Select Committee on Home Affairs Minutes of Evidence

Replies by the Lord Chancellor's Department to Written Questions from the Committee on the Lord Chancellor's Department Annual Report 2001-02


1.   PSA targets have changed significantly which makes it difficult to follow progress. From last year's report it would seem that not all of the previous targets, which ran for the three years to 2000-01, have been met by March 2001. For example, the previous PSA3 target to increase the proportion of administrative processes dealt with within a set time to 95 per cent. This target was not expected to be met for 2000-01. Did LCD pick up those targets not met by March 2001 and include them in the SDAs or have they been completely abandoned?

  The PSA targets and Output and Performance Analysis (OPA) measures or indicators contained within the Departmental Report 2000-01, were set as a consequence of the Comprehensive Spending Review 1998. The Report only comments on the outturn position for those targets up to and including 31 December 2000. The OPA are measures or indicators that support the delivery of each individual PSA target. A revised PSA was agreed as part of SR2000.

  A summary of departmental performance for the PSA targets is shown below. A more detailed summary table containing details of the PSA and OPA not achieved by 31 December 2000 is attached (Annex A).

Objective PSA targets
Met by 31 March 2001 Met by 31 March 2002

1All three targets met Not applicable
2All three targets replaced by SR2000 targets Not applicable
3Three of the eight targets were met A further two of the targets were met; the remaining three were replaced or superseded by SR2000 targets
4Six of the 18 targets were met A further two of the targets were met; the remaining 10 were replaced or superseded by SR2000 targets
5The PSA target was dropped New PSA and SDA were set during SR2000
6The two targets were met New PSA and SDA were set during SR2000
OperationalEight of the 15 targets were met The remaining targets were replaced or superseded by SR2000 targets or Court Service Key Performance Indicators

  The majority of these targets were replaced or subsumed into the Spending Review 2000 LCD PSA and SDA targets.

2.   The PSA targets were revised in December 1999 according to last year's report, where they were printed in full in addition to the targets for the three years to 2000-01. The targets are broken down into measurable sub-targets. For seven out of 10 of the current LCD PSA targets, specific measurable indicators or baseline data have still not been agreed for all sub-targets over two years later.

  For example, PSA2: To reduce by 2004 the time from arrest to sentence or other disposal for all defendants by:

    —  reducing the time from charge to disposal for all defendants with a target to be specified by 2001;

    —  dealing with 80% of youth court cases within their time targets, and

    —  halving from 142 to 71 days by March 2002 the time taken from arrest to sentence for persistent youth offenders and maintaining that level thereafter.

  Whilst the last sub-target has been met, the Department is still developing baselines for the first two sub-targets.

  Sub-targets and baseline data have also not been set for PSA3, 5, 6a, 7, 8 and 9. Targets run for three years from 2001-02 so the department is already one third of the way through this period. Why are such delays arising and what action is being taken to address this problem?

  Explanation for each of the PSA targets quoted above is attached (Annex B).

3.   PSA3: Increase the level of confidence in the Criminal Justice System by 2004, including improving that of ethnic minority communities. The PSA targets for 2001-04 as set out in last year's departmental report referred to a target date of March 2004 rather than 2004. Has the target been amended?

  The PSA target has not been amended. The PSA runs for three financial years ending on 31 March 2004. This target is also a criminal justice system PSA target. In the drafting of the Departmental Report 2001-04 the word March was added in error.


4.   Target 1b: To reduce waiting time for asylum appeals from receipt at the Immigration Appellate Authorities to promulgation of the Adjudicator's determination from 36 in 1999-2000 to 17 weeks. This was met in 2000-01 but will not be met in 2001-02. Why was this and what is the department doing to address this? What assumptions about the number of appeals underlie this target?

  The targets for 2000-01 and for 2001-02 appear the same but are actually quite different and not directly comparable.

  The target for 2000-01 was to achieve an average time from receipt of the appeal to promulgation of the adjudicator's judgment in 17 weeks. This target was for the first tier only of the Immigration Appellate Authority. It was met as the average time for receipt of the appeal to promulgation at adjudicator level was 15.4 weeks.

