1. Title of proposal
Reform of the publicly funded immigration and asylum legal advice system.
2. Purpose and intended effect of measure
The consultation paper issued in June 2003 set out a number of objectives which the proposed reforms are intended to achieve. Central to these is the need to ensure the taxpayer receives value for money, and that the costs of the legal aid budget for immigration and advice are brought under control. The proposals aim to do this by:
The proposals arising from the consultation paper impact both on suppliers of publicly funded legal services and on asylum and immigration clients seeking assistance from those suppliers. By definition those seeking assistance are generally not nationals of the United Kingdom and are frequently drawn from black and minority ethnic communities. So far as suppliers of legally aided services are concerned, 85% of those with immigration contracts with the Commission are solicitors' firms, and 15% are not for profit advice agencies. Of the solicitors' firms, 55% are owned or controlled by a majority of partners drawn from the black and minority ethnic community. The vast majority of organisations with immigration contracts with the Commission are small businesses or advice agencies. Thus it has been necessary to carry out both an assessment of the impact of the proposals on businesses, charities and the voluntary sector, which supply legal services, and an assessment of the proposals' impact on different racial groups, whether suppliers, clients or potential clients. We do this in line with guidance issued by the Cabinet Office guidance, 'Better Policy Making: A Guide to Regulatory Impact Assessment'.
These changes will apply to work undertaken in England and Wales.
3. The background
The legal aid costs of providing advice and representation in immigration and asylum work (including judicial reviews) have risen from £81.3m in 2000-2001 to £129.7m in 2001-2002 and £174.2m in 2002-2003. A number of factors have increased expenditure on legal aid for immigration and asylum, most of which are beyond the control of the LSC. These factors include past increases in the number of asylum seekers, the processing of backlog asylum applications, the increased rate at which cases are processed by the Home Office, the corresponding increase in appeals dealt with by the IAA, and effects of the dispersal policy. With the introduction of funding for representation before the IAA and IAT it was anticipated that there would be a rise in total spend however these factors together do not alone account for the dramatic acceleration in only the last three years in the costs of public funding in this area of law. Average costs continue to rise and the LSC estimates that average costs per case started have increased by 93% from 2000-2001 to the present date.
4. Legislative framework
The Government is committed to the provision of publicly funded legal services as a means of promoting social justice, economic well being and tackling social exclusion. In asylum work, the Government is committed to protecting people where they are at real and immediate risk of loss of liberty or life. However, the Government is also under a duty to ensure that the taxpayer receives value for money in relation to public service expenditure. The resources available for funding of this type of work are limited and any publicly funded system must be clearly focussed on delivering effective and sustainable services within an agreed budget.
Publicly funded advice and representation in immigration and asylum matters is available under the Community Legal Service (CLS). The CLS was established by sections 4 to 11 of the Access to Justice Act 1999. The CLS replaced the civil legal aid scheme and advice and assistance in civil and family matters under the Legal Aid Act 1988. The Legal Services Commission replaced the former Legal Aid Board as administrator of the CLS fund.
Since 2000, only firms with a contract with the Legal Services Commission (LSC) have been able to carry out legally aided asylum work. The LSC carries out audits on all contractors and assesses their claims for costs.
The services that may be funded as part of the CLS are those it considers appropriate to promote the availability of services to eligible individuals, subject to the Secretary of State's power to give directions as to priorities. The Commission is currently directed to give top priority to cases which include "civil proceedings where the client is at real and immediate risk of life or liberty" and higher priority to "proceedings against public authorities alleging serious wrong doing, abuse of position or power, or significant breaches of human rights". The latter would routinely include immigration and asylum cases, and some asylum seekers might fall into either of those categories.
5. Risk assessment
The main risk that is being addressed in this Regulatory and Race Impact Assessment is that there is currently not sufficient control over quality, duplication and waste within the publicly funded asylum system. Too many unmeritorious claims are being made and taken through the system. This has contributed to an increase in cost per case and an unsustainable level of expenditure.
An analysis of end of case outcomes self-reported by LSC suppliers between June and August 2003 indicates that a client's application was refused in 38.2% of cases. Additionally 57.1% of cases that were not completed were as a result of the client ceasing to give instructions which would suggest there is a significant level of duplication of work as clients move between suppliers.
