Compensation Bill [Lords]

As amended in the Standing Committee, considered.

New Clause 13

Mesothelioma: damages

‘(1) This section applies where—

(a) a person (“the responsible person”) has negligently or in breach of statutory duty caused or permitted another person (“the victim”) to be exposed to asbestos,

(b) the victim has contracted mesothelioma as a result of exposure to asbestos,

(c) because of the nature of mesothelioma and the state of medical science, it is not possible to determine with certainty whether it was the exposure mentioned in paragraph (a) or another exposure which caused the victim to become ill, and

(d) the responsible person is liable in tort, by virtue of the exposure mentioned in paragraph (a), in connection with damage caused to the victim by the disease (whether by reason of having materially increased a risk or for any other reason).

(2) The responsible person shall be liable—

(a) in respect of the whole of the damage caused to the victim by the disease (irrespective of whether the victim was also exposed to asbestos—

(i) other than by the responsible person, whether or not in circumstances in which another person has liability in tort, or

(ii) by the responsible person in circumstances in which he has no liability in tort), and

(b) jointly and severally with any other responsible person.

(3) Subsection (2) does not prevent—

(a) one responsible person from claiming a contribution from another, or

(b) a finding of contributory negligence.

(4) In determining the extent of contributions of different responsible persons in accordance with subsection (3)(a), a court shall have regard to the relative lengths of the periods of exposure for which each was responsible; but this subsection shall not apply—

(a) if or to the extent that responsible persons agree to apportion responsibility amongst themselves on some other basis, or

(b) if or to the extent that the court thinks that another basis for determining contributions is more appropriate in the circumstances of a particular case.

(5) In subsection (1) the reference to causing or permitting a person to be exposed to asbestos includes a reference to failing to protect a person from exposure to asbestos.

(6) In the application of this section to Scotland—

(a) a reference to tort shall be taken as a reference to delict, and

(b) a reference to a court shall be taken to include a reference to a jury.

(7) The Treasury may make regulations about the provision of compensation to a responsible person where—

(a) he claims, or would claim, a contribution from another responsible person in accordance with subsection (3)(a), but

(b) he is unable or likely to be unable to obtain the contribution, because an insurer of the other responsible person is unable or likely to be unable to satisfy the claim for a contribution.

(8) The regulations may, in particular—

(a) replicate or apply (with or without modification) a provision of the Financial Services Compensation Scheme;

(b) replicate or apply (with or without modification) a transitional compensation provision;

(c) provide for a specified person to assess and pay compensation;

(d) provide for expenses incurred (including the payment of compensation) to be met out of levies collected in accordance with section 213(3)(b) of the Financial Services and Markets Act 2000 (c. 8) (the Financial Services Compensation Scheme);

(e) modify the effect of a transitional compensation provision;

(f) enable the Financial Services Authority to amend the Financial Services Compensation Scheme;

(g) modify the Financial Services and Markets Act 2000 in its application to an amendment pursuant to paragraph (f);

(h) make, or require the making of, provision for the making of a claim by a responsible person for compensation whether or not he has already satisfied claims in tort against him;

(i) make, or require the making of, provision which has effect in relation to claims for contributions made on or after the date on which this Act is passed.

(9) Provision made by virtue of subsection (8)(a) shall cease to have effect when the Financial Services Compensation Scheme is amended by the Financial Services Authority by virtue of subsection (8)(f).

(10) In subsections (7) and (8)—

(a) a reference to a responsible person includes a reference to an insurer of a responsible person, and

(b) “transitional compensation provision” means a provision of an enactment which is made under the Financial Services and Markets Act 2000 and—

(i) preserves the effect of the Policyholders Protection Act 1975 (c. 75), or

(ii) applies the Financial Services Compensation Scheme in relation to matters arising before its establishment.

(11) Regulations under subsection (7)—

(a) may include consequential or incidental provision,

(b) may make provision which has effect generally or only in relation to specified cases or circumstances,

(c) may make different provision for different cases or circumstances,

(d) shall be made by statutory instrument, and

(e) may not be made unless a draft has been laid before and approved by resolution of each House of Parliament.’.—[Bridget Prentice.]

Brought up, and read the First time.

16:34:00

The Parliamentary Under-Secretary of State for Constitutional Affairs (Bridget Prentice)
I beg to move, That the clause be read a Second time.

