§ Motion made, and Question proposed, That this House do now adjourn.—[Mr. Conway.]2.33 pm
§ Mr. Hartley Booth (Finchley)
A year ago, I was approached by a constituent whose story portrays the other side of the legal aid coin which has been much in the news and which has been roundly condemned. There is no need to repeat the well-known scandal, which was universally condemned, of some of the richest families receiving millions of pounds of legal aid. The only official reply we received was the statement that "rules are rules and are the same for rich and poor alike". Thus I understood the Lord Chancellor to explain the position in a recent Radio 4 interview. I hope that he will not respond in the same way to what I will reveal to the House today. I have every confidence that the Lord Chancellor's long tradition of equity will allow him to see the merits of the argument which I respectfully put before the House. I hope that he will change some existing rules to assist people.
The aspect of the legal aid scheme which I raise today needs urgent attention. It is illustrated by the case of my constituent, Mrs. A, who came to my surgery in Finchley. She was a teacher who had suffered an unfortunate injury at school which had been compounded by medical negligence in hospital. She had apparently been close to appointment as a head teacher, but as a result of her injuries her promising career was ended. I am told that the evidence of medical negligence in her case was quite strong, with doctors prepared to testify in her favour, and because of the loss of future earnings the damages could have been substantial. However, she was not able to claim legal aid benefit as she was just over the means threshold and her husband earned too much. Her problem was made more acute by the difficulties and costs associated with caring for a disabled dependent family member.
Thousands of people suffer from this predicament: their income is just too large for them to receive legal aid. My constituent was denied the chance to sue the perpetrators of her injuries because she received state invalidity benefit of just over £4,000 a year, which took her over the income threshold of about £7,500 per year.
The rules for calculating disposable income in order to establish eligibility for civil legal aid are set out in schedule 2 to the Legal Aid (Assessment of Resources) Regulations 1989, which is statutory instrument 1989/338. According to paragraph 5 of the statutory instrument, all applicants who are in receipt of income support are eligible for civil legal aid regardless of their capital costs. In calculating a person's disposable income, it is important to note that payments of disability living allowance, attendance allowance, constant attendance allowance and payments from the social fund are disregarded under paragraph 6. However, the same is sadly not true of payments of invalidity benefit, which count towards a person's disposable income.
My constituent's case throws up a number of anomalies that should be addressed. First, it is crazy that one arm of the state is providing benefits which prevent a member of the public from going to court when, with the help of that second arm of the state, she could gain damages to pay back the state.
904 Secondly, it is wholly anomalous and unjust that some allowances are disregarded for the purpose of means testing, but that invalidity benefit is not.
The Parliamentary Secretary, Lord Chancellor's Department (Mr. John M. Taylor)
Invalidity benefit is treated differently because it is not means-tested. It is no sign of anyone's wealth by way of income or capital; a millionaire can receive invalidity benefit. It is not means-tested and, for that reason, it is treated differently from the other benefits that my hon. Friend has mentioned.
§ Mr. Booth
I understand about the means testing of benefits, but to a member of the public—we are dealing with members of the public—it seems wholly inconsistent and, in administrative law terms, one aims to have consistency. The policy appears to the public to be inconsistent.
Thirdly, it is wrong for our judicial system to have rules that take no account of the merits of a particular case. This was a disabled person looking after a sick dependent child but, although some costs were allowed, the total costs of looking after that dependant could not be taken fully into consideration. It is difficult to allow discretion in our judicial system, of which the legal aid system is a part. We should be big enough to allow relevant discretion in appropriate cases of hardship.
Fourthly, the legal aid system would, under the clawback rules, ensure that any damages obtained would be used to repay the state the money granted for those very legal fees.
Fifthly, the case is one more example of the state penalising marriage. The husband's income should not have been taken into consideration. The Lord Chancellor has personally been a great crusader for marriage, so I hope that he will want to change that aspect of the rule.
Last but not least, the claim needs redress. It is a classic case where the litigant cannot appear in person—she is unwell. She cannot be expected to summon medical evidence in the witness box. The courts must be open to the likes of Mrs. A, otherwise justice is denied. It might be asked why the lady does not forgo the small amount of benefit she receives so that she can receive the legal aid she deserves. That would be a cruel suggestion because she needs that money on which to live. She cannot simply forgo that benefit.
It may be said that thousands of people are in the same position as Mrs. A, but it is not a typical case. It is an unusual and particular case which, as I have argued—although I understand my hon. Friend the Minister's comment—is inconsistent with the social security system.
The legal aid fund has received considerable attention during recent years. Indeed, the Lord Chancellor's advisory committee last year even held a seminar entitled "Reinventing Legal Aid". Criticism has been defended by his Department on the basis that it has been increasingly generous in funding law suits and it points to the fact that rises in legal aid payments form the largest increase in Government spending since 1979. Apparently the result is that more solicitors are doing legal aid work, contrary to public perception. The Lord Chancellor has announced plans for this year to increase payments by 3.8 per cent., which is almost 1.5 per cent. above inflation, while the fee income for solicitors and barristers has risen by more than 16 per cent.
