§ Motion made, and Question proposed, That this House do now adjourn.—[Mr. Bates.]11.15 pm
§ Mr. John Marshall (Hendon, South)
I make no apology for raising in this Chamber, yet again, the question of legal aid—although I apologise to my hon. Friend the Minister for the hour at which I am doing so. However, he has the bonus that it gives him the opportunity to comment on the Government's White Paper "Striking the Balance" on the very day of its publication.
As my hon. Friend knows, I have raised the subject of legal aid many times, both in Adjournment debates and in parliamentary questions. I have found that the concerns that I have raised have been echoed by many colleagues within the House, and by many people outside it. I obtained from the Library today a list of the questions asked on the subject of legal aid over the past 14 months. They number 250, which shows the concern of a large number of hon. Members about the position.
I pay tribute to the interest of the press in the matter. Both theDaily Mail andThe Sunday Times have shown great interest. Whenever I have spoken on the subject and been quoted in the press, there is always an influx of letters from people all over the country who are concerned about the way the system is administered.
Paradoxically, while there has been a dramatic rise in the size of the legal aid bill—it was under £100 million in 1979, about £200 million in 1983–84, had grown to £1.2 billion 10 years later and is now about £1.4 billion—eligibility has been restricted. As my hon. Friend said only yesterday, the proportion of the population eligible for legal aid has fallen from 70 per cent. to 49 per cent.
Ironically, as my noble Friend the Lord Chancellor said, at a time of record expenditure on legal aid, the esteem and reputation of the Legal Aid Board are probably at an all-time low. There has been widespread concern that the taxpayer is not getting value for money, and that some of the cases supported by the legal aid fund are a disgrace.
A case referred to in parliamentary questions involved a prisoner who had absconded from prison, but was still being supported by the legal aid fund. The board might at least have said, "If you come back to prison, we will carry on funding you."
Only yesterday, we read about the disgraceful case of an individual suing the national health service because he has not died on time. It is a new concept of medical negligence—"You told me I would live for six months, but I have lived for three years. I am going to sue you, and it will be funded by the legal aid fund." The thought of taxpayers' money being used to sue the national health service for keeping someone alive beggars belief. I am glad to hear that my hon. Friend has called in the chief executive of the Legal Aid Board to discuss the matter.
Our constituents feel that the Legal Aid Board has not been a good judge of the quality of cases. The basic principle of legal aid—that no one should be denied access to justice—has been subverted in civil legal aid cases, because the legally aided litigant can blackmail his opponent. Such litigants know that, win or lose, they will not be out of pocket, but their opponents know that, win or lose, they will.
876 In the north-west, people have sued chief constables for wrongful prosecutions. The insurers told the defendants that it was cheaper to settle than to continue the cases. Defendants have to calculate how much to offer, because the legal aid certificate might be withdrawn at that stage. They have to try to work out an absurd equation: will it be cheaper to fight or settle a case which logically they know that they can win but in respect of which they could lose financially?
In my constituency, there was the case of a partnership that had broken down. One partner sued the other. The party that was being sued was told by his lawyer that he had a wonderful case and would win. He fought it and won, but he was substantially out of pocket because of the legal costs. While the Legal Aid Board is sometimes asked to contribute toward the cost of a successful defendant, the number of cases in which that happens is negligible. A written answer on 16 October 1995 stated that, in 1994–95, help had been given in 158 cases; in 1993–94, the figure was 186.
There is a feeling that the wrong people have sometimes obtained legal aid. It is a scandal that some very well-heeled individuals have managed to get it. One thinks of Mr. Ernest Saunders, the man who made the miraculous recovery from Alzheimer's disease—"Guinness is good for you, it cures Alzheimer's". He was reconciled with his wife and her assets once he no longer needed legal aid.
There was Mr. Gordon Foxley, who short-changed the taxpayer when he was employed at the Ministry of Defence, and did so again when he applied for legal aid, despite owning houses and cars and seeming to have substantial assets. Those people's legal bills, which were often substantial, were paid by taxpayers who live in much less salubrious homes. Why should the not-so-well-off be asked to pay the legal bills of people with luxurious life styles?
