I am today announcing the outcome of the recent consultation on Civil Court Fees.
The consultation paper published on 10 December 2008 proposed a package of fee increases designed to raise an additional £38 million a year in fee income. The consultation closed on 4 March 2009. Fifty-two responses were received from law professionals, local authorities, the judiciary, individuals and other stakeholder bodies.
After careful consideration of these, my right hon. Friend the Secretary of State for Justice and Lord Chancellor has decided to proceed with the increases, subject to a number of adjustments to reflect particular points raised by respondents.
These changes to the charging regime in the civil courts are to be introduced in order to target taxpayers’ money more effectively while continuing to help those in financial difficulty.
They are being introduced so that fees reflect the true cost of the work done by the courts—currently subsidised by the taxpayer and fee-payers in other types of cases.
This is in the best interests of people on low incomes and of taxpayers. Those who cannot afford to pay a court fee deserve the taxpayer’s help. But court fees need to reflect the true cost of court proceedings. Together with a system that waives or reduces fees for those who cannot afford them, that is the right balance to ensure fair access to justice, fairness to the taxpayer and proper funding of courts’ running costs now and in the future.
There are changes to 30 types of civil court fee, out of the 200-plus fees in operation. Most of the changes relate to applications to enforce judgments that have already been made in debt claims between private parties, and which are recoverable from defaulters who can but will not pay their debts.
For example, the fee for sending a bailiff to collect a debt or seize the debtor’s goods to pay it rises to £100 (currently there are two fees of £35 and £55). The creditor pays the fee but it is then automatically added to the debt.
Fees are waived automatically for people on means-tested benefits, such as income support or on low incomes, for example; £13,000 for a single person with no children and £29,720 for a couple with four children.
People who do not meet either of those criteria can still apply to the court for a full or partial fee waiver based on an assessment of their disposable income, that is, taking account of rent and other key household expenditure.
The scheme granted £23 million in full or part waivers in over 160,000 civil or family court cases in the year to October 2008 alone.
The civil and family courts are principally concerned with resolving private disputes between individuals or companies. These are not criminal cases. The Government do not believe that it is right for the taxpayer at large to continue to provide a general untargeted subsidy for resolution of these disputes in courts.
However, there currently remains a large general subsidy from the taxpayer in some areas of court business, from which all court users in those areas benefit regardless of their ability to pay. For example, magistrates court civil fees currently cover only 55 per cent. of the cost of doing the work. The changes made will mean that fees in this area of business will in future reflect the full cost.
At the moment, fees for enforcement processes do not reflect the full cost of those processes. This means that they are effectively subsidised by the fees paid in cases where enforcement is not required. This is unfair on the creditors and debtors in those cases. It is therefore right, particularly in the current economic climate, that enforcement fees should be set to reflect the true cost.
While we are keen to ensure that those who can but will not pay are pursued effectively through the courts, we are keen to help people with debt problems to avoid court in the first place, especially in the current economic climate.
The legal process provides ample opportunity, both before and during court proceedings, for debtors to come to payment agreements with those to whom they owe money. The Government have introduced a number of initiatives to encourage and facilitate this, and in particular to ensure that debtors receive timely information about the availability of free debt and legal advice. These include:
a new requirement, introduced this April, that any business wanting to take an individual debtor to court must first write to them, including details about how to find free debt advice;
all county courts now display posters giving details of free advice providers;
an advice desk in each of the 154 courts that account for the majority of possession claims;
HM Courts Service’s online possession claim system now includes details for all defendants on where they can find local financial advice;
a Housing Arrears Pre-Action Scheme, currently at pilot stage, involves courts inviting tenants with rent arrears to meet with local advice providers at the court before a claim is issued;
the judiciary issued guidance in November 2008 on ensuring that lenders demonstrate they have taken all the steps expected to resolve mortgage arrears before they take the matter to court.
If taken to court, defendants can complete an admission form and make a proposal for payment; if the claimant refuses to accept the proposal, the court will then step in and make an assessment for repayment based on the debtor’s income and expenditure. If ultimately enforcement action is required, it is right that debtors who can, but will not, pay face the full cost of their decision to let things get that far.
Equally, creditors should be discouraged from taking enforcement measures against vulnerable debtors who genuinely cannot afford to pay. Charging the true full cost for enforcement processes—for example, warrants or charging orders—will encourage creditors to consider more carefully whether they are throwing good money after bad. These fee changes are therefore a further measure to help those in financial difficulties by discouraging inappropriate or premature enforcement process against them.
In the light of the responses to consultation, my right hon. Friend has decided to make a number of changes to the proposals on which we consulted. The details of all these are set out in the two explanatory memoranda accompanying the statutory instruments. There are two main changes:
First, the Lord Chancellor has decided not to align the fee payable for a detailed assessment of costs in a legally aided case with the banded fees payable in private cases. Respondents argued that this was inappropriate because legal aid assessments were simpler and significantly less time-consuming for the courts than other assessments.
Secondly, we have listened to concerns expressed about the proposal to replace the three existing fees payable in general civil proceedings in magistrates courts by a single up-front fee. Responses suggested that a significant proportion of these cases never required a contested hearing, and should not have to pay a fee that reflected the costs incurred by those that did. We are therefore introducing a two-stage structure, with a single application fee equal to the existing three fees, and a second fee payable only once there is a contested hearing.
Three statutory instruments containing the new civil, family and magistrates court fees were laid before Parliament today and will come into effect on 13 July 2009. A report summarising the responses to the consultation paper in more detail is also being published today.