The Big Question: Are we spending too much on legal aid, and do the right people benefit?

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Why is this important now?

The Government outlined reforms to the legal aid system yesterday that would trim £100m from the annual budget for criminal work in the next two years. It follows a report by Lord Carter of Coles, the former head of Sport England, which argues for a market-based economy for the provision of legal aid. The Legal Services Commission, which administers the legal aid budget, expects to save £30m in administrative costs.

How much does the Government spend on legal aid?

Spending on criminal and civil legal aid has reached more than £2bn, a rise of £500m since Labour came to power. According to Lord Carter that makes Britain the most generous country in the world when it comes to funding legal representation. Most of this rise is attributed to the growing cost of advising and defending people accused of criminal offences.

Why is legal aid important?

The legal aid system is one of the pillars of the welfare state. Under the scheme everyone is entitled to free access to justice if they can't afford to pay for it themselves. Under article six of the Human Rights Act everyone is entitled to a fair trial. If a defendant cannot get a competent lawyer to represent them at the right time then they are being denied justice.

Why has the price for legal help gone up by so much?

There are complex reasons for the exponential growth in the legal aid budget. Lawyers and civil rights groups argue that the Government is partly to blame by creating a raft of new criminal offences - more legislation than any other government in history. But the rise is also due to rapid advances in forensic science and new technology used to fight crime. These are new areas of law that need to be properly explored in court and require specialist knowledge and training which does not come cheaply. Ministers would privately contend that lawyers have also become more creative at milking the system. Under the old payment scheme solicitors and barristers are paid an hourly fee which encourages lawyers to string cases out. The Government wants to put them on a fixed-fee basis so that each case is charged at one rate.

What has prompted the Government to act now?

This is not a new concern. Lord Irvine of Lairg, the Lord Chancellor who preceded Lord Falconer, also tried to bear down on legal costs. But pressure from the Treasury, where there is a strong belief that the current rate of spending is unsustainable, has produced what ministers hope will be a permanent solution. Of course it also does no political harm to Labour if it is seen by the electorate to be cutting fees paid to solicitors and barristers. Yesterday, Lord Falconer said that under the new reforms it would be impossible for a barrister to earn £1m in one year in legal aid payments. He said: "One of the things we want to see an end of is £1m paid to a barrister from legal aid in a year. It's something we never want to see again in relation to properly-handled cases in the future."

So why should we care about reduced profits for fat-cat lawyers?

The vast majority of publicly funded lawyers do not earn anything like £1m a year. Instead most high street solicitors make very small profits while providing a valuable public service. The Legal Aid Practitioners Group, which represents 600 grass-root law firms in England and Wales, says that many of its members will go out of business if the reforms go ahead. For tens of thousands of vulnerable people living in areas no longer served by legal aid practitioners this would mean a denial of access to justice. Richard Miller, LAPG director, said vulnerable people can have no confidence in the new system: "The result is that many of the most experienced and skilled lawyers undertaking this work will be lost to the system. Advice deserts will worsen, and many more clients will be unable to get the help they need." The national charity Citizens Advice warned yesterday that the reforms mean lawyers and advisers may be forced to turn people away with complicated cases.

So who will most suffer if these cuts go ahead?

Ethnic minority communities are disproportionately served by the so called one-man-band law firms working on the high street. Even by the Government's own estimates hundreds of firms would have to merge in order to survive, some being forced to close offices located within black and Asian communities. But the Government counters that the reforms will "safeguard access to justice for the socially excluded and vulnerable" with the aim of re-balancing towards a greater provision of legal aid for civil law advising those most in need. Vera Baird QC, the minister responsible for legal said: "We aren't making cuts to civil or family legal aid, we are maintaining expenditure on it."

What will happen next?

Groups of solicitors and barristers have threatened to take a form of industrial action if the Government doesn't rethink its plans. Yesterday the Government responded to this threat by announcing further consultation on the changes that would slow down the implementation and provide an opportunity to negotiate a better settlement for lawyers. But it may not be enough to stop lawyers withdrawing from the legal aid system. Asked if he believed the dispute would lead to a strike by solicitors, Lord Falconer said yesterday: "I strongly urge them not to. The worst thing that can happen is that they take industrial action."

Both the Bar Council and Law Society gave a qualified welcome to yesterday's proposals. Stephen Hockman QC, the Bar Council chairman, said the reforms would give a "better deal to hard-pressed junior barristers, who have for far too long suffered badly on legal aid pay". But the Law Society was noticeably less enthusiastic. Andrew Holroyd, vice-president of the Law Society, said: "The Lord Chancellor's statement about 'knuckling down' will be seen as a slap in the face for hard-pressed, hard-working legal aid solicitors who may feel they are being pushed beyond endurance. We will be working with our members and practitioner associations and other interested parties to provide a more detailed and considered response in the next few days."

Are the proposed cuts in legal aid justified?

Yes...

* The legal aid budget is out of control, and now stands at more than £2bn a year

* Lawyers have been abusing the system by stringing out cases and racking up fees

* Some barristers have earned as much as £1m a year from the public purse

No...

* Hundreds of small high street practices will go to the wall under the proposed reforms

* Ethnic minorities will be the worst hit, because lawyers in these communities will no longer be able to afford to do legal aid work

* The changes will create more 'legal advice deserts', where vulnerable people will be denied legal help