Mr. Speaker
With this it will be convenient to discuss the following:

New clause 6—Mesothelioma Compensation Board—

‘(1) The Secretary of State may by regulations establish a body known as the Mesothelioma Compensation Board.

(2) Regulations made under this section shall make provision as to the functions and powers of the Board.’.

New clause 7—Asymptomatic chemical exposure—

‘The lodging in the body of a chemical or substance which may cause injury as a consequence of negligence or breach of statutory duty, shall give rise to a cause of action whether or not the lodging has caused symptoms at the time the action is commenced or brought to trial.’.

New clause 8—Disapplication of Crown Proceedings Acts—

‘The Crown Proceedings Act 1947 and the Crown Proceedings (Armed Forces) Act 1987 shall not provide a defence to a claim brought after the Act came into force, in respect of injury caused by exposure to chemicals or substances occurring before that date but which did not manifest symptoms in the claimant until after that date.’.

Government amendments Nos. 7 to 10.

Bridget Prentice
I am delighted to be introducing new clause 13 and related Government amendments Nos. 7 to 10, which, I believe, will make a real difference to sufferers of mesothelioma and their families who have been, or would have been, affected by the recent House of Lords judgment in the case of Barker v. Corus.

Mr. Frank Field (Birkenhead) (Lab)
The Minister rightly talks about her pleasure in moving the new clause. That pleasure is widely felt, certainly among Members on the Labour Benches, because many of our constituents have a real interest in what she is about to say. I thank her.

Bridget Prentice
I am grateful to my right hon. Friend for his intervention, especially because I want to ensure that I make it clear throughout my speech how grateful I am to my right hon. and hon. Friends for the campaigning that they have done on this issue and the pressure that they have put on me, and the Government as a whole, to ensure that we would consider new clause 13 and the Government amendments today. I agree that the measures are important to many hon. Members, and they are especially important to the families and constituents whom they represent.

Mr. Oliver Heald (North-East Hertfordshire) (Con)
Of course we welcome the new clause and amendments. However, how would the Minister respond to a letter that I have received from the solicitor who acted for the Department of Trade and Industry when it instigated the litigation that resulted in the House of Lords decision in Barker v. Corus? The solicitor writes:

“It appears that the same government for which I was acting in what was then considered to be in the public interest has now apparently decided, following a clamour of protest, to legislate to reverse the decision which it itself sought.”

Will the hon. Lady explain which Minister decided to take the case of Barker v. Corus forward? How much did it cost, and why have the Government got into this mess?

Bridget Prentice
I am disappointed that the hon. Gentleman is trying to make juvenile points—[Interruption.] If he is prepared to listen, I will explain to him one of the simple things about cases in both the Court of Appeal and the House of Lords. Cases are given the title of the person taking the action and the person defending the action. The hon. Gentleman will see that no Government name appears in the case of Barker v. Corus as either the appellant or the defendant. The case was taken by the families against Corus. He should stop trying to make silly interventions and allow us to take a historic decision today that will change the lives of people who are suffering because of a horrible disease.

Mr. Heald
rose—

Bridget Prentice
If I may, I would like to get past the first sentence of my speech. I will give way again shortly.

Let me outline the situation. In the 2002 case of Fairchild v. Glenhaven Funeral Services, the House of Lords decided that a person who had contracted mesothelioma after wrongful exposure to asbestos—

Mr. Heald
On a point of order, Madam Deputy Speaker. Is it in order for the Minister to misrepresent the position, albeit no doubt inadvertently? It was British Shipbuilders (Hydrodynamics) Ltd that took the case to the House of Lords, funded by the Department of Trade and Industry. I have quoted from a letter from the solicitor—

Madam Deputy Speaker (Sylvia Heal)
Order. That is a matter for debate, rather than a point of order for the Chair.

Bridget Prentice
In the 2002 case of Fairchild, the House of Lords decided that someone who had contracted mesothelioma after wrongful exposure to asbestos at different times by more than one negligent employer could sue any of them, notwithstanding the fact that he could not prove which exposure had caused the disease, because all had materially contributed to the risk of his contracting that disease. Fairchild did not resolve whether liability should be joint and several, although it was presumed by the parties that that would be the rule, and that was the approach taken in practice. However, in Barker v. Corus, the House of Lords decided that, instead, the damages were to be apportioned among those responsible for the wrongful exposure according to their relative degree of contribution to the chance of the person contracting the disease.

