Legal Aid: Means Testing (Hansard, 28 February 1996)

§ The Lord Chancellor:

I have today laid before Parliament regulations which will: a) provide those assessing the means of applicants for legal aid with a discretionary: power to include in the means assessment the assets of friends, relatives and children where these appear to be providing a significant material advantage to the applicant: b) place a limit of £100,000 on the amount of equity value in a house that is ignored in the legal aid means assessment. The regulations also limit the maximum amount of mortgage that can be offset against the equity value of a house to £100,000 and limit the amount of mortgage repayment allowable against income to the amount due on a £100,000 mortgage.

These regulations will come into effect for applications for legal aid made on or after 1st June 1996. Both of these measures are being taken as a result of the consultation exercise on legal aid for the "apparently wealthy" which was undertaken in 1995. Also as a result of that consultation exercise, I announced last year that I intended that a special investigations unit should be established to handle legal aid means assessments where the applicant's financial circumstances are exceptionally complex. I invited the Legal Aid Board to advise me on the feasibility of establishing such a unit.

The Legal Aid Board has now submitted its report and I have placed a copy in the Library. I have accepted the central recommendations in the report and have invited the Legal Aid Board to take the necessary steps 102WA to ensure that the special investigations unit is fully operational as soon as possible.

The special investigations unit will build on the prototype of such a unit set up by the Benefits Agency in its Legal Aid Assessment Office at Preston in June 1995. This unit is already investigating certain cases.

Initially, the unit will deal with applications for civil legal aid, but it will be extended as soon as possible to cover both civil and criminal legal aid. Referrals to the unit will be made, in civil cases, by the Legal Aid Board or the existing staff of the Legal Aid Assessment Office and, in criminal cases, by the court or court clerk. They will be invited to refer cases to the unit when a) they are of the opinion that the means information provided merits further investigation, verification or expert evaluation by the Special Investigations Unit, and b) one or more of the following appears to apply:

(i) the applicant or partner has assets overseas;
(ii) the applicant or partner has access to assets or income apparently owned by others;
(iii) the applicant or partner has a wealthy lifestyle, such as an expensive car, house or jewellery, or is able to indulge in significant foreign travel;
(iv) the applicant or partner has interests in a business with substantial assets;
(v) the applicant or partner has other complex personal financial affairs, which may include personal insolvency or having assets subject to a mareva injunction or an asset freezing order.
(vi) legal claims of significant value are being pursued by or against the applicant or partner;
(vii) the applicant or partner is reputed to have significant income or assets;
(viii) the applicant or partner has re-arranged their financial affairs so that they now apparently qualify for legal aid.

The unit will be headed by a qualified accountant and will be empowered to seek outside expert assistance when this seems appropriate.

The Government are fully committed to ensuring that legal aid is only granted to those who are entitled, under the regulations, to receive it, and believes that the establishment, and further development, of the Special Investigations Unit is an important step in meeting that commitment.