The government suffered a rare ‘fatal defeat’ in the House of Lords last night on a regulation that would have denied legal help to people appealing welfare benefits on a point of law in first-tier tribunals.

It also agreed to amend a regulation which opponents argued would have restricted the availability of legal aid in public law cases, particularly judicial review.

In a debate on secondary legislation arising from the Legal Aid, Sentencing and Punishment of Offenders Act, peers backed a motion not to approve the regulation.

Labour’s former legal aid minister Lord Bach (pictured), who moved the motion, accused the government of failing to honour an undertaking made during the act’s passage through parliament to provide support in such cases. Bach said: ‘No government, whatever its colour, should be allowed to get away with this. An undertaking to parliament must be kept.’

Justice minister Lord McNally rejected the accusation and said he did not believe the regulation removes access to justice. He said concessions had been made to retain legal aid in a ‘vast swathe’ of welfare cases, but said that further concessions could be made.

‘Having listened carefully to the arguments we agreed to make available legal aid for advice and assistance for welfare benefit appeals on a point of law in the upper tribunal. In addition we agreed to make legal aid available for advice, assistance and representation for welfare benefit onward appeals in the court of appeal and the supreme court,’ he said.

But he said that at no point had the government pledged to provide legal aid for all first-tier benefit appeals. ‘The government's position throughout has been that in these economic times we need to target legal aid at cases of the highest priority and where it is needed most,’ he said.

He urged the house not to take the issue to a vote, warning: ‘I must make it clear that, if the amendment is carried and this concession is lost, the act is still an act of parliament and will still be implemented in April but without this concession. I would consider that a rather pyrrhic victory.’ The government was defeated by 201 to 191.

Elsewhere in the debate, McNally agreed to amend the regulation dealing with legal aid for public cases.

Crossbencher Lord Pannick said Regulation 53(b) would ‘very substantially restrict’ the availability of legal aid in public law cases, particularly judicial review.

As drafted, the regulation stated that legal aid for a public law claim would be available only if the director of legal aid casework is satisfied that the individual has exhausted all administrative appeals and other procedures available to challenge the decision before bringing a public law claim.

Pannick said that in many cases, whether judicial reviews, housing appeals or habeas corpus claims, it is not reasonable to expect the litigant to exhaust other procedures and appeal mechanisms before going to court.

The other procedures, he said, may take months and sometimes years to arrive at a conclusion with no power to grant an interim remedy.

Pannick suggested the issue could be resolved by amending the regulation to require claimants only to have used all ‘reasonable’ means to challenge the decision, thus giving the director discretion.

McNally said: ‘There was never any attempt on our part to change the rules as far as judicial review was concerned. However, when a former lord chancellor, a former lord chief justice and a former attorney general tell you that it needs clearing up, I think it is only wise to see whether it can be cleared up, and that is what we will do.’

Bach told the Gazette: 'This is the first fatal defeat of a government order or regulation for five years. To defeat a regulation is very unusual and means it is no longer extant. It was a victory for parliament. It was not a party issue, but about holding ministers to their word.'

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