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LEGAL AID looks destined for further radical change following the system's mauling by the Commons' Public Accounts Committee last week.
The Lord Chancellor's Department has been given less than three months to find a solution to Green Form fraud and incomplete eligibility tests.
Potential victims are the Green Form scheme itself and the practice of allowing justices' clerks to assess criminal defendants' means.
Robert Sheldon MP, committee chair, says: "There are a number of errors and omissions which have to be put right.
"The Lord Chancellor's Department has to exercise proper control on expenditure of public money."
The report comes only days after an investigation by The Lawyer revealed how a businessman with no legal qualifications set up a lucrative consultancy to "market" Green Form work on a massive scale.
Peter Lane's Clan generated more than £2 million in Green Form business for Birmingham solicitor Alan Pritchard, by "canvassing" housing estates.
The committee linked canvassing with fraud which totalled £3 million in the past two years. It said if the authorities did not "close loopholes" then "urgent consideration will soon need to be given to the future of the Green Form scheme".
The Law Society and the Legal Aid Practitioners Group have both proposed measures to tighten control on canvassing.
The report re-ignited the debate over Green Form. The Legal Aid Board had earlier suggested it was satisfied with its anti-fraud measures. Labour called for the scheme to be scrapped. Some practitioners believe it will be. One senior source says: "I think the Green Form scheme is for the bullet."
But, Bill Montague, co-chair of the Legal Aid Practitioners Group, defends the scheme: "We much prefer it to the alternative of block funding."
Steve Orchard, LAB chief executive, says the committee's finding will be taken into account. An LCD spokesman says: "If you are reforming a system as intended it wouldn't necessarily be inappropriate for this to be included."
On eligibility, the report accused justices clerks of failing to comply with regulations on statements of means. It said the Chancellor should monitor the performance of individual courts and urged him to consider whether clerks should continue to grant criminal aid.