The true figure of cuts for Criminal Solicitors is 27.25%

 

With peace breaking out between the Bar and the Ministry of Justice, the remaining issue to resolve is the overall budget for the litigation side of criminal legal aid spend.

 

The fee reductions being sought from this element of the criminal legal aid budget (as part of the overall saving to the Legal Aid fund) has always been calculated at £120 million and has been a consistent theme of the consultations and government releases since April 2013.

 

The cuts were always intended to fall most heavily on our side of the profession and this article will explain how savage the cuts will now be.

 

We have been told on numerous occasions that the rationale for the fee cuts we have faced (and are to face again in summer 2015) is because of the pressure on public expenditure. In order to achieve savings the MoJ calculated the amount of money they needed to trim from the legal aid budget.

 

The level of cuts was expressed as a figure, with a specific amount coming from the litigation budget. That amount was set using the recent highpoint of spending, that being the year 2011/12.

 

The reduction of £120 million from the litigation budget was then expressed as a percentage. That percentage figure was 17.5%. This level of saving was confirmed in the latest Impact Assessment Document released by the Ministry of Justice (MoJ) in February 2014.

 

The figure to concentrate on is £120 million, not 17.5%.

 

I have previously considered the misleading legal aid figures produced by the MoJ. The recent release (June 2014) of the current accurate figures undermines the need for any further cuts to the litigation budget.

 

It is now possible, with a level of certainty, to calculate the total litigation spend for the last four years. It shows that the overall level of spending for litigation services has collapsed.

 

The following table helps show the spending that can be attributed Police Station, Magistrates & Crown Court litigation. This is a combined total calculated from the figures in the MoJ / LAA data.

 

 

2010/11

2011/12

2012/13

2013/14

Total spend

(£millions)

677

687

642

608

 

The starting point for the analysis of these figures is the saving of £120 million. The figures above are for the period April – March in each year. To inform their decision-making through this whole process, the MoJ used the figures for October – September 2011/12 and puts the Legal Aid spend on Litigation at approximately £690 million.

 

A reduction of 17.5% on £690 million is £120 million. That percentage figure is the reduction that would have been needed in spending to achieve the saving if spending remained constant.

 

The anecdotal evidence from all providers was that money had been saved through the reduction in volumes and measures for savings already implemented. We now have the evidence to support this contention. £82 million has already been saved from the budget since 2011/12. The further reduction in litigation spending to achieve the £120 million saving is £38 million.

 

The current spending of £608 million does not reflect the 8.75% cut imposed on 20 March 2014. Assuming that the levels of spending remain the same, and no further savings are achieved through reduced volumes or other cost saving measures (Crown Court means testing? billing time lags?), the reduction to come from this cut is £53 million.

 

The non-negotiable level of saving required by the MoJ has been achieved and then some. On the figures released by the MoJ, when steady state is achieved, following the first 8.75% cut, the saving is £130million.

 

As part of the ongoing assessment of the effects of the current cuts, the MoJ has confirmed they will assess whether the further 8.75% cut is needed when the new 2015 Contract starts.

 

The figures they have provided undermines the need for any further reduction.

 

Indeed, if the further cut is implemented the reduction will be another £53 million. This will result in the litigation budget shrinking to £502 million, an overall cut of 27.25%, with savings of £188 million.

 

The fragility of the supplier base has been highlighted in a number of assessments and independent reports (KPMG, Law Society, Otterburn and Oxford Economics). The extent of the potential failure to come in the supplier base is stark.

 

The MoJ must consider the impact of proceeding with any further cut to rates. If, as they have always said, it is about budgetary controls, they must concede the savings needed have been achieved from the litigation budget.

 

{stephen}