Shailesh Vara outlines the Government’s decision not to go ahead with the introduction of the legal aid “dual contracting” system and to suspend for 12 months the second reduction in litigation fees.
The Parliamentary Under-Secretary of State for Justice (Mr Shailesh Vara): As the Lord Chancellor and Secretary of State for Justice announced yesterday, the Ministry of Justice has had to play its part in reducing the budget deficit, and economies have had to be made in every area of expenditure. In the last Parliament, spending on legal aid was reduced from £2.4 billion to £1.6 billion. Further changes in the legal aid system were due to be implemented in the current Parliament, with a second reduction in litigation fees in July 2015.
At the time when the fee reduction was proposed, the market was made up of about 1,600 legal aid firms. After careful negotiation, the then Justice Secretary decided to adopt a system of “dual contracting” to drive greater efficiency and consolidation in the market. Over time, however, opposition to that model has increased. Solicitors’ firms feared that it would lead to a less competitive market, and barristers feared that choice and quality would diminish. Besides, a process of natural consolidation was already taking place in the market.
Although we understood those arguments, we also needed to deliver reductions in expenditure, but since July 2015 there have been two significant developments. Her Majesty’s Treasury has given us a settlement that allows greater flexibility in the allocation of funds for legal aid, and it has become clear that there are real problems with pressing ahead. We currently face 99 legal challenges and a judicial review of the entire process. Litigation will be time-consuming and costly for all. We have therefore decided not to go ahead with the introduction of the dual contracting. We have also decided to suspend for 12 months the second fee cut. The Legal Aid Agency will extend current contracts to ensure that the service continues until replacement contracts come into force later this year.
We will review progress on joint work with the profession to improve efficiency and quality before returning to any decisions on the second fee reduction and market consolidation.
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Mr Vara: I welcomed the comments made by the hon. Member for Hammersmith (Andy Slaughter), although they were very brief. I must add, however, that his attempt to criticise what has been described as the Lord Chancellor’s sensible decision was opportunism, pure and simple. He obviously has a selective memory. I remind him that in 2009, when Jack Straw was Justice Secretary, he abandoned the criminal legal aid best value tendering scheme at a very late stage, just before the 2010 general election. I do not recall the hon. Gentleman’s grumbling to his boss at the time, and Jack Straw certainly does not recall hearing his voice. This needs to be put into proportion.
Let me now deal with the hon. Gentleman’s questions. When we embarked on the dual contract process, we had the support of the Law Society; the hon. Gentleman may wish to reflect on that. We have said that we will suspend the second fee cut for a year. We will then work with the professions, and will form a definite view in due course. As for the Legal Aid, Sentencing and Punishment of Offenders Act, the hon. Gentleman knows only too well—because I have said it many times at the Dispatch Box—that a review will take place within three to five years.
[Interruption.]
The hon. Gentleman is chuntering away, as he is wont to do on a regular basis. He says, “How much money?” He knows full well that all shades of Government, both Conservative and Labour, if they have listened to people and feel that a decision needs to be changed, will make that change. Just as the Labour Government made decisions to change policies, we have made such a decision. I do not recall previous Governments wasting time and effort in trying to make calculations when they have made a change of direction.
Our decision has been welcomed by the profession, and we are pleased about that. We now want to look forward and move ahead.
Robert Neill (Bromley and Chislehurst) (Con): The intelligent lawyer and the intelligent decision maker are alert to the dictum attributed to Keynes: “When my information changes, I change my conclusions.” Surely the Lord Chancellor should be commended rather than criticised for doing that on this occasion.
Will my hon. Friend give us some more details of the particularly welcome initiative to involve the professions themselves through the proposed advisory council?
Mr Vara: My hon. Friend is right to say that the Lord Chancellor should be commended. Mark Fenhalls, QC, the chairman of the Criminal Bar Association, said yesterday:
“It takes courage to make such decisions.”
Perhaps the hon. Member for Hammersmith will reflect on that sentiment.
The Lord Chancellor has his advisory board, and he will be working with the profession to ensure that as we progress further, the public will benefit, and the taxpayer who funds the legal aid budget will gain the maximum possible value.
