon to be published, will examine the impact of raising the small claims limit from £1,000 to £3,000 last year. Until we know that the procedure is being used happily by a wide range of people, it is difficult to see the logic of rejecting Middleton's advice to proceed with caution.

Raising the small claims limit so dramatically, at the same time as withdrawing legal aid from all money and damages claims, will inevitably produce a sharp increase in the number of litigants in person. The civil justice system needs to be ready for them. Both Woolf and Middleton were very clear that more help and information, not less, were needed by court users, and especially litigants in person. Do the Government have any idea of the cost implications?

Perhaps most importantly, Middleton did not recommend wholesale removal of money and property claims from civil legal aid. The Bowman review of the civil division of the Court of Appeal was published in September in response to a request from the previous Lord Chancellor in October 1996. That report—a document which repays careful study—recommends ways of improving the way in which the civil division works, so that it can deal with its case load more quickly and give better access to justice.

The Lord Chancellor's proposals for the reform of legal aid were announced in Cardiff on 18 October. He began by saying that he was there to announce an integrated package of proposals, on every one of which I intend to consult the profession. He said: Change is on its way, and the best thing to do with change is to manage it through consultation and in a spirit of consultation. Have we seen, or rather felt, the spirit of consultation moving among us? Has a great trumpet blast been heard announcing that the consulter general has come among us? I think not.

In the days before the Cardiff speech, the Government propaganda machine was letting selected home affairs correspondents know what the Lord Chancellor had up his sleeve, but he clearly did not think it appropriate to let legal correspondents know, let alone take the leaders of the profession or other interested consumer groups into his confidence.

The only problem is that the Lord Chancellor's spin doctors cannot have been much good, because headlines such as that in The Mail on Sunday Consumer anger at 'bully boy' reforms followed. There is a rather endearing little picture, with the caption "Accused: Geoffrey Hoon", showing the Minister looking like a dog food salesman, perhaps, or someone who is saying, "Not me, guv, I'm innocent."

Unfortunately, the text of the article says: Ministers are facing a consumer group backlash against plans to shake up the legal aid system. Deputy Lord Chancellor"— I congratulate him on his promotion, although it is not as grand as the way in which he answered a written question the other day, assuming that he was, in fact, the Lord Chancellor; perhaps by next week he will be down to Parliamentary Secretary, Lord Chancellor's Department, and there will no doubt be a party to welcome him and celebrate that great move— Geoff Hoon has been accused of bullying tactics in private meetings with campaigners over the most sweeping reform of the legal aid scheme since its introduction 50 years ago … An unprecedented alliance of the Law Society, the Bar Council, the Consumers Association, National Consumers Council, Justice, the Legal Action Group, Action for Victims of Medical Accidents and Liberty has lined up in favour of major changes to the proposed reforms. If that is the result of the spin doctors' efforts, it is quite an achievement.

The Lord Chancellor does not appear to want to hear others' views, if The Times on Wednesday is anything to go by. It says: Undeterred by opposition from the legal profession and the consumer lobby, they plan to issue a consultation paper in January or February that will carry first details … On Friday"— that is, today— the Government will deliver a strong message in a debate in the Commons that lawyers' opposition to the reforms stems from their fear of losing a former subsidy. A senior official said: 'I don't think any profession would be comfortable with having a subsidy taken away from it.' Solicitors had been able to run cases 'win or lose' he said. Ministers and officials reject claims by the Law Society, the Bar and consumer groups that changes would hit the poor and that the insurance market was not ready to provide affordable premiums for cover that people would need to protect themselves against paying an opponent's costs. Officials are in talks with several insurance companies. They insist that unless the Government shows that it is determined, the insurance market will not step into the gap. 'Nothing less than radical change and being resolute will ensure this happens,' one said. Ministers will make it clear that until they can control the legal aid budget, they cannot free funds for a community legal service or for areas such as industrial tribunals. There we have it: the result of the consultation is announced in The Times before we have even had this debate.

The Minister attracts opprobrium not only from The Times and The Mail on Sunday. An editorial in the November 1997 edition of Legal Action, not a magazine which naturally favours the Conservative party, says— [Interruption.] The Minister laughs, but this is a serious social issue. Perhaps we can draw some conclusions about his and his officials', as well as the Lord Chancellor's, attitude to the whole question. The editorial says: Examining, actually, what Lord Irvine said and meant is obscured, here as elsewhere, by excessive spin doctoring. Media manipulation may have won Labour the battle of the election, but it is in danger of losing the war of government. Ministers trailed their pre-release interpretation of policy in the speech to the Mail on Sunday and the Times, a well-rehearsed routine under the previous administration. To this was added intervention by Number 10's own press office on the day before Lord Irvine spoke. Presumably, the need to massage the message accounted for a surely ill-judged silence after the speech was delivered. On the edge of discourtesy, Lord Irvine refused to join a question and answer session after his speech, for which he had been booked, or even to give a press conference. Thus we are left with the pre-match hype and the text of the speech … This was structured around the presentationally challenging theme that allowing lawyers to double their fees for a wider range of litigation was a victory for middle-income Britain's access to justice. The editorial goes on to refer to Philip Stephens, who wrote in the Financial Times mat Lord Irvine's proposals were 'not so much New Labour as Old Treasury'. It continues: The introduction of a requirement to take account of available resources appears to be in flat contradiction to his previous views. He then objected to proposals under which 'legal aid would cease to be a benefit to which a qualifying individual is entitled [and] … in practice, become a discretionary benefit'. What is wrong with the legal aid system? The Lord Chancellor says that it has become a leviathan with a ferocious appetite and that litigation is too expensive, for both the legally aided and the unassisted litigant. He says that he wants to throw open the doors of the justice system to all who want to enter and that the civil justice system should be open to everyone, not only the very rich and the very poor. He says that expenditure on legal aid in 1990–91 was £682 million and that only six years later it had gone up to £1.4 billion, an increase of 115 per cent.

Then, with staggering perception, the Lord Chancellor exclaims that 90 per cent. of the legal aid budget goes mainly on lawyers: a remark which is as useful to the analysis of the problem as the statement that the education budget goes on teachers' salaries. He says that in the past four years average payments in legal aid have increased by more than 43 per cent. and the number of people helped has gone down by 9 per cent. He says that the taxpayer is paying more for less.

Mr. Mitchell

The Conservative party can claim some credit for increasing legal expenditure by pushing up the crime rate so much.

Mr. Garnier

I am disappointed in the hon. Gentleman, who has made a sensible contribution to the legal aid debate, not least in his in Adjournment debate on 5 November. Labour Members would benefit from reading that. I will not demean him by paying attention to his silly comments.

The Lord Chancellor has not asked which parts of the civil legal aid budget are costing more or are increasing disproportionately and to what extent they impact on the overall figure. Will his proposals get to the root of the problem that he describes? Is he aiming at the right target to control this aspect of public expenditure? It is not only civil legal aid that is growing wildly and leaving the taxpayer badly out of pocket. Criminal and family law legal aid are the two biggest culprits; they are responsible for the biggest increase in the budget, and public expenditure on them is rarely recovered. The Lord Chancellor seems to have no plans to restrict or alter legal aid in those spheres.

The Children Act 1989 alone is responsible for a massive increase in legally aided cases, in which both opposing parties are often legally aided and represented by senior lawyers. Of course, sometimes top lawyers are essential if the legal and evidential issues are to be properly explained and tested. What analysis has the Lord Chancellor's Department done to discover whether the legal aid fund is being sensibly deployed in family, divorce and custody cases? We have not been told of any.

Some litigants are granted legal aid for cases with no or very little prospect of success. In such cases, there is an equally low chance of recovering costs from unassisted parties. While there is an exceptionally high success rate in most civil legal aid cases, some sorts of case do not have a good record. More can and should be done to ensure that legal aid is not granted to undeserving applicants. We know about the high success rate in civil legal aid cases, but the rate would be higher still if unmeritorious claims were not supported by public funds.

The problem is illustrated by immigration law. The divisional court hears hundreds of immigration cases that have no merit. The judges who sit in that court constantly complain that legal aid is granted to bring hopeless cases, but the problem continues. Most disturbingly, most, if not all, such cases are supported by legal aid because solicitors or counsel have advised that they have a reasonable prospect of success.

Mr. Grieve

Does my hon. and learned Friend agree that a feature of the civil legal aid system that is particularly relevant to medical negligence is the number of cases where lawyers are reluctant to allow knife-edge cases to proceed and legal aid is withdrawn? Clients then appeal and the Legal Aid Board restores the legal aid certificate. It may not be wholly correct to suggest that lawyers milk the system by giving bad advice. The Legal Aid Board should consider its internal mechanisms if it wants to ensure a higher success rate.

Mr. Garnier

My hon. Friend makes a good point well. As a matter of law, the Legal Aid Board is entitled to override such advice if it considers it to be wrong, but it is not so easy to do in practice.

The board's resources mean that it must rely on the assessment of the strength of cases made by the applicant's lawyers. If a counsel's advice is overridden, the board risks facing judicial review proceedings. It has been attempting to do something about the problem, and has taken to making complaints to the Bar Council in the most obvious cases, and endeavouring to consider more closely initial advice in immigration cases. It must be doubtful whether much headway can be made under the present arrangements.

The Lord Chancellor's response has been to strengthen the legal merit test by insisting on a 75 per cent. chance of success. I fear that that does not address the problem. Incompetent or greedy lawyers will not find it more difficult to advise that a case has a 75 per cent. chance of success than a more than 50 per cent. chance. Competent lawyers will advise against legal aid in cases that are more likely to succeed than fail. The grossly unmeritorious claims that presently fall through the net may continue while more meritorious ones will never be advanced.

What steps do the Government propose to ensure that the guilty who can afford to pay have to pay for their legal representation? What steps are they taking to ensure that thorough inquiries into the means of defendants are made before legal aid is given to British and foreign defendants in criminal cases?

Much work needs to be done before the Lord Chancellor can say with confidence that abolishing legal aid in money and damages recovery cases is the best way forward. In response to his desire to cut the growth of the legal aid budget, he has decided to abolish legal aid for the very part of the legal aid budget that more or less breaks even. Some, including the hon. Member for Hendon (Mr. Dismore), an experienced personal injury solicitor, say that it makes a profit for the Government. The proposals will not save any money. Indeed, the Lord Chancellor has stated that he does not intend to cut the legal aid budget. The Minister confirmed that on the "Today" programme this morning.

From April 1998, the public will have the benefit of conditional fee arrangements in all civil proceedings except family cases. There are three essentials for CFAs to work: high predictability; a high level of success; and a sufficient level of damages to allow for a success fee for the lawyer. Only personal injury cases will provide all three, and only some of those cases at that. Can the Minister cite any example of a CFA being used in an insolvency case or in a case to the European Court of Human Rights? If he can, what was the result, both in terms of legal costs and of end result?

Let us assume that the concept of CFAs should be considered more widely. Will they have the effect that the Lord Chancellor's says that he wants to achieve— increasing access to justice? I do not imagine, Mr. Deputy Speaker, that you have seen the Law Society's model conditional fee agreement. It is a fascinating read, liable to send one to sleep. It is a long 10-page document. It will be handed to lay clients as they come in off the street. It sets out in language that is as clear as possible, but is still quite difficult to understand, the problems and responsibilities that face both providers of legal services and paying clients. For example, it states that clients must pay for disbursements as the case goes on, if the pay-as-you-go option is included in the agreement. Solicitors disbursements are Payments we make on your behalf to others involved in the case. These may be:

• ^* court fees;
• ^* experts' fees;
• ^* accident report fees;
• ^* official search fees;
• ^* travelling expenses.

Fees for barristers may also be counted as our disbursements … You have to pay all our disbursements, whether you win or lose. There are two exceptions to this: ^* If you win, we may be able to recover on your behalf the money for our disbursements from your opponent. ^* If you lose, we are liable to pay fees of any barrister who does not have a conditional fee agreement with us and whose fees you have not been paying on account. If you lose, and Accident Line Protect applies, the policy will pay our disbursements (excluding any fees to barristers or advocates) if proceedings began. The document explains that the success fee is The percentage of basic costs that we add to your bill if you win the case. It cannot be more than 100 per cent. of the basic costs. It is paid out of your damages.

• The percentage reflects:
• ^* our opinion of the level of risk we are taking—if you lose, we will not earn anything;
• ^* the fact that we are not receiving our basic costs in advance;
• ^* the fact that we may not be receiving our disbursements in advance.

The total of our success fee and any barrister's uplift fee … is capped—it will not be more than 25 per cent. of damages recovered. This calculation excludes any money your opponent pays to the DSS in repayment of any benefits you receive. The document has paragraphs that deal with What happens if you win? and What happens if you lose? It also describes what will happen if an agreement is brought to an end.

That is the document which will be placed before the lay clients whom the Government expect to go shopping around looking for legal services.

It does not stop there. If the barrister is also on a conditional fee arrangement, his chambers will have produced a conditional fee agreement checklist. Not only the barrister taking the case has to consider the uplift and success fees. His whole chambers must consider such matters, because the case may have to be returned. There must a scrutiny system for the risk assessment. Another barrister will have to spend two or three hours going through the same papers to check the first assessment. The system gives the barrister the option of taking or leaving the case. We will see the gradual, if not immediate, erosion of the cab rank rule, one of the bulwarks of our justice system.

We shall turn lawyers into a cross between insurers and bookmakers. That would not matter if, at the same time, we were benefiting the public, but, at their worst, CFAs will disadvantage the public if they prove to be uneconomic for lawyers or if they are only used by the incompetent, the negligent or the crooked. At worst, we will be creating a system for the bent or the brave.

Mr. Jonathan Sayeed (Mid-Bedfordshire)

What perplexes me about the Lord Chancellor's proposals is that a large proportion of cases—costing probably some £1 billion—will not be covered by conditional fees. A minority of cases will be covered, but the money is often recovered on those cases.

Does my hon. and learned Friend agree that the proposals are the wrong way round? We are looking not at the real problem, which is the legal aid budget for family and criminal law, but at the minor part of the problem, for which the fees are mostly recovered.

Mr. Garnier

That is precisely right. That is why I suggest that the Lord Chancellor's Department and the Minister are aiming at the wrong target. To some extent, I agree with the hon. Member for Hendon, who says that the personal injury system more or less washes its own face.

Access to justice will be decided by the solicitor's business appraisal of the commercial risk to him. Is there a profit to be made in the case? In an obviously complicated case, will the solicitor want to spend money on up-front costs such as expert reports or counsel's opinion before reaching a conclusion about the commercial merits of the case? Or will he simply say, "I cannot afford to carry these costs," and turn the client away? Much will depend on the solicitor's portfolio of risk at any given moment.

The Minister says that people should shop around. We are not talking about buying tables and chairs, deep freezes or television sets. It is unreal to believe that lay clients will go in and out of solicitors' offices comparing risk assessments, uplift rates and success fees. Solicitors will want to know whether the client has been to another solicitors and been turned away and, if so, why. As barristers generally carry a smaller case load than firms of solicitors, the Bar will have to charge higher success fees in order to take account of their smaller risk portfolio.

Lord Woolf wanted to see a cultural change in our approach to civil justice, but I venture to suggest that he did not have all this in mind. We shall see the culture of the legal profession change from one of giving dispassionate advice to a business culture. The only experience of that sort of legal environment is in the United States. I do not need to comment further on that.

The Lord Chancellor said that the proposals would give the legal profession a chance to redeem itself in the eyes of the public. I think not. The proposals will lead inevitably to a diminution of access to the civil justice system. That is not only my view but that of a range of others, lawyers, non-lawyers, politicians and non-politicians alike.

I cite a few examples. Ruth Evans, the director of the National Consumer Council, said in a letter to The Times last month: The legal aid system needs reform,"— we all agree about that— but it does provide access to justice for many people who are unable to afford litigation. To scrap a large part of it in favour of "no-win, no-fee" agreements is potentially dangerous. We know of no testing whatsoever of the viability of "no-win, no-fee" agreements from the consumer's perspective. No evidence is available on how well clients understand them or how satisfactory they have proved in practice. Nor do we know whether clients with good cases have been refused help by over-cautious solicitors. It is therefore extremely disconcerting that the Lord Chancellor proposes to give conditional fees such a key role in our legal system at this stage. In seizing on this desperate measure, the Lord Chancellor appears to have disregarded the potential of Lord Woolf's reforms of civil justice to bring down the costs of legal aid. There is a real danger that the new proposals will deny help to the most vulnerable, without being a panacea for the better-off. Similar criticism was expressed on the same day in The Times by the hon. Member for Great Grimsby (Mr. Mitchell). He wrote—

Mr. Mitchell

Give it its full eloquence.

Mr. Garnier

I will. No doubt the hon. Gentleman will have an opportunity to repeat his views at a later stage. He wrote: it is certainly not going to bring justice to the great majority of people in their disputes with the wealthy and powerful. By their very nature, their cases initially don't look promising. The cards are always stacked against them. Who is going to fight them on conditional fees? I urge Labour Members to read the hon. Gentleman's speech in his Adjournment debate on 5 November.

The professor of law at Warwick university, Professor Lee Bridges, wrote to The Guardian at the end of last month. He said: One estimate suggests that if conditional fees replace legal aid, this will result—in personal injury cases alone—in as much as £80 million a year, being transferred from the damages of the poorest members of the community straight into the pockets of their lawyers. And it is a Labour Government who are producing this policy.

