HL Deb 16 March 1999 vol 598 cc611-28

3.8 p.m.

The Lord Chancellor (Lord Irvine of Lairg)

My Lords, I have it in command from Her Majesty the Queen to acquaint the House that Her Majesty, having been informed of the purport of the Access to Justice Bill, has consented to place Her prerogative and interest, so far as they are affected by the Bill, at the disposal of Parliament for the purposes of the Bill.

Bill read a third time.

Clause 1 [Principles applicable to Part I]:

Lord Goodhart moved Amendment No. 1:

Page 2, line 12, at end insert—

("(2A) The Lord Chancellor shall before the commencement of each financial year inform the Commission—

  1. (a) of the sums which he intends to pay to the Commission during that year for the funding of services by the Commission as part of the Community Legal Service, and
  2. (b) of the sums which he expects to pay to the Commission during that year to meet the costs of any advice, assistance and representation funded by the Commission as part of the Criminal Defence Service.

(2B) The Lord Chancellor shall inform the Commission of any subsequent change in his intention referred to in subsection (2A)(a) or in his expectation referred to in subsection (2A)(b), and of his reasons for making any such change.

(2C) The Lord Chancellor shall not make any change involving a reduction of the sums referred to in subsection (2A)(a) unless the Commission has advised him that such reduction can be made without detriment to the services which are to be funded from the Community Legal Service for that year pursuant to the plan published under paragraph 15 of Schedule 1.

(2D) The Lord Chancellor shall lay before each House of Parliament a statement of the information given by him to the Commission under subsections (2A) or (2B).").

The noble Lord said: My Lords, the main purpose of this extremely important amendment is to prevent money allocated to the community legal service being transferred to make good an overspend on the criminal defence service arising during the course of a financial year. To go briefly into the background, up until now spending on both civil and criminal legal aid has been uncapped. If the applicant satisfies the criteria he gets it. The cost of both civil and criminal legal aid over the years has, regrettably, increased substantially faster than the rate of inflation. In an effort to control the cost of civil legal aid the financial limits of eligibility for legal aid have been squeezed until almost no one is eligible for civil legal aid unless he is living on benefits. We have undoubtedly gone as far as we can down that route. Reluctantly but nevertheless plainly, we accept the need for the capping of the civil legal aid budget.

Civil legal aid is technically now to be replaced by the community legal service and criminal legal aid will be replaced by the criminal defence service, both being administered by the legal services commission. The criminal defence service, like criminal legal aid, will not be cash-limited. Clearly, that is right. One cannot refuse to pay for the defence of an accused person who faces a long prison sentence because the CDS budget has run out. Indeed, Article 6 of the European Convention on Human Rights entitles an accused, if he has not sufficient means to pay for legal assistance, to be given it free when the interests of justice so require". The community legal service, on the other hand, will be cash-limited. Clause 6(2) provides that the Lord Chancellor, shall pay to the [Legal Services Commission] the sums which he determines are appropriate for the funding of services by the Commission as part of the Community Legal Service". That is the money that the community legal service will get for the year and will be entitled to spend.

The commission is also required under paragraph 15 of Schedule 1 to prepare a plan before the beginning of each financial year setting out how it intends in that year to fund services from the community legal service fund. That plan must be approved by the Lord Chancellor. If he does not approve it he can direct the commission to revise it in accordance with his direction. The funding of the community legal service which the Lord Chancellor considers appropriate must therefore, I assume, be the funding which is required to implement the plan that he himself has approved.

Paragraph 6.10 of the White Paper Modernising Justice published at the same time as the Bill stated: The CDS will be a separate scheme from the Community Legal Service … and its budget will not form part of the Community Legal Service Fund. Separating the two schemes in this way reflects the fact that they are responsible for providing different types of service in very different types of case; and that each scheme has its own distinct objectives and priorities". I concur completely with that statement in the White Paper. I had therefore assumed, as I believe did most other people who had studied the subject, that the CDS and the CLS would have completely independent budgets. Nothing in the Bill or the Explanatory Notes suggested otherwise. We did not become aware that that assumption was misplaced until the second day of the Committee stage when the noble and learned Lord the Lord Chancellor said: what is available for civil legal aid is what is left over from the budget after the prior claims of criminal legal aid have been met".—[Official Report, 21/1/99; col. 738.] The noble and learned Lord said something very similar on 26th January at col. 918.

The implications of that statement are truly alarming. We hope that the Lord Chancellor will be able to control spending on the criminal defence service so far as the interests of justice permit him to do so. But if he fails to do so, or if circumstances arise which are outside his control, there will be a clear and immediate danger to the funding of the community legal service.

The noble and learned Lord the Lord Chancellor explained in subsequent correspondence that there was no absolute requirement to meet an overspend on the criminal defence service from the community legal service budget. But he also explained that, save in exceptional circumstances, he would expect to meet an overspend on the criminal defence service from the other elements of his departmental budget, which in practice means the community legal service.

The diversion of funds from the community legal service to the criminal defence service is no theoretical risk. The commencement of the main provisions of the Human Rights Act is likely to lead to a temporary, but quite possibly substantial, increase in the cost of the criminal defence service as the criminal procedures are tested against convention rights under the Act. In some Australian states civil legal aid has been suspended altogether in times of budget crisis. In Ontario the capping of the legal aid budget led to an 80 per cent. decrease in civil legal aid certificates for a period of three years.

