[Relevant documents: The Third Report from the Constitutional Affairs Committee, Session 2005-06, HC 754, on Compensation Culture, and the Government’s response thereto, Cm 6784. The Twentieth Report from the Joint Committee on Human Rights, Session 2005-06, Legislative Scrutiny: Tenth Progress Report, HC 1138.]
Order for Second Reading read.
I beg to move, That the Bill be now read a Second time.
I am pleased that, after much debate and discussion in the other place, the Bill has finally come to the House. It is part of a much wider set of initiatives that we are promoting: we are determined to tackle practices that might stop normal activities, because people either fear litigation or have become risk-averse. We want to stop people being encouraged to bring frivolous or speculative claims for compensation, and the provisions in the Bill will help us to do just that. They will reassure people who are concerned about being sued that, if they adopt reasonable standards and procedures, they will not be found liable.
The Bill will also put in place the legislative framework needed to regulate claims farmers—people who encourage consumers to make claims—too many of whom are cowboys who have abused the system for too long, and we are going to put a stop to it.
Part 1 contains provisions on the law of negligence and statutory duty and on apologies, offers of treatment and other redress. Clause 1 relates to the law of negligence and statutory duty, and some hon. Members have had concerns about the need for that clause. We believe, however, that it is important and that it will have benefits.
The Better Regulation Task Force in its report “Better Routes to Redress” made clear its view that, although a compensation culture does not exist in this country, the perception that it does can have a real and damaging effect on people’s behaviour. That can be particularly significant in respect of activities provided by voluntary organisations and others.
Last autumn, Volunteering England found that nearly one in five organisations said that people had stopped volunteering for them because of fears about risk and liability and that nearly a quarter of organisations said that volunteers had been deterred from joining them in the first place by concern about those issues. Those fears might well be out of proportion and based on inaccurate perceptions, but they are very real. So there is a need to provide reassurance to those who are concerned about possible litigation—not only in the voluntary sector, but elsewhere too—and about how the law in this country works. That is what clause 1 will do.
The way in which clause 1 will work is that, in deciding a negligence claim or a claim for breach of a statutory duty that involves a standard of care, the court must consider whether the defendant owed a duty of care to the claimant and, if he did owe such a duty of care, whether that duty was breached, and whether the claimant suffered loss or injury as a result. In considering the second of those factors—whether the duty of care was breached—the court must consider the standard of care, and whether the defendant fell short of that standard.
In this country, the ordinary standard of care used in considering whether negligence is involved is that of reasonable care, and whether the defendant has met that test is a question of fact for the court to decide, having regard to all the circumstances of the case. Clause 1 is therefore concerned only with the approach of the court to assessing that question of fact. It does not concern or change what the standard of care should be, nor whether the defendant owed a duty of care to the claimant.
I hear what the hon. Lady has to say, but does not clause 1 go further than that by requiring the claimant to put together a risk assessment—in other words, to specify what steps should have been taken by the defendant in complying with the duty of care? Does that not go beyond what is required of the defendant at the moment?
No. The hon. Gentleman is putting more into clause 1 than is actually there. Clause 1 provides that, in considering a negligence claim and deciding whether the defendant should have taken certain steps to meet a standard of care either by precaution or otherwise, the court may have regard to whether a requirement to take those steps might prevent an activity that is desirable from taking place or whether it might discourage people from undertaking functions in connection with that activity. That reflects the existing law and the approach that the courts have already taken and the view that they have already expressed, particularly in judgments in the higher courts.
Perhaps my hon. Friend might offer a definition of desirable activity as it is a new concept in common law, which, as far as I can see, has not been defined by any previous authority. Her comment that the provision simply restates the existing law, the Tomlinson v. Congleton borough council ruling, which is the most recent authority on the issue, makes it quite clear that the sort of exclusion to which she refers does not apply across the board, particularly with an asymmetric relationship—for example, the employee-employer relationship. Will she therefore undertake to table an amendment to correct clause 1, to put right the fact that it does not accurately reflect the law as it stands?
The view that was expressed in the Tomlinson v. Congleton ruling, which is the most recent case, as my hon. Friend rightly says, is reflected in clause 1. The clause will have a range of benefits. It will reassure those who are concerned about possible litigation by making clear how the law works and it will help counter the view that people should cease activities for fear of litigation. I know that hon. Members will say that that will bring more cases to court. Any form of legislation brings the opportunity for people to bring a case to court so that the common law is established clearly. We should not be overly concerned in that respect. Clause 1 and clause 2, which has been added, make it clear that the law is clear, that people know where they stand and that the courts will use common-sense judgments in ensuring that people understand what desirable activities are and where the balance lies between the desirable activity and any precaution that individuals need to take.
I fully accept that the Government’s intention is not to alter the law but to maintain it as announced by the House of Lords in the Tomlinson case. That gives rise to the difficulty that the hon. Member for Hendon (Mr. Dismore) mentioned. Another problem with the way in which the clause is drafted is the phrase “breach of statutory duty.” There are statutes that set up standards of care, breaches of which are less than full negligence. An example is the Consumer Protection Act 1987. Is it the Government’s intention to change the way in which that Act works by adding this new clause?
I am grateful to my hon. Friend the Minister for being willing to debate the phrase “desirable activity” at this stage. It may well be an issue to be discussed in Committee. “Desirable activity” implies a notion of public good. I am concerned about public services, say accident and emergency units or ambulance services, in which people may work with difficult clients. Does the phrase imply that their conditions of employment and their access to the civil courts will be less at risk than for people not engaged in activities involving the public good?
Order. Before the Minister answers, may I take up the point made by the hon. Member for Sherwood (Paddy Tipping)? I do not wish to hinder the debate today, but I am sure that the Minister and other hon. Members will bear in mind the fact that the Bill involves some complicated matters that are probably best dealt with in Committee. That aside, it is quite in order for the Minister to make her usual observations.
Thank you, Mr. Deputy Speaker. You have rightly led us towards the way in which we should conduct the debate today. I am conscious that many hon. Members want to participate, so I will try to be as brief as I can in responding to my hon. Friend.
My hon. Friend makes an important point about emergency services. We have sought to capture with the term “desirable activity” the well-established concept of taking into account the wider social value of activities. The emergency services are a good example of that. If my hon. Friend will allow me, I will leave the matter there and perhaps we can pursue it in Committee.
Clause 1 will have a range of benefits. It will help counter the view that organisations should stop activities for fear of litigation. It will form a valuable part of the work that we are undertaking to tackle perceptions that lead to risk-averse behaviour. It will improve the system for those with valid claims. It will also ensure that the law is widely known and applied.
I mentioned in response to the intervention by the hon. Member for Hendon (Mr. Dismore) that clause 2 had been added to the Bill. It provides for an apology and an offer of treatment or other redress which shall not of itself amount to an admission of negligence or breach of statutory duty. That clause stemmed from an Opposition amendment, which the Government have been happy to accept. It reflects the approach that has been taken in clause 1 in that it does not change the law but provides reassurance on how it works and encourages the giving of apologies and other offers of treatment and redress. I hope that that is something that the whole House will welcome.
The clause also reflects the approach taken in the NHS Redress Bill, which was debated earlier this week, and should help to reduce the number of cases in which adversarial disputes about liability prevent early rehabilitation in cases involving personal injury. I am sure that hon. Members across the House have had constituents come to them in circumstances in which the length of time and the adversarial nature of proceedings have made matters much worse than they would have been had they been dealt with in a more simple and straightforward fashion.
In clauses 1 and 2 do the Government seek to codify—to put into written statute—the present law? Do the Government seek to take the law as the courts have defined it and put it into an Act of Parliament? If that is the case, there may be merit in that. The Government have a long-term plan, which many of us support to codify the law so that people have a clear view about what it stands for.
It is not my wish to enter into a debate on the merits of common law and case law versus codification, although the hon. Gentleman is right to say that we have a long-term ambition, as most Governments do, to codify the law properly. What I am trying to say is that clauses 1 and 2 seek to clarify the situation so that people feel comfortable with the activities in which they participate. It does not reduce the protection available to claimants. It will be open to the courts, as now, to decide, for example, whether the terms in which an apology is given amount to an admission of liability in the circumstances of an individual case.
In the context of what the Minister is saying, it is my understanding as a supporter of clauses 1 and 2, as far as they go, that they offer a form of protection to volunteers and volunteer organisations who are losing volunteers because of the perception that she discussed earlier. Is it the Government’s intention to make it clear to those voluntary organisations that those clauses will give them some legal protection against vexatious and spurious claims, which are having a practical and measurable effect on volunteering in the United Kingdom?
I have sympathy with the hon. Gentleman’s position. I have spoken to voluntary organisations in my constituency, as he and others have done in their constituencies. I do not want to commit the Government to something particular on this, but I hope that I can develop some ideas by the time the Bill becomes law, we hope in or around October, so that perhaps we can send out a clear message to voluntary organisations, schools and, indeed, to the public in general, about what the position is as part of our general encouragement to volunteer and not to be afraid to come forward.
I am grateful to the Minister both for giving way and for the helpful meeting a couple of weeks ago. May I suggest that that message also needs to go out to the lower courts. Post-Tomlinson, we are still getting bad cases and if I manage to catch your eye, Mr. Deputy Speaker, I intend to give the details of a particularly bad example of a case that took place while the measure was in another place.
Does not what my hon. Friend said in response to the previous intervention defeat her own argument? If the purpose of clause 1 is simply to clarify existing law, which of course the Lord Chief Justice told the Constitutional Affairs Committee could not be done in a single sentence, why does she need a great long pamphlet explaining what the law is? Is it not better simply to set out in detail in that pamphlet what the law is for organisations without tinkering by means of clause 1, which will create a whole batch of new defences and litigation?
I disagree with the premise of my hon. Friend’s question. From time to time, it is a good thing for Governments to let the public know what the law is and how it applies to them. Indeed, it is a duty of Governments to do so. If there is a way of ensuring that people, whether in organisations or as individuals, are aware of the situation, it might give them time to consider whether they would like to be volunteers in various organisations.
I really must move on.
Part 2 of the Bill sets out a scheme to regulate claims management services. Some very reputable claims management companies provide a good service, but consumers are too often exploited by firms that provide a bad service and encourage false claims—[Hon. Members: “Name them”.] I cannot name them, but apparently about 500 companies operate in England and Wales. They are not subject to regulation and many of them abuse the system.
As the hon. Lady knows, trade unions are one of the largest groups of claims farmers. They make their money from referrals to solicitors—often at about £500 per referral—and take money from damages in some cases. Many unions do an excellent job, but does she agree that for trade unions to be completely unregulated in this field, while she is saying that the commercial sector should be completely regulated, is nonsense?
Does my hon. Friend agree that providing services to the membership of an organisation such as a trade union is completely different from the situation in my area, where there are completely unsolicited mail drops from firms trying to farm as many claims as possible, especially for miners’ compensation? That is wholly different from an organisation providing services for its members.
I could not agree more. I am sorry that I did not bring with me an unsolicited letter that I received from a company offering me its services in making a claim, on the basis that I had at some point said that I had had an accident. I find such practices wholly abhorrent and I hope that the Bill will be part of our general scheme to ensure that they do not occur.
I point out gently to the right hon. Gentleman and to other colleagues that if they allow me to develop my speech I will come to that point.
The practices we want to stamp out fall into three main areas. The first is the encouragement of frivolous claims, by raising false hopes about the compensation available, through high-pressure marketing techniques, such as my hon. Friend the Member for Amber Valley (Judy Mallaber) described. Secondly, consumers are misled about the options for funding their claim; in some cases, companies do not let them know that there is a free alternative and, in others, they sell inappropriate additional services, such as loans to fund insurance premiums. Thirdly, we want to protect consumers against poor-quality advice where claims managers act directly for them.
Citizens Advice frequently has to pick up the pieces when claims farmers leave consumers high and dry. Its 2004 report, “No win, No Fee, No Chance”, referred to a woman who had tripped and suffered cuts and bruises. Three years later, she was offered £500 compensation from the company concerned, but on the advice of a claims management company she it turned down and was encouraged to borrow money to pursue the claim. She eventually won £1,200 but that was deducted from her loan, leaving a shortfall of £950, which is still accruing interest. Clearer information about the risks and the likelihood of additional costs that would have to be met from her own pocket might have led to a better outcome.
Which? has recently carried out research into claims management companies dealing with endowment mis-selling and found wide variation in the fees charged and services given. It also found evidence of scaremongering by some claims management companies, which suggested that claims brought by individual consumers themselves would almost certainly fail. The evidence is actually to the contrary.
My Department and the Advertising Standards Authority have recently funded comprehensive market research into the impact of claims advertising, which, among other things, confirmed that people have limited understanding of what is involved. Terms such as “No win, no fee” are often misinterpreted and the need for a third party to be at fault is not always apparent. The research is being presented to the bodies responsible for the various advertising codes, and they are considering whether changes to the codes are necessary.
National Accident Helpline is based in my constituency and has a strong reputation in the field. The company has pointed out that the definition of financial services or assistance in clause 3(3) is far too broad and could capture such groups as before-the-event insurers, liability insurers and individuals passing on claims to solicitors. The company feels that the Minister should provide more clarity about who the Government actually want to be caught by that mechanism.
We want to capture people who abuse the system and who do not give consumers all the information they need to make a clear and considered decision. Obviously, there will be costs and I shall talk about them later, but we estimate, for example, that the cost of direct regulation could be up to £1 million a year. However, that is not a huge cost in terms of ensuring that consumers get a fair deal. In some cases, people end up with massive debts as a result of bad, or no, advice.
I want to make it absolutely clear that we firmly believe that anyone with a genuine claim should be able to make it quickly and easily, but vulnerable people are being targeted so additional safeguards are needed. We want greater transparency, better quality control and a better service for consumers.
Does my hon. Friend agree that it is important that claims handlers who sell after-the-event insurance should be caught by the regulation? Companies such as FreeClaim IDC—a scam organisation in the north-east—make most of their money not from the claim that they sell on to solicitors but from the “insurance” policy that they sell to claimants.
I shall not comment on the individual company that my hon. Friend mentions as I do not know the details, but he is right to point out that it is scandalous, and a scam, when people think that their case is being made on the basis of their understanding of no win, no fee, but discover that because they signed up for an insurance premium they are paying back large amounts over a long period to companies that make large profits as a result.
Part 2 provides a proportionate and responsive framework for regulating the industry. Clause 3 defines claims management services and provides an order-making power to target the regulation in specific areas. Companies will need to seek authorisation only if they are providing a regulated claims management service. We intend to provide by order that the regulated services include personal injury, mis-selling of financial products, employment, criminal injury compensation and housing disrepair. The Bill is flexible. It allows new areas to be brought into the regulatory net as problems arise and it will allow areas to be removed from regulation if the problems subside.
Clause 4 allows a range of options for delivering regulation. We want an efficient solution that will be effective for the benefit of consumers. We are entering a period of considerable change in the legal services market. Last month I published a draft Legal Services Bill, which will reform the regulatory structure of legal services. I expect the regulation of claims management services eventually to be integrated into that structure. Another uncertainty is the impact of statutory regulation on claims management companies. I have to tell the House—in a sense this reflects the point raised by the hon. Member for Kettering (Mr. Hollobone)—that that is unpredictable. Recent analysis by Datamonitor predicts that the industry might shrink considerably, because once stringent regulatory standards are applied, false claims will, by their nature, disappear. In the short term, we need a flexible solution that can tackle the worst abuses. A longer-term solution can then be found once the landscape is more certain and we can have a more considered look at it.
Is it not time that we knew what the Government’s preferred option is, given that the clause allows the regulator to be an existing organisation, a non-departmental public body or the Secretary of State. When will we know the Government’s preferred solution?
I could hardly have handed the right hon. Gentleman the question, but the next line in my speech is: we have considered various options on the best way in which to proceed, including whether there should be a role for the Claims Standards Council. I can confirm that the Department for Constitutional Affairs will initially regulate the industry directly. My right hon. Friend the Secretary of State will be the regulator. The core elements of direct regulation will be: the Secretary of State as regulator, with day-to-day responsibility for regulation delegated to a civil servant with the appropriate skills and experience; a monitoring and compliance function, contracted out to a trading standards unit responsible for supporting the Secretary of State in carrying out authorisation, monitoring, complaints and enforcement; and a non-statutory advisory committee made up of representatives of the financial services and insurance industries, the legal profession, consumer groups and the claims management sector.
Our prime concern is to safeguard consumer interests. To that end, those wishing to provide claims management services will be required to seek authorisation from the regulator. The system will have teeth. As a condition of authorisation, authorised persons will be required to comply with strict rules and any person breaking the rules risks having their authorisation suspended or removed. There will be a clear mechanism for dealing with consumer complaints and authorised persons will need to have indemnity insurance. I hope that that covers the right hon. Gentleman’s question.
Does the Minister not understand that many of us are extremely disappointed that it is not a well established regulator in the financial field that is taking on the task? The Financial Services Authority or the Office of Fair Trading would be much more preferable, because they are experienced. We are just flying blind with a temporary lash-up solution. It will not be anywhere near enough, given the sort of people who run the claims farmers.
The hon. Gentleman seems to be the only person in the House who does not know that neither the OFT nor the Financial Services Authority wanted to do the job. My right hon. Friend the Secretary of State will do it, with, as I have already pointed out, a senior civil servant and a trading standards organisation to oversee matters. Once the structure in the draft Legal Services Bill is in place, these things will all be part of that regulatory system.
I was smiling at the picture of the Lord Chancellor, as he gives up his speakership of the Lords, becoming the regulator with teeth. Following the Minister’s helpful answer to my right hon. Friend the Member for Berwick-upon-Tweed (Mr. Beith), will she just add one more comment about the Government’s thoughts on the future? At the beginning, the regulator will be the Secretary of State. Is that intended to be a permanent solution or is it intended that, in time, we will move on and that, for example, one of the regulators that comes out of the draft Legal Services Bill will do the job?
The hon. Gentleman has got things absolutely right. This is intended to be an interim solution. In a sense, the Bill itself is an interim solution before the draft Legal Services Bill, and the structure that it provides, come into place. It is the intention that the regulation would come under the umbrella of the legal services board and the frontline regulators that will be in place.
Will my hon. Friend ensure that the people who are going to be involved in the regulation liaise with the coal health team at the Department of Trade and Industry, because they have got innumerable examples of the scams that are being used? It would be good for the people who will be involved in the regulation to know how those scams work.
My hon. Friend makes an important point. We are all aware of some of the atrocious behaviour that has taken place in some areas on the coal health scheme. I take his point and will make sure that the lessons are learned so that that is not repeated.
The regulation needs to be proportionate. Clause 5 gives the Secretary of State the power to exempt persons or classes of person. Our central focus must be to tackle commercial claims farmers. We therefore intend to exempt solicitors, barristers, legal executives and those who are subject to regulation by the Financial Services Authority. However, those exemptions will apply only to the extent that those concerned are already regulated in the provision of claims management services. A solicitor who offers claims management services through a business separate from his practice would still need to be authorised. That approach will avoid duplication in the regulation of claims management activities, although some organisations may find that they are regulated by more than one regulator for different activities. We have no wish to impose unnecessary burdens on those who provide valuable services on a voluntary basis. Individuals who offer advice voluntarily, such as those working on a voluntary basis in a legal advice centre, are specifically excluded from the scope of the legislation.
Does my hon. Friend accept that, as with solicitors and voluntary organisations, trade unions provide a vital service to their members and members’ families and that, where those trade unions operate properly on a not-for-profit basis, there is a strong case for exemption, as long as there is a form of internal regulation? Will she say how the Government intend to proceed on the concept of the exemption of trade unions where they are not operating as claims farmers, as the Union of Democratic Mineworkers perhaps has done in Nottingham?
Amazingly, my hon. Friend again brings me to my next point. He is quite right about not-for-profit organisations, voluntary organisations and the vast majority of trade unions. We intend, therefore, through secondary legislation, to exempt charitable organisations that provide claims advice and to exempt independent trade unions, where they provide services to their own members and their own members’ families.
