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Legal Aid Reform

Volume 460: debated on Wednesday 9 May 2007

Unusually for a Member securing a debate such as this, I am not a lawyer—I never have been, nor have I ever trained as one. My point of departure for bringing this debate to the Chamber is the issue of access to justice for my constituents, who are among the poorest people in society and make up a highly ethnically diverse community.

It is common now in smart circles to speak disparagingly about lawyers—“fat cat lawyer” is the phrase; the words run one into another. It is even common to be disparaging about the importance of the meticulous application of the rule of law. So it is important to remind colleagues that legal aid is one of the pillars of the welfare state of which we are so proud. The Legal Aid and Advice Act 1949 made reference to:

“assistance…and legal advice…so that no one will be financially unable to prosecute a just and reasonable claim or to defend a legal right”.

Legal aid needs defending just as all on my side of the Chamber would, I hope, defend free access to the health service at the point of use. Legal aid is one of the essential pillars of the welfare state.

It is to the credit of the Government that legal aid spending should have risen in recent years. However, that rise in expenditure and costs has been the basis for the Government’s legal aid reforms. It is true that in England and Wales we spend more per capita on legal aid than almost anywhere else in the world. Legal aid expenditure has gone from £1.5 billion in 1997 to nearly £2 billion today—extraordinary figures. We might say, “Gosh, all these fat cat lawyers in their limousines are carrying away bagfuls of money.” The Government are doing something about that—and only too right.

However, although the costs have risen and the Government are absolutely right to try to obtain value for money for the taxpayer, I draw people’s attention to the fact that the rise in legal aid costs is a complex subject. A recent study commissioned by the Law Society pointed out:

“It is correct that total legal aid costs have increased significantly over the past decade. However, it is…important to recognise that the increases do not apply to all areas of legal aid…In the past three years, 2002-06, costs in most areas of criminal and civil work have increased only slowly if at all, and on a per case basis have often decreased.”

Yet the Government are bringing in changes in the fee arrangements and reforms that are designed to apply across the piece, in spite of research that reveals that the inflation in costs has occurred only in certain areas—notably criminal defence in the Crown court, with the famous £1 million-a-year barristers. I hope that there are none in the Chamber today. Cost inflation has also occurred in litigation advice and child care proceedings. I ask Ministers why, if the cost inflation applies to very specific areas of legal aid practice, they are applying a remedy across the piece. That will have a detrimental effect, to which I shall come later.

In leaving the issues of costs, of the complexity of cost inflation and of the over-simple remedy that the Government are applying, I could do no better than quote a distinguished QC who spoke in a debate on criminal legal aid in October 2005. She spoke about costs and countered the argument that they were all down to fat cat defence lawyers, from whom we had to take money away. She said:

“The costs of the criminal justice system generally, leaving aside legal aid, have increased by 46 per cent. in the same period that we are talking about legal aid having increased. It is hardly surprising that defence costs have increased as well.”—[Official Report, Westminster Hall, 26 October 2005; Vol. 438, c. 74WH.]

That logical point was well put by a distinguished QC, who also happens to be the Minister replying to this debate.

Everybody accepts that it is important that the Government should get value for money. However, given that the cost inflation is specific to certain areas of legal aid, one of the questions asked by the Law Society and other representative organisations is about why we are engaging in such an across-the-board remedy. There are many critiques of the Government’s legal aid reforms and many are valid. However, in the short time available, I want to focus on the issue of the reforms’ effect on black and minority ethnic lawyers. I want to do that not because it is the only problem, but because it has become increasingly clear that the legal aid reforms will bear particularly heavily on such lawyers. One might ask, “Why should that be? The Government are not putting forward legislation designed to be deliberately discriminatory.” The problem is that black and minority ethnic lawyers are more likely to be in legal aid and to have smaller, newer companies.

I congratulate my hon. Friend on securing this important debate. Does she accept that one reason why there are solicitors’ firms and barristers’ chambers that are predominantly made up of ethnic minorities is that such minorities have difficulties in securing employment and tenancy in the mainstream chambers or solicitors’ firms? The legal aid reforms could well have the impact of making us lose those ethnic minority solicitors and barristers from the profession altogether.

I am grateful to my hon. Friend for making that important point. It is sad that such people have been forced into setting up their own firms and sets because of—I shall not mince my words—institutional racism among some of the mainstream of the legal profession. It would appear that there is now a serious risk that many BME lawyers will be forced out of business. Many may end up leaving the legal profession altogether.

