Austerity’s Effect on English Civil Justice

Abstract

This article considers the effect of austerity-induced public spending cuts on the English civil justice system. In doing so it initially examines two fundamental changes engendered by the effect austerity has had on civil court fees and legal aid: first, a challenge to the traditional commitment in English procedure to adversarial process, and a concomitant increase in inquisitorial or investigative processes; and secondly, the growth in use of unqualified individuals to act as advocates in court for individual litigants who are unable to afford legal representation. It then turns to consider what, if any, effect austerity has had on simplified processes available in English civil procedure.

1. Introduction

Austerity, which is to say the pursuit of a policy of public spending cuts by government, is an important issue in England and Wales (England) and has been since, at least, the 2010 general election. It arose as a consequence of the 2007 financial crisis and, most pertinently, the recapitalisation of the UK banking sector by the government in 2008. Since that time public sector spending has been subject to regular scrutiny by government in pursuit of both economic and political aims, i.e., in order to eliminate the structural deficit in public spending, stimulate the economy, maintain confidence in the UK’s ability to meet its debt obligations, and politically, as an aspect of a commitment to neoliberalism, to create a smaller State. There is no reason to believe that this will change as a consequence of the 2015 general election and every reason to believe it will continue; further reductions in public spending of between 25% and 40% are highly likely post-2015. 

Government scrutiny of public expenditure has led to significant reductions in public sector funding; freezes on public sector pay; and a reduction in overall employment in the public sector. The justice system has not been exempt. Spending cuts have resulted in rationalisation of the court estate, reductions in court service staff numbers, improved efficiency in court service administration in order to reduce costs, and a significant reduction to legal aid provision. Further such reductions, both those announced prior to the general election and additional ones determined following the election, are planned during 2015.

In respect of the former, an 8.75% reduction in legal aid will take effect after June 2015. In respect of the latter, HM Treasury has required the Ministry of Justice to reduce its expenditure by £249 million; a reduction that follows one of £500 million imposed in 2014. This article looks at a number of ways in which austerity has, and has not, affected the civil justice system. First, it considers two areas where austerity, in the form of changes to civil legal aid and civil court fees, is having a real impact: England’s historic commitment to adversarial process, and the growing use of non-lawyers to provide legal assistance for litigants. In this regard there is a discernible and, by English standards, radical trend, and one that may recast the nature of English civil justice significantly.

Secondly, it considers two areas, which have recently undergone reform: the English small claims process and the form of mediation related to it, small claims mediation. These areas could have undergone reform as a consequence of austerity. They could, for instance, have been made available to a wider range of cases in order to combat the consequences of civil legal aid cuts. What reform there was cannot, however, properly be attributed to reductions in public spending. Nor could such reforms have counteracted the effects of austerity in any event.

2 Civil Court Fees, Civil Legal Aid, Questioning the Fundamentals

This section is divided into two parts. The first considers changes since 2007 to civil court fees and their potential consequences. The second considers changes to civil legal aid over the same period and how they have called into question fundamental aspects of the English adversarial system of civil justice.

2.1 Civil Fees

Historically, the English civil justice system was funded from general taxation with a subsidy paid by court users through court fees. In 1982 the, then, government rejected this approach. The historic approach was replaced with one that required the system to be fully funded through court fees. General taxation would only be used to make up any funding shortfall; i.e., the taxpayer would subsidise court users. The rationale for this reform was the belief that the civil justice system simply provides a service for consumers who should be expected to pay for it. In practice this has meant the State has had to pay a significant subsidy each year, as court fees have never been sufficient to meet their purpose. From 2011 to 2013 the funding shortfall required the State to provide approximately £110-125 million annually by way of subsidy. Since the shift in approach, the government has repeatedly and unsuccessfully attempted to reduce and thereby to eliminate the State’s annual subsidy.