  The target for 2001-02 was to clear 65% of all asylum appeals in 17 weeks, through both tiers of the IAA—that is through the adjudicator and through the Immigration Appeal Tribunal as necessary. The way of measuring this target was changed to align with the target adopted by the Immigration and Nationality Directorate of the Home Office for the decision-making process.

  Figures for cases received in the period April 2001 to December 2001 (inclusive) show LCD has cleared 43% of asylum appeals through both tiers of the IAA.

  The target was set for a future projected caseload of 4,000 appeals each month, and a caseload mix which included 35% of certified cases which are dealt with at adjudicator level alone. The number of appeals has been steadily rising and will hit 6,000 appeals a month from November 2002. In addition, the proportion of certified cases has decreased considerably to 21% and a far higher number of appeals now continue to the Immigration Appeal Tribunal.

  Radical new ways of dealing with appeals, through tighter judicial case management, faster promulgation of judicial decisions, and the introduction of a single administrative centre in Loughborough are driving down the time that cases take. At the same time the IAA is taking on a huge increase in the number of appeals dealt with each month. This concerted action should achieve an improvement in progress towards the target over the remainder of the year.

  At the same time as handling this increasing workload, the IAA has embarked on an unprecedented 50% expansion of judiciary, staff and hearing and administrative facilities to handle the 50% increase in appeals.

  From April 2000 to March 2001 the IAA disposed of 26,810 adjudicator appeals.

  In the following year it disposed of 47,017 asylum appeals and an increasing number of family visit visa appeals and bail cases. Family visit visa appeals were only in place in the last five months of 2000-01 and so had a far greater impact in 2001-02. Bail cases have increased in line with the Home Office increases in detained places. These significant changes in volume and case mix, most of which could not be predicted at the time that the target was set, have inevitably had an impact on its achievement.

5.   According to page 78, the target is contained in LCD SDA targets for 2002-03 onwards in a modified form. How has it been modified?

  This target is modified from the previous SDA, which only covered an average time for those cases promulgated. The KPI for the Court Service for 2001-02 was in the modified form.

6.   Target 6: To increase the proportion of mediated divorce proceedings as against court-based proceedings from 5% to 20% by 2001-02 for those areas where the Family Law Act is implemented. This has not been met and has been dropped. It is now partly included in PSA5 but there is no mention of per cent targets or time deadlines and progress is not known. What were the difficulties which contributed to this target not being met, why does PSA5 not include per cent targets or time deadlines and how does the department now intend to measure progress?

  This target was relevant to the proposed procedures for implementing divorce reform set out in Part II of the Family Law Act 1996. The Lord Chancellor announced, in a written parliamentary answer on 16 January 2001, that the Government was not satisfied that it would be right to proceed with the implementation of Part II. He confirmed that the Government would invite Parliament to repeal the relevant sections of the Act when a suitable legislative opportunity occurred.

  His decision was based on the comprehensive research undertaken on pilots of the Part II information meetings which indicated that these did not meet people's needs. After considering the research and in the light of concerns about the procedures generally, the Government concluded that Part II did not meet the principles set out in Part I of the Act of saving saveable marriages, and bringing marriages which have broken down to an end with the minimum distress to the parties and children affected.

  His decision also took account of research undertaken on pilot contracts for the provision of publicly funded family mediation (published in December 2000). This indicated that mediation was not suitable in all cases, and that in many cases it was not possible to engage both parties so as to allow mediation to be successful.

  LCD has replaced this target, which focused on the procedures for dealing with relationship breakdown with a target that focuses on improving the outcomes for children caught up in their parents' relationship breakdown. LCD's current PSA Target 8: "to increase continued contact between children and the non-resident parent after a family breakdown where this is in the best interests of the child" is based on research evidence. This demonstrates that children's health, educational and general development is enhanced where the quality of the relationship between the child and the non-resident parent is good. LCD's PSA Target 5, covering the resolution of disputes other than through the courts, does not include specific targets or deadlines in respect of mediation because of the research findings that mediation in family cases can benefit only a minority of cases. However, publicly funded mediation under the Community Legal Service Funding Code has been available since March 1997. Over 270 mediation services have now concluded contracts with the Legal Services Commission to provide quality-assured mediation facilities in all parts of England and Wales. The volume of cases in which family mediation is provided under the Community Legal Service continues to be monitored as a means of assessing the volume of mediation and its effectiveness.

