Legal aid cuts force Immigration Advisory Service to go into administration

By Hugh Logue, Newswatch Editor

The Immigration Advisory Service (IAS) has announced that it has gone into administration following the Government's decision to remove immigration from the scope of legal aid and the Legal Services Commission's pursuance of it to repay monies paid in error.

The Legal Aid, Sentencing and Punishment of Offenders Bill also proposes to cut funding to family legal aid services in all areas with the exception of orders or procedures for the care, supervision or protection of children. Practitioners are concerned that if the Bill is implemented, charities that provide family law legal advice will also be forced to close.

The not-for-profit charity announced that went into administration yesterday, after the trustees were unable to find an alternative solvent restructure. The IAS has been in existence for 35 years, and employs 300 staff at 14 locations across England and Scotland. It is renowned for a large number of important legal precedent cases which have been taken through the Courts, including to the Court of Justice of the European Union and the European Court of Human Rights. 

The Government's reforms include the removal of immigration from the scope of legal aid, and a 10% cut in legal aid fees for refugees seeking asylum within the UK. Immigration accounts for around 60% of IAS's income.

The IAS was in discussions with the LSC in an attempt to gain support for a solvent restructure of its operations. IAS had also tried to reach an agreement with LSC for an extended period to repay monies which (in common with many other firms) had been claimed in error, partly, in IAS's view, due to the complex funding rules in place. The legal aid cuts put IAS in the position of needing to fund any repayment of these monies, from a much reduced income base, and as a result it was possible to reach an agreement on a way forward.

Last November, the National Audit Office revealed that the LSC overpaid legal aid providers by almost £77 million in 2009-10.    

Commenting, Law Society chief executive Desmond Hudson said:  "While Parliament debates further cuts in legal aid, the news of the collapse of IAS has left thousands of clients stranded. This is the true impact of funding cuts.   

"The Government claims that not-for-profit organisations like IAS will fill the gaps in public service provision. The fact that this is the second such collapse in the sector in less than a year shows that these claims are little more than wishful thinking."     

IAS administrators will be working closely with LSC over the next few days to ensure that appropriate arrangements are made for all of IAS's clients, and clients are advised to monitor IAS's website where updates on arrangements will be posted.