At Report stage the noble Lord, Lord Clinton-Davis, moved an amendment that would have required the Lord Chancellor in deciding what amount was appropriate for funding the community legal service to disregard expected spending on the criminal defence service. I forced that amendment to the Vote, which was lost. I cannot therefore bring back that amendment in the same form. Indeed, I accept that that amendment goes somewhat too far. In deciding the annual budget for the community legal service, spending on the CDS must be one of the factors that can be taken into account along with all other items of government spending. We shall have to rely on public opinion and pressure from voluntary organisations active in the field to prevent or limit cuts in spending on the community legal service year on year.

The main aim of this amendment is to restrict transfers during the course of the financial year from the community legal service to the criminal defence service. To use technical jargon, it restricts virement. According to this amendment, transfers can be made only if the commission is satisfied that they will not prejudice the services to be provided by the community legal service under the plan that has been approved for that year. The amendment also requires transparency about the transfer and requires Parliament to be informed. It does not require parliamentary consent to that transfer. If this amendment were accepted and became part of the Act any overspend on the criminal defence service for the year would, presumably, come out of the contingency reserve, which is where I believe it belongs.

This is therefore a modest amendment. It does not restrict the Government's powers over annual expenditure on legal services, either criminal or civil. The amendment merely restricts the power to cut spending on the community legal service during the course of the current year with all the consequences that such cuts would have for access to justice. One cannot sensibly plan the community legal service on the basis that one may be told half-way through the year that the budget for the year is to be cut by 20 per cent. or whatever other figure is appropriate or necessary. Strategic planning will be impossible. How can firms be expected to provide good quality service under their contracts if those contracts can disappear altogether when community legal service spending is cut back?

This amendment is supported by all the members of the Legal Aid Forum: the Law Society; the Bar Council; the National Consumer Council; the Consumers' Association; the Legal Action Group; and the Public Law Project. The fact that consumer bodies as well as legal professional organisations have come together to support the amendment makes it clear that this is not a proposal for the protection of the legal profession.

In the debate on the amendment moved by the noble Lord, Lord Clinton-Davis, at Report stage on the 11th February the noble and learned Lord the Lord Chancellor produced the usual mantra about schools and hospitals coming first. We accept that they are priorities for any increase in public spending, but we do not ask for an increase in spending on civil legal services but for protection of the funding of CSL which now exists for access to civil justice. What does access to justice mean? It means the right of homeless families who have been wrongly refused rehousing by their local authority to challenge that refusal in court. It means the right of a child who has been brain damaged at birth to claim damages for clinical negligence.

Cutting spending on the community legal service means denying those people the rights that they now enjoy. Even now I ask the Government to think again. If they do not do so, I fear that the Bill will become not the Access to Justice Bill but the End of Access to Justice Bill. I beg to move.

Lord Taylor of Blackburn

My Lords, it is not often that a Back-Bencher takes part in these debates. Most of those who take part are lawyers. In the 11 minutes that the noble Lord has been on his feet, he asked just this: will the noble and learned Lord the Lord Chancellor make sure that there are sufficient funds to carry out access to justice? I have said that in one minute.

Baroness Thornton

My Lords, I oppose the amendment tabled by the noble Lord, Lord Goodhart. I may take more than a minute but I shall not take 11.

When considering the Marshalled List for today's Third Reading, I was struck by how often noble Lords from the Liberal Democrat Benches have sought to amend the Bill. Almost without exception the amendments maintain the status quo or protect an already established interest. I draw attention to that because of the contrast with the Liberal Democrat Party's tendency to promote itself as the party of radical thought and action.

I wish to make two brief remarks on the amendment. First, we are again faced with lawyers trying to give themselves budgetary "wriggle room". They seek to ring-fence moneys under this heading. That flies in the face of a consolidated budget, controlling costs, making savings on all sides, including criminal and civil, with the whole system subject to the best value regime. Secondly, an important aspect of the modernisation imposed by this legislation is that the budgetary controls are transparent. Money for legal aid comes from the taxpayer and we need a system which we can demonstrate is under control and can be readily understood by people. The amendment does not allow either of those factors. That is why it should be resisted.

Lord Kingsland

My Lords, although my name is not attached to the amendment, that is through inadvertence rather than intention. I support the amendment in its entirety.

The Lord Chancellor

My Lords, at Report, the House agreed that it would not be appropriate to lay down in statute that a Lord Chancellor could not consider the expected cost of funding the criminal defence service when setting the annual budget for the community legal service. The Government must be able to take account of all competing priorities when planning public spending. The noble Lord, Lord Goodhart, wrote to me after Report that he now accepts that view. It would be neither acceptable, workable or effective to seek to protect spending on the CLS by saying that Ministers may take account of expenditure on all other areas of government-funded activity in setting the CLS budget, except for the amount likely to be spent on the CDS.

The noble Lord, Lord Goodhart, has now moved an amendment dealing with the annual budgets once they have been set. Subsections (2A) and (2B) require the Lord Chancellor to inform the commission of the annual budget for the CLS, the expected cost of the CDS, and any changes in either. Those subsections are, in themselves, wholly unnecessary. The system clearly could not operate if the Lord Chancellor did not do this. I am sure the noble and learned Lord, Lord Simon of Glaisdale, would deprecate the waste of words. Subsection (2D) would require the Lord Chancellor to lay a statement of any changes before Parliament. I think it is right that the Lord Chancellor should do so; and I would be happy to give an undertaking to that effect.

