HC Deb 28 March 1960 vol 620 cc1066-96

Order for consideration, as amended (in Standing Committee), read.

8.45 p.m.

Sir Lynn Ungoed-Thomas (Leicester, North-East)

I beg to move, That the Bill be re-committed to a committee of the whole House in respect of the Amendment to Clause 1, page 2, line 12, standing on the Notice Paper in the name of Sir Lynn Ungoed-Thomas, and the new Clause (Ascertainment of maximum contribution), standing on the Notice Paper in the name of Mr. Mitchison. leaving out of the original Motion: and the Amendment to Clause 1, page 2, line 16. Subject to that omission, I move the re-committal Motion.

The Attorney-General (Sir Reginald Manningham-Buller)

On a point of order. I thought that the Amendment also left out the new Clause—Ascertainment of maximum contribution.

Mr. Deputy-Speaker (Major Sir William Anstruther-Gray)

I did not understand it to leave out that. I understood the hon. and learned Member to include the new Clause.

Sir L. Ungoed-Thomas

It is as I said originally and the new Clause stands in.

Mr. William Ross (Kilmarnock)

There is in my name on the Notice Paper an Amendment to the recommittal Motion, which is at the end to add: and in respect of the Amendment to Clause 2. page 3, line 14, and the new Clause (Amendment of Third Schedule to Legal Aid Act in Scotland), standing on the Notice Paper in the name of Mr. William Ross. Do you propose to call that, Sir.

Mr. Deputy-Speaker

That has not been selected.

Question put and agreed to.

Bill immediately considered in Committee.

[Major Sir WILLIAM ANSTRUTHER-GRAY in the Chair]


Sir L. Ungoed-Thomas

I beg to move, in page 2, line 12, at the end to insert "one-third of".

The object of this Amendment is to do something to help the person with small savings.

The difficulty which we have felt and about which we have pressed in Committee is that while the Bill gives substantial relief to persons who are dependent on income, it does comparatively little for those who are dependent on small savings. It is a little puzzling to know why the Government have been so niggardly in dealing with that aspect of the Bill. One would have thought that they were particularly concerned about the person with a small amount of capital or savings, but the Government have done little to help that person.

This proposal is a modest one. All it proposes is that instead of the whole of what the earlier Act calls "disposable capital" being taken as a contribution towards legal aid, the amount that should be taken should be a proportion of that disposable capital, namely, one-third. It is the same proportion of disposable capital as the Bill proposes with regard to income.

The disposable capital involved here is not a substantial amount. As we know, the first £125 is not taken towards a contribution to legal aid. If there is disposable capital of over £500, generally speaking it is outside the legal aid scheme. We are concerned with the difference between £125 and £500, namely, £375, and what we propose is that, instead of the whole of that £375 being taken as a contribution towards legal aid, it should be limited to one-third of that amount. That is the maximum amount involved in the Amendment, the difference between £375 and one-third of £375.

In the Legal Aid Scheme, contributions are made according to means, whether of income or capital. There is no contribution below a certain limit, and above a certain limit a person falls outside the scheme. The general principle of the Bill, which we accept for the purpose of the Amendment, is that we go back to 1949 values. Unfortunately, the Government have refused to go back to the values at the time of the Rushcliffe Report, the 1946 values, although we have pressed them to do so. They have refused to do so despite the Rushcliffe Report and the advice of their own Advisory Committee. However, even accepting the underlying principle of the Bill, it is unfair in its treatment of people with small savings.

Let us consider the way in which the Government treat capital compared with income. In accordance with the Government's principle of going back to 1949 values, this is what the Bill does with regard to income, and contributions from income. It raises from £156 to £250 the limit below which no contribution has to be made. It raises the limit above which income is excluded from the scheme. It raises the limit from £420 to £700 disposable income.

The Bill deals with capital differently. It raises the limit below which there is no contribution from capital from £75 to £125, but it does not raise, as it does in the case of income, the limit above which a person with a greater capital falls outside the scheme. Now, as in 1949, a person with a disposable capital of more than £500 falls outside the scheme. In Committee we pressed for the £500 to be raised to the corresponding 1949 value of £875 and we were defeated. This is the first way in which the Bill discriminates against the person with small savings. It discriminates against the person with small savings as contrasted with the person with income.

The only argument which has been put up against raising the £500 to £875 was that it would mean that lawyers practising under the scheme would get less fees than they would from those who were outside the scheme. That was an argument which was treated by both sides, I am glad to say, as one which did not merit serious consideration. The Solicitor-General, to do him justice, said it with considerable personal reservation.

In the course of his speech, however, the hon. and learned Gentleman indicated, so I understood, that he would be sympathetic to a Measure which would deal rather more justly with a person with small savings. He said in Committee: If I thought for a moment that this"— that was, our Amendment to raise the £500 to £875— would result in a denial of justice, I should feel the force of the arguments used on me very much more strongly. Later, the hon. and learned Gentleman said: The point of these Amendments is not to ensure that a larger proportion of a man's capital is left to him."—[OFFICIAL REPORT, Standing Committee A. 10th March, 1960; c. 38.] That seemed to indicate that if we proposed that a larger proportion of a man's capital were left to him, there would be susbtance and justice in the proposal that would merit the serious consideration of the Government. That is the very proposal which we now put forward.

I agree that a discrimination was made in the 1949 Act as between capital and income. That Act provides that A person's contribution to the legal aid fund in respect of any proceedings may include— (a) a contribution in respect of income not greater than half the amount (if any) by which his disposable income exceeds … a certain amount, and (b) a contribution in respect of capital not greater than the amount (if any) by which his disposable capital exceeds … a certain amount. It takes a proportion of the income but the whole of the capital. What it says, however, is that the contribution to the legal aid fund may include a contribution in respect of capital". What has happened in the administration of the scheme is not simply to take a contribution in respect of capital over a certain amount, but to take the whole of the capital over that amount. It is that application of the 1949 Act which seems to us on this side, and, I believe, to a considerable number of hon. Members on the Government side, grossly unfair. So the maximum amount of disposable income that can be taken under the Bill is one-half of the disposable income. The amount of capital that can be taken is the whole of the disposable capital.