The financial crisis and its consequences brought this need into sharp focus. As part of the government requirement to reduce public spending, the Ministry of Justice was required to reduce its budget by over a third from 2010 to 2016. This had consequences for the civil courts. As the Justice Minister, Shailesh Vara M.P., explained, in the context of reform proposals in 2013,

…the courts must be properly financed so that they have the resources they need to deliver their services, as well as the funds they need to invest in improving them…But we can’t ignore the economy either. This government made deficit reduction our top priority. We have taken some tough decisions, and the signs of recovery are there for all to see. Yet there is still more to do to bring public spending into line with what we can afford. The courts cannot be immune from that, and the cost to the taxpayer must fall…

The taxpayer subsidy to the civil justice system thus had to be eliminated in order to enable the Ministry to play its part in securing an overall reduction in its, and the government’s, budget. This was to be achieved in a number of ways.

First, court fees were to be increased in order to ensure that court users paid cost price for the service they received. Secondly, some court users would be required to subsidise others. They would do this by paying ‘enhanced fees’, i.e., fees above cost. The rationale for this innovation was to ensure that the Ministry could, finally, ensure that the civil courts were entirely selffunding. It was to enable the State to remove any remaining present and future taxpayer liability to fund the civil justice system. 

Taken together these two reforms, the latter of which was effected through primary legislation in 2014, were anticipated to do two things: first, increase fee income by £105 million per annum; and secondly, via the use of enhanced fees, bring in further, additional, income of £190 million per annum. They were to do so by, for instance, increasing fees for money claims of £5,000 to £15,000 by 81% and for judicial review applications by 216%. Issue fees for some high value cases were to increase by 576%. Yet further fee increases, via enhanced fees, were proposed in 2015 in order to generate additional income of £55 million. The rationale for this further increase was to assist the Ministry in meeting further spending reduction targets by enabling it to eliminate its liability to bear the cost of fee remissions in civil cases. 

In other words enhanced fees were, amongst other things, to enable the Ministry to move its, the States’, responsibility for securing access to justice for the impecunious to court users. Rather than the taxpayer subsidise the impecunious, wealthy litigants would be required to do so. Apart from enhanced fee increases, which as at June 2015 had not yet been introduced, the various fee increases came into effect in 2014 and 2015. Further increases are expected in 2016. The exact consequences of these reforms, which as noted are not yet fully implemented, remain unclear. Those that are in force have not been in force long enough to produce empirical data concerning the impact on litigants and on claims being issued, although they have produced concern amongst the legal community generally. In terms of anticipated impact two points can be made.

First, the government concluded that there would be no real detriment to litigants, such that the increase would reduce rates of issue, i.e., the increases would have no real, adverse impact on access to justice, or on the aim of increasing fee income. It did so on the basis of a research study it commissioned to accompany its reform proposals (the 2013 research report). This study, which rested on an evidence base of eighteen telephone interviews, formed the basis of the Ministry’s conclusion that court fee levels were not a significant factor in individuals’ decision-making process when they considered whether to commence proceedings.

There are, however, problems with the 2013 research study and its evidence base. First, it is difficult to see how such a small number of interviews could be seen to be properly robust; that such a small survey could provide a valid foundation for sound conclusions. It is instructive here to consider that the Ministry of Justice, in a previous examination of the effect of court fee increases in 2007 (the 2007 research study), used a sample of 544 court users and concluded on the strength of that even small increases in court fees would adversely affect claiming rates: the greater the increase the greater the adverse effect.

Secondly, and a consequence of the limited number of interviewees, it cannot be said that the study is properly representative of court users. Of the eighteen interviewees, six were large debt recovery organisations with their own in-house legal teams, two were debt recovery agencies with their own in-house legal teams, four were solicitors who specialised in debt recovery, two were personal injury solicitors, and four were private client family law solicitors. The study therefore failed to consider the potential impact on individual litigants, small and medium businesses, or solicitors in these areas, even if it could be said – which it cannot – that it properly considered the areas of debt recovery, personal injury, and family law work. Equally, it failed to consider entirely the effect of court fee increases on any litigants or solicitors outside these areas, i.e., in immigration, social security, employment, contractual, negligence, clinical negligence, landlord and tenant, judicial review etc., disputes.