That decision did not impose a limit on the damages that could be recovered from those responsible for the exposure to asbestos, but it did mean that the risk of any of them being insolvent and unable to pay the appropriate share would fall on the claimant, and that in practice the claimant would have to trace all relevant defendants, as far as that was possible, before liability could be apportioned and full compensation paid, or alternatively to issue multiple claims to recover damages on a piecemeal basis.

David Howarth (Cambridge) (LD)
I fear that the Minister has missed one important part of the argument in the Barker case: it extended liability to cover cases where part of the exposure was caused by the claimant himself. Is not there a danger that the law will go back to its state before Barker if the new clause is passed?

Bridget Prentice
In one sense the law will go back to before Barker—to Fairchild, which represents the position that we wish to put people in. As I said at the beginning, although Fairchild did not in itself determine joint and several liability, in practice that is what happened, and that is what we want to achieve.

David Howarth
I am grateful to the Minister for giving way again, because this is a very important point. There are two aspects of Barker. One was in favour of the claimant, by expanding the scope of the Fairchild ruling; the other was the imposition of proportionate several liability instead of joint and several liability. If we return to Fairchild completely, the liability rule will contract and fewer people will gain damages in the first place.

Bridget Prentice
I do not accept the hon. Gentleman’s version of what will happen as a result of the amendments. If he will allow me to go through the rest of the outline of why and how we are doing this, with a bit of luck it will all become clearer.

The practical effects of the decision, which the Law Lords were not asked to consider, would be that claims could take much longer to be concluded and would be much more difficult and time-consuming for claimants, when they and their families are already under considerable pain and stress. That is why we are taking action today to reverse the effects of the Barker judgment and to help claimants suffering from this terrible disease to receive the compensation to which they are entitled as soon as possible.

Tony Lloyd (Manchester, Central) (Lab)
May I too congratulate my hon. Friend on this important step? Although she is absolutely right to emphasise that the decision is fair to the claimants, it is also logical medically. I know of no doctor who believes that it is even remotely sensible to try to apportion the responsibility or the causality among different former employers. The Barker decision was treated with total incredulity by the medical profession, who of course must deal with the consequences of the outrageous actions of the asbestos purveyors of the past.

Bridget Prentice
My hon. Friend makes a very important point. That is why we have tabled the amendments. The very fact that a single fibre of asbestos is enough for someone to contract this horrible disease makes it very difficult medically to decide directly where that might have happened.

I should make it clear that the amendments are just part of what the Government are doing. Together with colleagues in the Department for Work and Pensions, we are working with the Association of British Insurers, the Association of Personal Injury Lawyers and the TUC urgently to identify ways of speeding up the settlement of mesothelioma claims. My right hon. Friend the Secretary of State for Work and Pensions has already indicated that he will be making a statement about that work before the recess. I thank the ABI, APIL and the TUC for the helpful and constructive discussions that we had when formulating the amendments.

16:45:00

Chris Bryant (Rhondda) (Lab)
Those of us who last week heard the Minister for Employment and Welfare Reform make a commitment to providing a statement before the recess were encouraged. Will the Under-Secretary underline the importance of taking swift action? Sadly, people who contract mesothelioma may have no more than a year or 18 months between the moment when they know that they have contracted the illness and dying, so it is important that the Government move swiftly, and that the system is swift to administer. Does my hon. Friend agree?

Bridget Prentice
I absolutely agree with my hon. Friend, and I hope later to reassure him that we are making sure that that happens. It is all very well our introducing the amendments, but if people who are suffering had to wait an extended time to receive their compensation, much of what we are doing today would be undermined, so my hon. Friend is right to make that point.

Mr. John Greenway (Ryedale) (Con)
I, too, thank the Minister for the speedy way in which she has responded to this problem, which dominated Second Reading. She mentioned the ABI, and I am grateful for the changes that the Government have implemented. The new clause is complex, and amends, for example, the financial services compensation scheme. Can she give the House the assurance that all claimants will receive full compensation? If all those responsible were insolvent, there would be a loophole, and a gap in provision. That requires a great deal of attention, so it would be helpful to all of us if she gave that assurance. Finally, I endorse the point about speed, which is particularly important, given that the rules committee has to draw up a new framework to ensure that compensation is made speedily. That process has, in the past, been protracted, and that would not be appropriate in the circumstances.

