Access to Justice Bill [H.L.]

HL Deb 11 February 1999 vol 597 cc390-456

Consideration of amendments on Report resumed on Clause 6.

Lord Falconer of Thoroton moved Amendment No. 39: Page 4, line 21, leave out ("Directions given by the Lord Chancellor under section 4 may") and insert ("The Lord Chancellor may by direction").

On Question, amendment agreed to.

Lord Kingsland moved Amendment No. 40: Page 4, line 26, at end insert— ("(6) The Lord Chancellor shall by order make provision about the payments which may be made by the Commission in respect of advocacy provided by non-contracted private practitioners in cases funded as part of the Community Legal Service; and such provision shall require that the remuneration for such advocacy in each case be quantified and paid separately from other funded services. (7) For the purposes of subsection (6), representation is provided by a non-contracted private practitioner if it is provided, otherwise than pursuant to a contract entered into by the Commission, by a person or body which is neither—

1. (a) a person or body in receipt of grants or loans made by the Commission as part of the Community Legal Service, nor
2. (b) the Commission itself or a body established or maintained by the Commission.").

The noble Lord said: My Lords, the noble and learned Lord the Lord Chancellor will recall the substance of the amendment being debated on more than one occasion during the course of the Committee stage. Indeed, the notion of ring-fencing loomed large in the answer he gave before the dinner break. The amendment seeks to ring fence advocacy fees, but I hasten to add that it is not a barrister's amendment, as the noble and learned Lord suggested in Committee. It would protect the funding and payment for the services of a specialist solicitor-advocate as much as those of a barrister.

Funding by block contract arrangements can induce financial pressures not to use specialist advocates. Where the services of a specialist advocate are necessary, it is essential that clients are not under pressure to decline them. Clients must not be put under pressure and not be put in a position of having to accept unsatisfactory offers from the other side because the funds for advocacy services at a trial are not available or are not sufficiently separated from general funding to encourage or enable this to happen.

As I recall, in answer to the point when raised in Committee, the noble and learned Lord suggested that it was open to banisters to engage in direct block funding arrangements with the legal services commission. I entirely accept that, but, with respect, it is not the point of the amendment. The point of the amendment is to deal with the case which has reached the stage where a solicitor ought to consider whether it is appropriate to advise the client to engage in court proceedings and therefore perhaps to engage a specialist solicitor-advocate or a barrister.

In my submission, unless there is a separate budget for the payment of the specialist solicitor-advocate or for the barrister, there will be a strong temptation for the block contractor either not to advise his client to engage in court proceedings at all or at least to have a service which is less thorough than the one he ought to receive. I beg to move.

8.30 p.m.

Lord Ackner

My Lords, it has been frequently stated during the course of debates on the Bill that the Government recognise that a strong and independent Bar is absolutely essential in the interests of democracy, a well-run legal system and the public. You cannot, on the one hand, emphasise the need for such a branch of a profession if, on the other, you are going to starve its members of the wherewithal not only to flourish but to enter the profession in the first place. So these rather gratuitous smears that one hears from time to time—that "This is a method of protecting the narrow interests of the profession"—are quite wrong. This is a vibrant profession wanting to continue in existence, but very conscious of the fact that the Bill when enacted will cause it a great deal of problems. I can see nothing in the Bill which will enhance its position. It will increase the struggles which have to be made certainly by the very junior Bar. I support the amendment.

8.30 p.m.

Lord Renton

My Lords, the amendment is very necessary in order to ensure that in future the work of the commission can be done satisfactorily. Alas, one may have had to contemplate a situation in which not enough private practitioners make themselves available. Therefore, it may be necessary to go beyond those who have contracted. This amendment would give that necessary power to do so and would ensure that there was enough professional support for legal aid to be carried out as required. I hope that the Government will consider the amendment sympathetically.

Lord Goodhart

My Lords, one of the amendments in this group is tabled in the name of the noble Lord, Lord Clinton-Davis. He has not spoken to it and I do not know whether he intends to, but it raises another similar and important point with which, perhaps, I may deal briefly: that is, the question of disbursements.

If you need an expert witness, a doctor's report or something of that kind, if there is a contract and that price is to come out of solicitor's contracted payment due from the community legal service, the effect will be that inevitably the solicitor will be under considerable pressures from his partners to opt for the cheapest expert that he can find because there is no advantage to him in opting for anyone else. However, it may well be in the interests of the client to opt for an expert who is more reliable, better qualified and more experienced. In that case, it seems to me that there is a strong case for having a separate payment of not only advocacy fees but also disbursements, as is proposed in Amendment No. 47.

Lord Clinton-Davis

My Lords, I do have an amendment grouped with Amendment No. 40. It is a matter which I raised both on Second Reading and in Committee. It is extremely important that one should take proper account of what is likely to be a disadvantage not simply for the solicitor but also for the client whom the solicitor serves. My noble and learned friend has pointed out repeatedly that those clients are the principal targets for his concern.

A problem may arise because a lawyer may come under additional pressure; for example, because he needs to raise additional overdraft facilities. That is in addition to other pressures which assail so many firms. Even the largest firms operate with overdraft facilities of various kinds and sizes. Lawyers who are operating in the neighbourhood law service field, or high street firms, are particularly vulnerable to that specific form of economic pressure. They then find that they are impelled to cut back on what would ordinarily be described as necessary disbursements. They may even try to put pressure on a client to settle a case which should ordinarily be contested.

I know that my noble and learned friend really discounts that argument on the basis of the Thompson argument; that is, the argument that trade union firms can surmount such difficulties with a fair amount of ease. It is true that many of them do. However, I have gone to a lot of trouble to make inquiries of solicitors serving trade union clients and they tell me that the practice is variable. It is by no means the uniform position which the Thompson's news release would lead us to suppose. I have shown my noble and learned friend the letters that I have received from four leading firms in the field. It is a fairly narrow group of firms which practise in the field. Those letters describe the likely plight of the smaller, even medium-sized, firms which practise in an area in which disbursements are extremely crucial, as is the judgment as to whether to incur them at all. If those pressures exist, then there will be a temptation not to incur them.

My noble and learned friend argues also that the repayment of disbursements should wait until the end of a case and that experts' fees can be managed properly by firms of solicitors so that they do not have to pay them until the conclusion of the case. With respect, I say that that is being out of touch and will not be so in regard to many experts, and certainly not those who are involved in a recurrent type of case. Perhaps the ordinary orthopaedic surgeon is prepared more readily to wait some time before he is paid. It depends on the solicitor, where those people reside, where they carry on their practice, and on very many extraneous factors. It also depends, of course, on the solicitor being able to raise the funds ultimately to pay him, and that may be before the end of the case.

There is then that type of specialist advice which is extremely unusual; for example, a PI case in which someone has suffered brain damage. The consultant whom the solicitor consults will be consulted only on a very rare basis. He may not, and in most cases will not, wait for the payment of his fees. Alternatively, other forms of expert evidence may be required in order to carry out a proper investigation into a case. I suggest that what will happen is that many experts, particularly those who demand higher fees for simply carrying out an examination and then submitting a report, will say, "What's in it for us? Why should we bear the costs that are involved in examining whether or not a case exists?".

My noble and learned friend may dismiss that, but it is not right that the trial should be disadvantaged by a judgment that is forced upon a firm of solicitors who cannot enjoy the benefits of the Thompsons of this world. It is an embarrassingly difficult problem for some large firms practising in this field as well. It is not quite as straightforward as my noble and learned friend suggested in earlier debates.

I believe that there should be provision, perhaps in compelling circumstances, where the authority concerned has a discretion as to whether fees of this kind should be allowed. Of course, it would be the duty of the solicitor to establish that those disbursements are reasonably incurred and the question of the costs of advocacy in the court has already been dealt with.

I hope that my noble and learned friend will consult rather more than the Lord Chancellor's Department has so far done because serious injustice may arise. It is not ultimately that it is a form of great economic support for the solicitors who practise in this field; I want to see that justice is done to a vulnerable client.

Lord Falconer of Thoroton

My Lords, this group of amendments includes amendments relating both to direct payments to advocates—solicitor or barrister—and in relation to the payment of disbursements. It includes also a number of amendments tabled by the Lord Chancellor which deal to some extent with those issues. Perhaps I may deal with the amendments of the Lord Chancellor first because it is only in that context that one can go on to look at the amendments tabled by noble Lords.

The Bill gives the commission power in Clauses 7(3), 13(2) and 14(3) to secure the provision of services by making direct payments. In relation to the first two clauses this power is intended as a reserve power to be used in exceptional cases. It is the Lord Chancellor's firm intent that in general the provision of services will be through contracts. However, in relation to Clause 14 the position is different. Here there is an entitlement that the public receive representation and it is likely, in the medium term, that the principal means of securing services will be to make direct payments under remuneration schemes similar to the ones presently provided in regulations under the current Act. The Lord Chancellor undertook in Committee to consider further what provisions should be made in the Bill, in relation to the circumstances where direct payment is made, as to the manner in which the Lord Chancellor might set remuneration rates, the factors he should take into account, and the consultation he should be required to undertake before he sets rates.

Separately, as the Lord Chancellor mentioned when speaking to the first group of amendments considered today, he has provided a power to make orders about the way in which the commission shall discharge its functions under Clauses 7(3) and 13(2). This group of amendments considers how remuneration provisions should be provided within the structure of the Bill and the provisions relating to the making of orders.

The first amendment in this group standing in the Lord Chancellor's name amends Clause 14 by inserting three new subsections. As I said, Clause 14 creates an entitlement to representation and that, unlike the provisions in Clauses 7(3) and 13(2), it is likely that the provision of services by direct payment will continue to be the principal means of funding the provisions of representation in criminal cases. Even in the longer term, when we would expect services to be provided increasingly through contracts, direct payments will continue to be a significant means of securing provision of services.

Proposed subsection (3A), therefore, creates a duty on the Lord Chancellor, by order, to make provision about the payments which may be made by the commission in respect of representation funded under Clause 14. I should perhaps make clear that the words "making provision about payments" are intended to encompass not only the rates that are to be paid but also the mechanism by which the rates may be applied to arrive at a final sum of remuneration, and the court, person or other body that may carry out any determination of the final sum of remuneration.

Under the proposed subsection (3A)(b) the order may also make provision requiring the commission to discharge a function in subsection (3) in accordance with the order. This provision mirrors similar provisions which I have already mentioned were contained in the group of amendments that the Lord Chancellor moved earlier today relating to the making of orders by him. New subsection (3B) provides a definition of when representation is provided otherwise than through a contract, so that there can be no doubt about when the remuneration rates apply.

Finally, new subsection (3C) requires the Lord Chancellor to ensure that any order makes provision for reviews of, or appeals against, determinations required for the purposes of the order. The changes made by the inclusion of the new subsections required a consequential amendment to Clause 14(5), which is the second amendment in this group standing in the Lord Chancellor's name, to more accurately reflect the function being performed by the commission. As a result of the inclusion of the new subsections in Clause 14, Clause 15 is no longer necessary. All of the powers which are contained in Clause 15 are now contained in the provisions of the proposed Clause 14(3A)(a). Consequently, the third government amendment in this group seeks to remove Clause 15 from the Bill.

The final government amendment in this group is perhaps the one which interests the profession the most, for it provides for the factors that the Lord Chancellor shall consider in making a remuneration order, and the extent that he is required to consult before he makes a remuneration order. The new Clause 23(1A) provides a duty on the Lord Chancellor to consult the General Council of the Bar and the Law Society before he makes a remuneration order. This continues the duty contained in the present Act to consult those bodies before making remuneration regulations.

The new subsection (1B) sets out three factors to which the Lord Chancellor shall have regard in making a remuneration order. First, the Lord Chancellor must have regard to the extent to which the rates he is setting will ensure that he is able to secure the provision of a sufficient number of competent persons or bodies to provide the services required. The Lord Chancellor will also have to have regard to the cost to public funds. We have repeatedly told your Lordships that public funding of legal services has to operate within a controlled budget. It could not be otherwise than that, when setting remuneration rates, the Lord Chancellor must have regard to the consequential effect on the cost to public funds of any rates he decides to set.

Finally, the Lord Chancellor will have to have regard to value for money. This last factor places the same duty on the Lord Chancellor that is placed on the commission in relation to the community legal service and the criminal defence service by Clauses 6(5) and 17(3). It describes the act of balancing both quality and price in an attempt to achieve the optimum balance of the two.

The new subsection (1C) provides the definition of what the term "remuneration order" means, by making it clear that it is an order made under the provisions of the three new subsections that I have already mentioned: namely 7(3A), 13(2A) and 14(3A).

In rnoving these amendments, the Lord Chancellor sought to meet the concerns of the noble Lords, Lord Kingsland, Lord Goodhart, Lord Phillips and the noble and learned Lord, Lord Lloyd, who wished to see, on the face of the Bill, the manner in which the Lord Chancellor would determine remuneration rates in those cases where payment is made directly to service providers, and otherwise than through a contract.

That brings me to the three amendments in this group standing in the names of the noble Lords, Lord Kingsland, Lord Goodhart, Lord Hunt, Lord Phillips and my noble friend Lord Clinton-Davis. We are not able to accept these amendments because we believe that they are unnecessary and place an undesirable restriction in the Bill on the way in which services may be purchased by the commission.

They are unnecessary because there are ample powers for the Lord Chancellor to make provision of the kind sought if that were ever to prove necessary. Amendment No. 40, in particular, seeks to secure for the Bar a permanent privileged position. In Committee the Lord Chancellor said repeatedly that he fully understood the concerns of the Bar that they do not wish the fees of barristers to be treated simply as a disbursement to be taken from the contract price agreed with the solicitor. He said, too, that he is ready to contract with the Bar if it can organise itself to make that a practical proposition. To some extent, the ball is in the Bar's court. It should start addressing the issues to place itself in a position to contract for work with the community legal service.

I repeat the position. We understand the Bar's concerns. We would prefer to be able to contract with the Bar so that banisters can be paid directly. We do not favour, as a general rule, a position in which the barrister's fees are simply whatever the solicitor who holds the contract is prepared to allow. I do not believe that that would be healthy for the relationship between the two halves of the profession.

Finally, my noble friend Lord Clinton-Davis referred to disbursements to be paid to experts. He said that the noble and learned Lord the Lord Chancellor had not taken those concerns sufficiently seriously. I do not think that is right. There is a power in the Bill for the legal services commission to make such payments. I refer to Clause 7(3)(b). That power is already in the legislation and there is no appropriate basis for amendments which seek to restate it. In the light of what I have said, I hope that the noble Lords, Lord Kingsland and Lord Goodhart, will not press their amendment and I commend my noble and learned friend's amendment to the House.

Lord Carlisle of Bucklow

My Lords, I intervene to ask the noble and learned Lord, Lord Falconer, whether he will be good enough to answer certain questions. I say this with great diffidence because I did not take part in the debates in Committee, although I have attempted to read them.

There is one point I do not understand. The noble and learned Lord the Lord Chancellor said on many occasions in Committee that he was anxious that the Bar should contract with the commission for its services. How will that work? If I have raised this matter at the wrong time, I apologise, but this seems to be the appropriate group of amendments on which to mention it.

I understand that the commission will contract with a solicitor to do a certain volume of work. I declare an interest as a member of the criminal Bar practising in chambers which do a great deal of criminal work. When the noble and learned Lord the Lord Chancellor says that he hopes that the Bar will contract directly with the commission, how does he envisage that will occur as regards criminal work? Are the chambers to which I belong, or a group in that chambers, to agree to do so many cases during the year for a lump sum? If so, how will they get them? Presumably they will still come through solicitors, or will they not?

I accept that I ask these questions in ignorance. I hope that they are not so basic as to mean that I have not understood the principles of the Bill. I am not sure that I appreciate how contracting will work given that the noble and learned Lord the Lord Chancellor says that it should be direct with the Bar. I do not see how that will work in criminal practice. I should he grateful for an explanation.

Lord Falconer of Thoroton

My Lords, the noble Lord is certainly not misplaced in terms of timing. This seems to me to be the right place to raise the matter. The question of how the legal services commission will contract with the Bar is plainly, to a large extent, in the hands of the Bar. There have been discussions about how it might be done. The groupings might be chambers, people within chambers, or other groupings, including, for example, circuits. It has been suggested in some quarters that circuits could contract with the legal services commission.

As a matter of principle, we are prepared to discuss with the Bar what it sees as the most convenient way to contract. Thus, having identified with whom the contracts could be made—I make it clear that that could also be with individuals—one might contract for a type of case, an individual case or certain aspects of cases. The most obvious would be, "You will do a certain number of pleas from a set of chambers", or something of that nature. I am not ruling out anything. It seems to us to be possible that with goodwill on both sides—there is certainly goodwill on the side of the Lord Chancellor's Department—structures could be worked out that were acceptable to the Bar whereby there would be direct contracting with the Bar. The Bar would thus avoid the problem of being dependent upon what had been negotiated with the solicitor, given that there would be great pressure on the solicitor to negotiate as low a price as possible. It takes two to come to sensible arrangements.

Lord Renton

My Lords, I am grateful to the noble and learned Lord for giving way. This is an important matter. I refer to the word "groupings" in relation to a set of chambers. We must be careful to bear in mind that, not only by long tradition, but also by continuous professional standards, the Bar does not form partnerships. It does not contract "globally" as a set of chambers. Before the noble and learned Lord sits down, can he give an assurance that in the system he has described the individual responsibility of barristers will be retained?

Lord Falconer of Thoroton

My Lords, with the greatest respect to the noble Lord, it is not for me to set out how the Bar organises itself in relation to the sort of issue to which he has referred. I said groupings within chambers because I know, from my own experience, that in certain chambers some people do only criminal work while others do only civil work. It might well be that it would be inappropriate for the whole set of chambers to contract; perhaps only part of it would do so.

I do not think it appropriate for me to start talking about how the legal aspects of the matter should be dealt with. I believe that to a large extent it is for the Bar to work out the most convenient way to proceed and to come forward with ideas as to how this may be effected, having regard to its traditions, ethos and rules of conduct.

All that we can say is that we are willing in principle, and keen, for some arrangements to be entered into which would permit the payment of direct sums to advocates. In speaking about "the Bar", I appreciate that solicitors may be instructed by other solicitors, but for the purposes of the debate, it is easier to talk about "the Bar".

Lord Renton

My Lords, I know that we are not in Committee, but this is such an important matter that I am grateful for being allowed to intervene again. Surely, it is not good enough for us to leave it to the Bar when the Bill may make it possible to change the whole system.