Subsection (2C), however, would prevent the Lord Chancellor from changing the annual budget for the CLS once it had been set, unless the commission advised him that the change would not be detrimental to the services which were to be funded under the CLS. It is hard to see how any reduction in the budgets would not, in some sense, be detrimental. So the effect of this subsection is to prevent any reduction in the budget once it has been set.

Therefore I cannot accept this amendment. As I made clear at Report, to adopt any proposal totally to ring-fence either the CLS or CDS budget is not to live in the real world. In fact, I do not believe that any Minister in a responsible government would ever be willing—either in a statutory provision or by a non-statutory undertaking—to guarantee that a given level of spending on a particular function would be maintained, whatever other financial pressures might fall unexpectedly on this and other departments.

I have to say that to propose this amendment—I note that it is supported by the official Opposition—is to treat opposition as a luxury which relieves them of the need or the duty to prioritise.

Having said that, let me say that I am absolutely determined to ensure that the CLS is properly funded. But I must also tell your Lordships that it makes it more difficult to convince the public and others that legal aid expenditure should be maintained, let alone increased, if it is perceived to be out of control—both in not delivering value for money nor meeting priority needs. Indeed, I find it hard to reconcile the arguments of those who on the one hand wish, like me, to see a properly funded CLS, yet at the same time oppose those parts of the Bill that would give better control over the CDS and by other means help ensure that we get the most we can from the money available.

If in any given year spending on the CDS is higher than forecast, there is nothing in the Bill nor in any administrative arrangement within government that requires an overspend by the CDS to be made good from the CLS.

There will not be an overall legal aid budget or cash limit. Both programmes, however, form part of my departmental spending limit, along with other services such as the Court Service, magistrates' courts and other bodies for which the Lord Chancellor is responsible. I would be in the same position as any other departmental spending Minister faced with a new pressure. My colleagues would expect me to make every effort to offset the overspend by making savings elsewhere, including, but not necessarily from, the CLS. I have to say that the scope for covering a large CDS overspend from in-year savings is limited, because most of the CLS budget would already be committed to fund payments under contracts in earlier years. Of course, in exceptional circumstances, it would be open to me to seek additional resources from my colleagues, and I do not rule that out; but the starting assumption of every responsible department which lives in the real world is that it lives within its means.

I stress that the Bill will provide not only greater control over, but also far greater transparency in, the provision of publicly-funded legal services. The CLS and CDS will each be separate sub-heads on my departmental Vote. This will allow year-on-year comparison of spending plans and actual outturns; and means that any transfers between the two budgets will be reported in the annual appropriation accounts. And, as I have said, I further undertake to announce immediately to Parliament any such transfer beyond a de minimis amount.

The CLS will be based on published assessments of need produced at local level, an annual plan produced by the legal services commission of what services it is intending to secure for meeting that need and an annual report against that plan. So it will be possible to identify and compare what types and levels of services are available to the public year on year, as well as any in-year reduction or increase in those services. That transparency contrasts with the current system whereby the previous government sought to control expenditure by tightening financial eligibility, but there was no ready means to enable people to see what that actually meant in terms of reduced services, and hence hold the government effectively to account for their decision. I am committed to delivering the transparency which the noble Lord, Lord Goodhart, seeks to achieve through his amendment. Let me put that firmly on the record.

Finally, let me offer some further comfort to those who fear for the provision of services under the CLS. I am determined to create a properly funded community legal service. To do that, I want contracting used to achieve a strategic approach to planning how we meet priority need. But I agree that contractors will need reassurance that funding will not be suddenly cut and their contracts terminated or shrunk, if they are to invest their efforts and resources in providing the services people need. To offer some reassurance on that front, I have asked the Legal Aid Board to extend from six to 12 months the notice that needs to be given to vary or terminate a contract, except in cases of misbehaviour and breach.

It would not be prudent to go beyond that because, especially in the early years, we may need to vary contract terms; for example, to change the way services are paid for, the way work is monitored, or simply to move unused capacity from one supplier to another who is facing excess demand. However, I hope that your Lordships will agree that all this shows that we are prepared to listen to those with concerns about how pressures on the CLS budget might affect contractors and to do what we can to meet those concerns—within the realities of competing demands for scarce resources that every government Minister faces, and will always face.

On the basis of the assurances I have offered, I invite the noble Lord, Lord Goodhart, to withdraw his amendment.

Lord Goodhart

My Lords, I listened with great interest and attention to what the noble and learned Lord the Lord Chancellor said. I welcome his undertaking to lay information before Parliament in the event of any cut in the funding of the CLS. I also welcome the extension from six to 12 months of the period of notice to be given before any contract can be terminated.

Nevertheless, the noble and learned Lord has not resiled from the statement which I quoted earlier; that what is available for civil legal aid is what is left over from the budget after the prior claims of criminal legal aid have been met.

No doubt any amendment passed by your Lordships' House will be removed by the House of Commons, but it is important to establish once and for all the very great importance of the issue raised by the amendment. With that in mind, I wish to test the opinion of the House.

3.33 p.m.

On Question, Whether the said amendment (No. 1) shall be agreed to?

Their Lordships divided: Contents, 80; Not-Contents, 134.