7.   Productivity Target 1a: To improve the level of service to court users based on an index of quantitative measures from 82% in 1998-99 to 85% in 2001-02. This has not been met. It is now included in PSA1. Why was this target not met and how is the department changing its approach to ensure it can meet the improvement standards now included under PSA1?

  The target was in fact met—the performance figure was 89.2%. The final performance information was not available when the Report went to print.

8.   Productivity Target 10: A reduction in real terms of the unit cost of the Legal Aid Board processing current legal aid business by an average of 3% per annum. The status of this target is unknown although progress is said to be on course. Why is the status of this target said to be unknown?

  Progress is reported by the LSC in its Annual Report. The Report for 2001-02, to be published soon, will show that the Legal Services Commission (which replaced the Legal Aid Board in April 2000) achieved a reduction in real terms of 2.6% in the unit cost of current legal aid business. This applies to the processing functions that remain comparable before and after the legal aid reforms. The introduction of contracting has shifted much of the business to a new form of transaction.

9.   Further CSR Target Fraud: The Department's strategy includes extending the LAB's Special Investigations Unit to criminal cases, better detection through the use of LAB's Corporate Information System and exclusive contracting. This target has been dropped and new targets set in SDA 58, 59 and 60. Please provide details of the three SDA targets on fraud and the progress to date on each of them.SDA 58 states that: "LCD will continue to improve systems and controls throughout the Department designed to secure regularity, propriety, and value for money and safeguarding of assets and interests from losses. In particular, the Department will be focusing on meeting Government targets for the introduction of risk management and corporate governance procedures, and establishing mechanisms to demonstrate the effectiveness of those procedures".

  The Department maintains sound systems of internal control, which are kept under review and are subject to regular audit coverage. Specific measures taken by LCD to improve its systems and controls include:

    —  in January 2002 a revised system of internal financial control was introduced for LCDHQ and the Associated Offices. The system is based upon a flexible core of compliance controls, and strengthened the reporting and review structure. It introduced the assessment of risk to achieve a balance between the application of resources and the level (likelihood/impact) of the risk identified to ensure an acceptable degree of control. It also provides an auditable trail of evidence to enable assurance that controls are being operated effectively;

    —  a wide range of security measures are in place to safeguard assets and to deter and detect theft and fraud. These include physical security standards for all departmental buildings, personnel security procedures and arrangements to safeguard valuable departmental assets. The security of buildings is reviewed on a periodic basis and security arrangements in general are reviewed in the light of any emerging threats or serious incidents. The Department's programme to achieve compliance with BS7799, the British Standard for Information Security Management, will quality assure existing practices and introduce improvements where these are found to be necessary. Measures include more extensive use of risk assessment, security education and awareness for staff and improvements in physical security;

    —  the Department's Fraud Prevention Policy is communicated to all staff, and guidance on the identification, and reporting of fraud, is contained in the Departmental Finance Manual. All incidents of suspected or detected fraud are subject to rigorous investigation and appropriate action is taken, including consideration of whether controls need to be improved to prevent any further re-occurrence. The Department maintains an effective capability to investigate incidents of fraud, and includes a cadre of trained staff. The Department's Fraud Prevention Policy has been supplemented by the introduction in 2001 of a Confidential Reporting (whistle-blowing) policy, and the revision and reissue of staff conduct and disciplinary procedures in the Staff Handbook. Guidance on Propriety & Regularity issues has also been revised and is to be issued shortly through a Finance Bulletin to all staff.

  SDA 59 for 2002-03 has been slightly amended to reflect changes to government internal audit standards for internal audit in central government bodies, which took effect from April 2002; the target requires that:

    "LCD will provide annual internal audit opinion on risk management, control and governance, based on the evidence provided from an agreed programme of audit assignments and other activity; the audit work will have due regard to regularity, propriety and value for money. IAD will also provide advice and guidance on risk, control and related issues and provide assistance in the promotion of an anti-fraud culture and investigation of incidents of fraud, irregularity or corruption."

