A report by the Home Affairs select committee described Lord Mackay's proposals to cut back eligibility for legal aid as 'unfortunate', arguing that they sat uneasily with the Government's commitment to citizens' rights.
The cuts should be reversed as soon as other ways of saving the required funds had been found, the committee said.
The plans were announced by Lord Mackay last November in an attempt to restrict the legal aid budget, which has almost doubled in the past five years to more than pounds 1bn. Lord Mackay says that 283,000 people will receive civil legal aid next year, 127,000 fewer than would have been given assistance under the present scheme. In addition, thousands more people will be forced to pay a sharply increased share of the costs of their case.
The Lord Chancellor also plans to change the arrangements under which people are entitled to two hours of free legal advice. This will only be available to people with a disposable income of less than pounds 61 a week.
In Scotland, the Government has abandoned this aspect of its proposals, and it should do likewise in England and Wales, the committee said.
The committee went on to question why the legal aid budget had grown so fast. This was partly attributable to an increase in the number of cases coming to court, but there was also an unexplained leap in the cost of each case. 'It's absolutely fundamentally clear that the cost of the whole legal system is out of control,' the Conservative MP John Greenway said.
Lord Mackay should establish better consultation with both barristers and solicitors to ensure a full review of the legal aid system. This could include better funding for law centres. 'If we achieve one thing . . . it will be to knock the heads of the legal professions and the Lord Chancellor's Department together,' the committee said.
Earlier, Mr Justice Macpherson said the Law Society had an 'arguable case' when it accused Lord Mackay of acting illegally in attempting to reform the way solicitors are paid.
The Lord Chancellor is planning to abolish an hourly rate for criminal legal aid work in magistrates' courts, replacing it with a system of standard fees. While this could increase the earnings of some solicitors, others would lose out, the High Court was told. And if the losers no longer received 'fair remuneration' for their work, Lord Mackay would have contravened the 1988 Legal Aid Act, the court was told.
Granting leave for an urgent hearing, Mr Justice Macpherson said: 'I firmly believe there is a case which should be argued.' Afterwards, a spokesman for the Lord Chancellor's Department said that it would 'strongly oppose' the challenge.
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