My Lords, with the leave of the House I should like to make a Statement on the independent report of the noble Lord, Lord Carter, into the procurement of legal aid, which has been published today and copies of which have been placed in the Libraries of both Houses. A joint consultation paper on the proposals of the noble Lord has been issued simultaneously by the Department for Constitutional Affairs and the Legal Services Commission, and copies have been placed in the Libraries.

The report is the product of a year of engagement between a number of different stakeholders. Government, the Legal Services Commission, the Law Society, the Bar Council, the judiciary, individual practitioners and others, have all played a full part in the discussions that have led to the noble Lord’s recommendations. In his report, he identifies the importance of a publicly funded legal service to ensure proper access to justice for those in need of advice and representation, and for those charged with criminal offences. He rightly identifies the high quality of our legal system.

In a time of finite public resources and ever-increasing pressure on the legal system, it is vital that we review our arrangements for the provision of legal aid. For some time, under successive Governments, they have not fully been serving either the public or the clients of the system. Changing the way in which we purchase legal advice services is a key element of our desire both to reform the criminal justice system and to provide better outcomes in civil and family justice. I know from experience the difficulty in balancing all the competing factors to ensure that legal aid is fair to the vulnerable, fair to taxpayers, fair to defendants and fair for practitioners.

The noble Lord, Lord Carter, has concluded that fundamental change must be made in the way in which legal aid services are procured so that clients have access to good quality legal advice and representation; a good quality, efficient supplier base thrives and remains sustainable; taxpayers and the Government receive value for money; and the justice system is more efficient, effective and simple. He recommends a new system for the provision of criminal legal aid where the professions ensure proper quality control over their members; where lawyers are, as much as possible, paid on the basis of the completion of the case rather than for the number of hours they have worked; and where they are encouraged to be as efficient as possible by being able to compete for work on the basis of price.

The noble Lord, Lord Carter, has proposed that the criminal legal aid market should be restructured alongside his suggested timetable in the following way: April 2007 should see the introduction of a new fixed-fee scheme in police stations; it should also see changes to standard fees for magistrates’ court cases, changes to the advocates graduated fee scheme in the Crown Court and an extension of the graduated fee scheme to litigators in the Crown Court. For very high cost cases, the Legal Services Commission should introduce an enhanced quality threshold and use an increased level of in-house legal expertise and closer management to bring greater control over the individual case contracting regime. He proposes that that be achieved by the end of the financial year 2007-08 through the Legal Services Commission contracting solely with a panel of suppliers.

Panel membership would be determined through the demonstration of the appropriate level of quality as well as competition. Price competition should be introduced from 2009, with quality-assured suppliers bidding for multiple units of cases in police stations, which they would usually then take through to the magistrates' and/or the Crown Courts, depending on where the case ended. The transition to a more market-based approach comes alongside changes to the regulation of legal services, as outlined in the draft Legal Services Bill. Taken together, that will mean change for the profession: a degree of re-structuring for solicitors and barristers alike.

Those changes must be managed in a way that ensures continuing quality and choice for the public while giving the professions time and, where appropriate, support, to adjust to the new model. The noble Lord recognises the need to ensure the providers of legal services continue to serve BME communities and those in less densely populated and rural areas. He strongly acknowledges that one size does not fit all and he makes detailed proposals to ensure the continued improved provision of high-quality legal services for allthose communities. His report contains detailed recommendations that will help us devise a criminal justice system that the public expects: one that is simple, speedy and makes best use of summary justice.

On civil and family legal aid, the report provides for a more efficient, client-focused service, concentrating on meeting differing local needs. The noble Lord suggests that this will be achieved through the establishment of community legal advice centres and community legal advice networks, which is in line with the Legal Services Commission’s strategy for the community legal services. Best value tendering for the new centres and participation in the networks would begin in 2009.

New forms of contracting are expected to promote greater links between civil suppliers and, where possible, with family law suppliers, so that clusters of problems can be dealt with earlier and more effectively to avoid the risk that they multiply and lead to people falling into the social exclusion trap.

The Legal Services Commission also proposes to move to fixed and graduated fees from April 2007 for a wide variety of civil and family work and for most immigration work. This will promote and reward the most effective working by suppliers. The consultation document published alongside the noble Lord’s report contains full details.

The noble Lord, Lord Carter, estimates that if these reforms had been fully in place in 2005-06, criminal legal aid spending would have been £100 million lower, and this does not take account of the potential further savings from best-value tendering. In addition, a greater proportion of legal aid would have been spent on civil and family matters. By the end of the implementation period, because the reforms will also control unit costs far better than many elements of the current scheme, spending will be lower than it would be without the changes proposed.

