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Mr. Gerry Sutcliffe (Bradford, South): Does my hon. Friend believe that self-regulation is the reason for the failure of that office? Is there not a need for independent regulation?

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Mr. Hoon: My hon. Friend is consistently assiduous in pursuing that point and I shall deal with it in more detail shortly.

Between 1991-92 and 1997-98, expenditure on civil and family legal aid rose from £330 million to£634 million, an increase of 92 per cent. During the same period, gross domestic product rose by only 19 per cent. However, the number of people helped fell by 10 per cent. The taxpayer has been paying more for less. Expenditure has been more stable for the past couple of years, but the fact remains that legal aid spending is volatile and cannot be controlled with any certainty.

Mr. John Swinney (North Tayside): Legal aid is a power devolved to the Scottish Parliament, and the Bill will pass through the House of Commons during the period in which the Scottish Parliament will assume its full legislative functions from 1 July. Do any provisions in the Bill impinge on the default powers being given to the Scottish Parliament, and will there be dialogue between here and there on any area of the Bill?

Mr. Hoon: The answer to each of those questions is no.

Mr. Robert Marshall-Andrews (Medway): Given the worrying statistic that fewer people were helped over the period that my hon. Friend mentioned, does he accept the Legal Aid Board's finding that a principal reason was the increase in the limits of small claims courts, which took a large number of people out of the ambit of legal aid?

Mr. Hoon: That may well be the case, but the cost is rising at a time when the number of acts of assistance are falling. The taxpayer has been paying considerably more and getting considerably less. Expenditure in the financial year just ended was around £1.63 billion--£104 million or 7 per cent. more than in the previous year--which demonstrates the volatility of increases and the change possible from year to year in the present legal aid scheme.

Furthermore, civil legal aid is very restricted. For the most part, only people qualified to claim benefits can use legal aid. Those who have slightly more disposable income, but who still have very modest resources, are effectively excluded.

What are we doing to solve these problems? The Bill is only part of our plans. The White Paper laid before Parliament last December puts the Bill in a wider context, which includes the programme of reform to the civil courts that will come into effect on 26 April, and which will make the cost of cases more predictable and their progress more rapid.

Today, I must concentrate on what the Bill will do to modernise legal services. The first part of the Bill will reform the legal aid scheme to provide the best possible services for people within the constraints of available resources, and by securing the best possible value for money. The Bill will establish the Legal Services Commission to operate the community legal service and the criminal defence service. The community legal service will subsume the existing programme of family and civil legal aid, but its objectives will be wider and more innovative.

The most radical feature of the community legal service is that, for the first time, we will assess the need for legal and advice services and develop the provision of such

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help in response to that need. In partnership with local funders of legal and advice services, and in particular with local authorities, the community legal service will draw up plans for the delivery of legal and advice services, taking account of identified needs and priorities.

No Government can guarantee that all needs will or can always be met. That is certainly not the case with the existing legal aid system. But we intend for the first time to be in a position to base funding choices on real evidence.

Mr. Dominic Grieve (Beaconsfield): Is not one of the effects of the scheme that the Minister is introducing the fact that, whereas under the old system the state disbursed to help people who did not have enough money to litigate, the state will now choose which forms of litigation it considers socially desirable and therefore worthy of support? Is that a desirable development in a free society?

Mr. Hoon: That already happens under the existing scheme. The hon. Gentleman knows that some cases are within the scope of the existing system and some are outside it. If, as we hope to, we bring the overall cost of legal aid under control for the first time, we may also be able to think more carefully about the areas that have historically been excluded, and try to provide financial support. The precondition for that approach is to get the existing scheme under control, however. The previous Government consistently failed to do that, but it is our ambition to be successful.

Mr. Nicholas Winterton (Macclesfield): I am most interested in the Minister's reply to my hon. Friend's question. Is the Government's objective merely to contain or even to reduce the money that the taxpayer gives in legal aid, or is the Minister concerned to ensure that as many people as possible who need justice from our system but need to rely on legal aid to get it, receive help?