I know of and agree with the genuine concerns about the activities of a small number of trade unions, particularly in relation to coal health compensation schemes. My right hon. Friend the Secretary of State and I take those concerns seriously. However, few would dispute the high quality of legal services provided by the vast majority of trade unions to their members. The power to exempt by secondary legislation will give us the necessary flexibility to exempt trade unions, but, where appropriate, that can be withdrawn for individual unions where the consumer is losing out.
I welcomed the second half of the sentence. Does the Minister not accept that there is concern that trade unions are completely unregulated in this area? If she is saying that solicitors, the majority of whom behave properly, and all other professionals in the area are to be regulated, how can she possibly justify exempting trade unions, especially given the concerns about the way in which some trade unions have behaved? Is that simply because the Labour party is funded by the trade unions and many unions are solvent only because of their claims management activities?
Quite frankly, I will leave the last part of the hon. Gentleman’s comments for my hon. Friends to dismiss appropriately.
The exemption will apply to independent trade unions on the certification officer’s list. If the hon. Gentleman thinks that such trade unions are not already subject to a form of regulation, he misunderstands some of the legislation that the Conservative Government put in place. Trade unions that are not classified as independent will need to seek authorisation, as will those that provide regulated claims management services to non-members.
The Secretary of State will be able to attach conditions to an exemption. We will draw up a code of practice with the trade union movement that will provide a benchmark by which trade unions’ provision of claims management services can be judged. The Secretary of State, as the regulator, will take into account evidence of any breach of that code when considering whether to remove the exemption of trade unions.
I wholeheartedly welcome part 2 of the Bill, unlike part 1. As a former trade union solicitor, I think that the trade union schemes are important, especially owing to the way in which test cases can be financed through unions’ legal systems. The last big case that I did before I was elected to the House was against the former Home Secretary, the right hon. and learned Member for Folkestone and Hythe (Mr. Howard). It was supported by a consortium of 11 trade unions and led to the end of attempted reforms to the criminal injuries compensation scheme, which would have cost the victims of criminal injuries a sum in the region of £150 million.
My hon. Friend makes his point well.
I should tell the hon. Member for North-East Hertfordshire (Mr. Heald) that I know from the numerous discussions that I have had with trade unions that they generally do not charge for their services when acting on behalf of their members. We have already condemned the practice of organisations that abuse the system and would thus be caught by the Bill.
The new framework for legal services regulation will provide a suitable opportunity to review the effectiveness of the arrangements. For firms falling within the scope of the regulator, we need to make sure that the regulation can be enforced effectively. The regulator will thus have the power to investigate breaches of the rules and the code of practice. He will be able to require the provision of documents and to obtain a warrant to enter and search premises. The regulator will also be able to impose sanctions, including suspension and withdrawal of authorisation.
Does my hon. Friend agree that the hon. Member for North-East Hertfordshire (Mr. Heald) was actually correct when he said that trade unions are not covered in this area at present? However, they will be covered when the Bill is passed because the vast majority of trade unions, given their high standards, will be able to meet the code of conduct that she is outlining, whereas the rogue elements, such as the UDM and others, will fall foul of it. Does she further agree that trade unions do not charge for their legal services at the moment because, since we have had conditional fee agreements, money that comes to the union, which allows it to fight the test cases, is brought back as a success fee from the other side?
My hon. Friend is absolutely right. Labour Members understand the role of trade unions in looking after the interests of their members, although, in fairness, we should not expect a Conservative spokesman to do so. We will draw up a separate code of practice for trade unions under the exemption through consultation and discussion with the TUC. I am sure that all trade unions that wish to be part of the system and to look after their members’ best interests will abide by the code of practice.
I thank my hon. Friend for giving way, as she has done many times. Will the code of practice reflect the amount of work that is done between trade unions and the voluntary sector—there is a cross-over every single day? I represent a Scottish mining area and, indeed, am a member of the National Union of Mineworkers. In my office, it is common practice to discuss every single day with the voluntary sector and citizens advice bureaux how we can get best practice in the area. That should be recognised in the code.
My hon. Friend makes a good point. It is not surprising that Labour Members know and understand that vulnerable people, whether they are members of trade unions or individuals who go to citizens advice bureaux, need expert legal help. Trade unions, citizens advice bureaux and other organisations are freely available to give such help. We should commend them for doing that, rather than suggesting that they do so for their own profit.
Let me return to the regulation. If people carry on providing claims management services regardless of the regulation, the regulator will be able to apply for an injunction to prevent them from continuing to provide claims management services while he investigates and gathers evidence to proceed with a prosecution. If necessary, he can also request a warrant to enter and search premises. Anyone who is found guilty of the offence could face a term of up to two years’ imprisonment, a fine, or both. I think that I can say to the House that the cowboys’ days are numbered.
We would all support the end of cowboy practices in the sector. However, it is important to companies such as the National Accident Helpline, which is in my constituency, that the Bill create as level a playing field as possible. Given the good reputation of trade unions that has been mentioned by Labour Members, should not the burden of proof be the other way round? Should not the Bill cover everyone? If trade unions and others have a good reputation, they could then prove why they should be exempt.
The very fact that we are having this discussion demonstrates that the trade unions, voluntary organisations, the Law Society and other bodies with different forms of regulation have shown that the exemption is an appropriate way of proceeding. I repeat for the hon. Gentleman’s benefit that anyone who is given an exemption, but breaches the code of practice, could be brought back into the regulatory framework. The beauty of the Bill is that it is sufficiently flexible to allow that to happen. The comments of Labour Members show that trade unions are doing excellent work in the vast majority of cases. We can have every confidence that that will continue under the exempted procedure.
The framework provides flexibility to respond to a changing market. It is proportionate and closes the regulatory gap, and it will provide similar regulatory requirements for claims farmers and solicitors. It will also send out a powerful message to those who attempt to evade regulation.
I sense that my hon. Friend is drawing her remarks to a close. Before she concludes, can she tell us anything about mesothelioma and the recent case in the House of Lords? As she is aware, there is a substantial desire—certainly among Labour Members—to return the law to where it stood before the recent judgment. Is the Bill a suitable vehicle for doing that, and will the Government bring forward proposals so that the House can vote either to uphold the law as it is at present, or to put it back to what it was before? The House should make the final decision.
My right hon. Friend makes an important point about a tragic, serious case. He knows that the Secretary of State and I have a great deal of sympathy with the concerns that he and others have expressed about the judgment in Barker v. Corus and that we are very sympathetic to the claimants. The judgment gives rise to a number of serious and complex issues, and it is important that we get the answer right. I know that several of my hon. Friends have had discussions not only with the Secretary of State but with the Prime Minister himself, and the Prime Minister said yesterday that we are looking carefully at the context of this Bill.
We hope to be in a position to make an announcement shortly. I would be happy if it were possible for something to be done through the Bill, but it may not be the appropriate vehicle—we have people considering the matter carefully. I can assure my right hon. Friend that the Government are committed to doing all that we can to ensure that the victims in these cases are properly looked after. I will ensure that discussions on the issues continue and that we come to a conclusion as swiftly as possible.
I am grateful to the Minister for those helpful points. During her discussion and investigation will she look at another asbestos-related issue—pleural plaque? A large number of cases are currently stayed, awaiting a House of Lords judgment, after 20 years of paying compensation for pleural plaque. This, too, is an issue that deserves attention.
I know of the work that my hon. Friend has done on this matter. He has been assiduous in raising the issue with me and with others. I do not know whether it is appropriate to include that in our discussions on mesothelioma, but I hear what he says and we will certainly consider the matter.
The Minister has been extremely generous with her time, and I was reluctant to intervene, except that she has made a very important announcement: the decision that the Department for Constitutional Affairs will regulate the claims management industry. Given what she said about how that will fit with the legal services reforms planned by her Department, will she be a little clearer about the timeframe she envisages for the introduction of the regulatory framework? Given the mood of the House, does she agree that if in the meantime the unregulated claims management industry is to continue, there is a great deal more that the Law Society could and should do, through its code of conduct, to influence its members’ choice of who to work with in managing claims?
It is not for me to second-guess the discussions of the business managers in the House about how the Bill will progress, but I think that it is our intention to have the regulations, which hon. Members will want to look at, ready by October. There will then be a transitional period during which applications will be made to the regulator, who will consider them. We hope to have the system fully operating by April 2007. I accept the hon. Gentleman’s point about the Law Society, and indeed others who already have a regulatory framework in place. They should now be looking to ensure that they take a more proactive stance on these matters. I should say that the Law Society is already taking a number of firms, particularly those involved in the coal compensation scheme, to its disciplinary tribunal. It is aware that the House takes a firm view on these matters.
Returning to mesothelioma, I had a very sympathetic response from the Prime Minister at Question Time yesterday, and I appreciate the Minister’s remarks. I note that the Bill’s long title talks about specifying
“certain factors that may be taken into account by a court determining a claim in negligence”
and that Lord Rodgers in his strong dissenting judgment identified precisely the factor that was wrong in the Lords judgment in making liabilities several rather than joint and several, so I would have thought that it was perfectly possible to amend the Bill. Will the Minister let us know sufficiently early how the Government intend to proceed so that Members may decide whether we want to table amendments, if appropriate?
I take my hon. Friend’s point. I know that counsel and others are looking at the decision and, as I said, if there was any way to include the matter in this Bill I would be very happy to do so. However we deal with the issue, what is paramount for the victims of mesothelioma is that we get it right. I will try to make sure that hon. Members have the advice that I am given in sufficient time for them to raise it, if they wish, later in the proceedings on the Bill.
On the timetable, the Government have a unique agreement with a claims handler, Vendside Ltd, signed in January 1999, plus two separate agreements with the UDM. Should the Bill receive its Second Reading, will the Government ensure that action is immediately taken to build consumer rights into the agreement with Vendside, which can be defined in law only as a claims handler? After all, the Government, as a signatory to that agreement, have property rights over it.
My hon. Friend makes a very important point. As someone who advocates the rights of the consumer and says that we need to put the consumer at the heart of legal services, I will certainly look at the issue he raised to ensure that we, too, are compliant with the principle that I have outlined today and on a number of other occasions.
I am grateful to my hon. Friend; she has been very generous. On mesothelioma, we have heard a shopping list that includes Barker v. Corus and pleural plaque. There is a third injustice: the impact of the Crown Proceedings (Armed Forces) Act 1987, which excludes liability claims for those who were exposed to asbestos prior to 1987 but whose symptoms emerged many years later. Will my hon. Friend look at that Act sympathetically to see whether those who were exposed to asbestos many years ago—perhaps during military service or during civilian work for the Army or, as is more likely, the Navy—may be able to bring claims if their symptoms arose after 1987?
We want to look at mesothelioma cases in the round. That is why I have been unable to go as far as I might like today—we must make sure that we get this right. We do not want to discover that we have left loopholes. I take my hon. Friend’s point, and I am sure that it will be considered during that discussion.
We have worked constructively with the Opposition in the other place and amendments have been made as a result. We have already published a policy statement that outlines how we intend to use the delegated powers in the Bill, and model rules that will provide an indication of the standards that are likely to be applied to organised persons. Copies of both documents are in the Library. We will be consulting on draft statutory instruments later this month while the Bill is before the House. I will ensure that copies are available to right hon. and hon. Members as soon as possible.
We have undertaken targeted consultation on our proposals to regulate claims management companies and there has been widespread support from key organisations, including Citizens Advice, which has said that it is delighted with the Bill’s tough but flexible approach to protecting consumers.
The Secretary of State’s consumer panel on legal services reform has had its remit extended to advise on the development of the regulation. The panel was set up originally to ensure that wider reforms of the legal services market were focused on the interests of consumers. It, too, is fully behind the Bill, with the wider agenda of putting the consumer at the centre of the system.
As I have said, there are many reputable claims companies, but there are also cowboys. They need to know that we will not stand for shoddy service and poor advice. Consumers deserve better than that. Through the Bill they will get a better service. I commend the measure to the House.
We are all grateful to the Minister for setting out the details of the Bill and it aims. It was the subject of considerable scrutiny in the other place, and I pay tribute to Lord Hunt of Wirral, who made some important improvements to it through his constructive approach. I believe that his research team, under Andrew Parker, has done a great deal of work to help with the process.
We welcome the Bill because we recognise the need to tackle the perception of a compensation culture. It is perhaps more a perception than a reality, but it is, none the less, having an important effect, and the problem of risk aversion should not be understated.
It is important that the Government are issuing guidance to public bodies on what constitutes negligence. I disagree with the hon. Member for Hendon (Mr. Dismore)—he and I, as lawyers, understand these concepts. To educate people, particularly those in public bodies who want to run school trips and the like, is a sensible thing to do. The hon. Gentleman may wish to know that the Association of Personal Injury Lawyers—APIL—has advocated such education. I would have thought that the hon. Gentleman supported that.
The hon. Gentleman is right to support me in saying that we need education, but wrong to say that we do not need clause 1. It has a declaratory effect so that people know what the law is, and know that it is set out in statute. I cannot imagine why the hon. Gentleman is trying to nitpick over the wording of the clause when it has been made clear from the outset that its purpose is to declare what the existing law is, and to spread that knowledge more widely. To read the clause as though it is supposed to be a complete codification of the law, or anything of that sort, is a complete mistake.
As the Lord Chief Justice said, we cannot encapsulate the common law in one sentence. I can only assume that the hon. Gentleman has not read the entirety of Lord Hoffmann’s judgment on the Tomlinson v. Congleton borough council case. Lord Hoffmann makes it clear that discussions on what is now called “desirable activities” should not apply where there is no genuine informed choice, such as in the case of employees. There is no exclusion within clause 1 to reflect the important qualification that Lord Hoffmann applied to it. Therefore, it does not accurately represent the law.
The hon. Gentleman is at cross purposes with me on this matter. Is he seriously saying that we should make Lord Hoffmann’s speech in the Tomlinson case clause 1? If so, I cannot agree with him. Clause 1 is supposed to be a clear statement of an aspect of the law that needs to be declared so that people can go on school trips, enjoy their scout outings and the like. We do not need to try to second-guess the judges in the way that the hon. Gentleman is suggesting. The idea that a judge is not able to decide on and explain a “desirable activity” is preposterous.
It explains to that person exactly what the law is, excluding the common misconceptions that might have been encountered as a result of the perception of a compensation culture, which the right hon. Gentleman’s Committee analysed in a helpful way for us all.
As for the Tomlinson case, the plain fact is that the lower courts have not responded in the way that the House of Lords expected. I shall be setting out in some detail later this afternoon a case in a court in Manchester that was heard during the Bill’s proceedings in the House of Lords, which illustrates the point.
There might be cases that have been decided and have received a good deal of public attention, which should have been appealed and were not. APIL has made that very point. I am interested to see the hon. Member for Hendon (Mr. Dismore) nodding.
Having accepted the point that my hon. Friend the Member for Canterbury (Mr. Brazier) makes—we will all be keen to hear what he has to say because he has led the campaign in the House for a clear statement of the law in statute, and I congratulate him on that—we, like the Government want to see the balance struck correctly. That should ensure that people are properly compensated in genuine cases of negligence. However, we need to discourage a culture in which people are encouraged to pursue trivial or spurious claims in the belief that that will make them a great deal of money, either through awards by the courts or under out-of-court settlements.
We believe some parts of the Bill could benefit from greater clarity. I will table amendments to clause 1. I hope that we can proceed on a basis of consensus to try to produce a Bill that has overwhelming support in the House.
My view is that the courts are capable of deciding what is or is not a “desirable activity”. The expression comes from the very judgment to which the hon. Member for Hendon referred. The use of certain words in clause 1, including “particular” in several places, needs examining further. I shall table amendments on that point.
The hon. Gentleman will be aware that there has been considerable consultation with many voluntary organisations that regard clause 1 as materially beneficial to them. Does he agree that in Committee we need to examine in great detail the question that he has raised, in addition to other questions of definition that have been bouncing around the Chamber? As we all agree with what we are trying to achieve, the crucial question is whether a measurable difference will be made to the organisations for which the Bill has primarily been tabled. I hope that the hon. Gentleman feels that we can find consensus on that.
The hon. Gentleman has said that he, on behalf of the Opposition, is looking constructively to improve the Bill. In that sense he accepts the general spirit of what the Bill is designed to achieve. We have debated mesothelioma, and it is difficult for people to accept the Barker judgment. What is the Opposition’s position—will they support the Bill if an amendment is tabled to reverse that judgment? Do the hon. Gentleman’s colleagues in the House of Lords share that position?
Order. Before the hon. Member for North-East Hertfordshire (Mr. Heald) responds, I should say that we are in danger of reaching a stage where the Bill will not need to go into Committee. I appreciate that this is a detailed matter, but I should be grateful if he were not drawn away from the basic content of the Bill, and did not express a view on what it might include.
The Bill tries to deal with the way in which the law of negligence operates, as the hon. Member for Manchester, Central (Tony Lloyd) suggested in the case of mesothelioma. Mesothelioma cases should be dealt with rapidly, preferably out of court because, given the terminal nature of the condition, people with a diagnosis have only a short time—often, only 12 to 18 months—in which to act. A speedy out-of-court scheme is the best way forward. Many victims of mesothelioma cannot make a claim, because they do not know who was their former employer’s insurer. I am happy to hold discussions on Barker with the Minister once she has received legal advice but, in addition, we must try to improve the tracing service so that more people can make a claim. On the question of who pays, it is the people who did wrong in the first place and their insurers who should do so.
I accept that it is important to provide a simple, workable procedure, but one of the problems with Barker is that people have evaded their responsibilities—[Interruption.] Well, we must try to find ways of making insurance companies trace their records. Better insurance companies already do so, but we must encourage others to take action, too. We are keen to enter into constructive discussions with the Government on the Barker judgment once they have received advice, but more needs to be done.
The hon. Gentleman has got the facts wrong. The main liability does not fall on the insurers but on the Government, as claims are made against the Ministry of Defence, schools and so on. There is therefore a case for Government, insurers, and companies that cannot trace previous insurers to come together in a simple scheme. This is an urgent problem, because of the speed with which the condition progresses, but it will be with us for a very long time indeed. Most estimates suggest that mesothelioma cases will peak in 2020, which is a long way away so, for the future, it is important to introduce a simple system that works. I hope that the Government can act as an honest broker, but we should also bear in mind the fact that they have an interest, too. As I said, however, we are prepared to take a constructive approach.
In addition to the Constitutional Affairs Committee, which produced an excellent report, may I thank the Better Regulation Executive, which has served us well by publishing a very good report, “Better Routes to Redress”? That report cited a survey of 212 councils in England and Wales carried out by Zurich Municipal and the Local Government Association, in which 85 per cent. of respondents agreed that the
“introduction of conditional fee arrangements has increased the annual cost to my authority of handling compensation claims”.
In addition to the abolition of legal aid for personal injury cases, the growth of claims management companies has fuelled the development of a compensation culture. The Constitutional Affairs Committee concluded that introduction of conditional fee arrangements and a class of unregulated intermediaries acting as claims managers have
“adversely affected the reputation of legal services providers. The increased awareness of the public that it is possible to sue without personal financial risk, when combined with media attention to… unmeritorious claims being brought, has contributed to a widely held opinion that we do indeed have a compensation culture”.
My hon. Friend the Member for Canterbury (Mr. Brazier) and other hon. Members have cited many such cases, and I should like to make special mention of the examples provided by the scouts and the Field Studies Council. We have all seen headlines in the newspapers: a teacher won £55,000 after slipping on a chip at school; a boy received £4,000 after falling 1 ft from a tree; and a council tenant who had drunk 10 pints fell in the middle of the night as he tried to change a light bulb. I am sure that the hon. Member for Hendon would say that those are meritorious claims, but they give rise to questions, and they are certainly food and drink to the tabloid newspaper industry.
I am loth to accept tabloids as a guide to what is happening in the law courts, because they rarely reported accurately the cases in which I have been involved. The most famous example is the McDonald’s coffee case, which was successful because, despite numerous warnings, McDonald’s super-heated its coffee to such a high temperature that the individual who brought the case suffered third-degree burns. Those facts were not reported properly or fully.
