The £2.1 billion legal aid scheme is to be reviewed by ministers to ensure best value for money in a move that could lead to a split in the budgets for criminal and civil legal aid.

The review, which will be carried out by Sir Ian Magee, a former senior civil servant, was announced by the Ministry of Justice today

Lord Bach, justice minister, said that the decision would not affect ongoing reforms including proposed measures for savings, cuts in lawyers’ fees and a tendering scheme for legal aid contracts.

He said: “We are doing this now because it is ten years since the Legal Services Commission was set up. In that time there have been considerable changes in the type of legal advice and services the public needs.

“I believe that now is the right time to review the channels through which legal aid is delivered to ensure that we are getting the best value for taxpayers’ money.”

He told The Times that the review was not about finding more cuts or looking at the scope of legal aid or who qualified.

It was about looking at the way it was run and whether changes were needed.

At present the costs of the demand-led criminal legal aid budget increasingly eat into the budget for civil legal aid.

“We don’t want to pre-empt Sir Ian’s conclusions. Nothing is ruled in and nothing ruled out,” Lord Bach said.

“But we want to look whether we should ring-fence or separate the funds available for the community legal service (civil legal aid),” he said.

“I do believe the time is right to do this, to look at the way it is administered and whether it is set up in the right way so that public money is managed in the most efficient and effective way.”

He said that the scheme for England and Wales, which was run at a cost of £38 per head, was one of the most generous in the world.

Spending on the criminal side, called the Criminal Defence Service had risen from £873 million to £1.2 billion and on the civil side, called the Community Legal Service, from £719 million to £914 million over the past nine years.

Sir Ian Magee, who has been the chief executive officer of three executive agencies and was a member of the Capability Review team for the Cabinet Office, will report in January.

Steve Hynes, Legal Action Group Director, welcomed the announcement. “This is something LAG has consistently argued for in order to stop the government raiding the civil legal aid fund to pay for increases in criminal legal aid.”

“Unless the funds are separated, the Government’s policy on legal aid will continue to be dictated by the invidious choice of either paying for representation to ensure people are not wrongly imprisoned or can get help with housing, family and other civil law problems.”

“It is important to prioritise the independence of decision making on cases and that the separation of the funds should be more than just a paper exercise easily unpicked when the Treasury calls for cuts.”

He added that the Access to Justice Act 1999 which has been on the statute book for ten years envisaged the government eventually separating the funds. “This is really is a case of better late than never.”

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