I also welcome and accept the recommendation of the noble Lord, Lord Carter, for better management and control of spending, including through greater transparency and shared problem-solving between the Department for Constitutional Affairs, the Legal Services Commission, other government departments and the professions.

In conclusion, the Government strongly welcome my noble friend’s findings and we have today issued a consultation paper, which I encourage everyone to respond to. I look forward to the challenges ahead and to working with all stakeholders and the Legal Services Commission. The dedication and commitment of those commissioners and staff will be critical to success. Finally, I am immensely grateful to the noble Lord, Lord Carter, for his work. He has provided a blueprint for the future.

My Lords, I am most grateful to the noble and learned Lord the Lord Chancellor for making this Statement. Like the noble Lord, Lord Goodhart, I received it only a short time ago. It may be that the noble Lord, Lord Goodhart, reads more quickly than I do, or at least absorbs information more efficiently, but I have not had the chance to take in everything that the noble Lord, Lord Carter, said, so what I am about to say should be seen in that context.

First, will the noble and learned Lord the Lord Chancellor say a little more about how these proposals, and his response to them, fit in with the development of the legal services Bill, which is in pre-legislative review and is soon to emerge? Plainly, how the noble and learned Lord’s remarks today relate to the legal services Bill is important in developing the picture about cost efficiency and financial savings.

The second point I would like the noble and learned Lord the Lord Chancellor to reflect on aloud this morning is how he sees this new market-based approach squaring with the quality-of-service approach that he also lauded. Plainly, we all want to see legal services that are as cost efficient as possible, but it is not desirable for that to be at the cost of the quality of provision. This is not an easy matter to resolve, and I am certainly not going to pretend to your Lordships' House that I know the answer; but we have to grapple with it, as do those at the coalface deciding where the money should be spent and where it should not. I would like to see these ideas in a little more detail than they have been in the report by the noble Lord, Lord Carter. In saying that, I make no criticism of the noble Lord, because he clearly had a very wide range of issues to consider.

One of the possible consequences of the Government adopting the noble Lord’s proposals is a reduction in the number of solicitors’ firms providing legal aid, although we hope the quality of advice will rise. Has the noble and learned Lord the Lord Chancellor taken into account the likely geographical impact of this on the provision of legal service throughout the country? I can see that it is highly desirable to focus on those firms that have the appropriate expertise, but this may mean some firms will disappear altogether from quite large towns. In deciding which solicitors’ firms will receive legal aid contracts in criminal matters, will a geographical criterion also be applied by the DCA and the Legal Services Commission? In the context of magistrates’ courts, both the noble and learned Lord the Lord Chancellor and his predecessor, the noble and learned Lord, Lord Irvine, have always stressed the importance of local justice locally delivered. I respectfully suggest that it is desirable to have legal aid advice locally delivered.

One of the difficulties of fulfilling the task the noble Lord, Lord Carter, was entrusted with is that he has been looking at defence costs without knowing the number of prosecutions with which defence lawyers will be faced. That is particularly true with regard to large prosecutions. It is difficult to deal with legal aid in isolation from the prosecutorial policy of the Crown. It is no good complaining about higher defence costs if more prosecutions take place. Defence costs in criminal cases cannot be approached in total isolation from what is happening on the prosecutorial side.

A good example is the recent Jubilee Line case, about which, noble Lords will recall, your Lordships had a debate about a fortnight ago. The noble and learned Lord the Attorney-General accepted, frankly and openly, that the reason the case had gone on so long was entirely due to mistakes made by the prosecution. We will get a grip on defence costs in these more expensive cases only if we also get a grip on the way prosecutions are conducted in those cases. I am sure the noble and learned Lord understands the point very well; but when seeking to determine how to progress the Carter report, I respectfully suggest that he bear that factor in mind.

One of the most important reasons the Jubilee Line case took a long time was the use of the offence of conspiracy to defraud. That is a notoriously vague offence in criminal law. It is ill defined, and frequently gives rise to many additional evidential requirements. In the assessment of Mr Wooler, who conducted the Jubilee Line inquiry, it added about 15 more months to the case. The Law Commission, in its report on the reform of the offence of fraud, recommended that conspiracy to defraud should be abolished. I know the noble and learned Lord the Attorney-General is reluctant to accept that. We have had a debate about it in another context, and I do not intend to dilate on the topic further today. I would be most interested to know, though, and perhaps this could be done by sampling from a few court cases, just how much time the addition of the conspiracy to defraud offence has actually added to those trials. We know the answer in the Jubilee line case; but I suspect that such an analysis will produce the same evidence in other cases.

