“We got it wrong on spending”, MoJ mandarin tells MPs

Heaton: MoJ seeking additional funds from the Treasury

The permanent secretary at the Ministry of Justice (MoJ) has told MPs that two of its main spending assumptions have turned out to be “fundamentally unrealistic”.

Richard Heaton said the MoJ was seeking additional funds from the Treasury after it wrongly assumed that demand for services would go down and fee income would go up.

Mr Heaton said demand for legal aid had risen, particularly in family law cases, and the prison population had gone up.

He told yesterday’s meeting of the justice select committee that the assumptions were made “way before” his time as permanent secretary, and he could not say how they were arrived at.

Looking surprised and disappointed, Bob Neill, chair of the committee, said: “The principal cost that drives demand for services is prison places.

“Given that the demand for prison places has gone up year on year for a considerable amount of time, what on earth was the basis for saying demand would fall?”

Mr Heaton said that, since in some years the prison population was flat, it was assumed that “a level of flatness would continue and it didn’t”.

Mr Neill replied: “It’s before your time, I appreciate, but it seems a bit optimistic to say the least.”

Labour MP David Hanson, prisons minister in 2009, said the assumption at that time was that the prison population would rise, and that he believed this had been “baked into” planning assumptions in 2009 and “baked out” in 2010, when the Conservatives took over.

Mr Heaton said the MoJ was currently putting its “evidence-based” case to the Treasury for a new approach to spending.

“Why do we need new prisons? Why do we need more investment in the courts? We are hoping it will result in a proper baseline and a decent multi-year settlement we can live with and plan with confidence in.”

Mr Heaton said that, since 2010, the MoJ had been an unprotected department on spending, which the Treasury recognised was under “considerable strain”, while not being a “black hole department”.

While refusing to describe the 40% cut in the department’s budget over the last decade as “unsustainable”, Mr Heaton said the MoJ had been forced to abandon its criminal court enforcement reforms as it “simply couldn’t afford the up-front costs”.

A leading think tank predicted last week that the MoJ was among those departments “facing further large budget cuts over the next five years” on the basis of the Budget.

Mr Neill said the department was under further pressure from Brexit, and had received £17.4m in funding from the Treasury.

Mr Heaton said two-thirds of the money had been allocated to staff, whether in the Courts Service to cope with a rise in volume of cases or to help in trade negotiations.

Also giving evidence Mike Driver, chief financial officer at the MoJ, said no resources had been switched from the MoJ’s “global Britain” campaign in Asia and Africa, which had probably cost “in the low millions”.

Mr Heaton said he was “nervous” about banking too much on the MoJ’s income from fees, currently over £700m, as access to justice had to be protected.

“We need to achieve a fees strategy that protects access to justice, and asks users to pay where they can,” he said. “We are not seeking to squeeze as much money out of every litigant as we possibly can.”

Mr Heaton said 42,000 people who were entitled to refunds on employment tribunal fees following the Supreme Court ruling had received letters from the MoJ. Mr Driver said £15.8m had been paid out in refunds this year.

He said a failure to review fees at the Office of the Public Guardian (OPG) regularly enough had led to a £89m overspend.

Mr Driver added that by the end of September this year, £10.6m in fees had been repaid to members of the public for OPG matters.

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