The Ministry of Justice has confirmed that projected savings of £150m in fee cuts will not, as was expected, count towards required cuts of £220m a year - taking cuts in criminal legal aid to £370m.
An official also revealed that the MoJ has no contingency plan in the event that the proposed introduction of price-competitive tendering (PCT) leads to a market failure.
The consultation stated that the ministry wants to save £220m a year by 2018/19 through the introduction of PCT and fee cuts, from the £1.1bn budget spent in 2011/12.
The Legal Aid Agency’s (LAA) business plan indicates that the expected spend for 2013/14 is £941m.
At an MoJ roadshow on the criminal legal aid reforms, held in London last night, an official confirmed that even if the figures from the LAA show that the budget has already fallen from £1.1bn to £941m – a drop of £150m – the ministry will still look to save £220m on top of that.
The official said that the government expected to see a drop in the budget this year due to fee cuts introduced in October 2011.
She said: ‘The data we expect to be published this summer for 2012/13 will show a reduction in the baseline that’s used in the document, which is the 2011/12 data.’
She explained: ‘The issue is about the need for our ministers to save money both in what we call the current spending period as well as making further savings in the next spending period. If ministers proceed with these proposals, it means that some of the savings will accrue, for example, in this year and next year so that ministers will save money as early as possible.’
She said: ‘The fiscal situation in government is so severe that ministers asked us to put together a number of proposals to save as much money as we could.’
The official added: ‘It’ll be up to ministers whether they want to proceed on that [the consultation proposals] having up to date figures for 2012/13 and also what our ministers are under pressure to save from the Treasury following the outcome of the next spending review.’
A questioner suggested that the criminal legal budget aid budget had in real terms fallen by two-thirds since 2006/7, which the official accepted.
She was asked what safety net the ministry had considered in the event that the proposed delivery model leads to market failure.
She indicated that at present there is no plan. ‘I’m sure we will get suggestions [in the consultation response] about what safety nets we should be putting in. To look at scenarios of market failure ministers will have to consider what is the fallback position.’
But at the moment she noted: ‘It’s a risk we’re going to have to look at and consider how to mitigate.’
She added that despite the opposition to PCT, the ministry is ‘confident’ that firms will bid.
She told the meeting: ‘Many people do not agree with the proposals for price-competitive tendering, but I’m afraid it’s not everybody. We’ve had people who say that they will bid, the model is workable and they do want to proceed with it.’