  Internal audit work programmes for 2002-03 have been agreed with the Department and its agencies' Audit Committees and Accounting Officers. The programmes are on target for completion by the end of the financial year and will provide sufficient evidence to support the annual internal audit opinions. Activity within the audit programmes provides for a strong emphasis on assessing the reliability and effectiveness of controls to safeguard the Department's assets and interests from losses of all kinds, including those arising from internal fraud, irregularity or corruption. In addition to the programmes of audits, internal audit is delivering an active contribution to the Department and its agencies' anti-fraud culture including managing the risk of fraud and the promotion of fraud awareness, fraud policies and fraud response plans. On those occasions where internal fraud is suspected or reported investigations have been/are being completed. This includes identification of any lessons learnt and of any need to refine existing control arrangements.

  SDA 60 states that: "The Department will contribute fully to central government initiatives to combat welfare benefits fraud. The Legal Services Commission's policy will be to seek prosecution of individuals in all cases where there is sufficient evidence of dishonesty. The Commission's Special Investigations Unit will continue to examine rigorously applicants' financial eligibility for publicly funded legal services".

  We are making progress.


  In 2001-02, the Special Investigations Unit (SIU) concluded full investigations into 151 civil cases. In 85% of these cases, investigations led to either the refusal or withdrawal of funding, or an increase in contributions payable. This compares with 84% in 2000-01. In addition, the SIU assisted the Commission's regional offices with means assessment in a further 195 complex cases involving self-employed people and company directors. In 91% of these cases the additional enquiries led to a change in the previous decision. This compares with 93% in 2000-01. Estimated savings arising out of the work of the SIU are £1.2 million per annum.


  In April 2001 Recovery of Defence Costs Orders (RDCOs) replaced the former system of means assessment for criminal legal aid for cases which progress to the Crown Court. The SIU assists the courts in determining a defendant's ability to pay towards their defence costs where the defendant is likely to have access to significant assets and where their financial affairs are complex. In 2001-02 the SIU accepted 809 referrals from the Crown Court. Of these, 632 cases required full investigation. Investigations were concluded in 292 cases and reports submitted back to the courts. The Crown Court made 22 RDCOs as a result of reports from the SIU and the total of costs so far assessed on those 22 orders is £141,605.

  Investigations into the outstanding referrals are not yet complete. Many of the cases involving the SIU are large and the trials are not scheduled to take place until some time after the case has been referred to the SIU.

  The SIU also concluded 47 investigations relating to applications for criminal legal aid made prior to April 2001. In 40 cases (85%) these investigations resulted in a change to the decision regarding funding. This compares to 93% in the previous year. This slight reduction in the proportion of successful outcomes reflects the fact that some of these defendants withdrew their legal aid applications after April 2001 and reapplied under the new scheme.

Prosecutions for fraud

  The Commission is not a prosecuting authority and appropriate cases have to be referred to the police who, with the CPS, will consider whether to prosecute. The standard of evidence required for a criminal prosecution is far higher than that needed to take action on funding and these cases do not receive the highest priority by the police. Referral to the police is therefore limited to larger cases where there is clear evidence of fraud. Two new cases were referred to the police in 2001-02. In one case the police decided not to proceed further. In the second case, the file was referred to the CPS for a decision. The outcome is not yet known.

10.   Further CSR Target-Procurement: There were six targets on procurement, all of which have been dropped. In some cases they have been replaced by SDA targets. Please provide details of the SDA targets on procurement and the progress to date on each of them.

SDA 56 is: "To achieve value for money improvements in procurement, year on year, equivalent to 3% of general procurement expenditure".

  The target was met in 2001-02. Activities focused on expenditure in areas such as reprographics, postage, catering, security and motor vehicles and delivered value for money improvements of £8.63 million against overall expenditure of £50 million on general procurement. The £8.63 million will form part of the LCD contribution to the OGC £1 billion VFM target.

  SDA 57 is: "To deliver an annual programme to review at least 20% (by value) of the total expended on general procurement".

  Planned reviews of colour print services, hotel requirements and catering services, as well as security initiatives, including reviews of personnel, duties and hours worked were carried out. This represents an approximate value of £12 million against a baseline of £50 million (24%).