Lord Falconer of Thoroton

My Lords, the Bill makes it possible for direct payments to be made to the Bar. It would be wholly inappropriate for the Bill to specify the arrangements to be made by the Bar. I hope that that answers the noble Lord's question.

Lord Carlisle of Bucklow

My Lords, I am grateful to the noble and learned Lord, Lord Falconer, for what he said. However, I am still perplexed. I declare an interest again. I am a member of what I suppose is probably the largest set of criminal chambers in the Temple.

I understand the noble and learned Lord to say that the commission might contract with a certain number, juniors in those chambers, to do a certain number of cases in a year at a fixed price. But how will it get them? Does it mean that access will be direct from the Bar without going through a solicitor? Are we changing other principles of the profession at the same time or will those barristers get such cases only through a contracted solicitor choosing to come to that member of the Bar? I am genuinely mystified about how the system will work.

Lord Falconer of Thoroton

My Lords, I am sorry to repeat the answer. We are prepared to do it. However, in a sense, it is for the Bar to work out precisely how it wants the provision to work. It is not for me to comment on questions of direct access, for example. That seems entirely a matter for the Bar. Therefore, I do not think I can elaborate further on the position.

Lord Kingsland

My Lords, I thank the noble and learned Lord for his extremely full and most helpful explanation of the amendments in the name of the noble and learned Lord the Lord Chancellor. I shall read carefully what he said, but the impression I have is a positive one.

I have just one reflection on the latter exchanges between the noble and learned Lord, Lord Falconer. and the noble Lords, Lord Carlisle of Bucklow and Lord Renton. I entirely accept that the relationships between the legal services commission and the Bar are, in the first place, matters for the two parties. But the noble and learned Lord will bear in mind that the Lord Chancellor has taken substantial powers under Schedule 5 to deal with certain matters connected with competition in the provision of legal services which can, in certain circumstances, touch on the rules of the profession relating to etiquette, and so forth. Although the noble and learned Lord, Lord Falconer, said that contracting was really a matter for the Bar, it could become a matter for the Lord Chancellor if it touches on some of the very substantial powers that he has in Schedule 5.

In the period of deep reflection that I know will be going on between Report stage and Third Reading, it might be helpful for the noble and learned Lord to reflect on that fact to see whether, after due consideration, he might like to provide one or two suggestions about how this contractual relationship could develop. I am most grateful to the noble and learned Lord for the way in which he has responded to this amendment. I beg leave to withdraw my amendment.

Amendment, by leave, withdrawn.

Clause 7 [Services which may be funded]:

[Amendment No. 41 not moved.]

The Lord Chancellor moved Amendment No. 42: Page 4, line 29, leave out ("under section 4").

On Question, amendment agreed to.

The Lord Chancellor moved Amendment No. 43: Page 4, line 30, at end insert (", and (b) after taking into account the need for services of the descriptions specified in section 5(1A).").

On Question, amendment agreed to.

9 p.m.

Lord Phillips of Sudbury moved Amendment No. 4: Page 4, line 30, at end insert— ("( ) In funding services as part of the Community Legal Service, the Commission shall aim to obtain the best long term value for money on the basis that all persons and bodies applying for funding who meet the standards set by the Commission shall be able to provide services for individuals under this Part of this Act on terms as to remuneration and otherwise, set by contract or by regulations.").

The noble Lord said: My Lords, this amendment confronts a central financial instrument behind the Government's proposed reforms; namely, competitive tenders for block contracts to supply legal services. As it has been made clear, that is the ultimate destination for legal aid financing. Unless this amendment is successful or its sister Amendment No. 57, in future the public may only choose solicitors, and possibly barristers, who have won the competitive tenders. I make it clear that that will exclude many thousands of firms of solicitors of the requisite quality standards which are currently doing legal aid. No solicitor or barrister is looking for what the noble and learned Lord the Lord Chancellor sometimes mis-describes as "guaranteed contracts". No solicitor today can do legal aid work unless he or she has a client who wants him or her to do it. There is nothing guaranteed about it. Indeed, it is odd to find a spokesman of New Labour in this House proposing the replacement of free consumer choice in a free legal market by a restricted, highly bureaucratic régime. I can assure the noble and learned Lord the Lord Chancellor that local solicitors are highly sensitive to local demand; they have to be.

The only guarantee that legal aid lawyers currently get is that, subject to the means test, the merits test, the rules of court and the rigours of taxation, the solicitor who undertakes legal aid work is entitled to be paid, rather like NHS doctors. At the heart of the Government's case are three main issues and they are access, quality and cost. As regards access, the noble and learned Lord the Lord Chancellor said in his letter to The Times of 25th January, The point of my reforms is to give people on legal aid a choice from among about 3,000 quality assured firms". However, that compares with over 10,600 solicitors' offices doing legal aid work today. It is surely perverse to pretend that access will not be damaged even if many of the 7,000 or so excluded solicitors' offices currently do only a modest amount of legal aid work. Often they are the best. A fact well known to legal aid solicitors is that very many people still will not seek legal aid help when they need it, and that those who do are very often reassured by what someone has told them of the individual solicitor or firm to which they eventually go.

Personal "lawyering" is still about confidence and trust. Furthermore, where there is only one firm in a town with a block contract, the other side to the dispute will often have to travel to the nearest town to find a firm able and willing to do the work because the budget is capped and rationing may be operating. In my part of Suffolk that will mean very significant travel at considerable expense in terms of fares—if there is public transport—and in terms of time and inconvenience. That is sure to put off many needy people.

Great oaks from tiny acorns grow no less among law firms than any other form of business. In yesterday's letter to the President of the Law Society, of which the noble and learned Lord the Lord Chancellor kindly sent me a copy, he wrote, The Board have made clear in their contracting material that in the longer term they may need to Introduce minimum levels of work that firms are generally willing to contract for, otherwise there is a real risk that money that should he spent on services for the public would go in meeting the cost of administering large numbers of very small contracts". In effect, the bureaucratic tail is starting to wag the legal aid dog.

I have been approached by several small firms during the course of the proceedings on this Bill. Some have said that they are contemplating jacking out of legal aid even now because of the bureaucratic over-burden and the impracticalities for them of the franchising regime. Others made clear that they see no prospect of competing when the Phase II block contracting comes in. The noble and learned Lord the Lord Chancellor's letter, which I have just quoted, seems to give that game away despite protestations to the contrary made by him and the noble and learned Lord, Lord Falconer of Thoroton, in previous debates.

As regards cost savings via the bulk purchase of legal services, that might make sense were it not for the fact that legal aid is already the worst paid legal work., typically earning half private client rates. Most solicitors are trying to control the amount of legal aid work that they do and not increase it, as is made abundantly clear in surveys recently done by the Legal Aid Practitioners' Group and the Suffolk and North Essex Law Society. There are few, if any, economies of scale in private client cases. One of the inexorable rules of law firms is that the bigger they get the bigger their overheads become, and fees likewise. Noble Lords should try shopping around for themselves.

Finally there is the Government claim that quality will be improved by competitive block tendering. That seems to me to be the most incredible of all their claims. Although in a few exceptional cases it will no doubt be so, the reality is crude and simple: you pay for what you get, even with solicitors. Quality follows remuneration. I should be very surprised if the noble and learned Lord the Lord Chancellor shopped around for a cheap surgeon if ever he needed one, as we devoutly hope he will not.

What will be the position if Amendment No. 44 is carried? It stipulates that only solicitors who meet the standards set by the commission will be able to offer legal aid services. It confirms that the commission has a duty to obtain the best long-term value for money and it enables it to remunerate on terms set by contract or regulation. Other powers in the Bill already give wide discretions to the commission and enable it fully to police the system, if it has the will and skill to do so. The main riposte of the Government is that this will not allow the hard Treasury cap on the budget to be observed. But, as I said in the debate just before the dinner break, many of the claims made in that regard in terms of the escalation of the legal aid budget are now old hat and irrelevant.

Many in the profession, and indeed in the Law Society, have been perplexed as to why the Legal Aid Board has not been much more effective in policing legal aid payments using the considerable powers given it under the Legal Aid Act 1988. Some of us get worried when failure effectively to exercise existing powers becomes an argument for legislating even more extensive ones. In effect, what we are suggesting is that this element of the Bill represents a sledgehammer to crack a nut, and that, as the image implies, the legal aid scheme will in the years to come be severely, irreparably damaged.

Just over a year ago the Secretary of State for Health, Mr. Frank Dobson, told the other House in relation to the NHS reforms that the Government would, abolish the wasteful and bureaucratic competitive internal market introduced by the Tories". It is because we believe that the competitive block tendering proposed by the Government vis-à-vis legal aid would indeed be wasteful and bureaucratic and unnecessary that so many of us are so anxious to persuade the Government to change their mind. Support for this amendment and its sister, Amendment No. 57, extends to all parts of the House and is also supported by the Law Society, the Bar Council, the Legal Action Group and the Legal Aid Practitioners Group. As the names of the noble and learned Lord, Lord Archer of Sandwell, and the noble Lord, Lord Clinton-Davis, on the amendments indicate, there is also distinguished support from the Government Benches.

I really do believe that to attempt to present to this House the choice between a Bill that serves the provider or a Bill that serves the user is a wholly false analysis. The two are inseparably connected and all the concerns emanating from these Benches go to the impact and the long-term health and success of the scheme which will be enacted under this Bill. I can only urge that however central the competitive block tendering system appears to be to the Government at this moment, they reconsider the effects that it will most surely have on their plans. I beg to move.

Lord Clinton-Davis

My Lords, I wish to speak to Amendment No. 57 which stands in my name. I submit that it is an amendment that satisfies the criteria which my noble and learned friend has submitted, particularly in terms of quality control. It is also important in relation to accessibility and giving a wide choice to clients which, after all, is, I think, a rather critical element of the solicitor-client relationship.

The Law Society itself has established a management standards scheme, Lexcel, which is intended to provide that measure of quality control to a particular area of legal services. I submit that the legal services commission should be prepared to enter into contracts with firms that are achieving those standards. I refer to the specialist panels of the Law Society which at present exist for family personal injuries, medical negligence, children cases, Mental Health Review Tribunal and family cases. A similar standard will apply, as I understand it, to housing, immigration and criminal law. These are people who have demonstrated clearly, if they are going into those areas of practice, that they will be well equipped to do so. Therefore, one has to ask why is there the risk that they may be excluded?

The Law Society has taken the view, having, of course, been in close contact with its members—of which I am one—that quality assurance, the ability on the part of the Lord Chancellor to introduce cash limiting, and his ability to contain the costs of individual cases, would not be prejudiced by reason of what is being proposed here. I am suggesting that only those who meet prescribed quality criteria should be entitled to a contract. I am not saying all those who are presently involved in the provision of legal aid are automatically qualified for that purpose. Not at all.

My noble and learned friend's argument that this might be inconsistent with cash limiting, with respect, is also not the case. If more firms than expected were to enter into contracts the commission would simply need to scale down the size of contract available to each firm. Subsection (2)(c) of the new clause specifically recognises the ability of the commission to make proportionate reductions, where necessary, in the number of cases funded. That is a point made a few moments ago by the noble Lord opposite.

I know that my noble and learned friend is concerned about controlling individual case costs. We are not proposing that firms entering into contracts would be able to charge whatever they wanted in each and every case. They will have to be willing to work for the rates laid down by the Lord Chancellor or the commission. The proposed new clause would make it difficult for the Lord Chancellor to exclude firms from providing legal services through competitive price tendering. It is important not to introduce price competition at the expense of quality of service—a point previously made by my noble and learned friend. Where there are no reliable and generally accepted means of measuring the quality of work in a particular case, would it not be unwise to introduce price competition of that kind?

The new provision would not prevent the Lord Chancellor from introducing an element of price competition if he so wished. It would be possible for the Lord Chancellor to ask the commission to introduce price competition when asking firms whether they wanted to apply to take on additional cases beyond the level funded in the previous year—although the Law Society does not believe that it would be wise to introduce any such provision at the present time.

The root issue is giving clients a choice of firms which are able to provide the quality standards that my noble and learned friend so rightly insists upon. That would overcome the problems of geographical access, to which reference was made in previous debates. There is absolutely no reason why a lower level of choice and access should be provided in order to attain this criteria of quality.

I hope that my noble and learned friend will feel that this approach is not an unreasonable one. Any restrictions on choice which go beyond what is necessary to secure quality seem designed to meet the interests of the administrators of legal aid, who might well find it convenient to deal with a smaller number of suppliers rather than to serve the interests of the public for whom the scheme is intended. I hope that my noble and learned friend will look upon this as a constructive contribution to his considerations.

9.15 p.m.

Lord Hunt of Wirral

My Lords, quality must lie at the very heart of the services provided by the community legal service. I believe that there we are as one with the noble and learned Lord the Lord Chancellor. The noble Lord, Lord Clinton-Davis, highlighted an important area in saying that quality must he accompanied by choice. This is the Access to Justice Bill so I find myself very much in agreement with the noble and learned Lord the Lord Chancellor when he demonstrated again that right at the heart of his reforms lie the principles of improving access to, and the quality of, justice.

I find the arguments of the noble Lord, Lord Clinton-Davis, to be persuasive when he reminds us that there are a number of issues that we have to bear in mind. The Law Society has, I think rather persuasively, set out four principles which should underlie the approach to the provision of legal services in the future: first, to ensure high quality; secondly, to provide the widest possible choice for clients and potential clients; thirdly, to ensure ready geographical access to services; and, fourthly, to provide proper funding for the service. If one applies those four principles to the debate, one sees that to try to limit the number of firms which have achieved the requisite quality standard starts to get right in the path and presents a huge obstacle to the very purpose of the reforms that we are debating. If we are to improve access, it must surely be right for clients to be able to go to firms that have met the necessary quality standards.

I agree with the noble Lord, Lord Clinton-Davis, that the new management standards scheme, Lexcel, is an excellent move in the right direction. I commend the Law Society on applying the well-established principles of quality management to the particular area of legal services. The two combined standards of Investors in People, an initiative in which I was proud to play a part, and Lexcel will give law firms an opportunity to provide that quality service which must lie at the very heart of these reforms.

It may well be that the noble and learned Lord the Lord Chancellor will set all our minds at rest by giving an assurance in response to his noble friend that all firms meeting the quality requirements will be entitled to a contract. If that is the case, we will all go away very happy. But I have a horrible feeling that he may not yet be disposed to giving us that assurance. That is why we must continue pressing.

I say that because I have heard the noble and learned Lord argue that such an assurance would undermine efforts to provide quality assurance, would undennine the noble and learned Lord's ability to introduce cash limiting—he will know our views on that—and would also undermine his ability to contain the costs of individual cases. I would ask him to reflect again, because I do not believe that any of those arguments bear close scrutiny. The new clause proposed by the noble Lord, Lord Clinton-Davis, specifically says that only those who would meet prescribed quality criteria should be entitled to a contract. It is not suggested that all those currently providing legal aid should be entitled to a contract. Surely the proposed amendment fully meets the need to provide quality assurance.

It is necessary further to reflect on the argument about this proposal being inconsistent with cash limiting. If more firms than expected seek contracts, the commission would need to scale down the size of the contract available to each firm. Subsection (2)(c) of the proposed new clause specifically recognises the commission's ability, where necessary, to make proportionate reductions in the number of cases funded. I hope that the noble and learned Lord the Lord Chancellor will reflect for a moment on the fact that we are not seeking to stand in the way of his declared intention to limit the amount of cash. Concern about controlling the cost of individual cases is also unjustified. The new clause does not propose that firms entering into contracts would be able to charge whatever rate they wished for each case. The firms of solicitors would have to be willing to work for the rates laid down by the Lord Chancellor or by the commission.

However, I admit that the proposed new clause would make it difficult for the noble and learned Lord to exclude firms from the provision of legal services through competitive price tendering, but then he himself has recognised that it is important not to introduce price competition at the expense of quality of service.

I hope that the noble and learned Lord will reflect on the intention behind the proposed new clause. No doubt there will be problems with the implementation of some of the words and the drafting but I think that the noble Lord, Lord Clinton-Davis, would be happy to accept further amendments to it. I hope that the noble and learned Lord the Lord Chancellor will accept the principle behind the new clause, which is to go back very persuasively, I think, to those four principles relating to the provision of legal services in the future: high quality, the widest possible choice, geographical access and proper funding.

Lord Archer of Sandwell

My Lords, this will be a very brief intervention at this hour, but I share the deep concern of the three noble Lords who have already spoken that the number of solicitors' firms who have contracts in certain fields of expertise shall not be whittled down to the point where choice disappears. We all understand that contracts should be confined to those who can be shown to offer the expertise in question and the other requisite standards. No one wants to see inefficient and incompetent solicitors let loose on the public, except possibly the inefficient and incompetent solicitors.

However, there are small firms which can offer a very good, competent and caring service. Often they can offer it in geographical locations where large firms or specialist firms are not to be found. In my former constituency there are some very good firms of solicitors. If they are forced out of the picture it will be poor comfort to tell the people of Cradley Heath or of Oldbury that they can go to Birmingham for advice. In many cases we are talking about disadvantaged people. Sometimes the fare to Birmingham would be sufficient to discourage people from pursuing redress. I hope that my noble and learned friend will enforce the quality criteria but I also hope that when those are met he will not exclude small firms simply on the ground that "only big is beautiful".

Lord Thomas of Gresford

My Lords, the remarks of some noble Lords take me back to my youth when I was a solicitor in a small village in north Wales. We were a five-partner firm, and we endeavoured to provide a service to the community which was a mixture of rural villages and industrial and mining villages. We covered the whole gamut. I was the person in charge of legal aid, and so I was the partner who, I regret to say, made the least money in the whole practice. But if we needed expertise we had the advantage of being able to go to the independent Bar, to the finest minds in the country. I recall that on two occasions I went to my former tutor, who happens to be the noble and learned Lord, Lord Lloyd of Berwick, in commercial cases, and instructed him to advise. It was a rather unusual thing to receive such high quality advice in a rural area such as that.

Looking at these proposals, it seems to me that they will result in the fact that there may be one firm of solicitors—I can think of one firm—in north Wales that could possibly contract in bulk for legal aid work. I cannot think of more than one. That would mean that for a population of getting on for half a million people there would be all the problems of getting through the mountains and valleys of that rather beautiful part of the world to somewhere such as Rhyl or Colwyn Bay in order to obtain the legal services required.