Division No.1
Ackner, L. MacLaurin of Knebworth, L.
Addington, L. McNair, L.
Alton of Liverpool, L. Maddock, B.
Avebury, L. Mar and Kellie, E
Barber, L. Middleton, L.
Beaumont of Whitley, L. Miller of Chilthorne Domer, B.
Bridgeman, V. Milverton, L.
Bruntisfield, L. Monro of Langholm, L.
Cadman, L. Monteagle of Brandon, L.
Calverley, L. Morris, L.
Carlisle, E. Mountevans, L.
Clancarty, E. Moyne, L.
Clement- Jones, L. Moynihan, L.
Cowdrey of Tonbridge, L. Newall, L.
Craig of Radley, L. Northbrook, L.
Dahrendorf, L. Nunburnholme, L.
Dholakia, L. Park of Monmouth, B.
Donaldson of Lymington, L. Pender, L.
Effingham, E. Phillips of Sudbury, L.
Ezra, L. Razzall, L.
Gainford, L. Redesdale, L.
Geraint, L. Rodgers of Quarry Bank, L.
Gisborough, L. Russell, E.
Goodhart, L. [Teller.] Sandberg, L.
Grey, E. Sandford, L.
Halsbury, E. Soulsby of Swalffham Prior, L.
Hampton, L. Taverne, L.
Hamwee, B. Thomas of Gwydir, L.
Harris of Greenwich, L. Thomas of Walliswood, B.
Hayter, L. Tordoff, L.
HolmPatrick, L. Trenchard, V.
Hooson, L. Trumpington, B
Hutchinson of Lullington, L. Vivian, L.
Inglewood, L. Warnock, B.
Kingsland, L. [Teller.] Waverley, V.
Kirkwood, L. Wigoder, L.
Kitchener, E. Wilcox, B.
Lloyd of Berwick, L. Williams of Crosby, B.
McConnell, L. Wynford, L.
Mackie of Benshie, L. Young, B.
Acton, L. Clinton-Davis, L
Allen of Abbeydale, L. Crawley, B.
Allenby of Megiddo, V. David, B.
Alli, L. Davies of Oldham, L.
Amos, B. Dean of Thornton-le-Fylde, B.
Ampthill, L. Dixon, L.
Annan, L. Donoughue, L.
Archer of Sandwell, L. Dormand of Easington, L.
Bach, L. Dubs, L.
Barnett, L. Eatwell, L.
Bassam of Brighton, L. Elis-Thomas, L.
Berkeley, L. Evans of Parkside, L.
Blackstone, B. Ewing of Kirkford, L.
Blease, L. Falconer of Thoroton, L.
Bledisloe, V. Farrington of Ribbleton, B.
Borrie, L. Gladwin of Clee, L.
Bragg, L. Gladwyn, L.
Brooke of Alverthorpe, L. Glanusk, L.
Brookman, L. Glenamara, L.
Bruce of Donington, L. Gordon of Strathblane, L.
Burlison, L. Gould of Potternewton, B.
Callaghan of Cardiff, L. Graham of Edmonton, L.
Carmichael of Kelvingrove, L. GrayofContin, L.
Carter, L. [Teller.] Grenfell, L.
Castle of Blackburn, B. Hacking, L.
Charteris of Amisfield, L. Hardie, L.
Chorley, L. Hardy of Wath, L.
Christopher, L. Haskel, L.
Clarke of Hampstead, L. Hayman, B.
Hilton of Eggardon, B. Peston, L.
Hogg of Cumbernauld, L. Plant of Highfield, L.
Hollis of Heigham, B. Ponsonby of Shulbrede, L.
Howie of Troon, L. Prys-Davies, L.
Hoyle, L. Puttnam, L.
Hughes, L. Ramsay of Cartvale, B.
Hughes of Woodside, L. Randall of St. Budeaux, L.
Hunt of Kings Heath, L. Renton of Mount Harry, L.
Ilchester, E. Richard, L.
Irvine of Lairg, L. [Lord Chancellor.] Roll of Ipsden, L.
Ryder of Warsaw, B.
Islwyn, L. Sainsbury of Turville, L.
Janner of Braunstone, L. St. John of Fawsley, L.
Jay of Paddington, B. [Lord Privy Seal.] Sandwich, E.
Sawyer, L.
Jenkins of Putney, L. Sefton of Garston, L.
Judd, L. Shepherd, L.
Kintore, E. Shore of Stepney, L.
Laming, L. Simon, V.
Lockwood, B. Simon of Glaisdale, L.
Lofthouse of Pontefract, L. Simon of Highbury, L.
Lovell-Davis, L. Smith of Gilmorehill, B.
Macdonald of Tradeston, L. Stallard, L..
McIntosh of Haringey, L. [Teller.] Strabolgi, L.
Mackenzie of Framwellgate, L. Stoddart of Swindon, L
Mallalieu, B Stafford, E.
. Mason of Barnsley, L. Symons of Vernham Dean, B.
Merlyn-Rees, L. Taylor of Blackburn, L.
Milner of Leeds, L. Taylor of Gryfe. L.
Mishcon, L Tenby, V.
Molloy, L. Thomas of Macclesfield, L.
Monkswell, L. Thomton, B.
Montague of Oxford, L. Tomlinson, L.
Morris of Castle Morris, L. Tryon, L.
Morris of Manchester, L. Varley, L.
Nelson, E. Weatherill, L.
O'Neill of Bengarve, B. Wedderburn of Charlton, L.
Orme, L. Wharton, B.
Whitty, L.
Williams of Elvel, L.

Resolved in the negative, and amendment disagreed to accordingly.

3.43 p.m.

Clause 7 [Services which may be funded]:

Lord Phillips of Sudbury moved Amendment No. 2:

Page 5, line 17, 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 is supported, like the previous one, by the Law Society, the Legal Action Group and the Legal Aid Practitioners' Group whose 500 member-firms probably know more than anyone about the workings of legal aid and the likely consequences of competitive block tendering.