The noble and learned Lord will well rememberthe circumstances in which he commissioned the report—in the context of the public scandal about the amount of money expended in high-cost cases. Fifty per cent of defence expenditure costs in the Crown Court goes on 1 per cent of the cases held there. That, in absolute terms, amounts to over £100 million. With great respect to the author of the report, what he concludes is the least satisfactory part of it.

In paragraph 97, he suggests certain changes but admits that they would save only 5 per cent of total expenditure. He says, in paragraph 98:

“It still results”—

even after the reforms that he suggests—

“in approximately £100 million being spent on a small number of cases”.

He goes on to speculate on why that aspect of legal aid is still totally out of control. In paragraph 99, he says:

“This results partly from the established policy of each contract manager negotiating independent of what is agreed on other contracts on the same case and not being aware of the case management strategy being used by other defence teams”.

He then goes on, rather despairingly, to suggest that perhaps the only way of resolving this problem is to have an overall budget for these high-cost cases.

The noble and learned Lord’s success or failure in this matter will, as he will know, depend on the extent to which he gets to grips with high-cost cases. I suggest that, on this crucial issue, the noble Lord, Lord Carter, has taken him no further and that he will need to think again about what needs to be done. The noble Lord, Lord Carter, has suggested that there should be an overall financial limit, but this could not work unless you also had overall control of the number of prosecutions brought. How can you possibly make an overall financial limit work in high-cost cases if you do not know how many high-cost prosecutions there will be?

It seems, therefore, that the only way forward is to have very strict cost controls on each case. I am not sure how that would work for solicitors in the light of the other changes that the noble and learned Lord proposes. Indeed, we do not yet know how any of these changes will work; but, in the case of barristers, it must mean that the noble and learned Lord will have to consider whether the brief fee plus refresher system will have to be replaced by an overall fixed contracted sum, irrespective of the outcome. In other words, the risk would be shifted from the taxpayerto the Bar. I have no idea whether the noble Lord, Lord Carter, discussed this with any of the professions; or whether the noble and learned Lord himself gave evidence to the noble Lord. But I am extremely surprised not to find some analysis of that solution here, and I shall need a lot of convincing that it should be dismissed out of hand.

My Lords, the noble Lord, Lord Carter of Coles, is to be congratulated on producing a very full report in very reasonable time. Like the noble Lord, Lord Kingsland, I have not yet had an opportunity to read it, but I will do so rapidly and with considerable interest.

It is quite clear from the Statement and from brief consideration of the executive summary of the report that the report will lead to very important changes in the legal aid system. Indeed, together with the Clementi report, it will lead to fundamental changes in the legal profession, perhaps to an even greater extent than with the Access to Justice Act 1999.

We recognise that the increasing costs of legal aid have been and continue to be a real problem. We accept that civil legal aid must be cash limited and that procedures such as conditional fee agreements should be introduced, although there are aspects of that case which need to be looked at again. Like the noble Lord, Lord Kingsland, we also accept that very high-cost cases take far too great a proportion of the criminal legal aid budget and are altogether too expensive.

The report proposes that, in effect, much legal aid should be put out to tender. We do not object to that in principle, but will those granting legal aid be able adequately to take into account the quality of services? The Government have said in the Statement that they will do that, but we need ensure that it happens and to strike the right balance between quality and cheapness. What is needed here is value for money, not something cheap and nasty.

I have some concern over the proposal to place a limitation on the number of criminal cases that can be dealt with by firms as a result of client choice. Are the Government satisfied that the new system will put an end to the problems of legal aid deserts? Legal advice centres and networks can play an important part but could pose a serious threat to the availability of general legal services in the locality. A further important issue is whether the Government are prepared to ring-fence civil legal aid. It is wholly wrong that increases in criminal and immigration legal aid should mean a reduction in civil legal aid—including family legal aid—which deals with cases of the utmost importance to many claimants.

Going beyond legal aid and beyond the remit of the noble Lord, Lord Carter, will the Government commission a review into changes in court procedures which I believe are inordinately lengthy and expensive compared with those in most other countries? That would enable the same amount of money tofund legal aid for more cases. The Woolf reforms have been helpful, particularly in encouraging pre-trial settlements, but this needs to be looked at again.

Returning to the report, we shall need a full study of the proposals when we have had time to consider them. What is the Government’s timetable for implementation, and will it involve new primary legislation? If so, will that be brought in as an addition to the draft Legal Services Bill?

My Lords, I am grateful for the measured responses of the noble Lords, Lord Kingsland and Lord Goodhart. Perhaps I may say at the outset that throughout my Statement I should have referred to my noble friend Lord Carter of Coles rather than Lord Carter. I apologise for the discourtesy. I shall deal with the specific points raised.

