LSB set to block 11% budget boost for ombudsman

The oversight regulator was today poised to turn down the legal ombudsman's plea for an inflation-busting budget increase - risking the prospect of an escalation in the case backlog.

A paper prepared ahead of today’s monthly Legal Services Board meeting recommends that the organisation should approve a 6.5% increase, taking its budget for 2026/27 to £21.3m. The Office for Legal Complaints, which runs the ombudsman service, had requested an 11.1% increase, insisting it was the only option for dealing with unprecedented numbers of complaints.

But the LSB, which last year approved a budget uplift of 11.4%, said there was not enough evidence that a similar injection in 2026/27 would significantly improve performance.

‘After successive above-inflation increases and learning lessons from the 2025/26 budget approval process, it is critical that any future budget uplifts clearly demonstrate value for money,’ said the LSB paper. ‘It is already understood that the current operating model is not sustainable given new trends in demand for LeO’s services. As such, it will not provide value for money to the public to significantly increase spend on a model that is no longer considered appropriate. Instead, funding should be focused on transformation.’

The board was invited to approve the lower increase and also to reject an application for an extra £600,000 (on top of the approved £300,000) to fund the design phase of the OLC’s longer-term transformation scheme.

The lower-than-expected budget increase presents a headache for the OLC, which is already struggling to meet performance targets amid a surge in complaints about lawyers.

The organisation predicts a total of 8,640 complaints in 2025/26 which will rise in the next year to between 11,000 and 12,165. This current year, the ombudsman is expected to resolve around 8,600 cases but even that falls short of the self-imposed target of 9,000.

The backlog of unallocated investigations will be 3,218 by this April, against a target of reducing the queue from 3,275 in 2024/25 and to 2,700 in 2025/26.

The OLC is quoted in the LSB board paper as saying the growth in complaints is ‘so significant and rapid that it cannot be met by improvements to LeO’s operational outputs under the current operating model’.

Under the higher proposed budget, the OLC said it could fund 25 additional staff and resolve up to an extra 3,500 complaints, with wait times for cases waiting to be looked at kept to under 350 days. With the budget increase recommended by the LSB, the complaints handler will employ just four extra staff and resolve between 2,400 and 3,200 extra cases. The backlog could rise to more than 6,700 and average wait time for cases to be opened is projected to rise to 390 days.