What people think is important, too. In “The Man Who Shot Liberty Valance”, it was said once a fact becomes myth in the west it is the myth that is printed. There is a perception that there is a compensation culture, and we cannot ignore that perception. I do not agree that we should ignore educational leaflets.
The hon. Gentleman began by accepting that in reality there was not such a problem, as the number of claims has fallen. Those of us who have doubts about clause 1 want to know how passing a law will solve a problem that relates to perception, not reality.
I know that this is not popular in the Cambridge law faculty, but we can deal with the problem by accepting a clause that declares what the law is and advertising widely what its effect will be. According to the Better Regulation Executive, tort costs in the UK, as the hon. Gentleman said, are low compared with those in other countries. The Law Society, the Country Land and Business Association and others say:
“The fact is, Britain spends less on compensation than almost any other industrialised country…the number of accident claims had remained static and in fact fell last year” .
It is not inconsistent on the one hand to accept the fact that there is not a general compensation culture, and on the other, to argue that the attitudes of the lower courts towards sport and adventure training is deeply damaging. In the USA, there are five times as many compensation claims as there are in the UK, but most American states have a provision that protects sport and adventure training from the ordinary standard of negligence in court cases.
My hon. Friend speaks about risk aversion in the context of civil negligence claims. He will know that those of us who worry about clause 1 are concerned that it does not contain any provision affecting criminal prosecution by the Health and Safety Executive. Many of those who are risk averse are worried about the HSE taking criminal action against them. Does my hon. Friend agree that that should be dealt with in clause 1?
The matter needs to be reviewed but, given that the Bill deals with the civil aspects of compensation, I am not convinced that clause 1 is the place to do so. My hon. Friend raises an important point, which needs to be fully considered and reviewed. It would be interesting to hear from the Minister, perhaps later, whether the Government intend to do that.
When I was speaking to Norwich Union earlier this week, its representative explained to me that the current common law is clear and well established, and that Norwich Union questions whether new legislation on negligence is necessary. That was also the view of the Constitutional Affairs Committee, but we do not go that far. We believe that there is a case for clause 1, and that it is important to get the wording right. We have some comments to make about that in due course. As my noble Friend Lord Hunt made clear in the other place, the courts will have to build up their case law on the basis of the Bill if it is passed. I agree with the Minister that that is unlikely to create the huge difficulties that some claim.
Clause 2 recognises my noble Friend’s wish to support rehabilitation and early settlement of claims. The clause is one of his attempts to establish that if at an early stage an insurance company or an employer makes an apology and offers treatment, remedial works or whatever is necessary, that should not prejudice any later legal action.
My noble Friend achieved an important change in the law that will help to encourage mediation, boost rehabilitation and hopefully prevent cases from coming before the courts except where absolutely necessary. Citizens Advice and the Association of British Insurers are keen that such proposals should be pursued, as am I. We are pleased that in the other place the Under-Secretary of State said that she would not argue further about clause 2. I hope that the Minister will give us an assurance that she does not intend to remove or substantially amend it in this place.
One aspect that we intend to pursue is personal responsibility. It is an important issue and we shall press the Government to define the responsibilities of individuals and to consider whether in certain circumstances that might provide a defence of individual negligence. The matter has been considered in other jurisdictions. There is a problem for those who run leisure parks and other institutions where there is an element of risk. If someone is grossly irresponsible and negligent, it should be possible to defend a claim on that basis.
The Minister mentioned the case of Barker v. Corus, and I have set out our views and our constructive approach on that.
Have the Government any plans to deal with a problem pointed out by Citizens Advice? In hospitals the advertising of claims management services and legal services seems rather inappropriate. When the Minister reflects on the regulation of claims management companies, will she consider whether advertising is an aspect that needs proper attention?
Although we agree that regulation is long overdue, we believe, as I said earlier, that the trade unions need to be considered. I pay tribute to the work of many trade unions. I have worked as a volunteer in advice centres and undertaken cases for trade unions, and many of them provide an excellent service in the area of personal injury and employment law. However, if solicitors and all the other groups are to be regulated, is it possible to exempt the trade unions, which would be completely unregulated in this area?
It is mentioned that the Union of Democratic Mineworkers has had its problems, but that it is not the only trade union that has been criticised for making money out of referrals of this sort. It is said that many trade unions are solvent only because of this area of their activities. I notice that the right hon. Member for Newcastle upon Tyne, East and Wallsend (Mr. Brown) seems to agree with me.
I do not want to get into a long argument on that. I have had a good go on it. It is certainly said by me, and if the hon. Gentleman disagrees, he can take it up with me some other time.
The Government suggest that the regulator should be the Lord Chancellor, but that is not adequate. People expect a regulator who will deal with organisations in the financial and insurance sector. Surely it is not beyond the Minister to persuade one of the economic regulators to take on the role. It would be better if the Office of Fair Trading or the Financial Services Authority could be persuaded. We agree that the Claims Standards Council is not the answer. We want a proper regulator with an established reputation who can put a little fear into those who have been running those businesses in a way that has not been ideal.
The question remains whether the proposed regulation is adequate. Our view at this stage is that it does not seem to be. On the breadth of regulation, will the Minister ensure that regulation does not interfere with legitimate practices, such as insurers offering treatment or vehicle repairs to insured third parties at an early stage? If that is to be regulated or even prohibited, as is suggested, that would interfere with the agenda of trying to encourage early settlement and rehabilitation.
We will want to explore these many matters in Committee. In general, we welcome the Bill. It is not perfect in every respect. It provides us with an opportunity to tackle the perception of a compensation culture, to ensure that some common sense and proportion are injected into compensation cases, and to ensure that unscrupulous claims management companies are unable to exploit the vulnerable. The Bill has our support this afternoon.
I begin by congratulating my hon. Friend the Minister on her introduction to the Bill. One of the great pleasures of being in this place is to be able to follow an expert speaker speaking with knowledge on a specialist subject. Unfortunately, one does not always get the opportunity to do that, and on this occasion I do not. The knowledge of the hon. Member for North-East Hertfordshire (Mr. Heald) about the way in which trade union legal services work does not show hands-on experience. He seemed a little hazy about the real issue involved in the mesothelioma cases as well, although my hon. Friend the Member for Barnsley, West and Penistone (Mr. Clapham) tried to put him right about that.
I shall confine my remarks to part 2, which deals with claims management services. It is the Government’s intention, as my hon. Friend announced today, that the Secretary of State would be the regulator. That is, I think, intended only as a temporary expedient, and the Government’s long-term intention is that the mechanisms that form part of the new regulatory framework for legal services will encompass these arrangements as well. The Minister will correct me if I have got that wrong, but it seems to be the perfectly sensible direction in which we are heading.
I want to deal with three aspects: regulation in controversial areas, which essentially means personal injury cases; trade unions, which I know something about; and the mesothelioma situation. I should declare my interest as a member of the GMB trade union. I was an official of the union before I was elected to Parliament, I maintain close connections with it, and I am proud of my long-standing relationship with it.
Conservative Members have made much of the need to regulate unions, but the Minister made it clear that there will be a code of practice, and that if unions breach it they will lose their exemptions. In other words, if a union behaves like a claims farmer, it will be treated as such. As a Labour Member, I think that that is absolutely right, and I am pretty certain that my right hon. and hon. Friends agree with me.
The hon. Gentleman is correct to say that organisations that refer cases to solicitors are regulated by the Bill, and so they should be. The relationship between a trade union and its individual members is based on the rule book, which is itself a contract. The primary reason for joining a trade union is not to get access to its legal services; people join for a whole range of reasons, which are primarily concerned with work and bargaining between the employer and the employees collectively. Alongside that negotiating relationship, trade unions offer a range of services, one of which is the provision of free legal services at the time of need. It is a very different kind of organisation from the claims farmers that we are seeking to regulate, which go out to find whether there is a cause for action, and then, if there is something that can plausibly be made something of, pass it on to a solicitor. They are claims farmers, and should be regulated as such.
My right hon. Friend is right to say that no Labour Member would want any union to operate as a claims farmer without being treated as one. Will he confirm that far from trade unions not being regulated, there is a whole host of legislation that determines how they can deal with their members, gives remedy to members when they are in dispute with their union, and so on? In fact, the Conservative Government brought in quite a lot of that legislation, which this Government have not changed.
I am reasonably certain that the hon. Member for North-East Hertfordshire was more enthusiastic about that legislation than I was. One cannot escape the fact that trade unions are highly regulated. They are governed by specific laws, and there is a specific certification officer.
Professional people are deemed to be regulated by their own professional organisations. The hon. Member for North-East Hertfordshire announced proudly that he is a lawyer. Lawyers are regulated by the Law Society. It is worth pausing to consider how well it does that. To help us, we have the report from the legal services ombudsman for England and Wales—incidentally, there is no analogous report about the TUC—in which she examines how well the Law Society has done as a regulator of the legal profession in the most controversial area that we are discussing: the miners’ compensation cases.
I do not have time to read out the whole document, but let me read some of the key findings. The ombudsman states:
“It became clear to me during my investigations that the Law Society had not put into practice their stated approach for dealing with these cases”—
that is, the miners’ compensation cases. She found that the Law Society had
“failed to obtain solicitors’ files or to ask them to provide relevant papers.”
“failed to take account of the individual circumstances of each case…failed to adopt a neutral stance when seeking to conciliate the complaint”—
“failed to put their conciliation proposals in writing to the miners’ authorised representatives”.
What makes this a lot worse, from my point of view, is that those authorised representatives include Members of Parliament. To behave in a high-handed way towards Members of Parliament in respect of individual cases is completely and utterly unacceptable to me, and I think that I speak for a great many Members when I say so.
The ombudsman goes on to say that the Law Society
“failed to consider whether solicitors should pay back in full the fees wrongly deducted from miners’ compensation settlements, and, in addition, compensate miners for any inadequate professional services identified.”
“failed to examine a possible over-payment of the fee to the claims-handling agent…failed to examine the respective roles of solicitors and of the claims-handling agents in the processing of individual compensation claims and failed to examine the question of what advice, if any, solicitors had offered complainants about the claims-handling agents’ fees…failed to examine the relationship between solicitors and the claims-handling agents or to consider whether the relationship had resulted in a conflict of interest between their clients, the claims-handling agents and individual miners, or a conflict between the solicitors’ own interests and those of their clients”—
“failed to consider whether solicitors may have acted in breach of the Solicitors’ Practice Rules…and in breach of the Solicitors’ Introduction and Referral Code”.
“In all the Law Society failed to properly investigate the miners’ complaints.”
The ombudsman gives a list of recommendations and says:
“As part of the reconsiderations the Law Society itself should consider paying compensation to the miners whose cases have been inadequately investigated by them.”
That is pretty damning stuff. I am sorry to have read out all the failures, but there are a lot of them. Although the Government are right not to want to regulate twice over—we want only one regulator; I do not quarrel with that approach—the regulation must be properly done. It is clear that in this case it was very inadequately done. It is not for me to set out what the reasons are, but it is for me to assert that it has to be put right. That means that miners must get the justice due to them, and that the lawyers who have taken money that they should not have taken must give it back. We as a House should assert that as a principle, and we look to the Minister to do whatever she can through the powers that her office has to ensure that matters are put right as quickly as possible.
My right hon. Friend is talking about the ombudsman for England and Wales. Will he encourage the Minister to have discussions with her opposite number in Scotland to ensure that the legal system in Scotland, too, applies to miners in their just cases?
The right hon. Gentleman is right to say that there have been scandals about the way in which solicitors and claims farmers have behaved—and, as we heard from the right hon. Member for Berwick-upon-Tweed (Mr. Beith), the way in which some unions have behaved. The Government are introducing independent regulation for solicitors and claims handlers, but what is happening to the trade unions?
Nothing. The relationship is different. Trade unions must adhere to the code of practice that the Minister mentioned. If they do not, and behave like claims handlers, they will be treated as such, as they should be. I should have thought that the hon. Gentleman and I could agree on that.
Order. We cannot have interventions from a sedentary position, and I have a feeling that this argument is becoming somewhat circular.
Those are my thoughts precisely, Mr. Deputy Speaker. However, I would like to say a little about where the unions stand on the issue. Most unions do not behave in the reprehensible way described so effectively in that report. In most unions there is a rule-book relationship between the union member and the union as an institution. Legal assistance is available when members want it, not specifically when members have just joined the union. According to the Trades Union Congress, some 64,000 new personal injury cases were taken up on behalf of their members last year by TUC affiliates. It is important for us to do nothing to impinge on that relationship, and the enormous strengths that would not be there if there was a different structure. I know from my experience before I came to the House that trade unions can proceed with cases in difficult areas that become test cases, or vanguard cases. No individual solicitor acting for an individual claimant would have the resources to take on such ground-breaking cases.
I have been involved in settlements relating to industrial deafness and vibration white finger. There have been advances that are largely due to individual unions taking up test cases and funding class actions. I was a young official at the GMB when John Edmonds was the national industrial officer for the electricity industry. He went on to become general secretary of the GMB. We made an agreement with the nuclear industry to try to secure compensation for victims of radiation in the industry, given the possibility of their developing leukaemia. That agreement, gained partly through the law and partly through negotiation, has not yet been superseded in the courts. It has stood the test of time for 30 years. That illustrates the value to working people in difficult, even terrible, circumstances of membership of a trade union that can handle the law astutely and well, and has the financial resources to bring an action much too big for any individual claimant to afford. On the back of successes in the courts, the union was able to use its industrial muscle to negotiate a good, enduring agreement with the employers for people who did not deserve to be victims of the industrial injuries that they had suffered.
That brings me to mesothelioma, which, as most Members will know, is a horrible condition. There is no known cure, although there are palliatives. Alimta, a new drug, helps in some cases, but provides only remission. It does not reverse the condition, although it provides some comfort. Dying of mesothelioma is a horrible way to die, made all the more horrible when people see the sufferings of their loved ones as they go. I believe that we as a Parliament should stand in the victims’ corner, but in any event we should be able to vote on how cases are handled in the courts. It is a question of whether it is possible to join all the potential employers to the action and have the damages assigned proportionately, which used to be the arrangement, or whether it is necessary to identify the specific employer who caused the injury, which is what the new judgment means. It represents a substantial setback for a number of such cases.
The condition takes time to develop. We are talking about working conditions that prevailed in the past, notably in heavy industries such as mining, shipbuilding, heavy engineering, the railways and the merchant marine service. The condition might develop in any area where asbestos was used, perhaps sprayed, as a fire retardant, or a construction material. Those cases are emerging now, and there is nothing that we can do to stop the process. The hon. Member for North-East Hertfordshire was right to say that the number of cases would peak quite some way into the future.
Working practices in industry in those days meant that people would go to one job and carry out a task, and might then perform a similar task on a different project, perhaps for a different employer. It is difficult to identify the employer for whom a person was working at the precise point when he inhaled a specific fibre—not one that was too big to inhale, and not one that was so small that it was exhaled, but one that was just the right size to lodge in the lung and cause pleural plaque and eventually mesothelioma.
I am sorry, but I cannot. I am running out of time.
My plea to the House, and to the Government in particular, is for us to be allowed a vote at some stage on whether to return the position to where it was before, or to confirm the new judgment of the House of Lords. I for one would vote for the former, but there is a whole separate set of issues relating to pleural plaque and whether it constitutes an injury. I think that my hon. Friend the Member for Sherwood (Paddy Tipping) was absolutely right to raise the issue, and I agree with him, but the matter is still before the House of Lords and it is probably right for a decision to be made there before we reach our own decision.
It is a pleasure to follow the right hon. Member for Newcastle upon Tyne, East and Wallsend (Mr. Brown). Let me deal first with his central point, because it concerns what could be described as a ring-fence issue. If it is possible for mesothelioma to be dealt with in the Bill, my colleagues and I would welcome that and would assist the Government. My honest assessment is that it will not be easily done, but I am sure there is consensus in the House that it is right and proper for us to move as quickly as possible, given the horror, pain, grief, suffering and uncertainty involved, to ensure that the legal position is adjusted and, if possible, redress is provided at the earliest stage. However, we may have to adopt the process suggested by the right hon. Gentleman rather than trying to amend the Bill.
I am grateful to the hon. Gentleman for his clear statement of the Liberal Democrats’ position. Disappointingly, the hon. Member for North-East Hertfordshire (Mr. Heald) delivered a “maybe” rather than an assurance that the official Opposition would support a change in the legislation.
The official Opposition must answer for themselves, but the hon. Gentleman has our assurance that our colleagues—notably my right hon. Friend the Member for Berwick-upon-Tweed (Mr. Beith), who has constituency experience and practical knowledge—are committed to speedy progress. If that cannot be achieved here, as I suspect it cannot for drafting and other procedural reasons, I hope that it can be achieved soon. I hope that the position will be clear by the time of the Queen’s Speech in the autumn at the latest, but we may be able to move before then. In any event, we offer our co-operation.
There is another reason for the matter to be dealt with urgently. The Barker case did not end the story. The Barker decision remitted the case to the High Court for a decision on how risk should be assessed between the different parties, presenting an opportunity for a further chain of appeals leading to the House of Lords yet again. It could be many years before we see a resolution of the issue in the courts.
I understand that, which is why I think that we should cut the knot. The matter is before the courts, but there is no reason why we cannot intervene. The situation is paradoxical. We are having a substantial debate about whether a Bill states what the law is or what we think it ought to be in the cases of people who have suffered. Whatever the law is, I believe that Parliament is at liberty, indeed has a duty, to decide what should happen, because there are people outside—constituents and their families—who are waiting for us to do that.
Having heard the earlier exchanges, I suppose that I should make a declaration, although it is not a formal declaration. On the edge of my constituency is the headquarters of the Health and Safety Executive. I have an interest in looking after the interests of the HSE, but it did not lobby me before the debate. Having said that, I shall probably need to talk to it about the Bill fairly soon.
I want to make a couple of general points about the context of the Bill. I am grateful for having been given the opportunity to talk through with the Minister the Government’s approach when she took up her responsibilities and I took up mine. Although the Bill is small, it deals with what a lot of people consider to be big issues—issues that arise all the time. This is real politics that matters in the real world. I did not previously know the figures, but there appears to be no dispute that we are talking about a business that is worth £10 billion a year: in other words, 1 per cent. of our gross domestic product is circulating in the compensation industry.
There are two serious flaws in the current system. First, the various accidents and injuries that occur—collisions, incidents in the park, incidents on trips with scouts or guides—total some £2 billion a year in claimants’ legal costs. Much worse—this figure astounded me, but I have not seen it contradicted—more than 90p in the pound of the money that one gets back in damages is spent on costs. [Interruption.] My hon. Friend the Member for Cambridge (David Howarth) says that that is not right, but even if that figure is too high, this is still a significant issue. Pursuing what is a legal entitlement in civil law to appropriate compensation is often a hugely expensive exercise. So there are many issues to resolve and much work to do on the question of gaining access to justice in the civil world in a fair society.
Does the hon. Gentleman accept that this is an issue in coalfield communities and for textile workers? For example, women textile workers with conditional fees arrangements backed by a loan often end up owing more than the award that is made. So in that respect, he is quite right.
I represent people who worked in the docks and who lived in the old dock-worker community—although perhaps not to the same degree as other Members—for whom the same issues arose. There were significant knock-on effects.
I want to make two other general points. This debate is not unrelated to the great debates that we have had in this place on incapacity benefit, time off work and so on. Sometimes, even though people are physically able to go back to work, they are advised not to do so because the compensation has not been sorted out and the legal case has not ended. We want a healthy and working society, but we also need to get the balance right between people’s liberties and their duties to each other. There are some significant issues to deal with in that regard.
I was not doing this job when the Bill was launched last autumn, so I checked to see what my predecessor, my hon. Friend the Member for Somerton and Frome (Mr. Heath) said then. The title of the first page of his very brief notes was, “Compensation Bill modest but welcome—Heath.” [Interruption.] That was a description of the Bill, not of him, although he is probably both those things. He went on to say:
“We all agree that there is an urgent need to deal with and regulate no win, no fee ‘claim farmers’, but we need to look very carefully at the issue of duty of care…the idea that this Bill presents a massive set of plans to tackle the compensation culture is a huge oversell.”