Andrew Phillips, a noted solicitor and president of the Pro Bono Legal Action Group, has said: I can only say that I am amazed that a Labour Government would set the axe to one of the greatest achievements of the post war Government. It is a pretence that those who will no longer be able to obtain Legal Aid for money and damages cases will be able in all, or even the majority of cases to find lawyers willing to act on a conditional fee. Furthermore, the vast extension of conditional fees proposed is not based upon remotely sufficient research and evidence, and lays our legal system open to a steady and ultimately radical decline in standards of integrity. He is no Conservative.

Others, too, have expressed such views. I have mentioned the uncanny way in which the Parliamentary Secretary has managed to create an alliance against him. An open letter has been sent from the Law Society, the Consumers Association, the National Consumer Council, the Legal Action Group, the Law Centres Federation, the Advice Services Alliance, Liberty, Justice, the Federation of Independent Advice Centres, the Child Poverty Action Group and Shelter. Each of those respected and respectable groups has written to criticise and complain, not only about the policy but about the manner in which it is being introduced, and the fact that it is being introduced with such haste.

What sort of cases will be denied access to law? I shall give a few examples. A young lady journalist wanted an operation known as trans-cervical resection of the endometrium to relieve heavy and prolonged menstrual bleeding. After wide consultation with doctors, she went into a major London teaching hospital to have the operation performed. She signed a consent agreement which stated that the surgeons were permitted to carry out any further "necessary operation" beyond TCRE. She went into theatre and came out with a full hysterectomy. Her womb, ovaries and fallopian tubes had all been removed. Needless to say, she was extremely angry.

The woman sued under a legal aid certificate, but the case could not be run under a conditional fee agreement. It required extensive and expensive expert advice. The plaintiff's loss of earnings as a result of her deep psychiatric upset and her surgery was limited as her earnings were relatively low as a consequence of other physical health problems. The estimated damages were about £50,000 to £75,000. Her prospects of success were always good—perhaps 65 to 70 per cent. However, the success fee under a CFA would easily have exceeded 25 per cent, of the realistic damages and no lawyer could have taken her case under such an agreement. In fact, the woman's case was settled for £50,000.

Other cases include that of a former nurse who, for a few years before her death, had a history of ill health. Following a suicide attempt, she was admitted to the psychiatric wing of a well-known hospital. She was considered a suicide risk and placed under observation. She managed to obtain a quantity of insulin and a syringe and take it into the hospital, despite apparently being searched. At some point, she injected herself with the insulin and for approximately 12 hours she lay in a diabetic coma with a nurse at the end of her bed. Her condition was not noticed until her husband visited her at the hospital. Medical help was then sought and, after an hour, she was transferred to the accident and emergency department a little way away.

The woman suffered severe and permanent brain damage. She cannot speak or communicate in any way. She is doubly incontinent. She hits herself and others. She has difficulties eating and drinking and is difficult to dress and to bath. She needs full-time care.

The claim was obviously one of negligence. Until shortly before the trial, the health authority contested liability. It took a number of interlocutory points. It also joined the plaintiff s husband as a third party. After a late admission of liability and a notice of discontinuance against her husband, judgment was entered in the woman's favour earlier this year, but before the trial and after the judgment, the health authority paid £100,000 into court and applied to reduce the plaintiffs time for acceptance. The application was dismissed.

The health authority contested quantum in a five-day trial. Eight expert witnesses were called. Both sides were represented by leading counsel. The case raised difficult points of law. After a reserve judgment, the woman was awarded approximately £1.1 million.

To investigate that case would have involved no less than £5,000. It is not possible to estimate the cost of the insurance premium, but it is difficult to imagine that it would have been less than £10,000. That plaintiff's family did not have £15,000 and, even if they had been able to raise the money, it would have been necessary to persuade a firm or solicitors and a barrister to take the case on a CFA basis. Because of the health authority's tactics, the costs of the litigation would have deterred most solicitors. Under the new provisions, it is highly unlikely that the plaintiff would have been able to bring her large and justified claim. It is certain that her husband would have been unable to defend the third party proceedings against him without legal aid. Those are just two examples of litigants who would be denied access under the Government's proposals.

What about the second consequence of the Government's proposals? Access will be possible, but with a huge impact on the damages that ought to be awarded. A few years ago, the Law Commission reported that most compensation in personal injury actions was considered to be inadequate. The Government's proposals will tend to make the picture even bleaker.

Let us take the example that the Parliamentary Secretary loves to cite, that of a brain-damaged child, injured as a result of obstetric negligence. The child's life expectancy is only 50 years; he has cerebral palsy; and the estimated award of damages is £1.5 million. The legal costs bill will be about £150,000 and there is a 75 per cent, prospect of success. It will be three to four years before the damages and legal costs are paid by the defendant health authority or doctor. There is a 33 per cent, success rate uplift, which, adjusted for the delay in payment of four years, allows for an additional 7.5 per cent, uplift per year. That is a total of about 63 per cent, uplift as a success fee, which is broadly £95,000. The defendant's costs bill may be similar.

The insurance premium will be in the region of between £20,000 and £25,000. The solicitors have to pay the premiums and they would charge the success fee on top of the premium. The brain-damaged child will lose approximately £125,000 of the damages to which he is entitled. The solicitors will have invested in the development costs, the insurance and the work-up costs, and so will the barristers. What happens if £750,000 is paid into court? There will be a huge pressure on the lawyers to take that, even though it is half of what they believe that the child is entitled to. There is a direct conflict of interest, but, more importantly for present purposes, the child will be denied the damages to which he is entitled.

The third consequence that we must consider touches on cases such as false imprisonment and malicious prosecution which are tried by jury. How will the CFA operate with jury cases or in cases where ordinary innocent plaintiffs have to sue police forces in front of a jury? It is almost impossible to estimate the chances of success accurately. That view is also held by Magi Young, a personal injuries and civil liberties lawyer who practises in Exeter, and who recently expressed her concerns in The Times.

What about cases involving patients under a disability or children whose trustees walk off with the money? I suggest that a substantial part of their claim would go to the solicitors to get that money back. The court would have to approve any settlement.

Let us consider again our example of the brain-damaged child. The judge may know that the case is being brought under a conditional fee arrangement, so he will ask the lawyers what they intend to charge. Will the judge approve of the settlement if he disapproves of the uplift or success fees that have been agreed? What about the next friend or guardian ad litem who will be exposed to a huge risk on costs under the CFA? At the moment, an infant always gets legal aid, irrespective of his parents' means, in order to provide a distance between the child's and the parents' interests and rights.

What about the old lady knocked down on a zebra crossing? That is a perfectly ordinary claim and an open-and-shut case of negligence. It has a 95 per cent, chance of success; a success fee of between just 6 or 7 per cent, and perhaps £500 or £700 in up-front costs for a county court claim of between £20,000 and £25,000. When the defendants realise that it is a CFA case they defend it as slowly as possible and then, a month before the trial, they pay in £16,500. By then, the lawyers may have invested as much as £3,000 of their own money and the case is one of a 100 or so on the firm's books. Those lawyers will be heavily pressurised to advise taking the money out of court. If CFAs are the only way of funding that type of litigation, the payment is taken in to help the cashflow. There is a danger that lawyers will begin deliberately to underestimate quantum.

Insurance is the great unanswered question with which the Parliamentary Secretary has failed adequately to deal. None of the proposals will succeed without a fully developed insurance package to underpin CFA. No mention was made of insurance in the Lord Chancellor's Cardiff speech and what the insurance business thinks of his proposals. The Minister was quoted in the Financial Times on 7 November as saying: The insurance industry is showing considerable interest in developing further cover. In answer to my hon. Friend the Member for South Suffolk (Mr. Yeo), he said: A number of discussions have taken place with a variety of insurance companies.—[Official Report, 10 November 1997; Vol. 300, c. 573.] One could be forgiven for gaining the impression that that is precisely what has happened. I asked for some details about that contact and the Minister's answer is interesting in the light of his earlier remarks. That answer, which has been published today, is also interesting because it conflicts with what he said earlier in answer to his hon. Friend the Member for Wyre Forest (Mr. Lock).

In a written question, I asked the Parliamentary Secretary if he will list the insurers and insurance companies with whom the Lord Chancellor or his officials have held discussions about the Government's legal aid reform proposals, indicating in each case where and when the discussion took place and who was present. The Parliamentary Secretary's response was: Officials of the Lord Chancellor's Department have had contact with various insurers and their representatives for some years. However since my Noble and Learned friend, the Lord Chancellor, announced his intentions to reform legal aid on 18 October 1997, his officials have met a delegation from the Association of British Insurers on 29 October 1997. The meeting took place at the Lord Chancellor's Department Headquarters…The Lord Chancellor also met James Innes of Abbey Legal Protection Ltd. on 14 November 1997 in the Lord Chancellor's office in the House of Lords. Those meetings have been in addition to less formal contact over the telephone and in correspondence."—[Official Report, 20 November 1997; Vol. 301, c. 254.] The Minister spoke of a series of meetings, yet today's written answer mentions just two such meetings. No detail is provided about contacts prior to 18 October. There has been just one meeting with a delegation from the ABI and just one meeting with one insurance company director.

We are not told what is meant by less formal contact over the telephone and in correspondence. We know what Mr. Innes thinks, however, because he has told the Financial Times. He is quoted in the edition of 7 November as saying: In the two years since conditional fees were introduced for personal injury cases only Abbey Legal Protection and Litigation Protection have come forward. So it's not going to happen at once, and certainly not all the things that the Lord Chancellor wants by April 1 next year,' he said. Mr. Innes said Abbey found it hard enough to find underwriters for the personal injury scheme, where liability is relatively easy to assess because of the generally high success rate of accident claims. With other commercial claims it was likely to be even more difficult, he warned. In the same article Mr. Peter Brown of insurance brokers Bowring Marsh and McLennan, who has also worked with the Law Society on the personal injury scheme, echoed those views and is quoted as saying that there was unlikely to be a flood of underwriters wanting to write business on other money claims.

Before the election, the Labour party published a policy document entitled "Access to Justice"—a familiar title— in which it said about the CFA: We regard conditional fees as an experiment to be monitored closely and in the light of the Scottish experience"— I hasten to add that that does not mean the Lord Chancellor— do not expect their introduction to make a significant improvement to access to justice. They are at present little more than a gimmick designed to mask the chaotic state of the legal aid scheme and the courts service. Strangely enough, the then shadow Lord Chancellor speaking at the 1996 Bar conference was full of praise for the legal aid system, extolling it as one of the pillars of our welfare system, which was brought into being by the post-war Labour Government. He even said that it was in reasonable financial shape.

I was puzzled by the apparent U-turn represented in the Cardiff speech, despite the many other such manoeuvres sprung on us since 1 May. I naively assumed that the Lord Chancellor's Department, the Lord Chancellor and the Minister had carried out many hours of research into the data to see what had changed to make them alter their views so radically. I thought that perhaps they might have interviewed lawyers in Scotland to see whether what they did was more than just an experience to be confined to civil litigation north of the border. I thought that teams of civil servants had been touring the country to see what they could learn from the experience of lawyers and client groups that had used CFA since 1995.

At Lord Chancellor's Question Time on 10 November, I asked the Minister what research he had carried out and he replied: We have had the benefit of academic research into the use of conditional fees. That research demonstrates that in approximately 28,000 cases so far agreed under conditional fees, there has been a remarkable success rate. We are happy to base our policy on the results of that academic research."—[Official Report, 10 November 1997; Vol. 300, c. 575.] That was a very confident, if rather vague, answer. So I asked the Minister again in a written question about that research. He answered: I was referring to the research carried out by the Policy Studies Institute. Of the 837 cases entered into by the solicitors who responded to their survey they examined 197 cases in detail. The research was conducted between November 1996 and January 1997 and referred to agreements made no later than September 1996. The PSI estimated that some 10,500 agreements had been made in a little over the first year that conditional fees were available and acknowledged that they had become an established method of funding personal injury litigation. I understand that something in the region of 1,500 agreements are now being entered into each month. By the time I spoke at the PSI conference on 23 September some 28,000 cases had been entered into. I do believe that 28,000 agreements in a little over three years is a remarkable success and I am keen more of our citizens should have the access to justice that these agreements provide."—[Official Report, 18 November 1997; Vol. 301, c. 56.] How does the Minister know? What is his authority for the figure of 28,000? Is he prepared to weigh that in the balance with the 250,000 legal aid certificates for personal injury cases that have been issued over the past three years?

Mr. Gareth Thomas (Clwyd, West)

I have been waiting patiently for some recognition from the hon. and learned Gentleman that there is a crisis in the legal aid system and that public confidence in the legal aid system should be restored as a priority. It can then be seen to operate not by way of bestowing a privilege on the poor but to ensure that there is an equal playing field between middle-income England and poorer sections of society.

I am surprised that, as a representative of middle-income England, the hon. and learned Gentleman does not recognise that. Is he saying that there is no scope whatever for conditional fee agreements? Does he accept that there is room for CFA agreements at least as a supplement to the present system?

Mr. Garnier

Yes, of course I do. What I complain about is the fact that the Government are introducing CFA schemes in a huge range of previously legally aided aspects of the law by 1 April 1998—there is less than six months to go—without having considered the evidence, looked at the research or conducted an intelligent exercise into the whole question. It is not just me who is concerned about this matter; all the non-Conservative party bodies to which I have referred are equally concerned.

What does the PSI research to which the Minister referred, and on which he pins his hopes, say? The PSI study, "The Price of Success—Lawyers, Clients and Conditional Fees", contains nothing to back up what the Minister said either today or in his written answer. I shall not read out the whole booklet as that would try hon. Members' patience, but I suggest that they spend a few quiet moments looking at page xvii—conclusions and recommendations—which says: Further research is needed…doubt over the fairness of the entire scheme…these findings still raise questions about the fairness of the uplift in some cases…Monitoring will be needed to assess whether the agreement deals adequately with problem areas…Further research is needed into whether clients find the information adequate. Pages 92 and 93 express precisely the same doubts about the haste with which the Government are addressing the problem.

Despite the good will of those who well understand that there are deficiencies and problems with the legal aid service, the Government have created nothing more than a dog's breakfast. They have spoiled some excellent ingredients from the Woolf report and the Middleton report, and ideas from other consumer and professional groups. They have also betrayed many people's trust in their haste to appear relevant, radical and modern. They have been seduced by their own rhetoric and their mere sloganising. The message has overtaken the substance. The Minister may sincerely believe that he has done a wonderful thing and that everything will get better. This measure may even look good in the Government's eyes, although I cannot think how.

I remind the Government of the Spanish aphorism, which I shall loosely translate as, "a monkey in silk is still a monkey." Next time the Minister visits the Lord Chancellor for a drink or three he should urge him to think again and look before he leaps. This is a thorough mess and he should sort it out.

11.23 am

Mr. Robert Marshall-Andrews (Medway)

Thank you, Mr. Deputy Speaker, for calling me to speak in this important debate. I declare an interest: I have been a practising lawyer for 30 years and, as both a junior and a leader, have done a certain amount of civil legal aid work. In those circumstances, I am sorry that I should have been introduced with the old Spanish aphorism that a monkey in silk is still a monkey. We at the Bar tend not to believe that entirely to be the case.

I am sorry that this important debate should be so sparsely attended and that more hon. Members were not present to hear the elegant reading of the Government's case by my hon. Friend the Minister. One speculates that if, at the heart of this debate, there had been the withdrawal of a significant number of the poorest people in society of a tranche of free medical care—to be replaced by a mixture of insurance and an assessment of the success of their operations by surgeons—substantially more hon. Members would have attended.

It may be because the Government's proposals, which we are told will form the basis of orders to be brought before the House next year, are a mixture. As has rightly been said, a large proportion of them concern reform of the civil system with no reference to legal aid, and they are exemplary. One reason why they are exemplary is that they are based almost verbatim on the Woolf report, which was probably the most luminous appraisal of an important public institution in living memory. Its analysis was entirely accurate and its prescriptions were luminous and clear. Indeed, no practising lawyer or person cognisant with the civil legal aid process would find issue with it.

One reason why it is such an outstanding document is that, unusually in all the circumstances—indeed, almost uniquely—that important piece of public work was entrusted to the hands of an eminent practitioner who knew what he was talking about. Unhappily, it appears that having taken a step in that direction the Government now propose to resile from it. In the sense and context of civil legal aid, they propose a raft of measures about which virtually all legal associations and lawyers have considerable doubts.

For that reason, the only aspect of this morning's debate with which I wish to deal is the abolition of civil legal aid in respect of money cases. We have heard that in the vast majority of money cases civil legal aid will be withdrawn. I have heard not a single exception, so the legal aid system will in effect be abolished in all those cases and replaced by conditional fee agreements.

In declaring my interest as a lawyer, I should say that my interest is strange because I have not the slightest doubt that the proposals will greatly enrich my profession, many of my friends in the profession and also the solicitors' profession on which we rely. If the proposals, which allow lawyers to proceed on a conditional fee basis in all money claims, are pursued they will lead to an avalanche of litigation and a bonanza of work for the legal profession. That is wholly undesirable and if I possibly can I wish to stop my profession and my friends who work in it taking advantage of what will undoubtedly be a huge increase in their gross and net incomes.

What lies at the root of my opposition is both financial and philosophical. It cannot be overstated that the effect of the proposals will be that lawyers will be able to enrich themselves through a direct interest in their clients' damages. In the context of legal aid, they will be able to enrich themselves and take their stipend and income from the damages awarded to the poorest people in society. In making that proposition, I ask my hon. Friend the Minister to accept it in the spirit in which it is made. I also ask him to ensure that this serious debate is conducted in an atmosphere of calm, intelligent and academic serenity and with an absence of polemics.

