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Earl Russell: My Lords, I am most grateful to the noble and learned Lord. Would he accept a slight reformulation of the case he is putting? He said that decisions on charges are a matter of policy. Would he accept that they are a matter of policy so long as they do not prevent access; and that in order not to prevent access, the system needs to be slightly more generous than at present?

The Lord Chancellor: My Lords, I would accept only that a system of charging for access must be fair. I shall elaborate on what I mean by "fair" in the course of this speech. What I am saying very, very clearly is that those who attach the label "constitutional" to their arguments are doing so quite deliberately so as to put themselves into a position of arguing that government have no discretion left in the allocation of scarce public resources because to charge anything for the use of the courts would be unconstitutional. It is that position that I cannot give intellectual acceptance to. For example, I would not accept that before the National Health Service was set up on 1948 there was a "constitutional" right of citizens to free medical services which was being denied.

I read in my Times on Friday that Mr. Justice Ferris recently described as "profoundly shocking" figures which showed that all but £60,000 of the £1.68 million personal estate of the late Robert Maxwell would be

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swallowed up in professional fees. The judge said that if the amounts claimed by the insolvency firm appointed by the court to sell the remaining assets left after Mr. Maxwell's death were paid in full--and they were claiming at a billing rate of £270 per hour for senior staff and up to £195 per hour for other accountants--then the receivership would have produced,

    "substantial rewards for the receivers and their lawyers and nothing at all for the creditors".

The modest fees charged by the court service did not of course merit a mention. They were a drop in the ocean.

Now any civil litigant who does not represent himself, but is represented by a lawyer, will in practice pay fees to his lawyers vastly in excess of the modest court fees. It is the fact that there are number of QCs in this country who do earn £1 million a year and many who would regard £500,000 in one year as representing a very bad year for them. I have to acknowledge that until recently I had myself what I think I could fairly describe as an entirely satisfactory and rewarding practice at the Bar, so that, to some, my calling attention to incomes of this order might bear comparison to the conversation of St. Paul. On the other hand, I am in an especially good position to know the facts and I do not believe that facts should be suppressed. It is also fair to say that there are very many more who earn fair and reasonable incomes, largely from criminal legal aid, the level of whose incomes are not to be criticised.

We are not talking expressly about criminal litigation today, but we are talking plainly. It is a staggering fact that of the total criminal legal aid budget of £566 million per annum, the top 1 per cent. of criminal cases consume 24 per cent. of the total expenditure. In a Written Answer on 24th June I confirmed that £13.36 million had been paid as of 17th June 1997 from the legal aid fund to lawyers who acted in the recent Maxwell cases. I shall not know what the final costs are until early next year. It is the fact that top lawyers in this country easily earn at least four times what top surgeons earn. The main deterrent on going to law is not court fees but the price at which lawyers value their own services and, so far, have succeeded in charging. To argue that court fees act as a deterrent to litigants is rather like arguing that people are deterred from buying a new motor car by an increase in vehicle excise duty.

It is the overall financial cost and risk of ligation that affects decisions whether or not to litigate, not any particular component in the overall cost. I therefore question whether it can be right to suggest that one of the smallest components in that bill--court fees--is really the determining factor. Fat cat lawyers railing at the inequity of court fees do not attract the sympathy of the public. People who live in glass houses should not throw stones.

Let us for a minute consider the implications of any claim that users should not pay court fees. The total cost of civil business in the courts is £335 million per annum. Not all of this is required to be recovered in fees. The expression "full cost recovery" is a misnomer. The exemptions and remissions to which I have referred are funded by the taxpayer to the tune of about £15 million per annum. On top of this, the taxpayer, via the Legal Aid Fund, pays roughly £63 million of court fees. In all,

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a total of about £78 million of the costs of the civil courts is met by the taxpayer on behalf of the poorer users of the courts. The amount paid by court users out of their own pockets is, therefore, around £257 million.

And let us be clear who these court users are. We estimate that around £100 million of fees are paid by large concerns, either issuing claims on their own behalf or paying to support those taking advantage of legal expenses insurance. Far less than half the cost of civil business therefore falls on individual litigants.

If I wished to provide courts free to all those who wish to use them, whether corporations or individuals, your Lordships will appreciate that the £257 million currently taken in fees would have to be found from somewhere else. Should I deduct £257 million from a legal aid budget which last year totalled some £1.5 billion? That would not be met with acclamation, least of all from the noble and learned Lord. I do not think anyone would argue that I should withdraw criminal legal aid to any extent, although I am sure that everyone will agree that I should control its cost. Nor do I think that any of your Lordships would wish me to cease providing assistance to those of modest means bringing family proceedings, or cases under the Children Act, or those seeking protection from domestic violence. Over £1 billion of legal aid expenditure would therefore be regarded as representing categories of legal aid, which I think almost every one of your Lordships would regard as inviolable. Perhaps I could make the saving by an immediate wholesale abolition of the advice and assistance scheme? That would excite howls of protest and rightly. Anyway, we have a manifesto commitment to develop, not to abolish, community legal services. A high priority therefore attaches to the £151 million which they currently cost.