To be fair to the Government, I am not sure that they said that the Bill was going to do all that. It clearly is in some ways modest, but it is none the less important.
Given that the Bill started its life in the other place, I checked to see what my noble Friend Lord Goodhart said when he kicked off our comments. The Bill—not least clause 1, to which I shall return—was considered in the other place for quite a long time. On Second Reading, Lord Goodhart said:
“This is undoubtedly a well meaning Bill, but being well meaning is not enough. Part 1, which is clause 1, is at best unnecessary and may well lead to confusion and still more litigation. Part 2 unquestionably has a useful and desirable objective”.—[Official Report, House of Lords, 28 November 2005; Vol. 676, c. 87.]
Following Second Reading, clause 1 alone was debated for some nine hours in Grand Committee, and for two hours on Report.
I join the hon. Member for North-East Hertfordshire (Mr. Heald) in paying tribute to colleagues from all parties—and in particular to the Minister in the Lords with responsibility for the Bill—and to the Conservative and Liberal Democrat Front Benchers, who worked very well together. Lots of amendments, and progress, were made. I also pay tribute to Lord Hunt of the Wirral, who did a lot of good work for the Conservative party. I looked to see what the general collective wisdom was at the end of the debate. Lord Goodhart said:
“Part 2 has now been both changed and improved to an unusual degree”
that is true; much progress was made—
“and it is now a very much better Bill than it was when it was brought forward…As for Part 1, I remain dubious as to whether Clause 1 will do more good than harm. It presents a real risk of causing serious problems. However, I am pleased that the Government have accepted Clause 2…Overall, I welcome the fact that this Bill will now go on to the other place.”—[Official Report, House of Lords, 27 March 2006; Vol. 680, col. 577.]
I could not quite work out whether Lord Goodhart was saying, “Thank goodness we’re not going to be preoccupied with it any more”, or, “There is a lot more work to do, and you guys have got to get on with it.” But anyway, here the Bill is, and we will seek to do just that.
As the Minister said in her introduction, we must deal with the significant issue of new unregulated businesses dropping leaflets through our letterboxes seeking business, unsolicited. As the Government said, it is sensible initially to deal only with what are the most live issues, of which personal injury is obviously the biggest and most important. Housing disrepair is another issue that is raised regularly in our surgeries, and others include employment, criminal injury compensation and the mis-selling of financial services, which is an increasing problem not just in London but elsewhere.
Having been in the House for as long as I have, I take the fairly robust view—I hope that colleagues of similar long service agree—that we need as little legislation as possible, not as much as possible, and that it should be as simple as possible. I approached this Bill on that basis. I also believe that we should regulate as little as possible. We are in great danger of having too much regulation, which is why the Better Regulation Executive exists. Governments understand that we are trying to whittle down the amount of regulation. That said, of course consumers need a degree of protection, and the Bill is about getting that balance right. If we are to have regulation—we Liberal Democrats are persuaded that we should—it should be effective and proportionate and go only as far as is necessary in dealing with the problems that have arisen. At the end of the exercise, the judgment is whether we have got that balance right.
So if we are to have regulation, we clearly need a regulator. Again, I take a fairly simple view. I am absolutely opposed to the idea that every time we see a new problem, we should set up a new regulator and new committees, and new structures and organisations involving new people and new costs. Rather, we should look around to see who else exists who can do the job. I share the Minister’s view, however, that the two potential candidates in the financial services world were not the right ones. I also share her view that the other existing bodies that appeared suitable to do the job were not the right ones, and that it would be better for the regulator to be a member of the family regulating legal and other services.
However, we have to have an interim stage. It might seem slightly bizarre to think of the Lord Chancellor as the regulator of claims farmers, but that job will keep him occupied in his post-Lords-speakership days and justify his saying to the Prime Minister, “I’ve got plenty to do.” It might even justify his salary being kept at the same level. Following that interim stage, we will need to move on. Once the draft Bill on legal services has been enacted, I hope that we will have a single, streamlined and minimalist regulatory system that costs as little as possible and occupies as few people as possible.
The much-heralded progress that everyone applauds is clause 2—I have heard very little criticism of it—which was not in the Bill at its outset. It is very simple, but it deals with a very important issue. We have all been there. I remember stopping suddenly in my vehicle one day—it was an election day—at a set of traffic lights and someone immediately behind me failing to stop. On another election day, exactly the reverse happened. I was looking over my shoulder and by the time that I turned round, the fellow in front had stopped and I had not. One then thinks, “Dare I say sorry?” Dare one apologise when in some cases, it is self-evident that the accident is the fault of the person behind, who has run into the stationary vehicle in front?
As the hon. Gentleman, who also once fought the North Southwark and Bermondsey seat, says, that was exactly the question. The accident happened at The Blue shopping centre, and the person in question was a constituent of mine, so the response was slightly different.
Clause 2 states:
“An apology, an offer of treatment or other redress, shall not of itself amount to an admission of negligence or breach of statutory duty.”
It is very important for a courteous society that we do not say that someone will be liable for all the consequences financially just because they naturally said sorry. That is simple and welcome, and much easier than the great debate on clause 1.
We probably should not have started from here; we should have had a draft Bill, or we should have sent it to a Special Standing Committee where evidence could have been taken. Behind me sits my hon. Friend the Member for Cambridge, whose specialist subject in life is, as he will explain, this bit of the law; we have the best academic advice available. A kind of seminar is going on as to what the law should be.
I agree with the Government’s proposition as set out in the excellent Library research paper that
“we strongly should oppose any culture where people believe that if there is an injury there must inevitably be someone else to blame, and someone else to pay. And we oppose people being encouraged to believe that it is always worth ‘having a go’, however meritless the claim.”
I hope that there is consensus on that.
I hope that there is consensus also on something the Prime Minister said just after the last election; not about his future, but about the future of the Bill. He said:
“The Bill will also clarify the existing common law on negligence to make clear that there is no liability in negligence for untoward incidents that could not be avoided by taking reasonable care or exercising reasonable skill. Simple guidelines should be issued. Compliance should avoid legal action. This will send a strong signal and it will also reduce risk-averse behaviour by providing reassurance to those who may be concerned about possible litigation, such as volunteers, teachers and local authorities.”
All of us who did law know that the most famous such case is probably Donoghue v Stevenson, whose pre-eminent judge in the House of Lords was one of my Welsh secondary school’s great academic old boys, Lord Atkin. The principle that he set out still applies today;
“In English law there must be, and is, some general conception of relations giving rise to a duty of care, of which the particular cases found in the books are but instances…But acts or omissions which any moral code would censure cannot in a practical world be treated so as to give a right to every person injured by them to demand relief.”
The debate has focused on whether the law as set out in that case in 1932 and in the 2004 Tomlinson v Congleton borough council case is sufficient.
In the Tomlinson judgment, Lord Hoffmann and Lord Hobhouse made two simple things clear: first, that people must be allowed to take risks; and, secondly, that the landowner should not be worrying that he has to protect himself against people doing what they want to do on mountainsides and in fields. Lord Hobhouse made an important point about liberty, saying that it should never be
“the policy of the law to require the protection of the foolhardy or reckless few to deprive, or interfere with, the enjoyment by the remainder of society of the liberties and amenities to which they are rightly entitled. Does the law require that all the trees be cut down because some youths may climb them and fall? Does the law require the coastline and other beauty spots to be lined with warning notices?... The pursuit of an unrestrained culture of blame and compensation has many evil consequences one of which is certainly the interference with the liberty of the citizen.”
The test for the blessed clause 1 is whether it adds anything to the current law. I hope that we get a formulation that meets the concerns of the Select Committee chaired by my right hon. Friend the Member for Berwick-upon-Tweed and of those who say that adding “desirable activity” poses a problem and that making it a permissive rather than an obligatory requirement on the courts may add very little.
If a doctor does something wrong when operating on or treating a patient, the doctor is, by definition, carrying out a desirable activity. If a tattooist does something wrong, they may be regarded as not carrying out a desirable activity in the same sense. There is a danger that the liability for negligence of the doctor may then be lowered in a way that the public would not expect. I am not against seeking to codify the law, but, above all, I want to send a message that we must not discourage people from doing desirable things.
The problem with the excellent Tomlinson judgment was that it related specifically to a very reckless individual. Most of the cases that provide the most problems for organisations such as the Scouts and sporting organisations do not relate to individual recklessness, but to exactly what clause 1 addresses: namely, the court suggesting that somebody should have carried out yet another safeguard to prevent something.
I understand that, which is why I am more sympathetic to clause 1 than my right hon. Friend the Member for Berwick-upon-Tweed and my hon. Friend the Member for Cambridge. We cannot pass a law that has no effect. Once we pass a new law, the courts must take account of it and of some of the explanatory notes and so on. We have to be clear: adding uncertainty will not be helpful.
I do not mean to trespass on the hon. Gentleman’s good will, but does he agree that we quite often declare in statute what the law is, with the idea not particularly of wanting to change it, but of wanting to clarify it? An example is the Constitutional Reform Bill. He and I were anxious that it should make it clear at the beginning that the role of the Lord Chancellor in protecting the legal system should remain his duty, so we said it in the Act for that purpose and to declare it.
And that is why I have not said that I am wholeheartedly opposed to seeking to get this right. But if we start to introduce phrases that do not have a legal definition, we might get into a new set of definitions, which might mean that the law becomes uncertain, not certain.
The central point here is, was the law unclear before? Was it unclear after Tomlinson? Was it even unclear before Tomlinson? [Interruption.] The hon. Member for Canterbury (Mr. Brazier) says yes, but the question is, in what way was it unclear? If there was a specific way in which it was unclear, that is the way in which it should be made clear in the Bill. So far as I can tell, there is no suggestion from the Government that that is what is going on with clause 1.
I think that my hon. Friend will not like the answer to that question. I take the view that if it is possible to encapsulate in one or two sentences in an Act of Parliament what the law is, rather than drive people back to reading five House of Lords judgments, we should do that. Therefore, it is better to write something down as the law of the land, if we can, than to have to go and read the words of the great legal minds of the country, because most people do not go there, it is more difficult and there is more than one judgment. So, if we can, let us do it.
The last point that I want to make is about the rest of the Bill, which is much less controversial. There is one controversial issue left in the regulatory system, which was touched on by the right hon. Member for Newcastle upon Tyne, East and Wallsend and others. It is how we ensure fair play for all who are involved in the business of dealing with claims and the rest.
As I understand it, clause 3 says that if somebody, as an individual, is involved, but not as part of their business, they are exempt, or potentially exempt. I want to ensure that, at the end of the legislative process, there is a level playing field so that members of trade unions—in the past, I acted for Thompson’s, which did a lot of trade union work as solicitors and instructed me and others—who expect that, once they have paid, they will get a service, are in the same position as those who join a political party, the Co-operative movement, a voluntary organisation or whatever and are also told that they will get a service. Provided that there is a level playing field and everybody is treated the same, if the organisations are of the same sort, that is reasonable.
Of course, we need to ensure that individuals are not under some great regulatory system if they are doing something voluntarily and in a way that everybody understands does not give them a legal relationship, with the liability that follows.
The Bill does not deal with a lot of issues, which will be left on the agenda and have been set out by the Association of Personal Injury Lawyers and others, and which we shall have to revisit to achieve better access to justice in the civil law. However, the Bill does some important things. As my hon. Friend the Member for Somerton and Frome said, it is modest, but it is none the less important for that. However, I fear that we still have quite a bit of work to do.
I begin by welcoming the consensual tone of the hon. Member for North Southwark and Bermondsey (Simon Hughes). I also want to make a few brief points about the role of the trade unions and about the question of mesothelioma, which is enormously important.
I should perhaps start by saying that I have an interest as an active trade unionist and as chair of the trade union group of Labour MPs. I also have an interest in the asbestos industry, because I worked in an asbestos factory when people were systematically subject to risk that ought to have been criminal, not simply the subject of compensation. If I have some reasonably strong feelings on the subject, perhaps Members of the House will understand.
I was disappointed by the speech of the hon. Member for North-East Hertfordshire (Mr. Heald), in that he wanted to perpetuate a certain type of myth, which, I am afraid, goes back to the visceral view among some of those who occupy the Conservative Benches that trade unions are fundamentally a bad thing. The reality is that if most members of trade unions were asked in whom they had greatest trust in pursuing on their behalf an employment claim or a claim for personal injury, the trade unions would figure highly in terms of a relationship of trust.
That does not for one second ever absolve those trade unions—the Union of Democratic Mineworkers in the east midlands is one—that have behaved spectacularly badly with respect to their members and have operated, de facto, as claims farmers. However, it is important to establish that there is a position of trust between trade union members and their unions as their representatives.
In that light, the hon. Gentleman, who is absent from his place and who told the House that trade unions make their money by claims, did not give an accurate picture of reality. I wish that, when pressed, he had been prepared to justify his claims from the Front Bench and name the trade unions that he claims are abusing the position of trust.
It is important that, for example, lawyers maintain professional integrity and that their clients believe that most lawyers operate honestly and decently, even though we accept that there are rogue lawyers in the system. In the same way, it is important that members of trade unions have the same trust. It is not reasonable to use the facilities of this House of Commons to make a generalised condemnation of trade unions in a way that is designed actively either to mislead or to pursue a partial point.
I am not suggesting that the hon. Gentleman is wrong about that, but he knows that that is not what he said. I will make him an offer. If he reads exactly what he said in Hansard tomorrow and is prepared to come and apologise to me personally if he was wrong in what he said about trade unions making their income from referrals, I will also read Hansard and apologise to him if I am wrong about it. I would even be prepared to make a point of order to make that apology to the House. I hope that the hon. Gentleman will be big enough to do the same, because the problem is that his comments were not only an unfortunate misrepresentation, but a distorting misrepresentation. I am very disappointed that the new Conservative party should adopt its old position of hostility towards the trade unions.
No member of a trade union wants rogue trade unions that operate against the interests of their own members. Nobody seeks to justify the situation seen in the east midlands, of unions acting as claims farmers, and that should be condemned by every Labour Member of Parliament and by the trade union movement. We have to ensure that if a trade union operates as a claim farmer, it will not benefit from the general exemption offered to trade unions. The code of practice to which the trade unions will be expected to adhere must be sufficiently strong to regulate their role properly, in a way that is analogous to the regulation of the legal profession and others on this issue. That is an important part of the bargain for trade unions and would be accepted by most Members of Parliament as automatic, but more importantly it would be accepted by most trade unionists and their trade unions. The balance that my hon. Friend the Minister struck is important, because it establishes, not that trade unions have special rights, but that trade unions have a particular position of trust on behalf of their members and that has been respected. It is the rights of the ordinary members of trade unions that are protected by this legislation.
I am also concerned about the issue of mesothelioma and the capacity of the Bill to serve as a vehicle to change the law on Barker. As my right hon. Friend the Member for Newcastle upon Tyne, East and Wallsend (Mr. Brown) has already said, that is an important issue. We know that those who are diagnosed with mesothelioma, sometimes many decades after they have left the company, industry or situation that exposed them to asbestos, face a grim prognosis. People generally live only a short time after diagnosis—between 12 and 18 months—and it is a particularly cruel and unkind form of cancer even among those cancers that still kill. The families involved experience enormous distress. What that means is that the period in which the individual has access to proper justice, at least in the form of compensation, is also short. It also means that those who are entitled to compensation often—
On a point of order, Madam Deputy Speaker. I am sorry to interrupt the hon. Gentleman in making his important points, but there is a very irritating noise in the Chamber, which is making it hard to concentrate. Can somebody investigate whether it is the sound system or something else?
I am delighted to know that I am not the irritating noise.
We need the Barker judgment to be reversed. The present situation—as my hon. Friend the Member for Hendon (Mr. Dismore) pointed out—is bad because it splits liability and therefore in the many cases in which the companies no longer exist the individual firm that contributed to causing mesothelioma will be able to avoid paying compensation.
In fact, the problem is worse than that. The allocation of risk process means that the accepted defence in many cases will be that non-existent companies bear a greater proportion of responsibility for the factors leading to mesothelioma. Claimants will get only tiny levels of compensation as a result, and that is simply unfair. The Barker judgment has no legitimacy, and a change in that respect is needed very urgently.
I very much welcome my hon. Friend the Minister’s clear commitment that the Government are looking to make a change. Many hon. Members have raised this matter in the Chamber—my hon. Friend the Member for Amber Valley (Judy Mallaber) did so with my right hon. Friend the Prime Minister yesterday—and elsewhere. We know that the Government are sympathetic to proposals for change, but we need to ensure that there is an urgency about delivery, and that it is consistent with our recognition of the damage done to people who are rendered very vulnerable by the condition.
I know that many other hon. Members want to take part in the debate, so I shall not use my full 15 minutes. However, I must tell my hon. Friend the Minister that efforts will be made to table an amendment to the Bill that would allow the Barker judgment to be set aside. I hope that such an amendment, whether it comes from the Government or the Back Benches, will do the trick, although I understand that it may not be possible or practical to devise an appropriate proposal in the time available.
I hope that the hon. Member for North-East Hertfordshire will reconsider his remarks. I am afraid that he gave me nothing better than a resounding “maybe” in response to my question about the Opposition’s support for a change in the legislation. I hope that he will go further, as the inclusion of such a provision might have aroused opposition in the Lords and caused the Bill’s passage there to be blocked. Progress will be easier if we can agree that the change is desirable and deserving of support by the Opposition in the Lords.
My hon. Friend emphasises the urgency of this matter. Another factor is that claimants cannot now claim under the Pneumoconiosis Etc. (Workers’ Compensation) Act 1979, as was possible when the Fairchild case was being considered. Does he agree that that law must be restored as a matter of urgency?
My hon. Friend is absolutely right, and I pay tribute to his long and consistent campaign on this issue. I hope that we are moving towards consensus about what the range of problems is, and their possible solutions. It would be very strange if any hon. Member were to regard those who suffer from mesothelioma as deserving of anything but the maximum sympathy. We must take every practical step that we can to compensate them.
I shall finish by saying that, if I had my time again, I would be far happier to see the people who managed the asbestos industry when I knew it sent to jail rather than required to pay compensation. They were not merely negligent about their stewardship of the industry: they were criminals.
I congratulate my hon. Friend on the Bill, and on the way she introduced it to the House today.
Order. Before I call the next speaker, and in response to the point of order raised by Mr. Brazier, I inform the House that an engineer is investigating the distracting noise that we can hear to see whether it has anything to do with the sound system.
First, I remind colleagues of my entry in the Register of Members’ Interests. In warmly welcoming the Bill, I remind the House of the work of the all-party insurance and financial services group, which I have chaired since 1992. For many years, we have taken a close interest in the issues covered by the Bill. In anticipation of the draft Bill, we took evidence last year from a number of organisations and 11 witnesses in total, including various insurance lawyer trade associations, the industry and even the Claims Standards Council. We issued our report in November.
There are three features of the current compensation environment—I shall not be drawn into a debate on whether there is a compensation culture—against which to judge the likely effectiveness of the Bill: risk aversion, rehabilitation and the regulation of claims managers. Risk aversion is important because, as we all know, many events or activities do not take place because of concern over potential claims for negligence in respect of personal injuries. Public liability insurance costs have risen to the extent that many activities do not take place because there is no public liability insurance cover and the leisure industry has seen a dramatic increase in the cost of both employee and public liability insurance.
Secondly, rehabilitation is important because we are still not doing nearly enough to ensure that people who suffer major injuries as a result of a workplace or motor accident are treated quickly and got back to work quickly.