There was an anomaly in the application of the 1949 Act even before the Bill was brought before the House. The difference in treatment is, however, accentuated by the Bill. Whilst, before the Bill, the amount of income which could be taken was limited to one-half of the disposable income, under the Bill the amount is limited to one-third of the disposable income. Nevertheless, at the same time, the whole of the amount of capital is taken under the Bill and there is no reduction in the proportion of the disposable capital which can be taken.

9.0 p.m.

I know that disregards are involved. There are disregards in respect of income and in respect of capital. I have seen the Regulations which come into operation today and deal with the question of disregards for dependants in respect of disposable capital. In cases of claims not involving litigation, as I understand it, no deduction, no disregard, no allowance, is made at all in respect of dependants; although we have disregards for allowances in respect of dependants in the case of income and in respect of dependants for capital in cases involving litigation. I do not know whether I have misunderstood the Regulations, but that appears to me to be the result.

If I am right, it means that we are taking yet a further smack at the person with small savings, because in the case of non-litigious work a person with small savings "is treated differently—and more hardly—from a person with income, or a person with capital when he goes into litigation. I shall be glad if the Solicitor-General will enlighten me about that.

Let me illustrate how this works out in practice. Let us take first the position of income. As the Attorney-General pointed out during the Second Reading debate, there are now reasonably substantial sums of income still qualifying for assistance under the Legal Aid Scheme. A single person with a gross income of up to £1,180 qualifies. A married person with three children and a gross income of up to £1,625 qualifies. But when we come to assess what is the contribution of these people towards legal aid, we first take into consideration certain disregards, such as allowances for dependants which I have mentioned, and so on. Then we leave the first £250 untouched and then the maximum contribution which may be made is one-third of the amount which is left, that is, one-third of the disposable income after making the deductions or disregards and after taking account of the first £250. During the Second Reading debate, by way of illustration, the Attorney-General took the example of a married person with three children and an income of £1,500 a year who made a maximum contribution of £123. Let us compare that result. Let us take the position of the disposable capital. If a person has disposable capital, after taking account of certain disregards in the same way as with income—that is everything over £125—all that disposable capital goes towards legal aid in the form of a contribution. Whether the amount is £200 or up to the maximum enabling such a person to remain within the scheme at all—which is £500—the whole lot goes towards legal aid.

Such a person may even be in receipt of National Assistance. He may not even have the capital up to the National Assistance limit, because in the case of National Assistance—we shall deal with this matter in more detail when we discuss a later Amendment—there are various disregards, which are not disregarded under the Legal Aid Scheme. So a person may be in receipt of National Assistance and yet have to make a contribution of up to the £500 limit towards the Legal Aid Scheme. According to the way I have worked this out, a married person with three children would pay more in contributions towards the Legal Aid Scheme than a person with an income of £1,500. That simply does not appear to us to be just. It appears to be quite untenable to mulct persons with these small savings because they are called capital, of a greater amount than a person with a far larger income—an income of £1,500 a year—when the person with small savings may be on National Assistance.

I referred in Committee to a case mentioned on the Second Reading of the Bill by the hon. and learned Member for Warwick and Leamington (Mr. Hobson) —a most pathetic case—of a person who died during an operation in a hospital. Apparently the only asset that this person left was a policy of life insurance for £800. He left a widow with two boys, and the widow had no income of any description. Therefore, as the hon. and learned Member told the House, the widow could be given no assistance at all under the Legal Aid Scheme because she had capital above the £500 limit.

The Government refused to raise the limit as we proposed which would have enabled that widow to come within the scheme. Suppose she had capital of £500, disposable capital of over £125, would be completely taken, subject in the case of litigation to certain allowances for the children. I think that the allowance is £60 to £75 per child under the new Regulations if there is litigation, but there is no allowance of that kind if there is no litigation. Then the whole of that capital, after the disregards, will be taken. Why should the whole of that capital be taken, whereas if it were disposable income of, say, £800 a year, very much greater than her capital, the amount to be taken would be limited to one-third of the income? It seems to us entirely unreasonable.

The kind of reason given for it is that small capital savings of this kind are intended to be a nest egg against contingencies—apparently, against precisely this kind of thing. I agree that if substantial sums of capital are involved it is only right that they should be drawn on for litigation, but that is not this kind of case. We are dealing with a case where the capital will be disregarded for the purposes of assessing the National Assistance which would be provided, yet we say that, although that person is on National Assistance, the whole of that person's disposable capital should be taken for the purpose of legal aid, subject to the allowances and disregards which I have mentioned.

The Rushcliffe Report dealt with this matter and with the principle which appears to me to be unexceptional. It says: The underlying principle should be that while no one should be expected to make any payment if it would have the effect of materially diminishing an already exiguous income, people with substantial sums of capital must in general be prepared to pay their own law charges. That seems a perfectly reasonable principle and the Rushcliffe Report deals with it in reference to a small tarder, but here we have a case which is not even that of a small trader. We have a case within the knowledge of the hon. and learned Member for Warwick and Leamington of a widow without any income at all, yet nevertheless the whole disposable capital is taken. That seems untenable.

We have people almost on the margin of subsistence and the capital is itself a very valuable source of income. The sums involved, producing £500 or something like 10s. a week, or £375 or something like 7s. a week, are small savings and the income from them makes a very valuable contribution to the home. It is these people who have small savings with whom we are concerned. Once we get to those beyond the £500 limit generally speaking they are outside the Measure altogether.

All we ask is that these people should not be deprived of their small savings. They have not frittered their savings away and they should not be taken for the purposes of litigation, except the £125 minimum. All we ask is that these people with small savings should be treated in the same way as those who, perhaps, are substantially better off.

The Solicitor-General (Sir Jocelyn Simon)

As the hon. and learned Member for Leicester, North-East (Sir L. Ungoed Thomas) pointed out, the effect of this Amendment is to reduce the maximum contribution from capital to one-third the amount by which the disposable capital exceeds £125 instead of the whole of the excess capital above £125.

As he pointed out, so far as income is concerned, the contribution of one-third of the excess over the new limit provides a sliding scale. The reason for that is that from the very inception of this scheme it has been recognised that a person's day-to-day commitments go up with his income and that it is impossible to require a contribution from income which would entirely alter his way of living. The question raised by this Amendment is whether the same consideration applies to capital and whether it is relevant. On the face of it, of course it is not.

