Collapsed Charity ‘Unable To Manage Its Affairs’

Collapsed charity 'unable to manage its affairs'

Justice Secretary Kenneth Clarke tells MPs that the charity, Refugee and Migrant Justice, which has entered administration was “unable to manage its affairs.”

Press Association,
Thursday 17 June 2010 15.59 BST

A charity providing legal assistance to migrants and refugees which has entered administration was “unable to manage its affairs”, Justice Secretary Ken Clarke said today.

Refugee and Migrant Justice (RMJ) has blamed late payment of legal aid for its demise, which has left some 13,000 facing uncertainty over the future of their cases.

But Mr Clarke told MPs that “every other organisation” including charities had coped with changes in the way legal aid was paid. Responding to an urgent question in the Commons he said the “unfortunate situation” happened after the change designed to achieve “value for public money”.

He said: “It's not a question of any late payments, RMJ were paid what was due however they did not make the efficiency savings that other providers did.”

New contracts for immigration and asylum services were being tendered for and there had been an increase in the number of bidders. It would therefore be wrong to divert legal aid funds to save RMJ during the bidding process, Mr Clarke said.

Liberal Democrat deputy leader Simon Hughes, who raised the issue, said: “There are 13,000 clients currently being looked after by the RMJ, including nearly 1,000 children, who of course are very vulnerable.

“The reason for the financial problem is the change in the payment system and that although there has been a reduction … in the income coming in, RMJ have also reduced their costs by the same amount.”

The Law Society and immigration lawyers had described the new method of payment in arrears as “unsustainable,” Mr Hughes added.

But Mr Clarke said: “This, as far as I'm aware, is the only organisation that proved in the end unable to manage its affairs and manage its finances to avoid the demise that has occurred.”

The Justice Secretary said he would ensure that the clients affected by the charity's demise would be supported.

Shadow justice minister David Hanson said that the Labour administration was planning to make the Legal Services Commission an executive agency of Government.

Mr Clarke said the Government was still “actively” looking at that, adding: “We have some difficult issues to face under the legal aid heading at the moment.”

Liberal Democrat Bob Russell (Colchester) asked Mr Clarke: “I wonder if you can confirm that the consequence of this will be those MPs who represent predominantly urban seats are going to have their workload increased as a consequence.”

Mr Clarke replied: “With the greatest respect, we do face a lot of demands on legal aid and public money should be used to provide individuals with the legal representation they require.

“You can't simply start diverting huge sums of money out of the legal aid budget to bail out one of the voluntary bodies that has got itself into a financial mess because it has not made the same adjustments to the system in 2007 that everybody else succeeded in doing.”

Mr Clarke said there were many other firms trying to get into the market, adding: “We are making sure that nobody is left without the representation they require.”

But Labour's Kerry McCarthy (Bristol East) warned Mr Clarke he was “confusing quantity with quality” and said it was a “false economy” if firms were not able to provide the required advice.

The Justice Secretary insisted that quality standards were in place, repeating that money could not be provided to a body that was “the only one that has gone bust”.

And in a separate response, Mr Clarke said: “Actually, in a way it would have been very awkward for us had they folded after we had awarded the contracts.

“Because we would then have been in a mess if we had discovered we had actually awarded a contract to a financially insecure organisation which then went down once we were relying on it to provide the work.

“So I hope, and as far as we are aware, I hope everybody else who is bidding is of a sound financial state.”