What has happened in the past and what has been the strength of the legal aid system is that expertise and quality have been available to people locally within a few miles. Those firms have not only been able to ensure quality themselves but, as I indicated, they have had access to advice from the best legal brains in the country. These proposals are going to wreck that system and, to my mind, will be detrimental to the rural population.

The Lord Chancellor

My Lords, I hesitate to respond to what has just been said by the noble Lord, Lord Thomas of Gresford, because it is not immediately clear to me how his small firm had peculiarly advantageous access to the noble and learned Lord, Lord Lloyd of Berwick, which would not have been available perhaps, a fortiori, to a larger firm. It is not clear how that contributes to the argument on these amendments.

These two amendments seek to provide a protected position for lawyers providing services within the reformed scheme, while we are addressing purchases of legal services to be made in the public interest. The amendments seek to guarantee work for all lawyers who meet the quality threshold. They also seek to safeguard the market share of this work currently enjoyed by lawyers and to bind the commission to the terms on which it can enter into contracts. They are prescriptive and inflexible; they look backward, not forward. I really do encourage some noble Lords to avoid an occupational resistance to looking forward.

The new scheme is not intended to be a slightly polished-up version of the present scheme, which is a lawyers' scheme built with lawyers in mind. The commission, through the community legal service, will determine the needs of ordinary people who find themselves in difficulty and seek to match those needs within priorities established by the Government or the commission and within the resources that are actually available by securing services from a range of legal service providers.

I find it inconceivable that Parliament would seek to direct in detail the terms under which the National Health Service, for example, should discharge its functions in providing services, or indeed to direct how any part of government should undertake a major procurement exercise. To entrench in legislation detailed provisions about the terms on which services may be purchased by the commission is prescriptive and inflexible. The amendments are, I am afraid, an example of a feather-bedding culture which seeks to protect lawyers from the possibility of having to compete in order to retain work funded--

Lord Archer of Sandwell

My Lords, will my noble and learned friend—

The Lord Chancellor

—by the state. This culture must change. I will give way when I choose to give way.

Lord Archer of Sandwell

My Lords, I was not expecting my noble and learned friend to give way before he chose. However, knowing him, I was sure that he would be courteous enough to choose to do so before very long and I am most grateful to him.

Some of us are becoming slightly worried that every proposal that has been made during the course of today's debate has been met by the answer that the lawyers are ganging up to feather-bed their own concerns. I make no declaration of interest as I have no interest at all in any firm of solicitors. My concern is purely the people of the areas to which I referred who should have access to justice. I believe that that is true of the other noble Lords who have spoken. I fully follow my noble and learned friend's arguments, and he is entitled to deploy them, but it is less than fair to suggest that anyone who disagrees with him does so because this is a trade union ganging up.

The Lord Chancellor

My Lords, I am happy to acquit the noble and learned Lord, Lord Archer of Sandwell, of bad motives. However, I believe his arguments to be fundamentally wrong, and I shall endeavour to persuade him.

Essentially, both these amendments seek to preserve for the profession, subject to its members meeting quality standards, the right to do as much or as little legal aid work as they wish and, in the case of the proposed new clause, to preserve the market share that lawyers currently have of that work. We have heard it claimed, both in Committee and again today, that by giving guarantees of this kind it will be possible to ensure the widest choice for those seeking access to justice.

I accept that that is what the noble and learned Lord, Lord Archer of Sandwell, conscientiously believes. However, I believe him to be fundamentally wrong. I have noticed in the debates on this Bill that providing the greatest choice of lawyer is often regarded as central to providing access to justice. That is a lawyer's perspective. I have, I am afraid, an uncomfortable truth to reveal. The access that the disadvantaged require is not access to traditional lawyers; it is access to justice. Access to justice may not require the services of a lawyer at all.

The services provided through the community legal service, including the services of the lawyers, are no more than the conduits through which disadvantaged people gain access to justice. That is why the community legal service as a whole is wider than simply the efforts of the commission using the resources of the community legal service fund. What I want to achieve is public money to buy the right services of the right quality at the right price to allow the disadvantaged to resolve disputes, enforce their rights or seek the protection of the courts, where appropriate, particularly in areas of unmet need. That requires a radical departure from the current ways of providing publicly funded help with legal problems.

Granting a guarantee of contracts to all firms who obtain a franchise would reduce the commission's ability to direct funding to the needs and priorities identified by communities. This goes rank counter to the fundamental purpose of the community legal service.

I am also keen, and make no apology for it, that in the longer term selective contracting should allow us to introduce an element of competition. Competition is not inconsistent with the maintenance of quality. On the contrary, I believe that the spur of competition offers the prospect of increased quality and cost effectiveness of legal services. I want to ensure that taxpayers' money is used to its best effect, and that requires a change to the funding system.

However, giving guarantees of the kind suggested which provides across-the-board contracts to all providers would effectively maintain the present system. I want a commission that will be proactive in meeting local needs and priorities by purchasing the best and most effective legal services it can find to match the needs of communities.

I remain confident that enough contracts will be entered into to give good access to the public. Contracts have already been guaranteed to all those who obtain franchises in the mental health, immigration and family categories. On the current application rate, it would not be unrealistic to estimate that family contracts would be awarded to between 5,000 and 6,000 firms. That would cover about 96 per cent. of current family legal aid spend, with most firms doing a volume of work similar to their current caseload.

The position in regard to non-family advice and assistance will be clearer in the near future. But the figure of 3,200 contracts, widely cited recently, was not a target. It is in fact the Legal Aid Board's assumption about the number of contracts that would result from the contracting process. That was a number which it believed would be sufficient to provide reasonable access.

Looking ahead, contracting for non-family civil litigation work, currently certificated work, is timetabled for introduction in April 2001. We are still at the planning stage, but in the first round of contracting I would again expect all franchised firms who want a contract to receive one. Our current expectation would be the same for contracts for criminal work and we may even initially grant contracts to firms who meet standards other than those set for a franchise.

It is of course also the case that access can be ensured through requirements in contracts for service providers to go to the clients and through good publicity about where help can be obtained. The recent introduction of limited choice of representation in clinical negligence cases is a first class example.

The Legal Aid Board has established a panel of lawyers who may take these cases on behalf of assisted persons. I should like to make quite clear that any plaintiff who is the victim of clinical negligence, with all of the personal tragedies that that involves, is much better off with a limited choice going to a quality-assured practitioner than, as today, going through the door of any solicitor who, regardless of expertise, is entitled to take his case from beginning to end. These firms have produced publicity material to be distributed to advice agencies. It contains a freephone number so that people who need lawyers can telephone the board and be told where the nearest lawyer with the requisite skill and experience is situated. The contracts issued to those lawyers on the panel require that if necessary they must visit the clients if that is the only way that access can be provided.

We seek to make important changes at a pace that allows the profession to adapt, but it must stop looking backwards and start looking forwards. We are not talking about a big bang; ours is a cautious step-by-step approach. The first stage that is underway is effectively to issue licences to quality suppliers to carry out legal aid work. In some areas such as family work this has meant a guarantee for all those who hold a franchise. But we shall adopt a careful approach, possibly by means of pilot exercises, to introduce an element of competition—yes, competition.

I turn to Amendment No. 57, in particular subsection (2)(a): the Commission shall contract with every supplier who meets prescribed quality criteria and who wishes to provide services under the Community Legal Service". What is that? It is a prescriptive obligation to contract with a provider. That is something that no other purchaser of services is obliged to do. Let us consider (b): the Commission shall offer each contractor a contract for at least the same number of cases as they undertook in the year preceding the year of contracts". That is guaranteed work for lawyers. The future must be no less than equal to the past. What grotesque rigidity! We come to (c): where the total number of cases to be funded in any category of work in a particular region is to be reduced below the number undertaken in the previous year, the Commission may make proportionate reductions in the number of cases to be funded by each contractor in the region concerned". That is the right to a rigid, bureaucratic, proportionate reduction in work if there is an overall reduction. Under (d) it is proposed that, the Commission shall not set a minimal level for the number of cases for which it is willing to contract". What does that mean? The sky is the limit for any contractor.

We come to (e): contracts shall provide for separate payment, in addition to the contract sum, to be paid for disbursements reasonably incurred, and for the costs of advocacy in court". How prescriptive! That could be appropriate in certain cases but not always, for example if the lawyer were to act as the solicitor and also be the advocate.

We come finally to (f): contracts shall define the number of hours' work, or number of cases, to be undertaken for the contract sum". What does that prescribe? It prescribes that an hourly rate is the only acceptable means of remuneration. I stigmatise the whole of the proposed amendment as amounting to an uncommercial rigidity statutorily imposed on the purchaser of legal services when those purchases should be made in the public interest.

I hope that I have not waxed too indignant. For the reasons that I have given I dare say that it will not surprise noble Lords who have spoken in support of this amendment if I say to them that I do not believe that propositions of this kind, with which in any event for the reasons that I have given I disagree, are appropriate for the face of the Bill. These matters address the detail of contracts which have to be a matter for the commission flexibly to determine. I urge the noble Lords in whose names the amendments stand to stop looking backwards, to start looking forward and to withdraw the amendment.

9.45 p.m.

Lord Phillips of Sudbury

My Lords, I am sure we listened with a combination of emotions to the comments of the noble and learned Lord the Lord Chancellor. His extreme remarks were devoted exclusively to Amendment No. 57. Not one of his comments was devoted to Amendment No. 44 which I moved. I venture to suggest that none of his strictures could fairly be applied to Amendment No. 44.

We have spent 43 minutes debating the amendments. It would be wrong for me to labour what I believe deserves belabouring. I shall resist the jibes levelled several times by the noble and learned Lord at these Benches in particular. I defer to no man or woman in this House, least of all to him, in terms of my record vis-à-vis upholding or extending the effectiveness of legal aid. I was the first chair and co-founder in 1971 of the Legal Action Group, continuing with the founding of Lawyers in the Community Scheme and now the Citizenship Foundation.

In a serious debate such as this, it is unhelpful to slide off the point with a slur. I suspect and hope that the noble and learned Lord did not mean it too seriously. However, he did not address the main issues which I put to him in the debate. Not one single point made by the noble and learned Lord addressed cost, quality or access. To talk about a feather-bedding culture betrays a lack of awareness of what life is like on the legal aid frontline. If noble Lords think that that is a feather-bedded culture they must have been a long time away from such work.

To state that we on these Benches have an occupational resistance to looking forward is unfair. We say that the map devised by the noble and learned Lord the Lord Chancellor, his colleagues and the Legal Aid Board for their brave march into the new world is unsafe. Its destination will not be reached if a method of financing is pursued which will diminish rather than increase choice. For the arguments reasonably given, we believe that it will diminish choice.

Enough has been said. At this time of night there is no point in seeking a Division. However, I reserve the right to bring back the matter at the next stage. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Falconer of Thoroton moved Amendment No. 45: Page 4, line 44, leave out ("(or groups of individuals)").

The noble and learned Lord said: My Lords, noble Lords will be glad to hear that this is a technical drafting amendment. I am grateful to the noble and learned Lord, Lord Mackay of Clashfern, (who unfortunately cannot be in his place today) for identifying a possible problem with the current wording.

Clause 7(3)(e) empowers the legal services commission to secure services as part of the community legal service by making grants or loans directly to the individuals concerned to enable them to purchase the necessary services themselves. The amendment deletes the words in parentheses "(or groups of individuals)". Those words are unnecessary and potentially confusing. Removing them would in no way detract from the commission's ability to fund multi-party or group actions if the case were strong and important enough to merit it, although in practice I think it unlikely that the commission would choose to do so under the power in Clause 7(3)(e).

At present, legal aid in a multi-party case is available only to those plaintiffs who qualify financially under the normal test. It is the Government's intention to replicate that position for the community legal service under Clause 8(1). In the longer term, it might be possible to relax that position by waiving the upper eligibility limit under Clause 8(2) for other plaintiffs in a multi-party case. But we would of course expect such litigants to be liable for substantial contributions under Clause 10.

The problem is that Clauses 8 and 10 refer simply to individuals. The additional words "or groups of individuals" in Clause 7(3)(e) may carry the misleading implication that funding is provided to the group per se, rather than to the individuals who constitute the group. In reality it can only be to the individuals that the funding is provided, as shown by the fact that the rules about eligibility and contributions apply to each individually. I beg to move.

On Question, amendment agreed to.

The Lord Chancellor moved Amendment No. 46: Page 5, line 3, at end insert— ("(3A) The Lord Chancellor may by order require the Commission to discharge the function in subsection (3) in accordance with the order.").

On Question, amendment agreed to.

[;Amendment No. 47 not moved.]

Lord Falconer of Thoroton moved Amendment No. 48: Page 5, line 6, leave out ("in different areas") and insert ("in relation to different areas or communities").

On Question, amendment agreed to.

Lord Goodhart moved Amendment No. 49: Page 5, line 8, after ("not") insert ("(except as provided by subsection (6A))").

The noble Lord said: My Lords, in moving this amendment, which stands in the name of the noble Lord, Lord Kingsland, and myself, I wish to speak also to Amendment No. 53.

This is the first of a group of amendments attacking paragraph 3(a) of Schedule 2, which excludes all personal injury cases from public funding except cases of clinical negligence. If the Bill is enacted as it now stands, the only way round that exclusion will be for the Lord Chancellor to give directions under Clause 7(7) authorising the commission to fund personal injury actions which are otherwise excluded.

For the first, but not the last, time in the Report stage of the debate on this Bill, this raises the issue of the vision of the noble and learned Lord the Lord Chancellor of conditional fee agreements—CFAs—as a panacea. I emphatically disagree with that view.

CFAs do indeed have a role to play in the system. They provide access to justice for those with a claim for damages who do not qualify for legal aid on financial grounds but cannot afford the risk of litigation at their own expense. Indeed, I agree that where CFAs are available and workable, claimants should use them rather than put taxpayers' money at risk.

But we are simply not yet ready to scrap legal aid for personal injury cases. CFAs are in many respects unproven and may turn out to be unworkable over a large part of the spectrum of personal injury cases. The fact is that CFAs are so far of proven value in road accident cases. That is largely for a special reason; namely, that the police investigate every road accident which causes injury. That usually establishes causation and identifies the person at fault. That leaves very little to be argued about in court.

But, indeed, there are many cases where CFAs are unsuitable. Let us look at them. As the Government have accepted in the case of clinical negligence, CFAs are unsuitable where substantial costs of investigation have to be incurred before the commencement of proceedings. It is not only clinical negligence cases which involve such costs. What about product liability cases or industrial diseases such as the miners' white finger cases which were brought recently and resulted in large awards? What about damage to health by emissions from a nearby factory? All of those will require substantial investigatory costs before proceedings can be commenced. None of them is clinical negligence.

Solicitors will be extremely reluctant to carry heavy pre-commencement costs themselves. One might ask: what about cases involving expensive trials; for example, trials involving experts on both sides? Again, solicitors may well be unwilling to bear the costs themselves and in such a case insurance against payment of the other party's costs may be impossible to obtain or very expensive. Are CFAs appropriate where the claimant is a child or someone who lacks mental capacity?

The viability of CFAs in cases involving substantial up-front costs is far from clear. The KPMG repots for the Lord Chancellor says one thing; Professor Shapland's report for the Law Society says another. Investigations and research are still continuing. The availability of insurance at acceptable premiums in non-road accident cases is extremely uncertain. Premiums for accident-at-work cases have already doubled those originally set. So we are risking hardship to injured people by excluding the right to public funding for personal injury cases. And we are doing it to save a negligible amount of money.

The net cost of legal aid in personal injury cases to the Exchequer in each of the three years from 1994 to 1997 was less than £2 million, ignoring VAT on fees which comes back to the Exchequer within three months.

Various solutions are offered by this group of amendments. The first would be to leave funding available in principle for personal injury work but to rule that the applicant would have to show that CFA was not available or not likely to be available. Secondly, there is a possibility of listing in Schedule 2 categories of PI cases where funding should remain available. The noble Lord, Lord Clinton-Davis, tabled an amendment in Committee listing no less than 15 categories where funding should be retained. That is an illustration of the wide range of cases in which it is unlikely that CFAs will provide an adequate alternative. The third solution is the more limited amendment, set out in Amendments Nos. 49 and 53, which prevent paragraph 3 coming into effect as regards personal injury until the commission is satisfied that CFAs or some other kind of funding provide an adequate replacement. Why does not the noble and learned Lord the Lord Chancellor accept that implementation of paragraph 3 in relation to personal injury work should be delayed until we know whether CFAs will work?

On 3rd November, the noble and learned Lord's deputy, Mr. Geoffrey Hoon, in another place, said in answer to a Parliamentary Question: We have made it clear that legal aid will not be withdrawn from anyone in our society unless and until there are effective alternatives and effective access to justice. The extension and development of conditional fees will allow that to take place in due course, but we have made it clear that we want to see an extension of legal expenses insurance. We believe that that is appropriate for the great majority of people. Equally, we have made it clear that no one will lose out unless and until there is effective access to justice for them".—[Official Report, Commons, 3/11/98; col. 676.] In the period of a little more than three months since Mr. Hoon gave that answer, I see no reason to suppose that we have made such enormously rapid strides that we are now in a position to say that, yes, CFAs are the definitive answer. I ask the noble and learned Lord the Lord Chancellor to honour the undertaking given by Mr. Hoon in another place. I beg to move.

10 p.m.

Lord Archer of Sandwell

My Lords, this is a vexed problem and a genuine problem. It is not a piece of Luddism by a bunch of dinosaurs. Perhaps we can establish that at the outset of the debate.

A number of noble Lords have at various stages in our deliberations explored possible solutions to the problem. The Bill provides that the services set out in Schedule 2 shall not be funded as part of the community legal service, subject to my noble and learned friend's power to give directions to the contrary. One of the services which is not to be funded is help in proceedings for negligence other than clinical negligence. My noble and learned friend explained that those proceedings will be funded on a conditional fee basis or on such other basis as may be devised.

I ventured to raise the question in Committee as to how much money is likely to be saved, since I believe that in the large majority of personal injury cases the plaintiff's costs are ultimately met by the defendants, either after a settlement or a decision in the plaintiff's favour. I seem to remember my noble and learned friend making almost precisely that point in a speech to the Bar Conference in 1996. I am indebted to the Personal Injury Bar Association for the information that in 1996–97 more than 502 million damages were recovered at a net cost to public funds of £1,418,000, much of which was offset because it saved social security benefits. Now there's value for money!