The noble Lord, Lord Kingsland, asked how this would fit in with the Legal Services Bill. The proposals are freestanding in the sense that they are not dependent on that Bill. However, alternative business structures that the Legal Services Bill would allow—for example, partnerships between barristers or partnerships between barristers and solicitors—will enable them to bid more effectively once competitive tendering comes in. The noble Lord went on to emphasise, entirely correctly in my view, the issue of quality, and I made it clear in the Statement that proper arrangements must be in place to deal with the question of quality. I refer noble Lords to pages 10 and 14 of the report setting out the specific proposals made by my noble friend Lord Carter of Coles in relation to quality. In practice, what he is proposing is that the monitoring and judging of quality be handed over to the Law Society and the Bar Council respectively and that they do it on the basis of peer review. That will take some time to introduce, but I believe it to be a sensible proposal: those who know should judge the quality of those who provide, and only those who satisfy the relevant quality standards can then be in a position to bid for legal aid work.

The next point raised by the noble Lord, Lord Kingsland, is the worry about geographical effect, another issue that the noble Lord, Lord Carter of Coles, addresses. What happens if you live in Cumbria and you are serving a geographically difficult market? He makes the point, and we accept it, that one size does not fit all. It will cost more to provide legal services in Cumbria than it might in some inner-city urban areas.

The noble Lord, Lord Kingsland, then made the point that many of the difficulties in long cases come not from procurement of defence services but in how the prosecution is conducted. Again, we wholly agree. The report does not in any way limit us in addressing the issue of, for example, the very high-cost case, in terms of demand as opposed to procurement of defence services. However, I have absolutely no doubt that the way in which we procure defence services will have a significant impact on the length of some civil and criminal cases. The specific difficulty in the very high-cost case is the lack of predictability found in the smaller case. We need a system whereby a fair estimate is made of what should be paid by reference to the length of the case. Once that length is exceeded then the case should become much less financially productive for those engaged in it. In practice, that is what my noble friend Lord Carter of Coles is proposing.

The noble Lord, Lord Kingsland, continues in that vein by saying that he is not satisfied with the proposals of my noble friend Lord Carter of Coles on very high-cost cases. I would ask him to look in detail at paragraphs 4.17 to 4.23, the relevant detailed recommendations. What it amounts to is that only those who are capable of doing the long cases can bid. There should be a rigorous tendering process. There should be involvement of the prosecution, the defence and the judge in identifying how long the case should last. It should be value for money based only on that. The noble Lord asks whether consideration was given to brief fee and limited number of days. Yes, it was. This is the conclusion that my noble friend Lord Carter of Coles came to. I would therefore ask the noble Lord, Lord Kingsland, to consider in detail what he says about it.

I think that I have dealt with all the points made by the noble Lord, Lord Kingsland. The noble Lord, Lord Goodhart, made the point on quality that I hope I answered in response to the noble Lord,Lord Kingsland. The noble Lord, Lord Goodhart, makes the point that he is anxious about limiting the number of criminal cases that an individual solicitor or barrister can take. My noble friend Lord Carter of Coles made it clear that client choice is a vital part of our system. But if we want best value tendering, it has to be, has it not, on the basis of tendering for a number of cases and winning that tender? So, a balance has to be struck between client choice and rewarding the lawyer for efficiency by allowing him to tender on price.

I cannot guarantee that the proposal deals completely with legal aid deserts, but in the long run it will make more money available, particularly for civil and family cases. It is also clearly focused on the proposition, as I said in answer to the noble Lord, Lord Kingsland, that one size does not fit all. It will address the issue. I cannot guarantee that it will do so everywhere but I believe that it will make real progress.

I say no to ring-fencing the civil legal aid budget. I think that it is a bad idea because it reduces flexibility. It means that we could not shift funds from one to the other when that would be appropriate.

The noble Lord, Lord Goodhart, then raised a point on court procedures with which I completely agree. The now implemented proposals of the noble and learned Lord, Lord Woolf, have had a significant effect on civil litigation. I believe that we can do that in criminal cases as well, both in the magistrates' court and in the Crown Court. The judges have said time and again that the day of the six-month case or above is over; those cases should be shorter. The judges are keen to see implemented in practice in individual cases—for example, in a criminal case—the identification of how long the defence and the prosecution have for individual elements of the case. That promotes justice, in my view, rather than inhibits it. So I entirely agree with what the noble Lord says about the need for court procedures to make the length of cases shorter.

