The Ministry of Justice will see its budget cut by just under £2bn over the next four years, the chancellor George Osborne announced in the government’s spending review this afternoon.

He told the House of Commons that the MoJ budget, which is currently £8.9bn a year, would fall to £7bn by 2014/15, seeing on average a 6% reduction in each of the four years covered by the spending review.

Osborne said the MoJ will seek to make savings by reform of sentencing, improving the treatment given to mentally disordered offenders and through the increased use of public/private sector initiatives to reduce re-offending.

There will, he said, be reform to the criminal justice system, the closure of ‘underused’ courts and a reduction in the legal aid bill. He said the Law Officers Department – comprising the Offices of the Attorney General and Solicitor General - will see a 24% reduction to its budget, and stressed that the Crown Prosecution Service will be required to ‘greatly’ reduce its ‘inflated cost base’.

He said there needed to be access to justice but at a ‘fair cost’ to the tax payer.

The £1.3bn funding to maintain the current prison estate will continue, but plans to build a new 1,500-capacity prison have been put on hold.

Elsewhere, the chancellor said Revenue & Customs will be expected to make savings of 15%, with the courts making better use of technology and procuring IT services more efficiently, but he promised £900m in additional funds to target tax evasion and fraud.

The Home Office Budget will fall by 6% a year with spending on the police down by 4% a year.

The Ministry of Justice later released a more detailed statement on the cuts: ‘The Ministry of Justice is beginning a programme of radical change. By 2015 we will have fundamentally reformed the way in which we provide justice. That work has already begun and in the coming months we will:

  • Launch a consultation on proposals to reform the legal aid system;
  • Publish a green paper on sentencing and rehabilitation;
  • Announce the outcome of the consultation on the closure of 157 under-utilised courts; and
  • Increase our transparency by publishing data on our performance and spending.

‘The department will manage its reductions by undertaking a challenging reform programme; transforming the department so it is more efficient and generates significant savings in order to allow resources to be focussed on key priorities, by:‘By taking these tough decisions we will be able to punish and rehabilitate offenders more effectively, focus access to justice on those who need it most while cutting the costs of the justice system:

  • We will continue to lock up dangerous and serious offenders;
  • We will reform sentencing to rehabilitate offenders more effectively. The reforms will stabilise the prison population and then start to reduce it by 2014/15. We expect that by the end of the spending review period the number of prisoners will be around 3,000 lower than it is today;
  • We will increase the use of restorative justice and tough community penalties;
  • We will harness private sector expertise and innovation to make prisons places of hard work and purposeful training;
  • We will pay by results and use private sector investment as well as the voluntary and public sector experience to reduce
  • The government will take forward proposals to invest in mental health liaison and diversion services at police stations and courts, to divert mentally ill offenders and drug addicts into treatment;
  • We will consult on how to channel legal aid and related spend to the cases that most require it, saving £350m, subject to the outcome of consultation; and
  • Capital funding will be focused on maintaining the prison estate and funding essential new capacity and key invest to save projects.

  • Saving £1bn from administration and frontline efficiency, including a one third reduction in administration – our largest single saving;
  • The courts and tribunals system will be brought together in a single agency to ensure justice is delivered efficiently;
  • We are reducing our central London estate from eighteen buildings to four, saving £40m;
  • We will reduce and reorganise our arm’s length bodies to ensure services are being provided in the most efficient way;
  • A shared services model will be rolled out across the whole department making use of existing assets, capability and best practice;
  • We will reduce spending on courts and legal aid by developing and increasing awareness of access to alternative ways to resolve disputes; and
  • Plans for a 1,500 place new-for-old prison will be deferred to the next spending review period, while we develop a sustainable and cost effective prison capacity strategy. Spending on new IT and court projects will be limited to essential capacity.

‘The Ministry of Justice is also taking forward ideas suggested under the spending challenge, including reforms to: Justice secretary Kenneth Clarke said: ‘We need to create a justice system that punishes the guilty, reduces re-offending, protects our liberties, and helps those most in need. Over the period of this spending settlement the Ministry of Justice will be transformed into a lean, transparent, and affordable department.’'

  • Outline plans for changes to court business hours, including weekend and evening sessions, in the forthcoming magistrates courts business strategy. This will improve access to justice and make greater use of the court estate.

Reacting to the cuts, Law Society president Linda Lee said: ‘While the figure of £350m is less than some had feared, losing this amount of money from the system will inevitably prove to be a significant blow to legal service provision and access to justice.’

She said it is a basic feature of a democratic society which supports the rule of law that vulnerable people, whether they are children, have mental health or housing problems, are accused of crimes or have suffered loss, are able to have access to legal advice and representation to secure justice.

‘A creaking system is going to be less able to deliver the needs of the vulnerable in society,’ said Lee.

Chair of the Young Legal Aid Lawyers, Laura Janes, warned that the reduction in legal aid funding would ‘devastate’ the justice system unless ‘radical steps’ are taken to reduce other cost drivers first.

Janes said that if the government wants to reduce the legal aid bill it should reduce the need for legal aid through measures such as simplification of the law and the prevention of poor decision-making by public bodies.

She said: ‘It is important that the government recognises that high-quality representation at the earliest stages of the legal process can lead to huge savings later on. There are grave costs implications of clients representing themselves in complex legal proceedings against the state or corporate entities.’

‘Plans to cut to the heart of justice by targeting legal aid on the most vulnerable does not recognise the important role of legal aid in preventing social problems such as homelessness and spiralling debt,’ she said.

Shany Gupta, chief executive of London firm Duncan Lewis, said he was shocked by the announced cuts to the legal aid budget when over two million people rely on it to receive access to justice.

He said the £350m reduction will have a dramatic impact on the protection of their legal rights and give force to the theme of one law for the rich and one for the poor.

‘Sadly it made no difference that this frontline service, costing little more than 0.3% of all public expenditure, already delivers exceptional value; or that in the past five years the number of people helped by the legal aid scheme nearly doubled while funding for it hardly changed,’ he said.

Gupta said that the prospect of rising unemployment would lead to a greater demand for legal aid services, and said the cuts result in ‘an attack on the welfare of some of the most vulnerable members of our society’.

‘Legal aid has never been a vote winner, so it was an all too easy sacrificial victim in the government’s spending review. But this will cause considerable misery among the two million vulnerable people every year who depend on legal aid for their access to justice,’ he said.

Sir Alan Beith, chair of the Commons Justice Select Committee, said: ‘The Justice Committee was critical of plans for a new fifteen hundred place prison, so I am pleased to see this is not being implemented at present.’

‘However, the committee is keen to see the development of robust alternatives to custody and will, both in the Westminster Hall debate on the former committee’s report on Justice Reinvestment, and in its ongoing inquiry into the work of the probation service, be looking in more detail at the impact of the chancellor’s statement on the probation service.’

‘He said: ‘The lord chancellor’s commitment to reducing dependence on custody will only be made to work if effective alternatives are available, whether through public or private sector provision.’