It has been apparent for some time that the Legal Aid Board and the Government intend, after an intermediate phase of allowing only solicitors with legal aid franchises to do legal aid, to move to a position of unparalleled further restriction of public choice in the selection of a solicitor. This will be effected by means of exclusive competitive block tendering.

My amendment refers to the aim of the legal services commission as being, to obtain the best long term value for money". It reinforces quality by limiting legal aid to those firms which, meet the standards set by the Commission". It entitles the commission to impose other terms, as to remuneration and otherwise … by contract or by regulations". Last, but not least, it gives the public the right to engage the services of any solicitor meeting all those requirements.

But how would competitive block tendering work? This much we do know: in a letter to The Times of 25th January last the noble and learned Lord the Lord Chancellor said, the point of my reforms is to give people on legal aid a choice from amongst 3,000 quality assured firms". At present 10,600 solicitors' offices carry out legal aid and around 6,000 have, or are in the process of getting, legal aid franchises.

The legal aid authorities will put out legal aid work to tender on the basis—it is inescapable—that at the end of the day a high proportion (at least half) of the firms who were carrying out quality assured legal aid work immediately before the competitive tender will thereafter be prohibited from doing any legal aid work at all. The cull will bear disproportionately on the small legal aid firms (frequently among the best) and also on firms which do only a modicum of legal aid work, often of a specialist kind. It will not be practical for many of them to bid for the big block work, as the Government recognise.

The fact that many of the firms cut out may have the highest reputation, have highly satisfied clients and do excellent work, will be of no avail. Out they will go and with them will come further polarisation of the profession with predictable results on the long-term quality of legal aid work.

The Government also persist in pretending that block tendering will not create local legal aid monopolies. In counties characterised by small towns and villages it is bound to do so and in many of them there will be no contracted legal aid provider at all.

The Government persist, too, in asserting that the present arrangements "guarantee" work to solicitors' firms and preclude competition—an oft-repeated cry in these debates. Yet in today's world clients are not fools. They want to win their cases. They also want fair charges because most of them on legal aid have to pay a substantial contribution to their costs. So they go to the solicitors who they think are most likely to achieve that for them.

Furthermore, this amendment does not endorse the status quo. It does not, as the noble and learned Lord the Lord Chancellor recently put it, largely freeze the existing pattern of (legal aid) provision in place". Rather, it allows the commission to set the standards it thinks fit and to impose terms under the Act as to remuneration and otherwise whether by contract or regulations. By contrast, today, any solicitor, franchised or not, can offer to do legal aid willy-nilly.

Another government claim is that competitive block tendering will not only improve quality, but also lead to lower cost to clients and the legal aid scheme. This counter-intuitive assertion lies at the heart of these reforms.

If one asks the profession it is more or less unanimous. Legal aid is already much the lowest paid work that it does. Most of the solicitors, far from wanting more, want less. They are falling behind firms which eschew legal aid altogether and so have problems recruiting and retaining good staff.

The only extensive research done into the effects of bulk contracting in other jurisdictions of which I am aware is the recent work by Roger Smith published by the Legal Action Group, of which he was a director, under the title Legal Aid Contracting—Lessons from North America. In it he said this: The driving force behind the development of contracts with bulk providers of legal services has been the political requirement of cost containment". His conclusion is that, contracting for large numbers of cases tends to set up pressures for cost containment at the expense of quality". One would have thought that that was pretty obvious. Yet the Government, with absolutely no evidence to rebut this basic criticism, simply go on asserting that under the new regime economy of scale will prevail, prices will come down and the worker bees of the new regional boards will swarm over the bulk providers to ensure quality.

I suggest this points to a potential Whitehall farce, and a deadly one, where the bureaucratic means used to remedy the existing shortcomings are so unwieldy and expensive that they constitute a completely new and larger problem. That will be seen in the expense to the new regime of accommodating the small providers of legal aid which, it is now suggested, justifies their exclusion from block contracting. As the Lord Chancellor recently said, that would avoid, having to manage a larger number of small contracts". Ultimately, I suppose, it comes down to whether the interventionist command system, promised by the Bill, with its crowning glory of exclusive competitive block tendering, will perform better than a more pragmatic regime which sets quality standards and remuneration terms but leaves the clients to decide who shall do their work.

This issue is not about protecting solicitors. It is about preserving the public's real rights of access; their right to select their solicitor from among the quality assured firms and in a location accessible to them. With control over the means test, the merits test and the terms and conditions on which legal aid must be carried out by lawyers, and just about everything else, this amendment is a modest but vital measure to secure, in the long term, what the name of the Bill promises, namely, access to justice. I beg to move.

Baroness Crawley

My Lords, the noble Lord, Lord Phillips of Sudbury, is nothing if not persistent in the views expressed in his amendment. However, persistence is not necessarily a virtue in this instance. Once again I find myself at odds with his argument. The noble Lord believes that every solicitor who meets the qualifying criteria should be able to carry out legal aid work. That scenario would turn the community legal service criteria of prioritising, of meeting need and of best value for money completely on its head. If the noble Lord has his way, how will a controlled budget operate? How can there be contracts? What is the point of having contracts if there is a guaranteed right for everyone to do legal aid work? How can best value be established when there is—

Lord Phillips of Sudbury

My Lords, I am grateful to the noble Baroness for giving way. She asks how the legal aid budget will be controlled. Is she aware that over the past three years the budgeted costs have been under-shot? In the forthcoming years it: is expected that the amount spent on legal aid will decline.