Given these two methodological flaws it is difficult to see what, if any, weight could be given to the 2013 research study’s conclusions, not least because the paucity of that study’s evidence base cannot but be highlighted by the strength of the 2007 study’s evidence base. Given the comparison that can be drawn between the two studies, rather than placing any weight on the 2013 study’s conclusions, the better conclusion is that to be drawn from the 2007 study, i.e., contrary to the view taken by the government that the 2013 fee increases will have no adverse effect, its early research demonstrates that there will be adverse consequences on claiming rates, such that the higher the fee increase the fewer claims will be issued.

Secondly, comparative evidence from the Employment Tribunal suggests that the potential adverse impact may be severe. Historically, claimants were not required to pay issue fees to bring Employment Tribunal claims. In 2013 issue fees were introduced in order to deter vexatious claimants and help reduce government expenditure. The new fees, described as relatively modest by the government, produced a significant reduction in claims being issued. As noted by Pyper and McGuinness,

The introduction of fees coincided with a steep decline in the number of cases received. Employment tribunals received 32,671 fewer single claim cases during October 2013-September 2014 compared to the previous year, a 64% decrease. The number of multiple claim cases was down 3,527, a 67% decrease.

The government has accepted that the result was causal not coincidental. The reforms thus produced a significant decrease in claims notwithstanding the fact that the fees were set at a low level. Figures are not available to show the percentage of claims prior to the fee introduction that could properly be defined as vexatious. It is not therefore clear what proportion of the decrease in claims can properly be viewed as non-vexatious, i.e., genuine claims. On the assumption, however, that only a small number of claims are properly vexatious, it is not difficult to draw the conclusion that the percentage decrease in claims has produced a real decline in genuine claims being litigated. This is not an unreasonable assumption as only 13% of claims were, historically, struck out on jurisdictional grounds that would have encompassed vexatious claims. As such it can, it seems, properly be said that the reform has produced a reduction in access to justice.

Given the paucity and criticisms that can be raised in respect of the evidence base on which the court fee increase was predicated and the consequences of modest fees being introduced into the Employment Tribunals, it is not unreasonable to conclude that there is a real risk that the civil court fee increases and any introduction of enhanced fees will produce a similar result to that which occurred in the Employment Tribunals, if not a more adverse one. The practical consequence of this set of austerity-induced reforms might thus be to produce a serious reduction in and denial of access to civil justice. At the very least, it is difficult to see the basis for the assumption that the fee increases will have no such adverse impact, as noted by Lord Beecham. On the contrary there appears to be a real risk, as the Civil Justice Council put it, that these reforms will undermine the principle of equality before the law as the differential nature of the fee increases can be understood to disproportionately affect litigants of modest means and small and medium enterprises.

While the actual effects on the number of claims being issued and on access to justice remain unclear at June 2015, two more concrete conclusions can be drawn from civil court fee reform. First, if the fee increase produces a reduction in claims being issued, the reforms are likely to be self-defeating. The increases were predicated on reducing the taxpayer subsidy for the civil justice system. If claim numbers reduce in the light of fee increases, the benefits to the taxpayer will either, in whole or in part, not be realised. This will either result in the Ministry of Justice having to seek further savings from the civil justice system to meet its savings targets, increase fees further thereby compounding the problem, or continue to subsidise the system. Each potential alternative would undoubtedly entail further reform of the system.

Given the overall commitment to lowering public sector spending, the likely choice taken would be one that saw no further increase in public spending on the civil courts, which would result in a furthering winnowing of the system with an attendant decrease in the system’s ability to deliver civil justice effectively. Secondly, the increases, and the fact that they are predicated on eliminating both taxpayer subsidy for the system and to enable the government to reduce and then eliminate its residual role in funding fee remissions, further embed the flawed conception of the justice system that has been in place since the 1980s. It would further entrench the idea that the civil justice system ought to be funded by its users because, rather than provide a public good, it simply provides a consumer service which, like any other such service, should be paid for by the user. It may therefore mark a further step along a road towards the separation of the State from the English civil justice system.