Mr. Hoon: Our ambition is to control the cost of legal aid and to ensure that we can plan appropriate provision year on year to meet need. That means that we will carefully consider the range of people affected--the most vulnerable people in our society who have legal problems and need legal advice--so that we can direct scarce taxpayers' resources to meeting their needs. The present system does not achieve that, but we are determined that the Bill will right the wrong.

Mr. Nick Hawkins (Surrey Heath): Will the Minister give way?

Mr. Hoon: May I make a little more progress first? I shall give way in a few minutes.

Mr. Hawkins: On this very point?

Mr. Hoon: All right.

Mr. Hawkins: Further to the intervention by my hon. Friend the Member for Macclesfield (Mr. Winterton), will the Minister confirm the simple fact that in the last year for which figures are available, the number of people

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helped by legal aid increased by 3.2 per cent. whereas legal aid spending increased by only 1.2 per cent? Does that not make my hon. Friend's point for him and undermine the Government's claim that the new scheme is intended to help people? It is not intended to help people; it is simply intended to save money.

Mr. Hoon: On the contrary. The hon. Gentleman is not using the most up-to-date figures. That is understandable, because they are probably not available to him. The figures on which he is relying are for the year before last. I have already conceded that for a couple of years there was some slowdown in the rate of increase. However, our best information is that the level of increase for last year is about 7 per cent., which demonstrates the degree of volatility involved.

Within the overall community legal service, the community legal service fund will replace the existing legal aid scheme for civil and family cases. This will secure the provision of publicly funded legal services on the basis of national, regional and local priorities. The Legal Services Commission will, in the light of those priorities, draw up a funding code, which will be approved by the Lord Chancellor and agreed by Parliament. That code will set out the detailed criteria and procedures for deciding whether to fund individual cases.

This approach will be both tougher and more flexible than at present. The funding code will allow different criteria to apply to different kinds of cases and different types of help. We will ensure that help is channelled to the cases that most need support. That means that, where appropriate alternatives to public funding exist, we shall expect them to be used, to allow us to focus scarce public money where the need is greatest and where it can do most good.

Accordingly, this Bill carries through the policy announced last July of requiring most personal injury claims to be taken using conditional fee agreements. Conditional fees are an important means of extending access to justice to the great majority of the population, who have effectively been denied access to the courts by the fear of lawyers' bills. Only the very rich, those with insurance and those poor enough to qualify for legal aid have any hope of achieving real access to justice.

Mr. John Bercow (Buckingham): What does the Minister say to Mr. Phillip Sycamore, the president of the Law Society, who has said that the Government's proposals for conditional fee arrangements involve removing civil rights from large sections of the population and denying them access to justice? I was concerned to see the Minister, who is normally a polite soul, chuntering when I mentioned the president of the Law Society, who is an estimable person and deserves a proper response. As premiums, especially in relation to cases of medical negligence, can be onerous, is not the Minister concerned that people currently eligible for legal aid will find their cost beyond them?

Mr. Hoon: The reason for my concern about the hon. Gentleman's comments is that Mr. Phillip Sycamore has not been president of the Law Society for some time. I accept that he was previously president. I do not accept that the system of conditional fees restricts accessto justice. The overwhelming evidence of the correspondence that I receive from hon. Members on both

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sides of the House is that people complain that they cannot get legal aid because they are just above the financial limit. Those people are denied access to justice, which can be secured through no win, no fee agreements which mean that lawyers take the risk and that people can safely rely on the quality of advice that they are given.

The present problem with conditional fees is that they penalise the successful plaintiff by paying the lawyer's success fee out of the damages recovered, thus reducing the compensation. We propose instead to allow the claimant to recover the success fee. We will also make insurance premiums paid by a successful litigant in connection with specific proceedings recoverable by way of costs. That will make the use of conditional fee arrangements fairer and more effective for everyone and place the cost of having to take action in the courts squarely with the individual or organisation whose fault caused the litigation in the first place. For the client, the proposal will ensure that the full damages recovered will be retained, rather than a slice going to his or her lawyers. That is a significant step forward for the operation of conditional fees.

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