Why do the reforms impact more severely on black and minority ethnic firms? It is not because the Government deliberately want that to happen; I would not begin to suggest that. However, many aspects of the reforms are a problem for such firms. The minimum contract threshold will affect smaller firms and automatically put many BME firms out of the legal aid business. There is the issue of competitive tendering; in any competitive tendering situation, the bigger the organisation, the better the economies of scale. That mitigates against BME firms.

The boundary areas, which mean that only 20 per cent. of legal aid cases can be taken outside a firm’s local area, will be difficult for BME firms. There is the fact that high-cost cases will be dealt with only by a panel of approved firms, which will tend to be the larger and more established ones. Unless the Government stop and think, black and minority ethnic solicitors will be more likely to lose their jobs, more likely to leave or change companies and more likely to leave the legal profession altogether. By the bye, there will also be a smaller pool of black and minority ethnic lawyers from which to choose judges.

I should like to add to the hon. Lady’s pertinent list. The Government have not proved that there will be any financial benefit from what will be the disastrous consequences of their policies for black and ethnic minority firms. I should like to put on the record that the Conservative party is concerned at the situation. We see that the Government’s policy will destroy established lines of access to legal representation for no measurable gain to our legal system.

The point is well put. Obviously, the cost inflation is of concern, but the cost drivers of legal aid are complex. The Government have not proven that the reforms will bear down on costs without undue detrimental effects. I would go further and say that black and minority ethnic firms bring added value to our legal system; they are more able to gain the trust of black and minority ethnic clients and can therefore deal with their cases more easily and quickly. They are more likely to have employees who speak a relevant language.

Such firms represent an important point of communication and representation between black communities, which are more likely to be socially excluded, and the legal world. They play a vital role in community cohesion. The issue is not only about fairness, but community cohesion, and that makes me think it regrettable that the Government are going forward with the proposals in their current form.

For many in our black and minority ethnic communities—I can talk about this with some feeling—their black or minority ethnic solicitor or black and minority ethnic-led firm is where they turn in time of trouble. Many solicitors firms might have taken Doreen Lawrence’s case and fought it in the way in which Imran Khan did, but it was to Imran Khan that Doreen Lawrence turned. It was Imran Khan who stuck with Doreen Lawrence when she met terrible hostility under the Tory Government and when she did not have money to pay him, because he believed in the case not only because he was a good solicitor but because he came from a minority ethnic community and knew what she was going through. It is the Imran Khans and the Doreen Lawrences—maybe not involved in cases of that momentous nature, but that type of person—who will be detrimentally affected.

I do not think that my hon. Friend should take solace from the Conservative party, which is trying to put out of business my local law centre, which employs a number of black and minority ethnic solicitors. She says, rightly, that there is not deliberate prejudice on the part of the Government, and we would expect that, but, as she says, many BME firms are small firms. The changes appear to bear down on small firms, including through the inspection regime, and such firms are generally seen as a bad thing. The effect of inspecting and finding fault, often with small firms who have difficult overheads, may inadvertently drive BME solicitors firms out of business.

That is the point that I was trying to make. We are not looking at deliberate discrimination, but we may be looking at indirect discrimination. No less an authority than the Select Committee on Constitutional Affairs, in its recent report on the implementation of the Carter review of legal aid, said in paragraph 229, its final conclusion:

“We are concerned that some of the reform proposals may contravene the prohibition of indirect racial discrimination under the Race Relations Act 1976 as subsequently amended. Some of the reform proposals, notably the introduction of minimum contract sizes, leave us in doubt as to whether they are a necessary and proportionate means to achieve the intended objective, which is the legal test.”

We are faced with a set of untested changes, no doubt brought forward with the best of intentions. Everyone who has examined the changes, including practitioners in the field, has said that they will bear down more heavily on black and minority ethnic lawyers and will have the detrimental effect on access to justice and community cohesion that I have mentioned.

The Government do not need to change the direction of travel, but it is not too late for them to pause and market test the changes in one region of the country to see the effects. We might speculate this afternoon, but it would be better at the least to test out the package of reforms in one small area of the country and to come back with what we have found. As matters stand, we run the risk of decimating many good legal aid firms, small solicitors and black and minority ethnic law firms. The Minister and the Lord Chancellor have said over and over again that they are in favour of increased diversity in the legal profession, and we would be acting against that.

The Minister spoke in June 2006 to the Black Solicitors Network. Her speech to an audience of black lawyers was widely regarded as excellent. In her closing remarks, she said that

“many of you here this evening have already been working to make this profession”—

the legal profession—

“one that represents Britain in the twenty-first century. I hope that…you can regard me as an ally in that quest.”

