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What is so breathtaking about the judicial response to the idea of privatisation is that, subject to important safeguards, the judges would be willing to go along with it Photograph: Graeme Robertson/Getty Images
What is so breathtaking about the judicial response to the idea of privatisation is that, subject to important safeguards, the judges would be willing to go along with it Photograph: Graeme Robertson/Getty Images

Privatising the courts: if anyone needs advice, it's the judiciary

This article is more than 10 years old
Joshua Rozenberg
The judges have nothing to gain and everything to lose by negotiating with Chris Grayling in private

The very idea that private companies should be allowed to invest in the courts of England and Wales is extraordinary enough. But what is so breathtaking about the judicial response leaked to the Guardian and reported here by Owen Bowcott is that, subject to important safeguards, the judges would be willing to go along with it.

First news that something was afoot came in a deliberately low-key statement to parliament on 26 March from the justice secretary and lord chancellor, Chris Grayling. Explaining that it was necessary to raise revenue and increase investment in the courts, Grayling said he had asked his officials "to consider appropriate vehicles to achieve these aims".

Since running costs are clearly no object when there is money to be made, Ministry of Justice officials chose the Rolls Royce of managements consultants and lawyers, McKinsey & Company and Slaughter and May. We can take it that McKinsey are advising the government on structures and Slaughters are advising on raising capital.

The paper leaked to the Guardian represents the judges' view of how the courts administration service might be restructured. It was signed by Lord Justice Gross, the senior presiding judge, on 8 May.

In it, the judges frankly accept the "weakness of the present arrangements" for running the courts. This is the currently the responsibility of a body called HM Courts & Tribunals Service (HMCTS), an agency of the Ministry of Justice created two years ago. Uniquely, HMCTS operates as a partnership between the lord chancellor, who is a government minister, and two serving judges, the lord chief justice and the senior president of tribunals.

HMCTS is responsible for administering all the criminal, civil and family courts and tribunals in England and Wales. It has a budget of £1.7bn but recovers only £585m in fees. You can see why the government sees room for improvement.

From the judges' point of view, the problem with HMCTS is that it is a servant with two masters: the government and the judiciary. HMCTS is unable to raise capital and does not enjoy security of funding from a lord chancellor who has many other responsibilities.

So the judges believe that HMCTS is "not an attractive option for the long term — and likely to become increasingly unattractive as Treasury cut-backs and other fiscal constraints have increasing effect".

That is why the judges are willing to support a successor body, which they refer to as "New CTS". As envisaged by the judges, New CTS would be free to attract private-sector capital investment and raise revenue.

But any move towards privatising the courts would involve huge risks and the judges have made it clear that their consent is conditional on major safeguards.

First, they insist, New CTS must be independent of direct ministerial control. Other ways must be found to safeguard the public interest.

Secondly, say the judges, they must be involved in its management at all levels. Since other board members would no doubt have commercial backgrounds, there would need to be "an appropriate dispute resolution mechanism should there be any failure to achieve unanimity at board level".

This seems wise: members of the courts service board could hardly take each other to court.

As envisaged by the judges, membership of the board would reflect the public interest. There would be "an independent chairman of public stature, commanding respect from Westminster, Whitehall, the City and the judiciary".

The chief executive would be "tough and independent-minded". He or she would be accountable to the lord chief justice on matters of judicial policy, allowing senior judges to avoid being sucked further into management roles.

New CTS would be accountable to parliament rather to ministers, say the judges, perhaps through what they describe as a "non-partisan joint committee of both Houses".

One can see what the judges are getting at but there is unfortunately no such thing: all-party committees exist, of course, but they normally have a government majority and are chaired by a member of the party in power.

Money remains fundamental to the whole enterprise. "There can be no question of New CTS doing without significant state funding," the judges say. And if New CTS should fail, the government should intervene to keep the courts and tribunals running.

The judges would be happy to continue raising revenue by renting out court buildings for fashion shows and parties. On a more serious level, they can see opportunities for selling their dispute-resolution services to companies from abroad who might otherwise use foreign courts or arbitrators.

But they insist that their consent is conditional on the final proposals being in the public interest. Constitutional safeguards would be maintained in that judges would continue to be paid direct from money voted by parliament, although that has not prevented cuts of one-third in judges' pensions. Ministers would retain their obligation to uphold the rule of law and the independence of the judiciary.

In his letter of 9 May, the lord chief justice told Grayling that the judges would not agree to the government's proposals until they had been worked out in detail. Lord Judge was right to stand his ground.

He was deeply disappointed that his negotiations with Grayling failed to preserve judges' pensions from being slashed. He knew there was no point in trying to persuade the public that this was unfair to judges whose remuneration packages were being reduced after they had given up jobs that they were supposedly preventing from rejoining.

As I reported elsewhere last week, some judges have said they will go back to being lawyers despite the undertaking that they gave the lord chancellor on appointment.

Even though the review body on senior salaries thinks that we are now at a "tipping point" at which pay restraints and pension cuts will mean too few lawyers of the right quality are willing to to join the bench, the lord chief justice rightly judged that going public on the issue would be counter-productive.

But there is no such disadvantage in speaking publicly on the issue of privatising the courts. The judges have nothing to gain and everything to lose by negotiating with the government in private.

Just as there is intense public discussion about when and how to sell off parts of state-owned banks without damaging their potential share price, there can be public debate about how best to attract investment in state-owned courts without damaging their attraction to investors.

Far from deprecating the leak of their "restricted" paper, the judges — and the government — should ensure that this major constitutional change is discussed as widely as possible.

That's because although the judges' instincts are right — and their insistence on constitutional safeguards is essential — their skills at running a large commercial organisation are less even than those of the government.

The judges may be right in thinking that running the courts like a business is better than running them into the ground. But if anybody needs the advice of a top firm of management consultants and a top firm of city solicitors, it's the judiciary.

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