It has been revealed that the legal aid reforms introduced this year are having an adverse effect on the Prime Minister (pictured), David Cameron’s plans to break big businesses’ hold on government contracts.
In figures published this week, it was revealed that the Ministry of Justice is heading in the opposite direction to government policy and as the Ministry of Justice (MoJ) makes up a fifth of all government spending on small and medium sized enterprises (SME), this could in fact harm the prime minister’s plans.
A Law Society spokesperson commented on the release of the figures stating that the proposals for price competitive tendering will shrink SME spend further as contracts will go to larger suppliers.
They said: “Legal Aid represents about a quarter of all MoJ expenditure, over 90% of it with SMEs. As a direct result of government policy, that expenditure is falling. It is hard to see how the ministry can reconcile this with its confident assertion that in future an even higher proportion of expenditure will be channeled to SMEs.”
Since the legal aid reforms more and more firms are being forced to look into setting up Alternative Business Structures (ABS) with bigger firms, often from outside the legal sector. As this is happening small local firms are being pushed to their limits or as has been the case either out of the marketing or into extinction all together.
The MoJs spending with SMEs has fallen this year by 3% compared with last year. The majority of their £1.56bn direct spend with SMEs comes from legal aid contracts, which account for 31% of its total procurement budget.
1. Wikipedia; Toms Norde; https://en.wikipedia.org/wiki/United_Kingdom_general_election,_2015#/media/File:David_Cameron_(cropped).jpg