Community Legal Service Fund and Criminal Defence Service Accounts - 2010/11

27 October 2011

The Comptroller and Auditor General, Amyas Morse, has qualified the 2010-11 accounts of the Legal Services Commission because of overpayments made by the Commission to legal aid providers, estimated at almost £51 million.

The C&AG has also limited the scope of his audit opinion in respect of the valuation of the receivables balance, which is the debt owed to the Commission by people receiving legal aid, and the related impairment provision (the amount estimated to be non-recoverable). This is because the Commission has been unable to provide sufficient evidence to support the value of the recorded debt balance.

The Legal Services Commission is responsible for the provision of legal aid in England and Wales through the Community Legal Service Fund (for civil cases) and the Criminal Defence Service (for criminal cases).

The NAO, as part of its annual audit of the Legal Services Commission, identified an estimated total overpayment to legal aid providers of £50.7 million in 2010-11; this is down 34 per cent from an estimated £76.5 million in 2009-10. Of the estimated total error, £29.5 million were payments made to legal aid providers working on cases which were eligible for legal aid, but where legal aid providers over-claimed for the work they did. The remaining £21.2 million of erroneous payments were made to legal aid providers where legal aid had been provided to claimants whose eligibility could not be demonstrated.

The Commission has made substantial improvements in reducing the amount of overpayments made to legal aid providers. These have resulted from an increased focus on higher risk areas and enhanced assurance work. However, there is still scope for further progress; and ongoing work to reduce irregular payments will be made more difficult by the significant cost reductions that the Commission needs to make.

Amyas Morse, head of the National Audit Office, said today:

“While the Legal Services Commission has made considerable progress, it still faces difficulties in reducing the level of error in payments to legal services providers. The Commission also needs to make significant improvements to the quality of the data supporting the reported balance of outstanding debt.

“In an environment of spending cuts, the Commission will need to make difficult decisions on the costs and benefits of further work to improve in these areas.”

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