The remaining £250 million or so goes to provide full civil legal aid, funding help for those bringing or defending housing and personal injury claims, or bringing proceedings for judicial review. Noble Lords will have observed that this £250 million would be just about enough to enable me to abolish all court fees. But would it really be a sensible development of policy to tear away legal representation from an impoverished tenant under threat of repossession; or to cast aside a person who needs help to prove a claim for injuries at work or elsewhere? Can it really be right to cast such people aside as the price for exempting people who have the means from paying a small fee to use the court? I do not think so.

The plain fact is that to cut my budget by £257 million would affect access to justice even more comprehensively than the current court fees are claimed to do. Is the truth not that those who argue for free access to courts for all are really arguing that the Government should charge taxpayers an additional £257 million and then increase my budget by that amount so that I can dispense with court fees?

Lord Mishcon: My Lords, will the noble and learned Lord accept that no one participating in this debate

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asked for no court fees, but did indeed ask that any rise in those court fees should be of a moderate nature and not induce hardship?

The Lord Chancellor: My Lords, although the unspoken premise is never articulated, the unspoken premise of much that is said on this subject is that courts are part of the constitutional fabric of the state and therefore should be provided free for all. It is that which lies at the root of argument on this subject, but the logic of that is very often not accepted and picked up and run with by those who tacitly are arguing that because they realise that they would not prevail in that argument. I am very clear as to what the noble Lord, Lord Mishcon, wishes to hear from me. I can see that the existing structure of fees is not as rational as it should be. The front-loading of fees, which involves those who pay a fee to commence a claim cross-subsidising that small group whose case proceeds all the way to a hearing, may be an anomaly. As noble Lords know, I have asked Sir Peter Middleton to review the proposed reforms of the civil justice system and legal aid together. That is what I said in my address to the Bar conference that we would do if we were elected. That is exactly what I have done in appointing Sir Peter to report to me. His review is well under way and it is expected that he will report to me by the end of September.

What Sir Peter Middleton is doing is looking at the problem both of the proposed Woolf reforms and legal aid together. But it is legal costs (lawyers' fees) which make up the overwhelming proportion of the total cost to litigants. Should I decide--and I am directly responding to the debate--following Sir Peter's report, to implement the Woolf proposals or to make similarly sweeping changes to the procedures of the civil courts, it is clear that fees will need to undergo a similarly radical restructuring. Changes to the procedures of the courts would remove or redefine the current charging points, by which I mean the stages in court proceedings where fees become due. Alongside any reform of procedures there will, therefore, of necessity be a restructuring of court fees. I intend to consult in the autumn on the principles which this restructuring of fees should follow. That is the clearest response to the point made by the noble Lord, Lord Kingsland, on that matter. I am very concerned to get this issue resolved and resolved right.

I began by talking about protecting the poorest among us from the impact of court fees, and I explained that I regard the protections already in place--in the form of provision for exemption from, or remission of, fees, and in the form of legal aid--as adequate to ensure that they are not precluded from access to justice by being required to pay fees they cannot afford. The nature of the fees that are charged, and the way in which they are levied, however, needs to be reviewed. That is what I intend. But my present judgment is that there is nothing wrong with a general principle that those who can afford to do so should pay a fair fee for the use of the courts to resolve their disputes. The courts are cheaper by far than the charges associated with commercial arbitration.

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I have listened to this debate with great profit. I have listened to what the noble Lord, Lord Hacking, has said about daily hearing fees. I have no present plans to introduce them. The present principle is to recover the full cost of providing the civil courts, less an amount equivalent to the sum of exemptions and remissions. But I do not exclude any possibility from the review. There is a serious argument that court fees are excessively front-loaded.

Finally, in direct response to the noble Lord, Lord Mishcon, I acknowledge that the current provisions limiting the granting of automatic exemptions in the county court and the Supreme Court to those in receipt of income support is worthy of consideration. Other forms of benefit are in practice taken into account by court staff, to whom the day-to-day exercise of the power to reduce or remit fees is delegated. But as part of the review of the structure of fees I intend to examine the basis on which remissions are granted and I shall consider whether it will be appropriate for other categories of benefit to give rise to an automatic exemption from the liability to pay court fees.

In a debate which has not lasted as long as was thought likely, I apologise for having taken a little longer than I should, but I took the view that the importance of the subject matter merited it.

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