I make an impassioned plea that we should stop blaggarding legal aid lawyers. I make immediate common cause in that with my hon. Friend the Member for Great Grimsby (Mr. Mitchell). Legal aid lawyers, in their vast proportions, are not the fat cats to whom the Lord Chancellor famously referred, perhaps in a paroxysm of guilt, shortly after his elevation.

Mr. Corbyn

As my hon. Friend is referring to legal aid and the law profession's income from it, will he say what he thinks might be the effect of the proposals on law centres, which inevitably rely almost entirely on legal aid income and whose clients are obviously poor people who would otherwise not be represented?

Mr. Marshall-Andrews

I am grateful to my hon. Friend for asking that question. The Law Centres Federation is extremely concerned about these proposals. The difficulty is that the proposals for the community legal service are still inchoate, so we do not know what they are. It may be that law centres will be subsumed within the wider public service. I am sorry to say that my hon. Friend has directed his question to the wrong person. I cannot answer it because I cannot work out from the current proposals precisely what will be the effect on citizens advice bureaux and law centres. Suffice it to say that they are part of the large raft of organisations and people opposed to these ill-thought-out proposals.

As has been said several times in the House, the opposition to the proposals is not, at heart, a conspiracy of self-interest—quite the reverse. It is a widespread opposition not only from my profession, but from just about every charitable body operating within the legal system. I point out to my hon. Friend the Minister that there must be some merit in the opposition if it attracts that amount of support.

In dealing with legal aid lawyers, I echo what has been said by my hon. Friend the Member for Great Grimsby—that the vast majority of them inhabit small practices which are easily accessible to people who are in difficulties with their civil legal aid. For reasons that I will cite in due course, there is a near inevitability that if the proposals are carried through those small practices which, on a daily basis for little immediate reward, operate legal aid through the green form other schemes, will suffer and disappear because of the avalanche of money that will go to larger firms.

One piece of support about which I feel less comfortable is that we make common cause in this House with a large number of Conservative Members. That is not surprising as we perceive in many of the reforms the dead hand—or the mortmain, as we lawyers say—of Lord Mackay of Clashfern, who if he were here would no doubt express the view shared by many of us that the Government's proposals are rather unacceptably right wing and go very much further than the reforms that he would have advocated.

I shall deal briefly with the problems which it is said need to be dealt with by these reforms. First, it is undoubtedly right—I understand that my hon. Friend the Member for Hendon (Mr. Dismore) intends also to deal with this point—that personal injury litigation financed by legal aid should be self-financing and make a successful contribution to the legal aid budget. For the whole of legal aid, the net cost is £167 million. If we take from that the parts that will be affected by the proposals, it is a mere £75 million out of the legal aid budget. As my hon. Friend the Minister knows, the vast majority of the legal aid budget is expended on criminal legal aid, family legal aid and other publicly funded aspects of the legal aid system, which will not be touched by these difficult proposals.

Secondly, it has been said that there has been some form of collapse in public confidence in the legal aid system. That statement has appeared to gather some sort of credibility through repetition. I can only say to my hon. Friend the Minister that having practised in part in this sphere for 31 years I do not agree with that analysis of the public view. Of course, there is an overarching cynicism among the public about a large number of professions and institutions. If we ask people how they feel about the national health service, almost always they will say that it is dreadful. If we ask them how they feel about politicians, we will get a similar answer, as we will if we ask them about lawyers and the legal aid system. However, it is always the experience of those who deal in statistics that when that same group of people are asked about their individual experiences of politicians, lawyers or the medical profession, the answer is conspicuously different—they, of course, have been exceptionally lucky in their dealings with those whom, in the general sense, they criticise.

In my dealings as a lawyer in the civil legal aid system, I have never found an overarching widespread cynicism among the public about civil legal aid—quite the reverse. I have found almost universally that those who come into contact with it find that the system operates exceedingly well. I have some assistance for the proposition that it is not necessary to alter the existing legal aid system wholesale because of public perceptions. That assistance comes from a speech made last year: Supporters of legal aid must never cease to emphasise that it is a highly successful public social service. In civil cases which reached judgments in 1995 to 1996, there were judgments in favour of the assisted person in 81 per cent. of the cases. The proportion of cases where there was either a settlement or judgment in favour was 91 per cent."— I pause there to say that those of us who have given advice in this sector are not doing too badly— PI litigation as a category was conspicuously successful. Obviously the greater the success rate, the closer the legal aid system can approach self-funding. These success figures tell against any argument that legal laid is generally granted too readily. It must be remembered there are a small number of very high cost cases which account for a large proportion of expenditure. That ringing endorsement of the existing system, and the argument that we should defend it at all costs, came from the present Lord Chancellor, addressing the Bar conference in 1996—before the general election and before he became Lord Chancellor.

I shall take issue with the last point that the Lord Chancellor made and take up a point that my hon. Friend the Parliamentary Secretary made about medical negligence cases. We know that medical negligence cases use up a disproportionate amount of the civil legal aid Budget and feature prominently among the small number of cases that the Lord Chancellor mentioned. I was unhappy to hear my hon. Friend's use of the crude statistics because, as he knows, behind those statistics lies a considerable and real social problem.

In the 1980s, many cases emerged into the medical negligence world, and many of those concerned cerebral palsy among children. It became obvious to practitioners in the medical negligence field that there had been a high degree of negligence in such cases. It is estimated by the medical profession that as many as 10 per cent. of children suffering from cerebral palsy do so as a result of medical negligence.

It is an exceptionally difficult thing to prove. To start the process of discovering whether a child who has cerebral palsy is likely to attract damages in the order of seven figures it is necessary to obtain detailed hospital notes and expert reports from consultants in, for instance, obstetrics, paediatrics, paediatric neurology and neuro-radiology. All such experts cost a great deal of money and the process takes a great deal of time.

I will not have it said by my hon. Friend the Parliamentary Secretary—I suspect, on the basis of scant experience—that expenditure incurred in discovering whether a child falls into that 10 per cent. category is wasted by the civil legal aid scheme. However, it is immensely expensive and, almost by definition, a very high proportion of those cases that are investigated never reach the courts—rightly so, because a sensible, rational and reasonable decision is taken by the lawyers involved. Nevertheless, such cases form the basis of the figures on which my hon. Friend relies, apparently with such strength, to show that poor legal advice has been given if such expenditure has been incurred in the medical negligence field.

That is just an example. I should be very happy if my hon. Friend the Parliamentary Secretary would meet and talk to me or my colleagues practising in the area to allow us to demonstrate to him beyond peradventure that in the sphere of medical negligence we have some of the best, most capable and most caring lawyers who work in extremely difficult circumstances and who regard it as a measure of success rather than otherwise if cases that come to them for their consideration do not end up in court.

Mr. Burnett

rose—

Mr. Marshall-Andrews

I give way.

Mr. Burnett

I was removing my glasses.

Mr. Marshall-Andrews

I am sure that the hon. Gentleman can see the points of the argument far better now and will understand them readily. The picture is clouded rather than elucidated or illuminated by the statistical evidence that my hon. Friend the Parliamentary Secretary places before the House.

I shall not repeat what the hon. and learned Member for Harborough (Mr. Garnier) said about the clear and manifest lack of any coherent or long-term assessment of the effect of conditional fee agreements. I merely summarise that there is no evidence on which a sensible Government could at this stage proceed to a vast or widespread extension of such agreements.

I share with many lawyers the feeling that it is an abhorrence that poor people should have to pay for their lawyers with a proportion of their damages. Even if that proposition were ill founded, it remains true—as is borne out by the Policy Studies Institute report—that not nearly enough research is being done on which it would be possible to carry forward in six months this massive re-assessment in the welfare state.

My next point is, in a sense, philosophical. The welfare state, of which the legal aid system is an essential and integral part, was and is—as Aneurin Bevan, to be topical, frequently reminded us—not free. Nothing is for nothing, remarkably little is for sixpence and the welfare state is and was merely a collective insurance mechanism for the benefit of all, paid for by progressive taxation, to ensure that at the point of need all, especially those in the most need, have redress. For the civil legal aid budget, that simply meant that those who were in need, who suffered from injury or were wronged—the two may be the same—should have redress, and that they should have it without recourse, at the time that they go to law, to their own pockets or the worry that that involves.

Mr. Grieve

Does the hon. and learned Gentleman agree that one of the strange features of the Government's proposals is the way in which a wedge is being driven between certain categories of private rights, such as money litigation, and other categories of private rights, such as redress on a housing matter? Is it not worrying that, whereas the original principle underlying legal aid was the funding for those in need to assert private rights, we now have state interference, decreeing very subtly that certain categories will receive state support while other people can go to the devil and pay through the nose for their lawyers on the uplift?

Mr. Marshall-Andrews

I do not want to endorse totally most of the hon. Gentleman's pejorative comments about those things, but I agree that that division is, in essence, pragmatic. Money cases have been singled out for conditional fee agreements because it is more likely that lawyers will take those cases on the CFA than otherwise. There is no philosophical reason and there cannot be a social reason. The decision is entirely pragmatic. Let us face it: if the Government are right, pragmatism is the order of the day.

It is plain to anyone involved in the profession that the change will be a nightmare for those who can ill afford it. I will run through the three stages of the nightmare before concluding. The first stage will be that of obtaining a lawyer, mentioned by the hon. and learned Member for Harborough. Those who are injured, sick or vulnerable, will have to try to discover a lawyer who can take them, depending on that lawyer's risk portfolio. If my hon. Friend the Parliamentary Secretary does not understand that, he misunderstands lawyers and commerce.

Undoubtedly there will be an aggregation of money cases into a certain number of larger firms. They will have an overall aggregated risk assessment and they will know which cases they can and cannot take. A person may arrive at firm A which will not be able to take him. Firm B down the road may be able to do so on a no-fee arrangement. Some will find justice while many others will not. It has already been said eloquently that the people most at risk are those least equipped to shop around the legal profession to find lawyers able to take their cases.

The nightmare does not stop there. A litigant may have a good case and may have been damaged through no fault of his own, as in the case of a child with cerebral palsy. He may manage to find a lawyer prepared to take the case on a no-win-no-fee basis, subsidise the insurance costs and pay the disbursements to medical and other experts out of his own pocket. He may win the case. A similar case was cited by Sarah Leigh in her excellent report on contingency fees which came out last year; she is one of the most eminent lawyers in the field.

A High Court judge may say to the plaintiff, "You are entitled to £1.14 million of compensation which will, as best we can, give you a reasonable life." However, the litigant may then be told that out of that award, which has been carefully calculated to give him justice and redress, £114,000 will be removed for the lawyer, not because the lawyer is greedy, but because the money is needed to subsidise and succour other clients whom that lawyer has on his books because of the aggregate quantity of risk. A child suffering from cerebral palsy, for example, may find himself £114,000 short of the amount to which a High Court judge says that he is entitled and which he needs to live a reasonable life. That is not a rare occurrence; such a case was cited by Sarah Leigh.

I did not seek election to be part of a party that is putting together a proposal that will affect the welfare state and will leave a vulnerable and disadvantaged person in such a position. I refer, of course, to a person who wins a case.

Let us now consider the third proposition—the person who finds a solicitor who will take the case on a no-win-no-fee basis and who then asks for insurance. People must, of course, be insured against the other side's costs, against disbursements and against all the other expenses that litigation involves. In the case of severe medical negligence, the insurance could not be less than £10,000. In addition to that, one has to find the cost of disbursements—say £5,000—which places litigation wholly beyond the reach of the vast majority of people who, in addition to the misery of having a meritorious claim, of having been damaged and disabled and of having their lives ruined through no fault of their own, face the spectre of debt in order to pay for an insurance policy.

I repeat to my hon. Friend the Minister that I did not come to this House and I did not seek a mandate to be here to see such litigants in the welfare state reduced to penury and begging in order to achieve their rights. I have cited meritorious cases which under the present legal aid system would be taken on by us with no problem. I hope that my hon. Friend the Minister will give my observations long and careful consideration before we embark on the route to conditional fees, with all the misery that that is likely to cause.

As a lawyer, I share my hon. Friend's concern about an ever-growing legal aid budget and it is right that those of us who are engaged in the profession should take a responsible view of this potential growth in public expenditure. I commend to my hon. Friend the excellent work done by the Bar Council and the Law Society on the establishment of a contingency legal aid fund. Such a fund would not avoid all the problems that I have mentioned and it would mean that successful litigants in the round would make some contribution towards further litigation, but, based on the general principle of the spread of insurance across the widest possible body of people, it offers a genuine alternative to the Government's proposals.

I share the concern expressed by the hon. and learned Member for Harborough. I am not talking simply about my initial aversion to the nature of the proposals. I am worried that there is a headlong rush towards a system that will be immutable and which we shall regret over a millennium. Once the principle of this part of the welfare state is abandoned, it will be difficult to pick it up again. I am worried because we are rushing towards the proposals on a six-month time scale with no serious analysis of the existing system.

My hon. Friend the Minister clearly does not share my aversion to the proposed system. He should at least say that this is a matter which deserves much wider consultation and much more time. If we do not have more consultation and more time, we shall be judged by history as having removed from deserving people precisely the rights that they need.

Several hon. Members

rose—

Mr. Deputy Speaker (Mr. Michael J. Martin)

Order. Before I call the next speaker, I appeal to hon. Members to be aware that some of them will be disappointed today. They will be even more disappointed if speeches are long and I ask all hon. Members to take that into consideration.

11.57 am

Mr. Tony Baldry (Banbury)

Let me immediately declare an interest. I am a practising barrister—although I have not done any legal aid work in the past 10 years and, given my particular area of specialism of contentious and non-contentious construction law, I do not anticipate doing any in the foreseeable future.

I entirely endorse the remarks of the hon. and learned Member for Medway (Mr. Marshall-Andrews) and I very much hope that Ministers pay heed to them. I also hope that, for his own self-preservation, the Minister will have looked around to see that, with the exception of his Parliamentary Private Secretary and the Government Whip, there are only about a dozen Labour Members present in the Chamber.

Mr. Mitchell

What about Conservative Members?

Mr. Baldry

The hon. Gentleman should wait to hear what I have to say. As has been evidenced by the speech that we have just heard, not all Labour Members here today support the Government's proposals. Although the Minister can entirely disregard the number of us who are here or not here, I can tell him from former experience as a Minister that he must have regard to those who do not support the proposals.

The Government's intention to withdraw legal aid from all civil damages claims and replace it with insurance-led conditional fee arrangements will limit access to justice to those able to meet expensive insurance premiums; deny access to justice to the most vulnerable and poorest sections of society, including those on social welfare benefits; block access to justice to children who are currently entitled to legal aid; transfer the control of legal cases to commercially minded insurance companies; and divert the resources of the legal profession away from the socially disadvantaged.

I predict that, if the proposals go ahead as they are currently envisaged, within two or three years all hon. Members will have constituency surgery cases that will make our involvement to date with the Child Support Agency resemble a policy picnic. People in desperate difficulties will come to our constituency surgeries.

I am fortunate in being an advocate in that, occasionally, I can speak up for such people, but if the Government are not careful, there will be a series of Adjournment debates as hon. Members find that the only way to speak up for their constituents in those circumstances is to do so here. I am sure that those cases will collectively come to be known as "Irvine injustices".

The real difficulty behind the proposals is that they are Treasury led. They are not the result of the Lord Chancellor's waking up one morning and deciding that it would be good news to reform the legal aid system. I have absolutely no doubt that at some time during the month of May a letter landed at the Lord Chancellor's Department from the Chief Secretary to the Treasury stating that something had to be done to curtail and contain the cost of legal aid. That was clearly the driving force behind the reform. Doubtless, officials from the Lord Chancellor's Department sought to negotiate with the Treasury as to how the effects might be mitigated and there must have been discussions about how it could be presented as a package.

Today, the Minister tried very hard to present the proposals as a package to reform the civil justice system and legal aid. However, he must take on board the fact that he has lamentably failed, as has the Lord Chancellor, to convince any one of the organisations that have some care or concern in these matters. Every single one is opposed to the proposals. I would exhort him to listen to what the hon. and learned Member for Medway has just said and for heaven's sake have the courage to go back to the Treasury and say that the time scale of April next year is simply unrealistic. At the very best, the Government would be wise to delay the proposals for at least a year to provide a proper opportunity to consult much more widely and intelligently with those concerned.

I am conscious of what you said about short speeches, Mr. Deputy Speaker, but the House should have some regard to a joint letter from the Law Society, the Consumers Association, the National Consumer Council, the Legal Action Group, the Law Centres Federation, Advice Services Alliance, Liberty, Justice, the Federation of Independent Advice Centres, the Child Poverty Action Group and Shelter. They express considerable concern that the target date for implementation of April next year does not provide sufficient time for sensible debate and consultation, and say that they believe that the withdrawal of legal aid for money and damages claims could lead to the exclusion from the justice system of millions of the poorest and most vulnerable in society. I do not believe that, in all conscience, any hon. Member could ever support such a proposal.

The letter goes on to express concern about the position of those who currently claim legal aid…Its purpose was to ensure that those of low and moderate incomes were not denied access to justice because of their inability to pay. Although eligibility levels now restrict legal aid to the poorest in our society—the vast majority of legal aid recipients are probably in receipt of state benefits—legal aid still exists to act as a protection to those who could not otherwise afford to pursue legal remedies. Without assistance from the state they are unlikely to be able to afford the associated costs of conditional fees, such as the price of the necessary insurance, and will be significantly worse off as a result of the Government's proposals. It concludes: We will therefore be calling on the Lord Chancellor to find a way to develop an efficient and cost effective legal aid system, which operates alongside conditional fees to ensure the widest access to justice for all members of our society. I cannot believe that, on 1 May, many—if, indeed, any—Labour Members thought that, in a matter of months, organisations such as Justice, Shelter, the National Consumer Council and the Child Poverty Action Group would get together to write a joint letter exhorting the Government to reconsider a proposed piece of legislation.