Bridget Prentice
The hon. Gentleman makes a fair point. Officials are working on that issue, virtually as we speak. He is right about the effect on the Financial Services and Markets Act 2000, and indeed on the Policyholders Protection Act 1997. We are not changing liability under that scheme, but we will make sure that people are properly covered and that FSMA, as it is affectionately known, is used properly. Work on that is going on now. Later, I hope to show that people can receive compensation even before the regulations are made, and that the money can be drawn back later by the people who pay it. I hope that I have given the hon. Gentleman reassurance.

I want to deal with the detail of the amendments, and I hope that the explanatory note that has been provided will be of assistance. New clause 13 provides that where a person

“has negligently or in breach of statutory duty caused or permitted another person…to be exposed to asbestos,”

and

“the victim has contracted mesothelioma as a result”,

the negligent person will be jointly and severally liable. That will enable the claimant to recover full compensation from any responsible person, and will also apply to claims made by the claimant’s estate or dependants when the claimant has not made or resolved a claim prior to his death.

Mr. David Hamilton (Midlothian) (Lab)
I, too, congratulate the Minister and her officials on the manner in which they took the Bill through the House, and on ensuring that it will apply to Scotland throughout the period in question. The issue is extremely important, so does the Minister share my disappointment that Members from the Scottish National party do not see fit to be in the Chamber, even though the issue affects so many Scots?

Bridget Prentice
My hon. Friend points out the absence of SNP Members, but it does not surprise me, as they rarely come to the Chamber when something of such importance to many of their constituents is being debated. I am not surprised—disappointed, perhaps, but I may be too old and cynical even to be disappointed any more.

With reference to Scotland, I am grateful to our colleagues in the Scottish Executive who worked extremely hard in a very short time to agree the Sewel motion, which will allow the provision to apply to Scotland. I put on record my thanks to them for taking on board the issues that we raised with them, despite the fact that we did not necessarily have every t crossed and every i dotted.

The provision will apply regardless of where the exposure took place. I am aware that some concerns have been expressed that this may extend the principle contained in Fairchild. I do not believe that this is the case. Although the case of Fairchild related to a workplace exposure, the principle contained in the House of Lords judgment was not restricted to such cases. To restrict the provision to workplace exposure would mean that some of the claimants affected by Barker would be left in exactly the same difficulties as they are now suffering, and that different claimants would be treated in different ways purely because of where the exposure occurred. That cannot be right.

Mr. John Redwood (Wokingham) (Con)
Can the Minister give us an idea of how much in total might be paid out if the new clause goes through, and what that would mean for each sufferer?

Bridget Prentice
No, I regret that I cannot give the right hon. Gentleman a figure for the sum that would be paid out. When my right hon. Friend the Secretary of State for Work and Pensions makes his statement, he may have more detail. I shall let him know that that would be of interest to the House. If he can, I am sure that he will try to give a figure, but it is difficult to make a direct statement on such matters. We know that there are between 1,000 and 2,000 cases per year, so we can work on that basis. The changes to the FSCS will improve the speed with which claimants receive compensation, but as I said earlier, they do not alter liability under the scheme.

The provision also ensures that where a claimant has worked for a single employer who is now insolvent, but where only part of the period of exposure is covered by insurance, the claimant will be able to recover compensation from that insurer on the same basis as before the Barker case. That is a point that the hon. Member for Ryedale (Mr. Greenway) raised.

Subsection (3) makes it clear that the provision does not affect the existing law on contributory negligence. Where a claimant has himself been responsible for part of the negligent exposure, it is right that that should be reflected in the level of compensation, but the provision will apply where, for example, a self-employed person has been negligently exposed by another while working as a contractor.

Subsection (3) also makes it clear that a person who has paid full compensation can then seek a contribution to the damages awarded from other responsible persons under the Civil Liability (Contributions) Act 1978. In the light of concerns expressed by insurers, subsection (4) provides for contributions to be apportioned on the basis of the relative lengths of the periods of exposure for which each was responsible, unless the parties agree otherwise or the court thinks that another approach is more appropriate. That will ensure that defendants and insurers are able to recover contributions in as straightforward a way as possible. In that context, it is also important that the lawyers acting for claimants ensure that defendants are provided with a full employment and exposure history, and we are looking to see whether amendments to secondary legislation will help to achieve this. That, too, will help to speed up compensation.