Baroness Crawley

My Lords, I am aware of the figures for the past three years, but if the noble Lord, Lord Phillips of Sudbury, selected years previous to the last three years he would see that the legal aid budget soared, declined and soared again. None of us has a crystal ball to see what will happen in the future. Therefore, I say that his amendment knocks aside the need for control in terms of a budget, which is at the very heart of the legal aid service.

Lord Ackner

My Lords, I attached my name in support of this amendment because I was satisfied that it advanced what is meant to be the desideratum in the Bill; improving access for the public. If the amendment is not accepted there will be a gradual restriction on the public in regard to the lawyers they can consult, a restriction that will be unjustified because the terms of the amendment presuppose that solicitors who are available, or wish to be available, will have passed all the necessary competency requirements. For those reasons I support the amendment.

Lord Hacking

My Lords, my noble and learned friend on Second Reading was at pains to emphasise the enormous importance of the quality of service that litigants should have in the conduct of their litigation. The noble and learned Lord said that one way of achieving that quality of service was for solicitors' firms that wished to offer legal services to enter into contracts with the commission. I venture to suggest that the most important test that the commission should apply, when considering an application from a law firm to enter into a contract, is to see whether such a firm has the quality of service that the litigant has every right to seek and obtain.

The noble Lord, Lord Phillips of Sudbury, specifies in his amendment a requirement that persons offering those services should meet standards set by the commission. Although he did not give details I understand that he has in mind the quality of service that a particular firm can provide. The noble Lord kindly nods in acknowledgment of the point I make. The amendment specifies that those persons and bodies may provide services on terms, as to remuneration and otherwise, set by contract or by regulations". If the noble Lord suggests that there should be a proper test as to quality, and that that test should be achieved by contract and regulation, I think that the gap between him and my noble and learned friend is much narrowed. However, any diminution in the quality of service and the tests and means of achieving that quality will result in a widening gap between them.

4 p.m.

The Lord Chancellor

My Lords, I am a little surprised that I find myself debating this subject again with the noble Lord, Lord Phillips of Sudbury. It was fully debated in earlier stages of the Bill; in fact, your Lordships have spent over two hours debating substantially the same amendment. Both my noble and learned friend Lord Falconer of Thoroton and I have tried to explain to the noble Lord why his call for a guaranteed job for life for legal aid lawyers cannot be accepted by the Government.

The noble Baroness, Lady Crawley, noted the noble Lord's persistence. In raising the issue yet again on Third Reading, I wonder whether the noble Lord is trespassing on the patience of your Lordships' House. I have heard nothing that dissuades me from my view that the noble Lord's amendment would rip the heart out of the community legal service. It would mean that the legal services commission would be forced to purchase services from any lawyer who wished to do legal aid work, provided that such a lawyer could meet the prescribed quality threshold but regardless of where he was located or the types of cases he proposed to undertake—regardless, in short, of any consideration of need and priorities.

We are embarked upon fundamental reform. We shall not settle for tinkering around the edges of the present legal aid system, which was designed in the first half of this century. That is why I have repeatedly said to your Lordships that lawyers must stop looking backwards and start looking forwards, as the Government are, to devise new ways of delivering help to the disadvantaged that are relevant for today and tomorrow.

That is why the commission, through the community legal service, will identify the needs of the people who find themselves in difficulty; and will then seek to match those needs by securing services from a range of legal service providers, within the priorities established by the Government or the commission, and the resources available. That requires a flexible system. Flexibility in securing legal services is essential because the commission is dealing with a real world and real people whose problems differ and change over time. The provisions I have brought before Parliament are not intended to provide a short-term solution. Much as I enjoy the cut and thrust of debate in your Lordships' House, I have no burning desire to take the lead part in bringing forward an "Even Better Access to Justice Bill". My hope is that the structures we are putting in place will last for at least as long as the present basic structure of the legal aid system.

Therefore, the Bill provides the commission with wide powers to do that. It does not seek to provide a blueprint for the nature of services and the manner in which they are to be procured and paid for; rather, it acknowledges that legal services will be procured from a range of providers, not all of whom will be lawyers in private practice, and that the services will be procured by a number of means which best match need and provide good value for money.

That is why we are proposing that, in future, services should be supplied only through suppliers who have contracts (or other arrangements) with the commission. I accept that in using the term "exclusive contracts" we may inadvertently have misled because the expression was misconstrued as signalling local monopolies for single firms. It never was intended to mean that, rather it simply means that only those with a contract (or other payment arrangement) with the legal service commission can receive public funding for work under the two new schemes. But the initiative must lie with the commission.

Perhaps I may give the facts. In making these arrangements, the commission will be charged with securing adequate access for clients. We now expect there to be at least 5,000 first-round contracts for family work. But access should not be judged solely in terms of numbers. In future, no more than 200 firms with a clinical negligence franchise will be allowed to take medical negligence cases. That is an area where par excellence specialists are required to ensure quality. However, access is also ensured because the Legal Aid Board has a freephone number that potential clients can call to find out where the nearest franchised firm is to them. If the client is unable to travel to the solicitor, the contracts include terms requiring the solicitor to make arrangements to go to see the client.

As I have made plain, the Government are not wedded to any one model of contracting (be it "block contracting" or some other system). There will undoubtedly be different types of contract for different categories of work and in different places. In other words, if those who argue that a particular type of contract will not work in a given area are proved right, they need have nothing to fear; it will not be adopted.

