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Bar Council braces for £3m loss as Covid hits profession’s income

Barristers: Income to fall

The Bar Council is bracing for a £3.2m loss next year with revenue from practising fees – which are tied to barristers’ income – set to tumble because of Covid-19.

However, because of a £5m loan the Bar Council has applied for under the government’s coronavirus business interruption loan scheme (CBILS), it has proposed maintaining the practising certificate fee (PCF) at last year’s level.

A consultation on the 2021/22 budget and PCF [1] anticipated a 23% fall in PCF income to £12m, of which £8.4m would go to the Bar Standards Board (BSB) and the rest to the Bar Council under the ‘permitted purposes’ provision in the Legal Services Act 2007 that allows it to levy the profession for certain non-regulatory activities.

Although they expect a modest increase in other income, the PCF is the main source of the Bar Council and BSB’s funding, and so overall they project a 17% fall in budget to £16m.

Though the Bar Council is shaving £181,000, or 4%, from its operational costs, and the capital budget has been slashed by 44% to £823,000, it still projects a loss of £3.2m in 2021/22, compared to a surplus of £657,000 in the current year.

The consultation said the Bar Council was “very conscious of the financial and personal impact the Covid pandemic is having on the profession and is making every effort to ensure that it avoids adding costs to the profession at this difficult time”.

But despite reduced PCF income – surveys have also indicated that a significant number of barristers may even leave the profession as a result of the pandemic – the Bar Council’s costs are not easily reduced “without severely impacting” its work and that of the BSB.

Approximately 50% of the costs related to staff, with the rest made up of office costs, pension contributions, legal costs, levies – such as to the Legal Services Board and Legal Ombudsman – and overheads.

The Bar Council has been cutting costs and using the furlough scheme and, as we reported in July [1], was negotiating with its bank, RBS, for a CBILS loan to mitigate the expected drop in income.

The consultation said: “The CBILS loan is available on very favourable terms and is repayable over six years. The CBILS loan has been provisionally approved subject to finalisation of the loan documentation.

“This loan will enable the GCB [General Council of the Bar] to smooth out the effects of the lost income over an extended period. Consequently, the GCB does not intend to increase PCF for the budget year 2021/2022.”

It cautioned that the PCF may need to rise “modestly” in future years to cover the costs, repay the loan, and “rebuild our liquid reserves”.