Finally, the noble Lord asked whether implementation will require primary legislation. It will not. The Legal Services Bill will go ahead but none of our proposals requires primary legislation. We have published today a consultation document, which is also in the Library. The consultation period ends in October 2006. The report gives a timescale, to which I have referred from time to time. Broadly, it is that by April 2007 greater numbers of fixed fees will have been introduced, and that by April 2009 the best value tendering will have begun and the quality assurance arrangements will be in place. That is what we propose; it is on that that we are consulting, and we should get on with it.

My Lords, does my noble and learned friend agree that it is difficult, if not impossible, to forecast price changes with accuracy? They may well alter beyond anything capable of being foreseen. Therefore, is it envisaged that solicitors so affected will be able to make suitable representations to the legal aid authorities? I readily confess that I have not had an opportunity to see the report.

My Lords, my noble friend is absolutely right that forecasting is extremely difficult. Opportunities will be available for representations to be made. However, one of the themes that comes out from the report is that forecasting of demand can be a great deal better than it has been in the past. Some of the problems that historically exist with legal aid have been because the Department for Constitutional Affairs and the Legal Services Commission have got their forecasts completely wrong. We need to improve that dramatically.

My Lords, will the noble and learned Lord accept that it is impossible for us to give proper criticism of these proposals today? Obviously there is to be a consultation period, but no primary legislation is envisaged. Following that period, how are we to discuss and contribute towards any changes that may emerge to the proposals now before us?

My Lords, of course I accept what the noble Lord says. More time is required to look at the documents in detail, but it is right that I make a Statement to the House on the publication of the document, so that I can explain the position. Because primary legislation is not required, the way in which input can come is through responding to the consultation. If the usual channels take the view that the subject is appropriate for a further debate in this House, no doubt they will make that available. That is how we normally operate.

My Lords, my noble and learned friend referred to the view of the noble Lord, Lord Carter of Coles, that £100 million would have been saved in one year, plus the value-for-money savings arising out of tendering. Do the Government accept those figures? Do they believe that that level of economy would be gained arising out of these changes? In relation to the 50 per cent on 1 per cent to which the noble Lord, Lord Kingsland, referred, will those statistics stay the same or change?

My Lords, the£100 million to which my noble friend Lord Carter of Coles referred was putting aside tendering; it was on the basis of fixed fees and greater efficiencies, with additional savings in relation to tendering. Although we might quibble over the edges, we accept in principle that such savings could be made. In answer to the second question about the 50 per cent on 1 per cent of cases, yes—there needs to be a dramatic shift in that statistic.

My Lords, I am relieved to hear what the noble and learned Lord has had to say about value and quality so far as legal aid is concerned. I have been closely associated with three major group actions: the Gulf War action, the sheep farmers’ action, and the measles, mumps and rubella action. Something like £9 million of taxpayers’ money has been thrown down the drain on those group actions because, as I ascertained from the Legal Services Commission, no spot checks were done on work on the cases. There was no assessment of the competence of the lawyers to deal with the cases, and there seems to have been little follow-up for four or five years about whether the cases were going to go anywhere anyway.

I do not know whether the noble and learned Lord recalls, but in the time of his noble and learned friend Lord Irvine, I had an Unstarred Question on this matter, and his noble and learned friend arranged for me to go to the Legal Services Commission. I am frankly appalled at the waste of taxpayers’ money and the distress that has been caused to the litigants by the failure of these cases. They should not have been run at all if they were not going to succeed.

My Lords, I am very conscious of the sorts of issue that the noble Countess raises. It is not just a problem for those who end up receiving poor advice, which sometimes people do. It is also about the fact that this limits the budget for other people who have legitimate claims. My noble friend Lord Carter of Coles recognises, quite separately from any of the tendering or economic changes, that the quality assurance proposal that he made will itself have an effect on the providers’ market, because it will reveal some people who should not be able to tender for legal aid work.

My Lords, since there seem to be no further Back-Bench questions, I want to raise one point on procedure. It seems to me that cumulatively the secondary legislation that will implement the report will be enormously important, and it should be taken together. It is highly desirable that at some point when the secondary legislation is in draft we should have the opportunity to see and debate it, if possible in this Chamber, and certainly in the Moses Room. The body of new secondary legislation that will be brought forward will have a more serious impact than many proposals in primary legislation.

My Lords, it obviously will not all come at once. It will come gradually over a period of time; for example, a new graduated fee scheme for Crown Court advocacy, or a new graduated fee scheme for solicitors in the Crown Court. I will take away the point made by the noble Lord, because underlying his point he is asking me to think of a way whereby there could be a proper debate about the arrangements. That seems to be sensible; although I say that with some degree of trepidation because of the usual channels, but in principle what he is saying sounds sensible.