There are concerns regarding the quality of work undertaken by a significant minority of contracted suppliers. Regular audits and peer review systems set up by the LSC have highlighted overclaiming and issues with the quality of advice given. This is impossible to quantify however we believe that a significant minority of suppliers are over-claiming and offering poor quality advice. The LSC operates a sample-based audit of suppliers' files, which assesses compliance with the contract rules, and whether costs claimed are reasonable and properly evidenced on the file.
There is evidence of duplication of work. In 2002 there were 85,865 asylum claims, but the LSC issued over 158,000 new matter starts in immigration and asylum matters. While there may be legitimate reasons why some clients need to change representative, this does not explain the position entirely and there is evidence of clients shopping around and of suppliers continuing to pursue unmeritorious cases.
There is also evidence that the introduction of CLR from January 2000 for appeals to the Immigration adjudicator and Immigration Appeals Tribunal has increased costs in association with attendance and representation at the appeal hearing, and through the increased remuneration rates for the preparation of appeals under CLR, which are 8% higher than equivalent Legal help rates. Although it is difficult to quantify this 'additional' cost overall, the additional cost of hearings before the adjudicator or IAT incurred for 2000/01 & 02 is estimated to be £40 million.
There is also some anecdotal evidence that experts' reports are becoming more common leading to increased costs in the preparation of appeals. It is also common practice to use Counsel to represent at the appeal hearing, and although they are paid at the same rate as solicitors conducting advocacy, there may be additional costs for example for a conference prior to the hearing. Adjournments will of course also result in additional costs, as will any directions such as to obtain a further medical report.
The proposals tackle expenditure and quality assurance issues by:
6. Options
In its proposals for consultation, the DCA sought advice on how the budget for asylum and immigration could be contained whilst at the same time preserving the essentials of the system for those in genuine need.
Our principal proposal was to introduce a limit on the amount of money that lawyers would receive for individual asylum cases. We proposed a cap of 5 hours for the initial stage, and 4 hours for preparing any appeal. The 5+4 option was considered to be the best combination, and the minimum time in which an average case could be conducted effectively.
Before reaching this proposal however, the Department and the LSC considered various options, (as illustrated below), on time limits for Legal Help work, before deciding to consult on a 5+4 cap. The 5+4 proposal was reached following discussions between LSC officials and legal staff, and was based on their experience of asylum work.
The costs of legal aid for immigration and asylum advice and representation falls within the Single Asylum Fund (SAF), which is jointly controlled by Home Office, Department for Constitutional Affairs, and Treasury. LSC expenditure falls within the DCA allocation, along with the Immigration Appellate Authority, and DCA asylum project office (which co-ordinates the SAF for all DCA activity areas).
Details of the analysis of costs for the SR2002 period are set out in Chart 1 below, which is followed by an explanation of each option that was considered:
The resource costs if no action were taken were estimated to be:
| Year | Cost (£M) |
| 2003-04 | 194 |
| 2004-05 | 186 |
| 2005-06 | 192 |
These costs are based on the same forecast volume assumptions that are used in each of the options, that numbers of cases will continue to fall as new applicants reduce. The 'no action' option assumes that average costs of claims continue to grow at 12% per annum, notwithstanding the falling volumes.
The amnesty announced by the Home Office in November 2003, which applies to families who applied for asylum before October 2000, has been taken into account in these forecasts. Savings to Legal Aid would be limited as many of these cases had already been through the appeals stage, and would not require significant further work.
The LSC's SAF bid set out the required resource estimated to deliver the consultation proposals of a 5 hour cap to Legal Help, with a 4 hour cap on preparation of appeals to the adjudicator, as set out in Chart 1 above. The costs and savings of the SAF bid were estimated to be:
| Year | SAF Bid Cost (£M) | No Action (£M) | Saving (£M) | Cumulative Saving (£M) |
| 2003-04 | 186 | 194 | 8 | 8 |
| 2004-05 | 139 | 186 | 47 | 55 |
| 2005-06 | 132 | 192 | 60 | 115 |
7. Alternative Options
LSC was also asked to look at the implications of different approaches to the caps currently proposed. Two options considered are detailed here.
7 Hours Legal Help threshold plus 7 Hours Appeal threshold (7+7)
Implementing a 7 hour threshold for Legal Help and a 7 hour threshold for preparation of appeals to the adjudicator, was proposed as a compromise alternative. This option would include taking the merits test for grant of CLR in-house (from April 2004), with fewer cases being granted CLR for appeals to the adjudicator.