Sarah Champion (Rotherham) (Lab): Steve Hynes, director of the Legal Action group, has said:
“In its planning and execution the MoJ has demonstrated shocking incompetence with this tender exercise.”
Will the Minister now launch a review of his own Department’s competence?
Mr Vara: I appreciate that the announcement was made a relatively short time ago, and that the hon. Lady has probably not had an opportunity to hear what the profession has said. The profession has wholeheartedly welcomed the proposals, and I think she should note those comments, rather than individual comments.
Oliver Colvile (Plymouth, Sutton and Devonport) (Con): Will my hon. Friend write to me, explaining what impact the proposal will have on lawyers in the west country, especially those in my constituency, which contains, at Charles Cross, the busiest police custody suite in England?
Mr Vara: I urge my hon. Friend to look at the details of the statement made by my right hon. Friend the Justice Secretary yesterday, wherein the way forward is stated, but I will happily write to my hon. Friend with further details.
Nick Thomas-Symonds (Torfaen) (Lab): I should first say that I used to be a barrister before entering Parliament, and remain a non-practising member of Civitas Law in Cardiff.
A year ago, the previous Lord Chancellor said these very reforms were both sustainable and essential. I thought that was completely wrong and I am delighted that the current Lord Chancellor agrees with me, but can the Minister tell us why the previous Lord Chancellor got so many things so badly wrong?
Mr Vara: It lowers the tone of this debate when, not for the first time, the hon. Gentleman takes his lead from the hon. Member for Hammersmith by resorting to personal abuse. There have been two significant developments, which have allowed us to make the announcement. First, thanks to the economies we have made elsewhere in the MOJ, Her Majesty’s Treasury has given us a settlement that allows us greater flexibility in the allocation of funds for legal aid; and it has also become clear, as I have said, that there are real problems in pressing ahead as initially proposed. We recognise those issues and we want to do the best for the profession, and that is why we have taken this decision.
Mr Steve Reed (Croydon North) (Lab): The Minister’s Department has wasted close to £15 million now on ill-judged projects. What does this latest U-turn bring the running total to?
Mr Vara: The hon. Gentleman talks about millions of pounds; may I just remind him of the billions that were squandered and wasted when his party was in government, and that if it was not for its squandering and mismanagement, this Government would not have had to take the tough decisions we are having to take?
Conor McGinn (St Helens North) (Lab): The Saudi prison contracts, the secure college, the book ban, the outsourcing of the collection of fines by courts, the criminal courts charge, and now two-tier, the latest in the long line of U-turns by the Justice Secretary on measures taken by his predecessor. If he is looking for his next U-turn, may I suggest he looks at the repeal of the Human Rights Act—and, of course, the closure of the court in St Helens?
Mr Vara: I am sure the hon. Gentleman’s constituents will be grateful that he managed to slip in that last bit concerning his court. As I have told him previously, no firm decisions have been taken on that issue. On other matters, I am pleased that the hon. Gentleman pays such detailed attention to what is happening in the MOJ.
Carolyn Harris (Swansea East) (Lab): I welcome the Justice Secretary’s move to scrap the two-tier system. He said HM Treasury has given him a settlement that allows him greater flexibility in the allocation of funds for legal aid. Will he give us more detail about the settlement and whether it will extend further than what he has already said?
Mr Vara: I refer the hon. Lady to the Chancellor’s autumn statement. He said he would be allowing £700 million-plus for the courts reform programme and there would be £1.3 billion for reforming the Prison Service. We in the MOJ are also consolidating our estates programme generally in terms of the offices and space we use. If the hon. Lady reads the statement, she will also be aware that my Department will be making 50% administration cuts by 2019-20.
Mike Kane (Wythenshawe and Sale East) (Lab): The Justice team must be spinning like tops at the moment. Would the Minister care to estimate how many U-turns there have been since the new Secretary of State took his position?
Mr Vara: I will just mention that Labour’s 13 years of squandering taxpayers’ money, which has meant that we have to take these decisions, puts into total insignificance the very cheap jibe that the hon. Gentleman seeks to aim at this Government.