Aitken sees role for insurance to replace legal aid

Private legal insurance could be extended to take on some of the burden currently borne by the "spectacular growth" in legal aid, Jonathan Aitken, Chief Secretary, to the Treasury, said yesterday.

In a firm reassertion of the Government's intention to cut soaring legal aid costs, Mr Aitken levelled a thinly-veiled warning to the legal profession that the Government was no longer prepared to tolerate what he called the "moral hazard" inherent in the current system.

He told the Society of Conservative Lawyers: "Neither the providers of the service nor the ostensible clients have any significant interest in efficiency or economy in delivery. Indeed in the case of the providers, just the opposite is true."

Mr Aitken went out of his way to congratulate the society for the emphasis it had put in a recent pamphlet on the role that could be played by extended private insurance schemes.

He said he had been "struck" by international comparisons which showed that premium income in the legal expenses insurance market had been £1.25bn in Germany in 1991-92, £400m in France and only £70m in the United Kingdom.

He added: "These figures suggest that legal insurance is a neglected area." The Chief Secretary also said that "no other significant Whitehall programme" had seen such a rise over seven years - £363m in 1986-87 and 1994-95, an increase of 19 per cent in real terms per year.

He added that "it is important that a genuine level playing field exists between those requiring access to public funds and those who would reasonably be excluded from such welfare provision."

He said Lord Mackay, the Lord Chancellor, was rightly "seeking to combine improved access to legal services with better control and targeting of public provision so that quality can be maintained at an affordable cost".