They still regard her as an ally in that quest, but they will regard her as more of an ally if even at this late stage she pauses, reflects and listens to what all the representative organisations, including housing advice and homeless advice organisations, have to say and to all the evidence and information that has been proffered to Ministers about the unintentional detrimental effect of the legislation.

She will be more of an ally to the cause of increased diversity in the legal profession if she pauses and reflects on how the plans can be taken forward without the consequences for black and minority ethnic solicitors and access for justice that I have outlined in my remarks. We welcome the funding that the Government have given legal aid up until now and we do not query the good faith of Ministers.

I have known, grown up with and worked with people who have struggled to get their law qualifications, coming from backgrounds a million miles away from that of the traditional lawyer. They have struggled in a mainstream firm, perhaps, and to set up their own firm. At last, they are stabilising and can achieve their potential as a lawyer and serve the wider community. Now, that generation of solicitors and lawyers is threatened with decimation because of an ill thought out Government proposal. If they understood more about what that feels like and what it will mean to those communities and those people, Ministers would even now stop and think about the proposals.

Like my hon. Friend the Member for Tooting (Mr. Khan), I congratulate my hon. Friend the Member for Hackney, North and Stoke Newington (Ms Abbott) on obtaining this debate.

We debated the main thrust of our proposals for legal aid in this Chamber a short time ago and I shall not retread old ground. However, today is the first day of the new Ministry of Justice and it is important to reiterate our commitment to a legal aid system that serves 21st-century Britain in all its diversity. It is central to a properly functioning justice system in this country.

As my hon. Friend the Member for Hackney, North and Stoke Newington said, we have the best funded legal aid system in the world. Running closely behind us—we pay about £100 a head while they pay about £30—are the continental systems that have an inquisitorial process. All the other adversarial systems are further behind again. Without doubt, we have a well-funded system. My hon. Friend is right to say that there is an odd mixture of pride that the cost of legal aid has gone up and of difficulty, and that the drivers are complex. I do not change a word of what I said in the debate that she quoted from, and I am grateful for her use of the word “distinguished” to refer to me.

The drivers are complex, of course, but it is necessary to manage costs in the ever-spiralling legal aid fund, and in particular to manage them as they relate to crime. My hon. Friend talks as though it were totally a cost issue, but it is not. At least part of the reform involves changing the way in which lawyers are paid so that we can guarantee that we get appropriate value for money for a quality service, moving from hourly rates, which are likely to support inefficiency rather than efficiency, to fixed fees. That is part of the structural changes, and such measures are necessary in areas where there is not a huge overspend. That means that when we move money across we are sure that we are getting value for money in the places where we locate the new funds. The changes have a number of purposes.

We are looking for a system that is fair to clients, defendants, practitioners and the taxpayer. Since this is day one of the Ministry for Justice, I stress again the Government’s commitment, and my own, to diversity in the legal profession. In the judiciary, at the Bar, or in the front-line offices of solicitors’ firms across the country, a diverse legal profession is essential for a quality legal service for all the clients who will and must be served by our justice system.

I am well aware of the kinds of concerns that my hon. Friend has raised. One of my earliest meetings when I got this aspect of my ministerial portfolio was to meet the Black Solicitors Network and the Society of Asian Lawyers with my right hon. Friend the Member for Leicester, East (Keith Vaz). I told them then that the reforms will not be discriminatory; I say that again today.

When I delivered the third annual lecture to the Black Solicitors Network, I said that I was impressed that its members had come to see me straight away and that they do not mince words any more than I do. I emphasised that I was their ally in making the legal profession one that represents Britain in the 21st century, and I reiterate that today.

My hon. and learned Friend has said that she is certain that the reforms will not be discriminatory. Is she equally certain that they will not be indirectly discriminatory?

I said that it is everybody’s intention that they should not be, so let me consider that issue and see whether there is any danger. We listened at every opportunity to BME practitioners during the various consultations and we will carry on listening for as long as they want to talk to us. The Legal Services Commission has been careful to ensure that each step of the reform process has been accompanied by a regulatory impact assessment, which has included as much detail as possible to ensure that the impact on BME providers and clients was known. The LSC has a provider diversity reference group, which includes the BSN, the Society of Asian Lawyers and the Commission for Racial Equality. It has held BME-specific practitioner consultation events in London, Leicester and Birmingham, and I intend to ask the LSC to commit to a full retrospective regulatory impact assessment on the full reform programme in phase 1 so that we can see cumulatively the impact that it will have alongside the consultation on best value tendering.