2.2 Civil Legal Aid Reforms – Questioning Fundamental Aspects of the Civil Justice System

2.2.1 Civil Legal Aid Reforms

The availability of civil legal aid has been a central feature of the English civil justice system since it was introduced by the Legal Aid and Advice Act 1949. Originally, approximately 80% of the population were eligible for such an aid in a limited number of categories of claim. Over the next 50 years, its scope initially grew to cover more categories of claim while eligibility declined per head of population. By the late 1990s, 52% of the population were eligible for civil legal aid. This had declined to 41% by 2001 following the removal of most personal injury claims from legal aid cover in 1999.42 By 2007 it stood at 29%.43 In 2010 further reform of the system was considered.

The 2010 reform proposals were predicated on two grounds. First, it was necessary to reduce legal aid spending because the State continued to spend too much money on it. As the Lord Chancellor put it, notwithstanding serial reductions in legal aid cover, England and Wales continued to have ‘one of the most expensive (legal aid systems) in the world, available for a very wide range of issues, including some which should not require any legal expertise to resolve’. Expenditure consequently had to be brought under control so as to ensure that it was only provided for serious, meritorious cases, for classes of case for which the public interest required funding to be made available. A too generous system needed to be brought under control. Secondly, and in furtherance of the government’s overall plan to reduce public expenditure, reform was necessary. As the Lord Chancellor explained, ‘Legal aid must also play its part in fulfilling the Government’s commitment to reducing the fiscal deficit and returning this country’s economy to stability and growth.’

While the government acknowledged that, in its view, the legal aid system was in need of fundamental reform notwithstanding the financial crisis, the need for reform was acute given the financial crisis. The necessity for reform arose against ‘a backdrop of considerable financial pressure’. The specific reform proposals were specifically ‘developed with the aim of providing a substantial contribution to the Ministry of Justice’s target of a real reduction of 23% in its budget, worth nearly £2bn in 2014-15’. The proposals were to reduce public spending by £350 million, which was 17.5% of the required overall reduction. This reduction in ‘public spending [was] essential to economic recovery’. The reduction in civil legal aid spending would have thus gone ahead irrespective of it being, arguably, higher than in other jurisdictions.

Austerity was thus both the efficient and final cause of the reforms, a conclusion underpinned by the Justice Minister’s acknowledgment in Parliament, following their introduction, that the reforms were implemented on an inadequate evidence-base because ‘the economic situation that the Government inherited did not allow that luxury’. If austerity had not been the main driver of reform, time could have been spent on both securing robust comparative evidence as to civil legal aid spending in the context of differing approaches to the structure of civil justice systems and into its potential effects. That austerity was the main driver justified the actual approach taken and the lack of evidence gathering.

The civil legal aid reforms, following on from the 2010 consultation, were effected in 2012 by the Legal Aid, Sentencing and Punishment of Offenders Act 2012. It came into force in April 2013 and reduced civil legal aid by 40%, such that it stood at £157 million for a population of 53.5 million or approximately £3 per head per annum. Consequently, very few types of civil claim fall within the scope of legal aid. Areas still within scope, albeit subject to stringent limits, are actions against the police; clinical negligence; community care; debt; education; employment; housing; immigration and asylum inquests; mental health; personal injury, in very limited circumstances such as claims involving infants; public law and judicial review; and welfare benefits.

It was anticipated prior to their introduction that these reforms would be highly detrimental to effective access to justice, that they would, as the Civil Justice Council concluded, ‘have a disproportionately adverse effect on the most vulnerable in our society’ and that they would lead to significant increases in individuals having to litigate without legal advice or representation (litigants-in-person or LiPs). The Civil Justice Council’s conclusions were based on ‘informed prediction(s)’, such as those provided by free legal advice and support agencies based on their experience of increases of individuals seeking their services following previous reductions in legal aid provision. Evidence regarding the actual effects of the reforms is, however, thin, primarily because no data is kept concerning either the rate at which individuals litigate or the number of LiPs appearing before the civil courts. A limited amount of evidence suggests that the predictions have been borne out.

