The impact assessment (IA) accompanying the Ministry of Justice’s plans to charge some court users fees in excess of cost price is not fit for purpose, a government watchdog has declared.
The regulatory policy committee (RPC) is an independent body which scrutinises the quality of the analysis in IAs accompanying all new regulation proposed by the government, and has issued a relatively rare ‘red’ rating against the IA on enhanced fees which went out with the consultation on raising court fees, which closed yesterday.
The IA said the civil court system currently costs the Exchequer £150m, £105m of which will be recouped by moving to full cost recovery for fees that are not waived. Enhanced fees – that is, those pitched at higher than cost – may eliminate the remaining £45m.
However, the IA also said the policy will result in HM Courts and Tribunal Service increasing its fee income by £190m. The RPC said: “The IA must clearly explain why £190m is required and, if HM Courts and Tribunal Service will be generating a surplus, this must be clearly reflected in the IA and the department must explain what this additional revenue will be used for.”
The RPC said the IA also “contains insufficient discussion of the risks that fees above cost move demand below the economically efficient level”. For example, it provides no evidence to support the statement that those petitioning for divorce would be prepared to pay considerably more than the cost of the petition.
“The IA should discuss any risks associated with a reduction in demand for court services and will need to provide evidence-based estimates of any effect at final stage.”
The committee further criticised the ministry’s failure to explain whether it is considering “various possible levels for the different fees that would raise the same total revenue in different ways, for example a fee that goes up more slowly but with a higher cap.
“The IA should clearly explain how the proposed fee level was arrived at and whether other possible fee levels are being considered.”
More broadly, the committee said the ministry had not set out clearly the market failure the proposal is attempting to remedy. “While the department explains the need for a fee waiver system, it is not clear why this must be funded by other users of the courts system.
“The IA has not identified any negative externalities from use of the courts so it is not clear why users should be charged above costs simply because they are able to pay. The IA should clearly set out the rationale for intervention, supported by appropriate evidence.”
According to the RPC, departments have proceeded with a regulatory proposal which is not supported by an IA rated ‘fit for purpose’ in only “a small number of instances”.