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Told you so: City litigators unsurprised as MoJ requests £427m cash injection following drop in court claims

In line with what many dispute experts predicted, the Ministry of Justice (MoJ) has requested a cash injection after seeing a drop in court fee income.

In a letter to the House of Commons justice committee, permanent secretary Richard Heaton said the MoJ had requested an additional £427m of funding in 2015/16, of which £259m was due to ‘additional demands and income pressure’. The extra funding is also needed because of a drop in court fees from high-value cases.

Heaton added that the spending review settlement in 2013 ‘was a challenging one, requiring a 10% real reduction in a single year on top of the 27% real reduction’ in spending made in 2010. While the settlement was based on a set of assumptions agreed with the HM Treasury that were viewed as ‘reasonable and realistic’, ‘there have been significant changes both to demand in the criminal justice system and to our income forecasts since the settlement’.

He said: ‘Fee income has also not matched our expectations. This is the result of several factors, including unpredicted volume changes following introduction of enhanced fees in March 2015, delays to timetables for introducing new tranches of fees, scope changes, and decisions not to take forward some changes until 2016-17.’

The news has not come as a surprise for many disputes specialists in the City who predicted earlier this year that an increase in court fees would certainly reduce revenues.

‘The fees shortfall is because higher fees have not brought what was expected, but we all knew this but the MoJ proceeded anyway,’ said one City barrister.

Quinn Emanuel Urquhart & Sullivan disputes veteran Ted Greeno (pictured) told Legal Business: ‘If you look at what happened in the industrial tribunals from employment claims, these claims fell by around 80% when they increased the court fees. So if you put fees up people just stop issuing claims and that results in a loss of general taxation because litigation activity generates revenues from people coming from abroad who win proceedings in this country.

He added: ‘This is what we said would happen. So not only are they not recovering the fees they were hoping, but all the tax generated by litigation activity, which is way more than those fees, is also being lost.’