Thirdly, the regulation of claims managers is important because of the widespread malpractice by so-called ambulance chasers, run by some pretty ruthless and unscrupulous people who are happy to sell on the introduction of a victim while contributing precious little towards the speedy and satisfactory handling of a claim. The no win, no fee basis of claims handling is confusing to claimants, often results in significant parts of their compensation being hived off to pay legal bills and has contributed to a situation in which legal fees amount to a staggering 40 per cent. of all personal injuries claims costs—money better used to rehabilitate and compensate victims and, I dare say, better used if we all had to pay lower premiums for the insurance cover that we have to purchase. In the end, we all pay; insurers have no money other than what we pay them in premiums.
I shall deal with the three items in turn. On risk aversion, the new definition in clause 1 is meant to enshrine in statute the current understanding of the law of negligence. We have already had considerable debate on whether that clause is necessary, whether it adds anything to existing law and whether, if it does not, it has any point. Back in November, the all-party group agreed with the lawyer associations that clause 1 should be dropped, but the Government have not been persuaded to accept that view. If, as looks likely, clause 1 remains, I hope that we will be able to examine it in further detail in Committee because it is critical to understand precisely what the clause means.
I am concerned about some of the new concepts, particularly “desirable activity”, that may require a new definition, but I sense from listening to today’s debate that there may already be something new in the definition and perhaps more in the Government’s intentions than they have admitted—though I do not say that in a critical way. If the new definition clarified what precautions might be disproportionate in persuading people not to go ahead with a desirable activity—that seems to lie behind what the definition suggests—it could have a positive aspect.
As other Members have suggested, it is important that the courts, including the lower courts with which my hon. Friend the Member for Canterbury (Mr. Brazier) has a bone of contention, fully understand Parliament’s intentions. It is wholly desirable that voluntary organisations, who obviously rely on volunteers and do not have access to an army of expensive lawyers, understand precisely the legal implications of what they do.
I want to make one other point about the insurance aspect. Many activities do not take place simply because people cannot afford the public liability insurance cover. The long-term test of the new definition in clause 1 should be what it does to public liability insurance underwriting. I rather suspect that, for quite some time, underwriters will wait and see what happens in all the court cases that I know the hon. Member for Hendon (Mr. Dismore) thinks are likely—we had an exchange about the matter one evening in one of the Dining Rooms recently. We need to keep that prospect in mind.
I turn next to rehabilitation. Just one issue has dominated our news for the past six weeks. It is nothing to do with politics, the state of the world or even Iraq. It is Wayne Rooney’s broken metatarsal. It has dominated every news bulletin and every newspaper. We all hope that he has been miraculously rehabilitated, but that experience is in stark contrast to the long delays experienced by people with workplace and motor accident injuries in getting the rehabilitation that they need to get them back to work.
Clause 2 is a hugely welcome addition because it can provide new impetus to efforts to get people rehabilitated quickly. That is better for claimants and for employers. It is also better for third parties—people who have caused accidents. We should not always think that they are being difficult because they do not have sympathy with the victim. Most of the time, they do. In the long run, quicker rehabilitation is better for insurers.
All the evidence points to the fact that the more quickly someone can be rehabilitated, the more likely it is that they will recover from the injuries that they have suffered in an accident, especially motor accidents in which people suffer whiplash injuries, back problems and so on, and the more likely it is that, for the good of them, of all of us and of their families, they have the chance to get back to work. So I welcome the addition of clause 2 and congratulate my noble Friend Lord Hunt of Wirral and his colleagues in the other place on introducing it.
The regulation of claims managers is a long overdue measure. Some right hon. and hon. Members have concerns, as I do, at the notion of yet more regulation, but currently we have the farcical situation in which the arranging and sale of an insurance policy is subject to statutory regulation, and the loss adjusters who assist the insurers in the handling and measurement of claims are regulated through their professional body—the Chartered Institute of Loss Adjusters—but claims farmers are not regulated at all. Yet it is in the management of claims that abuse and mischief lies. “The proof of the pudding is in the eating” is an old saying, but it is only at the point of claim that people understand whether the insurance policy that they bought provided them with the protection that they thought it did when they paid the premium. It is at the point of claim that the real value lies.
Undoubtedly, whether the individual policy holder claims for himself against his own policy is an issue about which we should be concerned, but it is far worse if we are dealing with the management of a claim in respect of a third party, who has a right of action under the policy as a result of what has happened, but has no relationship with the insurance company in the way that the policy holder does. It is critical that we get the claims management industry properly regulated.
For the regulation to work, it must be comprehensive. There has been much discussion about exemptions. I want to make two points about them. If there are exemptions, the bodies that regulate exempt organisations must have equivalence in their regulatory bite. I am reassured by the Minister’s comments that if trade unions, about which there has been much discussion, do not match up, they will be subject to tougher regulation.
The most critical thing is definition. I strongly urge the Minister to regulate the activity and avoid the danger of simply regulating the name “claims farmers”. My experience in the matter comes from the past 10 years—all the time I have been a Member—of my election to the Insurance Brokers Regulation Council, which was a statutory regulator, but we regulated the name “insurance broker”. If a firm used the title “insurance broker”, it had to be regulated by the IBRC. Of course, many people practised, in effect, as insurance brokers but called themselves insurance consultants, so when we disciplined a broker and chucked them out of the profession they carried on in business under another name. We have to avoid that situation in respect of claims farmers.
It is also critical that the regulator has the power to exclude, and that there is no route back for the cowboys to whom the Minister referred several times. That means that we need strong codes of conduct, but we also need clarity about precisely what they can and cannot do in their presentations to claimants and possible clients and in the advertisement of their services.
The Government have made huge progress by specifying that the regulator will be the Department for Constitutional Affairs, even if only temporarily. I heard the comments of my hon. Friend the Member for North-East Hertfordshire (Mr. Heald) and I understand his sense of disappointment that we are not being provided with a distinct regulator. However, we have to bear in mind the other side of the argument. There are probably only about 500 claims management firms and my hunch is that half of them could be driven out of business, which would reduce their number to 250. Even charging them reasonable fees would not give us a basis for funding a regulator to do all that I have suggested needs to be done. We may have to wait until the new regulator has been set up under the Legal Services Bill to bring all the threads together.
I am disappointed, however, that the Financial Services Authority has not agreed to undertake the regulation process. Claims management is related to insurance products. It is a financial services issue, so that is largely where the regulation should be. The intention is not to pursue a vendetta against claims managers but to ensure that they operate professionally and that we protect consumers from the unscrupulous. We must also ensure that the accident or event that is the subject of the claim, which is a bad enough experience for the individual, does not become a double whammy, due to bad advice about how to claim. All of us have heard about such experiences in our surgeries.
Madam Deputy Speaker, I hope that you and the House will forgive me for not staying until the end of the debate, as I have another duty to perform. I particularly wanted to take part in the debate and hope that my comments show that I am very much behind what the Government want to do. The Bill is long overdue and I wish it well. The regulation of claims managers and strengthening the possibility of rehabilitation are two developments that we can all warmly welcome, and from which all our constituents will benefit in the long run.
I declare an interest, as I was a personal injury lawyer for 20 years before I became a Member. I worked with trade unions and their members, not in an academic way but hands on, with real cases, helping real victims. I remain a consultant with my law firm, but I have not taken cases since I came to this place. I am a founder member of the Association of Personal Injury Lawyers, a former member of its executive committee and a former Law Society specialist assessor for its panel of personal injury lawyers.
My job here is to represent constituents, not lawyers. If I were here to represent lawyers, I would probably welcome clause 1, because it will wave off not just a mere gravy train but a veritable Orient Express of rich cordon bleu sauces for the legal profession. It will create a tsunami of litigation that will flood the courts with cases of such complexity, and in such volume, that Jarndyce v. Jarndyce will look like a small claims debt recovery action in comparison.
Clause 1 creates confusion where there is settled law. It will jeopardise safety standards, creating a charter to kill and maim with impunity. It will deprive deserving claimants of their just compensation and will create a two-tier system whereby victims of identical accidents have entirely different outcomes. I chair the Joint Committee on Human Rights, which has expressed criticisms of clause 1. We were not persuaded that the clause accurately reflects the subtleties of the existing law of negligence. It restricts access to legal redress by claimants, including vulnerable groups. We believe that the clause will be applied in a manner that restricts claimants’ access to justice and runs the risk of being in breach of our country’s obligations under articles 2, 3 and 8 of the European convention on human rights.
It is claimed that all that clause 1 does is restate the law, but if that is the case, it raises the question: why do it? The common law has developed over the past 75 years in particular, starting perhaps with the Donoghue v. Stevenson principle and ending, most recently, with Tomlinson v. Congleton borough council. There have been many other cases in between. In no way does the clause accurately restate the law. The Lord Chief Justice made it clear to the Constitutional Affairs Committee that
“it is quite impossible to encapsulate the law of negligence in a single sentence.”
Despite the Government’s protestations and the Minister repeating herself until she is blue in the face, clause 1 manifestly fails to reproduce the common law as it stands. In reality, the clause is simply a reaction to the popular misconception of the compensation culture, which has been roundly rubbished by everybody who has bothered to look at it. The facts show a decline in claims, not an increase—so why reinforce prejudice?
Clause 1 is riddled with ambiguity, uncertainty and a lack of legal precision. It starts off by giving the court discretion about whether to apply it. That in itself will lead to many legal arguments about whether the judge should or should not have exercised his discretion in the first place. It refers to the need for the claimant to identify the taking of precautions—a positive case required from a claimant that was not previously required. This is about expecting a claimant to deliver a positive safety regime for the defendant if they are going to win their case. The clause introduces a whole new concept into common law of “desirable activity”, which the Bill fails to define. The Minister indicated earlier that she was not prepared to define it through an amendment.
Exactly—my hon. Friend is right. We will have a plethora of cases interpreting the provision. The courts could, in the end, come to the same conclusion as the Minister and say that there is no difference between it and the existing common law. They may rely on Pepper v. Hart and say that that is what the Government said. However, I doubt that. Even if that were the case, it would happen only after extensive, expensive examples were tried in the House of Lords—or, possibly by then, the new supreme court.
In reality, clause 1 creates a brand new series of defences, rebalancing the scales of justice against injured employees, travellers or schoolchildren and in favour of the multinational insurance industry. It does not replicate the key point in Tomlinson that willing consent to the risk is necessary, and that the principles laid down there are not appropriate when there is a real lack of informed choice or an imbalance of power, such as between an employer and employee, or a public authority as against children and vulnerable pensioners. I am truly appalled that a Labour Government should propose such a measure to weaken the rights of the small person against the mighty insurer.
The Government say that there is no need to exclude employment accidents from clause 1, but some jobs involve more desirable activities than others. Some are very desirable, but hazardous; some are less so, but safer. When I was in practice, for many years I represented injured firefighters. The principles of liability towards firefighters were well established in the House of Lords many years ago in the case of Ogwo v. Taylor. The clause considerably weakens those principles, and reopens some of the arguments that were put forward by the defence in the House of Lords and rejected. A seriously injured firefighter could well see his or her right to compensation undermined or even removed by the rebalancing of the law.
Of course, if the employment were a less desirable activity, perversely, the new defence would not work. There would thus perhaps be stronger protection for people with less desirable occupations. Journalists, estate agents or even Members of the House might thus attract greater protection than a firefighter, who does what might be considered to be a more desirable activity.
The situation becomes even worse when we find that clause 1 goes beyond negligence and covers breaches of statutory duty—exactly the sort of cases that Lord Hoffmann said should be excluded from the test in Tomlinson. Statutory duties underpin the health and safety regime, especially for some of the most dangerous occupations, such as those in construction. Contrary to the Government’s contention in the other place, very few of those statutory duties are absolute duties. There is a strong argument that we do not comply with EU directives in that respect already. The duties are circumscribed by conditions that use such phrases as “reasonable practicability”, “practicability”, “appropriate”, “suitable” and “adequate”. Some duties are already too weak, without watering down the protection still further through the desirability defence. All the duties apply without fail when there is an asymmetric power relationship, such as the employee-employer relationship, the relationship between a public authority and an individual citizen, or the relationship between an occupier and a visitor.
If we are thinking about the construction industry, should we consider whether some projects are more desirable than others? For example, people might think that it is rather more desirable to build Wembley stadium than it was to build the dome. What about the position of children? What of a school-run mum who crashes her 4x4 while ferrying her children and her neighbour’s children to school? Going to school is a desirable activity, which might weaken the case, but it could be argued that it would have been rather more desirable for the occupants of the vehicle to walk to school, instead of going by car. There could thus be an argument about which activity would be more desirable. In those circumstances, there would be a risk of there being a lesser standard for the passengers, and anyone whom the mum hit crossing a red light, than would be the case if the accident happened on the way home and the occupants of the vehicle had decided to call at McDonald’s for an unhealthy burger and chips, which could well be considered to be entirely undesirable. There is thus a paradox. It simply cannot be right that a less desirable activity gives the claimant a stronger case.
I cannot, because I am on a time limit.
I suspect that the roots of the clause lie in the private Member’s Bill promoted by the hon. Member for Canterbury (Mr. Brazier). He seems to be proselytising the measure as a change in the law, but if that is the case, why are the Government saying that it simply restates the law? The hon. Gentleman is right to say that the measure does not restate the law; it dramatically changes it, and weakens it from the victim’s point of view. The Government should recognise that they withdrew their support from the hon. Gentleman’s Bill for good reason, because between 2000 and 2005, claims against local authorities, schools and voluntary organisations fell by 7.5 per cent., rather than increased.
I cannot, because we are on a time limit—[Interruption.] I have given way already.
Of course we want to encourage adventure and volunteering, but the existing law already provides for that. If it is true that the clause simply restates the law, the Government must accept that argument. Contrary to the words that the hon. Member for North-East Hertfordshire (Mr. Heald) tried to put into my mouth, I warmly welcome the idea that we should issue guidance and publications to explain the law as widely and fully as possible—but frankly, I do not think that the clause is going to be the talk of school staff rooms, or scout leaders in the pub after a volunteering exercise. The fact remains that people will be far more interested in the guidance than what the clause might or might not state.
The real effect of the measure will be not to encourage volunteering, but to put young people at even more risk when they participate in adventurous activities. It will also discourage parents from allowing their children to undertake such activities. It will create different standards. For example, in relation to driving, a minibus of scouts going to camp would have less protection than a bunch of football supporters going to a match. The clause will lower safety standards, lead to fewer precautions and condone negligence.
What responsible parents would allow their children to go mountaineering, open-sea canoeing or sailing if they were told, “By the way, this is a desirable activity, so if Johnny or Jill is hurt badly, breaks a limb, becomes paraplegic, or is even killed, and if it’s our fault, there may be no compensation as a result.” Clause 1 stinks, and must be withdrawn from the Bill. It does not restate the law, but weakens the position of the average ordinary person in the street.
We should use the Bill to redress the balance. We should consider what needs to be done to improve the position of accident victims. There needs to be a clear exemption from clause 1 for employers’ liability cases, and from clause 2 for trade unions. We need to recognise that in the past the courts have, in many respects, failed accident victims, and we should take this opportunity to put right those mistakes.
We have already heard at length about Barker v. Corus and other asbestos cases; we have heard about the pleural plaque cases; there is the Crown Proceedings (Armed Forces) Act 1987, about which I made a point earlier; and there are many similar points to be made about asbestos. But that is only the start. If an insurer makes an admission of liability early in the case, why should that admission not be binding on it? The case of Sowerby says that it is not, and when a case is further down the track the insurer can say that it has changed its mind and does not admit liability after all. How does that strengthen the rights of claimants and avoid the need for litigation?
The Law Commission, in its 1999 report, made it clear that damages for personal injury claims were far too low. It recommended that in cases where general damages exceed £3,000 they should increase by between 50 and 100 per cent. The Court of Appeal considered that in the case of Heil v. Rankin, and did not do as the Law Commission recommended, but said that it was a matter for Parliament. It is a matter for Parliament, and we should take this opportunity to deal with it.
This Government rightly introduced the system of periodical payments to allow those who are seriously injured to have compensation assessed and paid out over the rest of their lives. However, the system for indexing those payments is drastically wrong. It simply refers to the retail prices index and does not take account of the fact that many of the elements in those compensation awards are tied not to the RPI but to much higher indexes, such as the index of average earnings. We should use the opportunity of this Bill to put right that injustice and ensure that claimants receive the compensation to which they are entitled.
The discount rate applied to an assessment of a future loss of earnings has been fixed at 2.5 per cent. since 2001. It is supposed to reflect the returns that a claimant can expect when investing his award, but unless it is reviewed regularly the discount rate does not accurately reflect market changes, which could put the claimant at a disadvantage. That, too, needs putting right, and the Bill is a vehicle by which we could do so.
I agree with the hon. Member for Ryedale (Mr. Greenway) that rehabilitation is a crucial process for any injured claimant. There has been considerable discussion between the Government and stakeholders about ensuring early rehabilitation for claimants. Where liability is clearly established, insurers should have a statutory duty to ensure that funds are released to facilitate early, appropriate and independent rehabilitation. That would provide the impetus needed to ensure that rehabilitation becomes an integral part of the compensation system. Again, we could take the opportunity of putting such a duty in the Bill, but the Government have indicated that they are not prepared to do so.
I was tempted to say that I would not vote for the Bill because of clause 1, which dramatically weakens the right of people in this country to compensation, thus pandering to the insurance industry, to the tabloids and to the myth of the compensation culture. But I shall vote for Second Reading because I passionately believe in the need for regulation of claims farmers, as set out in part 2. This is an opportunity to do some good in that respect, and the positive changes that I have advocated would take that even further. I first advocated regulating claims farmers many years ago, long before I came here, and I raised the issue at the very first meeting I had with a Minister in what was then the Lord Chancellor’s Department, back in 1997. Nearly 10 years on, I am very pleased that the Government have, at long last, recognised the problem and are dealing with it. This has been a serious problem since the 1980s, when claims farmers first got off the ground.
I hope that the Government will reflect on clause 1. It has little, if any, support beyond the tabloids, and even that is not clear. It is not supported by the lawyers, by the Constitutional Affairs Committee or by my Committee. I understand from the hon. Member for Ryedale that it is not supported by the insurance industry. Nobody has a good word for it—except the Government, the official Opposition and the hon. Member for Canterbury, who thinks that it does something entirely different from what the Government say it does. It is opposed by the TUC, the Association of Personal Injury Lawyers and the Law Society—just about everyone who has the interests of the little man or woman at heart, as opposed to those of the multinationals. We should not pander to myths; we should look at the evidence and at the harm that clause 1 will cause. I urge the Minister to look at the impact of what could be a useful reforming measure and to get rid of clause 1. Let us go ahead with part 2, which is badly needed.
The Register of Members’ Interests contains a reference to an interest that I have in the holiday park industry and states that I am the vice-president of the North Northumberland scouts. I hope that that pleases my hon. Friend the Member for Montgomeryshire (Lembit Öpik).
I shall speak briefly about the work that the Select Committee on Constitutional Affairs did on compensation culture and on the Bill. As many hon. Members have said, we were not satisfied with clause 1. We said:
“It neither satisfies those people who wish for volunteers to be provided with a special defence against claims of negligence, nor does it clarify the law. Instead, it is likely to lead to additional litigation, as people turn to the courts to define the precise nature of the provision.”
I shall return to that point.
The Committee did not conclude that conditional fee agreements or litigation had created a compensation culture, but rather that there was a perception of such, with a variety of causes, that was not soundly based.
”We found no evidence that conditional fee agreements or personal injury litigation were a significant factors in causing risk aversion, and personal injury litigation has not increased in recent years.”
“Risk aversion has a number of complex causes, including advertising by claims management companies, selective media reporting, a lack of information about how the law works and, on occasion, a lack of common sense among those who implement health and safety guidelines. Risk aversion of this sort is a concerning modern phenomenon that has an adverse effect on individuals and on the economy as a whole. Instead of a statutory provision restating the law of negligence what is required is a clear leadership by the Government”
We went on to suggest that that
“should include an education programme making clear that risk management does not equate to the avoidance of all risk and active engagement by the Health and Safety Executive to ensure that it adopts an approach which is proportionate, does not over-regulate vulnerable sectors and instead offers appropriate advice and support”.