Leaving that point aside, what troubles some of us—it certainly troubles the Law Society, the Bar Council, the Legal Action Group and the noble Lord, Lord Goodhart—is whether all potential plaintiffs will find solicitors and counsel prepared to act on that basis given, in certain cases, the amount of time entailed, the disbursements involved and the unpredictability of the outcome. We are also concerned as to whether contingency insurance against liability to pay costs will always be available or available at affordable premiums.

My noble and learned friend is an optimist in these matters and in Committee (at col. 568) he expressed confidence that conditional fee agreements would normally be available and that in exceptional cases he would exercise his direction-making power to make appropriate provision. He added that in what he believed was the highly unlikely event of a hiccup in the market—in fairness that is my paraphrasing, not his words—he would intervene by direction.

Finally, as I recollect, he said that if necessary he would make provision in individual cases, though that would entail an amendment to Clause 7(7). Taking him at his word, I sought to implement his suggestion by tabling an amendment, but he stalled me earlier in our deliberations today by tabling it himself. For that we are all duly grateful. I hope my noble and learned friend will forgive me if I am not totally persuaded to share his optimism. I am not stating the opposite; I simply confess to a strain of agnosticism and I am fortified by the fact that it is obviously shared by all the organisations I mentioned and a large number of your Lordships.

If it were to transpire that there were problems, the difficulties which may trigger my noble and learned friend's intervention would become apparent only after an appreciable number of people were shown to have been denied justice, after all the frustration and the despair and heart ache. It seems to me quite unprovocative to table an amendment, as a number of noble Lords sought to do, which says that the prohibition in Schedule 2 shall not apply in a case where it appears that adequate arrangements for alternative funding are not available. If my noble and learned friend is justified in his optimism nothing is lost and it will not cost the public purse anything.

I appreciate that it would impose an administrative burden to require the commission to satisfy itself in every case that alternative funding is available. That is why, in Amendment No. 50, I sought to reverse the burden, to remove the prohibition, only where the applicant can show that after making diligent inquiries he has not been able to obtain advice and assistance. I am being more accommodating than even the noble Lord, Lord Goodhart, and, I believe, more accommodating than the present position of the Bar Council. It may transpire that my noble and learned friend is completely right in his predictions. If so, the fund will be no worse off. If he is wrong, at least he will not have been disastrously wrong.

Lord Carlisle of Bucklow

My Lords, I think that the noble and learned Lord the Lord Chancellor is right in supporting conditional fee agreements. I believe that they can work perfectly well in many actions. I suspect—I am not sure whether rightly or wrongly—that many of those who appear before the Criminal Injuries Compensation Board, where there is no legal aid, probably have some form of conditional fee arrangements with their clients—in Scotland, at least.

I am surprised at the confidence with which the noble and learned Lord the Lord Chancellor says that he feels we can do away entirely with legal aid. Indeed, to some extent, as I understand it, by his own amendment, Amendment No. 55. he has attempted to meet this concern by saying that in individual cases he may waive those cases in the schedule for which legal aid is not available. I should have thought that there was a strong argument for retaining, in the short term at least, the possibility of people being allowed to have their cases funded by legal aid where a conditional fee agreement is found not to be practical.

However, I rise to ask a question, notice of which I informally gave to the noble and learned Lord, Lord Falconer, before the debate commenced today. I do not understand the relationship between what is now proposed and what I believe is the present green-form system. As I understand it, at present, anybody may go to a solicitor—the noble Lord, Lord Clinton-Davis, will correct me if I am wrong—and obtain a certain degree or period of advice which is dealt with on a green form and paid for accordingly through the Legal Aid Fund. Does that introductory advice apply to someone who is inquiring whether he has an action which would not be funded under the community legal service because it is an action for personal injury? In other words, if an individual goes into a firm of solicitors saying, "I had an accident at work yesterday and I want to know whether I have a claim for negligence against my employer for an unsafe system of work"—it may, as the noble and learned Lord, Lord Archer, said, in many cases involve a lot of exploratory work—is the solicitor entitled to any form of remuneration for answering the request and giving that advice?

Clearly, as I understand it, if the advice is, "Yes, you do have an action", the solicitor may decide whether or not he will take on that action on a conditional fee basis. He may or may not choose to do so. However, what if he says, "I am sorry: I've looked into the law and, in fact, you have no action"? Does that mean that the whole of the advice must be given free of charge or does the present provision for his remuneration through the green-form system apply although the potential action is one which is excluded, under the Bill, from the community legal service? I should be grateful if the noble and learned Lord who replies would try to elucidate the answer to my question.

Lord Clinton-Davis

My Lords, the noble Lord, Lord Carlisle, has asked an interesting and pertinent question. I do not know the answer to it. I suspect that it will not be possible to obtain advice under the green form system. I shall listen with interest, as he will, to whichever of my noble and learned friends replies.

I simply do not know what sort of contumely will befall me as a result of having the effrontery to put down certain amendments when my noble and learned friend—if it is he—comes to reply. I had better declare my interest. I do not say this with pride, and it is partly due to Brussels: I have not actually dealt with a legal aid case since 1984. I suppose I am with a fat cat firm of lawyers as many people are in this House. I remember and I keep in touch. I hear what the smaller firms, high street firms—call them what one will—have to say. They are not fat cats. By and large they are people who are very able and who have offered to provide a service in the interests of the community. One of my former partners came from a very large firm of City solicitors. Today he is certainly no fat cat. He is doing a wonderful job, as so many are.

It is all very well for my noble and learned friend, having had a very lucrative practice at the Bar himself—

The Lord Chancellor

Never!

Lord Clinton-Davis

Never? I believe that he has, and deservedly so. He was a very good barrister. It is no good pretending that the world is as he would like it to be. These people are dedicated and they should not be treated with disrespect as my noble and learned friend resorts to treating them frequently during the course of this debate. He says that he has a high regard for these people, but that does not always appear to be the case when he rises to his feet.

I turn to my own amendments which are designed to probe. I make that very clear. Amendments Nos. 51 and 52 are designed to see what my noble and learned friend will do if in fact he is faced by serious problems affecting personal injury cases. With whom is he going to consult about that, and where is he going to get his information? How do we know that he is actually looking at this matter with the intention of securing equity and justice? Or is he going to act on advice? This is a matter where my noble and learned friend needs to be closely involved with the practitioners in this area, and also with those such as the Legal Action Group and other organisations to which my noble and learned friend Lord Archer referred earlier.

We are saying here that legal aid should not be withdrawn from personal injury cases unless my noble and learned friend is sure—not on the basis of optimism—that adequate alternative arrangements are in place. There is a doubt about the efficacy of insurance arrangements. There is a doubt at the present time as regards some of the matters on which my noble and learned friend has formed an optimistic view. I have said some harsh things to my noble and learned friend and he has to me. I do not grumble. As he put it to me, this is a place where each one of us should take hard knocks. That is fair enough.

As regards conditional fees, I hope that my noble and learned friend will be absolutely right. I hope that all the anxieties that I and others have expressed will come to nothing. But can we be sure that that is the case? Unless he is prepared to take the view that it is right and proper at the time to remove what has been a protection for a very long period of time, I fear that it will be a judgment that we shall all regret.

Conditional fees should be used wherever they are appropriate. Cases which merit public funding, but for which conditional fees are impractical, should continue to be eligible for support. The legal services commission should not be swamped by applications.

We come to the question of compelling reasons. It may be that it is not the best form of words. I did not like "special reasons" for other reasons, as I said in Committee. However, I think there must be some way of making a judgment about this matter. I have tried to define a compelling reason in Amendment No. 62 which states: A compelling reason for the purposes of sub-paragraph (1)(a) or (c) above exists where—

1. (a) the case is one which a private client of sufficient means would be likely to wish to pursue or defend;
2. (b) it is not practical for the case to be conducted on a conditional fee basis:
3. (c) (in the case of sub-paragraph (1)(c) the circumstances are not such that a reasonably prudent person would have insured against the risk of a dispute arising")".

I refer to a private client of sufficient but not super-abundant means. I believe that this is not an unreasonable request. I hope that I may obtain a rather more reasonable response from my noble and learned friend on this occasion.

10.15 p.m.

Baroness Wilcox

My Lords, I support Amendment No. 53 which is a cautious approach to conditional fees. I can see why the noble and learned Lord the Lord Chancellor is in a hurry to take personal injury claims out of the legal aid budget. On the one hand, he has the interests of consumers in mind. He wants to revolutionise the way legal services are delivered. That is the point of the Bill and it is an admirable one. To do that he must free up money from a budget that at present leaves him little room for manoeuvre. Personal injury seems an obvious choice. An alternative method of funding has been developing over the past few years and it could well be a viable alternative for all or some people. In addition, conditional fees are much fairer to the winning opponent who will be able to recover costs.

On the other hand, the noble and learned Lord may remember that in previous debates I have expressed concern on behalf of consumers that we do not yet know enough about how conditional fees operate in practice. Saying that they have been running for three years does not tell the whole story. Over those three years there has been no monitoring of how they work from the point of view of clients. We still do not know how people manage to pay the upfront costs of experts and other expenses. We still do not know if good cases are being turned down purely because they are a little too complex or clients present special difficulties; for example, they are not articulate or have problems with the English language.

In the past the noble and learned Lord has listened carefully to the concerns of consumer groups about damages being eroded by the cost of insurance premiums and success fees. He helpfully proposes in this Bill to make them both recoverable from a losing opponent. But that seems to me yet another reason to take a measured approach. Would it not be better to let the new arrangements bed down for a year or two while his department monitors conditional fees, as I know it is planning to do? In the meantime, the Bill as amended would still allow personal injury cases to be turned down on a case by case basis provided the decision maker is confident that in a particular case a conditional fee is available. In that way a picture can be built up of cases that are particularly suited to conditional fees and those that are not. If that picture is distorted by lawyers cherry picking the easy cases for conditional fees, I shall certainly support measures the Government take to discourage that. But it is as well to discover and deal with cherry picking while an alternative is still available for those rejected for the wrong reasons.

I support conditional fees in theory. Properly implemented they can increase choice and access to justice for consumers. I also support many of the reforms the noble and learned Lord is trying to bring about with the money that will be saved from legal aid. But when we are withdrawing a safety net from poor people who have been injured—as we are here—we must be sure that we are not asking them to jump from a great height into a new net that is full of holes.

Therefore I urge the noble and learned Lord to accept this amendment of my noble friend Lord Kingsland with a review when the new arrangements have been properly tested through monitoring. It is my hope that during that time money for his other reforms will begin to be freed up as conditional fees find a market based not on compulsion but on real consumer choice.

The Lord Chancellor

My Lords, let me attempt to deal with two specific questions before addressing the amendments. My noble and learned friend Lord Archer of Sandwell suggested that the net cost to the Exchequer of personal injury cases was about £2 million a year. In fact, it is about £40 million a year. But rather than go into detail now, I will undertake to write to him.

Lord Archer of Sandwell

My Lords, will my noble and learned friend forgive me. To set the record straight, I never said any such thing. It may be that I was muttering into my beard, but I never mentioned £2 million. I do not think that I gave that figure at all.

The Lord Chancellor

My Lords, if I misheard the noble and learned Lord, I apologise. But, just to ensure that I did not, I will read Hansard tomorrow with great diligence.

The noble Lord, Lord Carlisle, asked about the green form in relation to a conditional fee agreement. I am not going to attempt an authoritative answer now—I undertake to write to him—but let me say shortly what I believe the answer to be. The noble Lord realises that the green form is only available to give very basic advice to very poor people. My understanding—and I will be corrected subsequently if I am wrong—is that if the advice was to the effect "You do not have a case", then there would be no charge. If the advice was "Yes, you do have a case. Would you like a conditional fee agreement?". then I think that the cost of the advice would be subsumed within the conditional fee agreement and a green form charge would be inappropriate. I am always anxious about giving immediate replies and I will therefore write to the noble Lord authoritatively. If I am wrong I will be the first to acknowledge it in my letter.

Lord Clinton-Davis

My Lords, I am grateful to my noble and learned friend. This is not really a matter of private correspondence between my noble and learned friend and the noble Lord, Lord Carlisle; it is matter of great importance to the legal profession. If my noble and learned friend reconsiders his view, or departs from it in any material way, the legal profession as a whole—and especially that part of it which practises in the green form area—will want to know. An exchange of letters would not achieve that.

The Lord Chancellor

My Lords, I will certainly ensure that the noble Lord, Lord Clinton-Davis is on the mailing list. But even adding his name will not ensure that the world knows. I shall think about some means of ensuring that the world is informed. Perhaps I shall write to the Law Society as well.

I am grateful to the noble Lord, Lord Clinton-Davis, for saying that we must not be too sensitive about our differences in the issues which engage us. Parliament is a place in which hard knocks are given and received in good spirit. The contributions of my noble and learned friend Lord Archer of Sandwell and my noble friend Lord Clinton-Davis have been so frequent from the Benches behind me that it demonstrates that on this subject our party is a broad church. I have noticed that the Liberal Democratic party is also quite a broad church on these issues—perhaps three broad churches.

These amendments are designed to keep some personal injury cases, which would be excluded by Schedule 2, within the scope of public funding, and to bring some cases involving property, companies and partnerships into scope. Amendment No. 50 would effectively mean that for every personal injury case the commission would have to satisfy itself that in each and every case adequate arrangements could be made to fund the case in some other way. Amendments Nos. 49 and 53 would have much the same effect. Amendments Nos. 5l and 52 seek to ensure that, before exclusions can be made under Schedule 2 to the provision of help in bringing or defending personal injury actions, the Lord Chancellor will have to satisfy himself that alternative forms of funding do exist throughout England and Wales. Amendment No. 68 is intended to put on the face of the Bill the circumstances in which cases could return to scope for funding.

I believe that these exceptions are better dealt with by way of directions. I shall explain my reasons in a moment. Amendment No. 58 would restore personal injury to the scope of publicly funded help. Amendment No. 56 would allow the Lord Chancellor to direct that funding should be given to an individual case that otherwise would be excluded. Amendments Nos. 59, 61 and 62 would allow help to be provided to individuals with disputes relating to the negligent damage of property, or involved in company or partnership disputes in certain circumstances. So I am speaking to all of the amendments in this group—Amendment Nos. 49 to 53, 56, 58, 59, 61, 62 and 68.

I shall begin by addressing the general issue of personal injury cases. I said in Committee that the majority of personal injury cases were, in my considerecl judgment, suitable for funding through conditional fee agreements. Perhaps I may give some more detail on how I have arrived at that conclusion. In 1996–97 there were 83,852 personal injury cases funded by legal aid. Of those, 11,868 were clinical negligence cases, which will remain within scope. That leaves 71,984 cases. Of those cases, 89 per cent. cost 6,000 or less; 84 per cent. cost 5,000 or less; and 81 per cent. cost 4,000 or less. These figures are total costs for the case. They include all disbursement costs, including counsels' fees. So, with all costs included, the vast majority of cases cost less than 4,000. Simply from the costs involved, it is possible to see that these cases did not require exceptionally large amounts of work or expenditure from the solicitors; nor were the costs of any investigations required particularly high.

We do know that taking a conditional fee in these types of case is profitable for lawyers. So, if the overall costs do not amount to more than 4,000 or 5,000 in most cases, I do not think it is unreasonable that solicitors should be asked to bear any risk involved. Every business incurs costs with a view to profit and runs risks. Why not lawyers as well? These cases, provided they have merit, are exactly the type of case which should be able to attract a conditional fee agreement. If a case is without merit, it may not be able to do so. But it would also be completely wrong for public funding to support cases of insufficient merit.

I know that there are those who argue that the financial arrangements in many solicitors' firms are such that they will be unable to support the increased overdrafts that might result and it is said that they will therefore be unwilling to enter into conditional fee agreements. I am not convinced. We know that some solicitors' firms already bear the up-front costs of disbursements, charging clients only after the case has finished. If those firms can organise their financial affairs in that way, it is not unreasonable to expect other firms to do the same.

I am also aware of the concern of some that conditional fee agreements will not be available in particular parts of the country. I do not accept that. First, since these agreements are unquestionably profitable when properly managed, it is hard to believe that no solicitor in an area would be prepared to take them on. But, secondly, even if that is the case, one of the important parts of the community legal service will be the development of information about the availability of assistance and better referral systems. If a specialist adviser is not available in the home town of the client, there should be little problem in putting the individual in touch with a lawyer who will want to help.

In contrast, if either the Bill or directions under it are used to make exceptions for individual areas, that would act as a disincentive to conditional fee agreements ever developing and there would be a continuing drain on limited resources that could be better spent elsewhere. The lesson is that lawyers, too, have to learn to adapt.

I return now to Amendments Nos. 50, 68, 49 and 53. If the majority of cases were suitable for funding elsewhere, then all that is achieved by forcing the commission to consider them individually is to take up a great deal of time and money of all involved in considering the application.

I want to say this again: we must ensure that the limited public money available is properly directed to provide help to those people who need help and cannot afford to pay for it themselves and we must ensure that, where there are alternative means of funding, they are used.

The removal of the majority of personal injury cases from the scope of legal aid is one of the principal methods of securing funding for other needy areas of law where conditional fee agreements may not be suitable. So I am not in favour of the return to scope of personal injury in general cases. On that basis, I would not accept Amendment No. 58.

Amendments Nos. 51 and 52 are linked with that, because they would prevent personal injury being returned to Schedule 2 until such time as the Lord Chancellor was satisfied that alternative funding arrangements existed throughout the country. I have spoken about the need to ensure that CFAs develop throughout the country, and I have little doubt that they will.

I intend to make directions so that public funding will be available in exceptional cases of high cost and complexity and I say in particular to the noble Lord, Lord Goodhart, that exceptional cases of high cost and complexity are not confined to criminal negligence cases—that is to say, cases where the costs of any initial investigation required to evaluate the strength of the case are very high or where there is a wider public interest—in that, although the costs and chances of success are disproportionate to the likely damages and therefore do not make the case naturally suitable for a conditional fee, nonetheless legal aid might be available for a case where there were wider benefits to society in having the case determined.

As the market develops and solicitors become more confident about which cases they can handle on a conditional fee basis, I would expect to be able to pull back such cases from public funding. Directions given by me will be more amenable to change than something set out on the face of an Act: as the market changes, the directions can change to reflect the new needs and priorities of society. Also there is the important point that by setting out factors on the fact of the Act there is a danger that they will act as a disincentive to developing alternative methods of funding.

