Legal Aid controversy – UK Government says RIP to small providers

One of the bright spots in the reported growth in UK government procurement  with small firms (SMEs) was apparently spend through the Ministry of Justice (MoJ).

However, we've pointed out a number of times that much of the growth came from MoJ classifying special purpose vehicle type companies, formed to run major court building PFI projects, as SMEs.  That might not have been totally MoJ’s fault, but it was very misleading.

But the other growth area appeared to arise from better classification of the £2 billion a year spent with law firms through the Legal Aid scheme. This showed that much spend does genuinely go to SMEs, but that had not previously been identified. So there may not have been real growth, but in terms of the reporting, this gave a boost to the Cabinet Office figures.

However, the latest plans for Legal Aid are bound to reverse this. The proposed structure for criminal law legal aid will award single contracts for larger areas to one provider, rather than allowing multiple small firms to do business. That means that “clients” (people who need criminal legal aid) will no longer have a choice of solicitor to defend them. And the prediction is it will see the number of criminal law firms in the UK decline from 1600 to 400.

I don’t want to go into all the ins and outs, pros and cons of this and other proposed changes in Legal Aid. I was a Commissioner (a bit like a non-exec director) for the Legal Services Commission for 4 years from 2006-10, and frankly I struggled to contribute successfully to the very difficult debates around how to organise the contracting and commercial issues around Legal Aid. It was, in all honesty, the most difficult commercial challenge I’ve ever seen in my life.  A shout out to their commercial director, Hugh Barrett, who has done an amazing job just to maintain his sanity in my opinion.

However, one thing is very clear with the new proposals. This will be very bad news for smaller law firms, most of whom will have to look at mergers or working as sub-contractors. And that will be a blow to the overall government figures on spend with small business. It could take something over half a billion pounds a year away from SMEs, I reckon, which would put at least a one percent dent in the Cabinet Office’s target of 25% spend going to SMEs – and they’re currently at 10% out of a total spend approaching £50B.*  So that could mean over a tenth of current spend with SME's disappearing in one fell swoop.

It also supports a suspicion, largely confirmed by Francis Maude at the Public Administration Select Committee recently, that when it comes to the crunch, “policy through procurement” aims, including supporting smaller businesses, take a back seat to economics and value for money.

I have some sympathy with that view, and there’s a strong argument that policy through procurement has limited proven success and can even distort markets. But the government are trying to have their cake and eat it here – professing support for SMEs whilst sanctioning actions that will have a very direct impact on a large group of small firms.

And you have to admire them actually - amazingly, apart from a few comments in places like this, they’re getting away with it, helped by the political Opposition whose interest in public sector procurement and commercial issues appears somewhat limited. And I'm being kind there.

* Mind you, the only way they're going to hit that target anyway is if MOD start buying armoured vehicles from Jim’s Body Shop, Peckham, “right-off’s our speciality” .

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  1. TripleDistilled:

    Worst off are going to be the accused!! The current consultation paper talks of fixed fees per provider, per procurement area. Fixed fee would surely mean that a not guilty verdict would be more expensive to the legal aid provider than a guilty plea. Will solicitors/barristers come under pressure form the legal aid provider for not coercing clients into guilty pleas? Conflict of interest anyone? Access to justice shouldn’t be based on cost effectiveness!

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