The distinction goes back to the very inception of this scheme in the Rushcliffe Committee's Report. That was a Committee of outstanding distinction, on which my right hon. and learned Friend the Attorney-General himself served. The hon. and learned Member quoted a passage from that Report, but in paragraph 151 the Committee said: In a scheme of this kind we feel that capital assets stand on a different footing and must be treated separately. That is, separately from income. The Report went on: We think it right to take a reasonably generous view of the amount of income a man should have before being expected to pay for legal expenses. We feel that, subject to the safeguarding of a small "nest egg," a man involved in litigation can properly be expected to use his capital before requiring public aid. There are, however, two rather different types of cases to be considered. In paragraph 152, the Committee goes on to say: In the ordinary case of the man who in addition to an earned income on which he supports himself has a small amount of capital, we think that the rule should be that capital in excess of £25 in the case of a single man and £50 in the case of a married man should be regarded as available to defray costs incurred. 9.15 p.m.

In the first place, we have the argument that the requirement in respect of income above a certain figure should not apply to capital, and, in addition, one has that distinction recognised by the Rushcliffe Committee. Indeed, that Committee recommended a nest egg of only £25 for a single man and £50 for a married man.

It does not stand only on Rushcliffe. When the Report was implemented, under the Legal Aid (Assessment of Resources) Regulations, 1950, made under the 1949 Act, there was a distinction between capital and income, and the nest-egg there was £75 for a single man and £150 for a married man. The whole sum above those figures was liable in contribution.

The hon. and learned Gentleman says that that has been administered rigidly and the whole of the excess has been taken. With very great respect, that is not so. The National Assistance Board has shown a wise flexibility, and it certainly does not insist on taking in contribution the whole of the excess, if it would cause real hardship to do so.

Sir L. Ungoed-Thomas rose

The Solicitor-General

I think the hon. and learned Gentleman may find that I shall deal with his remaining doubts as I continue my speech.

Thus, we have the general principle, the view expressed by the Rushcliffe Committee, and what was provided in the original Act and Regulations. One comes now to the Lord Chancellor's Advisory Committee which advised last year on the Financial Provisions of the Legal Aid and Advice Act, 1949, and the Legal Aid (Assessment of Resources) Regulations, 1950. This Committee also, looking at this matter, recognised the fundamental difference between income and capital. In paragraph 8 of its Report, it said: We do not think that the same considerations apply under the Legal Aid Scheme as apply for national assistance. Capital is accumulated, as the Rushcliffe Committee recognised, as a 'nest egg' for dealing with emergencies, and legal proceedings if undertaken in good faith are emergencies for which capital should be used. But we think that some regard has to be had to the decline in money values and to the desirability of encouraging people to save. We therefore recommend that the Act should be amended to provide for no contribution from capital below £125. Clause 1 (2, b) of the Bill provides for an increase in the nest egg from £75 to £125. The hon. and learned Gentleman says that all he asks us to do is to go back to 1949 values, and we have refused to go back to 1947 values. The Rushcliffe Committee, of course, recommended £25 for the single man. We are enacting a provision for £125 for the single man. This is five times the amount recommended by the Rushcliffe Committee. Therefore, if that is the test, we have more than taken account of any fall in the value of money. There has been a considerable increase in real terms.

The matter does not rest there. The Advisory Committee also recommended an increase in the nest egg where the applicant has dependants. Up to now, following the Rushcliffe Committee's recommendations, there has been only one further allowance of £75 for a married person irrespective of the number of children and other dependants he might have. In paragraph 14 the Advisory Committee recommended that there should be further allowances of £50 in respect of a child or second dependant and £25 for each dependant above two. My noble and learned friend the Lord Chancellor intends to implement that recommendation when he shortly amends the Assessment of Resources Regulations. The nest egg for a married couple with two children will be £275 instead of the present £150, over five times the amount recommended by the Rushcliffe Committee.

Again, the matter does not rest there, because that nest egg is disposable, not gross, capital. Besides the allowance for dependants to which I have referred, there are many capital resources which are ignored—household furniture and effects, for example, a television set, obviously articles of personal clothing and obviously personal tools and equipment for trade. But the value of a dwelling house owned and occupied by the applicant is ignored up to the first £2,000 and only one-half of the equity of redemption over £2,000 is taken into account.

My noble and learned Friend has in mind to amend this provision so as to allow the whole of the first £3,000 of the house's value instead of the first £2,000. It is therefore unreal for the hon. and learned Member to talk about taking the last of a person's small savings when it is considered that the disregard in the case of a man with a dwelling house is at present £2,000 which will go up to £3,000.

The Board, in addition, has a wide discretionary power to ignore capital in special circumstances, and it exercises that power. The most usual circumstance in which it exercises that discretion is in the case of someone with a low disposable income and some disposable capital. That covers the sort of case to which the hon. and learned Member referred of someone with some small capital but who is on National Assistance—in other words, having no income. It is simply not true that the National Assistance Board in those circumstances insists on taking the whole of the capital. On the contrary, as a matter of practice, it allows a further £75 where the disposable income is less than the present free income limit of £156 a year. After the Bill, when the free income limit goes up to £250, it will allow a further £125 free capital where income is below that figure.

Again, above the free income limit the special allowance is reduced pound for pound with rising income. The effect will be that someone with a disposable income of £250 will get a further £125 capital allowance, and someone with a disposable income of £350 will get a further £25 capital allowance. Again, the hon. and learned Gentleman said that if the capital falls outside the limit of £500 he will not get legal aid. That is simply not true, as we found in Committee. It is purely a discretionary limit for the National Assistance Board to apply.

Let me give a specimen case so that the Committee will see how it works out. Take a single person with two children.

Sir L. Ungoed-Thomas

The hon. and learned Gentleman has just made a statement about the amount which is discretionary over the £500. Of course, as the Solicitor-General knows very well, what the Advisory Committee said in that special Report which it was asked to give was that … the Committees grant legal aid where disposable capital is larger than £500 if in their view the cost of the proceedings will be greater than the maximum contribution which the applicant would pay if he got legal aid. It is in that case and in that case only. It is not true in general application. There is not a general discretion over £500. It is so simply where the cost of litigation exceeds the amount the applicant would have got.

The Solicitor-General

We discussed this very fully in Committee, and the way that the £500 works out is to enable the area committees to refuse legal aid where the whole of the costs will be covered by the contribution.