Amendment No. 56, in the name of my noble and learned friend, Lord Archer of Sandwell, would allow the Lord Chancellor to direct that funding should be given in an individual case. In my view, however, it goes too far, in that it would allow a Lord Chancellor to do this regardless of the considerations motivating him and even if the commission did not believe it met the relevant conditions of the funding code or commanded the necessary priority. I hope that my Amendment No. 55, which would allow funding to be given exceptionally in an individual case where the Lord Chancellor agrees to a request initiated by the commission, meets the substance of my noble and learned friend's concern. I do not think that the executive should intervene in individual cases in the way that this amendment would permit but I believe I would be entitled to respond to an approach from the commission in an exceptional case. On that basis, I would invite my noble and learned friend not to press his amendment.

Finally, perhaps I may make a further comment on Amendments Nos. 59, 61 and 62. These amendments would restore funding for negligent damage to property and for disputes in partnerships and companies in certain circumstances. I say only this. The Bill is about ensuring that limited resources are directed to areas of priority. I do not believe that, given a controlled budget, these areas will have sufficient priority to qualify for public funding within the foreseeable future. There is simply not enough public money to bring those areas back within scope. To do so could only be at the expense of priority areas such as clinical negligence or cases involving children. That would go against the whole underlying principle of the changes that I seek to make to the legal aid system—changes which are designed to ensure that the limited money available is spent on those cases that are most deserving of public funding. On that basis, I—

Lord Archer of Sandwell

My Lords, before my noble and learned friend sits down—and I am most grateful to him for giving way—of course I accept what he says about my Amendment No. 56 and I shall not move it. However, for the removal of a misapprehension, he has twice said that my Amendment No. 50 would entail that the commission in every case would have to satisfy itself that no alternative source of funding was available. My amendment is designed precisely to avoid that problem. It would be for the applicant to satisfy the commission in any particular case that he had looked for alternative funding and failed to find it.

The Lord Chancellor

My Lords, I appreciate that that is so as a matter of drafting, and indeed as a matter of substance. Nonetheless, in any case in which an applicant so contended and applied for legal aid considerable resources would be involved in investigating whether or not that was so.

Lord Ackner

My Lords, before the noble and learned Lord sits down, can he assist me on the following matters? What monitoring is currently being carried out by the Lord Chancellor's Department into the effectiveness and justness of the way in which the conditional fee system is working? Secondly, can the noble and learned Lord assist us with the results of his department's inquiry into what is available on the insurance market? Finally, in regard to the cases that have averaged £4,000, £5,000 and £6,000, did any of them actually reach the court—not reach the court doors, but get through the court doors?

The Lord Chancellor

My Lords, at this hour these are questions of considerable detail. We are in discussion with the professions and we are about to commission research in relation to the operation of conditional fee agreements. The question asked by the noble and learned Lord about the insurance market calls for a very detailed reply subject to commercial confidentiality. We have had many conversations and discussions with many insurers and that is the basis of my confidence. As to the detail of the personal injury cases, that is much more suitable for a detailed letter.

Lord Goodhart

My Lords, I listened with care to what the noble and learned Lord the Lord Chancellor said. At this time of night I certainly do not intend to comment on it in any detail. The one point I would make is that, as I recall, the noble and learned Lord said that 85 per cent. of the non-clinical negligence cases involved costs of no more than £6,000. That means that 15 per cent. of them did, and that (again if my recollection is right) means more than 10,000 cases, which is a very substantial number. Of course I accept that not all of those cases may be ones where CFAs would not be appropriate.

I very much regret that the noble and learned Lord was not able to be more forthcoming on this matter. Once again, after half past ten at night it is hardly appropriate to seek the opinion of the House and I do not intend to do so. I shall read with great care what the noble and learned Lord the Lord Chancellor said. We may feel the need to bring this issue back before the House for a final attempt. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 50 to 53 not moved.]

The Lord Chancellor moved Amendments Nos. 54 and 55: Page 5, line 12, leave out ("give directions under section 4 requiring or authorising") and insert ("by direction require"). Page 5, line 14, leave out ("by the directions") and insert ("in the direction, and (b) may authorise the Commission to fund the provision of any of those services in specified circumstances or, if the Commission request him to do so. in an individual case. (8) The Lord Chancellor shall either—

1. (a) publish, or
424
2. (b) require the Commission to publish,
3. any authorisation under subsection (7)(b) unless it relates to an individual case (in which case he or the Commission may publish it if appropriate).").

On Question, amendments agreed to.

[Amendments Nos. 56 and 57 not moved.]

Schedule 2 [Community Legal Service: excluded services]:

[Amendments Nos. 58 and 59 not moved.]

Lord Archer of Sandwell moved Amendment No. 60: Page 54, line 37, at end insert—

1. ("(ii) cases for children and people suffering from a mental disability,
2. (iii)cases where the overall costs are likely to exceed £25,000,
3. (iv)cases where the costs of investigation are likely to exceed £3,000,
4. (v)complex cases where damages are likely to exceed £50,000,
5. (vi)cases involving multiple causes of action,").

The noble and learned Lord said: My Lords, my noble and learned friend has been patient with us, but I am sure that he appreciates that there are some deep anxieties here. If funding by the community legal service is to be denied to personal injury cases other than for clinical negligence, I hope that my noble and learned friend will look again to ensure that some exceptional categories of case are protected. I accept, as he said a few moments ago, that their number will not be large.

I am grateful to the Legal Action Group for the benefit of its advice and experience in setting out the list which I have in this amendment of the categories which occasion the greatest anxiety. First, there are the cases for vulnerable clients. I have suggested two classes of vulnerable people: children and people suffering from a mental disability.

Since 1990, children have been able to make their own applications for legal aid and the financial assessment is that of their own resources. This has meant that they are not dependent either on their parents' willingness to apply or on their parents' means.

There are a number of reasons for making special provision in this case. First, children and people under a mental disability may have greater than average difficulty in finding a solicitor prepared to act under a conditional fee agreement and in negotiating a fair agreement with him. Secondly, there is likely to be an increased need for initial investigation and an increase in the time needed to take instructions. If there is a cherry-picking process, they will be the least colourful cherries.

Thirdly, negotiations for a conditional fee agreement may have to be conducted through a next friend, who may feel very exposed to criticism in bargaining away a proportion of their entitlement. Fourthly, I suspect—though I concede that I have no evidence—the insurers will be inclined to load the dice against them for actuarial reasons. I have read that 53 per cent. of legally-aided personal injury victims are children. So it may be that I was wrong to concede that it may be a very small category. I hope that my noble and learned friend will agree that they are very much a special case.

The second category of special case comprises those where the costs are likely to be unusually high. Not only may solicitors be reluctant to invest the initial disbursements—and we have discussed that already—but insurers may charge high premiums to provide cover. I am told that cover against liability for costs up to £25,000 would normally attract a premium of about £1,650. Cover for costs up to £100,000 could be as much as £6,000. That outlay seems likely to fall on the client.

The Policy Studies Institute some time ago studied 197 conditional fee agreements undertaken by 120 firms of solicitors. I do not know whether these figures are already at my noble and learned friend's fingertips but I hope that he will take account of them at some stage during our debate. The insurance against liability for costs was taken at the expense of the client, not the solicitor, in 99 per cent of cases. I can understand the reluctance of solicitors to speculate to that extent with their own money. With premiums at that level clients would be virtually excluded in a high percentage of cases from seeking redress. I am aware that the Legal Aid Board knows about the problem because paragraph 7.13 of the funding code makes the point. I shall not trouble your Lordships at this hour by reading it out.

The next category I have sought to list is where the investigating costs exceed £3,000. I would not go to the stake for that specific figure. As I understand it, this is the factor which influences my noble and learned friend in excluding clinical negligence cases from Schedule 2. I point out that there may be other cases where investigative costs are exceptionally high. If that is prohibitive the client may never even discover whether he has an arguable case.

This overlaps with the next category that I list: complex cases where damages are likely to exceed £50,000. Frequently, they can be the test cases that establish a basis of liability for many other claimants—whether a particular product is toxic, whether a particular situation can give rise to a cause of action or which of two links in the marketing chain is responsible for the damage. If they have to rely on conditional fee agreements it is doubtful whether the early claimants relating to human growth hormone could have brought proceedings.

My final category is where more than one cause of action is involved against the same defendant. There may be a claim for false imprisonment and personal injury. It would be virtually impossible to pursue part of the claim through C. L. S. funding and the other part by CFA funding. I would not go to the stake for my list, but I hope that my noble and learned friend recognises that there are exceptional circumstances where there may be a high risk of injustice. I hope that he will set everyone's mind at rest and agree to write those obvious special categories into the Bill.

Lord Falconer of Thoroton

My Lords, to some extent this amendment raises the same question as the previous debate, so I shall be brief. My noble and learned friend seeks to define a number of factors which would bring personal injury cases back within the scope of funding. My noble and learned friend the Lord Chancellor said in Committee that he was aware it would not be possible overnight to fund personal injury cases through conditional fees in all circumstances. The Lord Chancellor will make directions which will allow some classes of case to come back into the scope of public funding. I have sympathy with most of the criteria suggested by the noble and learned Lord, Lord Archer, in his amendment. However, I do not think that the face of the Bill is the correct place to make these exceptions.

I set out the intention of the Lord Chancellor in relation to directions that he will make so that public funding will be available in exceptional cases of high cost and complexity, where the costs of any initial investigation required to evaluate the strengths of the case are very high, or where there is a wider public interest in that, although costs and chances of success weighed against the likely damages do not make the individual cases suitable for a conditional fee, it is nonetheless a case where there are wider benefits to society from having the case settled.

As the market develops and solicitors become more confident about which case they can handle on a conditional fee basis the Lord Chancellor will feel able to pull back from public funding. Directions given by him will be more amenable to change than something set out on the face of an Act of Parliament, so that as the market changes the directions can change to reflect the new needs and priorities of society.

I hope that what I have said will provide some reassurance to the noble and learned Lord that we are to a significant extent overlapping what we seek to achieve. I hope that that will be sufficient to persuade the noble and learned Lord to withdraw the amendment.

Lord Archer of Sandwell

My Lords, I am grateful to my noble and learned friend for that caring and careful reply. I am not sure that I agree that it would not be wise to set out some of the exceptional cases on the face of the Bill and set everyone's mind at rest. But good intentions are better than bad intentions. I settle for the half loaf. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 61 to 63 not moved.]

Lord Goodhart moved Amendment No. 64: Page 55, line 28, at end inser— ("( ) proceedings before the employment tribunals,").

The noble Lord said: My Lords, in moving the amendment, perhaps I may also speak to Amendments Nos. 65 and 66 which stand in my name.

The amendments propose that public funding should be extended to certain tribunals where legal aid has not been available under existing law. At Committee stage I moved an amendment which would have included appeal tribunals under the Social Security Act 1998 in the list of tribunals where legal aid public funding should be available. In his reply, the noble and learned Lord the Lord Chancellor persuaded me that the procedure in those tribunals made public funding inappropriate. Both tribunals investigate claims and there is no opposing party in the ordinary sense, so they do not have what one might call a normal court procedure.

That is not true of employment tribunals which follow an adversarial procedure with parties arguing their cases on each side. Furthermore, the raising of the limit on awards for unfair dismissal now makes these highly significant tribunals. Race and sex discrimination cases before employment tribunals have a particularly high priority. They tend to be complex and in some cases, especially those concerning equal pay for work of equal value, they cannot in practice be brought without legal assistance. The absence of power to award costs makes employment tribunals unsuitable for CFAs but changing to the rule that costs follow the event would deter employees from applying since they cannot face the risk of paying their employers' costs. I therefore ask the noble and learned Lord the Lord Chancellor to add employment tribunals to the list in paragraph 5 (2) of Schedule 2 on the basis, which I accept, that for the time being representation before employment tribunals would have to be given a low priority.

I recognise that employment tribunals could be added in the future, but including them in the list now would ensure that the need to provide funding for employment tribunal cases would not be ignored.

Next in the list is immigration tribunals. These are included as a warning shot. Advice and representation before immigration tribunals are of the utmost importance to applicants. In some cases they are literally matters of life and death. Few of the applicants speak English. All of them are likely to be wholly ignorant of English legal procedure and under great stress.

The current system of funding for immigration and asylum work is partly through green form legal aid and partly through Home Office funding for appeals representation. This delivers an incomplete service which leads to duplication and poor management of resources. Legal advice and assistance for hearings before the adjudicators and the tribunals are funded under the legal aid green form scheme. This scheme does not allow representation by a lawyer. Thus, while an appellant can get limited help with the preparation of the case he will be left with the responsibility of preparing his case before the adjudicator or the tribunal. The immigration advisory service and the Refugee Legal Centre receive grants from the Home Office to provide advice, assistance and representation at appeal. But the type of split funding between the first year and the appeal results in duplication of work and is a thoroughly ineffective way of managing resources. It is clear that the management and allocation of resources for advice, preparation and representation at both the initial hearing and the appeal should be conducted through the community legal service. It should have the appropriate transfer of funds from the Home Office.

I recognise that the Immigration and Asylum Bill may he a more appropriate place to deal with the issue. However, I wish to flag up the fact that we will take it very seriously when vie come to that Bill.

Finally, I have put my name to an amendment tabled by the noble and learned Lord, Lord Archer of Sandwell, about hearings before the social security commissioners. I can be brief because it is for the noble and learned Lord to speak to it. I wish to make only two points. First, appeals to the social security commissioners are on points of law, whereas most appeals to the social security appeal tribunals raise factual issues. It is impossible for most claimants to research and argue points of law. Secondly, the Government have indicated that welfare rights will have a high priority. A combination of these factors surely makes a case for funding appeals to the social security commissioners unanswerable, unless perhaps the noble and learned Lord the Lord Chancellor can make some suggestion as to how they can be funded by CFAs. I beg to move.

Lord Archer of Sandwell

My Lords, in Committee a number of your Lordships proposed additions to the list and my noble and learned friend most helpfully set out his thoughts on the various categories of proceedings which we discussed. One category, suggested in Committee by the noble Lord, Lord Goodhart. was proceedings before social security tribunals. My noble and learned friend gave reasons why the extension of funding to all social security tribunals was not considered appropriate, at least at that stage. I seek now to explore only one sub-category of proceeding within that general description; proceedings before the social security commissioners. Your Lordships will know that they hear appeals from various social security tribunals. Appeal lies only on a point of substance involving a matter of law, as the noble Lord, Lord Goodhart, said, and it lies only by leave of the tribunal chairman or commissioner. Therefore, there is little risk of a plethora of frivolous appeals.

Social security law has become increasingly complex. Even in the days long ago when I used to appear before the commissioners it was unusual for anyone to appear unless he was known to have some expertise in the subject. Since then, it has increasingly become a special field of practice. An unrepresented appellant is at a grave disadvantage. I pay a warm tribute to the work of the commissioners who strive to ensure that an unrepresented appellant is not unduly penalised and often they carry out their own research very commendably. But, like any members of the judiciary, they are bound to rely largely on the arguments which are addressed to them.

The people who are appealing are frequently the most vulnerable and disadvantaged in respect of health and sometimes of schooling. I wonder whether it will he possible for me to have the attention of my noble and learned friend. I am not unmindful of the valued work done by bodies such as the citizens advice bureaux, but there is not an inexhaustible supply of CAB officers trained in the subject.

Sometimes, it is not even a question of whether the claimant decides to appeal to the commissioners. A claimant my win his case before a tribunal and the Benefits Agency may appeal so that the claimant has no choice in the matter. Legal aid is now available before the employment appeal tribunal. I understand that the reason for that is that it is considered largely the equivalent of the High Court.

I am bound to point out that the social security commissioners exercise precisely the same kind of appellate jurisdiction as the employment appeal tribunal does within its field. They are regarded as being on the same kind of level as the High Court. It is certainly no less complicated a system of law which it administers, as I said.

The Government indicate repeatedly, as the noble Lord, Lord Goodhart pointed out, that they have a concern for those involved with welfare law. In the White Paper Modernising Justice, my noble and learned friend said that he proposed to accord priority to social welfare cases which help people to avoid or climb out of social exclusion.

This is a fairly modest proposal to extend Schedule 2. I hope that in this case my noble and learned friend will feel able to agree.

11 p.m.

Lord Clinton-Davis

My Lords, I wish to speak to Amendment No. 67 which stands in my name. I was encouraged by what was said in Committee by my noble and learned friend when he suggested that there may be truly exceptional circumstances in which it would be fair for public funds to be spent on representation at inquests and inquiries. He cited the example of the "Marchioness" disaster in support of what he said.

My noble and learned friend stated that the new legal aid funding scheme would contain a similar provision and that my noble and learned friend the Lord Chancellor would be considering how best that might be achieved. For that reason, I have tabled what I consider to be a probing amendment in order to find out more about the Government's intentions.

As regards coroners' inquests, I take the view that that is an important area of investigation, or it can be. But I do not say that in every case legal aid should be available automatically. I am not saying that at all. It must be apposite and within the community legal service's power to provide legal aid. It should not be a duty but a power. Without this amendment, as I understand it, there will be no power for the community legal service to fund a coroner's inquest into death or public or judicial inquiries. If I am wrong about that, I am sure that my noble and learned friend will point that out. As I say, I was encouraged by what was said at an earlier stage and I await my noble and learned friend's reply now.

Lord Falconer of Thoroton

My Lords, these amendments are grouped together since they are of a similar nature. Each seeks to extend the scope of the community legal service. My noble and learned friend Lord Archer of Sandwell proposes an amendment to Schedule 2 which would allow the commission to fund representation in proceedings before the social security commissioners. The noble Lords, Lord Goodhart and Lord Thomas, propose a similar amendment in relation to employment tribunals and immigration tribunals. My noble friend Lord Clinton-Davis proposes that public funds should be available to provide representation at coroners' inquests and at public and judicial inquiries.

Lord Clinton-Davis

My Lords, I did not say "should be". I said that there should be the power to make it available.

Lord Falconer of Thoroton

My Lords, that is quite right. I stand corrected. We debated similar amendments in Committee so I shall try to be brief.

At present advice and assistance are available for all those proceedings under the green form scheme but, as with most tribunals, legal aid is not available for representation. Under the new scheme, my noble and learned friend the Lord Chancellor intends initially to mirror the present arrangements so that advice and assistance will continue to be available but representation will not. That initial view is, of course, subject to the interdepartmental review which is due to start shortly. That review will consider for the various tribunals the extent to which current procedures and other arrangements, including representation, comply with our ECHR and European Union obligations. It would be premature to reach any decisions about publicly funded representation before that review is complete.