The generosity of the legal aid scheme knows precious few limits. The most absurd case was that of the German inventor, who lived in Germany but sued Sony in the British courts. He will never pay one deutschmark of tax to Britain, but he received £500,000 in legal aid. That is a disgrace. I was sorry to read in the White Paper that the Government are going to consult on whether overseas residents who bring legal actions in the British courts should get legal aid. The Minister can consult me at any time of the day or night, and my answer will be no. Those who are not British taxpayers, owe no allegiance to the Crown or have no residence in this country should not qualify for legal aid.
It is also felt that there has been some fraud that the Legal Aid Board has not been good at detecting. On 2 February, a written answer in column260 of theOfficial Report gave the number of representations about fraudulent applications for civil legal aid. In 1991–92, there were only 2,775; by 1995–96, it was estimated that there would be 15,000. There have been many representations but very few prosecutions.
In a written answer of 18 July 1995, at column1013, the then Parliamentary Secretary said that the number of applicants investigated for false declaration of means in 1987–88 was nil; in 1988–89, nil; in 1989–90, nil; and in 1990–91, six. The figure reached 15 in 1993–94, and 25 in 1994–95. The reply then said that the number of assisted persons prosecuted under section 39 of the Legal 877 Aid Act 1988 over the same period was nil until 1991–92, when we had a dynamic year and two were prosecuted. The figure returned to nil the next year, and, in 1993–94 and 1994–95, the Crown Prosecution Service went into overdrive and managed to prosecute two people in each year.
More recently, on 22 May this year, a parliamentary answer on fraud said that, in 1995–96, 29 cases were referred to the police in respect of civil legal aid, and, in respect of criminal legal aid, five assisted persons had been referred to the police. The number of applications for criminal legal aid runs into hundreds of thousands, and we are asked to believe that those chaps who are accused of crimes suddenly become terribly honest when they fill out the legal aid form. I just do not believe it.
Let us look at the cost of some of those cases. We were told on 26 February that, to date, the Maxwell case had cost the taxpayer £8.3 million. We can console ourselves with the thought that that includes an element of VAT, but it is still a large sum, which causes concern to taxpayers.
I congratulate my hon. Friend the Member for Corby (Mr. Powell), who asked on 1 May how much money had been paid to certain firms. In 1993–94. Robinsons topped the list of legal aid millionaires, because it received £3.2 million. It did not do quite as well the following year, when the figure was topped by Leigh Day and Company, which received £8.3 million from the legal aid fund. Those figures cause concern to taxpayers.
Another worry about the legal aid fund is part of a wider concern: that the costs and delays involved in legal action mean that the very rich can afford legal action; the very poor can afford it through legal aid; but middle England, middle Scotland and middle Wales find it very much more difficult. That is why I welcome the imminent report by Lord Woolf, which will speed up justice and thereby make it cheaper. That will help everyone—the legal aid fund and the rest of us who may from time to time have to litigate.
Today's publication of the White Paper is a fortuitous coincidence, and it enables me to comment briefly on it. I welcome the fact that the Government withdrew legal aid from the apparently wealthy, because nothing did more to bring the legal aid fund into contempt than the sight of very wealthy individuals living in large, luxurious homes, with a nice life style, being funded by people on much more modest means. There is no doubt that the legal aid fund gives the impression of being a juggernaut out of control, and the Legal Aid Board gives the impression of having a strange order of priorities. That is why I welcome some of the comments in the White Paper.
I welcome the fact that the White Paper is the first document for a long time that has emphasised the need to get value for money and financial control in the legal aid system. I also welcome the fact that the Lord Chancellor has said that he will lay down priorities within civil and family legal aid, and that, as one would expect from him, his main priorities will be the protection of children and the detention of mental patients.
I welcome the fact that there will be criteria for deciding whether cases should be supported. One criterion is the chance of winning the case. My God, that should have been a criterion from the start. The importance of the case, and the likely cost compared to the likely benefit—those should have been criteria from the start.
878 I welcome the statement in paragraph 2.21:Once a case is in progress, the provider will be able to withdraw legal aid if the circumstances … such as the chance of winning change so that it is no longer worth pursuing.I am sure that that will be welcomed throughout the country.