However, that is not immediately relevant to what we were discussing, and I was going to give a specimen case. I am told that I said a single person with two children. Perhaps I had better say, one married person with two children with a gross income of £750, and £21 family allowance, a total of £771. The maximum contribution from income will now be £21 10s. If there were capital in that case, the applicant would receive £125 personal allowance, £75 for the first child and £50 for the second. Because the disposable income figure qualifies that applicant for the further special allowance which I have just referred to, a further £60 10s. would be allowed. No contribution from capital would in those circumstances be required unless his capital were more than £310 10s., and that is, in addition, after disregarding the value of his dwelling-house.

In those circumstances, it is really unreal for the hon. and learned Gentleman to speak as if the scheme were framed so as to screw the last penny of capital out of the small saver. In the end it really comes to this, that quite different considerations apply to the treatment of capital under the National Assistance scheme and under this scheme. In the National Assistance scheme it is frequently a permanent or semi-permanent situation, and, as I ventured to point out in Committee, it is reasonable to expect then that capital should be used in small amounts to eke out income, and it is unreasonable to expect it to be completely expended before National Assistance becomes available; but litigation is quite different.

Litigation is unlikely, one hopes, to be recurrent. This, as the Advisory Committee itself said, is an emergency, of exactly the type for which capital is accumulated. Under the National Assistance scheme it is to the saving of the taxpayer if capital is taken in lieu of assistance, but in litigation the litigant and not the taxpayer is going to get something back at the end of the litigation and he does in fact get it back in 85 per cent. of the cases in the Queen's Bench Division.

It really comes to this: is it reasonable to tax somebody whose means may be very much less than the means of the sort of person whom I have been describing, with the disregards, in order to let somebody go into litigation with part of the risk insured, he getting the whole of the benefit of that litigation? It seems to me unfair to the small taxpayer to do that, and for that reason I ask the Committee to resist the Amendment.

9.30 p.m.

Mr. Graham Page (Crosby)

I did not have the privilege of serving on the Standing Committee, though I had hoped to do so and had collected a number of instances of hardship resulting from applicants for legal aid having what I would call a small amount of capital. I do not propose to detain the Committee by giving those examples now beyond saying that they mainly consisted of retirement pensioners in rented houses. I am quite aware of the disregard for those who own a house, but so frequently one finds a couple of old-age pensioners living merely on their pensions with something in excess of £500 savings and living in a rented house and, therefore, not getting any disregard for their dwelling.

Whatever figures my hon. and learned Friend the Solicitor-General may have put to the Committee on this occasion— and he has rather blinded some of us with those figures—there are instances of real hardship to pensioners. There may not be hardship to those entitled to the disregards—married couples with children living in their own house. It may work out quite well for them, but it does not work out well for the pensioner who is involved in litigation when he compares his situation with that of a man with an income of £1,500 who because he has children and has his own house gets the disregards and the benefit of legal aid. The couple with a retirement pension and with a little over £500 are refused the legal aid certificate. That cannot be right.

The principle on which the House of Commons decided, as my hon. and learned Friend said, was that those of substantial income should be given legal aid because a person sets his commitments according to his income and when any emergency arises and he finds himself involved in litigation it is perhaps unfair to ask him to set aside those commitments and devote his income to that litigation. Exactly the same argument applies to the retirement pensioners. They have set aside a part of capital and we know perfectly well that if they go on living they will use that capital as their income. My hon. and learned Friend mentioned the decline in money value and, of course, any reasonable retirement pensioner looks upon that capital as a nest-egg—as income, not capital. Retirement pensioners know that they have to draw on it in due course. We must recognise that and recognise that these savings are needed for use as income as these people get on in age.

Whatever these rules may be that my hon. and learned Friend has been putting before the Committee, those who practise and have examples before them of applications which have been refused know that there is hardship in these cases. I cannot help but support the hon. and learned Member for Leicester, North-East (Sir L. Ungoed-Thomas) in his plea in this case.

Mr. F. H. Hayman (Falmouth and Camborne)

After listening to the debate, I begin to wonder whether anybody benefits at all from legal aid. A case came to my notice not long ago of a disabled person with a very low income who had received notice to quit from his rented house. Not only was the notice served on him but it was served separately on his wife. He received legal aid. They were assessed by the National Assistance Board and in the end it came out—though I speak entirely from memory—that the two could be assessed to pay up to £36 each.

The case came before the learned judge in the county court and he deferred consideration of it for a period. A sum of that kind to a comparatively elderly, severely disabled person and his wife was frightening indeed to them, as it was to me. As a result of inquiries, I gathered that these costs are taxed by a taxing master at the maximum which could legally be charged whereas, if the case went before an ordinary solicitor, he would probably assess them in his own way at far less than would the taxing master. As I say, it gave me a shock, and I seriously wonder whether it is worth going to the National Assistance Board in any case.

Mr. Ede (South Shields)

I listened to what was said by my hon. and learned Friend the Member for Leicester, North-East (Sir L. Ungoed-Thomas) and I wondered how far the Solicitor-General would dispose of one case. I know that the answer I shall get from most of the galaxy of legal talent I see before me will be that hard cases make bad law in any event. The hon. and learned Gentleman did not tell us about what happened to the widow with the £800 capital and no income, who had two children. I gathered from what my hon. and learned Friend said that, because she had over £500 capital, she was refused legal aid. I understand that the case was mentioned to the Committee by the hon. and learned Gentleman the Member for Warwick and Leamington (Mr. Hobson) and so I assume that the Solicitor-General had heard of it before.

I should like to know the answer in that case, because it seems to me Chat it is an extreme case of the kind brought forward by the hon. Member for Crosby (Mr. Page), where the person will regard the £800 as income. I imagine that a widow with £800, with two boys to bring up and a house and clothing to provide for them, will ask herself, "How long is this going to last? "She will use it week by week, hoping that by the time she exhausts it she will either have found employment or something will have turned up to relieve her of getting into the position where, never having had an income of her own, she will have no capital on which to draw. What happened in that case? If the widow was denied legal aid, how could any lawyer argue that case? Clearly no lawyer would get any money out of it, and certainly if it were a case that ought to be litigated, he should have something.