A matter of further concern to the House is that the very dramatic and radical changes will not be subject to primary legislation, so they will not be examined in detail or be the subject of great scrutiny. The changes will be introduced by means of orders, on which there will be short debates, probably late at night. That is all the more reason why, before the Government put the proposals before the House, it behoves them to ensure that they have some support.

The Lord Chancellor was somewhat disingenuous in the summer when he sought to portray lawyers as fat cats. Everyone in the House knows that there are many excellent lawyers who provide good advice to our constituents in very difficult conditions. It is not just the Law Society, the Bar Council and others that are expressing concern. None of us could be insensitive to the recent representations from a whole host of organisations that are expressing concern about people with whom they deal. I shall give two instances of the sort of people who I suspect—if the proposals go ahead—will shortly be in our constituency surgeries.

Headway, the national organisation for people who have experienced head injuries, says: Withdrawing access to legal aid in personal injury cases will hit people who suffer a brain injury and their carers harder than any other disability group. By denying brain-injured adults and children access to litigation, the Government would in many cases be denying them access to specialist treatment and care. Headway goes on to explain how it is often necessary to obtain damages to ensure the provision of essential services for head-injured people. It says: Often a head-injured person will only start receiving treatment on payment of an interim settlement. No legal aid will mean no litigation in very many cases. No litigation will mean no funding for services. Cutting legal aid means taking substantial funds away from care services. The Royal National Institute for the Blind expresses concern that the majority of blind and partially sighted people live in financial hardship. Much of the legal action undertaken by disabled people deals with complicated casework involving new and unfamiliar legislation. It adds that those who have their sight damaged will be substantially prejudiced by the proposals.

I cannot believe that Ministers can be insensitive to all those representations. There can rarely have been an occasion on which a Minister has proposed from the Dispatch Box a dramatic reform of a key piece of social policy and not been able to pray in aid the support of one single organisation. Over the past 18 years, my colleagues were at least able always to cite the Institute of Economic Affairs or some organisation. Yet the Minister has not been able to cite anyone other than those at the Treasury who supports the Lord Chancellor's proposals.

I do not intend to detain the House further, because my hon. and learned Friend the Member for Harborough (Mr. Garnier) summed up the concerns of the Law Society and others about the introduction of conditional fees. It is clear from the answers to parliamentary questions that the Government have done little research and little consultation of the insurance industry about its preparedness to help to underwrite the scheme. For heaven's sake, the Government intend to introduce the scheme in April next year.

I say to the Parliamentary Secretary, "Have a care," because there is no support for the proposals. As the hon. and learned Member for Medway said, all those who have some dealings with legal aid recognise that it could be reformed. Others, such as the Law Society and the Bar Council, have suggested methods of reform. However, reform cannot be done on the basis of these proposals because they are fundamentally flawed and driven simply by the Treasury's desire to reduce public spending. If the Government follow that path, it will be a disaster—not for the lawyers, who may collectively do well out of the proposals, but for the most disadvantaged in our society.

If the Labour party adopts the proposals, I predict that it will live to regret it day by day as they take shape and as newspapers such as The Guardian cite ever growing numbers of hard cases of people suffering terribly because they have been denied access to justice. I cannot believe that all those Labour Members who were elected on 1 May will wish to have that as a stain on the history of their party.

12.11 pm

Ms Chris McCafferty (Calder Valley)

I am grateful for the opportunity to make my maiden speech in this debate. The constituency of Calder Valley, which I represent, follows the line of the River Calder, nestling in the heart of the south Pennine hills and surrounding but not including the town of Halifax. Much of the upland has been designated an area of outstanding natural beauty and there are significant areas that have been designated sites of special scientific interest. Stretching from Todmorden on the Lancashire border—a town which many still believe to be part of Lancashire—through Hebden Bridge, Mytholmroyd, Luddendenfoot, Sowerby, Ripponden and Elland to Brighouse, Rastrick and Hipperholme, my constituency is a place of tremendous variety, rich in contrasts and where the urban meets the rural, the historic meets the modern and affluence meets significant disadvantage.

The constituency played an early role in the development of industry, and evidence can be found in the towns and villages and in the many older mills that still stand in the remote valleys and narrow hillsides. Manufacturing, especially of textiles, has traditionally been Calder Valley's most important industry, but it has been in severe decline. Despite the decline in trade, a small number of mills continue in textiles and engineering today, while others have found alternative uses, as homes to small business units, visitor attractions and conversion to housing.

The area has also moved with the times. The Lowfields industrial site at Elland is now home to many modern and innovative firms, while Todmorden is fast becoming a base for imaginative new uses of telecommunications and information technology. The majority of local firms are small, employing fewer than 50 people. Full-time workers earn less than the average for Yorkshire and many earn less than the threshold for low pay in Britain. I am pleased that Government policies have ensured that the higher than national and county average unemployment rate has started to reduce, but young people under 25, the long-term unemployed and the ethnic minorities are still caught in the trap.

I welcome the Government's new deal proposals. Unemployment and low pay combine in the constituency to increase poverty, disadvantage and debt. One in four households are on benefit, and there is much concern about the effects of poverty and disadvantage on local crime rates. I hope that as a result of the attempt to alleviate the conditions that lead to anti-social behaviour, more crime will be prevented.

As well as the problems faced by the constituency as a whole, the rural areas have extra problems. It has never been easy to make a living from an upland farm, but the bovine spongiform encephalopathy crisis has been a disaster for Calder Valley beef farmers and their families. There is also a shortage of rented accommodation. Not all farmers' children want to live and work on the farm, and many properties have been renovated and are now far beyond the price range of local youngsters.

Calder Valley has a lower than average level of car ownership, and because of deregulation and privatisation, there are increasing limitations to public transport. There are no longer regular bus services to all the outlying villages. We depend heavily on our rail service, which desperately needs further investment, especially in the Elland and Brighouse areas, to develop better commuter services, expand employment opportunities and help regenerate the area.

There is a fine thriving artistic tradition in Calder Valley; our brass bands are rightly famous. I was pleased to be able to follow in the tradition established by my predecessor, Sir Donald Thompson, and bring five local bands to play on the Terrace in June. Hebden Bridge is home to a four-week arts festival, which builds on the presence of the many writers and artists of all varieties who live and work in the area.

Calder Valley is a unique and dense mix of the urban and the rural, with its people recently described in a book on the area as bloody-minded, proud, pernickety and independent". It is a great privilege to represent such people.

The hard-pressed local communities have in the past produced many people regarded as extremists—although they were usually not without humour. One favourite, Mr. Hanson, speaking at a Chartist rally in 1839, said: They preach Christ and a crust and non-resistance. Let the people go to those who preach Christ and a full belly; Christ and a good house; Christ and universal suffrage! It is not surprising that a constituency with such a long tradition of radicalism, non-conformity, Chartism and co-operation should have produced men and women who were leaders of economic and social thinking. John Fielden, a Todmorden mill owner and radical Member of Parliament, successfully fought for a reduction in children's working hours to 10 a day.

More recently, right hon. and hon. Members will recall the late Lord Houghton, who was the Labour Member for the Sowerby division for more than 25 years, and who is remembered with enormous respect and affection both in the House and in another place, as well as in the constituency. Douglas Houghton entered the House at the age of 50—and, while not wishing to give my age away, I consider him a role model in that respect.

Before becoming a Member of Parliament, Douglas worked as a clerk in the local tax office, and in the first world war he fought in the trenches at Passchendaele—an experience which coloured his attitude to life and fed his determination to do whatever he could to make the world a better place.

In 1922, Douglas Houghton founded the Inland Revenue Staff Federation and was its general secretary until 1960. During the second world war, he became a household name with his weekly BBC broadcast, "Can I Help You?" In the Wilson Government, he had an illustrious career as Chairman of the Public Accounts Committee, as Chancellor of the Duchy of Lancaster and even as Minister without Portfolio.

Finally, Douglas was chairman of the parliamentary Labour party, a role that he played with objectivity and fairness until 1974, when he went to another place as Lord Houghton of Sowerby.

Until his death in 1997, Lord Houghton spoke and worked on a wide range of controversial issues including abortion, animal rights, war crimes and population and development. I have been surprised and delighted to find that I follow him not just as the hon. Member for what is now the Calder Valley constituency, but as a member of the all-party group on population, development and reproductive health, of which he was a founder member.

Douglas Houghton was followed briefly by Max Madden, whose example of hard work and concern I shall do my best to follow. My most recent predecessor, Sir Donald Thompson, represented Calder Valley for 18 years. During that time, he won the affection of constituents of all parties for his unfailing courtesy, good humour and genuine and obvious love of Calder Valley and all things Yorkshire. He took news of the achievements and successes of the communities he loved to those down south who, he felt, sometimes failed to recognise them.

Sir Donald was unwavering in his public loyalty and commitment to his party, and while that may have been criticised by those of us who did not share his views, I must pay tribute to the steadfastness which he believed to be natural, even if it was not shared by others. I do not believe that I have ever heard him publicly criticise his colleagues; nor did I ever hear him indulge in unfair or public personal attacks on any of his political opponents. Indeed, he always treated me with the utmost courtesy and respect. His political obituary was written prematurely on a number of occasions, but he proved to be a great survivor, reflecting his loyalty to the people and the area.

In his own maiden speech in 1979, Sir Donald Thompson said that the people of Sowerby were seeking to remove head teachers and teachers who failed to teach children properly or to encourage children to reach acceptable standards. It is ironic that it has taken 18 years and a new Labour Government to bring that about. Calderdale's education system gained unwelcome publicity last year, with often undeserved coverage of the Ridings school, situated in the neighbouring constituency of Halifax.

There is a fine tradition of education in the area, from local village schools that are closely knit into the web of the community, through to the excellent and long-standing comprehensives such as Calder high school and Brooksbank school. I am proud that Calder High is the oldest purpose-built comprehensive in the country, and it continues to provide an excellent, open and challenging education to every child within its catchment area, whatever his or her academic ability.

This debate is about access to justice and to legal aid. Many people in my constituency feel that they cannot access the current legal system—they find it barely civil and hardly justice. I welcome the reforms that will enable access for all, irrespective of income, and aid that is directed to those whose need is the most deserving. The reforms are undoubtedly challenging and radical, but they are necessary if we really want access for all to be a reality and not just a cheap policy gimmick.

I welcome the extension of conditional fees, which will allow greater access to justice for those not eligible for legal aid, but I am concerned about the potential withdrawal of legal aid from money and damages claims, which could lead to the exclusion from the justice system of some of our most vulnerable people. For instance, many of the early asbestosis claims from Hebden Bridge in my constituency might not have succeeded under the proposed 75 per cent, success criterion. Indeed, other new, not proven industrial or medical claims may be jeopardised also. We must not exchange one exclusion for another. That feeling was eloquently and, dare I say it, comprehensively expressed by my hon. and learned Friend the Member for Med way (Mr. Marshall-Andrews).

I welcome the Minister's assurances that he will continue to consult widely on aspects of what must be the biggest and most welcome shake-up of the legal and justice system since the Labour Government's programme in 1949.

12.23 pm

Mr. John Burnett (Torridge and West Devon)

As a fellow newcomer and rural Member of Parliament, I am delighted to congratulate the hon. Member for Calder Valley (Ms McCafferty) on her excellent speech. I know her constituency well, and it is beautiful. She spoke with great feeling about her constituency and her constituents, who are fortunate indeed to have her as their Member of Parliament.

I must declare an interest as a partner in a firm of solicitors. I shall try to heed Lord Woolf s exhortation for "greater expedition". We are not here to justify the vested interests of lawyers. This is a debate about access to justice for all. Within weeks of coming to power, the Lord Chancellor asked Sir Peter Middleton to conduct a review of legal aid and civil justice. It was completed and published in September.

Following the review, the Lord Chancellor set out the Government's proposals for the reform of civil justice and legal aid in his speech to the Law Society's conference on 18 October. He said that he had two intentions. The first was to control the legal aid budget and the second was to reform the civil justice system so as to enable middle-income England and Wales to have access to the law.

Both those aims are laudable, but I should like to scrutinise the Government's assumptions and their proposed solutions, which are, first, to abolish legal aid for all civil matters except certain family and restricted cases, and to replace that provision with conditional fee agreements—the so-called no win, no fee. Secondly, they propose to contract or franchise out legal aid and, thirdly, to tighten the merits test to 75 per cent.

On 18 October, the Lord Chancellor described the legal aid budget as a leviathan with a ferocious appetite", as we have heard. He went on to say that expenditure had "rocketed" and was out of control. I shall take the House back just over a year to Lord Irvine's statement to the House of Lords. He asked: does the noble and learned Lord agree that the actual outturn for legal aid expenditure in 1995–96 was £74 million less than the supply estimates' figure of £1.46 billion, and that the supply estimates were £67 million less than the original estimates? For this year the supply estimates are £156 million less than the original estimates. I do not expect the noble and learned Lord to confirm those figures precisely, but does he agree that the general picture is the opposite of a budget out of control?"—[Official Report, House of Lords, 13 June 1996; Vol. 572, c. 1832.] Secondly, the remuneration for work done has fallen far behind the retail prices index. Fat cat is hardly a description that one could apply to the many dedicated legal aid solicitors and those working in law centres and citizens advice bureaux.

Thirdly, the Lord Chancellor frequently states that 90 per cent, of the legal aid bill is spent on lawyers' fees. As has been remarked upon, I also am at a loss to see how that proportion is a problem. It is a labour-intensive industry. What else is the money supposed to be spent on?

The apt question has to be: will no win, no fee increase access to justice for middle-income Britain? For 18 months or so, no win, no fee has been available for personal injury cases—cases where there is usually a 90 per cent, chance of success and winning, and where insurance for plaintiffs has been relatively easy and inexpensive to obtain.

As far as I am aware, the only study on no win, no fee has been that conducted by the independent Policy Studies Institute. The survey was uncertain whether conditional fees would open access to justice, especially to people on modest incomes who were ineligible for legal aid. What research have the Government done? Will the Minister publish that research and its results?

Will insurance be available to pay defendants' costs? What conditions or limitations will be attached to the insurance cover? On 10 November 1997, the hon. Member for South Suffolk (Mr. Yeo) asked the Minister, in a timely question, which insurance companies he had had discussions with. The Minister gave what could at best be called a general reply. We need specific responses on the matter. The letter of today's date to the hon. and learned Member for Harborough (Mr. Garnier) takes us no further.

Before the changes come into effect, the Department should provide the House with the details of its research, and a comprehensive schedule of the availability, conditions and approximate costs of insurance cover. Currently, no one knows what those costs are likely to be. The Government must satisfy the House well before the changes take effect that insurance cover will be affordable and that companies will be prepared to provide it.

No win, no fee raises many issues of great importance, not least of which is the ethical question. With everything riding on a win, the temptation for lawyers to compromise their standards of honesty and integrity is too great. At the heart of the arrangements is a conflict of interest: the lawyer's interest in settling and getting paid, including the uplift, is pitched against the client's interest in maximising her or his claim.

Have the Government considered the position of independent witnesses? Is it proposed that they should work on a no-win, no-fee basis? If so, what credibility will their evidence have? What thought has been given to the predicament of defendants? What quality of representation will be available to them? I hope that I am correct in thinking that I heard the Minister say that legal aid would continue to be available for eligible defendants.

Mr. Hoon

indicated assent.

Mr. Burnett

I am glad that the answer is in the affirmative.

During the Adjournment debate of the hon. Member for Great Grimsby (Mr. Mitchell), I asked the Minister: If conditional fees are introduced, will the insurance premiums of those who currently qualify for legal aid be paid by the legal aid fund, and will the fund pay the costs of investigating a case and its merits? The Minister replied: It is for the lawyers to consider whether they should absorb those costs …If we receive persuasive evidence that that is totally impossible, we may take other considerations into account".—[Official Report, 5 November 1997; Vol. 300, c. 294.] I do not believe that the majority of law firms, and especially small ones, are in any position to make those advance payments. The cost of investigating medical negligence cases can be as high as £20,000, and the vast bulk of that is specialist medical experts' fees. The resultant damages save the Exchequer other costs of care and maintenance. The Minister must make allowance for the poorest and most vulnerable in society, including those with special needs.

At 75 per cent., the Lord Chancellor has set the merits test too high. It is as high a probability as any barrister is normally prepared to give, except in some personal injury cases. I endorse the remarks of the hon. Member for Calder Valley on that point in her maiden speech.

For obvious reasons, the merits of a case do not become entirely clear until formal discovery or the hearing itself. On 10 November, I asked the Minister whether in private practice he had ever advised that the merits of a case, other than a personal injury case, were greater than 75 per cent. He told me that he had never been required to make such an assessment and explained that lawyers had failed over many years to satisfy adequately the existing test, which is essentially a 50 per cent, chance of success. There has been some abuse in this regard. The merits test should, as Sir Peter Middleton suggests, be set at about 60 per cent. A lawyer with accountancy assistance—not a civil servant—at the Legal Aid Board should validate the means of applicants and be satisfied in each case that that merits test has been passed. Those changes would not only root out abuse but save money, or enable increased access.