I welcome the fact that, in civil legal aid, everyone will be expected to make a minimum contribution toward the cost of the case. That may deter some, but I still think that there is an unequal balance between the legally aided litigant and the person who must fight a case against him. It is true that, in the White Paper, the Government propose that, if the successful party suffers financial hardship, he will get some help, which he has not received until now, but I suspect that he will still suffer for winning, and that is not right.
I welcome the fact that other agencies besides barristers and solicitors are to benefit from the proposals, because one of the big growth areas of civil legal aid has been matrimonial legal aid, which grew from £87.5 million in 1989–90 to £266 million in 1993–94.
I especially welcome the publication of the White Paper, and the determination that the Lord Chancellor and the Parliamentary Secretary have shown in carrying out this desire to get value for money, to bring common sense back into the operation of the legal aid system.
As the White Paper says,We need to restore confidence that the scheme is fair and excludes weak or trivial cases.If my right hon. and hon. Friends can do that, they will be doing a service to justice throughout this country.
§ The Parliamentary Secretary, Lord Chancellor's Department (Mr. Gary Streeter)
I congratulate my hon. Friend the Member for Hendon, South (Mr. Marshall) on his success in securing this Adjournment debate, and on the timing of the debate, which coincides, as he said, with the launch of our White Paper today on legal aid reform. I am grateful to him for his customary robustness and forthright views on the administration of legal aid; I sympathise with much of what he has said.
I am as outraged as my hon. Friend when I see apparently fruitless cases being pursued with the benefit of legal aid. I am certainly not here tonight to defend the indefensible. The current state of the legal aid scheme and its administration leave much to be desired. That is why we have today published a White Paper containing a programme of radical action designed to transform the legal aid scheme into one that can command public confidence. The Government are determined to stop abuses of legal aid such as those that my hon. Friend mentioned.
I warmly pay tribute to my hon. Friend for his perseverance over the years in raising these abuses in the House. This has played a major part in bringing the Government to the stage of reforming the legal aid system. I am grateful to him for his warm welcome of the White Paper.
Before explaining the proposals that the Lord Chancellor has made in his White Paper, it is important to spend a moment reflecting that there is another side to the legal aid story. Reasonable access to the law is 879 fundamental to the health of our country. Legal aid is intended to, and does in thousands of cases, provide those in genuine need with the help they need with their legal problems. No one should be denied access to justice because he has nothing in the bank.
In 1995–96, the Legal Aid Board paid for 3.33 million acts of assistance. In only 5.2 per cent. of civil cases was judgment awarded against the assisted person. Since 1989, when the board assumed responsibility for the administration of most legal aid, the percentage of refusals of civil applications on legal grounds has increased from 11.3 per cent. to 22.7 per cent., demonstrating an improved commitment to the rigorous examination of applications. I nevertheless fully accept that there is much more to be done.
We will not rest until we are satisfied that the Legal Aid Board is capable of weeding out all undeserving applications for legal aid. My hon. Friend's list makes it clear that we have some way to go.
To illustrate what I have in mind, I shall outline some of my thoughts on what a legal aid scheme should and should not be about. The first principle that should be applied in every case in which an application for civil legal aid is made must be that public funds should not be used where a private client would not pursue the case with his own money. The legal aid system does not exist to support any and every piece of litigation that might crop up; nor is it designed to give financial backing to the whims of political correctness. We must have in place mechanisms to ensure that help is properly targeted.
It cannot be right that those granted civil legal aid are put in a position to blackmail their opponents by virtue of their superior financial support. I have spoken recently about opponents facing "state-funded rottweilers" when they are involved in proceedings against legally aided opponents. Legal aid was designed to stop the rich riding roughshod over the rights of the poor. However, all too often, legal aid is now used as a weapon of blackmail—my hon. Friend gave examples of that.
People with only modest resources find themselves unable to afford to defend their legitimate rights against those supported by the bottomless purse of the legal aid fund. The balance is wrong, which is why "Striking the Balance" is the title of the White Paper. All litigants, whether they be legally aided or not, should have a financial stake in the proceedings—an assisted person must have a real interest in his case. The Government cannot allow themselves to be a party to any form of blackmail caused by the legal aid system.
Legal aid must go only to those whose means are such that they are deserving of help. We have established strict financial eligibility limits to ensure that help is targeted properly. Despite this, it would appear that there are still those who seek to get around these rules in an attempt to get legal aid where they should not. On this front, we have already taken positive action.