The resource costs of this option are set out in Chart 1 above, and in the table below.
| Year | 7+7 Option (£M) | No Action (£M) | Saving (£M) | Cumulative Saving (£M) |
| 2003-04 | 191 | 194 | 3 | 3 |
| 2004-05 | 159 | 186 | 27 | 30 |
| 2005-06 | 149 | 192 | 43 | 73 |
No Legal Help other than basic information plus 10 Hours Appeal threshold (0+10)
Removing Legal Help for immigration and asylum cases but allowing for the provision of some basic information and then a 10 hour threshold for preparation of appeals to the adjudicator, which was considered a more radical option. This included funding some Legal Help for clients who are unaccompanied minors, who are detained, or who are mentally ill (based on current estimates).
| Year | 0+10 Option (£M) | No Action (£M) | Saving (£M) | Cumulative Saving (£M) |
| 2003-04 | 187 | 194 | 7 | 7 |
| 2004-05 | 135 | 186 | 51 | 58 |
| 2005-06 | 131 | 192 | 61 | 119 |
In addition, a proposal from the Law Society/Legal Aid Practitioners' Group was considered, for 15 hours Legal Help plus interview attendance, then 10 hours appeal preparation plus hearing attendance. This option would not deliver the required level of savings, and would not address the problems of the pre-existing scheme.
Following the consultation exercise, of course, Ministers decided to go ahead with thresholds and not caps, but retained the 5 + 4 option as a template. This was the scheme announced by Ministers in November 2003. Focus shifted from strict limits to a more flexible system, ensuring that funding is targeted on deserving cases and away from unmeritorious claims at an early stage. The Commission subsequently decided after a further period of consultation to take the decision making process for granting funding for appeals in house rather than allow suppliers to make the decision. Therefore apart from the cases conducted by a small number of trusted suppliers the Commission will assess the merits of an appeal before deciding whether public funding should be granted
8. Costs
There will, of course, be some additional costs and risks to firms and NFP agencies undertaking publicly funded asylum work following the implementation of the proposals. However, the LSC has considered and taken action to mitigate these.
For example, service providers will have to bear some of the cost of accreditation. The exact cost will not be known until the assessment organisation is in place at the end of March 2004, but the LSC has confirmed that they will reimburse a significant proportion of that course fee for successful candidates.
There will also be some additional administration for service providers in applying for CLR and extensions once the decisions on funding are taken 'in house' by the LSC. However, the LSC will make an allowance for this additional work, and will deal speedily with applications. It is worth noting that the LSC already makes in house decisions on funding in most other categories of civil law, so is merely bringing asylum in line with other civil work, by introducing this control to asylum cases. Only appeals that have little prospect of success will be refused funding, so if practitioners have always applied the merits test for funding appeals correctly, then it is unlikely that the introduction of 'in house' funding will have a dramatic effect on their income.
It is likely that overall income will reduce over the next 12 months, but this is due in the most part to the reduction in the numbers of asylum seekers, which have halved over 2003-04. Of the changes being implemented, the removal of the substantive interview from the scope of Contract work will have the biggest impact on the potential income of suppliers. Despite this, it is unlikely that the reduction in income will be proportional to the drop in numbers of applications, at least initially, as complex cases will continue to receive funding extensions.
In theory the introduction of the new thresholds should have no impact on the potential income of businesses. The Commission is merely requiring suppliers to apply for permission to incur further costs at an earlier point in the case and assuming the case has sufficient benefit funding will be granted. Under the current arrangements suppliers have been making those decisions themselves and so should have stopped providing a service at the point that their case failed to satisfy the sufficient benefit test. However in practice we believe that many suppliers were not applying the test properly and therefore unmeritorious cases that would have been funded under the existing arrangements will no longer be funded under the new arrangements. This could reduce the income for some suppliers but only those who were not applying the sufficient benefits test properly in the first place.
However, firms could experience cash-flow problems from the removal of existing stage-billing arrangements. This will be mitigated, however, by the acceleration of the decision-making process - i.e. at present, over 80% of initial decisions are made within 2 months. In addition, the LSC will review the impact of this on a firm by firm basis, and may allow higher contract payments to alleviate cash-flow difficulties.
