The ProcureCo model for contracting for legal aid work will for the first time give the bar the ‘whip hand’ over solicitors, justice minister Jonathan Djanogly said last week.

The minister also disclosed that he has ruled out imposing a levy on the financial services industry to fund fraud cases.

Djanogly told the All Party Parliamentary Group on Legal Aid that the government was moving away from an ‘antiquated system of dividing lines between solicitors and barristers’ to a system that would offer a ‘fairer’ balance between the two sides of the profession.

ProcureCos are commercial vehicles that can be grafted on to barristers’ chambers, enabling them to contract for work directly with public bodies and corporations. The introduction of a system of one case, one fee in legal aid work will enable barristers to be in control of fees, and refer work to solicitors, which Djanogly said would give the bar the ‘whip hand’.

Djanogly was responding to comments from barrister and former Conservative MP Ivan Lawrence about criminal legal aid rates and their impact on the bar. Lawrence said hundreds of barristers go to court to be paid £40 to £80 a day, and may earn only £500 a week, meaning that even if they are in court every day, once their overheads are deducted they earn less than £20,000 a year.

‘Many barristers do not earn a living or wages comparable with what nurses, teachers and policemen earn,’ he said.

Following questioning from former City solicitor Lord Phillips of Sudbury, Djanogly conceded that the legal aid budget has not doubled over the last two decades, as he has frequently claimed in justification of the government’s proposed budget cuts.

The minister said the £2.1bn budget had doubled in ‘absolute’ terms, but he could not contradict Phillips’ assertion that in ‘real’ terms that amounted to a ‘significant shrinkage’.

Djanogly said the budget had shot up and then evened out over the lifetime of the last government, with a big change when personal injury work was taken out of scope.

Asked about the lack of alternative funding streams in the government’s green paper on legal aid reform, Djanogly said he had discounted the notion of a levy on the financial services sector to compensate for the cost of expensive fraud cases, which had been mooted by the Conservatives when in opposition.

After discussing the concept with the Treasury, he said he had decided not to pursue it as the number of cases was small, and the financial sector already had its own sanctions, which would mean institutions would be penalised twice.