Data shows that, since 2013, there has been a 62% drop in civil cases that have been granted legal aid funding, that in the year 2013-2014, ‘326,004 fewer cases than would have been expected without the (2012 Act) reforms’ received civil legal help, i.e., advice funding and ‘36,537 fewer cases’ received civil legal representation funding. The free advice agencies, those that provided the Civil Justice Council with ‘informed predictions’, have seen significant increases in vulnerable indiiduals calling on their services for debt advice, employment, housing, social security and immigration, and asylum advice and support.

The Personal Support Unit, for instance, reported that it provided free advice and assistance to nearly 40,000 individuals in 2014-2015 and in 2015-2016 expects to assist approximately 50,000 individuals seeking such a help. In 2012-2013, the year before the legal aid reforms were introduced it provided such assistance to approximately 12-13,000 individuals. Other evidence shows a variety of adverse consequences of the reforms ranging from a reduction in numbers seeking such legal support that remains available both in terms of individuals seeking legal aid where it does remain available, due to a failure to appreciate its true extent, and significant reductions in a variety of free legal advice services which have themselves lost funding. Unsurprisingly in the circumstances, the House of Commons’ Justice Committee concluded the reforms harmed access to justice.

The most significant noticeable impact on the civil courts arising from the legal aid reforms has, however, concerned LiPs. The expectation that the reforms would lead to a significant increase in LiPs appears to have been borne out. As the Justice Committee concluded in the light of a wide range of evidence presented to it,

…there has been a significant rise in the number of self-represented litigants (LiPs) before the courts but even approximate numbers are difficult to determine. Figures for litigants in person are not collated in the civil courts, but the Master of the Rolls, Lord Dyson, told us that the civil courts had experienced a significant impact from a rise in litigants in person.

The Lord Chief Justice’s Annual Report 2014 reiterated the point, as did a survey conducted by Cookson on behalf of the Bar Council. This increase in LiPs has led to a number of fundamental aspects of the English approach to civil justice being questioned, alternative approaches being proposed and, in some cases, being introduced. It is this that is producing what is likely to be the most far-reaching consequence of austerity on the civil justice system. The following section considers those issues and approaches.

2.2.2 Questioning the Fundamentals

The increase in LiPs has produced two significant areas of reform: the first concerns the English civil justice system’s commitment to adversarial process; the second has seen a rise in the use of non-legally qualified individuals as advocates contrary to the traditional approach that strictly regulates such rights.

2.2.2.1 Inquisitoriality

The English civil justice system is primarily adversarial. It has traditionally been characterised by a passive judiciary who ensured that procedural rules were observed and determined claims based on the law and on evidence submitted by the parties. Responsibility for case progression to trial, gathering, submitting, and testing evidence was that of the parties. The Woolf reforms of the late 1990s effected a significant change to one aspect of this traditional approach through the introduction of active court-based case management. Since 1999, the court, rather than the parties, has been responsible for ensuring cases progress to trial economically and efficiently. Parties are under a duty to assist the court carry out this duty. This reform, however, left the fundamental structure of the adversarial process untouched.

It did not, for instance, provide judges with any power to gather evidence. Nor did it permit judges to test witness evidence or require of the court’s own motion the production of documentary evidence that the parties had for whatever reason not adduced at trial. While it removed one aspect of the adversarial system – party autonomy over case progression – it left the remainder untouched. Case management powers did not thus equate to, or provide, investigative or inquisitorial powers; a point highlighted by Lord Dyson JSC in Al Rawi v. The Security Service in 2012. Discussing the extent of the court’s power to regulate its own process, he noted that it was, ‘surely not in doubt that a court cannot conduct a trial inquisitorially rather than by means of an adversarial process (at any rate, not without the consent of the parties)’.