  As a component part of e-commerce, the successful pilot of the Government Procurement Card has been evaluated and a phased implementation to remaining areas of the Court Service is due to be completed by the Autumn. The introduction of the Card to the remainder of the Department will follow by the end of this year.

  A key task for 2002-03 is the further development of the procurement cross-cutting responsibility which is aimed at strengthening procurement across the whole of the Department's commercial activities. The Centre Led Action Network (CLAN) has been created and as a priority a survey of commercial activities, expenditure and capability across the Department, its agencies and NDPBs is under way. The survey is intended to facilitate the sharing of information and best practice and to identify opportunities for collaboration and scope for improvement.

  The expectation is that the CLAN will play a major role in contributing to the achievement of procurement objectives and targets.


11.   The Department has now completed one full financial year with a live resource budget and is coming to the end of the first quarter of the second year. How effective have the assumptions underlying resource budgeting process been and how has the department performed against its budget for 2001-02?

  The assumptions underlying the resource budget were generally fairly robust. In some instances, particularly with regard to the provision for higher criminal legal aid (increased by £50 million) and the increase in capital charges for the Court Estate (increased by £14.7 million), the initial assumptions required adjustment through the Supplementary Estimates process. The Department's in-year monitoring process highlighted those changes and enabled the adjustments to be made through the normal parliamentary procedures for approving government expenditure.

  The performance against the 2001-02 budget is currently being finalised. The outturn figure is expected to be close to budget but is still subject to some accounting adjustments such as those associated with the Machinery of Government changes. In addition, of course, it is possible that a significant event after the year-end (known as a Post Balance Sheet Event), may necessitate further adjustments to the final outturn position at any point until the accounts are certified.

12.   In previous years there have been significant losses disclosed due to the fines, fees, costs and contribution that could not be collected. Given this, has the Department estimated the likely impact on losses of removing means testing and moving to a system whereby at the end of the case the judge can order defendants in Crown Court cases to pay back some or all of the costs of defence after an assessment of means?

  The primary purpose in abolishing the means test was to remove the potential for delay in the Criminal Justice System, and to avoid administrative weaknesses that the National Audit Office (NAO) had highlighted every year since 1990. It was not to increase the amounts collected from defendants. Some reduction in revenue net of the direct costs of administering the test was expected, but with gains in enabling the criminal justice system to deal with cases more expeditiously. In reviewing the new system, we shall assess the likely impact on financial losses and the options for reducing them. The Comptroller and Auditor-General has accepted (in his Report of 20 February 2001) that Recovery of Defence Costs Orders (RDCOs) have removed the control weaknesses over the grant of funding in the Magistrates' Courts.


Financial Tables

13.   Tables A2 to A4 and the additional table for Capital Employed for LCD include outturn figures for 2000-01. Should these figures equate to figures included in the published resource account for 2000-01? For example, Table A2 analyses expenditure under the same headings as Note 8 of the 2000-01 resource account but the figures in Table A2 differ substantially from those in Note 8 of the accounts (see below). Can you clarify why the figures above disclosed in Table A2 are not the same as those in the published resource account?

  The figures shown in Table A2 are prepared on a different basis to the Resource Account figures, but it is possible to reconcile the two. The main reasons for the differences are explained in detail below, but generally speaking it is due to the structure of the HM Treasury FIS Database (from which the Departmental Report tables are drawn). It has not yet been possible to update the database with figures derived from the Resource Accounts, although it has been possible to reconcile the database to our Appropriation Accounts, as the database structure more readily suits that format. For example, it is not possible to show the Legal Aid provision or the capital charge related to this provision under Legal Aid on the database. This has instead been shown under Headquarters.

  There are also certain streams of expenditure that appear under different headings in the DR tables and the Resource Accounts. The table below sets out the key differences:

Published RA
Legal Aid
Consolidated Fund Non-cash charges/accrualsTable A2


Headquarters and
Associated Offices
66918 16181
Court Service306 83(39)350
Public Trust Office10 (6)4
Community Legal Service781 15 796
Costs from Central Funds40 (1) 39
Legal Aid: Criminal972 (91)(30) 851

  Non-cash charges and accruals adjustments are not included in the Appropriation Account, and so have not yet been updated from forecast figures. The non-cash items are reflected in the Department's Annually Managed Expenditure due to the fact that they were never forecast before the introduction of Resource Accounting and Budgeting and are therefore highly volatile.