The Solicitor-General

The right hon. Gentleman is quite right in saying that this case was put by my hon. and learned Friend the Member for Warwick and Leamington (Mr. Hobson) during the Second Reading debate. That case does not relate to this Amendment, which relates to the contribution from capital which has to be made by those who are admitted to legal aid and not to those who should be excluded from legal aid. I do not know what actually happened in that case, whether there were any special circumstances or whether possibly the Act was over-rigidly administered. I can tell the right hon. Gentleman how it will work out under the new Regulations which I said in Committee my noble Friend proposes to make.

Take a woman like that. She would have an allowance, first of all, of £125 for herself, £75 for her first dependant and £50 for her second dependant. In addition, since she has no income at all, she would have a further £125 allowance of free capital. I make that come to £375 in allowances, which would certainly bring her well within the limit of £500.

Mr. W. R. Rees-Davies (Isle of Thanet)

I am bound to say that I have some appreciation of the argument of my hon. Friend the Member for Crosby (Mr. Page) in this matter, but at the same time I do not think anyone can say that the Government are in any sense inconsistent in their approach to this matter, arising as it does from the background of the Rushcliffe Committee.

We are discussing now the question of a person's contribution, having regard to the amount of capital which is disposable, and, as approached from that angle, the view expressed by the Government is that very little of one's capital shall be regarded as a nest egg, certainly in the light of modern conditions, and that primarily it shall be treated as a matter of income, and that a person in a normal income position shall be able to get legal aid to a large degree in the form of hire purchase investment; that is to say, it is nothing more in the average divorce case than the right to proceed with one's case and gradually to recover from the applicant moneys which he pays by monthly instalments. As it runs today, it is a method of hire purchase.

I want to draw attention to something which shows how great injustice can occur. Frankly, it is amazing to me that this Bill should have passed its Second Reading, gone through its Committee stage and reached this stage without anybody drawing to the attention of the House the position so far as disposable capital is concerned. The position at the present time is this. For example, if one is a person who has £125 in the world from all sources, one is quite unable to go to the highest tribunals in the land. It so happens that if one's disposable capital is £125, one cannot go to the House of Lords and one cannot go to the Privy Council. One has no means to go there, and that is the situation about disposable capital. When my right hon. and learned Friend indicates that he wants to impose certain limits on disposable capital in actions in the county court, the High Court and the Divorce Court, and he feels that it is not right to raise these limits, I certainly am not prepared to dissent from him, but when, in fact, he is unable to find money for people who have received the leave of the Court of Appeal and the Privy Council to go there, having obtained a judgment in the first court for thousands of pounds, he is perpetrating a very serious injustice, and it is about time it was put right.

I have read and carefully considered the whole matter, and have even gone to the extent of asking a number of the best-known solicitors in London whether they would be prepared to act for nothing in such cases on grounds of prestige. I would rather not mention any names, but, universally, they indicated that they would not do so. I know that members of the Bar are willing to do so in certain circumstances. Whether they are willing or not, the House ought to consider these figures.

First of all, if one wants to go to the House of Lords today, one's disposable capital to start with must be £700—£200 cash and further recognisances of £500. In addition to that, one has to go through an indignity, and I call it an indignity because it is an affront to any civilised society today.

I will read from the House of Lords, Form of Appeal, Method of Procedure and Standing Orders, paragraph 10 (iii): The petition must be supported by an affidavit of poverty by the Petitioner and also by a certificate of poverty signed by two responsible persons of official or professional standing who have personal knowledge of the Petitioner's lack of means. They must testify that the person is telling the truth when he says that he has less than £100. These are the cases which have led to a hardship which is far greater than anything which would happen to people in the county court or elsewhere.

9.45 p.m.

If we are proud of the highest tribunals of the land and of the fact that leave to appeal is given to those tribunals, from the Court of Appeal or, in the case of the Privy Council, often from the Commonwealth, then I find it very surprising that their Lordships passed the Bill without ensuring that the highest tribunals in the land are those where the liberty of the subject is most strongly defended.

I say little about the position of solicitors in this matter, although I speak in measured language when I say that I know that few, if any, solicitors—and I am speaking in the presence of some very eminent solicitors—would be prepared to take cases to the House of Lords, with all the time which is involved, for nothing. I know members of the Bar in number who would do so. All of us may well do many hours of work for nothing. But the plea I make in this respect arises from the hardship which is involved in this question of disposable capital. I know of three cases at present where, having been given leave to go to the highest tribunal, people are unable to do so because they have not the money to meet the bills—and these bills must be paid.

Let us assume that they have £500 to £1,000 disposable capital available to them. First they have to find £700. In addition, the printing costs in the House of Lords are between £1,000 and £1,500. They must be met by the appellant. By the time people have attempted to meet these bills, they will be unable to go to the tribunal. It is a great surprise to me that I should have to raise the matter at this stage.

The Chairman

I am having difficulty in relating the hon. Member's argument to the Amendment.

Mr. Rees-Davies

I am saying that if hon. Members wish to raise the limits of disposable capital, I am not prepared to support arguments of that kind under any circumstances until they are prepared to invite the Government to put their house in order and to put the position right in the highest courts of the land. I am submitting that this ought to have priority over the other cases.

Today the retired person may often be drawn into litigation. For instance, a widow may wish to retain her house against eviction. Such people very often have a small unearned income and are living on capital. If any change is made, I should prefer to see a lower amount for the income and a higher amount for the disposable capital, and that is directly in line with the Amendment. But I cannot support either view here, or the Bill, as it appears before us, until the House is prepared to give more attention to an injustice which I am sure many do not realise exists. My right hon. and learned Friend the Attorney-General on Second Reading indicated the courts which had been introduced into the provisions. He spoke of Bristol Tolzey Court, sheriffs' courts and courts nobody had heard of and into which very few people go. But not a word was spoken of the two greatest courts of the land and cases of the kind which I have described.

These hardships arise irrespective of the fact that lawyers may be prepared to work for nothing. It is very good that they should do so from time to time— good for their consciences—and it is probably something which the House warmly welcomes. But even so, there are still people who are unable to take advantage of the benefit of free legal counsel and even a free solicitor because, as a result of the Act of 1893, it was provided that in these cases the disposable capital should be £100 and no more. These cases can be contrasted with the winged words of the hon. Member in calling attention to questions of disposable capital. What has been said by hon. Members falls into insignificance against the hardship that can be created in cases like that of Lady Hoare and the difficulties that arise in cases like that of Colonel Wintle and others I could mention I hope that another place, if not the House, will in due course seek to put this in order and see that we have on the Statute Book the whole proper provisions.