Having said that, perhaps I may deal individually with each tribunal referred to. I deal first with the social security commissioners referred to by the noble Lord, Lord Goodhart and my noble and learned friend Lord Archer. As my noble and learned friend Lord Archer said, the commissioners hear appeals on points of law from social security appeal tribunals. The vast majority of hearings are paper hearings, with only approximately 300 cases a year settled by an oral hearing out of a total of around 4,000. The help we propose to make available includes everything short of advocacy and we think it is therefore sufficient to prepare a case for a paper hearing. Subject to any findings of the interdepartmental review, to which I have already referred, the Government do not believe it would be justified to extend the scope of legal aid to provide representation in oral hearings.

We have to face up to the fact that we will be operating under a controlled budget. Any extension of scope in one area would have to be at the expense of another area. Representation is already provided by a number of not-for-profit organisations such as the Child Poverty Action Group, and we believe that the help that the commission will fund under the community legal service will be sufficient for an applicant to present his or her case thoroughly. Despite the eloquent pleas made by my noble and learned friend Lord Archer and the noble Lord, Lord Goodhart, therefore, it cannot be a priority to extend the scope in this area.

Lord Archer of Sandwell

My Lords, I am grateful to my noble and learned friend for giving way; I hope I am not being tiresome. Surely the fact that there are so few oral hearings is an argument in favour of granting it because the calls on the fund would be very small.

Lord Falconer of Thoroton

My Lords, surely that points the other way. If there are other sources of funding available and other areas which could be assisted by the community legal service, then perhaps it is not appropriate and not a priority. If we extend the scope, then we necessarily treat it as one of our priorities and that may not be the appropriate thing to do in the light of the limited number of cases. The fact that they are paper cases; the fact that advice can be obtained through the Green Form Scheme and the fact that there are other bodies which will be assisted by the community legal service accounts for the difference. I appreciate that there is no bright line answer to that; it is a question of where one draws the line.

Turning to immigration, publicly-funded representation is already available. The Home Secretary makes grants under Section 23 of the Immigration Act 1971 to the Immigration Advisory Service and the Refugee Legal Centre. Those are two voluntary organisations which provide free advice, assistance and representation at those appeals. That complements the advice and assistance that is available under the Green Form Scheme.

As the noble Lord, Lord Goodhart, knows, the whole immigration and asylum system is in flux. The Immigration and Asylum Bill was introduced in the other place on Monday. The Lord Chancellor has been working closely with his right honourable friend the Home Secretary on many aspects of the reforms, such as the rationalisation of the appeals system and the control of unscrupulous immigration advisers. We are therefore actively involved in ensuring that good quality advice, assistance and representation are available for immigration and asylum matters. Again, that specific amendment does not seem appropriate and we cannot agree to it.

On the question of whether the commission should fund representation in proceedings before employment tribunals, the Lord Chancellor's views are well documented. As he said in Committee, there are certainly some cases before employment tribunals for which legal representation is desirable because often factual and legal issues arise which are resolved indistinguishably from litigation in the ordinary courts. But that is not to say that representation should necessarily be provided through legal aid or its successor. A number of organisations already provide some representation in these proceedings; for example, trade unions, various not-for-profit organisations such as Law Centres, the Equal Opportunities Commission, the Commission for Racial Equality and the Free Representation Unit. But they certainly do not cover the whole ground.

The Lord Chancellor is also considering how to make conditional fee agreements more attractive for cases before employment tribunals. They are currently available for people to use, but as the Lord Chancellor explained in Committee, where, under the employment tribunals' current cost rules, costs do not follow the event, a successful applicant under a conditional fee agreement would have to pay his lawyer's success fee and the insurance premium from the damages awarded because he could not recover them from the respondent.

The Government believe that, where the private sector can provide an effective service, such as conditional fee agreements, public money should not be spent. With a change to the employment tribunals' cost rules, conditional fee agreements could be a viable and attractive option for many cases before the employment tribunal.

The reform of the legal aid scheme will give control over expenditure and the ability to target resources to priority areas. Savings generated in one area can be spent in another. The Lord Chancellor has said that he is willing to consider whether the commission should, in time, fund representation in certain cases before employment tribunals. However, he cannot consider this until he has control over expenditure. By that time, the Government will also have completed a review, for all tribunals, of the extent to which current procedures and other arrangements, including representation, comply with our ECHR and EU obligations.

As I said previously, coroners' inquests and public judicial inquiries, unlike most court proceedings, are inquisitorial. Legal representation should be unnecessary, which is why civil legal aid is not available. The new scheme will operate under a controlled budget. There will be many competing claims on this budget and resources will be targeted towards priority areas. Any extension of scope would have to be at the expense of other parts of legal aid expenditure. We cannot agree that providing publicly funded representation at inquests and inquiries should be a priority for taxpayers' money.

Lord Clinton-Davis

My Lords, when we last discussed this, the noble and learned Lord said that public funding might be available, as in the "Marchioness" case. Am I wrong?

Lord Falconer of Thoroton

My Lords, no, absolutely right!

Lord Clinton-Davis

My Lords, if I am absolutely right, I have at least one success.

Therefore, presumably the position is that public funding comes out of another budget. That is the point that I anticipate the noble and learned Lord making. In reality, it does not make a lot of difference. I repeat that I am not asking that it should happen, but that the Government should have the power to make it happen through the legal aid commission.

Lord Falconer of Thoroton

My Lords, it is my fault; there was such a long introduction about why the power is there. That is why my noble friend interrupts me—

Lord Thomas of Gresford

My Lords, perhaps I, too, may intervene. I have been very quiet! The noble and learned Lord refers to priority areas. The White Paper, Modernising Justice, states that the area of greatest priority is, social welfare cases, which help people to avoid, or climb out of, social exclusion; for example, cases about people's basic entitlements, like a roof over their heads and the correct social security benefits". How is the £40 million that is to be saved on negligence cases to be spent on such priority areas? Nothing in the Bill assists us on that point.

Lord Falconer of Thoroton

My Lords, I believe that the noble and learned Lord, Lord Archer of Sandwell, also cited that quotation in his excellent speech on this issue—

Lord Thomas of Gresford

My Lords, I have not yet heard an answer!

Lord Falconer of Thoroton

My Lords, I am not complaining; the more that it is read, the better!

The answer is that the community legal service will provide the money for such things. It is not simply a case of direct legal aid being paid to solicitors. There are also the citizens' advice bureaux and the not-for-profit organisations, such as the Child Poverty Action Group, which, as part of the services that they provide, specialise in advising those who are making claims to the social security commissioners. The answer to the question from the noble Lord, Lord Thomas of Gresford, is that some of the money in the community legal service will go to such groups which help people more widely than by providing straight legal advice. They will be able to help people with, for example, preparing cases for the social security commissioners.

The noble Lord, Lord Thomas of Gresford, interrupted me interrupting the question about foreigners which came from my noble and learned friend. Under current arrangements, legal advice and assistance is available under the green-form scheme. When truly exceptional circumstances warrant it, the legal services commission will be able to fund representation at inquests. That was made possible by government Amendment No. 55, which we considered earlier. I do not blame noble Lords for not spotting it because there were about 40 other amendments in the same group. It would provide for circumstances similar to those concerning the inquiry into the "Marchioness" where a second inquiry was necessary because of failures in the running of the first. I believe I said on the previous occasion that we would want there to be such a power as my noble friend wished. I believe that we have now provided it. I am sorry that I took so long to say that. In the light of what I have said, I invite my noble and learned friend Lord Archer, the noble Lords, Lord Goodhart, Lord Thomas of Gresford, and my noble friend Lord Clinton-Davis to withdraw their amendments.

11.15 p.m.

Lord Goodhart

My Lords, I listened with such attention as I can muster at this time of night to what the noble and learned Lord, Lord Falconer said. As I said earlier regarding the immigration tribunals, I accept that, given recently introduced legislation whereby the whole system is to have a fundamental shake-up within the next few months, it is perhaps not appropriate in this Bill to deal with this matter. However, I make it clear that it is virtually certain that we shall wish to return to it in the debates on the Immigration and Asylum Bill.

As regards the employment tribunals, I was somewhat alarmed at the suggestion that the cost rules for those tribunals might be changed. While I recognise that that might make CFAs more viable, the advantage of the cost rule at present is that an employee who believes that he or she has been unfairly dismissed or has some other appropriate claim against an employer, even if they believe that they have only a small chance of winning, can take their case to the employment tribunal knowing that if the worst comes to the worst they will not have to meet the employer's costs, which are very likely to be considerably higher than those of the employee because the employer can afford to pay more.

It seems to me that the existing cost rule in employment tribunals provides considerable assistance for an employee. I would be very much disturbed if it were changed. Taking that into account, I believe that cases before the employment tribunal should be very seriously considered. I have taken such comfort as I can from the statement of intent from the noble and learned Lord the Lord Chancellor to look into it in the fullness of time and possibly produce a form of public funding in some circumstances for those tribunals.

Finally, there are the social security commissioners. As I suggested earlier, I believe that the case is unanswerable. They are not likely to be expensive because there are very few cases which proceed to an oral hearing. But they involve points which hardly any claimant could deal with himself. Given that in the social security field there is no doubt that a represented claimant stands a much better chance of success than an unrepresented one, that should have a very high priority for funding. It should go into the schedule now as a case where funding is permitted. Having said that, it is not my intention to press this amendment. With the hope that the noble and learned Lord the Lord Chancellor will give these matters more favourable consideration in future, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 65 to 67 not moved.]

[Amendment No. 68 not moved.]

Clause 9 [Code about provision of funded services]:

The Lord Chancellor moved Amendment No. 69:

Page 5, line 36, leave out ("to") and insert ("for").

The noble and learned Lord said

My Lords, in moving this amendments and, with the leave of your Lordships, I shall speak also to Amendments Nos. 70, 71, 74, 75 and 79. I bring these amendments forward in response to our debate at Committee stage. They are designed to ensure that concerns expressed by some of your Lordships on a number of issues which the amendments address are dealt with on the face of the Bill.

The noble Lord, Lord Phillips of Sudbury, expressed concern that the word "conduct" was too wide and could be used to exclude cases where the conduct of a particular individual seeking assistance was, for whatever reason, unpopular. This of course was never my intention and I am happy to provide for a tighter definition on the face of the Bill. The types of conduct which I think we would all agree should be taken into account are where, for example, there has been a persistent failure to attend appointments with lawyers, persistent failure to give proper instructions, or a failure to co-operate in a reasonable way or behaving in an abusive way. Amendment No. 71 will ensure that only the conduct of the applicant in relation to his current or a previous application for funding or in connection with any proceedings shall be taken into account. Clearly it will be the case that the current proceedings will be the most relevant.

However, where in the past an individual has, for example, submitted a fraudulent application for funding it should be capable of being considered although it would not necessarily rule out funding in a new case. Amendment No. 79 to Clause 10 ensures that the same meaning is given to "conduct" when considering conduct in the context of the applicant's liability to make contributions. Where an individual had given misleading information on an application or behaved in some other way that would result in withdrawal of legal aid, the commission would be able to seek to recover money spent.

Concern was also expressed that the applicant should be given reasons if his or her application for funding was not successful and information about where alternative funding might be sought. I am grateful to the noble Lord, Lord Kingsland, whose suggestions have formed the basis for Amendments Nos. 74 and 75. These amendments place a duty on the commission both to inform applicants of the reason for refusal and to give information about alternative forms of funding available. They do not, place and are not intended to place the commission under any obligation to advise on the relative merits of alternative sources. Amendments Nos. 69 and 70 are technical amendments designed to improve the clarity of the Bill. I hope that, taken together, these amendments go a long way to meeting concerns expressed by your Lordships in Committee. I beg to move.

On Question, amendment agreed to.

The Lord Chancellor moved Amendments Nos. 70 and 71: Page 5, line 38, leave out ("as part of the Community Legal Service"). Page 5, line 42, at end insert ("in connection with services funded as part of the Community Legal Service (or an application for funding) or in or in connection with any proceedings").

On Question, amendments agreed to.

The Lord Chancellor moved Amendment No.72: Page 6, line 1, leave out from ("may") to end of line 3 and insert ("by order require the Commission to consider.").

On Question, amendment agreed to.

Lord Clinton-Davis moved Amendment No. 73: Page 6, line 5, at end insert (", provided that the code shall not require applicants to attempt mediation rather than application to the court save in circumstances where a privately paying client would be advised to attempt mediation.").

The noble Lord said: My Lords, I can speak quite shortly on this. I want to probe the Government's intentions with regard to mediation. Mediation is frequently in suitable cases an important way of proceeding. It is also frequently a less costly method. It is a good way of settling legal disputes. But of course it has to be dealt with on the basis of appropriate cases; that is appropriate in terms of the case itself and appropriate in terms of the client. What would be utterly wrong would be to have mediation foisted on a client as a way of avoiding the costs of providing legal services through the state.

The amendment that I have tabled requires applicants to attempt mediation wherever a privately paying client would be advised so to do, rather than the suggestion which we made previously that this would occur only where a privately paying client would be likely to opt to do so. It strikes a better balance. Most importantly, I should like to know from my noble and learned friend where the whole question of mediation stands in relation to the questions we are considering and the Bill in particular. I beg to move.

Lord Kingsland

My Lords I rise to support the amendment, which also stands in my name. I support what the noble Lord, Lord Clinton-Davis, said about mediation. Mediation should be available to all clients, whether or not they are meeting the costs of legal disputes themselves.

Lawyers—especially in family cases—need to be aware of the value of mediation and should be prepared to advise clients to attempt it where appropriate. However, it is important to ensure that the mediation is used in cases where it is suitable for the clients, rather than it being foisted on those who cannot afford the costs of legal services as a cheap alternative to publicly-funded representation.

During the Committee stage, your Lordships considered an amendment which would have precluded the code from requiring applicants to attempt mediation, save in circumstances where a privately paying client would be likely to opt for it. Some of your Lordships may recall that that was criticised on the ground that private clients may be free to make unwise decisions which will incur greater costs than necessary. The amendment tackles this issue by enabling the code to require applicants to attempt mediation wherever a privately-paying client would be advised to do so, rather than only where a privately paying client would be likely to opt to do so.

This strikes the right balance between the need to ensure prudent use of public funds and the need to ensure that the services available to the lesser off are, as nearly as possible, the same as those available to those meeting the costs themselves.

The Lord Chancellor

My Lords, this amendment is similar to the one proposed by the noble Lords, Lord Kingsland and Lord Phillips of Sudbury, at Committee stage. As I explained then, I cannot accept the amendment as it would cut across the discretionary framework of the code by imposing an entitlement to representation rather than mediation in certain, rather vague, circumstances where a privately paying client would be advised to attempt mediation. I do not know how that could be a workable criterion. I do not know how you could possibly evaluate whether a privately paying client who could afford a court battle—and perhaps desired it—would be likely to be advised not to go for it but to attempt mediation.

Under a controlled budget there can be no entitlement to particular services. Instead, the commission must seek to ensure that the most appropriate types of services are funded for individual cases, taking account of priorities and achieving value for taxpayers' money. I would stress to my noble friend Lord Clinton-Davis that there is no question of compelling people to mediate when they do not wish to do so. But if in the commission's judgment a particular type of service is the most appropriate for a particular circumstance, then it should be entitled to fund that service but decline to fund other services.

It is the Government's belief that in many family proceedings mediation is more constructive than adversarial court proceedings. The commission should be entitled to provide help for mediation but not for litigation where it is more likely that mediation will provide the more satisfactory outcome. That is likely in many family proceedings where future co-operation between the parties will clearly be in the interests of the children. Mediation encourages co-operation whereas litigation often serves only to fuel passions and create continuing acrimony. Experience shows that parties to a mediated outcome share a sense of ownership in the outcome which is very often absent in court-imposed solutions.

It is also a fact that mediation is cheaper than court proceedings. That will, of course, not deter some privately paying clients who would be likely to want their Olympian confrontation in court regardless of the cost and perhaps be likely to be advised by lawyers to proceed in that way. That is their choice. It is their money. However, the money that the commission is spending is the public's money and it therefore has a duty to ensure that the services that it purchases are not only effective but also offer good value for money. It is the Government's belief that for many family proceedings, though not all, mediation services will fulfil both these criteria and therefore the code should reflect that. I therefore invite my noble friend to withdraw his amendment.

11.30 p.m.

Lord Clinton-Davis

My Lords, I listened with interest to my noble and learned friend. I thank him for the care with which he has looked at this issue. I was encouraged by many of the things he said. In those circumstances, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Henley

My Lords, before Amendment No. 74 is called, perhaps I may ask the noble and learned Lord the Lord Chancellor or the noble Lord the Deputy Chief Whip what their intentions are in terms of how late we should sit. It is now 11.30 p.m. While Amendment No. 73 was being discussed I tried to find the noble Lord the Government Chief Whip to ask him what his intentions are. It is getting very late. A number of important amendments are coming up. I know that some noble Lords feel we should not go beyond Clause 10 tonight so that we can start later amendments on another day. I should be very grateful if I could hear from either the noble Lord the Deputy Chief Whip or from the noble and learned Lord the Lord Chancellor what the Government's intentions are.

Lord McIntosh of Haringey

My Lords, it is somewhat unfortunate that this kind of exchange should take place across the Floor of the Chamber rather than through the usual channels. If I may conduct the Opposition Chief Whip to the Government Chief Whip, perhaps we can discuss the matter in a more convenient and suitable place.

Lord Falconer of Thoroton moved Amendments Nos. 74 to 77: Page 6, line 15, after ("funding") insert— ("( ) provision requiring applicants to be informed of the reasons for any decision to refuse an application, ( ) provision for the giving of information to individuals whose applications are refused about alternative ways of obtaining or funding services,"). Page 6, line 16, at end insert ("and for the giving of information about those procedures"). Page 6, line 19, leave but from first ("code") to end of line 27 and insert— ("( ) Before preparing the code the Commission shall undertake such consultation as appears to it to be appropriate; and before revising the code the Commission shall undertake such consultation as appears to it to be appropriate unless it considers that it is desirable for the revised version to come into force without delay. ( ) The Lord Chancellor may by order require the Commission to discharge its functions relating to the code in accordance with the order."). After Clause 9, insert the following new clause—

PROCEDURE RELATING TO FUNDING CODE

(".—(1) After preparing the code or a revised version of the code the Commission shall send a copy to the Lord Chancellor.

(2) If he approves it he shall lay it before each House of Parliament.

