In a move decried by many in the profession, the Ministry of Justice has put price-competitive tendering back on the agenda, launching a consultation on using it for the Housing Possession Court Duty Schemes. Catherine Baksi reports.
It is completely mystifying why they are doing it. The only reason must be because they think they can save money.
Tenants faced with eviction are not cans of beans or widgets, whose legal cases can be bought or sold for the lowest price by law firms operating a factory production line. They are vulnerable people faced with the frightening prospect of homelessness, who require expert assistance from patient, dedicated and skilled lawyers. It is for this reason that housing lawyers have been left aghast by proposals, which have come out of the blue from the Ministry of Justice (MoJ), to introduce price-competitive tendering (PCT) for the Housing Possession Court Duty Schemes (HPCDSs).
Many might have thought the MoJ would have learned a lesson from its disastrous attempts to introduce PCT for criminal legal aid contracts. In 2013, proposals from the then justice secretary and lord chancellor, Chris Grayling, to introduce price competition, as part of his package of criminal legal aid reforms, were met with unprecedented and united protest action by barristers and solicitors, who took to the streets brandishing placards and noisily chanting their disapproval of the scheme, which they said would irrevocably damage the criminal justice system.
Eventually, Grayling was forced to make a U-turn and abandoned the plans that September, following the now infamous deal with the Law Society, which sparked the successful vote of no confidence in the Chancery Lane leadership three months later. But in January 2017, the MoJ published a short consultation paper proposing reform of the HPCDSs (Housing Possession Court Duty Scheme: commissioning sustainable services
), which has operated since the early 1990s, to introduce an element of price competition.
The schemes offer on-the-day, emergency face-to-face advice and advocacy at court to anyone facing possession proceedings and in danger of eviction or having their property repossessed, free of charge, regardless of their financial circumstances. Out of an annual legal aid budget of around £1.5bn, the MoJ says HPCDSs cost around £3.6m.
The current contracts for these schemes were introduced in April 2013. The MoJ says the retender is part of the wider retendering for the 2018 Civil Legal Aid Contract, which aims to align all of the current civil contracts to start on 1 April 2018.
Currently, the services are remunerated by an administratively set fee of £75.60 per case, whatever its complexity or the length of time spent on it, and with no additional fee for travel or waiting. MoJ figures state that in 2013, there were 115 HPCDSs – one for each scheme area.
But the consultation states that the government is concerned about the ‘ongoing stability’ of the services (page 5, para 15) and suggests that the current approach to contracting with providers for each individual court is ‘unsustainable’ (page 2, para 4). The paper says around half of the current schemes have ‘very low’ volumes of work (page 5, para 22) and are ‘unlikely to be commercially viable’ (page 2, para 4) or attractive to providers. As evidence to support its contention, the MoJ points to the fact that 13 providers have pulled out of the scheme since 2013, which necessitated retendering and ‘added to the administrative burden on the [Legal Aid Agency (LAA)] and, ultimately, the cost to the taxpayer’ (page 2, para 5).
The consultation proposes moving to fewer, larger contracts, each serving a wider geographical area, which the LAA suggests will be more sustainable for providers. It will reduce the 117 schemes that were running in 2015/16, to just 48. The schemes will be split into three sizes according to the number of acts of assistance anticipated: small (0–270 cases), medium (271–599 cases) and large (600 or more cases), with the ‘large’ category making up just over 60 per cent of the proposed schemes.
Previous tenders for the schemes have been competitive in that they have been based on the ability of providers to demonstrate how they best meet certain quality criteria, which, the MoJ claims, ‘can lead to high levels of costly litigation’ (page 5, para 17). The paper proposes that bids for the new contracts will be run on a competitive tender model based on price and quality, which, the MoJ says, will ‘provide a better service for those needing advice and increased sustainability for those delivering the services’ (page 5, para 19).
The paper states: ‘In our opinion, the nature of HPCDS work and the manner in which it is delivered to clients at specified courts means that it lends itself to be competitively tendered with price as a factor’ (page 7, para 28). The inclusion of price in a tender process, it says, ‘introduces an objective element for the award of contracts’ (page 5, para 19) and ‘will allow rates to be set closer to the cost of delivering the service, taking into account any economy of scale gained through the award of larger contracts’ (page 5, para 20) and providing better value for the taxpayer. Although contracts will only be awarded to single legal entities, the paper says that the LAA may consider the use of sub-contracting or agents – which is how much of this work is currently managed.
The MoJ says it is worried about the sustainability of the sector, so why is it introducing something that will make it less sustainable?