Hon. Members will be aware of the changes that the Lord Chancellor has announced to deal with apparently wealthy legal aid applicants. On 28 February 1996, he announced new regulations to strengthen the arrangements for means-testing apparently wealthy applicants for legal aid. The first will allow the assets of friends and relatives of the applicant to be included in the financial assessment. The second will introduce into legal aid assessment a limit of £100,000 on the equity allowable 880 in the applicant's home, the amount of repayable mortgage that can be allowed, and the amount of mortgage that can be offset against equity.
The Lord Chancellor also announced that he had asked the Legal Aid Board to set up a special investigations unit as soon as possible. The unit will build on a prototype already in existence in the Legal Aid Assessment Office, and it will investigate the means of applicants whose financial circumstances are particularly complex. That will strike at the heart of the issues raised by my hon. Friend. Initially, the unit will deal only with applications for civil legal aid, but it will be extended as soon as possible to cover both civil and criminal legal aid. I am sure that my hon. Friend would welcome that.
We have already made these changes, and the White Paper that was launched today goes further. I believe that three main public perceptions must be addressed: first, the public see legal aid as wasteful in supporting too many weak and undeserving cases; secondly, the public see legal aid as over-priced, with taxpayers paying for what appear to be huge lawyers' fees; and, finally, the public see legal aid as unfair to the opponents of legally aided people, who too often feel that they have to give in on cases that they would have a good chance of winning.
We need a legal aid scheme that gets more of the right services to the right people. At present, we have a scheme which—despite efforts to control lawyers' pay and the tightening of the eligibility rules—is delivering less and less to fewer and fewer. Expenditure has doubled in the last few years, yet the percentage of households that qualify for help has fallen from about 70 per cent. in the early 1980s to about 50 per cent. now. In that light, reform is inescapable.
We have four fundamental proposals to tackle the problems that we have now identified in civil legal a:id. First, in future we will buy a wider range of services under bulk contracts at fixed prices. In that way, we will be able to decide what services should be available and be able to meet local needs within nationally set priorities: we will he able to get the right services to the right people.
The second proposal is to open up legal aid to new services, such as advice agencies, and to promote competition in the contracting process. I welcome my hon. Friend's kind remarks about that suggestion. Contracts will have in-built incentives to promote efficiency and quality, and in that way we will be able to get more and better services for our money.
Thirdly, we will introduce a new test of whether a case deserves to share in the money available. That test will be stronger than the current merits test, which is concerned primarily with the legal merits. We will open the test out to include criteria that ensure that only those who are most in need receive help. An individual's nationality and place of residence may be relevant.
I want to make sure that any test that is operated under the new scheme has no difficulty in weeding out applications from people whose cases are being heard in this country only in order to take advantage of the generosity of our legal aid scheme. My hon. Friend will be reassured to hear that. In addition, by requiring assisted persons to pay more often towards the cost of a case, we can expect them and their legal advisers to be careful not to bring ill-founded cases.
Finally, we will redress the balance between assisted persons and their opponents by ensuring that, when legal aid is used to back losing claims, unaided opponents will 881 have better rights to get some or all of their costs back from the assisted person or the Legal Aid Board. As a result, the state will be even-handed in its treatment of both parties. We see no reason why the taxpayer should be expected to fund litigants who are not willing to make a sacrifice themselves. It is in no one's interest to encourage people to bring weak and undeserving cases before the courts, especially when the taxpayer must foot the bill.
That is only part of the picture. We look forward in the near future to the publication of the Woolf proposals, which I hope will usher in a new regime of cheaper and 882 simpler access to justice. That would be a significant step in the right direction. I trust that I can rely on my hon. Friend's support in implementing those legal aid reforms. He has played a vital role in bringing them about.
I truly believe that the reforms can achieve a fairer, more efficient and better controlled legal aid scheme. I fully expect that the horror stories that we have heard tonight will become things of the past. The changes outlined in the White Paper are indeed radical but, as my hon. Friend has helped us to understand tonight, nothing less will do.
§ Question put and agreed to.
§ Adjourned accordingly at nineteen minutes to Twelve midnight.