(3) The Commission shall publish—

1. (a) the code as first approved by the Lord Chancellor, and
2. (b)where he approves a revised version, either the revisions or the revised code as appropriate.

(4) The code as first approved by the Lord Chancellor shall not come into force until it has been approved by a resolution of each House of Parliament.

(5) A revised version of the code which does not contain changes in the criteria set out in the code shall not come into force until it has been laid before each House of Parliament.

(6) Subject as follows, a revised version of the code which does contain such changes shall not come into force until it has been approved by a resolution of each House of Parliament.

(7) Where the Lord Chancellor considers that it is desirable for a revised version of the code containing such changes to come into force without delay, he may (when laying the revised version before Parliament) also lay before each House a statement of his reasons for so considering.

(8) In that event the revised version of the code—

1. (a) shall not come into force until it has been laid before each House of Parliament, and
2. (b) shall cease to have effect at the end of the period of 120 days beginning with the day on which it comes into force unless a resolution approving it has been made by each House (but without that affecting anything previously done in accordance with it).").

On Question, amendments agreed to.

Clause [Terms of provision of funded services]:

Lord Archer of Sandwell moved Amendment No. 78: Page 6, line 33. after ("individual") insert ("other than a person who is in receipt of income support, income-based jobseeker's allowance or family credit").

The noble and learned Lord said: My Lords, in Committee I set down amendments to provide that no contribution should be payable in respect of services funded by the commission from someone in receipt of means-tested social security benefits, as it would already have been ascertained that he was not in a position to pay. In reply my noble and learned friend Lord Falconer made two points (at col. 748 of Hansard of 21st January). First, he said that those in receipt of income support and income-based jobseeker's allowance are already passporteei through the legal aid means test.

Secondly, he said that there are other social security benefits which, although they are means-tested, do not necessarily entail the occupier being on a very low income. He instanced family credit. These are not at present passported. He indicated that it was proposed in regulations to replicate the existing position. I promised to go away and consider what my noble and learned friend had said, and I did. On reflection, his argument does not appear so persuasive as it did the first time round.

It is true that family credit may be paid to someone who is not on the lowest income, but it is paid because by reason of the number of children a man has to support his income is too low for his needs. It follows that it is paid only to people who by definition have no money to spare and, if legal assistance is made conditional on paying a contribution, they may have to decline the offer and lose their right to redress.

Your Lordships may remember that in 1993 there was a restructuring of the legal aid contribution system. It is true that no contribution was required if someone on income support applied, but someone on family credit could be made to pay a contribution, as my noble and learned friend said.

In 1996 the Legal Aid Board, which was troubled by what it was finding, commissioned research into the consequences. It was found that the reduction in eligibility had affected some 12 million people, many of whom could no longer afford to take up an offer of legal aid. Of those interviewed who were in receipt of family credit, invalidity benefit and similar benefits in that category, 77 per cent. said that paying contributions would have left them without sufficient money for food, heating and rent. Typical was a divorced mother of two, who was quoted as saying, If you are on family credit of £46 a week, to find £91 per month for legal aid is impossible". On page 35 of the White Paper, Modernising Justice, the Government announced their intention to increase the number of people potentially eligible for advice and assistance under this scheme. This provision would deny justice to a large number of people who have already been dealt a rough hand from life. I hope that in the light of that my noble and learned friend will feel able to reconsider what he said. I beg to move.

Lord Clinton-Davis

My Lords, my amendment is No. 80. What I am suggesting is that the current provisions which are not contained in statute should be incorporated in primary legislation, as far as disregard of house capital is concerned, in assessing resources for legal aid. That would have one very positive effect in that Parliament would be able to control the situation, which it cannot do at the moment. The present position is as stated in the first part of the amendment: £100,000 is the exempted amount, and it is limited to that. I think it is a perfectly reasonable proposition to have a limit so far as the disregard of equity is concerned, and the regulations currently do that.

However, it is important also to strike a balance between ensuring that people are not effectively being denied legal aid through being required to contribute from assets which are not realisable and ensuring that those applicants who are well off are required to pay even if their affluence simply took the form of house capital rather than a large disposable income.

From the Explanatory Notes to the Bill, it appears that the Government intend to move away from that principle and to treat house capital in the same way as any other capital asset so far as assessment of contributions is concerned. The only modification would be that applicants would not be expected to provide the contribution up front; instead, it would attach as a charge to their house.

If that is the Government's decision, it is a wrong one. It would effectively mean that applicants entitled to income support would be required to meet the full costs of their legal aid. In reality, people in that position will be almost bound to turn down legal aid All the research shows that those on low incomes do not want to borrow against the security of their house, even when it comes to more vital matters such as repairs So it is unlikely that they would be any more willing to borrow to meet legal costs. The effect would be to make legal aid unavailable to those buying their own homes. That seems a wrong decision. It is one that I certainly do not like.

Retaining a £100,000 exemption for house capital is not an ideal situation, as it takes no account at all of different house prices in different regions of the country. However, it is a sensible compromise between the need to obtain contributions from those who can afford to pay and the need to ensure that legal aid is not, through unrealistic rules about contributions, effectively denied to those buying their own homes.

Lord Goodhart

My Lords, as I said in Committee in moving an amendment similar to the one I have tabled today, this proposal is a lot more important than it looks. Amendment No. 84 in my name brings back in a varied form an amendment that I moved previously.

The background is that under the present legal aid regulations the first £100,000 of equity in a house is disregarded for determining both eligibility for legal aid and liability to pay contributions. An individual is eligible for legal aid if he or she has a house with an equity of less than £100,000 and other capital of no more than £6,750, provided that he or she satisfies the income qualifications. If a person has capital of between £3,000 and £6,750, he or she may have to pay by way of contributions capital in excess of £3,000.

The Government's proposal as set out in Annex A to the Explanatory Notes to the Bill is that the £100,000 disregard will be continued for eligibility for legal aid or public funding, but will not be continued for liability to pay contributions. So if someone has no capital assets other than equity of £99,000 in their house, a litigant who is funded by the community legal service will be liable to pay contributions of up to £96,000. The community legal service will most generously defer enforcement of that debt until the sale of the house, but meanwhile the litigant must pay a market rate of interest under the proposals in Annex A.

The effect of that is that hardly any home owner will ever apply for funding from the community legal service. Those eligible for funding—we do not expect the funding limits to be raised above the present ones—will be those living on benefits or modest pensions, or holding low-paid jobs. Many people in those categories are, however, home owners. If such a person loses a case and is saddled with a contribution of, let us say, £20,000, which is perfectly possible in a case that is not of enormous complexity, how on earth is he or she to pay interest of £1,000 to £1,500 a year, which means £20 to £30 a week, out of his or her income? For example, what about those whose mortgage interest is paid out of income support? Will income support cover the interest on these contributions as well? I would bet pretty strongly that it will not.

What about a young couple wanting to start a family and needing their existing equity in their present house in order to buy a bigger house? Will they take the risk of losing that equity and being unable to make the move that they need to make?

The Law Society, in giving a briefing before the Committee stage, said that the Government's proposal in Annex A would effectively mean that legal aid would only be available to those living in rented accommodation. I agree. Equity in a home is simply not a resource that is available to fund litigation. My amendment therefore directs a disregard of the first £100,000 of equity for contributions as well as for eligibility. The amendment also covers the assessment of resources when deciding on liability to pay costs ordered by a court under Clause 11, as well as for the purpose of liability to pay contributions under Clause 10.

I should add that, since the resources of all parties are relevant for Clause 11, fairness requires that there should be disregard for the party seeking costs as well as for the party liable to pay costs.

Subsection (2) of the new clause in my amendment brings in a limit on the deduction of mortgage debt from equity that already applies to legal aid. That is, if you have a debt of more than £100,000, it is a limited charge on the house, the charge is limited to £100,000.

Subsection (3) is intended to cover the situation where an individual funded by the community legal service is a co-owner rather than sole owner. For example, where the action by the husband will benefit the wife as well as him and they jointly own a house with an equity of £200,000, it is probably unreasonable to allow the husband to claim the full disregard of £100,000 in an action in which he is receiving public funding. Regulations could provide for that situation.

If this amendment is not accepted and the Government go ahead with their proposals in Annex A to the Explanatory Notes, I believe that a very serious injustice will be done and that many people will in practice be unjustifiably excluded from public funding for legitimate claims.

11.45 p.m.

Lord Kingsland

My Lords, I wish to speak to Amendment No. 78 and Amendment No. 80, to which I put my name. Amendment No. 78 would ensure, as the noble Lord, Lord Clinton-Davis, has already said, that those in receipt of family credit would not be required to contribute towards the cost of assistance they receive from the community legal service.

Family credit is a benefit paid to low income families where at least one parent is working. It is a regular weekly supplement to income. It seems anomalous that those who have been assessed as requiring regular weekly support from public funds to meet their ordinary living expenses should, at the same time, face the possibility of contributing towards the cost of legal help.

This amendment will also ensure that the arrangements for contributing towards the cost of legal representation, where cases go to court, are brought into line with the rules concerning legal advice. At present, those receiving family credit are not required to contribute towards the cost of legal advice, but they are potentially liable to contribute towards the cost of legal representation.

Amendment No. 80 would incorporate in primary legislation the current provisions concerning disregard of house capital in assessing the resources of applicants for legal aid. It would ensure that there was parliamentary control over any variation to the figure.

Until recently, as noble Lords will have learnt from the speech of the noble Lord, Lord Goodhart, any equity value which an applicant might have in his or her dwelling house was disregarded for the purposes of assessing contributions towards legal aid. It was similarly disregarded for other means-tested benefits.

The principal reason for the disregard was that contributions were required from disposable capital rather than all capital resources. It was recognised that to require contributions from capital which was not readily available would effectively be to deny support to the applicants in question. Regulations introduced by the previous government modified this principle as far as concerned legal aid. Those regulations limited the exempt amount to £100,000.

The reasoning behind this was that those with equity in a dwellinghouse above that figure might reasonably be expected to borrow against the security of the home to meet legal costs. I accept that it was reasonable to have a limit in the disregard of equity. It was important to strike a balance between ensuring that people were not effectively denied legal aid by being required to contribute from assets that were not realisable and ensuring that those applicants who were well off were required to pay even if their affluence took the form of house capital rather than a large disposal income.

However, the Government have indicated in the explanatory notes to the Bill that they propose to move away from that principle. They intend to treat house capital in the same way as any other capital asset in assessing required contributions. The only modification is that applicants will not be expected to provide the contribution up front; instead, it will attach as a charge to their houses.

Her Majesty's loyal Opposition believe that that approach is fundamentally misconceived. It means that applicants who are entitled to income support will be required to meet the full cost of their legal aid. In reality people in this position will be almost bound to turn down legal aid. Research evidence shows that those on low incomes are unwilling to borrow against the security of their homes even for vital repairs. They are unlikely to be any more willing to borrow to meet legal costs. The effect of this is to make legal aid unavailable to those who are buying their own homes. In terms of social justice that seems a peculiar approach for the Government to take. The retention of the £100,000 exemption for house capital is not perfect; in particular it takes no account of different house prices in different regions of the country, but it is a sensible compromise between the need to obtain contributions from those who can afford to pay and the need to ensure that legal aid is not effectively denied to those buying their own homes through unrealistic rules about contributions.

Lord Phillips of Sudbury

My Lords, I have put my name to Amendment No.84. If a Bill can be said to have a sentiment I give the Government credit that in the Access to Justice Bill they try to concentrate scarce resources where they are most needed. It appears bizarre to my noble friend Lord Goodhart, to me, and to others who have tabled amendments relating to this aspect of the Bill that the damage done by the previous government in reducing the disregard for the family home to £100,000 should now be added to by the proposal that will follow if the Bill is passed unamended. This is a very important matter that affects a very large number of would-be legal aid applicants. I very much hope that the Government will remain true to the spirit of their own Bill.

Lord Falconer of Thoroton

My Lords, the amendments raise effectively two entirely separate questions. The first is the question raised by the noble and learned Lord, Lord Archer or Sandwell; namely, should there be passporting straight through if one receives jobseeker's allowance, income support or family credit? The second and entirely separate question is whether or not there should be a disregard of the first £100,000 of the equity in people's houses when considering not eligibility but contribution to legal aid.

Noble Lords have set out the background in fulsome detail, so I need not go into that. I deal, first, with Amendment No. 78 in which my noble and learned friend Lord Archer raises the question of passporting if one is on certain benefits. The three benefits are income support, income-based jobseeker's allowance and family credit. I consider the amendment unnecessary in relation to the first two benefits listed, income support and income-based jobseeker's allowance, and undesirable in relation to the third which is family credit. The noble and learned Lord the Lord Chancellor intends to preserve the existing system of what is called passporting—automatic eligibility for free legal aid—for recipients of income support and income-based jobseeker's allowance subject only to the possibility about which he will consult of a capital contribution from equity only payable at a later stage once the assisted person was no longer receiving benefits. In relation to those first two benefits, I respectfully submit the amendment is unnecessary.

In relation to family credit, I respectfully submit that the amendment is undesirable. Income support and jobseeker's allowance are basic benefits intended to guarantee a minimum level of income. Family credit is not. Family credit supplements the income of parents in relatively low paid employment. It is calculated on a tapering scale—that is to say, unlike income support, the benefit payable is not reduced pound-for-pound as earnings increase. As a consequence of this, a person receiving family credit can have a disposable income which makes them liable for substantial contributions; or even, in certain circumstances, ineligible for legal aid altogether. It cannot be right for people with the same disposable income—that is, disposable income having made allowance for the extra cost of looking after children—to be treated differently for legal aid purposes, which is the consequence of including family credit.

I hope that the noble and learned Lord will revert to his first impression of my argument on the last occasion namely, that it was unnecessary in relation to the other two benefits and that it is not appropriate in relation to this benefit—and that he will withdraw the amendment.

I turn to the homes issue. This revisits an area which was covered in Committee. The noble Lords who moved the amendment seek a provision under which the first £100,000 of equity in a house would he disregarded in calculating contributions from capital. In the case of Amendment No. 84 there would be power to increase the figure of £100,000 but not to reduce it. In the case of Amendment No. 80, there would be a general power to change the protected figure by affirmative procedure regulations. Unless the noble and learned Lord the Lord Chancellor used the power provided by Amendment No. 80 to reduce the protected figure close to zero, both amendments would prevent the Government from implementing the proposal about equity to which all noble Lords referred.

I respectfully submit that the proposal about the £100,000 equity is to do with greater fairness. At present those who have, say, £25,000 saved, perhaps as a result of redundancy, cannot receive legal aid. Those who have the same amount of equity in a house, but no savings, can receive legal aid and benefit from cost protection. Their equity is, moreover, not subject to any subsequent change if they lose, unless their home was a subject of the dispute. We propose to go some way to putting both classes of litigant on a more even footing by making the equity in the property subject to a charge in relation to contribution. It still does not apply in relation to eligibility. Of course we recognise that the house is more than an investment and that assets in that form are not readily realisable. That is why people with less than £100,000 equity will continue to be eligible for legal aid, and why the Lord Chancellor also intends to ensure that any charge on a house would not be realised unless and until the house was sold; and not even then if that would result in hardship.

One can imagine a situation where if the position were that both sides had small incomes and both sides had equity in their houses of some tens of thousands of pounds, but one of the two sides had £10,000 or £15,000 in savings, thereby depriving that person of the right to legal aid, when the person who did not obtain legal aid won he would be forced to sell his house. The other person would not be forced to sell his house at all and would gain a great advantage in the litigation. If the charge does not come into effect until the house is sold, and if it does not apply until it is established that there is no hardship, or it cannot be established that there is hardship, that is a much fairer situation than the current one. Indeed, the current situation was not dealt with by the noble Lords, Lord Goodhart and Lord Kingsland, in their eloquently expressed submissions which I felt I had heard during an earlier debate. In advancing the amendment, it is important for noble Lords to address the issue of fairness and not look at it from the point of view of only one party in the litigation, but of both parties.

We cannot accept a provision on the face of the Bill that would effectively preclude a change to the regulations which would make the financial conditions on which help is provided fairer; which would produce savings that could then be applied to improve other aspects of the system; and which, I might add, the noble and learned Lord the Lord Chancellor could implement tomorrow by negative regulations under the existing powers of the Legal Aid Act. On that basis, I invite my noble and learned friend to withdraw his amendment.

Midnight

Lord Archer of Sandwell

My Lords, I am grateful to my noble and learned friend for expressing his argument so clearly. As regards Amendment No. 78, I agree that in respect of the first two benefits which are listed it is not necessary. Had it not been for the third benefit, family benefit, I would not have tabled the amendment.

In respect of that benefit, I am aware that it is proposed to continue the present position, which I believe is unfair and unjust. I was hoping to change it, but this is not the moment to continue that debate. I doubt whether I would enhance my popularity if I attempted to do so. For the moment, I ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

The Lord Chancellor moved Amendment No. 79: Page 6, line 36, after ("conduct") insert ("such as is specified in section 9(2)(f)").

On Question, amendment agreed to.

[Amendment No. 80 not moved.]

Lord Falconer of Thoroton moved Amendment No. 81: Page 7, line 27, after second ("or") insert ("in any compromise or settlement of any").

The noble and learned Lord said: My Lords, I will speak to Amendments Nos. 81 and 82 together. These are drafting amendments, intended simply to shorten the Bill. I am grateful to my noble and learned friend Lord Simon of Glaisdale for pointing out the opportunity to shorten the statute book by some eight lines. During Committee, the noble and learned Lord asked whether Clause 10(8) added in any material way to the tail of Clause 10(7).

The tail of Clause 10(7) and Clause 10(8) are, in substance, drawn from the current Legal Aid Act 1988. They define the scope of the legal aid statutory charge, which allows the Legal Aid Board to recover any outstanding costs from the property recovered or preserved as a result of their case by litigants who received legal aid. Let me make it clear, for the record, that the Government intend the charge created in this Bill in relation to funding provided by the community legal service fund to have exactly the same scope as the legal aid statutory charge has now. These amendments are aimed solely at brevity; they in no way represent a change of substance.

They are possible because of certain other differences in the drafting of the Bill and the 1988 Act. In the 1988 Act, the equivalent words to what is now Clause 10(8)(a) are necessary for two reasons. First, they make it clear that the statutory charge bites on cases settled before proceedings are issued. The appearance in Clause 10(7) of the words "or dispute", which do not appear in the current Act, mean that Clause 10(8)(a) is no longer necessary for that purpose.