On balancing risk, the Committee was given a strong impression by the HSE that balancing different risks was not something in which it engaged. The classic example is the HSE stopping a commuter station from being opened because the platform was not long enough. Somebody might get out through a door, not obeying the guard’s instructions, and sprain or break an ankle. That is a lower risk and a lower injury than if all commuters got into their cars and drove on congested roads into the city. There is the balancing of risks from two different areas. The system is not equipped to carry out that exercise, which leads to the consequences about which hon. Members are concerned.
There is also the widespread and gross misuse of health and safety arguments, and sometimes on the basis of mere error. A lovely example of that is provided by the Lord Chief Justice, who was told when he went to a governors’ meeting at his old school that he could no longer take an early morning dip in the swimming pool because there was no lifeguard or qualified member of staff present to supervise his swim. As a modest man, he did not assert, “I am the Lord Chief Justice, and this would not stand a moment’s chance in my court.” If he had done so, that would have helped to spread greater knowledge of the law.
Perhaps more often health and safety arguments are used as an excuse when a public body does not want to spend some money or does not have a budget for something that is clearly necessary to enable an activity to take place. Health and safety is often loosely quoted when it is not the real reason for not doing something.
On clause 1, most accepted authorities will say that the Tomlinson case got it right, and that there is no clearer and sounder definition of what the law says than what came out in that judgment. I will not quote them again because my hon. Friend the Member for North Southwark and Bermondsey (Simon Hughes) referred to Lord Hoffmann’s trenchant words on the subject. There are real dangers in trying to second guess, as is done in clause 1. That relates particularly to satellite litigation on, for example, what might be desirable activities. That is only one of the areas in which litigation could take place on the basis of clause 1, and examples of that have already been given.
If, as the Government concede, there is to be litigation to establish the meaning of clause 1, that immediately defeats its sole objective, which is to give people a clearer understanding of what the law is now. The moment that we get into fresh litigation, we have to wait for that understanding to exist.
It is not an extra defence. Indeed, the Government differ from the hon. Gentleman, because they have sought to make it clear that the provision does not add a legal protection that does not already exist. It is simply designed to remind the public and the courts of the basis of the law as it stands, and it will not create any new legal defence. The clause will be read by people from one end of the country to the other, so it must be clear. It must be clear, too, as he has rightly suggested, in the lower courts. The Lord Chief Justice said that he did not know who was going to read clause 1:
“The average man in the street is unlikely to be reading clause 1. As far as the judges are concerned, and judges and lawyers are the ones likely to be reading statutes, and the clause sets out to define the position…not to change it”.
We should make the position clear so that cases related to the Pepper v. Hart case have regard to the fact that Ministers have said that the law is not changed by the provision. Litigation will, however, arise from measures such as the desirable activities provision.
There are two other dangers. Public authority staff are at a disadvantage, because they engage in desirable activities. The Government state that the clause is not intended to effect a change in the law, but there is a danger that that will give false comfort to voluntary organisations. My Committee took evidence from voluntary organisations, including the Scouts, whose evidence impressed us, not least because they have made efforts to ensure that risk management was built into their systems and training. The problems are greatest for small voluntary organisations that do not have the facilities or experience built up by larger organisations. If we are not careful, the clause will give them false comfort.
Turning to other issues, I am glad that the Minister gave me a clear, precise answer about who will regulate claims handlers. I sympathise with the Government’s position, as we must look at what emerges from the proposed regulation of lawyers before we decide where responsibility should reside. In the meantime, the Secretary of State should do the job, so that he has something to do now that all his other responsibilities have been taken away. As a result, my Committee would have oversight responsibility for the claims handling process, and we look forward to making sure that it works.
Turning to the exemption provisions, anyone who, like me, represents a mining constituency will be concerned about the gross abuses of which claims handlers, trade unions and the Law Society, which failed to regulate lawyers, were guilty. Several firms of solicitors were deeply and disgracefully involved in that huge scandal, defrauding vulnerable people whom the Government had set out systematically to protect from any costs—indeed, they paid for that protection. The exemption provisions must be proof against such a scandal, while recognising that trade unions and voluntary bodies such as citizens advice bureaux do a great deal of work to direct claims and ensure that people receive appropriate legal advice. The Committee must look carefully at the exemption provisions so that they meet the objective of ensuring that people whose claims are dealt with by a trade union or a voluntary body are not at a disadvantage if they are defrauded or not provided for.
Most of the Bill is much needed, but clause 1 might prove to be a great deal more trouble than it is worth, as it might not satisfy genuine anxieties about participation in voluntary activity or the promotion of sports that involve an element of risk. Many of those anxieties are based on a misunderstanding of the law, on fears of prosecution by the Health and Safety Executive, on misunderstanding of the provisions required by the HSE and, indeed, on a series of things that the clause is not designed to address.
I am grateful to the right hon. Gentleman for giving way once more. He took evidence in his Committee from Derek Twine of the Scout Association. The concerns of the Scout Association—we are dealing with the civil law here, not the HSE—are based on a series of court cases that it has lost, some of which, I know, were cited to the right hon. Gentleman in evidence, yet his report did not reflect that at all.
I am sure that the hon. Gentleman will refer later to one or two cases that do not even appear in the law reports. That will be helpful to us. If cases are not resolved satisfactorily in the lower courts on the basis of the law as we know it to be post-Tomlinson, it will be necessary for those cases to go to appeal and to go up the system to ensure that they are dealt with satisfactorily. If that places an unreasonable burden on some of the voluntary bodies involved, such as the Scout Association, we must address that. We will not necessarily help them if we put in a clause that they think provides them with a protection which, in fact, it does not.
I shall listen to the remainder of the debate with considerable interest, because I think that the hon. Member for Canterbury (Mr. Brazier) and my hon. Friend the Member for Montgomeryshire genuinely believe that this restatement of the law will provide an additional legal protection. It is not the Government’s view, as they have clearly stated, that the law is changed.
The Government are wrong, as the hon. Member for Hendon (Mr. Dismore) pointed out, on a different point. They are wrong that the Bill does not restate the law, because in relation to employees it clearly has that effect, but in relation to the defence that can be advanced by an organisation engaged in providing a voluntary activity or a risky sport, it is not intended to change the law. If it does, the House should know that it does. The Government cannot rely on two Back-Bench Members insisting that it does. In a Pepper v. Hart judgment later in the day, it will not be their view that is considered, but that of Ministers. At this point I shall rest my case, as I want to hear other views.
I am grateful for the opportunity to speak in support of the Bill. Claims handlers have been described as cowboys. If that is the case, coalfield communities such as north Nottinghamshire are the wild west. The activities of claims handlers have caused false hopes, false expectations and real concerns and financial difficulties, not just to people who work in the mining industry, but for the women in the textile industry who have been gullible enough to make deafness claims through claims handlers. I strongly support part 2. The regulation of claims handlers is long overdue.
My hon. Friend the Member for Hendon (Mr. Dismore) was hostile towards clause 1. I am agnostic. I would like to see the phrase “desirable activity” defined. It is not defined. In her opening remarks the Minister made it clear that there would be further court cases to test the scope of the phrase. Rather than clarifying the law, that may well lead to confusion and delay.
I am concerned about the position of public sector workers—people who work in difficult environments, such as the fire brigade or the ambulance service. They are undertaking desirable activities, but the level of protection that they have under the clause may be less than they have at present. I am with the right hon. Member for Berwick-upon-Tweed (Mr. Beith). His Select Committee has considered the matter. I am agnostic about the way forward. I do not think the clause moves us on, and I look forward to a rigorous debate on clause 1 and its significance.
Clause 1 is well balanced by clause 2. All bodies, particularly public bodies, ought to be prepared to apologise much more readily than they do. An apology is simply good practice. An early acknowledgement that things have gone wrong and that the institution is sorry could save a great deal of litigation later on.
Let me turn my remarks to part 2. As I said, claims handlers have ridden roughshod over coalfield communities, and the difficulties involving coal health claims are well documented. It is not only down to claims handlers but to solicitors and, I have to say, to trade unions. Hon. Members are right to question why trade unions should be exempted from the Bill by secondary legislation. I have come to support that view, but we must be very careful about what it says in the code of practice that the Government intend to introduce.
We must not be swayed by traditional allegiances to organisations such as trade unions. The unions have done, and continue to do, a tremendous job. They have brought test cases that have radically changed the law and have benefited working people—but at this stage, given recent events, we must ensure that claimants are at the centre of our concern. Where trade unions act as claims handlers—as they do; let us not kid ourselves—they must not be exempted. I am determined that the code of practice should make that clear. People who have been ripped off in north Nottinghamshire and other coalfield communities will be astonished and dismayed if a loophole is left open so that illegitimate, immoral activities can be undertaken by trade unions acting as claims handlers.
Another aspect that the code of practice will have to cover is that of a trade union acting for a member and his or her close family and for a wider group of people. Trade unions sometimes act for groups of people far extended from their traditional activities. For example, the south Wales branch of the National Association of Colliery Overmen, Deputies and Shotfirers acts for people in the Kent coalfield who are not members of that organisation. The code of practice must make it clear that there is a difference between acting for members and acting for a wider audience.
It is important that the code of practice is discussed with the TUC, which will, I am sure, be positive and helpful. It should not act as a sleeping watchdog but ensure that it intervenes heavily to stamp out abuse. Of course, some trade unions are not, and never will be, affiliated to the TUC. The code of practice must make it absolutely clear that trade unions, whether affiliated or not, operate legitimately within it.
As the hon. Gentleman knows, I am concerned about this point as well. Solicitors, for example, are also exempted but they are regulated in this field by the Law Society and, soon, by another regulator. The problem with the unions is that they have no regulator in this field. He will know that there have been some dreadful examples of union misbehaviour in this respect. Is he really satisfied with this exemption?
I am making it clear to the Minister that I will be satisfied only if the secondary legislation and the code of practice really do the job for which the hon. Gentleman asks. When trade unions act as claims handlers, they must be treated as claims handlers. I do not, in principle, object to unions charging a reward fee for a successful claim. I know the benefit that will result if the money is used by the trade union movement for other activities, such as taking on test cases. However, I believe that it must be absolutely clear that the claimant understood the nature of the contract when he signed it. It is obvious from the whole claims scenario that that has not been happening.
The Minister is right, in the short term, to want to regulate claims handlers through the Department, but I hope that that is an interim solution. I should like there to be a regulatory framework separate from the Department. As others have said, a new legal services board will provide useful opportunities, but in the long term I should like to see more independence.
A number of my hon. Friends have mentioned the Barker case and asbestosis. I am impressed by what the Minister has said publicly today and privately to colleagues who have pressed her on the issue: that the Government will try to establish a process to resolve it. This is a matter of life and death. It is also a matter of simple fairness and simple justice. I cannot understand the House of Lords judgment, and I hope that we will act with equity and fairness to resolve the issue. Although I probably do not need to do so, I seek an assurance from the Minister that over the next few days, and certainly in the next fortnight, we shall be able to engage in discussions about the process or mechanism that is required.
I mentioned pleural plaque earlier. I accept that the litigation is now further down the road. The Court of Appeal has put many hundreds of cases on hold and the claimants are waiting for them to go to the House of Lords, but I know people who are suffering with pleural plaque, I know the history of payment over 20 years, and I know that—as with the Barker case—the law is changing fundamentally for working people. I hope that we will act with social justice again to resolve the cases of people who, through no fault of their own and through the fault of their employers, have been disadvantaged and put at risk.
This is a good Bill, which has been improved in the other place. It is concerned with the essential elements of looking after claimants and workers. I am conscious, however, that we must work hard to improve it even more. We are heading in the right direction. As we say, much has been achieved, but much more needs to be done.
I welcome the Bill, especially clauses 1 and 2. I too congratulate Lord Hunt on his handling of the Bill, and in particular on his success in winning the vote on the splendid clause 2; and I congratulate the Government on their graciousness in accepting it.
I shall make four basic points. First, I shall explain how adventure training and certain types of sport are being severely damaged by the current culture. Secondly, I shall try to make it clear that this is not just a question of perception; it is based on a string of court cases. Thirdly, I shall touch briefly on what society is in danger of losing. I shall end with a few ideas for strengthening the Bill.
When I introduced my private Member’s Bill, which has been mentioned in both Houses in this context, I was touched by some of the letters of support that I received. The Children’s Play Council wrote:
“I have read with interest about your Private Members Bill on volunteering and risk taking…it is very common for playgrounds to be closed or removed because of local authorities liability fears”.
The Youth Hostels Association wrote:
“YHA welcomes the private members bill”.
“I am happy to add the full support of Youthsport…As a training project for volunteers across London, Middlesex and Surrey we have been acutely aware of the growing trend towards litigation”.
After my private Member’s Bill was blocked, colleagues and I set up the all-party group on adventure and recreation in society. I am particularly glad that my co-chairmen, the hon. Members for Sittingbourne and Sheppey (Derek Wyatt) and for Montgomeryshire (Lembit Öpik), are present. We campaigned for fresh legislation, with the support of the Campaign for Adventure—whose remarkable director, Ian Lewis, has done much to keep us informed—and we are delighted that the Government have introduced the Bill.
The truth is that a huge amount of damage is being caused. In 2003, the Central Council of Physical Recreation and Sport England conducted the largest survey ever in the field of volunteering in sport and outdoor activities. It listed eight factors that were damaging volunteering, top of which came
“risk, fear of blame and the threat of litigation.”
More recently, the Scout Association carried out a survey of 1,100 scout masters. It stated that
“69 per cent. agree or strongly agree that the recruitment of new volunteers is made more difficult because of fears of being sued…a staggering 92 per cent. agree or strongly agree that risk-aversion is affecting the range and nature of activities being offered to young people”,
at a time when 30,000 youngsters cannot get into the scouts because they do not have enough scout masters, and when almost twice that number are waiting to join the girl guides for the same reason.
That leads me to my second point. Why does that state of affairs exist, or is it just a perception—an urban myth? I believe that it is a reality, given the large number of cases that have been fed to me. We sent a dossier of them to Baroness Ashton, who was very courteous about meeting us; however, we were told that, because her Department did not have law reports on those cases, even though we had given the dates, the courts and the names of the judges, it could not comment on them.
I then read the proceedings on the Bill in another place. Lord Goodhart, speaking for some of the Liberal Democrats—although not, it seems, I am relieved to hear, for the Liberal Democrat Front Benchers in the Commons—said:
“There are, of course, reports of cases where damages have been awarded to people who are the authors of their own misfortunes. It is difficult to find authentic texts for these judgments and I suspect that some of them are urban myths. Some of them are reported; some were decided before the law was clarified in the Tomlinson case; and some are simply bad decisions, which are unavoidable in any legal system.”—[Official Report, House of Lords; 7 March 2006, Vol. 679, c.647. ]
The question for Parliament is: is a pattern developing, or not?
Six days after Lord Goodhart’s speech, and while the Bill was still before another place, a court case took place in Manchester. It was one of many cases inflicted on the Scouts while the Bill was being debated in the Lords. The Scouts’ legal adviser said:
“I attach a note of a recent case in which the Scout Association lost following an injury to a brownie attending a scout panto...chairs were set out in the village hall and the brownie was injured on allegedly sharp piece of metal protruding from one of the chairs…Apart from individually inspecting every chair with considerable resource implications endangering the running of such an event it is hard to see what more the group could have done. To add insult to injury the Judge awarded the claimant twice our counsel’s valuation of the claim and 20 per cent. more than the claimant asked for!”
It cost the association £15,000.
Yes, and I will explain why in a moment. I am clear that clause 1 does change the law.
Judge Tetlow presided over the Manchester case that I mentioned. In summing up, he said:
“It follows there was a jagged edge which should not have been present in an area likely to be inhabited by children. Something had gone wrong. I do not think the defendant can avail itself by relying on the licensing officer’s inspection. The defendant set out the chairs and was in a position to remove any chair that was broken or defective. The system obviously went wrong for this chair to slip through the net.” Actually, the chair was never found but, on the balance of probabilities, it was decided that a defective chair was the cause.
“It presented a reasonably foreseeable risk of injury and should have been removed. I therefore find that the defendant failed to take reasonable steps to ensure the reasonable safety of the claimant.”
The point is that these chairs and the premises had been checked by the scoutmasters, and the licensing officer from the council had done a safety check, too. In the end, the judge’s view was that an additional and burdensome extra check should have been carried out; a check of every chair.
There could not be a clearer example of something to which clause 1 would have applied. The clause asks whether or not, by taking precautions against a risk, we could prevent a desirable activity from being undertaken or, more importantly, whether we could discourage persons from undertaking functions. The one thing about which the Scout Association, the Girl Guides and all the other groups to whom we have talked are clear is that anyone who has been hauled through a case like this as a scoutmaster, guide leader or whatever almost invariably leaves the Scouts or Guides and so do a lot of their friends.
First, for Lord Goodhart’s sake, will the hon. Gentleman place in the Library the documentation he has about the case so that, at a later stage, we can all read what the judge said in full? Obviously there is no time in a Second Reading debate to go through the whole judgment.
The test in clause 1 is the existing law; the precaution that it is said the defendant should have taken is tested against its cost and its benefits. There is no change brought in by clause 1 that would affect the case that he has mentioned. The problem is the way in which it was applied by the judge, but that cannot be changed by having a new statute.
I half agree with the hon. Gentleman. Without exception, all the cases have come from the last 12 or 13 years; not a single case arose before 1993, and we have had a flood since. There has been a change of interpretation that has had nothing to do with anything that Parliament has done. That is true, but crucially, by spelling the point out—we can get into semantics as to whether it is a change in the law or not—there is a real chance that the lower courts will take this on board. Tomlinson was an excellent judgment but it dealt with a rather narrow point about an individual who was behaving extremely recklessly. I hope that this measure will embrace a wider range of cases, as I have tried to describe.
Does the hon. Gentleman agree that it is evident that the individuals in the case he mentioned were not protected by the law? Something went wrong; the courts ignored all the guidance given to them. Some of my hon. Friends here do not completely agree with clause 1, but in Committee we must recognise that there is an imperative to put some legal protection in place to prevent the kind of outrage that the hon. Gentleman has just described.
Let me give details of a second case, from a large dossier; the Gaping Gill incident. In summary, a scout troop visited a beauty spot and some parents were invited to come along as additional supervisors. On the way, a little boy asked a scoutmaster if he could investigate a cave in the side of a hill that they had passed. The scoutmaster said no, that it was dangerous and explained why. The boy asked his father, who said yes, took him to the entrance and gave him a lighter. The poor little boy walked over a 300 ft cliff to his death. His elder brother was serving in the troop.
Two years later, when the boy’s elder brother left the troop, the father sued the Scout Association. The scoutmaster was declared to be negligent in a British court of law on the grounds that having spotted an “urban parent”—a parent from an urban environment—the scoutmaster should have taken more active steps to prevent the boy from getting into the cave because he could not be expected to understand the danger.
Let me make it clear that not only the Scouts furnished us with cases. We have had them from the guides, the mountaineering community and the Royal Yachting Association, as well as one from a school.
We must understand how much is at stake and how much damage is being done to our country. The Duke of Edinburgh, who is the patron of the Campaign for Adventure, has said in public:
“The danger for society is not that people take risks, it is that they do not take risks because they see risk as entirely negative rather than the very positive thing it really can be and most often is.”
By coincidence, almost the same month, Lancashire education advisers issued a statement:
“Many Duke of Edinburgh Award Schemes and other providers of diverse educational opportunities are having trouble recruiting”
“due to fear of unfair litigation.”
Sir Chris Bonington, who addressed the inaugural meeting of the all-party group, said:
“A sense of adventure is vital for children growing up and society as a whole.”
If young people are not offered opportunities to take risks and to learn to expand their horizons in a properly organised and structured environment, the less enterprising will turn into couch potatoes while the more enterprising will get out and make their own opportunities for risk. We see that in joy riding, people playing chicken on railway lines and a string of other unhappy events.
I rather agree with the comments made by the right hon. Member for Berwick-upon-Tweed (Mr. Beith) on balancing risk. Those are the risks we have to balance with the damage we are doing to voluntary organisations, and indeed professional ones, that provide adventure training and sport.
