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Joined-up government? Yeah right

Finance | Tania Mason | 1 Jul 2010

In the sad case of Refugee and Migrant Justice, the government is trying to take with one hand while refusing to give with the other, says Tania Mason.

Yesterday's High Court case involving Refugee and Migrant Justice and the Legal Services Commission served to highlight the ludicrous financial situation that the charity has wound up in.

It has paid its staff wages and its rent up to 30 June, the day its contract with the LSC was terminated.  But it was unable to meet its rent payment for the next quarter and would not have been able to pay its staff beyond this day.

It also owes £500,000 to HMRC that it cannot currently pay.

These circumstances combine to make RMJ technically insolvent, as it cannot meet its liabilities.

However, it also emerged in court that by the end of May, RMJ was owed at least £850,000 by the government for legal aid services rendered.  There are also other monies not yet assessed or calculated by the LSC or the administrators, for work that has been done during June, along with licensed cases that have not been billed yet.

So while the charity is insolvent in that it cannot meet its liabilities, it is “not insolvent on the balance sheet test”, as Mr Justice Mitting put it.

Anyone familiar with this case will know that RMJ's financial problems only came about because the last government changed the legal aid payment system so that fees are only paid once cases have finally ended, having exhausted every avenue of appeal. 

Justice Secretary Ken Clarke in the Commons last month seemed to hold the view that RMJ’s financial management simply wasn’t quick enough on its feet to adjust to the new payment system.

According to him, other providers working in the field were perfectly able to reorganise themselves to accommodate the change – though in court yesterday it was said that others were struggling to manage it too.

But even if RMJ’s management is to blame for its downfall, it doesn’t change the ironic fact that one arm of the government – HMRC – is unable to collect money it is owed because another arm of the government - the Ministry of Justice – is refusing the timely payment for work incurred on its behalf.  

Joined-up government is working as well as ever, it seems. The situation would be laughable if it weren’t for the thousands of vulnerable asylum seekers – many of whom are unaccompanied children – that will inevitably suffer as a result of RMJ’s collapse.

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