905 I call on the Government again to review the workings of the legal aid scheme. I am grateful to my hon. Friend the Minister who, a couple of years ago, was prepared to meet me to discuss some administrative proposals. What I suggested would have helped the administration of the legal aid system. I was grateful for the co-operation and help that I received from my hon. Friend at that stage. One proposal, for example, was to fax the relevant legal aid offices—a modern facility that, even now, is not permitted.
I call on the Lord Chancellor and my hon. Friend the Minister to reconsider and change the rule that denies constituents such as mine the ability to take their grievances to court because they are in receipt of invalidity benefit. There are other faults with the legal aid system that should be rectified. If someone such as Mrs. A ever managed to get to court, the position could well arise that the clawback would eat away every penny of benefit she had ever received. There should be a minimum amount of benefit that should never be taken away under any circumstances.
The level of contributions has been found irksome and onerous by some. A Mr. M, a chef of a cruise ship, had a negligently performed hernia operation—a case that eminently should come to court. As a result of his application for legal aid, he was asked for a contribution of £91 per month. He was unable to pay it, so the case could not go to court.
Another lady—a Mrs. N, who is a housewife—was involved in a road traffic accident. At the end of the process of trying to get legal aid, she was required to pay £49 a week, which she was unable to manage. That denied her access to the courts. It may be argued that there is no money to spend on bringing such cases to court. There would be money, if sensible and fair reforms were implemented.
In another life, when I worked in government and was charged with producing policies, I was always told," If you propose a policy, bring us some savings to pay for your expensive policy proposal." That is what I hope to do.
For hundreds of years, we have saved costs by using the simple principle of caveat emptor. Thousands of potential court cases have been avoided because the courts imposed on ordinary people and their lawyers the duty to be careful and watchful. The Government must apply the same thinking in other parts of the law.
The second largest category of legal aid bill is for boundary disputes, which are costly, time-wasting and usually caused by people who fail to pay proper attention to fencing their land. Huge savings could be found there, which could help us all and could help Mrs. A in her predicament. I hope that in time the Law Commission or the Lord Chancellor's Department will give my proposal adequate consideration—not this afternoon, as it is a big proposal.
I call for those changes for all the above reasons, but most particularly because a failure to change the rules would be administrative nonsense. It would be unfair to the taxpayer, who would stand a chance of recouping social security money, and most of all it would be unjust to the victim of negligence.
It is true that legal aid was never there for every conceivable case, but it was always there for people such as Mrs. A and I urge you, Mr. Deputy Speaker, to agree that she should receive legal aid to bring her case.
The Parliamentary Secretary, Lord Chancellor's Department (Mr. John M. Taylor)
I congratulate my hon. Friend the Member for Finchley (Mr. Booth) on securing the debate and thank him for the unfailing courtesy that he has shown in our correspondence on legal aid matters. I am sorry that my hon. Friend has become concerned about the financial eligibility limits for legal aid and I hope that today's debate will go some way towards removing some of those doubts.
My hon. Friend began by mentioning some cases that have recently received considerable publicity because the recipient of legal aid was apparently wealthy. I know that he does not want me to concentrate on those, but I want to reassure him that the general problem is one that the Lord Chancellor and I have taken very seriously and we shall shortly be issuing a consultation paper. I shall ensure that my hon. Friend is sent a copy at the outset and would be delighted to receive any suggestions or comments that he may have.
I am sorry to learn of my hon. Friend's constituent's injuries and I hope that she has made as full a recovery as possible. As he is probably aware, I am prevented by the Legal Aid Act 1988 from intervening in any way in individual cases, since those applying for legal aid are entitled to their privacy. My comments on financial eligibility should not, therefore, be taken to refer to the way in which the rules were applied in particular cases and I hope instead to explain why the rules are as they are.
It may be helpful if I explain how financial eligibility for civil legal aid is calculated. Those with disposable incomes below £2,382 per annum pay no contribution. In most cases, the upper qualifying limits are £7,060 for disposable income and £6,750 for disposable capital. However, in view of the costly nature of personal injury cases, the Government consider that the limits should be higher to bring more people within the scope of the scheme. The limits for those cases are £7,780 and £8,560 respectively.
The key point is that we are talking about disposable income. People are not assessed on their wages, or even on what they take home in earnings or benefits, but on the income that they have left after a wide range of allowances have been made, including rent or mortgage and work expenses. My hon. Friend commented that there should be discretion within the legal aid system to take account of particular circumstances. The assessment officer can already make allowances at his own discretion, depending on the case.
My hon. Friend is particularly concerned about the eligibility for legal aid of those people who receive state benefits. Setting the eligibility limit is never easy and it may be inevitable that there will always be hard cases falling just outside it. However, the Government have tried to remove the most pressing difficulties. For example, in April last, the eligibility limit for green form assistance was raised by 15 per cent.—several times the rate of inflation—partly because those on the lower levels of invalidity benefit were not being covered by the scheme. However, some of those receiving larger amounts of invalidity benefit may still not be eligible for green form assistance. It would not be right to make invalidity benefit a passport to full civil legal aid as it is not 907 means-tested. It would clearly be wrong to grant legal aid to an applicant who may have significant other sources of capital or income.
