The Government is expected to seek to cut upwards of 25% from the legal aid budget. One area predicted to be cut is legal aid for ancillary relief. The logic is simple, if divorcing families have enough assets (usually their home) to fight over, legal costs should be paid out of those assets not out of legal aid funds. Often legal aid costs are set against this asset under the statutory charge (hence legal aid in such cases acts like a loan) but getting rid of legal aid for ancillary relief looks like it would save up to £42 million (using figures from the Legal Services Commission statistics – my understanding is that the figure is probably less as ancillary relief certificates often cover other issues too which may not be cut, such as disputes over children).
As John Bolch notes divorcing families will probably be expected to get a loan secured (possibly on their property) to pay for their lawyers. Putting aside how one does this when the property is the subject of a dispute, it gives rise to another problem – what happens if the parties cannot afford to do this. Presumably, given the parlous financial situation of most legal aid applicants, this is likely to be the case for a large number of applicants. They may fail to secure rights in relation to the property or be forced to sell and then be pushed into rented accomodation. If this is the case, there is a significant likelihood that a large proportion will be on housing benefit. I have done some back of a fag packet calculations. If half of all those granted legal aid in financial matters are pushed on to housing benefit for one year, housing benefit for one year of £500 pcm would wipe out the legal aid cost saving.
I do not know, of course, what proportion of applicants would be pushed into dependancy on housing benefit. My figure of a half may well be too high, but equally the £500pcm and one year period are probably rather on the low side. It will be interesting to see, if and when such cuts are suggested, whether such knock-on effects have been taken into account and how rigorously they have been modelled.