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Legal aid income and capital limits have not been uprated since 2009, meaning that the proportion of the population who qualify is ever shrinking.
1This figure was 25 per cent in 2016, down from 80 per cent when legal aid began: Spending of the Ministry of Justice on legal aid, House of Commons Library Debate Pack No CDP 2020/0115, 21 October 2020. Until recently, low-income homeowners were unlikely to qualify, as house prices have risen above inflation and home value is included in the assessment. Despite a failure (until recently) to conclude the long-awaited
Legal Aid Means Test Review, that position has vastly improved in recent years.
Litigation successes by low-income trapped capital homeowners
R (GR) v Director of Legal Aid Casework [2020] EWHC 3140 (Admin) involved a domestic abuse survivor who was unable to access legal aid after the value of her house brought her above the eligibility threshold. She was unable to sell her house after her abusive ex-partner refused to consent to a sale on equal terms. The High Court found that the Legal Aid Agency (LAA) has a discretion to value assets other than money on an equitable basis (ie, by valuing at nil).
The position improved further in early 2021, when the Ministry of Justice (MoJ) made another change in response to litigation by another survivor, scrapping a rule limiting the mortgage amount that could be deducted when valuing the home.
2See ‘Legal aid rule change for home-owners on low incomes & domestic violence survivors’, PLP news release, 18 December 2020. This made it more likely that low-income homeowners would fall within the limits, but ‘trapped capital’ still occurs where a person has a low mortgage balance.
Despite the successful case, Public Law Project (PLP) found last year that almost a third of applicants with trapped capital were still unable to access legal aid.
3Dr Emma Marshall and Daniel Rourke, ‘Trapped capital’ and financial eligibility for legal aid, PLP, April 2022, pages 17–18. It also found that providers were discouraged from making trapped capital applications, uncertain whether decisions to grant legal aid would be overturned by the LAA at a later stage. Additionally, many LAA caseworkers appeared unaware of
GR when assessing eligibility and were still advising individuals inaccurately.
Implementing the judgment has resulted in higher grant rates
In response to concerns raised over the failure to incorporate the GR judgment into practice, some key improvements have been made. These have helped make individuals aware that value trapped in their home may not exclude them from legal aid, made providers aware of what is expected of their applications and ultimately improved access to justice.
The LAA has acknowledged ongoing issues with call handlers failing to understand the trapped capital rules and has implemented specific quality control measures. It has also stated that applicants will not usually be expected to demonstrate that they have tried to borrow money against a property. This reduces the evidence-gathering requirements for making a successful application to disregard trapped capital.
Additionally, new procedures have been established to ensure that refused cases are reviewed robustly, lowering the risk of incorrect decisions standing. The LAA has committed to collecting and sharing internal records of trapped capital cases, which will be crucial in helping the sector better understand and tackle issues that arise. In May 2022, the grant rate was 100 per cent: 26 out of 26 cases granted.
4Civil initial applications: financial eligibility (means assessments) including ‘trapped’ capital, LAA webinar, 12 July 2022, supporting slide 15.How does this fit in with the Legal Aid Means Test Review?
The MoJ published the long-awaited consultation outcome to the
means test review on 25 May 2023. The amended proposals on trapped capital appear, on balance, to be a positive development. The MoJ will seek to replace use of the discretion with a new mandatory disregard but will no longer seek to introduce an additional charging system. The additional charging system proposed appeared to apply in a greater range of circumstances than the ‘statutory charge’ that applies wherever assets are obtained or recovered using certificated legal aid. It would also have introduced significant administrative burdens.
While it is good news that the MoJ has listened to concerns raised by consultees, whether the new disregard is effective in ensuring access to justice will depend on the precise definition of trapped or inaccessible capital used. We retain concerns that it is in practice difficult to make the disregard mandatory, as there may be disputes with the LAA about whether an asset is really trapped or inaccessible. In the event of a dispute, there remains no independent right of appeal and judicial review is an ineffective remedy (as it is practically inaccessible without legal aid).
Finally, unless deep-rooted issues around legal aid sustainability are addressed, there will be insufficient providers to take on new trapped capital cases.
What does this all mean?
Despite legal aid’s uncertain future, there is room for optimism among practitioners and impacted individuals, who should be encouraged by evidence that trapped capital cases are now more likely to be identified and legal aid more likely to be granted as a result.
There is a wealth of materials available to assist providers in preparing applications, and evidence demands from the LAA should be more proportionate. We are interested to hear of challenges faced by providers and individuals and may be able to assist, so
please get in touch.