We are still waiting to hear the Government's proposals on test and lead cases, citizens advice bureaux, law centres and a community legal service, which is one of their manifesto commitments. When will they bring those proposals into the public domain? Will they provide full costings? Will all interested parties have a chance to scrutinise the proposals and make submissions?

There are funding proposals that do not involve additional Government expenditure, which the Government should seriously consider. The Bar Council has suggested a contingent legal aid fund. I believe that the Law Society has advanced a proposal called law link, whereby the Legal Aid Board, in money recovery cases, having paid the insurance costs and funded the disbursements, would receive a significant tranche of the success fee as well as its costs. It is incumbent on the Government to consider those proposals, which could go a long way to increasing access to justice for middle-income Britain. Franchising, which we support, will not simply provide for the efficient monitoring of legal services; it should also provide financial discipline and savings.

We welcome Lord Woolf s suggested reforms. Cases should be heard faster and justice should be cheaper, but when Sir Richard Scott was asked to implement the Woolf proposals, he said that he would implement them only if sufficient resources were made available for implementation. Woolf will mean savings overall, but it cannot and should not be done on the cheap. To ensure that we achieve justice as well as savings, more and better resources, and appropriate training, must be available to the court service. More judges are needed to supervise cases and more information technology will be needed.

This debate is about the crucial issue of access to justice for all. The important policy changes were announced and set out in Cardiff, not the House of Commons. The policy is ill considered and precipitate, and it is being rushed through without proper analysis and research. Much of the debate has been conducted by the Government through press releases and private briefings. We look for the policy changes to be implemented by Act of Parliament, with a proper opportunity for the House of Commons to discuss and scrutinise the proposals and their merits.

Finally, we look to the Government to confirm that they are not seeking to reduce the legal aid budget and will honour their manifesto commitment to the development of legal aid according to the needs and priorities of regions and areas. It is not too late for the Government to reconsider their proposals. The weight and diversity of the opposition to the proposals speaks for itself. I ask the Government to reconsider and re-evaluate them and to make some genuine proposals in the interests of the public and justice.

Several hon. Members

rose—

Mr. Deputy Speaker (Sir Alan Haselhurst)

Order. If the average length of speeches continues as it is, the many hon. Members who are seeking to catch my eye will not all succeed in doing so. May I please, therefore, appeal for brevity, so that everyone who wishes to participate may do so before the end of the debate?

12.39 pm

Mr. Austin Mitchell (Great Grimsby)

I rise with some trepidation, as only the second non-lawyer to speak in this debate. Never have so many lawyers spoken at such great length for so little in fees as this morning.

That is an initial reason for congratulating my hon. Friend the Member for Calder Valley (Ms McCafferty) on her maiden speech. She not only came into the debate as a non-lawyer, as I do, but delivered her speech with great elegance, humour and charm. I congratulate her on an effective maiden speech. I read of her coming in Pete Davies's book "This England" about the campaign in Calder Valley. I was expecting great things and I am sure that she is beginning to deliver them. She certainly did with her speech this morning.

I must say that my hon. Friend was wrong in referring to Donald Thompson as a Chartist. He was in fact an old, not a new Chartist, because the invocation of class hatred would have disqualified him from new Chartism. All that she said about Calder Valley was true. It is the most beautiful part of the country after Grimsby. It is the place that I view with most affection after Grimsby. I congratulate my hon. Friend on being such a wonderful representative. She has worked as a councillor in the interests of the people, and I am sure she will continue to serve them here in the Chamber. My congratulations to my hon. Friend.

Fewer congratulations to the Parliamentary Secretary, Lord Chancellor's Department, however, for proposals which, despite our conversations on the matter, I still fear will lead to cheapjack justice for most people—the kind of legal representation that fell off the back of a practice.

The main motive of the proposals seems to me to be not to bring justice more effectively, promptly and expeditiously to the mass of the people but to cut spending. As soon as a problem is approached from that angle, the approach becomes disastrous. It is certainly true that expenditure is rising. That is not because the legal profession is exploiting the system. The rise in crime is in itself responsible for a huge increase in spending.

People need legal services more as their standard of living rises. It is a feature of a rising standard of living that people want to pursue their rights and all the problems that they have in their lives. The legal system is important in pursuing those rights.

People have higher standards of medical services, building services and consumer services. They need to be able to pursue their rights to those standards. They need the law for that purpose. That is why expenditure on legal aid is rising. It is also rising because of the continued assertion of restrictive practices, particularly by the Bar. It is alarming to see so many speakers from the Bar adding to our debate this morning. A system in which people do not have direct access to a barrister so that they have to go through a solicitor, who takes his cut, and then through a clerk, who takes his cut, inevitably drives up expenses.

Expenditure on legal aid is rising because of the slow and cumbersome processes of the legal system. When one attempts to cut and control spending, it is wrong to place the main sacrifices on the poor—the people who need a better legal service. Service to the poor and to ordinary people will be curtailed by the Government's proposals. There is no doubt about it. People cannot afford the up-front costs or the insurance costs. They do not have the experience and the confidence to hawk their case around from one set of solicitors to another to get the best terms.

The proposals will result in a worse service for the poor. So will bulk purchasing of legal services. It will lead to cutting of corners, compression and a less adequate service.

I cannot accept all this, even if it is justified with the glowing but unspecific prospect of better things to come, because it is not realistic to start scrapping what we have got in favour of a better "might be", unless we have evidence of what that "might be" will be. We do not—all we are offered is a glowing prospect.

It is right that the Government should hit the ground reviewing, but if ever there was a case for a considered review and considered verdict, it is on legal services. That review has not been conducted. All that the legal services are being offered is a glowing prospect and a ritual chant against fat-cat lawyers, usually delivered by fat-cat lawyers. The Minister is usually an amiable, approachable man and I deprecate the way in which he and the Lord Chancellor are stirring up class hatred against fat-cat lawyers. That is not at the heart of new Labour's mission.

The Government's approach is wrong, especially when we are the party of progress, and the party which defends and represents the interests of the people—the mass of the ordinary people, whose interests need to be protected.

The people need the law more and more in their lives to advance their causes; protect their interests; protect them against the exercise of power or from large organisations; and protect them from all the abrasions of life.

A deep gulf is opening up between the mass of the people and the legal services, which are becoming strangers to the ordinary people because of their escalating costs. We should reform the legal services; the key question is how we can deliver them to the people more effectively. The answer is that the £1.5 billion devoted to legal aid should be spent more rationally.

We cannot, unfortunately, rectify our historic mistake. The Labour party has always had a vision of a legal version of the national health service which provides legal services at the point of need. After the war, the Rushcliffe committee suggested that that could be advanced by establishing 250 law centres across the country. Unfortunately, the Legal Aid and Advice Act 1949, which represented our first step towards implementation of that vision, did nothing about law centres. Instead, it subcontracted legal aid to the Law Society. It was a disastrous mistake to subcontract it to that vested interest. The Treasury knew that at the time and that is why the policy was not fully implemented until 1962. From then on, however, the exponential growth in costs began.

The answer to the problem is to take legal aid back from private practice. Of their nature, those practices are inefficient with high overheads. They cannot achieve economies of scale and they operate on the basis of restrictive practices. We have two sets of private practices whereas an employed service would be much more efficient, effective and available at the point of need. It would have far lower overheads per case than private practices.

We could provide an employed service through law centres for civil cases. Such a service should be boosted. If money is to be saved from the legal aid budget, why is it not to be spent on law centres, which need it so desperately and which have suffered from such serious financial cuts in the past?

We could also bring legal services back to the people by creating a public defender service for criminal cases, which operates extremely effectively in some of the better American states, such as California. We should enact a right to representation, as exists in the United States and is a constitutional right in European countries such as Sweden. Under that right of representation, people should have the choice to fulfil it by opting for the employed service, which would be dedicated, competitive, efficient and would charge fees as a ratio of a person's income. Alternatively, people could opt to go to a private practice and pay full fees to have their case pursued, or conditional fees, or even contingency fees, as charged in the United States. I would opt for the contingency fees so that private practice had the means to fight back against an employed service.

An employed service structure could be financed out of the £1.5 billion that goes to legal aid, particularly if it is supplemented by local authorities bringing financial support to local law centres and by fees charged in proportion to income. That would parallel the structure of the national health service, which is a successful example that we should use. It has both employed and private practice; it has specialists and generalists; and people can make their choice confident in the knowledge that medical services are there when they need them. That is what we want in the legal service.

Such a measure would be a responsible alternative because it would protect and advance the cause and the powers of the people. That is what the Government should have proposed. The Labour party in opposition should have been developing such ideas instead of lamenting the cutbacks in legal aid and saying that some bonanza in legal aid was in store. Everybody knew that that would not happen because the Treasury would take control of legal aid expenditure. We should have thought the problem through, but, instead, we took a negative stance and criticised what the outgoing Government were doing, without proposing an alternative.

We need that alternative now, which is why, in reviewing legal services in this fashion, my hon. Friend the Minister should start from basics and consider what an employed service could do to bring legal services to the people. Socialism—I am sorry to mention that dreadful word—is about building for everybody the platform of rights, services, education, welfare and jobs that is available to the rich because they have the money to buy them. Part of that platform is the legal services that people need to protect themselves and advance their cause and their rights. Unless we work towards developing a fair society, we shall lessen the odds in favour of the people and increase the odds in favour of power, wealth, privilege and all those who oppress the people and work against their cause.

The law is crucial if we are to arm people in that respect. Regretfully, the Government have opted for cuts, promises that may or may not be kept, and a measure that may or may not work, and about which we have only the barest details. That is because they have approached the issue too quickly and without enough consideration. Only by opposing the proposal will we get better from a Government who want better and will provide better if pushed into it, and if the pressure to cut spending is broken.

I regard the proposals as an infringement not only of the socialism that I would like but of people's basic rights. How will curtailing the provision of legal aid and support to ordinary people, especially the poor, be acceptable under article 6 of the European convention on human rights, which we are about to incorporate into our law? Article 6 speaks of a level playing field in terms of representation. Legal aid provides that by bringing a legal support service to the masses. If we cut that away, we shall infringe the convention and produce far more miscarriages of justice because of inadequate representation and defence. The inevitable outcome will be more appeals, more controversy and more failures, and the legal system will have to go back and redress the problems.

Those are my basic criticisms of proposals that are wrong and should never have been advanced in the first place without our having thought through to basics how we could better serve the cause of those who need legal services.

I wish to make two or three detailed criticisms. Benedict Birnberg has raised in correspondence with me and other Members of the problem of cases against the police. He has cited miscarriages of justice and even cases in which people have been beaten up, had their rights infringed and been maltreated by the police. Those are matters of public interest—certainly the Stoke Newington scandals are of public interest.

When an individual makes a complaint, he faces the whole machinery of oppression from the Home Office, the law, publicly financed litigation for the police force, finance from the Police Federation and so on. How can an individual take on all that with the proposed cuts in legal provision? Some of the cases are bitterly fought to the extent of trying to bankrupt the firm of solicitors handling them. The odds need to be redressed.

Thompsons, a firm of devoted trades union lawyers which does not charge the trade unions or the members whose cases they take on, has raised the incompatibility between the fixed or no costs imposed through the Woolf regime and conditional fees. If the motive of conditional fees is to get costs at the end of the case out of which to pay the lawyers' fees, that is incompatible with the regime envisaged in the Woolf reforms. It is a real problem which must be addressed.

How will medical negligence cases be handled? They are very difficult cases. One of my hon. Friends thinks that they are almost a waste of time and that people should not take on the national health service as it costs it money. I believe that by taking such cases to court, people are acting in the public interest to get an improved service and to maintain standards. Those difficult cases need support.

The Consumers Association, the National Consumer Council and the Policy Studies Institute review of such cases emphasise the need to have conditional fees running alongside legal aid so that we can assess whether conditional fees actually work. The Non-Practising Barristers Association wants to offer contract services, through law centres, to the Legal Aid Board. That is one way of getting a cheaper legal service from barristers. Why are the Government not taking up that offer?

Indeed, why are the Government not investigating the whole structure of restrictive practices? They say that they are not prepared to interfere with professional organisations, but all Governments seem perfectly prepared to interfere with the trades unions, on any pretext. The Bar Council is nothing but a silk-lined trades union which is exercising enormous power to maintain restrictive practices to the cost of the legal system and the consumer. Why are the Government not considering simplifying the procedures in injury cases through a state-financed scheme, paid for by a levy on insurance companies? That system already operates in New Zealand and it removes much of the legal argument and costs.

These proposals are full of holes. It is irresponsible to throw away what we have and what is working in favour of an alternative, without questioning whether we can do better. It is a problem which my Government will have to face. I strongly support and am enthusiastic about my Government, but they know that, with such a large majority, we can get away with anything.

If my hon. Friend was introducing a Bill for the slaughter of the first born, it would be strongly supported on the Labour Benches. We would argue that it would save a great deal of money, reduce public expenditure and allow us to fulfil our commitment to stay within the previous Chancellor's spending limitations. We would all nod sagely at every cue in my hon. Friend's speech. He would get the Bill through—he could get any Bill through. That very fact increases the onus on him and the Government to think through the fundamentals of what they are doing and whether they are serving the cause of the people, which is what the Labour party is all about.

12.58 pm

Mr. Graham Brady (Altrincham and Sale, West)

I cannot help but think, hearing the remarks of the hon. Member for Great Grimsby (Mr. Mitchell), that if the Government were to introduce a Bill proposing the slaughter of the first born, it would enjoy more support from Labour Members than does the proposal that we are debating. I have not heard a single Labour Member support the Minister.

I may be the third non-lawyer to speak in the debate. I can at least claim to be the first from the right side of the Pennines, which is something that I can be proud of.

I was nearly a lawyer and I suppose that I should declare that as an interest. I took a law degree, but at that juncture I decided that it was not a bearable proposition to enter such an unpopular profession and I resolved instead to enter the House of Commons. As I am not a lawyer I am not used to being paid by the minute, and as I am not a journalist I am not used to being paid by the word, so I will be brief. [HON. MEMBERS: "Hear, hear."] Thank you. I am tempted to quit while I am ahead, but I will continue.

I wish to argue the consumer interest and the interest of my constituents. That leads me to support the Government's attempts to streamline the criminal justice system, to lower costs and to speed up the process; I wish them well in that. However, I am extremely worried about the Government's proposals for legal aid. There are several significant reasons why they will cause problems for the Government and for the people whom legal aid currently helps.

The problem with our current legal aid system is that justice is open only to the very poor and the very rich. That is unacceptable and a scandal, and the Government are right to seek to tackle that problem.

My concern about the Government's proposal is that although by opening up the contingency fee basis to the majority of people, it will seek to redress the inability of the vast majority of the public to have access to the legal system, it also seeks to snatch away the benefits that are currently available to help the poorest people, the most disadvantaged people in the country, to have access to the legal aid system.

The conditional fee may extend access to justice to the vast majority of people on middle incomes, although one must bear in mind the fact that the likelihood of success will probably be a major factor in determining whether each case is brought under these proposals. Many hon. Members have mentioned the insurance element of the proposals, which is a very serious problem, especially in medical negligence cases, where the cost of insurance can be very high indeed. That does not by any means guarantee that justice will become more accessible.

If greater access results, that is to be welcomed. If the proposals, by withdrawing the legal support that the poorest people currently enjoy, reduce access, that should cause all hon. Members concern.

The hon. Member for Wyre Forest (Mr. Lock) referred to the possibility of cherry-picking taking place if a twin-track approach were adopted. That argument is worth exploring further because the difficulty with the Government's proposal as it stands is that cherry-picking will take place anyway. Effectively, lawyers and insurance companies will determine whether it is possible for an individual to pursue his case in the courts. Lawyers will cherry-pick. They will take the cases on which they will make the most money and the cases that they believe that they are most likely to win. However, that cannot be used as an argument for withdrawing support from the people who cannot afford to provide legal representation for themselves, and it is inconsistent to argue that one cannot have a safety net—effectively, a benefit system— because one wants to avoid cherry-picking.

Alarmingly, the proposal is consonant with other measures that the Government are taking, such as seeking to introduce tuition fees for higher education. There is a close analogy. The Government will argue that they are giving access to a system by introducing a new charging mechanism, but, at the same time, they are withdrawing the support that ensures that people at the bottom end of the scale have access.

In withdrawing maintenance grants for students, just as in withdrawing legal aid for civil cases, the Government are snatching away support from those who are least able to provide for themselves. That will have a damaging effect on access to the civil justice system. We have already seen the devastating effect of the introduction of fees on access to higher education.

The proposals need to be properly debated. We have had a good debate this morning, although I share the concern expressed by the hon. Member for Great Grimsby that too many lawyers and too few people outside the profession have spoken. We have had a good debate, but this should not be the end of the matter. We need proper consultation on the proposals, which have enormous implications for the administration of justice.

The consultation period will run until 1 April, when the proposals will be introduced. That cannot be deemed to be proper consultation. There is not enough time either for consultation to be carried out properly or for proposals to be drawn up in the light of that consultation. I call for a longer period of consultation and for the Government to give greater thought to the proposals. The proposals are largely untested. It would be sensible to run the two systems concurrently—to maintain the legal aid net for those who need it while extending trials to see how the contingency fee system will work and to measure the effect of insurance premiums on access to justice.

The conditional fee—I emphasise an earlier point—will inevitably mean that the system will lean towards larger and more specialist firms. That is a cause for concern. One of the most important aspects of providing proper legal advice across the country is the service given by small, local firms of solicitors. The danger with the proposals is that those firms will be hit. Small, general practices, especially in small towns, may no longer be viable. That does not mean merely that they will go out of business; nobody sheds many tears when a lawyer is put out of business. It also means that those towns lose the service that those practices have given. That should be most unwelcome and a major cause for concern.

