Inns of Court: Bar Council needs to replenish reserves
The Bar Council and Bar Standards Board (BSB) are looking to increase the cost of practising for barristers by 4% in the coming year.
The practising certificate fee (PCF) is charged depending on income and this year’s consultation proposes spreading it over 12 bands, with a new band for those earning £2m or more.
They would pay £4,711 in 2026/27, while those in the bottom band – earning up to £40,000 – would pay £124. Previously the top band was for those earning £1.5m or more.
The proposed 4% increase, combined with the ever-growing number of barristers paying the PCF, would generate £27.5m, an increase of 8.8% in total, of which 74% would go to the BSB.
With other sources of income, the total turnover for the Bar Council is expected to be £34m and total expenditure £32.8m – which includes the Bar’s contribution to the costs of the Legal Services Board and Legal Ombudsman – leaving an estimated surplus of £1.15m.
“Some contingency has had to be built in to account for replenishment of reserves due to current year forecast deficit, inherent uncertainties in the income forecasts, expected additional costs from the autumn budget and the ever present risk of costs arising due to legal challenges.”
The Bar Council said it has used its reserves since 2021 to help mitigate the effect of PCF increases on the profession.
“The strategy was instigated to try and shield the profession from the recent extreme economic events; Covid, the impact of a war in Europe and the cost of living, with the return of high inflation.
“The strategy of containment, offset by the BSB’s budget demands, led to there being no increase in 2021, a 4.5% increase in 2022, a 5% increase in 2023, 9.5% in 2024 and 8.5% increase last year. The higher increases in the latter years relate to the BSB reform programme.
“Over the same period to this autumn, inflation has risen by 25%. In the face of the sustained increases in costs the [Bar Council] must maintain and replenish its reserves to provide financial stability. This year the increase is broadly in line with inflation.”
The Bar Council also obtained a loan from the Coronavirus Business Interruption Loan Scheme, which has now been repaid, and used funds previously earmarked for its closed defined benefit pension deficit recovery plan, which have now bee “fully depleted”.
In its part of the consultation, the BSB said that it would soon publish its new five-year strategy but was working on the assumption that the priorities for the first two years would be performance improvement – so as to meet the voluntary undertakings it gave to the Legal Services Board in July – and implementing Baroness Harman’s recommendations following her review of bullying, harassment and sexual harassment at the Bar.
The BSB noted that its five-year programme to increase salaries to align them with median pay levels for the sector has been largely completed after four years and had “a lasting and positive impact both on voluntary turnover rates and on the BSB’s ability to fill vacancies”.
In September 2022, the resignation rate stood at 20% a year; three years later, it was 7%, below the industry benchmark.
“This reduction in turnover rates is not solely attributable to our pay reforms, as there have been changes in the overall economy and recruitment market since 2022. However, our exit interview data from both 2021 and 2022 showed that pay was the most significant factor impacting on decisions to leave the organisation at that time.”
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