The increase in LiPs as a consequence of austerity has called into question the commitment to adversarial process: it has raised the very doubt Lord Dyson JSC thought to be beyond question. It has done so because, as Lord Thomas CJ put it in evidence to Parliament, the adversarial system cannot work without legal aid, i.e., without the provision of funding for legal representatives. Party autonomy, and its converse judicial passivity, in framing and controlling the substantive content of the litigation, in investigating the issues, securing and testing relevant evidence, as well as ensuring effective navigation of relevant procedural rules and compliance with procedural obligations is predicated on the presence of lawyers. In the absence of lawyers, the court is faced with a dilemma: either take on the lawyers’ role in addition to its adjudicatory role or, potentially, fail to discharge its duty as a court of law to provide a fair trial. As Ryder LJ explained it, in the context of family proceedings in C (a child), following a failure by two LiPs to secure and submit appropriate evidence and information in advance of a hearing so that central issues in the claim were neither identified nor answered at the hearing,

Appointments of the type I have so far been describing take time, particularly where one or more of the parties are litigants in person as a consequence of the provisions of LASPO 2012. If the dispute is not immediately susceptible of conciliation or out of court mediation it will require a lawyer’s analysis. This is after all a court of law. In the absence of lawyers, the judge has to do that and to do that without assistance and sometimes with quite vocal hindrance. That requires more time than in a circumstance where the lawyers can be required to apply the rules and practice directions, produce the witness statements, summaries, analyses and schedules, obtain instructions and protect their lay client’s interests. Where a court is faced with litigants in person the judge has to do all that while maintaining both the reality and perception of fairness and due process.

Similar problems have been identified in civil claims. Tugendhat J in Mole v. Hunter, for instance, explained that in the absence of legal representatives the court had to adopt an essentially investigative approach. He did so by consent of the parties, albeit this was in his view unnecessary, as the court’s case management powers provided the jurisdiction for such an approach to be taken (see CPR r.3.1(2)(m)). His approach also required the court to question the parties to ascertain the nature of the dispute, to place the parties’ case papers in an appropriate order, to carry out preparatory work that would otherwise be carried out by lawyers, particularly by junior lawyers. It had to do so ‘in order for the case is to be tried justly’.

Necessity, in the absence of lawyers, has therefore meant that courts have had no choice but to carry out administrative functions ordinarily the province by lawyers. More significantly however, as the two cases cited demonstrate, they have had to start to move away from the traditional, adversarial, idea that the judge should play no part in evidence-gathering, issue identification, or in examining parties or witnesses at trial. While such a move to a substantively quasi-inquisitorial (in the sense that a fully inquisitorial process would be one that enabled the court to initiate proceedings) was initially mooted as an idea that needed consideration by, for instance, a Judicial Working Party on LiPs in 2013 and then by the Lord Chief Justice in 2014, the pace of change has been faster than might have been expected for such a significant shift in approach. Reform has been implemented in two distinct ways.

The first change, which partially outran the calls for considered reform, encompasses the change in practice in the courts already outlined. It goes wider than this though. The judiciary has not simply started to develop more inquisitorial practices; it has taken an active role in reforming the justice system by developing a number of measures to assist LiPs. It has been instrumental in the establishment of pro bono legal advice and assistance schemes in the High Court. Such schemes are operated by the legal profession and seek to facilitate the provision of such assistance and, in some cases representation in court, by junior or trainee lawyers. The judiciary has also devised a number of legal practice guides, aimed at giving LiPs straightforward guidance on court and trial procedure. There has also been an increased emphasis on revising court forms to render them more comprehensible to individuals who have had no legal training.

The second change concerns the rules of court. In its report from 2013, the Judicial Working Party on LiPs identified three modifications to the CPR that could be made. It recommended, where one or more parties to claim was a LiP, that: (i) a dedicated rule be introduced that made ‘specific modifications to other (procedural) rules’; (ii) a new case management power to provide for an inquisitorial process be introduced; and/or (iii) a new provision that provided for a fully inquisitorial process be introduced. While it has been acknowledged, as previously noted by Tugendhat J in Mole v. Hunt