We have had my hon. and learned Friend the Solicitor-General presenting his case with the lucidity and fairness one always gets from him. Even so, one is unable to extract or understand the precise figures, particularly if one is an ordinary layman or someone not versed in this subject. It is not surprising that one finds very few who know what is meant by disposable income or disposable capital. I hope that in the next year or two i: may be possible to incorporate in a place where they can easily be found regulations which would indicate precisely how the disposable capital—

The Deputy-Speaker

The hon. Member is getting very far from dealing with the Amendment.

Sir L. Ungoed-Thomas

I have a great deal of sympathy with the hon. Member for the Isle of Thanet (Mr. Rees-Davies) and agree that it is most desirable to extend the legal aid provisions to the House of Lords. We said so on Second Reading. However, we took the view that this Bill was not appropriate to deal with that aspect of the scheme. We are dealing with alterations of the financial provisions, and it was extremely adroit of him to get so much within the four corners of the rules of order.

It is not our object in this Amendment, and nor have we ever suggested, that the Legal Aid Scheme is screwing the last penny out of capital. I made it clear that the first £125 of capital, for instance, was entirely free from legal aid contribution. The point we make is that small savings capital is, compared with substantial sums of income, most unfairly treated. If the Solicitor-General is not seized of that point—unless he is not seized of it because he is adroit in his advocacy—then I hope he will be seized of it now. The kind of case we are concerned with is that put forward by the hon. and learned Member for Warwick and Leamington (Mr. Hobson) and that of the pensioner put forward by the hon. Member for Crosby (Mr. Page).

The Solicitor-General made a great deal of play with the raising of the minimum amount from £75 to £125, whereby capital sums beneath that amount were excluded from the scheme. Then he said that that was considerably more than the sum mentioned in the Rushcliffe Report. I agree, but he did not go on to read the last sentence of the quotation which he made from the Report of the Advisory Committee, dealing with this question of £125. That sentence was this: This is rather less than the effect of the increase in the cost of living since 1946. I was generous—if I may so describe myself—an saying that this scheme, by and large in this Bill, restored the 1949 value. There is nothing much in the £125 point.

He went on to say that there were disregards and allowances made for dependants. Of course there are. I referred to disregards and allowances made for dependants, but they are also made in the case of income and that does not touch the case which we are making against the Government, namely, that they are treating small savings unfairly compared with substantial income.

I invited him to deal with the Regulations which the Government have made in the case of non-litigious cases. It seemed to me that in those Regulations no allowances were made for dependants, although allowances are made for dependants in the case of income and in the case of litigation. I cannot understand why no allowances are made for dependants in respect of capital, and capital only, in non-litigious cases. All the hon. and learned Gentleman said about dependants was not even applicable to the non-litigious class of capital applicants.

Dealing with dependants and disregards, the Solicitor-General referred to dwelling houses and so on, but there are comparable disregards in the case of income, too. What I invited him to do was to compare the unfairness resulting from only a one-third proportion being taken in the case of substantial sums of income, while the whole of the capital was taken in quite small sums of capital.

The third point was in regard to the Rushcliffe Report. The hon. and learned Gentleman again referred to the £125 limit, which was £75 in 1949 Act. In one of the passages which the hon. and learned Gentleman quoted, the Rushcliffe Report recognised that there are two different classes of capital to be considered. The one case, which the Report 'said was the ordinary case, was that in which it recommended the £25 minimum amount, which in the 1949 Act was the £75 minimum amount. We are concerned with the principle not of that, but of the other case. Where there is a substantial sum of income and a substantial sum of capital, what matters is the overall resulting contribution. It may be quite reasonably fair where there is substantial income in a particular case to take the whole of the disposable capital where capital sums are comparatively small, but it is not fair to take the whole of the capital in cases where income is small and where, as the hon. Member for Crosby said, the poor person has to resort to capital as a means of supplementing income and making both ends meet.

The Solicitor-General

The hon. and learned Gentleman will have in mind that I dealt specifically with that second class of case when I dealt with the discretion which lies in the National Assistance Board.

Sir L. Ungoed-Thomas

I am coming to that very point.

In the second class of case, the Rushcliffe Report clearly laid down the principle which I quoted and which I now repeat because I want the Government to recognise it. It is the whole principle underlying the Amendment and is that … while no one should be expected to make any payment if it would have the effect of materially diminishing an already exiguous income"— which is what it does when there is very small income and the capital is a source of a very valuable 10s. a week income to the person dependent on it— people with substantial sums of capital must in general be prepared to pay their own law charges".

Mr. Philip Bell (Bolton, East)

We are in difficulty when we talk about living on capital because it depends on how old the person who has to live on it is— whether it is a sick person aged 50 with only £500 of capital or a sick person aged 85 with £500 capital. The spreading of the capital if it is to be lived on depends a great deal on the situation.

Sir L. Ungoed-Thomas

I hope that I do not treat the hon. and learned Gentleman unfairly if I say that that is very much a lawyer's point. I fail to recognise the human distinction between the two. If there is a person of 50 who is sick and dependent on capital to eke out income, he should be treated in exactly the same way as the person of 85.

I am coming to the point which the Solicitor-General mentioned about the amount of capital which is in fact disregarded. He said that the National Assistance Board took various factors into consideration in deciding whether to take the whole of the capital or some proportion of it and that—

It being Ten o'clock The CHAIRMAN left the Chair to report Progress and ask leave to sit again.

Committee report Progress.

Proceedings on the Legal Aid Bill exempted, at this day's Sitting, from the provisions of Standing Order No. 1 (Sittings of the House).—[The Solicitor-General.]

Bill again considered in Committee.

Sir L. Ungoed-Thomas

I am anxious to understand the Solicitor-General's argument on this part of his case. As I understand it, he is now saying that, apart from dependants' allowances and disregards such as the value of a house which are taken into consideration by the National Assistance Board, it may take into consideration all the circumstances of the case and take a smaller proportion than the whole of the resulting disposable income.

The Solicitor-General

It is rather more. The Board gives a further allowance at its discretion, although on an unstated scale, before arriving at the disposable income which it reports to the legal aid committee.