There is an outside risk to asylum applicants, that large numbers of firms consider the new arrangements unworkable, and decide to pull out of this type of work. However, we believe this risk is mitigated by the more flexible approach of thresholds as opposed to strict caps. Early indications from the bid round for new contracts from April 2004, were encouraging, with many existing suppliers renewing their contracts and new firms also bidding for work.
9. Benefits
Conclusions following consultation
Accreditation and the Unique Client Number
The proposals in the consultation paper for a comprehensive new accreditation scheme for all fee earners undertaking legal aid work, and for a unique client number to enable the LSC to track cases through the system, won wide support in the consultation. The unique client number will involve some changes to suppliers' IT systems, but the change is not substantial. An equivalent change has been delivered without difficulty or undue cost in the case of solicitors providing criminal defence services, for whom a unique file number system has been in operation since 2001.
The accreditation system will impact on suppliers in a significant way as all fee-earners will have to go through a detailed assessment of their skills and competencies between April 2004 and April 2005, when the scheme is scheduled to become compulsory. Testing organisations will all be independent of the LSC and will be establishments with a good track record in assessment and testing of skills and competencies. This will give assurance that testing will be fair and objective irrespective of the background of the candidate.
The testing organisations will charge fees for each individual assessment. In order to alleviate the financial burden of paying for accreditation testing, the LSC has agreed to pay a significant contribution towards the cost for each individual who is successful. Thus apart from the need for organisations to allow some time off for staff to prepare for and undergo the accreditation process, the financial impact on the business and charitable sector will be small.
The advantages on the other hand will be significant. All suppliers under contract to the LSC will be able to put themselves forward as fully accredited services. There are very many suppliers who provide immigration services on legal aid who are of excellent quality who will find no difficulty in meeting the requirements of accreditation. However, the public will gain confidence knowing that those who fail to meet the accreditation standards will have been properly excluded from continuing to provide services. The LSC has agreed to pay a premium of 5% to those fee-earners achieving the highest level of accreditation, which will further encourage quality.
Controls over work done
The other main consultation proposal was to impose a cap on the amount of public funding per case equal to a number of hours of time spent by lawyers and advisors with their client, subject to stated exceptions, and on disbursements. This proposal did not find favour on consultation. It was considered that the proposed caps of five hours at the initial stage and four hours for appeals was too inflexible and was not sufficient to allow a professional job to be done, and the effect would be to encourage the incompetent at the expense of the competent. This could in turn undermine the benefits of accreditation.
Despite this, it is undoubtedly necessary to introduce better individual case controls given the exceptional context of immigration compared with other types of legal aid services. Many claims for asylum are made which are unlikely to succeed. Current figures for 2003 show that less than 15% of asylum claimants are granted refugee status or leave to remain. Although about 80% of the remainder submit appeals, only about 21% are successful before the adjudicator, and only a very small proportion of those succeed in overturning the adjudicator ruling on subsequent appeal. One of the reasons for this is that an application for asylum serves to extend the time otherwise unlawful entrants may remain in the country, as well as entitling them to benefits. In our view where this happens at the taxpayers' expense it undermines public confidence in the asylum system and is not conducive to good race relations. It is imperative to ensure that scarce public resources for legal aid only go to cases which merit it.
It has been agreed therefore to introduce a set of thresholds on costs and disbursements at which all individual cases must come in for review by the LSC. In addition at the appeal stage applications for legal aid should in future be made to the LSC rather than be granted by suppliers exercising devolved powers as at present. No further work, or authority to appeal, will be allowed in any case which does not have reasonable prospects of success. Where a case does have reasonable prospects and requires further work prior to the initial decision which is both reasonable and necessary, an extension may be granted. The proposal to check all cases going on to appeal at the outset is a departure from the original proposals which requires further consultation.
The decision to apply thresholds rather than caps, which do not have the flexibility of thresholds, addresses the argument that good quality solicitors cannot do a professional job in genuine and complicated cases within the caps proposed, and will avoid any unfairness to clients. The move to individual case control is designed to distinguish between those cases which do not have sufficient merit, in which case publicly funding should cease, and those which are genuine and complicated cases where some additional work may be allowed, and to stop unmeritorious appeals being taken at the outset. This proposal alone should have a minimal impact on solicitors/NFPs overall, because in taking the merits test in house at the LSC, the Government is merely ensuring that the merits test (as approved by Parliament) is being operated properly by practitioners.