My hon. Friend referred to the clawback of benefits from awards of compensation. The principle behind that is that people who receive damages for injury should not be compensated twice for any earnings that they may have lost—once in the form of state benefit and once as part of the damages award. The point that my hon. Friend has made—in effect, that if legal aid were to be extended, the recovery of benefits would be increased to the benefit of the Exchequer—is one that has been put to us before and is one that we shall think about further. However, I am bound to say that so far we have not been convinced that any extension of legal aid would, overall, result in a net increase of income to the Exchequer. In any event, the Lord Chancellor is shortly to introduce conditional fee arrangements that will provide a method of funding for those outside the legal aid limits, and I shall return to that point later.
More generally, my hon. Friend has mentioned that the income of the partner of the applicant is taken into account in the means assessment process. That provision includes not only married couples, but people who live together as if they were married. The thinking behind it is that a couple who live together will normally share their resources as well as their home. While the extent of that will vary between couples, joint income is frequently volunteered in means assessment in other areas such as mortgage requests, and is used in social security applications too.
The allowances made against expenditure in calculating eligibility for legal aid are also aggregated, so that, for example, when the partner who is not applying for legal aid is the one who pays the mortgage, the cost of that is none the less taken into account. It is also the case that, if individual means were assessed separately, it would be difficult to settle the ownership of the assets involved, which would open the way to abuse of the scheme. The means of a couple would not of course be considered together if they lived apart or there were a conflict of interest between them.
My hon. Friend considers it an injustice that, through a mechanism known as the statutory charge, money spent by the Legal Aid Board on a particular case must be repaid from any winnings—I am afraid that I must disagree. My view is that the statutory charge is fundamental to the justice of the legal aid scheme.
In view of my hon. Friend's clarification, for which I am grateful, we may not be far apart.
I believe that the statutory charge is fundamental to the justice of the legal aid scheme. One can draw the parallel that someone paying privately must pay his lawyers as he goes along. If, at the end of the case, costs are awarded in his favour but his opponent does not pay up, he is obliged to pay his solicitor himself. After all, the solicitor has done the work. The effect of the statutory charge is to ensure that a legally aided client finds himself in the same position. If it did not exist, the legally aided client would in fact be getting a considerable bonus from the 908 state, which is not available to those paying privately. Just as the private client must deduct the possible cost of the action from the potential winnings when deciding whether the litigation is worth it, so must the person receiving legal aid.
The aim of legal aid is, as far as possible, to prevent lack of funds from becoming an insuperable obstacle to access to the law. That is not easy. Those who are unable to obtain legal aid must consider how important the matter is to them. Everyone, in everyday life, must balance his priorities and decide what to do with the money he has and what, perhaps reluctantly, he must relinquish. I can see no reason why taking legal advice or legal action should be immune from such discipline.
Legal aid eligibility is by necessity determined by set financial limits. As my hon. Friend is aware, there are many calls on public funds to widen the proportion of people or types of case eligible for legal aid and, more widely, in many other aspects of our lives. The public purse is not bottomless and the current eligibility limits are therefore determined against a background of competing priorities for Government expenditure. I believe, however, that the scheme is still a generous one.
My hon. Friend may also be interested to know that the Lord Chancellor will shortly be implementing the conditional fee provisions of section 58 of the Courts and Legal Services Act 1990. That will allow lawyers to take cases on a "no win, no fee" basis, with the lawyer receiving an enhanced fee if the case is successful. Those arrangements will be available for personal injury cases, and will provide another means of financing legal proceedings for those who are ineligible for legal aid.
My hon. Friend also criticised the increase in legal aid fee income to the legal profession. The Lord Chancellor has long felt the need to secure better control in this sector and has progressively introduced prescribed hourly rates, and he is keen to extend standard fees still further.
My hon. Friend may also be aware that my Department has been engaged in a fundamental review of publicly funded legal service. It has been examining the principles behind the operation of the scheme and what it is that we are trying to achieve through legal aid. It will build on a number of recent initiatives such as franchising. We are likely to be seeking views on the proposals emerging from the review in the early part of next year.
We are also looking at the problem from a broader perspective. Lord Woolf is conducting a review of procedure in the civil courts, which was announced by the Lord Chancellor on 28 March, and it is to last two years. Lord Woolf s objective is to ensure that the civil justice system provides remedies that people can afford, within a reasonable time. In particular, he is looking at ways of making costs in smaller cases proportionate to the amount in dispute.
While I do not accept all the criticisms my hon. Friend has made of the legal aid scheme, I hope I have at least made clear the reasons behind various aspects of it. I hope also that he is reassured that some of the problems most commonly associated with the scheme are being re-examined from first principles.
Question put and agreed to.
Adjourned accordingly at two minutes to Three o'clock.