How much money does legal aid save the country?

Published: 8th Jan 2016

In brief

Claim

For every £1 spent on legal aid, the state saves £6.

Conclusion

This claim has evolved down a chain of several different pieces of research and should be treated with caution. Academics say that we need more research about the savings that spending on legal aid can bring.

"For every £1 spent on legal advice and aid, the state saves around £6 on other forms of spending"

Unite, 10 March 2015

"For every £1 spent on legal aid the state saves £6"

Claim attributed to Jeremy Corbyn, 6 January 2016

Labour leader Jeremy Corbyn gave a speech to lawyers at a legal aid rally in London this week, reportedly saying that free legal advice for those unable to afford it saves the state money—to the tune of £6 for every £1 spent.

There are a few possible sources for this and we've seen similar claims elsewhere, but academics say that more research is needed to prove the economic impact of providing legal aid.

Lots of literature, not all of it very convincing

Legal aid is aimed at providing legal advice and representation to people who need it but may not be able to afford it. The last government significantly reduced the availability of legal aid, saying that it needs to reduce the cost of the scheme. Lawyers complain that access to the justice system is under threat.

In 2014 academics from the University of Surrey looked into the "business case" for legal aid, and advice services more generally.

All the UK studies they found agreed that legal aid saves the government and the economy money, but the researchers noted their "concerns over the quality of the data and methodologies adopted". They concluded that the evidence was "generally poor quality" and that further research would be helpful.

Savings of £6 for every £1 spent?

A claim to this effect was made last year by the trade union Unite and Goldsmiths University.

Their report on legal aid says that "for every £1 spent on legal advice and aid, the state saves around £6 on other forms of spending, such as families becoming homeless and children being taken into care".

This isn't an original research finding. The statistic is from the Legal Action Group, a charity promoting access to justice.

In 2011 it said that £49 million of cut spending on legal aid would end up costing £286 million elsewhere. That's roughly £6 that would have been saved for every £1 spent, according to the charity's director.

This is calculated by using older research from Citizens Advice on how much is saved by spending on different kinds of legal aid.

For example, Citizens Advice had said that for every £1 spent on legal advice in employment problems, £7.13 is saved. Legal Action Group calculated that if £4 million of legal aid for employment law is cut, the lost savings are therefore £28.5 million.

This is repeated in other areas of law—housing, debt and welfare benefits—to get the overall 1:6 ratio. It's only really relevant to a particular set of spending cuts in 2008/09.

A simple statistic built on a lot of complexity—and uncertainty

The original Citizens Advice paper  from 2010 goes into a lot of detail in its attempt to put exact figures on the costs and benefits of legal aid.

It uses older research again to estimate how legal issues lead to people having problems with the likes of debt and housing, and how much those problems end up costing the state. That figure can be compared to the cost of providing legal aid.

There are uncertainties to this exercise. For example, the paper acknowledges that it's "impossible" to assume that that legal aid will always prevent costly problems, although there is evidence that it helps.

So a simple claim like "for every £1 spent on legal aid the state saves £6" turns out to have evolved down a chain of different research findings, all with their own assumptions. It seems sensible to be cautious about it.

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