Source · Select Committees · Public Accounts Committee
Recommendation 5
5
Accepted
Require MoJ to routinely review profitability and sustainability for all types of legal aid.
Recommendation
We remain unconvinced that MoJ has put in place sufficient measures to ensure the future sustainability of the legal aid market. In its 2024 report, this Committee raised concerns that while MoJ was undertaking large scale reviews of both criminal and civil legal aid it had not put in place mechanisms to routinely review the profitability of legal aid fees. MoJ has since committed to increasing legal aid fees for housing and immigration but it has not yet implemented these uplifts. Further, fees for other areas of civil legal aid, which have not increased since 1996, remain under review. Even after these commitments, organisations such as the Law Society remain concerned that these uplifts are insufficient to tackle the long-term sustainability of the market. LAA is exploring what it can do to reduce the administrative burdens on providers and has made entry into the market 5 for providers easier. However, there remains no mechanism in place for routinely reviewing the profitability of all types of legal aid. While we accept MoJ’s argument that setting legal aid fees is a decision for Ministers, regular reviews of profitability and sustainability would provide Ministers with the information they need to make informed decisions. recommendation Although Ministers are responsible for setting legal aid fees, the Ministry of Justice should better support them by routinely reviewing profitability and sustainability for all types of legal aid. It should set out its plans to do this in its Treasury Minute Response.
Government Response Summary
The government agrees with the recommendation and is undertaking a feasibility study with Ipsos to establish a repeatable methodology for monitoring legal aid demand and market sustainability. They will also explore options to routinely monitor the profitability of legal aid firms and will provide an update to the Committee in October 2026.
Government Response
Accepted
HM Government
Accepted
The government disagrees with the Committee’s recommendation. The government agrees that incentives on departments for cost reduction and productivity improvements should apply as equally to all services regardless of the funding mechanism. The Government Efficiency Framework (GEF) already provides extensive guidance for efficiency in the fee-setting framework and endorses public sector organisations to use the framework as a guiding set of principles on how they progress and track efficiencies. Where the costs of delivering a fee or charge service have been reduced through a technical efficiency and the fees/charges have been reduced (in line with 6.2.2. of Managing Public Money) and this can be clearly evidenced; this can be included as a monetisable non cashable efficiency. Departments are therefore incentivised to drive efficiencies in their fee-funded services as this will count towards their bespoke technical efficiency targets agreed at the 2025 Spending Review. All government departments identified at least 5% savings and efficiencies by 2028-29, delivering technical efficiencies of almost £14 billion a year by 2028-29, with funding repurposed towards core priorities. The government is committed to continuous improvement and will repeat the technical efficiencies process at the next Spending Review. Treasury, Parliament and the public will be able to both track and hold public bodies to account on how they are achieving efficiency savings to both the taxpayer and the fee payer as part of their overall publicly reported steps towards meeting their efficiency targets. This will also be assessed as part of departments’ annual financial performance evaluations.