Sir L. Ungoed-Thomas

No wonder, as the hon. Member for the Isle of Thanet (Mr. Rees-Davies) said, it is difficult to follow the intricacies of this. I am at a complete loss to understand the significance of the Solicitor-General's observations. Apparently the Board makes some allowances which are not covered in any regulations, about which we have no knowledge, which it exercises in accordance with some scale which is private to itself and known to nobody else, which we cannot criticise in this House, and which is utterly unknown. We do not know whether it is fair. We do not know whether it is exercised on the same principle by the different area committees, or how on earth the thing works out.

We are now told, for the first time, at this stage of the Bill, that the National Assistance Board exercises some discretion of that kind. This point was put expressly to the Solicitor-General in Committee. My hon. Friends and I pressed him about it. We wanted to know whether, after the £125 minimum capita] which was allowed, the whole of the difference between £125 and £500 total disposable capital, namely, £375, was taken, or was not taken, for legal aid purposes. I have the answer here. After considerable questioning the Solicitor-General made it clear that the whole lot was taken, without any indication that there was any discretion in the National Assistance Board, that something less than a proportion was taken, or anything of that kind.

When we made the point that the whole of the amount was taken, and not just a mere fraction of it, there was never a glimmer of suggestion that less than the whole was taken. Today for the first time we are told that the National Assistance Board, in some utterly unknown way, according to some utterly unknown criterion, exercises some discretion which we do not know, and about which we are not entitled to ask. We do not know whether it is just, or unjust, or what is the amount.

The Solicitor-General

The hon. and learned Gentleman does not need to get so excited about this.

Dame Irene Ward (Tynemouth)

Yes, he does.

The Solicitor-General

It is the perfectly plain distinction that we have investigated time and again in the Bill between gross capital and disposable capital. It is true that if one takes £125 and the figure of £500, which is all that we were considering in the Amendments in Committee, the whole of that difference can be taken. What we are discussing here is how to arrive at disposable capital. There are other things besides the £125. That is only the personal allowance. There is also the allowance in respect of dependants. There is also the flexibility of which, I should have thought, every hon. Member knew —the discretion vested in the National Assistance Board. If the discretion of the National Assistance Board is new to the hon. and learned Member, I can only say that I am very much surprised.

Sir L. Ungoed-Thomas

All that this means is that the discretion is exercised before what the Solicitor-General calls the disposable capital is arrived at instead of being exercised after the disposable capital is arrived at.

The disregards and the allowances are laid down in the Regulations. We know what the disregards and the dependants' allowances are and we know what factors have to be taken into consideration, yet we are told that there is some unknown element, of which we know nothing at all, which is to be taken into consideration. We do not know how it is exercised and all my criticisms of it stand. I should like to know exactly why that is not provided for and why we do not have something provided for which we in the House of Commons can see and get at and be in a position to criticise and see that the administration is properly enforced.

The Solicitor-General has dealt with the Warwick and Leamington case with some enlightening observations. He told us, in answer to my right hon. Friend the Member for South Shields (Mr. Ede), that nowadays in that case the £125 general allowance would be deducted— we all know about that—and that under the Regulations which are now proposed to be made, but which are not yet in operation, there will be £75 for the first dependant and £50 for the second dependant, but that these allowances are to operate only in litigious cases under the Regulations which have not been made and not in non-litigious cases operating under the Regulations which have already been made. Apparently our discussion on the Amendments may have had some beneficial effect.

The Solicitor-General said that there was then to be an allowance of £125, as the lady in the case had no income. Let us consider that. One hundred and twenty-five pounds is one-third of the difference between the £125 minimum allowance which is allowed in all cases and the £500 maximum above which one goes outside the Legal Aid Scheme. So that, we are told, in the case where there is no income at all, one-third of the income is to be allowed.

Mr. Philip Bell

Capital, not income.

Sir L. Ungoed-Thomas

I am sorry; I meant capital, not income. One-third of the capital is to be allowed. We very much welcome that. It is a step forward, which we very much welcome, on the lines of our Amendment. It is an admirable thing and we welcome the concession.

What happens if the lady, instead of having no income, has 10s. a week? Is there any proportional scaling or is the one-third allowance to be given irrespective of income, or only where there is no income? I hope we shall be given an answer to this. It may affect the way in which we act on the Amendment.

We are concerned precisely with these hardship cases as mentioned by the hon. and learned Member for Warwick and Leamington (Mr. Hobson) and by my right hon. Friend the Member for South Shields. These are cases which cannot, as it were, be laughed out of court. They are cases of substantial hardship to people of poor means who are hit in their poverty simply because they happen to have a little capital instead of a little income. We say that cases of capital and income, if they come within the limits of the scheme, should be dealt with in the same way. Both represent small sums. It is utterly unrealistic to refer to these cases as "nest egg" cases in which we should be entitled to take the whole amount up to a certain figure.

Dependants' allowances are taken into consideration, because it is recognised that they should be considered irrespective of other matters, whether it is capital, income or whatever it happens to be. But when those deductions are made, we are dealing with what is left. We say that if they are made, people with small means, whether it is capital or income, should be dealt with in exactly the same way. I hope that the Solicitor-General will be able to give us more encouraging news about this £125 which he has mentioned as being allowed under the National Assistance Scheme—or rather which it is proposed to allow under the Regulations to be made by his right hon. and learned Friend. That would go a considerable way to meeting the purpose of the Amendment.

The Solicitor-General

I think I can reply easily to the points put by the hon. and learned Member for Leicester, North-East (Sir L. Ungoed-Thomas). I did in fact give the answer to what happens about £125 where there is this sliding scale, but I realise that I gave it in a spate of figures and it must have been extremely difficult to follow.

The position is that where the disposable income is less than the free income limit—I will give what is proposed to be done rather than the present figure in order to keep it simple—Dhey allow a further £125 free capital where income is below that figure. So it follows that up to £250 income there is a further capital allowance of £125. Above that free income figure of £250 the special allowance is reduced £ for £ with the rise in income. I gave the example of someone with disposable income of £350 who will get a further £25 capital allowance. The income has risen by £100 so the capital allowance has been reduced by £100.

