Court strikes down "unlawful" cap on defence costs

The government has defended its predecessor's 'unlawful' attempt to save £20m by limiting recoverable defence costs to legal aid levels.

The new Ministry of Justice (MoJ) has confirmed it is considering an appeal against today's High Court ruling that blocks the former Lord Chancellor Jack Straw's central funding scheme.

Responding to Elias LJ and Keith J's decision today, the MoJ said: 'It is crucial for government to achieve value for public money, particularly in the current economic climate.

'The central funds scheme aimed to do just that by giving people accused of crimes access to a fair defence at a fair price.

'The scheme was designed to prevent spiralling legal costs while still ensuring access to appropriate legal support, and so we are disappointed with the ruling that the scheme cannot continue. The Ministry of Justice is considering its options and the appropriate next steps.'

Des Hudson, chief executive of the Law Society, which fronted the judicial review, has warned the new government not to attempt to resurrect the device, stating: 'We are glad that this policy has been halted in its tracks. We recognise that there are severe financial constraints on the MoJ budget but we would urge the government not to seek to overturn this judgment.'

The case focused on the Prosecution of Offences Act 1985, section 16 which stipulates successful defendants can be awarded 'reasonably sufficient' compensation for court costs.

Previously these costs were calculated as a 'reasonable' hourly rate for solicitors or counsel.

Overruns in the Ministry of Justice budget led to the decision to reinterpret 'reasonable' costs on the basis of central funds rather than private rates, which the Law Society estimated would see recoverable costs plummet from £19,000 to the state-subsidised £2,800.

Handing down judgment today, Elias LJ said the government's scheme was a 'decisive departure from past principles' which if allowed would be 'some constitutional moment'.

Elias LJ continued: 'It is not disputed that at present it is not possible for lawyers to be hired privately at legal aid rates. The (former) Lord Chancellor considers'¦ that in time this may be possible because lawyers will respond to the tighter purse strings by lowering their fees.

'I do not think that it is a legitimate objective for the Lord Chancellor to try to mould the market in that way.

'In the meanwhile defendants will receive less than the costs which are necessarily and reasonably incurred in their defence.'

The Law Society, represented by Dinah Rose QC as instructed by Kingsley Napley, described the ruling as a 'resounding defeat' of the previous government, but said it was always aware that the new coalition was not opposed to the scheme.

Law Society president Bob Heslett added: 'This is a great victory for the society on behalf of innocent people who have been prosecuted by the state. The High Court's ruling strikes down the previous Lord Chancellor's plans, which would have meant that many people who were ineligible for legal aid and who were acquitted could have been seriously out of pocket because of the limits on the costs that they could recover.

'This was entirely at odds with the accepted principles of justice. It was quite wrong for the previous government to devise such a scheme and I am delighted that the court has struck it down.'