Westminster Watch

Mark Hatcher on the Public Accounts Committee and its devastating report into the legal aid reforms.

The veteran Whitehall watcher, Professor Peter Hennessy who now observes the behaviour of mandarins from the cross benches in the House of Lords, once described the Commons Public Accounts Committee (PAC) as “the queen of select committees … [which] … by its very existence exerted a cleansing effect in all government departments”.

The structure and functions of the PAC, which was set up in 1857, date back to reforms initiated by William Gladstone when he was Chancellor of the Exchequer. The committee quickly developed practices and procedures that continue to this day. Based on evidence from the Permanent Heads of Whitehall departments and other officials, the themes of the committee’s reports have remained much the same over the past 150 years or so. They identify waste, poor performance and the need to make the best use of public funds.

The Permanent Secretary of the Ministry of Justice, Dame Ursula Brennan and her colleagues, Matthew Coats (Chief Executive of the Legal Aid Agency), Catherine Lee (Director General, Law and Access to Justice Group), and the recently retired Chief Executive of HM Courts and Tribunals Service, Peter Handcock were given a bumpy ride by the committee shortly before Christmas. They were up before the redoubtable Margaret Hodge and her colleagues to give evidence on implementing reforms to civil legal aid through the Legal Aid, Sentencing and Punishment of Offenders (LASPO) Act 2012.

Like many select committees at this stage in the life of the current Parliament, the PAC has been busy finishing off reports into their inquiries before Parliament is prorogued towards the end of March. The PAC’s report into the legal aid reforms (HC 808, published last month) was short, and devastating.

The committee noted that the Ministry was on track to making significant and rapid reduction in civil legal aid expenditure. But it had introduced major changes on the basis of no evidence in many areas.

It had been slow to fill considerable gaps in its understanding and had not properly assessed the full impact of the reforms. Almost two years after the implementation of LASPO, the Ministry was still playing catch up: contrary to the assurances which had been given to Parliament, it did not know if those still eligible were able to access legal aid. The Legal Aid Agency had told the committee that was “not a knowable fact”. Nor did the Ministry understand the link between the price it paid for legal aid and the quality of the advice given.

Perhaps most worryingly of all, the committee found that the Ministry did not understand, and had shown little interest in, the knock-on costs of its reforms across the public sector. It was unable to say, for example, whether the cuts it had made to civil legal aid had simply shifted costs elsewhere in the public sector. It did not know whether the projected £300 million cut in public expenditure in legal aid was outweighed by additional costs to other parts of government. Unsurprisingly, the committee concluded that the Ministry did not know whether “savings” in the civil legal aid budget represented value for money.

The experience of MoJ officials in trying to meet challenging targets for savings in departmental expenditure in response to the overarching need identified by the Coalition in 2010 to reduce the national deficit, focused attention on the ability of Whitehall to anticipate, assess and respond to the most significant challenges over the next decade.

The question of how well equipped officials are to advise an incoming government on big strategic issues (such as the cross-departmental effects of climate change on flood defence expenditure, or a prolonged period of currency instability following a break-up of the euro, or changes in the national demographic profile on pensions with very big long-term financial consequences, and the effects of constitutional change) has been occupying the attention of another group of MPs along the committee corridor at Westminster, the Public Administration Select Committee (PASC).

The PASC launched an inquiry last year into Whitehall’s capacity to address future challenges. The committee, which is chaired by Bernard Jenkin, has been examining evidence on the adequacy of current Civil Service capabilities, the need for new capabilities in the future, and the conduct of strategy and leadership. These are just the sort of issues in which the next ministerial team at the Ministry of Justice might be expected to take an interest in what, for years to come, will remain a very demanding fiscal and economic environment.

The committee has heard evidence from the Cabinet Office, the Department of Health, the Ministry of Defence and the Treasury but not from the Ministry of Justice. Perhaps the strategic issues facing policy makers responsible for long-term planning on justice and home affairs do not loom sufficiently large in the eyes of parliamentarians to warrant attention. This is unfortunate.

A few weeks ago the PASC heard evidence from the Treasury’s Permanent Secretary, Sir Nicholas Macpherson. He acknowledged the need to address cross-departmental effects in a way that his counterpart at the MoJ was unable to do in relation to the effects of cuts in legal aid on other Whitehall departments’ budgets. One might think, for example, that the relationship between the NHS and local authorities responsible for social care was critical because, unless properly managed, you could squeeze one part of the system but the problem would just re-emerge somewhere else.

Similarly the effect of making savings on legal aid expenditure might be dwarfed by the additional increases in spending on health, benefits and housing budgets. Mr Jenkin reminded Sir Nicholas that in the 2009-10 Public Expenditure Review the Treasury squeezed £150 million out of the Ministry of Defence which came out of the aircraft carrier programme by delaying it 18 months. That added a staggering £1.6 billion to the programme. The PASC Chairman said that it was “seared on my imagination as an absolutely appalling episode”. Sir Nicholas responded dolefully: “It is something we should learn from.”

Assessing policy impact is not a precise science and assessments will reflect the different perspectives from Whitehall and Westminster. Giving evidence to the PASC inquiry, the Cabinet Office Minister for Government Policy, Oliver Letwin was asked how to overcome barriers to long-term thinking in Government. His response was to urge parliamentary committees to go on asking departments searching questions about the need for strategy, coherence and long-term thinking “because Whitehall does pay some attention to what Parliament is forcing it to think about.” But he recognised that the short term media focus and the institutional agendas of government departments could easily cut across this. In practice the long-term rewards for politicians are constantly in the balance with the need to make short-term popular gestures.

Is it too much to hope that in the new Parliament which will gather at Westminster in May a refreshed and reinvigorated Justice Committee will ask some searching questions about the MoJ’s capability and capacity, with other spending departments, properly to assess the long-term effects of cuts in legal aid on access to justice for all? By doing so the Justice Committee, like the Public Accounts Committee, could have a cleansing effect.

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Mark Hatcher

Mark Hatcher is Special Adviser to the Chairman of the Bar. After working at the Law Commission and in the House of Lords, he became Head of Global Public Affairs at PwC. He is a Bencher of Middle Temple, as well as being a priest. He is Reader of the Temple.