The hon. and learned Gentleman expressed surprise that this was the first time we had heard of this matter. It is, of course, the first time it has been relevant in these debates. But it is no new thing to the House of Commons. Indeed, the discretion given to the National Assistance Board in this very regard is given in the Legal Aid (Assessment of Resources) Regulations, 1950, Second Schedule, Part II, paragraph 5, which reads: 'Where there are special circumstances the amount to be deducted from the applicant's capital resources may be adjusted as is appropriate to meet those circumstances. In view of that explanation, I hope the hon. and learned Gentleman will feel that there is sufficient flexibility to deal with the cases of small capital to which he has drawn the attention of the Committee.

10.15 p.m.

Dame Irene Ward

I always think it dangerous for a layman to intervene in what certainly appears to be a lawyers' argument. My dilemma becomes greater because, owing to other commitments, I was unable to be present to hear the whole of the argument. On coming into the Chamber I heard my hon. Friend the Member for Crosby (Mr. Page) talking about people on retirement pensions and I thought at once of those living on small fixed incomes. I have listened very patiently to the arguments which have been put forward and I do not feel satisfied on this matter.

I also listened very carefully to what the Solicitor-General said about dependants' allowances. What he said may well be so in the case of people who have dependants; but, if I assess rightly the case put forward by my hon. Friend the Member for Crosby, it is the people who no longer have dependants who will not obtain the benefit of these allowances. Therefore, the older one gets, the less help one appears to get under this scheme. That seems to be very unfair and very unfortunate, because it hits the whole range of people who have retired on relatively small pensions. I am not necessarily speaking of retirement pensions within the framework of the National Insurance Act, but of the whole range of people who retire on small fixed incomes and who will not have the benefit of dependants' allowance.

I also listened to the argument about the steps that will be taken by the National Assistance Board. When one is talking about people who want to have recourse to legal aid, there are masses of people who, in my interpretation of small fixed incomes, do not come within the range of the National Assistance Board.

The Solicitor-General

I am sure that my hon. Friend will know that very-body applying for legal aid has to have his resources investigated by the National Assistance Board.

Dame Irene Ward

Of course, I know that the National Assistance Board is the operating body for the investigations. Perhaps I have interpreted my hon. Friend and my hon. and learned Friend incorrectly, but there has been a very long argument about the amount of disposable capital and disposable income. Large numbers of people have very small incomes, and, if I understood it correctly, the case put by the hon. and learned Member for Leicester, North-East (Sir L. Ungoed-Thomas) was in relation to people with small incomes as well as people with much larger incomes.

I have always found, when speaking about those living on small fixed incomes who come within the purview of legal aid, that the Government argue that it is very difficult to find ways and means of helping them. I thought that under the scheme put forward today, and after hearing the arguments put forward by my hon. Friend the Member for Crosby and from the Opposition Front Bench, we might have gone much further towards helping those living on small fixed incomes. I do not feel that the explanations given have been entirely satisfactory. Presumably the advice given will be to wait for the regulations. I have waited so long with regard to small fixed incomes, without any results, that I am not particularly hopeful that when the regulations come forward they will help us very much.

The next argument will be that we cannot alter the regulations because they relate to the basic foundations of the Bill. I would have much preferred the Solicitor-General to have been more forthcoming. I hope that, even at this late stage, we may get something a little more satisfactory in the interests of a great many people. I am delighted that today so many of the legal profession are trying to protect the interests of those living on small fixed incomes. I hope that the Solicitor-General will be able to be more forthcoming than he appears to have been in the arguments which he has put forward.

Mr. Ede

I wish to thank the hon. and learned Gentleman for the careful way in which he explained to my untutored mind the way in which the widow who was the protégée originally of the hon. and learned Member for Warwick and Leamington (Mr. Hobson) would fare under the new arrangements. I understand that she has £800 capital and is entitled to £375, that is, three groups of £125 each, leaving her £425. Suppose she had £875 or, to give her a little bit for luck, £900.

Mr. Philip Bell

If by some accident she happened to expend some of her capital on a fur coat or a cottage, she would be all right.

Mr. Ede

That is the kind of intervention one would expect the hon. and learned Member for Bolton, East (Mr. Philip Bell) to make on what I regard as a very human case. I hope he will take it from me that widows with children and only £800 in the world do not buy either fur coats or cottages.

Mr. Philip Bell

It is cheaper than litigation.

Mr. Page

I think my hon. and learned Friend the Member for Bolton, East (Mr. Philip Bell) was endeavouring to be constructive and to assist the argument of the right hon. Member by showing how ridiculous the position is in that a person who squanders money on fur coats or something like that can get the benefit of legal aid whereas the widow in this case was refused it.

Mr. Ede

I do not want to detain the Committee for very long. Hon. Members are always very kind to me and I want to get home as much as do other hon. Members. Do I understand that if this widow had £900 instead of £800 she would still be debarred? That is what I understood the mathematics which the Solicitor-General so carefully explained to me would prove, that she would still be excluded.

I have frequently had to deal with widows of teachers in cases where, if the woman has not been a teacher herself, all she has is the gratuity which comes out of the superannuation fund. Such a woman has to say, "I have these few hundreds of pounds and two boys to look after. I shall have to spend so much each week to keep myself and the two boys alive, so much to keep us housed, fed and clothed." They work it out and hope that by the time that small capital is exhausted they will have found some means of employment or can persuade the benevolent orphans' fund of the National Union of Teachers to take the boys off her hands.

These are cases of great poignancy, in my experience, and, judging by the explanation which the hon. and learned Gentleman has given, it does not seem to me that the Government, in the arrangements they have made, have grasped the fact that there are very many people who, perhaps as the result of a motor car accident or because some woman's husband has been knocked down by a bus, are plunged from lives of comfort and reasonable security into acute mental agony as they contemplate the future.

The Solicitor-General

I apologise for detaining the Committee, but the right hon. Member for South Shields (Mr. Ede) always puts his requests for an intervention very courteously, and, of course, he rightly says that these are poignant cases. Indeed, wherever one draws the line, there are always bound to be difficult cases.

The right hon. Gentleman has asked me a question which does not immediately arise on the Amendment. Let us suppose that the widow had, let us say, a capital of £900. Would she necessarily be refused legal aid? The answer is "No"; it is still discretionary. Under the proviso to Section 2 (1) of the 1949 Act, a person may be refused legal aid if he has a disposable capital of more than £500 and it appears that he can afford to proceed without legal aid. That still leaves some discretion in the National Assistance Board, although, obviously, there comes a time when it has to draw a line.

Amendment negatived.

Clause ordered to stand part of the Bill.

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