I welcome the fast-track proposals and I wish them well. I hope that they will result in cheaper and quicker justice. I believe, however, that, in general, the proposals will have the opposite effect to that intended and that, far from widening access to justice, they will narrow it. If the Government believe that access to justice will be widened by the proposals, what provision are they making to expand the court service to take account of the increased number of cases that may be involved?

The conditional fee may extend access for some, but not for others, especially those who cannot afford insurance and those who, in medical negligence cases, cannot afford the disbursements that their lawyers may require. Rather than rush into uncharted territory, the Government owe it to themselves and to the country to have a proper, full consultation period and to look at the proposals much more carefully.

1.7 pm

Ms Hazel Blears (Salford)

Thank you, Mr. Deputy Speaker, for calling me in this very important debate. I should say at the outset that I am a solicitor, although I am not currently practising because I believe that it is important to be a full-time Member of the House. I have experience of working both in private practice and in the public service as I was a solicitor for Manchester city council, specialising in education and employment matters. I have also been a member of the management committee of my local law centre for seven years, so it is fair to say that I have some experience of the variety of ways in which the legal aid system functions. I also add, for the benefit of Opposition Members, that the House is about to hear a speech by a Labour Member in favour of the proposals.

The proposals to reshape our civil justice system and to refocus the assistance provided by the public through the legal aid scheme will enable many more people, irrespective of their wealth, to enforce their legal rights. Access to justice for all was the overriding principle behind the establishment of the legal aid scheme. There was clear recognition that legal advice—and especially representation—was exclusive, expensive and out of the reach of many ordinary citizens. Over the years, eligibility limits have squeezed thousands of people out of the legal aid scheme, yet the bill has grown enormously and legal aid now costs almost £1.5 billion every year. It costs every taxpayer £57 a year to fund the legal aid scheme, yet fewer people are entitled to receive help from it. How can we possibly defend the status quo?

Quite naturally, there is immense public concern that the costs should not be allowed to spiral out of control but need to be shaped and targeted at areas of greatest legal need. We need to get one point absolutely clear at the outset: the changes are not about slashing legal aid, as was put about in the scaremongering headline of The Law Society's Gazette—I wish that lawyers would have a better regard for the truth in respect of this issue. There will be no cost cap on the fund, but there will be tighter control, the elimination of waste and duplication, increased efficiency, planning and organisation, fixed costs and certainty about precisely which legal services can be provided through the fund. I am surprised that Conservative Members are so opposed to efficiency and good management.

There has been an outcry among the profession, predicting that thousands of poorer people—how I hate that phrase and the patronising connotations that sometimes go with it—will be excluded from legal help. There has been much agonising about access to justice for the poor. I wonder why we always hear such expressions of concern and anguish whenever the income of solicitors and barristers is under discussion.

For years, solicitors in inner-city areas such as my constituency of Salford been encouraged to take on cases involving housing, employment, benefit advice and other issues that fundamentally threaten the comfort of people living in difficult circumstances—those who are beset by poverty, unemployment and, in many cases, are exploited by those more powerful than themselves. Many solicitors have been extremely reluctant to get involved in such cases as they are not considered attractive or profitable and often entail dealing with people with tremendous personal problems.

The legal issues involved in employment and housing are often extremely complex and require imagination and creativity to resolve satisfactorily. There are, of course, some dedicated solicitors who are driven by a desire to ensure that everyone's voice is heard and to achieve genuine justice. I am lucky to have in my constituency some of those solicitors and a law centre which has been of immense help to many people in Salford.

The refocusing of legal aid and the move to contracting with firms that specialise, have expertise and consistently produce high quality efficient work will enable us to encourage and reward lawyers who are genuinely committed to improving access to our legal system. We shall be able to fund them to develop more innovative services such as home visiting, telephone advice lines, plain English documentation that is easy to understand and full explanatory advice so that clients truly feel part of the legal process rather than simply being on the receiving end of an unfathomable system.

The freeing up of millions of pounds of legal aid by the introduction of conditional fee agreements for the majority of claims will liberate funds which can then be directed at current gaps in provision. Sir Peter Middleton said in his report that once the budget is under control legal aid could be extended to more widespread funding for advice agencies, Law Centres etc.; funding for alternative forms of dispute resolution (mediation, arbitration etc); direct financial help to litigants-in-person to cover the cost of, for example, experts reports, court fees and travel costs; and representation in appropriate cases before tribunals or at coroners' inquests. What could be more important than providing legal representation at an employment tribunal for someone who has lost their job and been the subject of unfair dismissal? The right to work and the right to decent housing are fundamental rights in our society which are currently devoid of legal assistance and representation.

I would, however, add a note of caution. I share the many concerns of my hon. Friends about the costs of insurance in conditional fee cases. Many people on low incomes and benefits will find it difficult to raise the money to pay for insurance, so I should be grateful if the Minister would give further consideration to the funding of those items. It would be a real denial of justice if a genuine claim were to lie unpursued for want of the means to pay for insurance.

I turn to one other area of the proposals which I believe will be a genuine step forward in obtaining real value from the legal aid fund and ensuring that the kind of legal services available properly reflect the needs of local people.

In the north-west, we have been extremely lucky in recent years to have had the north-western legal services committee operating across our region, consulting a wide range of groups and individuals about the types of legal service that are needed. In October last year, the north-west pilot project was completed and it was clear that its excellent work ought to be spread throughout England and Wales to ensure that the voice of local people could be heard in deciding priorities for funding legal services.

The regional legal services committees, which are to be established in every area, will be uniquely placed to collect data about legal need and where suppliers are and to identify crucial gaps in provision. They will advise the Legal Aid Board on appropriate contracts and have a key role in monitoring the impact of contracting, whether on advice and assistance, mediation, or whatever other work is subject to the contracting process. They will have a key role in monitoring quality. They can bring together solicitors firms, advice agencies, local authorities, courts, prisons and community groups to draw up co-ordinated plans so that duplication can be eliminated and waste cut out. We shall be planning our legal services and, in so doing, spending taxpayers' money much more wisely and effectively.

There will be a regional plan informed by the work of the committee and it will shape the provision of legal services. It will be able to innovate. There could be contracts for employment tribunal work, housing advice, top quality benefit and debt advice, education work and representation. It opens up the prospect of doing new things that will be of immense benefit to people who are often unable to pursue justice for themselves. That is what legal aid was always intended to do. It may have lost its way in recent years, but the Government are determined to put it back on track.

The development of a community legal service, possibly with salaried lawyers, bringing together citizens advice bureaux, advice agencies, welfare rights advisers and trade union advisers—often experts on employment matters—holds exciting possibilities for increasing access to justice. Funding mediation and arbitration may help to reduce conflict between neighbours, which often causes grief and long-term damage to communities. There will, of course, be difficult decisions. If we are to have more litigants, we must ensure that they are armed with the knowledge and skills to pursue claims confidently and well. That may mean the provision of court-based advice services, which I ask my hon. Friend the Minister to consider.

The proposals can mean a new beginning for legal aid and civil justice in this country. Gaining control of the budget and targeting funds at those most in need is the practical way to increase justice for ordinary people. Simplifying the court system and introducing certainty about costs and procedures will go a long way to demystifying the process and opening up the legal system to many more people.

The reaction to the proposals so far has been narrow and pessimistic. Perhaps after 18 years of constant attacks on our public services we have lost the ability to look forward, to embrace change in a positive way and to have the courage to do things differently. I ask hon. Members, the profession and the campaigning groups to have confidence in the proposals. Perhaps with some modification following consultation, the proposals will help many more citizens to feel that they have a real stake in the legal system, enable people to pursue their genuine claims without fear of financial ruin and give them access to high quality relevant advice in their communities. I commend the proposals.

1.17 pm

Mrs. Eleanor Laing (Epping Forest)

I, too, congratulate the hon. Member for Calder Valley (Ms McCafferty)—who, unfortunately, is no longer in her place—on her excellent maiden speech. In the spirit of the pioneering women whom she mentioned, and even though she is on the wrong side of the House, it is always nice to welcome another woman to the House when she makes her maiden speech. That allows me to mention that I look forward to welcoming another woman to the Conservative Benches as a result of the Beckenham by-election—at which point the percentage increase in the number of women on the Conservative Benches will be significant.

One of the serious points made by the hon. Member for Calder Valley was about asbestosis claims. I could not agree with her more. It was after dealing for many months with the complicated and long process of investigating asbestosis claims when I was practising as a solicitor that I realised that I could not spend the rest of my life doing so. I therefore have no interest to declare, because I have not practised law for many years. However, I suppose that it is a case of once a lawyer, always a lawyer.

I agree with my hon. Friend the Member for Altrincham and Sale, West (Mr. Brady) that the debate has been interesting in that so few hon. Members on either side have supported the Government. I was surprised to agree so often with the comments made by the hon. Member for Great Grimsby (Mr. Mitchell), although I disagreed with him when he said that never have so many lawyers spoken at such length: I have heard many lawyers speak at even greater length on many occasions—perhaps because, as my hon. Friend the Member for Altrincham and Sale, West pointed out, they are used to being paid by the hour.

Like many hon. Members, I welcome the Government's intention to reduce the legal aid bill, to target taxpayers' money on those really in need of it, and to get rid of the unnecessary delays which now occur in the administration of justice. However, I have serious doubts whether the Government's proposals will be effective in achieving those goals. Legal aid, unfortunately, is a typical example of a scheme which is good in theory—we all agree that everyone should have access to justice, no matter what their means and position or the case that they wish to fight—but, like so many similar schemes, it has been undermined in practice by a minority who abuse it.

From my own professional experience and that of those to whom I have spoken, I have no doubt that some solicitors use the system to their own advantage. In some cases, the potential litigant does not even realise that he has a case to bring, but he is encouraged by a solicitor who will be the only beneficiary from any legal proceedings. That happens especially when certain types of solicitors' practices go to certain areas of the country and encourage people who they know will get legal aid—because they are unemployed or on low incomes—to bring cases against large companies which are then obliged to defend them and probably settle out of court. The result is that the client gains little—and wastes much time and effort on the difficulties of court proceedings, which nobody enjoys—and the only person who benefits is the lawyer.

The Parliamentary Secretary gave us an interesting statistic when he revealed that 83 per cent. of cases brought in the civil courts produce nothing or next to nothing for the litigant. The real injustice occurs not so much when somebody is encouraged by a legal adviser to bring a case against a large company, which can probably bear the cost of defending it, but when somebody is encouraged to bring a case against another individual who cannot get legal aid because he is in the middle-income bracket.

Mr. Hoon

I should make it clear to the hon. Lady that those statistics related to legally aided medical negligence cases.

Mrs. Laing

I thank the Minister for clarifying that. I take his point, but it is still a stunning statistic, which is why the matter must be dealt with as a matter of urgency. I suspect that in some other types of civil case, for the same reason, the proportion must be quite high, although perhaps not so high as 83 per cent.

My concern is the injustice done to the individual who, while not eligible for legal aid, does not have large means and cannot afford to defend a case. Under the present system it is in the interests of the solicitor acting for a legally aided client to spin the case out and obtain higher fees for the longer period while the defendant, who is not legally aided and therefore cannot afford to defend the case, is the victim of extreme injustice.

Mr. Hoon

indicated assent.

Mrs. Laing

I am glad to see that the Minister agrees with me there.

There are two possible answers which would surely be preferable to the complicated proposals that have been put before us. The first would be to strengthen the merits test. I do not mean that an artificially high 75 per cent. chance of success should be demanded. We all realise that many cases without such a strong chance of success would thereby be disqualified from legal aid, and cases worth testing would then not come before the courts. I should like the merits test to be strengthened so that people would not in future be put in the position that I have described.

In connection with the personal injury cases to which the Minister's statistic of 83 per cent. related, I am sure that we all recognise the difference between an injury incurred at the workplace or a genuine medical negligence case, in which a proposed litigant has suffered seriously either physically or financially, and the other type of case, in which someone has tripped over a paving stone and hurt their ankle. Such cases, legally aided, are still coming before the courts. If we strengthened the merits test we would be able to weed out the unworthy cases from the genuine cases which should properly be financed by taxpayers' money.

The second possibility would be to alter the balance of who bears the risk so that all litigants, no matter what their means, would have to make a contribution from their own pockets towards the costs. Somebody with very few means would have to contribute, say, £50 or £100—not a seriously large sum—so that people bringing cases would always know that they were putting their money where their mouths were. That is the way to separate serious litigants from those who are simply taking a bet with somebody else's money.

Mr. Lock

Does the hon. Lady realise that, under her scheme, people on income support, rather then putting their money where their mouths are, would be taking food out of their children's mouths to fund the rights to which they are properly entitled? Is that what she wishes to see?

Mrs. Laing

Yes, it is. I am not talking about a punitive sum. Perhaps someone on income support should make a contribution of £25. I am not talking about making it difficult for someone to bring a case to court; I am merely saying that we must draw a distinction between a serious litigant and someone who has been encouraged by an unscrupulous lawyer seeking to make a lot of money from the legal aid fund.

Mr. Brady

Does my hon. Friend agree that a £25 contribution would be considerably less than, say, the £95 needed for the insurance premium for a typical road traffic case?

Mrs. Laing

My hon. Friend makes a good point. There is no question of making it more difficult for genuine litigants to come forward and gain access to justice. The aim is to stop those who come forward because they are encouraged to do so by ambulance-chasing solicitors. They are a minority, but they have been milking the legal aid system for years and have made it more difficult for genuine litigants and lawyers with good intentions to bring serious cases before the courts.

My greatest concern is about the Government's proposals for introducing conditional fees. My first concern is the effect that this would have on the legal profession, for which I have every respect. I am not here to indulge in any lawyer-bashing—[Interruption.] Not at all—my lawyer-bashing concerned a tiny minority. The legal profession is honourable and we want it to stay that way. A lawyer's professional objective involvement in his client's case will be diluted, or even removed, if we introduce conditional fees and a contingency basis on which lawyers will be paid. My hon. and learned Friend the Member for Harborough and the hon. Member for Great Grimsby gave excellent examples of cases where such concerns might arise and I shall not repeat them.

We must bear in mind the fact that there are many reasons for a case succeeding or not succeeding; it is not just down to the efforts of the lawyers concerned. Not every case that is brought is an interesting Rumpole of the Bailey affair where the solicitor or barrister does something clever at the eleventh hour to win the case for his client. It is worth noting, incidentally, that the creator of Rumpole does not support the Lord Chancellor's proposals. We thought at one point that he would be Lord Chancellor himself and it is perhaps a pity that he is not, as I agree with his views on this point. If a lawyer's income becomes involved in the outcome of a case, the lawyer will inevitably lose his objectivity, however hard he may try not to let that happen—my hon. and learned Friend the Member for Harborough made a good case in that respect.

My second concern is that conditional fees could put our society in great danger of becoming even more litigious than it already is. Sometimes good ideas come to Britain from the United States of America and I encourage such good new ideas—I am no more interested in American-bashing than I am in lawyer-bashing—but this is not one of them. Encouraging litigation on everything, as the introduction of contingency fees would do, would make our society as litigious as that of the United States. Such a move would encourage the idea that whatever happens to anyone, in whatever walk of life, there is always someone else to blame. If we perpetuate such a culture of blame, we dilute the concept of personal responsibility. Every time someone trips on a paving stone—or, as in a recent case, spills a cup of coffee on themself—they find someone else to blame. It is not reasonable to waste a court's time deciding what temperature a cup of coffee should be sold at and whose fault it is when a cup of coffee bought by an American lady in a London restaurant is spilt. That is spurious and ridiculous litigation.

We must not enter into such a litigious culture that we allow our courts to be blocked up with such trivia when there are important matters of justice and legal precedent to be decided. We all want fair and equal administration of justice, and we all want access to the courts for everyone, no matter what their income, means or profession, but let us not go down the slippery slope of becoming ever more litigious and encouraging frivolous use of the courts. Let us continue to try to provide justice for all. Sadly, the Government's present proposals will not achieve that aim.

1.35 pm

Mr. Michael Jabez Foster (Hastings and Rye)

It might be said that I have been slow off the mark in making my first contribution. In my many years in local government, I have learnt that there is no point in simply saying how much one agrees with one's friends. I see no valid addition to the sum of human knowledge in remarking, "My colleague has said all I want to say," and saying it again. That is particularly so in this place, where the talents and advocacy of so many of my colleagues are so formidable in the forceful contributions that they make.

The other benefit has been that of hearing a gazette of the United Kingdom when, in their various maiden speeches—as happened this morning—my colleagues have told the House of the charms and beauty of the constituencies that they represent. Many have said that they represent the best or most beautiful place in Britain. While I have been in agreement with most of what they have said, on that matter they are mistaken—they must be wrong, because I represent the most charming, beautiful and historic place in all the land, Hastings and Rye.

The ancient Cinque ports of Hastings and Rye are indeed twin jewels, and their residents the most charming and talented in the land. However, the ragged trousered philanthropists still live on, albeit now voting Labour. For me, it is a special honour to represent Hastings and Rye, as it is the place of my birth and in which I have lived throughout my life. I can go so far as to say that my longest continuous absence from it was a two-week holiday. That may seem boring, but it is an incredible honour and privilege to represent one's friends, family and neighbours in this place.

Popular with visitors since 1066, this year, the town of Hastings celebrated the opening of a new shopping centre, with the particular honour of a visit from Her Majesty the Queen to open the same and also, but not more important, a visit from the Prime Minister's wife, Cherie Booth, to shop in it.

