Justice secretary Chris Grayling said he would scale back planned market reforms, which lawyers feared would see large outsourcers such as G4S take work away from high street solicitors who currently dominate the sector.
Legal aid – where the government pays an individual’s legal fees – will still be automatically withdrawn from wealthy individuals with an annual household disposable income of more than £37,500 a year.
There will also be a residency test to ensure only those with strong connections to the UK are able to receive legal aid for civil cases, while many prisoners will have their access to legal aid curtailed.
“We cannot close our eyes to the fact legal aid is costing too much,” said Grayling, who believes he can cut the legal aid bill by £220m a year from 2018-19.
“Even after these reforms, we will still have one of the most generous legal aid systems in the world. I want to ensure the limited money we have is concentrated on those cases and people who need it most.”
Nicholas Fluck, president of the Law Society, helped agree the deal: “No change is not, and has never been, a realistic option. The current market is ill-equipped to deal with the challenges of the future.”
“However, we made clear in our response to the spring consultation and in subsequent discussions with officials that price-competitive tendering was highly unlikely to bring about the sustainable change the sector needs.”