With the Solicitors Regulation Authority (SRA) expecting income derived from the Solicitors Qualifying Exam (SQE) to double this year, there are concerns that the regulator is treating its new way of training lawyers as a “huge cash cow”.

According to the SRA’s annual business plan and budget consultation paper, SQE income is expected to more than double this year from £30m to £66m and nearly match income derived from practising fees (£70m).

The SRA’s draft business plan illustrates that 42 per cent of the SRA’s income was comprised of SQE assessment fees in the year 2023: income that did not exist three years ago.

Sources told The Lawyer that they have noticed a strategic shift from the SRA on income priorities since the SQE was introduced. “It’s just a huge cash cow for the SRA, isn’t it? Look at the cost the resit the exams for a start”. 

The Lawyer calculated how much the SQE could cost applicants, taking into account potential resits and travel to exam centres. Added to this, the SRA announced earlier this year it would be increasing the cost of the SQE for the second year running. The exams will increase by 5 per cent from September, bringing the total cost to sit both exams for the first time from £4,564 to £4,790.

The previous year saw a much higher increase of 11 per cent, which is reflected in the spike in SQE income, as well as the increase in students sitting the exams.

In its report, the SRA stated that all SQE income comes from the assessment fees charged to candidates who sit the exam. It commented: “Income that is generated by the SQE is dependent on candidate numbers and candidate numbers in actual terms may vary from those we are anticipating. However, this will not create risks for our budget, because the income offsets the delivery costs for the SQE assessment, and vice versa.

“We have seen a significant increase in candidate numbers during the current financial year and expect that to continue into 2024/25.”

The report further highlights that the SQE is entirely not-for-profit. All income received from the exams is comprised of income related to the assessment and the direct cost of delivery as well as internal costs associated with exam delivery. Surplus revenue is segregated and invested solely into education and training.

Commentators are still concerned by the need for the SRA to increase exam fees, given that the volume of people sitting the exams is also expected to grow almost exponentially year on year as the old Legal Practice Course (LPC) is phased out. They also add that the cost to resit the exams is the same as the original fee.

One legal education provider commented: “If we’re introducing a system that is meant to help access, are we keeping a very close eye on what it is costing a student who is not sponsored to get through this system? Is it right to raise the fee year-on-year? Are we recognising the invisible cost of the SQE?

“You’re an organisation. So make your money how you like, but are you really consciously thinking about how you are then – because this is the SRA getting the money and not Kaplan – ensuring that standards are met in terms of getting people to the right venues etc.”

Others are more concerned, however, that the issues candidates have faced since the rollout of the SQE is down to a lack of funding for the SRA. They argue that the income raised from exam fees is being put back into the cost of running the assessment, but this leaves nothing for improvements.

An early careers specialist commented: “I think what they’ve probably realised is, bearing in mind that the SRA are the judge, jury and executioner of who gets in, they’ve kind of just moved the money from the university’s pockets into their own.

“The SRA could desperately use some more funding with some of the stuff that’s happened over the last year, but I’m not sure I’d have any confidence that the money is going to be better spent. But, as a starting point, I think it does need to be better funded.” 

While the SRA’s draft business plan illustrates that 42 per cent of the SRA’s income is comprised of SQE assessment fees, practising fees for the 200,000 England and Wales-qualified lawyers that the SRA regulates accounts for 45 per cent of the SRA’s annual income. Just over 8,000 individuals took one or more of the SQE exams last year alone.

Before the SQE was introduced, the SRA’s annual income totalled £71.6m. The SRA anticipates that for 2024/25 its income will look more like £157.3m.

The SRA’s consultation opened earlier in June and is seeking feedback on its business plan for 2024/25, marking the second year of work under the SRA’s new corporate strategy for 2023 to 2026.

The SRA’s consultation on its business plan is open for questions until 2 July.

For more about the SQE and the stories around it, read here.