Hastings and Rye are historic towns and some history was made on 1 May, when an 18.55 per cent. swing to new Labour was the greatest in the country on existing boundaries—it might be said that I am the most unlikely lad of all to be in this place.

My immediate predecessor, Jacqui Lait, was a woman who also made history by becoming the first ever Conservative woman Whip—an achievement somewhat greater in her party than in mine. Her loyalty and commitment to her party are to be admired. When that party was unpopular, she did not seem to distance herself from it. Some might regard such loyalty as foolhardy, but to be certain where one stands is to my mind a quality to be admired and cherished.

Following the decision of the voters of Beckenham in yesterday's by-election, it might be foolhardy on my part to be too fulsome in my praise of Jacqui Lait, as I might live to regret it. She became the Member of Parliament in 1992 on the retirement of Sir Kenneth Warren, a man for whom I have enormous regard. As Chairman of the Select Committee on Trade and Industry, he was forthright and open and consequently made many friends in the constituency and in this place. I saw Sir Ken on the train a few weeks ago on the way back to Hastings, when he was good enough to give me some advice. He told me, "Do not take too much notice of the Whips." If I follow that advice, I shall no doubt learn whether it was good or ill.

Not all my predecessors were men and women of such integrity. The notorious William Long II, who represented Rye in the 12th century, caused an international scandal for Henry IV's Government, when he was found indulging part time in piracy. He was a man who in modern times would certainly have caught the eye of Nolan and would perhaps have appeared before the Select Committee on Standards and Privileges. Amazingly, perhaps setting a precedent, to the best of my knowledge he did not resign his seat.

From what I have said so far, hon. Members may be forgiven for believing that my constituency is a paradise. That is far from the truth: Hastings, or Mugsborough, as it was called in Robert Tressell's 1920s book, "The Ragged Trousered Philanthropists", is still a place of poverty and want. Our unemployment is as bad as that in inner cities: 1,000 young folk out of work and 1,000 long-term unemployed. We have an elderly population of about 34 per cent. of the electorate, many of whom are poverty stricken and excluded from the good life in their old age. Even the solicitors are poor in Hastings and Rye.

The constituency suffers above all from its lack of infrastructure. The A21, known as the snail trail, must be improved. I have in common with my recent predecessors the belief that the A21 improvements are an essential prerequisite to economic development in the constituency. Ken Warren said that in his maiden speech in 1966, and Jacqui Lait said it in hers in 1992. It would be remiss if I did not carry on the tradition, albeit in a different debate.

The Government's more positive attitude on Europe will benefit our fishermen in their plight; the new deal will give hope to the unemployed; the minimum wage will provide opportunity for those who are economically abused; and the pensions review will, I hope, give aid to the poorest of our retired residents; but we most need not handouts but handups, and the building of the road is the single most important contribution that the Government could make to the prosperity of my constituency.

My constituents expect justice from the Government, and I have every confidence that new Labour will create the climate to enable our community to achieve that, but I am concerned that the Lord Chancellor's proposals for the future of legal aid may deny many of them justice in pursuit of personal claims. I ask that further thought be given on safeguards before fundamental changes are made.

The complexity of legal remedies, increased crime and the breakdown of family life have led to an explosion in the need for legal expression, and legal aid has already been restricted. I have sympathy with the notion that the legal aid system is out of control, and it is not unreasonable that the present level of expenditure on legal aid should be held, but I believe that the current proposals are a nut to crack a sledgehammer.

My joy on 1 May at winning the Hastings and Rye seat for new Labour was equalled only by my delight that I did not have to return to my office desk and fill in another legal aid form. The bureaucratic nightmare that besets the current system wastes the resources.

I have calculated that up to a third of the time spent by a solicitor on a civil file can be on the administration of legal aid. That is a monstrous waste of professional time. There is some improvement where franchises have been granted, but the nature of auditing and the requirement under the franchise regulations to write a multiplicity of pointless letters to the client that have little to do with his claim is where the fundamental fault lies.

I am firmly of the opinion that most solicitors can and should be trusted. I know no fat cats who depend on legal aid for their living. There is no cream for legal aid: it is very much a matter of skimmed milk and water. Indeed, in the Hastings and Rye area, three or four firms—I know that there is no sympathy for this—have gone out of business, having depended essentially on legal aid.

If the current plans are implemented, many of my constituents will be dependent on pot luck rather than universal access to justice. If their case is sufficiently profitable, a solicitor will take it up on a conditional fee basis. If not, where do they go? Already many solicitors in my constituency have abandoned legal aid because of the low profitability. We could reach a stage where, as with national health service dentists, it will be increasingly difficult to find a lawyer who can afford to work the system. I accept that some alternative is required.

I know that my time is limited by reason of the early formalities in a maiden speech, but I have five bullet points to make.

First, is it not premature to consider legal aid before we see how the Woolf proposals work in practice and how savings to the cost of civil justice can be contained?

Secondly, how will people such as my constituent Mr. Brown, who has a good claim for medical negligence worth about £8,000, finance the often substantial disbursements required by medical negligence claims—if he can find a solicitor who would work for a conditional fee at such a level? Few solicitors, as I know from my friends and colleagues in the past, will come up front with the disbursements; they cannot afford to, especially in medical negligence cases, in which the fees are substantial. Will there be some form of limited legal aid in such cases to cover at least the disbursements, or even a loans scheme such as the one suggested for students? Even if a solicitor is prepared to fund his work on a conditional fee basis, a method of funding the disbursements must be provided. My hon. Friend the Minister mentioned the disproportionate and substantial cost of medical negligence claims, but how much of those costs are solicitors' fees and how much medical disbursements?

Thirdly, if the balance of probability—that is, 51 per cent.—is the civil justice test, what is the justification for imposing a merits test of 75 per cent. before granting legal aid? To impose such a test suggests arithmetically that 50 per cent. of those who might succeed in litigation will be denied the opportunity of leaving first base because of their poverty. That is selective justice. In cases of professional negligence especially, the 75 per cent. test will often not be met and justice will be denied.

Fourthly, another constituent, Mrs. Fox, won her case at an industrial tribunal and now wishes to enforce it, but cannot afford the court fee. I was delighted to hear this morning that the Minister will exempt such folk from the barrier of fees from 1 December. That is a step forward indeed.

Fifthly, what will be the position if "costs orders" insurance is not available or affordable to litigants who do not have the protection of legal aid? I accept in principle that there is no reason why litigants should be protected against claims for costs if they lose, but what if an application is made for security for costs? Would that security be given by the Legal Aid Board, or what?

I am concerned about the Lord Chancellor's proposal that the merits test should be used as a tool to regulate the pressure on the legal aid budget. That is rationed justice. It is acceptable to determine merits tests as to whether legal aid will or will not be granted, but to say one day that it is available and the next, in the same circumstances, that it is not, suggests that access to justice will become a lottery. Even the NHS has a waiting list.

The Lord Chancellor said last year on cost capping that, if imposed, Legal aid would cease to be a benefit for which a qualifying individual is entitled. It would in practice become a discretionary benefit available at bureaucratic disposal, a benefit which would have to be disallowed when the money ran out. He was right.

Happily, the Government's proposals are only proposals. I hope that the concerns expressed, not only by the legal profession but by a wide range of those involved in poverty and consumer affairs, will be heeded before the proposals are set in stone.

1.47 pm

Mr. Andrew Dismore (Hendon)

I congratulate my hon. Friend the Member for Hastings and Rye (Mr. Foster) on his well-informed maiden speech. I speak as a solicitor who has specialised in personal injury work for the past 19 years. Until elected, I was also an assessor for the Law Society specialist personal injury panel. I am an executive member of the Association of Personal Injury Lawyers.

I commiserate with my hon. Friend the Minister about the battering that he has had from the profession. Like my hon. Friend the Member for Salford (Ms Blears), I welcome much of what has been said by the Lord Chancellor. I am sure that the Minister will forgive me if, in the short time available, I concentrate on one or two of my reservations about the scheme.

Fast track has not been dealt with at length in the debate, but it is a central feature of the reform plan and impacts on the proposed alternatives to legal aid. If it is done properly, it could produce major benefits in some cases. Equally, particularly in respect of personal injuries, there are many detailed concerns which, if not answered, could lead to widespread loss of existing access to justice, leaving the insurance industry, as the main beneficiary, laughing all the way to the bank at the expense of accident victims.

A key issue is to consider what sort of case is suitable for fast track. In the personal injuries sphere, for example, it may be appropriate for a straightforward road accident with anticipated damages within the suggested financial limits. However, a disputed liability accident at work claim will rarely be right for the fast track as it is at present envisaged.

The fast-track procedure means that cases cannot be as fully investigated as they are at present. The unfortunate consequence is that the accident victim, in bringing his or her case to court, will do so with less evidence, fewer witnesses, less documentation and less material evidence. Yet the burden of proof remains with the injured employee.

At present, trade union solicitors score an amazing 96 per cent. success rate in litigation. Last year, they helped some 150,000 injury victims recover £330 million in damages, at no cost to the taxpayer. But if the union lawyer cannot, because of the constraints of the fast track, put before the court a properly prepared case, inevitably there is a very real risk that the case, which might be won under existing procedures, could be lost in the fast track, which would be a highly undesirable result.

What about professional negligence implications? At present, if a lawyer messes up the case, the disgruntled client can, rightly, sue him, but the fast track will prevent the lawyer from doing the best job that he can. Are the rules to be relaxed so that the lawyer can defend himself on the ground that fast track did not allow a full investigation? Can we really believe that a client would accept such an undesirable outcome?

On the positive side, my suggestion of excluding disputed employers' liability cases from fast track would act as a powerful incentive to insurance companies to admit liability at an early stage, if the result of such an admission would be the transfer to, or retention of, the case within the fast track. An early admission of liability is clearly in everyone's interest. As it is at present configured, the fast track has entirely the opposite effect. The insurer will know that there is a better chance of winning in the fast track.

Fast-track costs are also important. While fixed costs may be suitable for certain types of case, I am concerned about the issue in this context. I believe that it will radically shift the balance in personal injury litigation to the benefit of the insurer, again at the expense of the injured victim.

While I know that academic exercises are under way to investigate hypothetical fast-track costs, Sir Peter Middleton very sensibly suggested that the introduction should be delayed until the fast track itself had been introduced and allowed to settle down. Only then could we identify the true cost of running a case efficiently. If the costs regime does not reflect that, the end result will be entirely the opposite in terms of access to justice to what the Lord Chancellor intends and we all wish to see.

Fixed costs will also impact on the commercial viability of conditional fees, including conditional fees under the existing arrangements, as a success fee percentage based on too low a costs figure will be inadequate to offset the financial risks that the solicitor will be expected to take. If we do not get costs in the fast track right, that will also impact on private insurance and trade union schemes, which are one of the great success stories in terms of access to justice and are proposed as one of the key provisions as an alternative to legal aid.

Personal injury litigation, especially in the trade union market, is very competitive and has led to extremely efficient firms working on tight profit margins with little leeway to absorb substantially reduced fees or increased expenses. Unless disputed employers' liability cases are excluded, the vast bulk of trade union-backed cases will be in the fast track. That will undoubtedly detrimentally impact on the financial viability of the trade union schemes, and prevent them from being expanded in the imaginative way suggested by John Monks, the general secretary of the Trades Union Congress, in his recent positive and innovative speech to the Association of Insurance and Risk Managers.

Trade union schemes are already under pressure from increasing difficulties caused by the indemnity principle, which prevents their further development. I hope that my hon. Friend the Minister will pay close attention to those problems, and not add to them, through the fast-track plan.

I intended to deal with conditional fees, but they have been dealt with extensively in the debate. I welcome them. They have been a great success story in personal injury and they can be elsewhere. My concern is that the Government could be the biggest loser if they get things wrong. Personal injury legal aid has proved very cost-effective. In 1996–97, more than £500 million in damages was recovered in legally aided personal injury cases, at a net cost to the legal aid fund of £34.5 million.

In the same year, the Department of Social Security recovered £135 million by way of recoupment of benefit. Clearly, not all those cases were legal aid cases, but a substantial proportion were. We know that there are plans to extend the recovery scheme to national health service costs for treating road accident victims, which the Law Commission has estimated at £100 million. If one adds in the VAT on legal fees, the Government make a healthy profit on their legal aid investment. There is a real risk that, if we get these things wrong, we shall be throwing the baby out with the bath water.

The other point that I wanted to make about conditional fees is the impact on levels of damages. My hon. Friend the Minister is aware of the Law Commission research paper "How much is enough?", which demonstrates the extent to which personal injury damages have fallen behind. If we do not do something about the levels of damages as part of the process, hardship could follow through the loss of compensation under the present success fee cap. Again, I therefore urge my hon. Friend to consider acting on the outstanding recommendations from the Law Commission concerning damages, in particular through the early implementation of section 10 of the Civil Evidence Act 1995 and section 1 of the Damages Act 1996. That would go a long way to solving the problem of the damages gap.

A conditional legal aid fund could provide a safety net, and I know that various proposals on that have been put forward. The main problem with it is the difficulty caused by the adverse selection argument, but that could be overcome. I have met my hon. Friend to put forward proposals and I shall pursue that matter in writing, given the limited time now available. The problem could be avoided by combining the concept of block funding with the conditional legal aid fund and perhaps restricting clients' direct access to solicitors and, instead, expecting them to be referred on. That would take away the choice of client from the solicitor and put it in the hands of perhaps the legal aid fund and, in the longer term, the community legal service. We would then mirror the way in which the trade unions operate—through that process, they have avoided the adverse selection argument.

There is much of a positive nature in the Lord Chancellor's proposals. It is incumbent on the legal profession to advance positive suggestions rather than to react with the knee-jerk negativism that we have seen so far, and which was amply demonstrated to any who went to the Bar Council meeting on Wednesday night. Our message to the lawyers must be, "Don't panic." Let us work together in partnership to develop a better civil justice system that will be quicker, cheaper and available to all.

1.55 pm

Mr. Paul Stinchcombe (Wellingborough)

Thank you, Mr. Deputy Speaker, for allowing me to make a short contribution to the debate.

I have an interest to declare, because I was a barrister in practice for 12 years prior to 1 May. I cut my professional teeth in the chambers of my noble and learned Friend the Lord Chancellor, perhaps a bruising baptism to the legal profession.

I wish to address one matter that has not been covered in great detail, but first I, too, would also like to urge on my hon. Friend the Minister the essential obligation to listen carefully to the voices of concern that have been raised by his hon. Friends on the Government Benches. We were sent here to represent poor people—we must represent poor people. We must act with caution and tread carefully lest we prejudice those for whom we must fight the hardest.

Little attention has been paid today to the impact of the legal aid proposals on judicial review. The Lord Chancellor is suggesting that ordinarily the threshold for legal aid applications being successful in such cases should be a 75 per cent. prospect of success. I share the concern that lies behind that proposal, because in too many cases legal aid has been granted as early opinions have been bullish, but, ultimately, those cases have been proven to be hopeless. They have been lost and money has been thrown away.

I am unconvinced, however, that the current proposal is the way forward. As a barrister specialising in judicial review, I rarely, if ever, was able to put my signature to or stake my reputation on such a prediction of success. That was not because of any inherent conservatism on my part but because of the nature of judicial review. In judicial review proceedings, litigation risk always looms large. One has difficult issues to contend with, such as statutory construction or the construction of a decision letter from a deciding authority. Doctrine moves very fast. I am not the only public lawyer who has such feelings, because not a single public lawyer whom I have talked to dissents from the views that I am now expressing.

I have two fears. The first is that barristers may, in time, be persuaded to put a 75 per cent. probability of success on a case rather than a 50 per cent. probability of success, simply because they wish the case to go ahead. If that happens, and that temptation is acceded to, we shall not secure the cost savings that we want.

The more serious concern is that if barristers do not act in that way, we may simply stop people having access to justice. We must remember that we, as the Government, are one of the most obvious potential respondents to any such litigation. Judicial review is brought against us. If we took any action and adopted any policy decision that prevented people, especially poor people, from challenging our decisions, we would be acting with an apparent conflict of interest. We would even run the grave risk of conflicting with article 6 of the European convention on human rights.

It is important that we tackle a known problem, but that we do so with greater flexibility, so that we find a fair and proper solution that saves costs but does not run counter to the interests of the poor, fairness, the interests of justice and the European convention, which we shall incorporate into our domestic legal system next year.

I have two or three suggestions. Why is the person who gives the original legal aid advice not denied the chance to take the brief? That simple check could be put in place to save costs. Why cannot we have a rolling audit of the quality of the advice given under legal aid? If people put their signature to the opinion mat they will win a case at the 75 per cent. threshold, we have the means to check the accuracy of such predictions. We can introduce greater scrutiny for the Legal Aid Board to wrestle with the problem, rather than pick an artificial dividing line— the 75 per cent. threshold—which is arbitrary, may lead to injustice and may breach European law.

1.59 pm

Mr. Gareth Thomas (Clwyd, West)

I declare an interest not as a fat cat but as someone who practised at the provincial Bar for a number of years. I have also had experience in the international insurance industry, which may interest my hon. Friend the Minister.

I well understand why the Government have embarked on the process of the long-overdue reform of the civil justice and legal aid system. If there is not exactly a crisis of public confidence in that sphere, there is real concern that the civil justice system fails adequately to fulfil its role as a guarantor of people's rights. People are also concerned that legal aid does not fulfil the function of providing access to justice to an enormous number of people. The Lord Chancellor is right to concentrate on the need to correct the imbalance in the system so that middle-income as well as low-income Britain has access to justice.

