Government faces criticism for increases of up to 600%, sparking fears of adverse affects on SMEs and litigants as well as driving work away from UK lawyers

Senior judges have expressed deep concerns about dramatic increases of up to 600% in court fees.

The government announced on Friday that the fee for issuing a money claim worth more than £10,000 will be increased to 5% of the sum claimed, subject to a maximum fee of £10,000.

Calculations published by the civil justice council, which brings together judges and court users, indicate that court fees on a claim worth £200,000 will go up by £8,725. A claim worth slightly less than that figure will cost more than six times as much in court fees as it does now.

Although very high-value litigation is unlikely to be deterred, the council adds, “the fee will be seen, by international standards, as a high entry price to begin a commercial case in this jurisdiction”.

The most senior judges in England and Wales, headed by Lord Thomas of Cwmgiedd, have expressed fears that the increases could drive work away. “To illustrate this,” they told the government, “the fees proposed are 25 to 100 times greater than those payable in New York. A real concern will be uncertainty over future fee increases and the possible imposition of daily hearing charges putting major litigators off London, particularly as commercial cases can take years to develop.”

The lord chief justice and his colleagues told the Ministry of Justice that fees of £7,500 on a claim of £150,000 were likely to have a disproportionately adverse impact on small and medium enterprises (SMEs) and litigants in person.

Litigants would have to pay the money up front, they pointed out. In cases where damages were not specified in advance, including some personal injury claims, the maximum fee of £10,000 would be payable, even though that sum might be “completely disproportionate to the damages ultimately recovered”.

And the senior judges did not pull their punches in criticising the government’s methodology. “The research evidence-base for these proposals is far too insubstantial for reforms and increases of this level,” they said.

That criticism was endorsed by the civil justice council:

“It is a matter of grave concern that the ministry is contemplating such a significant reform, and one that carries with it potentially far-reaching and damaging consequences for access to justice, on such a poor evidence-base. To take a vitally important example, the draft explanatory memorandum makes clear that there is no knowledge of what the impact of this proposal will be on SMEs as a key sector of the court-user community and the wider economy.”

Chris Grayling, the justice secretary, has scrapped an earlier proposal that would have seen the court fee for obtaining a divorce rise from £410 to £750. “This proposal attracted the highest level of criticism among respondents to the consultation,” the government reported, while admitting that the estimated cost to the courts was just £270.

That announcement has been welcomed by the family judiciary. But the civil justice council said that the wider shortfall would have to be met by other claimants. “This will further entrench the approach so far taken that the civil justice system is used to underwrite the family justice system, rather than being used to improve the functioning of the civil justice system,” it explained. “Both systems ought to be properly funded.”

However, senior judges welcomed the government’s decision “not to introduce daily hearing fees for commercial cases and not to impose extremely high court fees for very high value commercial claims”. A year ago, ministers had suggested court fees of up to £20,000 or a daily fee of £1,000. The government accepted that there would be “practical difficulties to be overcome before either of the proposed options for charging higher fees for commercial proceedings could be implemented”.

Shailesh Vara, the justice minister, said: “Increasing court fees will never be welcome. I believe, however, it is right that those who use the services should make a greater contribution towards their running costs, where they can afford to do so. I am also sure that those who choose to litigate in our courts will continue to recognise the outstanding qualities our legal services offer, and the excellent value for money they provide.”

The government is now consulting on a £75 increase on the fee paid by landlords and mortgage lenders for recovery of land. It is also seeking to increase fees for general applications by up to £100.

The lord chancellor’s willingness to abandon some of his earlier proposals in the light of criticism from senior judges and others shows how seriously he takes the views of the judiciary. But the judges’ resolve to draw critical attention to changes that they believe will have a detrimental effect reminds Grayling that he cannot take them for granted.