Leaked letter warns of 'black hole' in Court Service's budget

Documents leaked to the Conservative Party have revealed that the introduction of the controversial Family Proceedings Fees Order, which came into force on 1 May 2008, has caused a sharp drop in child protection cases being issued by local authorities and has contributed to a £90m "black hole" in the Courts Service's budget over the next three years.

The budget shortfall has been further exasperated by a reduction in cases brought by Revenue & Customs chasing unpaid taxes.

The introduction of full-cost fees has increased local authorities' fees for care orders from £150 to £5,225 for a fully contested court case.

In April the Justice Minister, Bridget Prentice, reassured concerned practitioners that: "The practical effect of the statutory duty in this instance is to require authorities to ensure that adequate budgetary provision is made to pay the necessary court fees, and to ensure that individual decisions are not affected by budgetary considerations." However, with applications in care cases by local authorities having dropped by 25 per cent since May, the evidence would support many practitioners' argument that local authorities do decide whether or care orders make decisions are indeed affected by budgetary considerations.

The budget crisis was revealed in a letter sent by Lord Justice Leveson, the senior presiding judge for England and Wales, to all judges and magistrates last Friday, warning them that the Court Service has identified a £27 million shortfall in fee income for 2008-09, with shortfalls of £46 million and £17 million in 2009-10 and 2010-11 respectively.

An earlier memorandum from the Courts Service to court managers said: "No part of HMCS will be protected from having to find savings.

"Some parts of our budget are fixed costs which are difficult to cut (eg, rent on buildings) so we have to find savings from parts of the budget where we have control, such as salary costs, sitting days, building works." The memo adds that a redundancy scheme "is something we may have to consider for the future".

Shadow justice minister Henry Bellingham said: "Once again, this government's incompetence has led to a crisis in the justice system. If court sittings are cancelled and trials delayed, the public will be put at risk and justice undermined. Ministers ignored warnings from judges, magistrates and local authorities and now they do not have the money to address the shortfall. This is a black hole of their own making."

An action plan to address the crisis is to be presented to the board that runs the Courts Service and to the Ministry of Justice this month.