  The Legal Services Commission: Admin line cannot be reconciled because they are being reported on two completely different bases, which is due to differences in the resources accounting and resource budgeting boundaries. In the Resource Accounts, the grant paid to the LSC is recorded. In the Departmental Report, the resource consumption of the LSC itself is recorded. This resource consumption has also yet to be reconciled to their own published accounts, and so the table shows their forecast resource consumption.

14.   Under Publicly Funded Legal Services, does the line "Legal Aid: Criminal" include both criminal and civil legal aid for 1998-99 and 1999-2000?

  The entry, which relates to expenditure incurred before the creation of the Community Legal Service and Criminal Defence Service, should have read "Legal Aid". We apologise for the error.

15.   Overall, legal aid has increased significantly in 2000-01 and Table A2 suggests that costs are expected to remain at this increased level. Where is this arising (ie Magistrates' Courts, Crown Court)? What are the reasons for this and what is the Department doing to cap expenditure at the present level?

  The increase relates solely to criminal legal aid—civil legal aid has decreased.

  The increase is mainly in the Crown Court, where average costs are rising partly as a result of a fall in the plea rate—with fewer guilty pleas and more trials. But the main reason is the increase in the cost of high-cost cases; the most expensive 1% of cases (mainly serious fraud, drug trafficking and revenue cases) now cost 49% of Crown Court legal aid. We expect some increase in the volume of cases going to the Magistrates' Court as a result of Government initiatives for tackling crime and dealing with persistent offenders.

  Criminal legal aid is demand led and available to anyone charged with a serious offence. Decisions to prosecute are taken elsewhere (by the police and prosecuting agencies). The Department cannot simply cap expenditure when it has no control over case volumes, or increasing complexity.

  Nevertheless, the Department has done much to control costs in individual cases. For example, 90% of cases in Magistrates' Courts are paid at a standard fee. In the Crown Court advocates are paid a graduated standard fee in all cases involving trials of up to 25 days. Use of QCs is now more tightly controlled, and QCs are used in 50% fewer cases. Additionally, the Legal Services Commission is piloting the use of contracts in very high cost cases, when the work required and rate payable at each stage are agreed in advance. Early indications suggest that considerable savings are possible, but there would be a substantial initial cost in extending these contracts because lawyers must be paid earlier. No decision has yet been taken on extending these contracts; we will look at this carefully in light of the spending review.

16.   Court Service resource expenditure increased by 76% in 2000-01, is expected to increase by 22% in 2001-02 and is thereafter expected to rise by about 5% per year. What were the reasons for these large increases and the sustained higher expenditure levels in later years?

  The expenditure figures in Table A2 do not provide an accurate picture of changes in Court Service expenditure because of the change in accounting from the cash system to Resource Accounting and Budgeting during the period covered by the table.

  The Court Service published its first set of audited agency accounts in 2000-01. Total net expenditure was £411 million in 2000-01 rising to £514 million in 2001-02, an increase of 25%. This increase is almost wholly explained by additional funding secured to support the following:

    —  Courts' Modernisation Programme (£11 million);

    —  asylum expansion (£38 million);

    —  additional Crown Court sitting days (£10 million);

    —  inflationary increases (£14 million); and

    —  transfer of staff functions relating to Magistrates' Courts administrative issues (£26 million).

  Increases in future years will depend on the outcome of spending decisions, for example, additional asylum expenditure, and investment in court information technology.

Table A5: Staff Numbers

17.   In Table A5 no casual staff are included for LCD for 2000-01 and overtime was lower than in other years. How did circumstances at LCD differ from in other years so that there was reduced overtime and no casual staff needed to be employed during 2000-01?

  The figure recorded for casuals in 2000-01 was omitted in error and should read 450, which is not significantly different to previous years.

  The overtime figure is only slightly lower than the three previous years. Overtime fluctuates according to local business needs, and we do not collect information on the particular reasons for authorising overtime.

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