The justice secretary, Chris Grayling has announced that the controversial legal aid competition plans have been scrapped after months of unease and protests from many law firms across the country.

The plans were originally designed to cut around £220 million from the annual legal aid budgets in England and Wales because the UK’s justice system was deemed too expensive to run. We blogged about the proposed legal aid plans back in June saying that the plans would have been devastating to local solicitor firms. It was also feared that the new PCT scheme would have a detrimental effect of the British legal system.

If the plans had become law, then the government would have introduced a price competitive tendering (PCT) structure where large corporations would compete with smaller ones for legal aid contracts. This would have seen many multinational firms offer legal aid for cheaper costs, essentially driving smaller independent solicitor firms out of business. It would also have changed the legal landscape dramatically with massive corporations such as Serco and G4S potentially dominating the market.

Other legal aid cuts expected to go ahead

Although the PCT scheme has been scrapped, it is expected that other legal aid cuts announced back in April will still to go ahead. These will see:

• Defendants with a disposable income of over £37,000 unable to receive automatic access to a legal aid.
• Reduction in all prisoners’ rights to claim support if they are making any claim against the British prison system.
• Immigrants who have been in the country for less than a year will be unable to receive access to any form of legal aid in civil cases.
• A cap on all contracts for any duty solicitor work at UK police stations.
• A 17.5% cut in legal aid fees across the board – phased in over 2014-2015.
• A 30% cut to VHCC fees.

Local law firms are still at risk of bankruptcy

While we welcome the news about the PCT, local law firms are still at extreme risk of bankruptcy, due to the structure of legal fees. The new structure will encourage many defendants to plead guilty as it would be more financially beneficial for companies. This will see a lack of work available in the system, but there will still be the same number of firms competing for it. The government may meet their cost cutting target of £220 million but many local firms will struggle to find work and could go under.

The view of local law firms’ futures is also shared by Ray Shaw from the London Criminal Courts Solicitors Association when he said:

“There's still an anticipation of a significant reduction in the number of firms. It will lead to lots of firms sinking. Things are already lean. We have taken so many hits and cuts. The idea that it can be done without any significant reduction in the quality of everything in the justice system is laughable".

The charity Reprieve had very strong words for the government, especially about the lack of legal aid for immigrants. They said:

“Blocking legal aid to immigrants would deny justice to a wide range of people wronged by the UK government - from victims of torture and rendition to Gurkhas and Afghan interpreters denied the right to settle in Britain".

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