Let me spend my last couple of minutes looking at ways in which we could strengthen the Bill. I want to make four points, two of which, funnily enough, were put forward by the Field Studies Council. First, there is perhaps something to be said—this is the only part of the speech made by the hon. Member for Hendon (Mr. Dismore) that I agreed with—for a clearer definition of “desirable activities”. Lord Hunt made an excellent stab at this.
The basic point, if the House will forgive me for repeating it again, is that there is no contradiction between saying, on the one hand, that there is no compensation culture and accepting, on the other, that in this specific area—a tiny proportion of all cases, involving adventure training and sport—real damage is being done. The American experience proves it. America is the worst country in the world for a compensation culture, but there is specific protection for sport and adventure training in the law of many American states and a much higher burden of proof. I would be happy to have provision restricted to sport, adventure training, physical recreation and educational purposes, or something similar. I leave it to others wiser than me to draft the clause.
My second point is that, having restricted the provision, we really should say “shall” rather than “may”. I entirely understand the objection to that made by the Minister in the courteous hearing that she gave us, but that objection would surely be coped with if we had a more restrictive definition of “desirable activities”. As time is short, I shall move on from that point.
The third issue concerns landowners and farmers; there was a close vote in another place on it. The plain fact is that all organisations such as the Scouts and the Guides, as well as those that provide for schools that want to visit farms, can operate only with the good will of the farming community. I cannot see why—this does not have to follow the exact wording promoted in the House of Lords—we cannot have an element of clause 1, or indeed an extra clause, that specifically provides comparable comfort for those who make their land available for such activities.
The fourth and final point was also made by my hon. Friend the Member for North-East Hertfordshire (Mr. Heald). We must consider the possibility of including a specific measure to address the issue of those who disobey instructions or behave manifestly recklessly. As my hon. Friend pointed out, that is important for people who run leisure parks and provide opportunities for youngsters to do adventurous things professionally, but it is even more so for those who do so in a voluntary context. If somebody deliberately sets out to disobey an instruction and brings a serious accident on themselves, that should be a stronger defence than it appears to be now, as the Gaping Gill incident all too sadly illustrates. If somebody is drunk or drugged, the same point should apply. I am glad that the Field Studies Council supports that move.
This is a good measure—I have confined my remarks to the first two clauses—and it is one that most hon. Members support. I strongly urge the Government to consider strengthening the first clause so that it provides even clearer protection for those who provide opportunities, frequently on an unpaid basis, for young people to test the boundaries and grow as individuals in a structured way that is not necessarily safe, but is sensibly balanced in terms of risk. That is what they need if they are to grow up without feeling the need to take the sort of risks that none of us wants to see them take.
I shall confine my remarks to part 2 of the Bill. I take on board what my hon. Friend the Member for Hendon (Mr. Dismore) said about clause 1 and I note the controversy. I shall examine the results of the consideration in Committee of that clause, but overall it is a good Bill.
My hon. Friend the Member for Sherwood (Paddy Tipping) made the point about the exemption. One has to make a clear distinction between trade unions and claims farmers, and look at the legal services that trade unions have provided over time. They have pushed the boundaries of the law and in so doing have made society a fairer place. Trade unions and their legal services have made civil society a better society.
Part 2 will bring structure and regulation where there was none previously and it is essential that we are able to provide regulation of claims farmers. My hon. Friend the Minister suggested that there were some 500 claims farmers, and I suggest that half of them have come into being since the chronic obstructive pulmonary disease scheme started under the coal health scheme. At present, there are 582,000 registered claims for COPD, 170,000 registered vibration white finger claims and 15,000 posthumous vibration white finger claims. That is 767,000 claims, and many of the claims farmers saw the opportunity to exploit the community.
I agree with the hon. Gentleman about claims farmers, but I know that he is a member of the National Union of Mineworkers. It has been reported that a firm of solicitors acting for the NUM
“advised miners to sign an agreement letting the NUM ‘fund’ their legal claims—for chronic chest diseases and a crippling hand condition…in return for paying part of their eventual compensation to the union.
The miners were not told that in reality the Government, not the NUM, was paying the legal costs”.
How can the hon. Gentleman justify not regulating a union that behaves like that? It is disgraceful.
I cannot justify the fact that the solicitors to which the hon. Gentleman has referred did not provide the expected standard of professional advice. They should have advised claimants that they did not need to make the payment that was requested when they signed the form.
It was the solicitors who were at fault, not the union. Trade unions and their legal services have worked to provide a better society. I do not know which area of the NUM was involved in the case to which the hon. Gentleman refers, but I presume that it was in Yorkshire or the north-east. I maintain that the solicitors involved did not advise clients properly, and so failed to provide the proper service.
As I said, there is a clear distinction between trade unions and claims farmers. The solicitor in the case that we are discussing failed to give the expected standard of professional service. Payments were made to the trade union, which had asked its solicitors to ensure that a form of authority was signed by claimants. I do not excuse that, but the solicitors should have explained that claimants could go to another firm of solicitors that did not seek payment. The fact that that was not explained makes the solicitors culpable.
There is a very big difference between claims farmers and trade unions, as I shall explain by reference to a couple of cases in my constituency. Lots of elderly people live there, and many are the widows of miners. One lady, Mrs. Leadbeater, was approached by a claims farming organisation using a name that gave the impression that it was linked to the trade union movement or to the Coal Industry Social Welfare Organisation. That is a common practice, and one of which I hope my hon. Friend the Minister is aware.
In this instance, the claims farmer called itself the Miners Welfare Compensation Agency Ltd. It approached Mrs. Leadbeater about her claim, and she thought that she was dealing with a legitimate organisation related in some way to CISWO. The agency took the claim and passed it to a firm of solicitors in Manchester called Lopian Wagner. When the claim was settled, Mrs. Leadbeater found that £9,000 had been deducted from her damages and paid on to the claims farmer.
When a claims farmer works with a solicitor, a very complex situation is created. I and my hon. Friend the Member for Barnsley, Central (Mr. Illsley) got involved in the case and, with the help of one of the BBC’s local political programmes, we forced the solicitors involved to pay back the money. We advised Mrs. Leadbeater to take her case to another solicitor, which she did. She took action against the original solicitors through the Law Society, and the matter eventually went before a Law Society disciplinary committee. As a result, that firm of solicitors was fined and had to pay £1,800 for the trauma that it had caused to my constituent.
Another example from my constituency involved a company called Zuco Legal Ltd. As often happens, that company came into being simply to exploit problems in mining communities. It garnered 5,000 claims, and then wrote to various firms of solicitors. One of those firms was Towells of Wakefield, which passed to me the letter that it received from Zuco.
Zuco succeeded in selling on the claims that it had gathered, although I emphasise that Towells would have nothing to do with the proposal. Zuco sold those claims on at £400 or £500 per claim, although we do not know the exact figure. It made £2.25 million and then disappeared from the scene. That is the sort of problem that has occurred in mining communities.
I hold to the point that there is a clear difference between claims farmers and trade unions. I accept that some trade unions may have behaved less well than one would have expected, but that does not alter the fact that, in the case mentioned by the hon. Member for North-East Hertfordshire (Mr. Heald), it was the solicitor who failed to provide the level of service generally expected of a solicitor.
I have great respect for the hon. Gentleman’s work, but he cannot escape the fact that, in respect of the money that arrived in the NUM’s accounts, it is not sufficient to say that the solicitor should have told union members about it. The NUM knew that its members were getting that money, so it should have told them as well.
Let me deal with that point. The right hon. Gentleman may not be aware that, as my hon. Friend the Member for Bassetlaw (John Mann) has mentioned before, a deal was done with the Union of Democratic Mineworkers, which had a separate arrangement. It was not offered to other trade unions in the industry, though it was offered later when some trade unions had abandoned their in-house legal services. Consequently, certain areas of the NUM went into an arrangement with solicitors whereby a payment would be passed from them back to the NUM on the basis that a form of authority would first be completed. I would have thought that, in that context, the onus was on the solicitor acting for the trade union to advise the client that he could go down the street to a firm of solicitors that would not charge him. The fact that the solicitors did not do that makes them culpable. It is not the trade union, but the solicitors who are at fault. We must also understand why the problem came about. It happened, as I said, because of preferential treatment being given to some miners’ unions and not to others.
The purpose of part 2 is to bring some form of regulation to claims farmers. Where the claimant has a relationship with a trade union, we have been able to ensure that the Law Society acts for them. I have referred many complaints to the Law Society, most of which were dealt with, bringing redress to claimants who could claim back the money held by law firms to pay for the services provided by the claims farmer. I continue to hold to my point that there is a clear distinction between the trade unions and claims farmers. One or two trade unions may not have provided the service that they should have, but that should not be used to tarnish the whole trade union movement. In my estimation, the trade union movement has been a force for good.
It is essential to overturn the Barker judgment and to go back to the law as established in the Fairchild case. In that case, it was clearly established that the responsible employer or insurer had to pay full damages to claimants suffering from exposure to asbestos and mesothelioma. I believe that we must return to that principle and hope that the Minister will table a Government amendment in Committee to achieve it.
There has been a marked increase in mesothelioma claims over the last 40 years. For example, in 1966, there were just 153 claimants; today, there are almost 2,000 diagnoses of mesothelioma cancer each year, and the prediction is that the number will increase. The Health and Safety Executive’s latest projection is that it is likely to peak in about 2015, reach a plateau and then taper away by 2050. However, one authority—an investigative journalist by the name of Peter Martin, who wrote an article in The Sunday Times Magazine of 16 May 2004—has estimated from his research that 186,000 deaths are likely between 2000 and 2050, as a result of exposure to asbestos. So it is essential that we return to the law as set by the Fairchild ruling.
A little earlier in an intervention on my hon. Friend the Member for Manchester, Central (Tony Lloyd), I referred to the fact that, under the Barker decision, people could not make a claim under the Pneumoconiosis etc. (Workers’ Compensation) Act 1979, and I did so because of a legal opinion that I received by e-mail from a QC by the name of Allan Gore, who practises at 12 King’s Bench Walk. I shall read the pertinent part for the Minister:
“In Barker no answer is offered to the question. But if fair in Fairchild, why is it not fair now? Surely the answer cannot simply depend on what was argued in each case? Victims will now obtain only partial damages in many cases. This leaves cases outside the 1979 Act so that safety net is not available.”
That is why I have referred to the fact that redress under the 1979 Act would not be available, but the Minister has been advised that it would be available.
I have no doubt that the Government could say that redress is available under the 1979 Act for claimants to make such claims, but I can understand the logic that has decided that the 1979 Act is not available for that purpose. One of the planks of the Barker decision was that, if people were unable to identify one of the employers for whom they worked, their damages would be reduced accordingly. The 1979 Act provides for claims to be made where an employer has either gone out of business or cannot be traced, or there is no insurer. So it logically follows that, given the Barker decision, there could be no claim under the 1979 Act. If that is the legal decision, the Government must ensure that the route to redress under the 1979 Act stays open.
Overall, this is a good Bill. It will deal effectively with claims farmers and allow us to introduce some regulation and order, and by doing so we will avoid people being exploited in the way they have been exploited in mining communities.
I declare an interest as a non-practising barrister, although not in the field of personal injury or negligence. I want to say a few words about part 2, which I welcome, and then to say a little more about part 1. I am certain that part 2 is an entirely appropriate and necessary measure, which will introduce some consistency and ensure that claims farmers are treated in the same way as lawyers and insurers. That is entirely welcome. Like my hon. Friend the Member for North-East Hertfordshire (Mr. Heald), I hope that that there will be full consistency, and that trade unions will be included in the general consensus.
As the House has heard, the Constitutional Affairs Committee, of which I am a member, considered the Bill in some detail and concluded in its investigation that there is no compensation culture. There is broad agreement not only about that, but about the fact that there is a perception of a compensation culture. In my view, that is almost as bad. That perception is widespread and profoundly damaging, as other hon. Members have said. Claims management companies have contributed substantially to that perception, and that is one of the many good reasons for regulating their behaviour. The Government wish to go further to address the apparent perception that there is a compensation culture—and that brings me to part 1 of the Bill.
There is no doubt that the perception of a compensation culture must be challenged and changed, because it is doing a great deal of damage. Of course it is right that if somebody suffers injury or loss as a result of negligence they should receive compensation for their loss. That is clear, and it is the law, but it seems to me that a sense that there is no longer any such thing as a straightforward accident for which no one is to blame, and that someone is always to be held financially accountable, is corrosive.
It is clear that people are not rushing to the courts to pursue claims. That is what the evidence shows us, but it is also clear that many of those who operate voluntary organisations and the like still have a profound fear that they might do that, and that fear has to be addressed by the House. That fear is important because it inhibits activities that are not only enjoyable, as my hon. Friend the Member for Canterbury (Mr. Brazier) described, but can be extremely valuable for the economy. That is important, because clause 1 is about persuading people that the position is as the Government argue it to be.
The law does not prohibit someone from operating a voluntary organisation or running a scout troop or adventure training organisation or anything like it, but the law will consider someone’s behaviour, and if it is reasonable and they have taken appropriate measures to ensure that risks are limited, they will not be liable. However, that is not the perception. The perception is that if people run an event, they may be liable. That is important, because the effect is difficult to measure. When we look at the figures, we can see whether accident claims have gone up or down. That is quantifiable, but we cannot quantify the things that do not happen—all the decisions taken by teachers not to run a school trip, or by youth club organisers not to undertake a potentially dangerous activity that they fear may leave them liable to legal action. There is an area of undisclosed and undeterminable activity that is not happening, and that is the real root of the problem.
There is no doubt that that non-activity is real. This is a genuine and far-reaching problem. I do not want, and I am sure that other hon. Members do not want, to live in a society where in some activities that our children pursue in their education it is made impossible for them to fail, while they are told that other activities are too risky for them even to try. If we pursue that sort of scenario, we will discourage our potential entrepreneurs and scientists from trying the type of activities that inevitably involve risk, but without which progress cannot be made in a competitive economic environment. That is the kind of Britain that I fear we are moving towards, not because of a reality but because of a perception.
I support wholeheartedly the Government’s intention and aspiration to address that perception, but I have severe doubts whether clause 1 is the way in which we should go about doing so. My basic principle is that if we can do something better without making extra legislation, we should do so. That is something that will be explored as the Bill progresses through the House. I wonder whether the Government can achieve what they, quite properly, want to achieve other than by constructing something like clause 1. Clause 1, as the Government have made perfectly clear, restates the law. In their view it does not change the law, although I appreciate that some hon. Members disagree with that assessment. The Government believe that clause 1 is about expressing the law more clearly and making clear to everyone who has an interest in this area of the law exactly what it says.
What the Government really need to do is to get that message across to the people likely to be affected by the law, but the way to do it is not with a clause in a new piece of legislation, which will hardly come immediately to the attention of people engaged in voluntary activities, or who run scout troops, adventure training or anything of that nature. Those people will want to hear directly from the Government what their responsibilities are and what they are liable for. That is a communication job; it is an exercise in getting the message across. It is—dare I say it?—a public relations exercise. If there was ever a job for the Government, that must be it. However, given all the problems that have been outlined about clause 1, all the difficulties of defining precisely what a desirable activity is and all the possible downsides that we have discussed, could we not do things in another way? I hope that in the course of the debate we shall consider that point more carefully.
To be fair to the Government, they have accepted that they cannot simply rely on clause 1 to get across the message that the compensation culture is a myth and that people should not change their behaviour as a result of that myth. There is clearly much more to be done. In an intervention on my hon. Friend the Member for North-East Hertfordshire, I referred to activities that are not covered by clause 1 and which relate to the Health and Safety Executive. There is much work to be done in that regard. If the Government are to succeed in persuading those who operate in the voluntary sector and elsewhere that they are not liable to penalties, in the form either of prosecution by the HSE or of a case brought by someone injured in an accident, they will have to consider not only the civil law but also the criminal law, and ensure that the HSE gives clear guidance about what people are safely able and entitled to do.
I hope that the Government will go further and consider the work of the HSE and make sure that the guidance it issues is clear, and does not change behaviour in undesirable ways.
The provision would need to be much wider than my hon. Friend suggests. A farmer in my village used to give up two days to display lambs to young children—one to raise money for the parish church and the other to raise money for the local hunt. He can now do neither, because the HSE warned him that the children might catch a disease if they touched the lambs. That has had a devastating effect on our small village, so how can we reach out to such people?
I am grateful to my right hon. Friend, who makes a valid point. Part of the difficulty is that the HSE appears to operate on the premise that it must do whatever is necessary to reduce the prospect of an accident almost to zero. That approach is fundamentally flawed and, as many Members have said, although we should look for methods of reducing risk, we must always accept that we cannot eliminate it entirely. We must also accept that if we reduce to almost nothing the chance that people—especially young people—will engage in potentially risky activities, we shall damage their development far more than the risk of an accident would. The Government will have to look at the matter in a broader context than that presented by the Bill.
It is important that we recognise what is right about the Bill: it addresses the long-overlooked issue of how to regulate the claims farming industry. That is welcome and we shall make sure, as the Bill goes through Committee, that those provisions work as well as possible. To achieve that, the Government must avoid drawing attention away from their primary purpose by leaving clause 1 as it is, because it may simply act as an unwelcome distraction from what the Bill will, I hope, do effectively.
The Government can address the perception that we have a compensation culture, but they need to get their information transmission mechanisms right, and to send the right messages through Departments, through the HSE and through regulation of the claims farming industry that the compensation culture is not a reality, and never can be. It would distract us, and the individuals whom we are trying to help, to talk incessantly about the sorts of legalistic problems that clause 1 throws up. I hope that the Government will take those comments on board and that the Bill can be improved still further as it progresses through the House.
I intend to ask a number of questions of the Minister and the House, and I hope that people will take them into consideration as the Bill progresses. I will address each question by illustrating what I am talking about with an example from the mother of all gravy trains, the scamming of money from miners. I pay tribute to more than 1,000 of my constituents who have already taken action—many of them successfully—against more than 35 firms of solicitors and a whole range of claims handlers.
The first example involves a claims handler called IDC. Many of my constituents signed a form that said that IDC would pay the costs of the claim. It even contained a clause about what would happen if the claimant deliberately misled the company. In fact, the opposite happened. A firm of solicitors called Gorman Hamilton got the claim from IDC and wrote to my constituents to say:
“You, as our client, are liable for our costs but, as you know IDC Ltd have agreed to pay them on your behalf.”
That was not true. The Government were paying the costs. It was a scheduled case. There were never any costs being paid by IDC. Here we have a conspiracy between a solicitor and a claims handler. My question for the Government is: what will happen with that conspiracy if there are different agencies regulating the claims handler and the solicitor? That is the nub of the issue.
I have some minutes from the national marketing meeting of IDC. Oxley and Coward solicitors, Park Hutchison solicitors, Marrons solicitors, Whittle Robinson solicitors, and Russell Young solicitors were all at that meeting. IDC went through the importance of knowing the needs of solicitors and what they consider “good referrals”, of looking at the screening processes and of the “personal touch”. Mention is made of “MTFS” or “make them feel special”. That is with reference to the clients. Mention is also made of:
“The introduction of a theme to build on in order to provoke a response and to attract and hold the favourable attention of the prospect whilst the selling message is being told.”
There is a discussion of whether to use a shotgun or a rifle approach to the marketing of the product.
The question of collusion between solicitors and claims handlers is at the heart of the issue. Under the heading of questions raised from the floor, the minutes state:
“With this strategy in place expect clients to cross from Union Solicitor to IDC.”
That was the aim of that marketing meeting. The question of the two culprits together is important.
The second example involves PR and Associates. Again, a number of my constituents signed a common law claim form, headed “Common Law Claims”. The offer was that the costs would be covered for a common law claim, and the claimant would pay 15 per cent. plus VAT in return. That sounds fair, but of course, those were not common law claims, despite the fact that Kidd and Spoor Harper said:
“In accordance with… your Agreement...we have deducted”
the fee to PR and Associates from the claim. Here we have the solicitor doing the work on behalf of the claims handler. There is a cast iron case against the solicitor, but how will that be affected in terms of how the claims handler is regulated?