Many practitioners fear that the introduction of price competition for this small, discrete area of civil legal aid could be the thin end of a wedge that will, in time, be extended to other areas of civil work, if the LAA can make it function. However, the consultation document states: ‘For the avoidance of doubt, this is the only area of civil legal aid which we are consulting on in respect of introducing this form of competitive tender as part of the 2018 Civil Legal Aid Contract procurement’ (page 7, para 28), and a spokeswoman for the MoJ told Legal Action: ‘Legal aid is a vital part of our justice system and the proposals in this consultation are designed to make sure services will be delivered sustainably. We currently have no plans to include a price element in the tender process for the other civil contracts.’
‘If it ain’t broke, don’t fix it’
Despite these reassurances, practitioners remain concerned and of the view that the proposed change is unnecessary and ill-conceived. ‘Practitioners will see this and shudder,’ says Chris Minnoch, operations director at the Legal Aid Practitioners Group. The current scheme, he suggests, works well and he offers this advice to the LAA: ‘If it ain’t broke, don’t fix it.’
Vicky Ling, consultant at Partnership Quality Systems, says it is ‘extraordinary that the LAA wants to try price competition on a bit of the service delivery that is obviously critical to one of the most important aspects of life – having a roof over your head’. The scheme, she explains, is vitally important for ensuring access to justice for some of the most vulnerable people, and the LAA is taking a big risk in seeking to introduce a scheme that will have a hugely destabilising effect on the supplier base. ‘If anything happens to the scheme, the implications in relation to increased homelessness and the knock-on cost to local authorities are enormous,’ she warns, adding: ‘It is completely mystifying why they are doing it. The only reason must be because they think they can save money.’
PCT, says Debra Wilson, partner at south London firm Anthony Gold and a member of the Law Society’s housing law committee, is a ‘blunt instrument to save money which the Treasury demands’. And the president of the Law Society, Robert Bourns, warns that it could result in a ‘race to the bottom’ that will lead to a drop in the quality of service provided. ‘A price war will not improve services and could negatively impact on clients,’ he says, and asks the LAA to set out the steps it will take to mitigate that risk.
Where are the economies of scale?
Simon Marciniak, chair of the Housing Law Practitioners Association and a partner and head of the housing department at Miles & Partners, questions where any economies of scale are to be found. Firms doing housing cases, he says, have faced years of cuts and already provide the duty service at a ‘substantial loss’, doing the work as a loss-leader in the hope they will pick up more financially viable certificated work.
Echoing his comments, Ling points to the current list of providers: ‘It is not the big firms that are doing this work, but the small and medium-sized ones and financially strained third-sector organisations.’ This, she says, indicates that there is not profit to be made in this area of work, otherwise large profit-making organisations would be doing it.
‘The people who work in this field are motivated by access to justice, not money,’ she continues, and warns that cutting the fees they receive from the scheme will have a destabilising effect on providers. Some organisations or firms, she suggests, will seek to continue to do the work and bid for it at an unsustainably low level of fee. Agreeing, Wilson says the introduction of PCT will ‘cause irretrievable damage to an already fragile supply base’.
Price versus quality
Minnoch wonders where the emphasis between price and quality will fall in the bidding process. ‘If the decision is based 75 per cent on price, quality will be almost irrelevant,’ he notes. Legal Action did ask the MoJ for clarification on this point, but none was provided.
He also wonders how the LAA will check the sustainability of bids. If a supplier says it can offer the service for, by way of example, £60 a case – £15.60 less than the current fee – how will the LAA know if it is offering to do the work at a viable level, rather than just setting itself up to fail and leaving a gap in provision further down the line? ‘The ministry says it is worried about the sustainability of the sector, so why is it introducing something that will make it less sustainable?’ he asks. If its concern about the viability of the sector is genuine, Minnoch suggests that it should endeavour to make the rest of the housing scheme more financially viable.
Additionally, the consultation is being run as the MoJ presses ahead with its programme of court closures and there is concern over how the reduced number of courts will be grouped in the scheme. If one scheme covers courts that are spread over a wide geographical area, it will mean that practitioners have longer travel times. This will have a particular impact in rural areas and some of the London boroughs, and will make it even less likely that providers will be able to offer a sustainable service.
Out of the blue
Expressing the views of many, Ling notes: ‘It’s disappointing that this consultation was the first time we’d heard of the plans for PCT. It was not an issue that has been raised or discussed with providers in advance.’ This, she says, makes it more likely that the scheme, if introduced, will fail. ‘The LAA sit in Petty France and come up with new schemes without the benefit of providers’ professional knowledge – and they make mistake after mistake.’
The consultation closes on 17 March. While many suspect that the MoJ has already decided the outcome, Wilson urges practitioners to respond to it and voice their opposition to any ‘notion of PCT being applied to housing cases’.