NAO report on legal aid cuts

In November 2014, the National Audit Office (‘NAO’) published a report of their findings into the impact of the changes to legal aid made under the Legal Aid, Sentencing and Punishment of Offenders Act 2012 (LASPO). You can read the full report here. The function of the NAO is to assist Parliament in holding the government to account, and ensure that the nation is spending wisely.

The report considered the value for money achieved by the cuts, by measuring the Ministry of Justice’s objectives in making the cuts (making savings, discouraging unnecessary litigation, targeting legal aid to those who need it and delivering better value for money to the tax payer), against the impact they have had on providers and clients.

Overall, the NAO concluded that the cuts had the potential to create additional costs. There were several factors that the Ministry of Justice had failed to consider in implementing LASPO. Increased and transferred costs have arisen in various guises such as;

1. The increase of litigants in person who are less likely to settle cases outside of court, and whose court hearings have been found to take 50% longer than with representation;
2. Court fees where a litigant in person no longer eligible for legal aid will be eligible for fee exemption rather than the fee being met through the Legal Aid Agency. The estimated cost to the courts is £10 million. As the Ministry is responsible overall for both the Agency and courts this is not an overall saving to the Ministry but a transfer of costs; 
3. The loss of VAT payable on legal aid cases, which is estimated to be £60 million for 2013-2014. Payments from the Agency to legal aid providers are subject to VAT so 20% of savings to the Agency are cancelled out by reduced revenue to HM Treasury.

The overarching message of the NAO’s report is that the reforms were introduced without proper research into the sustainability of the market, or how people who could no longer access legal aid would cope. These findings are largely consistent with the concerns of legal campaigners before the cuts were introduced. In YLAL’s response to the government consultation ‘Transforming Legal Aid’, we drew attention to the likely increase of litigants in person, and the costs that the reforms would cause, rather than save.

 The NAO’s report does not cover the full extent of the impact of the cuts, for example the cost of the satellite litigation arising from the cuts and focuses primarily on the impact to family law rather than other areas of civil legal aid, where data is more difficult to collate. However, the NAO’s findings are important as an independent body endorsing the predictions of the legal aid market.