The third example involves Union and General Services. It is the same old thing. The contract says that the company will pay the costs of the fee. This time the firm of solicitors is called Robinson King, and £3,284 was deducted in this case. The letter states:
“you are funded by Union & General Services…I enclose a copy of the signed agreement…I have forwarded this cheque on to Union & General Services who will deduct their…fee and provide you with a cheque”
for the rest. How will that be dealt with? Money has passed wrongly to a third party.
Separately, Union and General Services, which was a limited liability company, has gone into receivership. When we started to raise the issue, the company was closed down. How will the regulation affect such a scam company, which was set up by a Mr. Revell from Doncaster, a former union official? It was a pretence to call the company Union and General Services. Given that the company put itself into receivership, we would not be able to take a common-law case against it to the small claims court because it is no longer in existence. How will the ability of companies not to be pursued be dealt with?
Another of my constituents, Mrs. Beckett, went to Raleys, a firm of solicitors that I have already named. She was told:
“NUM funding is available only through this firm”.
However, Mrs. Beckett did not go through the NUM, but contacted Raleys directly by using Yellow Pages. Despite that, she was told:
“You are of course at liberty to explore other types of funding arrangements, however we cannot guarantee that they will protect you from the need to pay any expenses or from the amount that your solicitor may recover from your compensation”—
I have a copy of the kind of publicity that Raleys puts out from a brochure produced by one of the health authorities. Raleys says, “Millions won in compensation,” and asks miners to come forward, but the publicity makes no mention of the NUM. However, when one goes to Raleys, as did another of my constituents, Mr. Dunstan, the situation becomes clearer. He was told:
“If you do not wish to take up the option of Union backing then it will be necessary for us to consider alternative funding arrangements. If you are not eligible for legal aid then it will be necessary to discuss funding your case by either private funding or through a conditional fee agreement.”
However, we should not forget—the letter was written in 2000—that the Government were paying the fees.
The letter continues:
“If you choose to fund your claim on a private basis then you will be liable for the costs and disbursements of this firm in dealing with your claim. You will also be responsible for the opposition’s costs, should you lose”—
not true; it is a lie. The letter then sets out a statement on conditional fee arrangements and says:
“Please find enclosed a form of authority confirming the funding options which you would prefer.”
The TUC briefing for the debate makes the situation when dealing with unions clear. The vast majority of unions are decent organisations that deal with members who can get remedies in a range of ways. However, Mrs. Beckett was not a member of a union and Mr. Dunstan was a retired member. The situation was affecting non-members, not members, so remedies available for members, ranging from the certification officer to common law governed by statute, would not be available. Precisely how would that be addressed?
Of course, we have also heard about another union: the Union of Democratic Mineworkers. I have lots of similar forms that contain such phrases as:
“I will pay … a fee … to cover the cost of pursuing this Claim”.
However, that should not be the case. One of the dilemmas is that although the majority of people went through solicitors, so the Law Society would be involved, some did not. That is precisely why I intervened on the Minister to ask about the Government’s ongoing three agreements with UDM Vendside. There are no solicitors involved and no consumer right is available. The people involved have never been to court or had dealings with solicitors before. Many of them are in their 80s and 90s, and their only remedy is to go to court to get justice, but that does not appeal greatly to people of that age.
There is far more to the situation. I have a form from a Mrs. Cocker. The Vendside bit of the form has been covered by a sticker for Walker and Co., which is not known to my constituent. An individual employee of Vendside and the UDM had set up a different company. That company then took a cut. I know that because I have a copy of the minutes of a UDM meeting in January 2002 between Beresfords solicitors, the UDM leader, Mr. Stevens, and Clare Walker—Walker and Co. The minutes explain in graphic detail who gets what cut of the money. There is a range of information detailing what Beresfords, Vendside and Clare Walker will be getting. The minutes also cite a company called Melex that is being set up, 90 per cent. of which is owned by the Beresford family.
Letters between Beresfords and the Law Society have come into my possession. Beresfords has been asking, in essence, how it can get around the Law Society rules on referral fees. It asks, “Can we set up a third party?” It does not call it Melex, but Melex comes into existence. Who should get paid? Obviously, the Beresford family get some money, but so does Clare Walker. But it goes on, because then there is the conditional fee arrangement, and insurance. In some cases, Beresfords hands matters on to another firm of solicitors—its panel—which pays a fee back to Beresfords. In a hearing loss claim, there could be five or six different deductions. There is an amount for the ATE Insurance commission—the minutes say who is going to get a bit of that. There is the Melex money. There are the vetting, administration and marketing fees.
That leads me to my key point. It is very easy to set up new companies to get round the guidelines. In other words, people say, “It’s not a referral fee—that’s not allowed under Law Society rules. It’s a marketing fee.” It is only when someone manages to get all sorts of files that they see that lots of people are doing the same work. Walker and Co. was doing the marketing; Vendside was doing the marketing; Beresfords was doing the marketing. Oh, and there is another firm, Indiclaim, which was doing the marketing as well. There are lots of different people doing the marketing. We must ensure that these dodges are not allowed.
I understand that some of these companies are now charging money for training. Training has nothing to do with my constituents. There are different ways of skinning the cat and getting the money. Another firm of solicitors, BRM, is paying £500 plus VAT to Indiclaim. Another one, Wake Smith, has done a better deal, as it has to pay only £300 plus VAT to Indiclaim. My constituents have never heard of Indiclaim Ltd. They do not realise that it is owned by one of the people running Vendside, which is owned by the UDM. We must ensure that people cannot wriggle out of regulation. It is essential that the Government use the opportunity of their agreement with the UDM to look into the matter in graphic detail.
The Law Society is quoted in the legal services ombudsman’s report as saying that:
“it is not clear what (if anything) Vendside and/or the UDM did pursuant to the Vendside Agreements in respect of the fee paid”.
What they did was set up lots of other companies. My constituent Annie Robinson, aged 93, gets £352.50, which she struggles to get back either from the solicitor or from Vendside. That is simply not acceptable.
It is essential that we act now, and do not wait until the Bill comes into force. The scandal of the miners’ compensation is going on at the moment. These people need consumer rights now, because the Raleys, the Vendsides and the plethora of other firms who have been ripping people off should be held to account—and if solicitors who are claims handlers are struck off, the Government should cancel their agreement with the UDM.
I wish to declare an interest as a member of the Law Society. Like Members on both sides of the House I warmly welcome the Bill, particularly part 2, although I do have reservations about part 1, which I will touch on later.
Regulation of the activities of these so-called claims farmers—an expression that appears to have supplanted the traditional “ambulance chasers”—is long overdue. Whether or not there is a compensation culture in this country is a matter of debate, and it has been debated today. The Better Regulation Executive took the view firmly that it was a myth, and certainly it appears that costs in negligence actions in this country are considerably lower than those in the United States, France, Germany, Australia or other major jurisdictions. Nevertheless, there is, as appears to be widely accepted, at least a perception of a compensation culture, and that is having a significant and detrimental effect on the national life of this country.
The compensation culture, if it is not a reality, appears to be something that the claims farmers are aimed at creating. We have seen their marketing campaigns. We have seen also their slogans, such as, “Where there is blame, there is a claim”. These slogans are clearly intended, aggressively, to encourage the pursuit of actions for personal injury. Such advertising can frequently raise unrealistic expectations in the minds of vulnerable people.
Since legal aid was abolished in 1999 for personal injury claims, the no-win, no-fee regime that has replaced it has made it more difficult for potential litigants, particularly those who are less sophisticated than others and therefore more vulnerable, to obtain legal redress. It is unfortunate that it is precisely those people—more vulnerable potential claimants—whom the claim farmers seek to attract. Perhaps the expression “prey upon” might be more appropriate.
I am sad to say that the more vulnerable in our society find the prospect of approaching a solicitor intimidating. They find the prospect of making a free telephone call to a claims farmer a more attractive option. Once the potential litigant is in the clutches of the claims farmer, it is often difficult for them to get out.
The abuses of claims farmers have been catalogued this afternoon. As time is short and because other Members wish to speak, I will not rehearse them. There is no doubt that regulation of the industry is a matter of priority and one that is long overdue. I congratulate the Government on bringing legislation forward.
The activity of claims farmers has its consequences. Their pursuit of the creation of a compensation culture has created an increasingly risk averse society. We have heard the stories of school teachers and scout leaders who have been dissuaded from taking young people in their charge out on what would be valuable and character-building expeditions.
Many years ago, when I was considerably younger, I used to go rock climbing. I did it because I enjoyed the risk. When one is clinging 100 ft up on a rock face, it is difficult to think of anything other than maintaining that position on the rock face. I would not begin to pretend that I was in any sense a Chris Bonington, but I enjoyed the experience. I was taken into the mountains by a guide called Terry, but I wonder whether these days Terry would be so willing to take me to the mountains. He has probably heard about the culture of where there is blame, there is a claim and he might well be dissuaded from doing so.
I believe that that is happening. We have heard from my hon. Friend the Member for Canterbury (Mr. Brazier) of the experiences that have been related to him. This is sad. Risk is a fact of life; we take risks every day. Risk is good and it develops character. If we are being dissuaded from taking risks by the activities of claims farmers, we need to deal with the culture that they are generating.
I applaud the aims of the Government in part 1. I understand what they are trying to do. They are trying to deal with the risk aversion that has been built up. They are trying to provide what I imagine is a statutory defence, based upon what they say is common law as it now exists.
Clause 2 is an extremely valuable component of the Bill. I congratulate Lord Hunt on ensuring that the provision was introduced into the Bill. I similarly congratulate the Government on accepting Lord Hunt’s valuable amendment and incorporating it into the Bill. It achieves a number of things. It deals with the simple issue of courtesy. If someone has caused damage or injury to another individual, in a courteous society he should be encouraged to apologise. As we have heard, he is frequently inhibited from doing so, because that may amount to an admission.
The problem extends even further, as we have heard. The clause will give insurers the opportunity to pay for a certain amount of treatment for people who are injured. The fact that that treatment is paid for will give considerable solace to the claimants but, in due course, it will reduce the value of claims that are made and ultimately reduce insurance premiums across the board.
I am concerned, however, about clause 1. I applaud its aim of seeking to ensure that the courts pay regard to the question of whether certain steps should have been taken by defendants or whether it would be unreasonable to expect them to take them. However, it is poorly drafted and, if we are not careful, it will become a fertile source of litigation in future. The application of the clause by the courts when considering such cases is not mandatory but permissive. The word, “may”, is used, but “shall”, is preferable, because it would give the lower courts the guidance that they need, ensuring that they consider the matters dealt with in the clause. However, the drafting is loose—there are references to “particular steps” and “a particular way”, but the glaring omission is the nature of “a desirable activity”. What does “desirable” mean? There is reference to
“undertaking functions in connection with a desirable activity”.
What are those functions? The thrust of the clause is sensible and desirable.
Indeed. The House has an opportunity to give the courts clear, unequivocal guidance about how they should interpret the law of negligence in personal injury cases. That is an extremely important issue: it must be addressed in Committee, as the clause requires significant improvement. Notwithstanding that reservation, I applaud the Bill, which is long overdue. I welcome its introduction by the Government, and I hope that, pursuant to its enactment, regulations will be adopted and made law. If the House passes the legislation—and I hope that it does so—it will do a great service to some of the most vulnerable people in the country.
I welcome the Bill, as it tries to stem the development of a compensation culture and deal with risk aversion. It seeks, too, to discourage and resist bad or unwarranted claims while improving the system for people with a valid compensation claim.
I welcome the fact that the Bill will establish a regulatory scheme to control runaway claims management companies, but I share concerns with the TUC about clauses 1 and 2. I thank the Government for their recent statements acknowledging those issues, and I congratulate the Minister on her opening speech, which addressed some of my concerns. The TUC is worried that the wording of clause 1 requires a worker injured in a “desirable activity” to prove a higher degree of negligence than a worker who suffers the same injury in a different activity, leading to the creation of a two-tier system in which workers engaged in desirable activities receive one standard of care while other workers receive a different one. The Government have said that the clause will not alter the standard of care required of employers, and I should be grateful if the Minister confirmed that. As other hon. Members have mentioned, there are also concerns that it is not entirely clear what constitutes a desirable activity. It would be helpful if that could be clarified in Committee.
I support the measures to restrict the compensation culture. Over the past five years there have been many abuses by claims farmers. Many of those companies actively encourage frivolous claims, combined with misleading advertisements targeted at certain parts of the country—areas where there was heavy industry. I represent a constituency in Durham where such companies have targeted their activities at former miners. Still, even though we acknowledge that, we cannot and must not compromise the protections afforded to our workers.
I share the concern of the TUC that in clause 2 it would be wrong to group trade unions with the ferocious claims management companies. I declare an interest. I am a member of the GMB and have been very active in the union for some time. I wish to put that interest on record.
I have recently been reading some of the speeches from the first parliamentary Labour party a century ago. It is interesting that those early speeches in the House were in defence of trade unions. They also reminded Conservative Members of the advantages of belonging to a trade union. It is extraordinary that we have to do that today.
Does my hon. Friend agree that the main drive from trade unions is against a compensation culture? What we want is a culture at work in which people do not get killed, maimed or damaged for life. Trade unions want to stop that happening, which is the opposite of claims farmers, whose purpose is to prey on people who have been through those experiences.
We all agree that trade unions do a useful job, but is the hon. Lady seriously trying to justify what the NUM was doing in the example given a moment ago by the hon. Member for Bassetlaw (John Mann) and in the example that I gave? The union was doing exactly what claims farmers do and taking a cut of the miners’ money. Is the hon. Lady saying that that is fine and that we should not regulate trade unions?
I shall deal with that point in a moment. We should not forget that unions are constantly working to prevent the injuries that lead to claims in the first place. That is a very important distinction between trade unions and claims farmers. Whereas such companies choose to maximise profits, trade unions seek to maximise protection for their members and my constituents.
Trade unions represent more people making personal injury claims than any other body, so it is important that unions are not undermined in the eyes of their members by being lumped together with disreputable claims companies. Trade unions do need regulation, and I shall deal with that. The TUC has outlined a number of reasons why union legal services are usually completely different from claims farmers. First, unions are already heavily regulated. Secondly, when a member makes a claim, the union will work for a fair settlement, often to keep medical and legal costs to a minimum. Thirdly, as my hon. Friend the Member for Blaydon (Mr. Anderson) said, unions’ primary task is to protect their members. Fourthly, unions link the work that they do on compensation with work on prevention. Fifthly, unions do not automatically steer their members towards claiming compensation from their employer: many union claims are made to state compensation funds, which is an entirely legitimate task.
It is for those reasons that unions and certain not-for-profits need a specific exemption in the Bill. I applaud the Government’s statement that they will be afforded an exemption in regulations, but it is important that in drawing those up it is clear that trade unions have to operate within a code of practice, and that if they act like claims farmers, they must be treated as such. I am sure that all hon. Members would accept that.
I want to say a few words about the Barker ruling on mesothelioma victims, which has acted very much against their interests. The Government have called it “disappointing” and pledged to consider a response to it. I urge them to respond soon. In my opinion, the judgment fails to recognise the realities of the problems that the victims are facing. It is often impossible for them to show which employer caused the disease, so several previous employers are thrown into the frame. The former Association of British Insurers scheme dealt with that complexity, but that is no longer possible. It is impractical for the claimant to trace everyone concerned, especially because, as my hon. Friend the Member for Hendon (Mr. Dismore) observed, they often have only a short time to live after the disease has been identified.
It is important that the Barker ruling does not influence the judgment that we are awaiting on pleural plaques. Like many MPs who represent ex-mining areas, several people who come to my surgeries suffer from such diseases, and we must ensure that they are protected. I urge my hon. Friend the Minister to take action as soon as possible.
I should start by declaring an interest, in that I still receive the occasional royalty for the books on this subject that I wrote several years ago. However, I am not a member of the Law Society or a barrister. I completely agree with the speeches by my fellow Constitutional Affairs Committee members, my right hon. Friend the Member for Berwick-upon-Tweed (Mr. Beith) and the hon. Member for Rugby and Kenilworth (Jeremy Wright). Perhaps my speech will be seen as a technical footnote to theirs.
I want to concentrate on my worries about clause 1. Part 2 has been entirely justified by the tales that we have heard today about the extraordinary cases of claims farming in the mining areas. The problem with clause 1 concerns the perception that there is a high risk of being sued when it is not justified. I hope that the people on the other side of the debate who support clause 1 will accept that there are circumstances in which it is justified for one person to be sued by another. When one person is injured and it is another person’s fault, there should be a high risk of the person who did the injuring having to pay compensation. That is just and right; it also serves the social purpose of reducing the risk of unreasonable action causing harm.
The perception arises from two sources—legal error and excessive litigation. I will deal with legal error in a moment, but everyone now seems to accept that there is no compensation culture in the sense that the number of claims being made in any part of society is rising fast—it is not. In fact, in most parts of the legal world the number of tort claims is falling.
Interestingly, there is evidence that the number of claims must have risen rather dramatically between the late 1970s and the mid-1990s, when the figures became more widely available—between the Pearson report and the time when national figures became available through the recovery unit. Oddly, during the period when the number of claims apparently increased, no one seemed to complain about the compensation culture, whereas in an era when the number of claims is falling, complaints about it are common.
Again, the hon. Gentleman is confusing the issue of an overall compensation culture with the specific concern of the public that worthwhile voluntary and sporting activities are being hit. During that period of increase, there was not one of the bad cases to which we have referred. All the cases that have affected the public in a big way have arisen since the mid-1990s.
That is an interesting point, which would benefit from further research. It is difficult to know what was going on across the board during that intermediate period. I have a different view: I believe that what is really going on is that the insurance companies want an excuse, or an explanation, for the vast increase in premiums that they have been imposing during the more recent period. Instead of pointing to their own problems in managing their investments, they point to various claims and start talking about the compensation culture.
The question is whether clause 1 by itself can deal in any useful way with the perception of excessive litigation. The Government repeated today that they are not trying to change the law, which raises the issue of how the clause can make a difference. There is a particular problem in respect of “breach of statutory duty”, which was added by the House of Lords and which poses a grave danger that the Bill will change the law, accidentally. “Breach of statutory duty” is a very slippery phrase, covering a wide range of types of legal action. It covers types of liability that do not quite constitute negligence. Reference was made earlier to the test of reasonable practicability. We are talking about something that is not strict liability. I fear that clause 1 will accidentally apply to such actions, and will reduce liability.
The clause attempts to bring statutory form to the law after Tomlinson. It came as no great surprise to most lawyers that the Tomlinson case went the way that it did. The law with which we are dealing dates back to 1946—to the Daborn case, which involved the use of a left-hand-drive ambulance during the war. I think that this answers the points made by the hon. Member for Canterbury (Mr. Brazier). The ambulance was involved in an accident, and the question that arose was whether the fact that we were at war and needed all the ambulances we could get, including American ambulances, could be taken into account in determination of whether the way in which the ambulance had been driven was negligent.
The Court of Appeal decided that there was no liability, because what could be taken into account was what Lord Justice Asquith called
“the importance of the end to be served by behaving this way or that”.
That has been the law for 60 years.
When judging whether a precaution is required by the law of negligence, we must judge whether the benefits of the extra precaution that it is claimed should have been taken—including the social benefits—outweigh the costs. There has been no change in the law in that regard. It seems to me that the case raised by the hon. Member for Canterbury is simply a case in which the established rule has been badly applied. The problem is that there is no way in which an extra law can be passed to stop judges from getting the existing law wrong in its application. We cannot make laws about the application of the law. That is trying to do too much; it is expecting too much out of statutes. The legal system is peopled by human beings, who make mistakes. Error is inevitable, which is why there are appeals. Error is inherent in a system where someone is allowed sometimes successfully to sue somebody else for damage caused by their fault. Occasionally the system will go wrong, and a case will get through in which damages are unjustifiably paid. The only way to prevent that is by having no liability at all.