The Government has succumbed to concerted pressure from lawyers to ditch controversial new criminal legal aid contracts and suspend fee cuts.

Justice Secretary Michael Gove announced that the Government will not go ahead with the dual contracting arrangements for police station work and will suspend the second 8.75% fee cut, introduced last July, for 12 months from April.

In a written statement, he also said that he will ‘in due course’ appoint an advisory council of solicitors and barristers to help him explore ways to ‘reduce unnecessary bureaucratic costs, eliminate waste and end continuing abuses within the current legal aid system’.

Gove’s department faced almost 100 legal challenges from individual firms denied new contracts by the Legal Aid Agency (LAA), as well as a judicial review of the legality of the assessment process, following whistleblowing claims – denied by the LAA – that it was flawed.

He said: ‘My decision is driven in part by the recognition that the litigation will be time-consuming and costly for all parties, whatever the outcome.

‘I do not want my department and the legal aid market to face months if not years of continuing uncertainty and expensive litigation, while it is heard.’

In addition, he said he had been able to halt the plans, designed to cut the legal aid budget, due to ‘economies’ made elsewhere in the Ministry of Justice that had allowed him ‘greater flexibility’.

Welcoming the decision as the ‘right one’, Chairman of the Bar, Chantal-Aimée Doerries QC, said: ‘It shows that the Lord Chancellor has listened to the legal profession’s concerns about access to justice and is acting upon them.’

Having staved off challenges to the tender process, the Ministry could now face compensation claims from firms that have spent money preparing for the new contracts.

The Ministry also faces scrutiny over its handling of the whole affair. The Shadow Lord Chancellor, Lord Falconer, has asked the public spending watchdog, the National Audit Office, to investigate the debacle. The policy change, he said, had come ‘very late in the day’ and cost firms time and money.

Responding to a Parliamentary question from his Labour shadow, Andy Slaughter, the justice minister Shailesh Vara told the House of Commons that the LAA had, up to the end of December 2015, spent £141,519 on external legal fees associated with the contracts.