Significantly for clients of BME solicitors, those solicitors are available. In total 16 per cent. of solicitors are BME, far more than the proportion of BME people in the general population. We are proud of that. There is no reason why the reforms should make any difference to the number of solicitors, nor has anybody pointed out any such reason. Some, but only some, BME-controlled firms are newer and smaller. Some are older, better-established and larger. Many BME solicitors also work in well established, major supplier firms, sometimes white-owned and controlled, sometimes mixed-owned and controlled. Those businesses offer strong opportunities for BME solicitors, as they do for others, and will continue to do so.

At the meeting that I referred to with the Black Solicitors Network, the Society of Asian Lawyers and my right hon. Friend the Member for Leicester, East, was a BME solicitor who asked whether, having merged into a firm that had—forgive me for forgetting—either six or eight partners, he needed to consider merging further to fulfil the needs of what was then the interim Carter report. The answer to that was probably no, but let us be clear that not all BME firms are small and not all BME solicitors are in BME-owned and controlled firms. There is not a uniform picture but a significant spread.

However, I do not hide from the fact that my hon. Friend the Member for Hackney, North and Stoke Newington has put her finger on the point that some aspects of our reforms may have an adverse impact on some BME firms as they are currently configured. I recognise that some BME solicitors want to work for themselves and that some BME clients come to such solicitors because of the cultural resemblance. That is inevitably the case. The core point is that proportionately more firms in some parts of the country are run by BME solicitors than by white solicitors.

Undoubtedly many young black firms run by black entrepreneurs of the kind whom we want to encourage are small, because they are new and have not had the time to grow and develop. They are concerned that the drive is in the direction of bigger firms and that they have not served the time to gain enough slots on duty rotas on a historic basis, so they will have a poorer chance of thriving under a fixed-fee scheme, which my hon. Friend hinted is likely to move towards bigger firms.

Neither the LSC nor I can give an open-ended guarantee that the security of every firm will remain exactly as it is when the change comes. For instance each firm will have to work out, like the BME practitioner to whom I referred, whether it wants to merge with similar practitioners or act with them in unofficial conglomerates that need not be as definite as a merger. However, we are considering ways to accommodate our BME justice partners who work in their own firms and want to stay there. We are looking for ways forward.

One issue to consider is how best to ensure that new firms under BME majority-owned control can access the market under best value tendering. One possibility—it is only one—is lower-value, smaller contracts for newer firms to enable them to establish themselves in the market. There could be not just great groups of contracts for big firms but perhaps another tier for smaller firms. Similarly, the LSC will consider closely how competition should be rolled out across the country, perhaps in a phased way, to ensure that firms are not locked out of their local markets for prolonged periods. As is true throughout the reform process and particularly in this sector, practitioner input will be important and welcome.

The LSC has made compulsory the provision of data by legal aid firms on the ethnicity of their staff, which will ensure that we get a better picture as we go along. The data are far better for London than outside. We are continuing efforts to ensure that all firms have robust diversity policies, because the underlying sub-text is that some black and minority ethnic solicitors feel that they cannot get through what they perceive as a glass ceiling in certain firms. That is a criticism not of the changes but of the legal world as it is. We must tackle that, and we are doing so.

Because we have the Constitutional Affairs Committee report to respond to, we are in mid-consultation on a number of the relevant matters and our conclusions must wait until we have had an opportunity to assess all the feedback. I hope that I can reassure my hon. Friend that the issues raised have been known about from the start and continue to be well understood by the Government as we proceed with the reforms.

Our proposals for legal aid are part of a wider reform agenda across the entire justice system, which now, in our new Ministry, we are better equipped than ever to take forward holistically and thoroughly. We are equipped to bring improvements to the justice system, not only for the people whom it serves but for those who work in it. I hope that my hon. Friend is reassured and can join me in inviting black and minority ethnic firms and solicitors to take an active, not an oppositional role in helping us to pursue the ideas that I have indicated are in the ether. Those ideas can ensure that, as I undertook to the Black Solicitors Network at its third annual general meeting, the proposals will not proceed any further as discriminatory proposals, whether directly or indirectly. That is certainly not our intention. I hope that she is reassured and will join me in the belief that if we turn the proposals appropriately and drive them forward in their current framework while examining the issues closely as we progress, we can have a system in which practitioners from all backgrounds can prosper and make a positive difference to the communities that they serve.

Sitting suspended.