Stand and deliver

The future of the Legal Services Commission will not top the agenda of the incoming legal aid minister. The public finances mean she or he will face a more pressing problem. Since 2003, the profession has struggled with the legal aid budget being capped at £2bn. Well, let's prepare ourselves for a new given: the need to reduce public spending could well mean that the legal aid budget of the future will be £1.5bn.

It is in this context that ministers will consider the future of the Legal Services Commission. Before decisions are made on the structure of the organisation they need to be clear about what needs to be delivered; what is the LSC's core function? Regardless of the formal structures, it is clear that policy, and responsibility for ensuring its implementation, will lie with ministers. The commission, or its successor, will focus on delivery. This is both necessary and overdue.

Establishing the Legal Aid Board in 1989 as a non-departmental public body (NDPB) rather than an executive agency was understandable. Its purpose was to take control of a growing area of public spending from the Law Society which was both the custodian of the monies it dispensed and the representative of the major recipients of those funds.

An NDPB, with independent board members, was seen to be a suitable structure to improve delivery, deliver changes to the scheme and still be seen to be independent of government in its decision making on individual cases.

With hindsight, the problem over lack of clarity on policy began to grow almost immediately, as the board began to exercise its 'independent' role not only over decisions on individual cases but also over key policy areas affecting scope, eligibility and delivery.

Different approaches

Despite occasional tensions in the relationships, this arrangement worked relatively smoothly in the early years. However, the game has now changed. In reality it's been changing since about 2003 as a result of explicit decisions by the Treasury not to continue to fund the forecast growth in legal aid funding requirements.

Pressures arising from this tougher financial climate, and the need to implement reforms quickly, inevitably magnified differences in approach between ministers and the commission. The new environment demanded a structure capable of delivering radical change competently, quickly and with clarity. The structures and responsibilities developed up to 2003 militated against this. Decisions had to be brokered through both ministers and commissioners, and this resulted in compromises, a loss of clarity of purpose and delay.

The structures implemented for the task of 1989, including the policy role the commission had subsequently developed, had become unfit for the task. This was the case probably from 2003, but certainly from 2006 onwards. The difficulties were managed for a long time, many of the reforms in Lord Carter's procurement review were delivered, and the legal aid budget was controlled: but in spite of the structure rather than aided by it.

The qualification of the legal aid accounts for 2008/09 by the NAO brought the commission full circle '“ putting a question mark against the operational competence on which it had originally built its credibility.

Future of the commission

The commission's future as an agency (or under any other label) will be to procure the services defined and required by the MoJ and to ensure value for money and financial propriety in doing this. It will be smaller, have fewer tasks and be less interventionist with providers '“ properly leaving standards and quality to the regulators.

Quite probably the more significant player in shaping the future of legal aid delivery will not be the LSC but the LSB '“ the Legal Services Board. This brings us back to the £1.5bn question.

Whether the current range of legal aid services can be delivered for £1.5bn needs to be seen, but they could be delivered for less than £2bn if the ministry is prepared to reform fundamentally the way in which services are delivered. If there has been a collective failure by the commission and the ministry it has been that it has not grasped this nettle. While espousing the need for reduced expenditure, it has not made the changes necessary to enable providers to drive down delivery costs. In fact, they have consistently implemented changes that have driven them up.

The MoJ must enable providers to drive down their own costs of delivery by increasing contract sizes and removing the structural requirements that drive up delivery costs. It will be these changes allied to the LSB's opening of the legal services market that will radically change the delivery of legal aid and the role of the commission. Over the three-year life of legal aid contracts, the government is committing some £6bn of expenditure (or possibly £4.5bn in future). These are contracts that will be attractive to new legal services providers with the ability to organise the delivery of these services efficiently and with the capital necessary to put those efficient systems in place.

The task for the policy makers is to take advantage of those changes. In designing the new commission, those policy makers must focus on how it will do business with a far smaller number of such providers, within the new regulatory environment, and liberate them to drive down the cost of delivery.