The �7m drop is largely due to a reduction in the numbers of civil and criminal applications for legal aid.

Presenting details of the board's expenditure in its annual report, chairman Jean Couper said payments for 1998/99 were down by almost 5% to �138m.

The board collected �9m in contributions, expenses and amounts recovered, so the net cost to the taxpayer was �129m.

The cost of administering the legal aid system also reduced slightly to �7.6m (1997/98 - �7.7m) and the board made improvements against its performance targets in almost all areas.

Summary applications down

Mrs Couper said the number of summary criminal legal aid applications dropped by 6% to 64,156 and civil legal aid applications fell by 8% to 23,890.

She said: "The number of legal aid applications received has been falling for a few years but this is the first year that the amount paid out of the legal aid fund has fallen.

"It is difficult to say exactly why the number of applications is decreasing but possible reasons for the drop in summary criminal applications could be the introduction of fixed penalties and the use of fiscal fines.

"We propose to undertake further research into the reasons behind the reduction in applications."

'Always room for improvement'

Welcoming the report, Law Society of Scotland president Michael Scanlan said: "This year's report bears out what the society has been saying for some time - the people of Scotland have some of the best provision of legal aid services provided by solicitors in the world supported by one of the broadest legal aid schemes in Europe.

"There is always room for improvement and the society will not cease to propose change to a system whose overall aim is to provide access to justice for those who cannot afford to pay for it."