Michael Gove – 2016 Statement on Changes to Criminal Legal Aid Contracting

Below is the text of the statement made by Michael Gove, the Secretary of State for Justice and Lord Chancellor, to the House of Commons on 28 January 2016.

My department is committed to upholding the rule of law, by defending the independence of the judiciary, guaranteeing access to justice and supporting the highest quality advocacy in our courts.

My department has also had to play its part in the broader requirement to reduce our budget deficit and bring our national finances back into balance. Economies have had to be made in every area of expenditure, but steps have been taken to ensure our judiciary remain the best in the world, to provide a fair system of publicly-funded legal support and to explore how we can strengthen the quality of advocacy in all our courts, but most particularly in criminal proceedings.

In the last Parliament spending on legal aid was reduced from £2.4 billion to £1.6 billion. That reduction was achieved by my predecessors following consultation with the profession and they were both determined to ensure those most in need were not denied public support. Indeed at the start of this Parliament expenditure on legal aid per capita was more generous than any other EU nation or comparable common law jurisdiction. I would like to place on the record my gratitude for the determined, yet sensitive, way in which my predecessors pursued these economies.

Further changes to the legal aid system, agreed in the last Parliament, were due to be implemented in this. One of those changes, a further reduction in the advocacy fees paid to barristers and solicitor advocates was not implemented by my department while we conducted work to ensure the quality of advocacy would not be adversely affected by any change. My department is particularly committed to retaining a vibrant independent bar. The health of the independent criminal bar in England and Wales is an important guarantor of good advocacy, and Sir Bill Jeffrey’s report, commissioned by my predecessor, described the independent criminal bar as a ‘substantial national asset’. Without quality advocacy in the criminal courts the risk of injustice is greater. The liberty, and reputation, of any individual who finds themselves in court depends on a high quality advocate making their case effectively, and testing the case against them rigorously. That is why my department has been so grateful to the Bar Council, circuit leaders and others for their work to help inform our review of advocacy quality.

Another change, which has been pursued, is the move to reduce litigation fees and encourage greater efficiency in the provision of litigation services.

The first reduction to litigation fees of 8.75% occurred in March 2014. The second occurred in July 2015. At the time the fee reduction was first proposed the market was made up of around 1,600 legal aid firms and it was proposed to drive greater efficiency and consolidation within the market by simple price competition for legal aid contracts.

The legal profession opposed this model and after careful negotiation my predecessor decided to adopt a system known as ‘dual contracting’.

Under the dual contracting system, two types of contract were to be awarded to criminal legal aid firms.

An unlimited number of contracts for ‘own client’ work based on basic financial and fitness to practise checks – in others words continued payment for representing existing and known clients.
And a total of 527 ‘duty’ contracts awarded by competition, giving firms the right to be on the duty legal aid rota in 85 geographical procurement areas around the country, with between 4 and 17 contracts awarded in each. In other words, these contracts would allow a limited number of firms the chance to represent new entrants to the criminal justice system.
The dual contracting model was a carefully designed initiative from my department that aimed to meet concerns expressed by the legal profession about price competition.

But over time, opposition to this model has been articulated with increasing force and passion by both solicitors and barristers.

Many solicitors firms feared that the award of a limited number of “dual” contracts – with a restriction therefore on who could participate in the duty legal aid rota would lead to a less diverse and competitive market. Many barristers feared that the commercial model being designed by some solicitors’ firms would lead to a diminution in choice and potentially quality.

And many also pointed out that a process of natural consolidation was taking place in the criminal legal aid market, as crime reduced and natural competition took place.

These arguments weighed heavily with me, but the need to deliver reductions in expenditure rapidly, and thus force the pace of consolidation, was stronger.

Since July 2015, however, two significant developments have occurred.

Firstly, thanks to economies I have made elsewhere in my department HM Treasury have given me a settlement which allows me greater flexibility in the allocation of funds for legal aid.

Secondly, it has become clear, following legal challenges mounted against our procurement process, that there are real problems in pressing ahead as initially proposed.

My Department currently faces 99 separate legal challenges over the procurement process, which has required us, anyway, to stay the award of new contracts at least until April.

In addition, a judicial review challenging the entire process has raised additional implementation challenges. Given how delicately balanced the arguments have always been, how important it is to ensure we maintain choice and quality in the provision of legal services, how supportive HMT have been of our broader reform agenda and how important it is to provide as much certainty as possible in the face of legal challenge, I have decided not to go ahead with the introduction of the dual contracting system. I have also decided to suspend, for a period of 12 months from 1 April 2016, the second fee cut which was introduced in July last year. As a consequence of these decisions the new fee structure linked to the new contracts will not be introduced. My decision is driven in part by the recognition that the litigation will be time consuming and costly for all parties, whatever the outcome. I do not want my department and the legal aid market to face months if not years of continuing uncertainty, and expensive litigation, while it is heard.

The Legal Aid Agency will extend current contracts so as to ensure continuing service until replacement contracts come into force later this year. I will review progress on joint work with the profession to improve efficiency and quality at the beginning of 2017, before returning to any decisions on the second fee reduction and market consolidation before April 2017.

By not pressing ahead with dual contracting, and suspending the fee cut, at this stage we will, I hope, make it easier in all circumstances for litigators to instruct the best advocates, enhancing the quality of representation in our courts.

I will also bring forward proposals to ensure the Legal Aid Agency can better support high quality advocacy. Furthermore, I intend to appoint an advisory council of solicitors and barristers to help me explore how we can reduce unnecessary bureaucratic costs, eliminate waste and end continuing abuses within the current legal aid system. More details will follow in due course.

We have an ambitious programme of reform to our courts planned for the rest of this Parliament. It is designed to make justice swifter and more certain. The reforms to our legal system, including taking more work out of courts, moving from a paper-based system to a digital platform, tackle unnecessary costs and reduce harmful delay. Criminal legal aid solicitors perform a vital role in our justice system and these reforms will need the support of all in the legal profession. But these reforms also provide an opportunity for the legal profession to offer better access to higher quality advice and representation to more individuals.