Defending the public purse:
The economic value of the free legal
Supporting free legal advice would save Treasury £4bn next year
* New economic research shows that Treasury would save over £4bn next year alone by supporting free legal advice for the most vulnerable
* Modelling shows that this will result in a further 235,000 people remaining in the workforce, with additional tax revenues of at least £588 million a year
* Second surge in demand for free legal advice expected as Covid-mitigation measures withdrawn over coming weeks impacting millions of people
New primary economic research released today has shown that the provision of free legal advice to the most vulnerable in society on issues such as housing, employment, welfare benefits and debt would save the taxpayer £4bn a year.
The detailed report, ‘Defending the public purse: The economic value of the free legal advice sector’, was compiled by independent financial modelling experts Pragmatix Advisory working with the Centre for Economic and Business Research (CEBR) on behalf of the Community Justice Fund.
It comes as the Treasury is considering how to reduce public expenditure ahead of next month’s Spending Review (SR21) and at a time of deep economic uncertainty for millions of people as the Government’s furlough scheme finishes and it ends the £20 weekly uplift in Universal Credit.
Pragmatix Advisory findings suggest that when people present for free legal advice, they are at a point where things cannot continue as they are. Whatever happens to them past that point incurs a cost to government, with or without the funding for free legal advice.
The research shows that there is a saving to the public purse of £8,000 for every client in receipt of free specialist legal advice. On average, the cost to Treasury of an individual experiencing a legal problem was £14,000 if specialist legal advice was not available, compared to just £6,000 per person in receipt of free specialist legal advice. With around 500,000 people benefiting from free legal advice delivered by organisations supported by Community Justice Fund alone, the total saving to the taxpayer amounts to £4bn
In addition to calculating the fiscal benefits of free legal advice, Pragmatix Advisory estimated the impact that advice will have on an individual’s employability. Data suggests for every client assisted, there will be 0.47 more people employable in their household. Provision of advice for half a million clients will result in 235,000 people remaining in or entering the workforce who would otherwise have been unemployed, with additional income tax and National Insurance contributions of at least £588 million a year.
Clare Carter, Director of the Community Justice Fund said:
“What is clear from this new research is that early intervention saves money for the taxpayer preventing future social costs from spiraling upwards and helping vulnerable people to feel more in control of their lives. If nothing is done, it will ultimately cost the Treasury more.
“By properly supporting the legal advice sector in the forthcoming Spending Review, the Chancellor has a unique opportunity to help the most vulnerable in society and save the taxpayer money at the same time. If the government fails to act, economic and social costs will start to rise again impacting on an inclusive recovery and the chance to build back better post-Covid.”
The legal advice sector is expecting a second surge of demand as the government’s covid-mitigation measures are withdrawn. Housing was one of the big areas of concerns for organisations with many expecting statutory homelessness figures to begin rising at the end of this year. As unlawful evictions and court proceedings resume, more households will be in need of advice and support.
Government support grants have kept a significant number of businesses and self-employed individuals going for the last eighteen months. With 1.9 million still on furlough at the end of June, and the scheme coming finishing on 30 September, unemployment is expected to peak at 6.5% in the final quarter of the year, fuelling demand further for legal advice. Additionally, long-covid will continue to present additional challenges going forward, as symptoms may impact on an individual’s ability to work or care for dependents.
Legal advice specialists in the field fear a significant increase in individuals presenting at crisis point. If the funding is not available for specialist legal advice providers to assist them, the costs to government could be even more substantial than forecast in this report.
Sue Bent, Chief Executive of The Central England Law Centre in Coventry said:
“Over the past eighteen months, we have helped over 6000 people get their lives back on track in our area alone. This includes women suffering from domestic abuse to tenants facing unlawful eviction from their homes to employees being unfairly treated by their bosses. Often they come to us with multiple problems at the same time, compounding the issues they face.
“We’re already at breaking point but without further government support we fear that things will only get worse in the months ahead as demand for our services has begun to sharply increase. Every penny we spend really does make a difference to the lives of those who are most vulnerable.”
In order to assess the free legal advice sector, Pragmatix Advisory undertook interviews with practitioners in the field, launched an online survey, and made use of existing research and data.
The sample size of clients used in the model was substantial. The 40 plus organisations that researchers spoke to included law centres, specialist charities, local advice providers, strategic litigation specialists and national advice providers who had supported 169,000 people over the previous two years.
Mark Pragnell, director of Pragmatix Advisory said:
“In compiling this comprehensive economic research report, we have spoken directly to dozens of on the ground organisations. The research clearly demonstrates the economic value to the whole of society of providing free legal advice to the most vulnerable – a £4bn saving to the taxpayer using modelling based on our central scenario. We are confident that our assumptions are representative of the free legal advice sector, but even with more conservative estimates, funding for providers makes fiscal sense to the Treasury.”