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Courts and tribunals fees

4th July 2016

Speaking in a debate on the Justice Select Committee’s report on courts and tribunals fees, Jonathan Djanogly highlights the need for alternative methods of funding to meet the costs of the court service.

Mr Jonathan Djanogly (Huntingdon) (Con)

Much of the preliminary work on court and tribunal fee reviews was carried out in the early days of the coalition Government, when I had the pleasure of minding those issues at the Ministry of Justice. I acknowledge the ​point made by my hon. Friend the Member for Bromley and Chislehurst (Robert Neill): the issues are complex and dependent on the differing circumstances. I think, however, there is now a level of understanding that was not generally prevalent back then—first, that it costs money to have, as we do, a decent court service, decent quality courts and an excellent quality of judges; and, secondly, that this cost should not just be for the taxpayer to shoulder.

We invested £300 million in the state-of-the-art Rolls building to hear large international and money cases. This gave the UK the quality of courts required to retain our premier status as the place to seek justice, using English and Welsh jurisdiction clauses, and thereby added greatly to the offering and income of UK plc. I have to ask, however, whether very high-value cases should be subject to a £10,000 fee cap? The first case to be heard in the Rolls building involved two Russian oligarchs and would have cost them hundreds of thousands of pounds per week in lawyers’ costs but, relatively, peanuts to hire the court and judge. I appreciate concerns that fees should not be so high as to impact on international competiveness, but I would appreciate hearing from the Minister whether he feels that we have the balance right.

On employment tribunals, the claim figures may be smaller—most of the time—but the principle remains that the service has to be paid for. Given that an employment contract is a private contract that does not involve the state, except when the state is the employer, why should the taxpayer subsidise the private claim? I think we now have the right formula: so far as possible, and as the starting point, the fees paid by the applicant should cover the cost of the application, but following that, where it is in the interests of justice, people who need help should be individually assisted via a remission scheme.

In that context, I do not agree with the Justice Committee’s suggestion that the overall quantum of fees should be reduced, and I do not believe that its report justifies that in any event, although I accept that the Chairman has just acknowledged that more data are required to make the assessment.

The figures for employment tribunals are material. There were 67% fewer single cases from October 2013 to June 2015, although that still represents tens of thousands of claims per year. The fall in multiple cases by 72% was more expected, as lots of public sector equal pay claims were working their way through the system. There seems to be some debate, however, about the extent to which fees have put people off claiming, and this will always be a hard figure to tie down. The Committee speculated that it could be 13,000 a year, based on 26% of ACAS claimants saying they would not progress their claim because they found the fees off-putting. Of course, a significant proportion might have believed this, but possibly only or mainly because they had weak claims. We would need more research.

The debate around employment tribunal fees often focuses on the questions raised by vexatious or highly risky claims and the impact on business and the economy. I shall come back to these important issues, but they did not form the starting point of our initial review, which was, first, to get those who could pay to do so; secondly, to encourage parties to seek alternative methods of dispute resolution, where possible; and, thirdly, to maintain access to justice. I still maintain that those were sound ​principles on which to proceed, and I think that this has been justified by the very many judicial reviews, brought mainly by the trade unions, that have to date consistently failed.

I strongly believe that when a claimant could issue a claims form at zero cost to themselves, he or she had every incentive to do so—but, most importantly, every incentive to do whatever the weakness of the claim itself. The Justice Committee report describes a witness who suggested that vexatious claims may be less than 5% of claims, but that still represents a significant number for the unfortunate companies that are subjected to them. Witnesses also stated that fees had deterred claimants who would otherwise have won as the proportion of successful claimants has not increased, despite a fall in the number of cases.

Andy Slaughter

The hon. Gentleman says that 5% is significant, but we are talking about falls of 70%. If he is genuinely concerned about discouraging unmeritorious or frivolous claims, a small charge—not one of £1,200—might be appropriate. Does he not think that that amount is disproportionate, even if he agrees with the principle?

Mr Djanogly

I am coming on to alternative ways of funding. The starting point is to get cost recovery and then to look at individual circumstances, where necessary. I would have liked hon. Members to spend a little more time talking about the remission system rather than fees—perhaps one of my hon. Friends is about to do so. More winnable cases leads to more of them being settled before going to tribunal, but even if this is an access-to-justice issue it should be dealt through the remissions system rather than the fee itself.

I certainly recall personally the significant numbers of businesses complaining that the threat of employment claims alone was enough to put them off employing more people. Interestingly, this was very much more prevalent among small businesses than large ones. Indeed, this is reflected in the Justice Committee’s report, as the Chairman said, which clearly shows the CBI to be more relaxed on the issue than the FSB. This is undoubtedly because it is the larger companies that have the large HR departments that can manage claims as part of their overall business. For small businesses, processing a claim, let alone taking time off to go to tribunal, can take up an impossible amount of the principal’s time.

Angela Crawley (Lanark and Hamilton East) (SNP)

Does the hon. Gentleman accept that if the employer is given an unfair financial position or advantage over the claimant, ultimately, regardless of whether it is a big or a small firm, the greatest cost will be borne by claimants themselves?

Mr Djanogly

The hon. Lady talks about unfair advantage, but I am not sure how she defines it, particularly if it is a single employer. Most of the FSB’s membership are two-person companies. If the hon. Lady is saying that it is unfair if it is one employer against one employee, I would say it was not. The answer to her question is that it would depend on the circumstances.

There grew a culture of settling claims, even weak claims, so that they would simply go away. The fact remains that there is more to business confidence than ​statistics. If the indirect impact of fees has been to change this perception among business owners, which I feel it has, fees have made a significant contribution to an economy that is delivering the creation of the highest level of employment the UK has ever enjoyed. We should be cautious about meddling with that.

The big change from when I was a Minister in the Ministry of Justice is the use of ACAS conciliation. I should be interested to hear more from the Minister, but the figure of 83,000 claims being dealt with by ACAS at an early stage sounds very promising indeed. It was the policy of the last Labour Government and then of the coalition Government and this Government that alternative dispute resolution should be promoted as a cheaper, quicker, more consensual and less stressful form of sorting out problems, including employment disputes. I shall be interested to hear whether the Minister has plans to extend the use of ADR further still.

I note that, on access to justice, the Justice Committee’s report is rather limited to looking at the status quo—fees versus remissions, which seems to have a feeling of trade union influence.

Robert Neill

Will my hon. Friend comment on our specific proposal that there should be an uprating of the remission threshold to take account of inflation. Otherwise, there will be a risk of fiscal drag. That is one of a number of specific points we make about remission.

Mr Djanogly

It is useful to look at that, perhaps along with a wider review of the way in which remissions are working. A new system has been put in place, and I accept that such things need review.

The report totally overlooks the changing nature of the funding of legal claims now and possibly in the future—for instance, the use of loans to fund claims, or the use of no-win, no-fee agreements and insurance to fund claims. It assumes that the burden of risk is simply to be shared between claimant and defendant, which is unreflective of reality. What about the risk of claims being shared between insurers, lenders, lawyers—and, yes, even trade unions? For instance, should we not investigate what level of risk they should all take on board, before the taxpayer has to step in? Neither Opposition party statements so far, nor the Justice Committee report seems to be looking at the broader issues in an area where we need innovative ideas and an assessment of the wider marketplace. I would therefore be grateful to hear the Government’s views.

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