The Lord Chancellor is also right to test alternative arguments, including those for the status quo, against the principle that legal aid should exist only to remedy the imbalance between the poor and the better off—I am sorry to use those pejorative terms—not to put the poor in a privileged position. However, that principle, which the Lord Chancellor has chosen as a litmus test, should not be adhered to slavishly. The proposals give every indication of an over-dogmatic adherence to that principle at the expense of justice.

In the circumstances, the Government have rightly judged that the wider public interest demands that the reforms should be decisive and far reaching, although whether they should be as swift and far reaching as suggested by the Lord Chancellor is another matter. Although the Government are right to exercise healthy scepticism when dealing with the legal profession's claims in that respect—experience teaches us that scepticism can be the right approach—I am bound to conclude that the concerns expressed by both sides of the legal profession as well as by consumer groups are well founded in certain respects. I perceive that the Lord Chancellor has been doing his best to seek to establish a correct balance between taxpayers' right to expect efficiency and value for money and, as befits a Labour Lord Chancellor, concern that the poorest and most vulnerable in society have better access to justice.

I welcome the Government's commitment to establishing a community legal service and I echo the sentiments of my hon. Friend the Member for Salford (Ms Blears) in that regard. It is an opportunity to focus attention on areas of law that have been overlooked, such as social welfare and possibly tribunal representation. I also welcome the commitment to introduce a fast-track procedure for claims of up to £15,000, which will benefit many people of modest means whom I have represented over the years. The removal of delay and complexity, which are so much part of our legal culture, can only benefit the majority of litigants.

The Government's commitment to retain an arbitration limit of £1,000 for personal injury claims is welcome, as is their commitment to extend exemptions from court fees to those in receipt of income-related job creation allowance, family credit and disability living allowance, and their refusal to countenance contributions to legal fees for those on income support.

We must not forget that legal aid will continue to be available for all civil cases that do not involve money or damages claims. Those positive factors, which must be put in the balance, are consistent with the Government's overall commitment to end social exclusion and build a fairer society. But—and this is the critical question—how does the proposal to remove legal aid at a stroke for all money and damages claims square with that principle? I do not say this lightly or with pleasure, but I have grave concerns about whether these proposals can adequately be consistent with our commitment to a fairer society.

The best approach for the Government to adopt is that in Sir Peter Middleton's report. He said that it was right and proper to allow a certain degree of discretion to the Legal Aid Board. He said: One approach would be simply to remove those areas of work for which conditional fee agreements are most suitable (e.g. most personal injury work) from the scope of the legal aid scheme. In practice, however, it would prove difficult to define the appropriate categories, and within any definition there could conceivably be cases that ought to be pursued but whose individual circumstances made them unsuitable for a conditional fee. Time does not allow me to explore the arguments further as I know that other hon. Members are anxious to speak. The Government should look again at Sir Peter Middleton's report and adhere to the principle of flexibility in order to do justice in individual cases. There must be greater consultation. The Government should adopt a more cautious approach, especially on the issues of affordability and availability of insurance.

I echo the comments of many hon. Members on both sides of the House in saying that the Government have a positive approach to reforming legal justice and legal aid, but there is substantial scope for caution and reconsideration.

2.6 pm

Mr. David Lock (Wyre Forest)

Thank you for calling me, Mr. Deputy Speaker. I declare an interest as I was a barrister for 12 years. Due to the delays in legal cases, I have one or two hanging over, but I hope that the Government's proposals will ensure their speedy disposal.

This is a debate about civil justice during which I have heard many attacks on the Government's proposals. One should only attack if prepared to defend the status quo or put up an alternative. It may be apposite to quote, "You are defending the status quo ante-bellum." We appear to be in something of a war.

The present position cannot be supported. Legal aid is available for personal injury, but not for unfair dismissal; for labour disputes, but not welfare rights; for mental health tribunals, but not social security appeals; for a commercial dispute, but not for a family at an inquest. If we had to start from the beginning and devise a system for where to place legal assistance, we would not end up with the current system.

There is enormous merit in the Government's proposals, especially on conditional fees. I want to discuss three aspects of them to try to advance the debate—first, weak cases; secondly, complaints about conflicts of interest; and thirdly, insurance.

On balance, is it in the public interest for weak cases not to come before the courts? My first reaction as a lawyer, who has won a few cases that I thought were losers, and lost a few more that I thought were sure-fire winners, was that all cases should be litigated, but, on balance, I think that I was wrong.

For whose benefit are weak cases run? Is it for the litigants? I do not think so. Their hopes are raised, but in the vast majority of cases they are then dashed. Let us not forget the strain of being a litigant, especially an unsuccessful litigant. Litigation dominates people's lives, saps their energy and prevents them from getting on with their lives. If they lose, their heartache was for nothing. Taking on weak cases is rarely for the benefit of weak litigants.

Secondly, defendants have rights, too. The prime example of that is the national health service. The money spent in litigation would be better spent in other ways. With respect to my hon. Friend the Member for Great Grimsby (Mr. Mitchell), I believe that medical negligence litigation is a very blunt instrument for improving practice in the NHS; there are much better ways.

Thirdly, other litigants will suffer if weak cases are pursued. Weak cases clog up the courts and cause delays and every other litigant pays the price. They are the cases that are hardest to settle, so they take up a disproportionate amount of court time.

Fourthly, and most important, unmeritorious litigation promotes a litigation culture. All of society pays a price for that. The professional seeks a second opinion, not because it is a professional view, but because of a fear of lawyers. Access to justice is important, but we pay a heavy price if we are trigger-happy with writs.

Another objection that is made to conditional fees is that there is a conflict of interest for the lawyers. It is said that lawyers lose their objectivity because their financial interests are linked to the success of the claim. That objection is misconceived. Lawyers already have a massive conflict of interest every time that they advise the Legal Aid Board whether a case should or should not be financed. The duty to the client and the duty to Legal Aid Board are in conflict, as every practitioner knows. Frequently, the client wins and the Legal Aid Board does not.

Lawyers also have a direct personal financial interest in the advice that they tender to the Legal Aid Board because, if legal aid is granted, the lawyer who advises gets the fees. Do lawyers discharge their duty? I believe that in most cases they do, and they manage to balance their own financial interest with the financial interests of the Legal Aid Board.

I see no difference in principle between that and the conditional fee approach. All that conditional fees do is to substitute the advice to the Legal Aid Board with the advice to the firm's finance committee. Lawyers are in the business of running cases and it would be a strange case of which the lawyer could say to the Legal Aid Board, "This case is worthy of funding because it has a sufficiently good chance of success" but could not give the same advice to the firm's finance committee or to his or her partners.

The next objection is that litigants will not be able to afford insurance against an adverse finding of costs and the problem of non-lawyer disbursements—the matter raised eloquently by my hon. Friend the Member for Hastings and Rye (Mr. Foster). The Government's answer to that objection is that lawyers will learn, as part of the new culture, to finance those costs as part of the opportunity costs of taking on litigation. I have sympathy for that approach, but I foresee problems in the short term.

In the words of Mr. Jonathan Swift, I have a modest proposal. While the culture is changing and the financial service industry is learning to assess the risk, might legal aid for money claims be retained solely for two purposes? The first purpose would be to fund non-legal disbursements—essential medical reports, engineers' reports and so on. I understand that well in excess of 90 per cent. of legal aid money is paid to lawyers, so this preservation should not put undue strain on the legal aid budget.

The second—and, I emphasise, temporary—extension that I seek is that the existing cost protection should be left in place for legally aided plaintiffs. People have the benefit of knowing that their lawyers believe in the litigation because they are taking it on a conditional basis. However, for the short time of the exemption, if they were to lose, they would not suffer the effect of an adverse costs ruling—as they do under the present system. That would enable us to avoid insurance products not being available in time or being available only at extreme cost because the full effect of the Woolf reforms and the limitation of costs—and so the insurer's limitation of exposure on costs—had not worked its way through the system or was not fully appreciated by the underwriters.

The real benefit of all these proposals is that they will make money available to develop the important community legal services that are not funded by legal aid, and which are most needed by the people, rich or poor, inside or outside the legal limits. Many services are not included in the legal aid system. If the price that we must pay is a small trimming of the legal aid budget to finance a community legal service to provide these benefits to very many people, as my hon. Friend the Member for Salford (Ms Blears) eloquently said, it is a price well worth paying. I invite the Government to see these proposals in the round. In the round, and subject to one or two small concerns, I whole-heartedly welcome them.

2.14 pm

Mr. Hoon

With the leave of the House, Mr. Deputy Speaker, I shall reply to the debate. It has been a serious, thoughtful and constructive debate. I hope that my hon. Friends will forgive me if I say that it has taken me a little time to get used to the idea of having more lawyers behind me than opposite me.

I will try to deal with the wide variety of issues raised; if I fail to deal with every point, I apologise. I am willing to take up any argument in correspondence if I fail to address particular concerns. I could have taken much more time to respond to the debate, but I hope that hon. Members will understand that, by limiting my closing remarks, I have allowed more speeches than would otherwise have been possible.

I congratulate my hon. Friends the Members for Calder Valley (Ms McCafferty) and for Hastings and Rye (Mr. Foster) on their excellent maiden speeches. My hon. Friend the Member for Calder Valley gave the House an enjoyable account of the history and present circumstances of her constituency, an area I know quite well from my days of living in Leeds. I had the chance to play cricket on many of the beautiful cricket grounds in and around my hon. Friend's constituency. I came to appreciate the Yorkshire approach to fair play and winning at cricket, which may be relevant to the subject of litigation.

I have not had the privilege of visiting the constituency of my hon. Friend the Member for Hastings and Rye. I suggest that he treats the advice he received about the Whips with some caution, as I would not want him to end up like King Harold. He is obviously used to the slings and arrows of outrageous fortune as he is, I note, a qualified Football Association referee. As I always agree with the referees' decisions on a Saturday afternoon, I congratulate my hon. Friend again on his maiden speech.

As congratulations are in order, I ought to congratulate the hon. and learned Member for Harborough (Mr. Garnier) on his complete conversion to the role of Opposition. Some of his Front-Bench colleagues are struggling with difficulties of adjustment; they do not know how to use public transport or how to write their own speeches. I assure the hon. and learned Gentleman that the next time the sweater-clad massed ranks of the Conservatives assemble at Eastbourne, he will be hailed as a star.

During the hon. and learned Gentleman's hour-long speech, he managed to avoid making a single reference to any aspect of his party's policy on these questions. During such a long contribution, we could have been treated to some idea of what he thought might be an alternative to our proposals. He seems to suffer from an obsession with spin doctoring; we had 10 minutes of concerns about spin doctors. Perhaps the hon. and learned Gentleman should instead congratulate journalists on the excellence of their articles.

The hon. and learned Gentleman made one or two points about the Government's proposals with which I shall endeavour to deal. He expressed some concern about consistency and about the speed of the introduction of fixed costs and fast track. I emphasise that Lord Woolf advised against piloting the fast track. He favoured the development of a series of hypothetical case studies; that is precisely what the Government are doing.

I seem to recollect that the previous Government recommended a rather earlier implementation date for the proposals than the one on which we have decided. Again, it seems a little unfair of the hon. and learned Gentleman to criticise the Government for undue haste. We are taking a little longer than the previous Government thought appropriate.

In respect of the Policy Studies Institute research and my authority for quoting 28,000 cases, the figure was obtained from the Law Society shortly before the PSI conference on 23 September 1997. It represents the number of agreements registered with Accident Line Protect, but, as that is only one of the insurance companies involved, it is likely that more cases have been agreed so far. I emphasise to the hon. Members who have contributed to the debate that we are determined to consult in respect of the description of cases that will be excluded from legal aid and in respect of what, if any, special arrangements may be required for difficult cases. I shall refer to some more examples in due course.

My hon. and learned Friend the Member for Medway (Mr. Marshall-Andrews) asked for tolerance of his views. Perhaps I should remind him that I was so tolerant of his views that I devoted a day of the general election campaign to driving from the north midlands to Medway and back in order to ensure that he would be here to express those views. That certainly demonstrates a degree of tolerance.

Mr. Marshall-Andrews

I thank my hon. Friend for his contribution.

Mr. Hoon

I think that I am grateful to my hon. and learned Friend for his remarks, but I have certainly never blaggarded legal aid lawyers and I do not intend to do so. Turning to his comments about caring lawyers dealing with medical negligence cases, I might be more impressed by their caring qualities had they not always been paid for their work.

The Government's difficulty in respect of legal aid is that far too many unmeritorious cases are supported by the taxpayer. It is clearly necessary to get legal aid under control, and that is our ambition. It is a matter not of being dictated to by the Treasury, but of finding mechanisms to control legal aid expenditure.

My hon. and learned Friend was most eloquent about the philosophy underlying legal aid and its introduction in 1949. However, if we are to ensure that legal aid continues to be available on any basis, we have to bear in mind the fact that since 1949 eligibility has continually fallen simply because successive Governments have been unable to afford its costs. In making judgments about whether to spend more money on education, the health service or legal aid, my hon. and learned Friend will know better than I do that Governments have not necessarily favoured the prospect of spending still more money on lawyers instead of teachers, nurses or doctors. All Governments have to face that judgment.

Despite his philosophical approach, my hon. and learned Friend should realise that at some stage we shall have to recognise that so few people are eligible for legal aid that the very principles that he so eloquently set out are being undermined. My hon. and learned Friend makes his criticisms now, but if we continued with the status quo, he would have to make them at some stage—if not against the present Minister, against whoever will be standing at the Dispatch Box in a few years' time—when tough decisions have to be taken. [Interruption.] That was not an announcement of my resignation.

My hon. Friend the Member for Salford (Ms Blears) emphasised the difficulties of eligibility. As I said in my opening remarks, all hon. Members have experience of constituents writing in or coming to their surgeries complaining that although they had properly paid their taxes for many years, they were not eligible for legal aid.

There have been complaints that the Government have not had sufficient contact with the insurance industry. As I have said, those contacts have continued over a very long period. We are not suddenly discovering the existence of the insurance industry. We have had regular meetings at ministerial and official level. I could read out the long list of contacts that has been supplied to me, but I am not sure that that would be appropriate at this stage. I assure the House that the Department is analysing very carefully how best risk can be borne. We will involve professions and the insurance industry in the work. It is clearly important that we achieve the right balance.

I emphasise that someone has to be responsible for paying the up-front costs of litigation. We may end up with some sort of compromise. We are considering such ideas. Lawyers may share some of the burden, as may the insurance industry. Indeed, it is not impossible that, in some cases, the taxpayer will continue to share some of the burden. We are engaged in such discussions and consultation.

My hon. Friend the Member for Great Grimsby (Mr. Mitchell), who kindly told me that he would not be present for the winding-up speech, said that the rise in legal aid spending was not solely attributable to civil cases. We are, however, concerned with civil cases today. He is not strictly accurate in suggesting that the rise in crime under the previous Government contributed so much to the rise in legal aid spending. There has been a very significant increase in the cost of civil legal aid, but it cannot be attributed to an increase in the number of cases, which he implied.

The hon. Member for Altrincham and Sale, West (Mr. Brady) said that he was not a lawyer. I must reveal that he is a political consultant by profession. Whether that is a more popular job than being a lawyer I am not so sure. Nevertheless, he made a serious point about the need for consultation, which we are undertaking. He emphasised the importance of the small firm. I would simply respond by saying that we want firms that offer expert, specialist and professionally competent advice to their clients. Such firms might be small or large. I want the taxpayer to support through legal aid lawyers who are competent in the work in question. I cannot see that anyone can object to that.

I largely welcome the contribution of the hon. Member for Epping Forest (Mrs. Laing). She is both a solicitor and a political consultant. How popular that will be remains to be seen.

I am grateful to my hon. Friend the Member for Hendon (Mr. Dismore) for his very thoughtful and detailed comments. He has already contributed to the general debate and I know that he will continue to do so.

My hon. Friend the Member for Wellingborough (Mr. Stinchcombe) described his concern about the impact on judicial review. I assure him that that is the kind of area in which we are carefully considering whether the 75 per cent. chance of success is entirely appropriate. Different criteria may operate in certain cases.

My hon. Friend the Member for Clwyd, West (Mr. Thomas) referred to the community legal service. That gives me an opportunity to emphasise that unless and until we gain control over spending in the traditional legal aid system, we will never be able to switch resources effectively to areas of legal advice that, over long periods, have been sadly neglected. Although we have been pressing down on eligibility and thereby reducing the number of people who are able to receive traditional legal aid, it has been quite impossible to provide advice and assistance in any other area. That is what we are consulting on with regard to the community legal service. That will give us an opportunity to redirect and refocus resources on new areas of advice and assistance.

My hon. Friend the Member for Wyre Forest (Mr. Lock) made a number of detailed points, as he has done at previous meetings with me. I appreciate his suggestion that it is necessary for us to put aside our respective professional interests for the sake of the public interest and I thought that his comments amply demonstrated the importance of that. We are consulting about the way in which we can support non-legal disbursements in money claims, and we have received a number of thoughtful proposals which we are considering carefully as part of our reform programme.

Our proposals form a far-sighted and radical package of legal reform for the 21st century, which is no less than people in this country deserve. Our plan is to create a legal system that provides access to justice for everyone, against a background of fundamental reform of the civil justice system and legal aid. I am grateful to all my hon. Friends and other hon. Members who have contributed to the debate.

It being half-past Two o'clock, the motion for the Adjournment of the House lapsed, without Question put.