June 24, 2011 • 11:09 am
Government reforms to legal aid, including plans to save over £300 million from the cost of the system, have proved controversial.

One of the key proposals was to reduce – or no longer provide – legal aid in some cases, and this has been particularly contentious, with critics arguing that the changes would end up costing the government more than they would save.

The claim has been made by Citizens Advice and also in The Guardian. The News of the World reported earlier this month that the current regime actually saves the Government £188 million from the outlay spending on debt cases.

So what research is there underpinning these claims, particularly that in the News of the World?

Analysis

The figures used are based on research from Citizens Advice (CA) in 2010 that tried to put a value on the negative outcomes that were avoided through positive outcomes to legal cases assisted by legal aid.

The research works from data from the Civil and Social Justice Survey (CSJS), which among other things tried to assess what kind of negative consequences a person with a ‘civil justice problem’ could face.

In plainer English this means things such as the physical and mental health costs of dealing with problems such as divorce, homelessness, or discrimination issues – these in turn have costs associated with them, some of which could be borne by other public services.

The report, citing secondary research, argues that legal advice can boost successful outcomes to these legal problems, and thus mitigate the negative consequences, or stop them escalating.

“On this basis the cost of legal aid should be considered against the cost impacts on other public services where the client receives no advice and therefore is likely to experience a set of adverse consequences.”

Putting a value on these costs, to get a full picture of the costs and benefits of the system, is the tricky part.

The CA report itself acknowledges that to assume that no adverse consequences happen when aid is available is “impossible.”

“There is no conclusive evidence to date that obtaining advice will always mean that an individual suffers no adverse consequences as a result of receiving early advice on a civil justice problem,” the report says.

Despite this, work can still be done to ascribe some figures to the cost savings arising from legal aid.

This is done by matching up the aforementioned survey data from the CSJS on the prevalence of these adverse outcomes with the data for the outcomes of different types of legal aid cases recorded by the Legal Services Commission.

Where a case was recorded as as having a ‘substantive benefit’ to the person involved, the costs associated with their problems are then calculated to have been avoided. This is done through estimates produced by the Legal Services Research Centre of the financial costs of these outcomes (listed in the Appendix of the CA report).

For the cases listed in data from the Legal Services Centre where an outcome was recorded as a ‘substantive benefit’ to the person involved, the costs worked out above were deemed to have been avoided – or to put it another way savings were realised as a result of the legal advice funded through legal aid.

The findings are summarised in the table below.

Such figures would suggest that legal aid saves more than it costs, so in theory reducing the amount spent reduces the amount saved. This seems to be where the News of the World got its figure from, although the £188 million is the estimate for benefits cases, not debt as the paper reported.

However the CA report does acknowledge that the figures provided are not definitive.

The research is described as “very much a first stab at demonstrating an intricate level of cost-benefit ratio analysis for legal aid spend could be developed, and as such it comes with a health warning that the findings will be far from perfect.”

The Government however does not accept this view of the costs of the reform. Justice Minister Jonathan Djanolgy has told MPs that he does not recognise the Citizens Advice figures.

The Ministry of Justice has insisted that the reforms will prove cost effective for the taxpayer.

However the initial Impact Assessment produced by the Government was a little thin on detail.

Many of the kinds of costs flagged up by the Citizens Advice report are also discussed as potential effects in the Impact Assessment.

It states, for example, that the reforms could see “increased resource costs for other Departments. If civil and family issues are not resolved effectively people might continue to rely upon the state, because failure to resolve one issue may lead to another arising. This may include health, housing, education and other local authority services including services provided by the voluntary and community sector.”

In addition factors such as the cost of cases taking longer as people attempt to represent themselves are listed.

However no value is given to the potential costs incurred by these kinds of factors.

Conclusion

Ultimately it is difficult to say with any certainty whether the savings realised in the legal aid system will ultimately be eclipsed by costs incurred elsewhere.

We are left to choose between a report which, though thorough, acknowledges its own limitations, and a Government that questions the figures but does not seem to have provided any detailed ones of its own.

The Justice Select Committee did touch on the issue during its report into the reforms. The figures from Citizen’s Advice were submitted as written evidence to the Committee and are included in the final report.

Though the Committee does not make any conclusions about the accuracy of the figures, it notes that no corresponding figures were given by the Government.

They concluded: “We are surprised that the Government is proposing to make such changes without assessing their likely impact on spending from the public purse and we call on them to do so before taking a final decision on implementation.”

Though the Ministry of Justice have since responded with another Impact Assessment, we are no closer to a definitive figure on the issue.

The updated assessment simply states: “The lack of a robust evidence base means that we are unable to draw conclusions as to whether wider economic and social costs are likely to result from the programme of reform or to estimate their size.”

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