Attendance at Home Office interviews
The proposal to cease funding representatives at interview also attracted adverse comment on consultation. It was considered that although this might not make a difference in all cases, it could result in unfairness or oppression in some, and was therefore an essential part of the job to be done for clients. Having considered this carefully, it has nevertheless been decided that the provision of a legal representative at interview does not provide sufficient value for money to warrant its continuance in any but exceptional cases: unaccompanied minors; applicants going through fast-track initial decision processes; those suffering from a recognised and verifiable mental incapacity which makes it impractical to undergo an interview without support. This decision reflects the limited role which representatives play at interview. It is also informed by the facts that firstly, the Home Office operates its own quality control of all its caseworkers responsible for interviewing and decision making, and secondly, there are procedures in place for ensuring fairness in relation to applicants including special procedures for interviewing those who are particularly vulnerable owing to their experiences before arrival in this country. This is not to say that there are no failures within the interviewing and decision-making system, but where there is an allegation of unfairness or misunderstanding at interview, this can often be remedied by the submission of further representations after the interview, or if necessary, by way of appeal. We will nevertheless monitor the position, with the Home Office, to ensure that the non-attendance of representatives at interview does not reduce the level of assurance of access to justice.
10. Savings
We expect the savings in 2004/05 to be around £30m from the package overall (around £32m in a full year), including up to £17m from withdrawing representatives from interviews.
There will be some additional administrative costs to implement and operate the new scheme. Currently the LSC has 130 FTE staff working on immigration and asylum. This is forecast to rise to 170 FTE staff as a result of taking in-house decisions on cost extensions and the grant of funding for appeals to the adjudicator.
The additional costs to administration are small compared to the savings that are forecast under the revised scheme. Overall in 2004-05 the LSC estimate that the costs of the new scheme will be £143m compared to £176m if no action were taken. Further savings would be generated in future years.
11. Summary and recommendation
The impact of these proposals on suppliers, taken together with the fall in numbers of those seeking asylum in this country, is likely to lead to a reduction in the amount of work being carried out at public expense on legal aid. As well as resulting in a smaller number of advisers, as some are found insufficiently skilled to meet the accreditation standards, there is likely to be an improvement in quality which is to be welcomed.
So far as clients are concerned, those seeking services in this field are often vulnerable people who do not have English as a mother tongue. They will gain greater assurance that the advice they receive is competent, and this will have a positive effect on race equality.
The overall impact of the proposals will be to focus scarce resources on those whose cases merit assistance at public expense, whether in making a claim to the Home Office or by way of appeal. Such applicants will continue to have access to the services they need. At the same time the new system will bear down on scarce public resources being devoted to cases which have little or no prospects of success. We understand and share the concern that community relations may be adversely affected by what may be seen in many quarters as exploitation of the immigration and asylum system, including the part played in it by legal aid, at significant cost to the tax-payer. We consider these proposals will not involve any unlawful discrimination against clients or suppliers, and are likely to promote good relations between persons of different racial groups.
12. Monitoring and review
The LSC will continually monitor the effectiveness and success of each proposal following its introduction and report back to DCA.
For example, they intend to gather data on;
13. Enforcement and Sanctions
As the administrators of the Community Legal Service Fund, and the contracting scheme, the LSC will enforce the new requirements and will continue to impose sanctions on poor performers by either restricting or terminating their contracts. They will continue to make regular reports on progress to the DCA.
14. Competition Assessment.
There are no real competition issues brought about by the introduction of these reforms. All firms or NFP organisations with a franchise in asylum work, either with current contracts (or those applying for contracts for the first time) have had an equal chance to bid for new contracts from April 2004 - (unless the LSC has either revoked their contract or prevented them from applying for a new one due to poor performance). In addition, all have an equal chance to meet the new accreditation standards.
15. Consultation
A full list of those organisations which responded to the consultation paper is set out on the DCA Website in the response to the consultation paper. We have also consulted with the Small Business Service on the effect of the reforms, and they have agreed that they should not have any significant impact on small firms
16. Declaration
I have read the Regulatory and Race Impact Assessment and I am satisfied that the benefits justify the costs.
Signed.............................(This remains blank until the legislation is to be sent to Parliament. It then becomes a final RIA.)
Date
Minister's name, title, department
Contact point
Derek Hill - Public Legal Service Division, DCA HQ