The noble Lord's amendment, however, would freeze the existing pattern of provision in place. The ability of the Government to redirect resources to areas of identified need would be removed, or severely restricted. That strikes at the underlying rationale of the community legal service. Guaranteeing work to solicitors' firms would also preclude the development, in the longer term, of any element of competition for contracts, with the scope that that may offer for maintaining and improving value for money. Indeed, I would argue (with, I hope, the greatest courtesy to the noble Lord, Lord Phillips of Sudbury) that the noble Lord is guilty of a verbal sleight of hand when he puts forward an amendment which contains both a guarantee for all existing providers and the aim of ensuring the best long-term value for money. I say that it is a verbal sleight of hand because guaranteed work for all providers stands in the way of best value.

In addition, the amendment would tend to stifle the further development of franchising. Under this amendment, any future enhancements to the quality requirements would be resisted by some parts of the profession as threatening their guarantee of income from the scheme under the present quality criteria.

That said, I have sought to offer as much reassurance as I can to the solicitors' profession about how contracting will be developed in practice. We intend to proceed gradually and carefully to ensure that we get the details right, and to give the profession time to adapt to change. In particular, we have undertaken to contract with all firms with a family franchise in the first round of contracting for family work. As I said on Report, on the current application rate, and subject to applicants having their franchise application with the commission by the end of March, it would not be unrealistic to estimate that family contracts could 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. I would expect that a roughly similar number of contracts would be issued to solicitors to provide advice and assistance and here, too, that is subject to solicitors having their applications for a franchise in by the closing date of 31st March.

I have also recently given the president of the Law Society an assurance that we will adopt the same approach when we come to contract for other forms of civil litigation and criminal work.

We have heard again today that the need for this guarantee is not some lawyer's trade union restrictive practice, but a consumer-oriented desire on the part of lawyers to ensure choice and access to justice. Unwittingly or otherwise, I am afraid that the proponents of this measure are in substance making a trade union point for it does not recognise the reality of the needs of those who seek help. When people seek access to justice, that is not synonymous with seeking access to lawyers. What they need is the right help to get access to justice, which may not necessarily involve lawyers. I am determined that the community legal service will ensure that they get the help they need (including the services of the lawyers where this is appropriate) in the right way from the provider who best can meet their needs. That is why the community legal service as a whole has to encompass not simply the legal services commission and lawyers' groups, but local authorities, citizens' advice bureaux, law centres and other not-for-profit sector suppliers.

I am absolutely determined to ensure that public money buys the right services, of the right quality, at the right price. I am determined also to ensure that we identify areas of unmet need and do the best we can to ensure that the need is met. I cannot, therefore, tolerate attempts, however well intentioned, to build into the structures contained in the Bill guarantees which are vested in the provider of the service rather than the procurer of the services.

I hope that I have explained why I cannot accept the amendment and why the fears that underlie it are truly misplaced. In the light of those observations—I apologise for them taking a little time—I hope that the noble Lord, Lord Phillips, will agree to withdraw his amendment.

Lord Phillips of Sudbury

My Lords, I have listened with great care to the noble and learned Lord the Lord Chancellor. I feel that there is a dislocation of perception between him and his advisers and those to whom I speak. I repeat that those to whom I speak are not solicitors; they are the public who use the services of solicitors. If there is any sleight of hand, I think that it could be applied also—I say this with the greatest of respect—to the constant reiteration of the phrase "guaranteed work for solicitors". It is like saying "there is guaranteed work for the corner shop" because people go in and buy their cornflakes. No solicitor has a guarantee of anything unless a member of the public wishes to use his or her services.

I have not heard one single argument, whether from the noble and learned Lord the Lord Chancellor or from those on his Benches, which makes me believe that by cutting out from legal aid work as a matter of policy, possibly more than half of the firms currently doing it can conceivably increase access to justice, when all those firms I have been talking about will have complied with the necessary standards tests.

So two hours we may have spent on this amendment but, as the noble and learned Lord the Lord Chancellor said, this goes to the heart of his Bill. He feels very strongly and sincerely about it and, I am afraid, so do I. In the past we have discussed this matter somewhat late at night before a rather thin House and at this moment I feel it would not be inappropriate if the House had the opportunity now to show its views on this specific issue. Therefore I seek the opinion of the House.

4.11 p.m.

On Question, Whether the said amendment (No. 2) shall be agreed to?

Their Lordships divided: Contents, 119; Not-Contents, 127.

