City tax was floated to replace cash generated from the controversial court charge ditched last year
A Robin Hood-style tax on top City law firms to help fund the criminal courts’ system has been abandoned, according to reports.
The 1% levy on law firm turnover was initially proposed by Michael Gove back in October 2015, as a way of replacing the now defunct criminal court charge introduced by his predecessor Chris Grayling.
Trumpeting his proposals at the time, Gove urged big-earning corporate lawyers to “look into their consciences”, while describing justice as a “community” and not “marketplace”.
According to website Legal Business, a number of City firms were less than happy with the Ministry of Justice’s (MoJ) proposals and “directly lobbied” the Treasury with their concerns.
Speaking at the time, City of London Law Society chief Alasdair Douglas — who is a former senior partner at Travers Smith — described the idea as “intellectually unsustainable”.
Fast forward several months, and it appears the City levy has been ditched. Apparently MoJ staff met with a number of top City lawyers, and indicated that Gove’s idea would not be pursued. One senior lawyer at City firm told the website:
The Treasury doesn’t like different departments having their own tax-raising powers. It’s no longer on the table.
The leading human rights lawyer Sir Geoffrey Bindman has long championed such a scheme. In 1994, Bindman, as part of a Law Society pro bono working group, tried in vain to persuade his colleagues to support a scheme. Last month the founder of London-based legal aid firm Bindmans LLP again came out in favour of hitting City lawyers in the pocket. Bindman proposed a 10% tax on City lawyer earnings over £150,000.
Describing the levy as “hardly punitive”, he said:
Think how much is left. How much does anyone need to lead a comfortable life?
In spite of today’s development, an MoJ spokesperson said:
Nothing has changed. The justice secretary has been clear that those who benefit financially from our legal culture must do much more to help protect access to justice for all. We have begun constructive discussions with the sector about how we can best achieve this aim and will continue to explore a wide range of options with them.