Secondly, Clause 10(8)(a) serves to make clear that the charge bites on any property contained in a compromise or settlement, regardless of whether that was the property originally at issue in the proceedings. This is necessary because case law has established that the words "recovered or preserved in proceedings" relate only to property formally at issue in the case. Amendment No. 81, which inserts additional words in Clause 10(7), is intended to preserve this position.

The equivalent words in the 1988 Act to Clause 10(8)(b) are necessary to ensure that the board can recover any outstanding liability to the legal aid fund from a successful litigant who was legally-aided at an earlier stage of the case, but not at the time when costs were awarded or agreed in his or her favour. This provision is no longer necessary because of the different way that costs ate dealt with in the Bill.

Clause 11 gives power to make regulations about, costs in cases in which services have been funded … for any of the parties [including regulations] requiring the payment to the Commission … of any sum awarded by way of costs". In other words, these regulations can provide for situations where a litigant received services funded by the commission for any part of the case. Clause 10(8)(b) is therefore unnecessary. I beg to move.

On Question, amendment agreed to.

Lord Falconer of Thoroton moved Amendment No. 82: Page 7, line 29, leave out subsection (8).

On Question, amendment agreed to.

Lord Goodhart had given notice of his intention to move Amendment No. 83:

After Clause 11, insert the following new clause—

PUBLIC INTEREST LITIGATION FUND

(".—(1) The Commission shall establish and maintain a fund known as the Public Interest Litigation Fund.

(2) The Lord Chancellor—

1. (a) shall pay to the Commission the sums which he determines as appropriate for the funding of services by the Commission out of the Public Interest Litigation Fund, and
2. (b) may determine the manner in which and times at which the sums are to be paid to the Commission and may impose conditions on the payment of the sums.

(3) The purpose of the Public Interest Litigation Fund shall be to finance the provision of services of any of the kinds specified in section 5(1) to a person who is or may become a party to legal proceedings if the conditions in subsection (4) are satisfied and the Commission thinks it appropriate to finance the provision of those services.

(4) The conditions referred to in subsection (3) are—

1. (a) that the proceedings give rise to an issue of substantial public importance,
448
2. (b) that the person seeking the services is not entitled to have those services funded out of the Community Legal Services Fund or as part of the Criminal Defence Service, and that neither the person seeking the services nor any other persons having a similar interest in the proceedings can reasonably be expected to pay for such services out of his own financial resources or resources which may be made available for that purpose from another source.

(5)Regulations may be made for the implementation of this section.

(6)In this section "proceedings" include prospective proceedings and any step in proceedings.").

The noble Lord said: My Lords, at this time of night. I propose to give your Lordships' House a little treat by not moving this amendment.

[Amendment No. 83 not moved.]

[Amendment No. 84 not moved.]

Lord Goodhart moved Amendment No. 85: After Clause 11, insert the following new clause—

CONDITIONALLY FUNDED FEE AGREEMENTS

(".—(1) The Commission shall conduct research into the likely demand for and financial viability of conditionally funded fee agreements (as defined in section 58(6) of the Courts and Legal Services Act 1990).

1. (2) For the purposes of such research the Lord Chancellor may by order authorise the Commission to enter into conditionally funded fee agreements as the funder subject to such restrictions as may be specified in the order.
2. (3) The Lord Chancellor shall pay to the Commission such sums as he thinks appropriate to enable the Commission to conduct such research.
3. (4) The Commission shall submit a report on the results of its research under this section to the Lord Chancellor and shall publish its report.
4. (5) The Lord Chancellor may, after receiving the report, by order authorise the Commission to enter into conditionally funded fee agreements as the funder to any extent specified in the order.
5. (6) The Lord Chancellor shall pay to the Commission such sums by way of loan or grant as he thinks appropriate for meeting any liabilities incurred by the Commission in acting under an authority given under subsection (5) and may guarantee discharge by the Commission of any such liabilities.").

The noble Lord said: My Lords, I shall move this amendment but I shall be brief. This amendment is grouped with Amendment No. 144.

This amendment raises the issue of CLAF—the contingency legal aid fund—although those words are not mentioned in the amendment. I shall not explain exactly how a CLAF scheme works, nor shall I explain again the manifold advantages of CLAF over CFAs, which I explained in some detail in Committee.

The amendments tabled in Committee required the legal services commission to set up and fund a full-blown CLAF scheme. I accept that that goes too far. This amendment involves a commitment only to a research project, possibly involving a pilot scheme. The cost to public funds will be very limited. There will be no obligation at all to go ahead if it is shown that the scheme is not viable. If the pilot scheme shows that CLAF is viable, a full-scale scheme can be set up on the basis of private funding, the Government's involvement being limited at most to the giving of the guarantee. That guarantee will not be needed until research has shown that the scheme will work and therefore the guarantee, in practice, is unlikely to be needed.

I believe that CLAF has important advantages over CFAs for clients, lawyers and the interests of justice. It deserves a trial and the costs of the trial would be well within the means of the community legal service.

Amendment No. 144, which is grouped with Amendment No. 85, serves a more limited purpose. It would enable the noble and learned Lord the Lord Chancellor to give the go-ahead for an independent CLAF at no cost whatever to public funds. It makes it clear that in that event, the CLAF agreement, described as a conditionally funded fee agreement, is legal if it satisfies the test for legality in CFAs. It requires approval by the noble and learned Lord the Lord Chancellor for any organisation acting as a funder of a CLAF scheme, which seems appropriate, and as Amendment No. 144 involves no expense to public funds and is simply permissive, I hope that the noble and learned Lord the Lord Chancellor will be prepared to accept that, even if he is not prepared to accept Amendment No. 85.

The Lord Chancellor

My Lords, in speaking to the two amendments in this group, I shall speak to the second first because it provides the definition of a conditionally funded agreement which is referred to in the first amendment.

The amendment that is sought to Clause 27 would include in the proposed new Section 58 of the Courts and Legal Services Act 1990 three new subsections. The proposed new subsection (5) allows the Lord Chancellor to direct by order that the provisions of Section 58 shall apply to conditionally funded fee agreements as if they were conditional fee agreements which provide for an enhanced fee, defined by Section 58(2). Subsection (6) goes on to define a conditionally funded agreement as an agreement made between a lawyer, his client, and some third person who agrees to act as funder to the action being pursued by the client which provides for the circumstances in which, first, the costs of the client will be met by the funder to the extent that they are not payable by some other person; secondly, the costs awarded by the court are to be paid to the funder; and, thirdly, the client will be liable to pay his lawyer's fees. Subsection (7) further provides that a person may only act as funder if he has been so authorised by order made by the Lord Chancellor.

These provisions seek to provide a statutory basis for a third party to agree to fund litigation along the lines of the CLAF. That is what was proposed by the noble Lord in Committee. Your Lordships well know from our discussions in Committee that I am not attracted to the idea of establishing a CLAF with public money because I believe conditional fees will provide a suitable alternative and that in competition with conditional fees a CLAF would not be viable. I have nevertheless taken a reserve power in Clause 10(2)(c) to establish a CLAF in the unlikely event that it should prove that conditional fees cannot make adequate alternative provision.

Although I am not minded to establish a CLAF, I have in the past encouraged the profession, if they believe that a CLAF represents a viable proposition, to seek to establish one of their own with private financial backing. The amendment seeks to establish a statutory basis on which such a scheme could be established.

I do see that there would need to be absolute clarity about whether or not agreements made with a fund of this kind established in the private sector were lawful. The common law doctrines of champerty and maintenance were intended to prevent third parties encouraging actions by agreeing to fund a person to commence litigation and then sharing in the proceeds to litigation to which they were not a party. It is important that a client who is funded in this way is still able to recover his costs from his opponent if he is successful. Save where statute law or the common law as developed by the courts otherwise provides, any agreement for funding of this kind might be liable to legal challenge and struck down by the courts as contrary to public policy and unlawful.

The noble Lord's amendment appears to have fundamentally the right structure in that it provides a proper mechanism for authorising someone to act as a funder; it also provides for the provisions of Section 58 to apply with necessary modifications specified by order to conditionally funded fee agreements. Therefore I have some sympathy with the intention of the amendment but would like time to consider it further. It is unlikely that I will be in a position to come back to this House before the Bill moves to be considered in another place. However, I shall keep the noble Lord informed and if I was minded to cause an amendment to be tabled in another place, I would try to notify him sufficiently in advance to have his comments before the amendment was tabled. I cannot guarantee that, but I undertake to try.

As I imagine the noble Lord anticipates, I have less cheer for him on his first amendment because I cannot accept it. It seeks to place duties on the commission and to require the commitment of public money in a way which I believe is unnecessary and unacceptable.

Subsection (1) of the proposed new clause would require the commission, in perpetuity so far as I can see, to undertake research into the demand for, and financial viability of, conditionally funded fee agreements. Subsection (2) provides that the Lord Chancellor may by order allow the commission, for the purposes of the research, to enter into conditionally funded agreements with the funder, subject to such restrictions as he may determine.

Subsection (3) requires the Lord Chancellor to provide the commission with the funds to undertake the research. Subsection (4) provides for a report on the results of the research to be furnished to the Lord Chancellor by the commission, a report which he is required to publish. The final two subsections allow the Lord Chancellor by order to authorise the commission, once the report has been received, to enter into conditional fee agreements as funder to the extent specified in the order and require the Lord Chancellor to make funds available for this purpose by way of loan or grant and to guarantee discharge by the commission of any liabilities.

As I said, I am certainly not minded to establish a CLAF. I have no objection if the profession really has that confidence in the CLAF which it invites the Lord Chancellor to share. I have no objection if it wants to put its money where its mouth is to establish a CLAF and run it in competition with conditional fee agreements, as I am unwilling to do. However, I am happy to consider further whether particular statutory provisions would need to be made to allow that to happen. That is what I have indicated I propose to do.

However, if the profession or another private organisation wishes to establish such a fund, it will have to meet the costs of establishing whether there is a demand for such a fund and whether one can be viable. That is part of the costs of establishing and running a fund of this kind. However, I do not accept that the state should be required to undertake research for the benefit of private organisations. As my noble and learned friend Lord Falconer said in Committee, if, as we believe to be the case, a CLAF cannot operate viably in competition with conditional fee agreements, it cannot be right for the Government to risk public money in seeking to establish its viability. That goes equally for funding cases directly to test viability and funding research.

I would ask the noble Lord, Lord Goodhart, therefore, to withdraw his amendment but with a fair prospect that I may be able to do something later in the Bill's passage through Parliament to meet the intent of the second amendment in this group.

Lord Goodhart

My Lords, I am disappointed but hardly surprised at the reaction of the noble and learned Lord the Lord Chancellor to Amendment No. 85. I have more comfort from his reaction to Amendment No. 144.

I had felt that Clause 10(2)(c) created a rather slender basis for the possible introduction of a privately funded CLAF scheme and that, in particular, it did not get over the problem that, under the common law, such a scheme might well face problems of unenforceability through champerty and maintenance whatever Clause 10(2)(c) authorised because it does not, I believe, authorise a change in the common law.

That being so, as the noble and learned Lord the Lord Chancellor knows, both the Bar Council and the Law Society are giving serious consideration to the development of CLAF. If it looks to be financially viable and might be attractive to a financial organisation, Amendment No. 144 would at least make it possible to go ahead with it. I am therefore grateful to the noble and learned Lord the Lord Chancellor for what he said on this amendment. With regret, I shall wave farewell to the idea of a publicly-funded CLAF by begging the leave of the House to withdraw Amendment No. 85.

Amendment, by leave, withdrawn.

Clause 12 [The Criminal Defence Service]:

The Lord Chancellor moved Amendment No. 86: Page 8, line 30, leave out from ("of") to end of line 32 and insert ("securing that individuals involved in criminal investigations or criminal proceedings have access to such advice, assistance and representation as the interests of justice require.").

On Question, amendment agreed to.

Lord Falconer of Thoroton moved Amendment No. 87: Page 8, line 33, leave out ("this Part") and insert ("subsection (1)").

The noble and learned Lord said: My Lords, with the leave of the House I shall move Amendments No. 87 and speak to Amendments Nos. 88 to 94, Amendment No. 100, Amendments Nos. 114 to 121, and Amendments Nos. 139 and 140.

These amendments deal with the range and scope and the procedure for grant of representation. In particular, the amendments clarify the procedure for grant of representation in additional categories of case that the Lord Chancellor may prescribe under Clause 12(3)(f), and limit the power of the Lord Chancellor to transfer responsibility for grant to the legal services commission to those cases.

We have already discussed Amendment No. 86 which sets out the purpose of the criminal defence service as securing that individuals involved in criminal investigations or criminal proceedings have access to such advice assistance or representation as the interests of justice require. That duty arises in the circumstances set out in Clause 13(1)(a), or circumstances prescribed by the Lord Chancellor under (1)(b) for advice and assistance, and Clause 14 for representation.

Paragraph 1 of Schedule 3 sets out the individuals to whom the right of representation may be granted and Amendment No. 115 extends the right to all individuals who would come within Clause 12(3).

Amendment No. 115 also extends criminal defence services to private individuals who successfully bring private prosecutions before the magistrates' court, in circumstances where the conviction is appealed to the Crown Court, for the purpose of resisting that appeal. Specific courts are no longer named so that criminal proceedings before any body, such as the Parole Board, would be covered by the word "court" under Schedule 3. Amendment No. 100 brings Schedule 3 into effect and states that the commission shall fund representation to which an individual has been granted a right under Schedule 3.

In deciding whether it is in the interests of justice for a right of representation to be granted, the criteria in paragraph 6(2) of Schedule 3 must be taken into account. As presently drafted, the factors are expressed in terms which are applicable to courts. Amendments Nos. 119 to 121 generalise the wording of the criteria in paragraph 6(2) so that they are not confined to court based proceedings. For example, paragraph 6(2)(a), as amended, refers to whether the person concerned is in danger of losing his liberty as a result of the proceedings, without specific references such as "accused" and "sentence". This will enable the factors to be equally applicable to other criminal proceedings such as Parole Board reviews of discretionary life sentences, or sentences of young offenders detained at Her Majesty's pleasure.

Amendments Nos. 116 to 118 amend paragraph 4 of Schedule 3 to reflect the Lord Chancellor's undertaking, in response to Amendment No. 180 of the noble and learned Lord, Lord Ackner, in Committee, reported in Hansard for 26th January 1999, [cols. 926–7] to clarify our intentions for the procedure for grant of representation.

In substance the effect of paragraph 4 of Schedule 3 as it stands at present is to carry into the present Bill powers similar to those contained in Section 20(9) of the Legal Aid Act 1988, which allows the Lord Chancellor to transfer to the Legal Aid Board the power to grant legal aid for representation in criminal cases by providing that, In the event of the Lord Chancellor making an order under section 3(4) as respects the function of granting representation under this Part for the purposes of proceedings before any court, the Board shall be competent as respects those proceedings, on an application made for the purpose". In the event the power has never been used. Decisions about granting representation in criminal proceedings will, in future, turn solely on the interests of justice. I cannot envisage circumstances in which it would be necessary to take that decision away from the courts and Amendments Nos. 117 and 118 reflect that by removing the Lord Chancellor's power to make regulations to provide for the legal services commission to have power to grant or withdraw rights of representation and for the commission to delegate those powers. However, Clause 12(3)(f) gives the Lord Chancellor power to extend the scope of "criminal proceedings" to other circumstances not covered in subsection (3)(a) to (e). The Lord Chancellor gave examples in Committee of the use of this power to extend "criminal proceedings" to hearings which might not be before a court, such as Parole Board hearings. Amendment No. 116 limits the power of the Lord Chancellor to transfer responsibility for grant to the legal services commission to criminal proceedings prescribed under this paragraph.

The other amendments in this group are minor drafting amendments. Amendments Nos. 88 to 90 and 92 to 94 are intended to clarify that the criminal defence service is for individuals subject to criminal investigations and proceedings, and not, as was feared by the noble Lords, Lord Wigoder and Lord Renton, judges, Home Office pathologists, and others.

Amendment No. 91 deals with the rare situation where a convicted person has died and approval is given to someone else to proceed with an appeal on behalf of the deceased person. This situation is expressly retained within the scope of the clause.

Amendment No. 90 simply corrects the Bill to show the relevant section of the Extradition Act. Amendment No. 140 removes "criminal investigations" from the interpretation Clause 24. Amendment No. 87 is a consequential drafting amendment.

Finally, the giving spirit of Committee is continued in Report. The Lord Chancellor is of the view that regulations made under paragraph 5 of Schedule 3 should be subject to affirmative resolution, as this paragraph provides for rights and avenues of appeal against a decision to refuse or withdraw a right to representation. I invite noble Lords to approve Amendment No. 139, which achieves this. Accordingly I beg to move.

On Question, amendment agreed to.

Lord Falconer of Thoroton moved Amendments Nos. 88 to 94: Page 8, line 37. after ("proceedings") insert ("before any court"). Page 8, line 38, leave out ("for dealing with an offender for an offence or") and insert ("before any court for dealing with an individual convicted of an offence, for dealing with an individual"). Page 8, line 39, leave out ("offender under section 6") and insert ("individual under section 9"). Page 8, line 44, at end insert— ("( ) proceedings on an appeal brought by an individual under section 44A of the Criminal Appeal Act 1968,"). Page 8, line 45, leave out ("supervision orders") and insert ("a supervision order in respect of an individual"). Page 9, line 1, after ("contempt") insert ("committed, or alleged to have been committed, by an individual"). Page 9, line 2, after ("proceedings") insert ("concerning an individual, before any such court or other body,").

The noble and learned Lord said: My Lords, I beg to move Amendments Nos. 88 to 94 en bloc.

On Question, amendments agreed to.

Lord Falconer of Thoroton moved Amendment No. 95: Page 9, line 8, at end insert("; and any system of accreditation shall include provision for the monitoring of the services provided by accredited persons and bodies and for the withdrawal of accreditation from any providing services of unsatisfactory quality.").

The noble and learned Lord said: My Lords, this amendment has already been spoken to. I beg to move.

On Question, amendment agreed to.

Lord Falconer of Thoroton moved Amendment No. 96: Page 9, line 8, at end insert— ("( ) The Lord Chancellor may by order require the Commission to discharge the functions in subsection (5) in accordance with the order.").

On Question, amendment agreed to.

Lord Carter

My Lords, I beg to move that consideration on Report be now adjourned.

Moved accordingly and, on Question, Motion agreed to.

House adjourned at twenty-six minutes past midnight.