Division No. 2
Ackner, L. Brougham and Vaux, L.
Addington, L. Burnham, L.
Addison, V. Cadman, L.
Alton of Liverpool, L. Caithness, E.
Anelay of St. Johns, B. Carlisle, E.
Archer of Weston-Super-Mare, L. Charteris of Amisfield, L.
Arran, E. Clement- Jones, L.
Attlee, E. Cowdrey of Tonbridge, L.
Avebury, L. Cox, B.
Barber, L. Craig of Radley, L.
Beaumont of Whitley, L. Cranborne, V.
Bethell, L. Cullen of Ashbourne, L.
Biffen, L. Dahrendorf, L.
Blatch, B. Dean of Harptree, L.
Brentford, V. Dholakia, L.
Bridgeman, V. Dixon-Smith, L.
Broadbridge, L. Elliott of Morpeth, L.
Ezra, L. Newall, L.
Falkland, V. Northbrook, L.
Gainford, L. Park of Monmouth, B.
Geddes, L. Phillips of Sudbury, L. [Teller.]
Geraint, L. Platt of Writtle, B.
Glentoran, L. Rankeillour, L.
Goodhart, L. Razzall, L.
GrayofContin, L. Redesdale, L.
Grey, E. Renton of Mount Harry, L.
Halsbury, E. Rodgers of Quarry Bank, L.
Hampton, L. Rowallan, L.
Hamwee, B. Russell, E.
Harding of Petherton, L. Sandberg, L.
Harmar-Nicholls, L. Sandwich, E.
Harris of Greenwich, L. Seccombe, B.
Hayhoe, L. Selkirk of Douglas, L.
Hooper, B. Sharp of Guildford, B.
Hooson, L. Soulsby of Swaffham Prior, L.
Hutchinson of Lullington, L. Steel of Aikwood, L.
Hylton-Foster, B. Stodart of Leaston, L.
Inglewood, L. Strathcarron, L.
Kelvedon, L. Strathclyde, L.
Kingsland, L. [Teller.] Suffolk and Berkshire, E.
Kirkwood, L. Swinfen, L.
Kitchener, E. Taverne, L
Long, V. Thomas of Gwydir, L.
Lucas of Chilworth, L. Thomas of Walliswood, B.
Luke, L. Thomson of Monifieth, L.
Lyell, L. Tope, L.
Mackie of Benshie, L. Tordoff, L.
MacLaurin of Knebworth, L. Trenchard, V.
McNair, L. Trumpington, B.
Maddock, B. Vivian, L.
Mar and Kellie, E. Waddington, L.
Mayhew of Twysden, L. Wallace of Saltaire, L.
Mersey, V. Warnock, B.
Miller of Chilthorne Domer, B. Waverley, V.
Monro of Langholm, L. Wigoder, L.
Monteagle of Brandon, L. Wilcox, B.
Mountevans, L. Wise, L.
Moyne, L. Wynford, L.
Moynihan, L. Young, B.
Acton, L. Cocks of Hartcliffe, L.
Ahmed, L. Crawley, B.
Allen of Abbeydale, L. David, B.
Allenby of Megiddo, V. Davies of Oldham, L.
Alli, L. Dean of Thornton-le-Fylde, B.
Amos, B. Dixon, L.
Ampthill, L. Donoughue, L.
Annan, L. Dormand of Easington, L.
Archer of Sandwell, L. Dubs, L.
Ashley of Stoke, L. Eatwell, L.
Bach, L. Evans of Parkside, L.
Barnett, L. Ewing of Kirkford, L.
Bassam of Brighton, L. Falconer of Thoroton, L.
Berkeley, L. Farrington of Ribbleton, B.
Birmingham, Bp. Gladwin of Clee, L.
Blackstone, B. Glenamara, L.
Blease, L. Gordon of Strathblane, L.
Borrie, L. Gould of Potternewton, B.
Bragg, L. Graham of Edmonton, L.
Brooke of Alverthorpe, L. Grenfell, L.
Brookman, L. Hacking, L.
Bruce of Donington, L. Hardie, L.
Burlison, L. Hardy of Wath, L.
Callaghan of Cardiff, L. Haskel, L.
Carmichael of Kelvingrove, L. Hayman, B.
Carter, L. [Teller.] Hilton of Eggardon, B.
Castle of Blackburn, B. Hollis of Heigham, B.
Chorley, L. Howie of Troon, L.
Christopher, L. Hoyle, L.
Clarke of Hampstead, L. Hughes, L.
Clinton-Davis, L. Hughes of Woodside, L.
Hunt of Kings Heath, L. Pitkeathley, B.
Ilchester, E. Plant of Highfield, L.
Irvine of Lairg, L. [Lord Chancellor.] Ponsonby of Shulbrede, L.
Prys-Davies, L.
Islwyn, L. Puttnam, L.
Janner of Braunstone, L. Ramsay of Cartvale, B.
Jay of Paddington, B. [Lord Privy Seal] Randall of St. Budeaux, L.
Richard, L.
Jenkins of Putney, L. Roll of Ipsden, L.
Judd, L. Sainsbury of Turville, L.
Lockwood, B. Sawyer, L.
Lofthouse of Pontefract, L. Sefton of Garston, L.
Longford, E. Shaughnessy, L.
Lovell-Davis, L. Shepherd, L.
Macdonald of Tradeston, L. Shore of Stepney, L.
McIntosh of Haringey, L. [Teller.] Simon, V.
Mackenzie of Framwellgate, L. Simon of Glaisdale, L.
Mallalieu, B. Simon of Highbury, L.
Marsh L Smith of Gilmorehill, B.
Mason of Barnsley, L. Stoddart of Swindon, L.
Merlyn-Rees, L. Strabolgi, L.
Milner of Leeds, L. Symons of Vernham Dean, B.
Mishcon, L Taylor of Blackburn, L.
Molloy, L. Taylor of Gryfe, L.
Monkswell, L. Tenby, V.
Montague of Oxford, L. Thomas of Macclesfield, L.
Morris of Castle Morris, L. Thornton, B.
Morris of Manchester, L. Tomlinson, L.
Nicol, B. Turner of Camden, B.
Northbourne, L. Uddin, B.
O'Neill of Bengarve, B. Varley, L.
Orme, L. Wedderburn of Charlton, L.
Peston, L. Whitty, L.
Williams of Elvel, L.

Resolved in the negative, and amendment disagreed to accordingly.

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