Subsections (7) to (11) confer a power on the Treasury to make regulations about the provision of compensation to a responsible person or an insurer of a responsible person in specified circumstances. These provisions are essential to help avoid delay in paying compensation, and will allow the current practice of employers and insurers making parallel payments with the FSCS to continue. As well as speeding up the claims process, they also produce a fair outcome for insurers.

These subsections confer a power for the Treasury to make provisions that would facilitate speeding up the payment of claims to mesothelioma victims. These provisions would enable responsible persons to claim money back from the financial services compensation scheme, when another responsible person and their insurer are both insolvent and thus unable to pay their own share of compensation payments—again, that is related to the point that the hon. Member for Ryedale made. The power includes the ability to deal with situations arising before the establishment of the FSCS that were, as I have said, settled under the Policyholders Protection Act 1975.

The power will come into effect only when the Treasury has laid the necessary regulations and the Financial Services Authority has made the relevant rules. However, the rules permit the liable party to claim contributions in respect of claims dealt with from the date of Royal Assent—that is the point that my hon. Friend the Member for Rhondda (Chris Bryant) asked about. The Treasury will make regulations, which will be laid as soon as practicable in the autumn, once Parliament reconvenes.

The FSA is considering what changes may be needed to the FSCS to facilitate the swifter settlement of mesothelioma claims in accordance with the amendment of this Bill. The FSA proposes to take forward any changes as a matter of priority.

Jim Sheridan (Paisley and Renfrewshire, North) (Lab)
On the subject of the Treasury, my hon. Friend knows that many voluntary organisations are involved in helping victims and families through such traumatic times. Will she tell the House whether the Bill will assist voluntary groups such as Clydeside Action on Asbestos, which does a terrific job helping people to prepare claims and apply for compensation?

Bridget Prentice
When we consider other parts of the Bill, my hon. Friend will find out what we are doing to exempt some groups, and the organisation that he has mentioned may fall into that category. Where charitable and voluntary organisations are helping victims, I hope that the Bill will protect them and allow them to continue their good work.

Simon Hughes (North Southwark and Bermondsey) (LD)
The Minister knows that I welcome the initiative, about which I shall say more later. When she secured the general support of the Association of British Insurers for a compensation scheme, what was her answer to its proposal that there should be a separate body to deal with claims, which might be a quicker method than the one that she has just described? May I assume that she will go on to discuss how the Government are sure that they will be justified in law and that the retrospective aspects of the proposal will not be overturned?

Bridget Prentice
I will discuss the retrospective aspects of the proposal shortly. The ABI has been helpful, and we have taken on board a number of issues that it has raised. We think that that method will be faster than setting up a board, which would require rules, regulations and appointments. We will be able to get compensation to people from the moment of Royal Assent, which employers and insurers will, where appropriate, be able to claim back. The system will be swifter and simpler for victims—the hon. Gentleman supports the new clause, and he knows that our main focus is getting compensation to victims as swiftly as possible.

On retrospection, amendment No. 8 allows the provision to be retrospective, which means that it will apply to claims settled or determined on or after 3 May 2006—the date of the Barker judgment—and it allows parties to seek the variation of any such settlement or determination. It will also apply to cases that have not been concluded. We regard it as being of the utmost importance that all claimants affected by the Barker judgment can secure full compensation, including the parties to that case, the parties to the cases conjoined with that case and the parties to cases subsequently settled or determined on the apportionment basis proposed by Barker.

I recognise that this is an exceptional step, but I believe that it is justified. I hope that it will have the full support of this House given the exceptional circumstances and that it will not raise difficulties in relation to compliance with the European convention on human rights. There are number of reasons why that is the case, and I want to set them out.

First, the degree of retrospection is strictly limited and will apply only to a very short period and a very few cases. It is my understanding that following Barker, the great majority of cases that were under way have been stayed pending clarification of the appropriate method of apportionment or in the light of the Government’s announcement that they intended to introduce these amendments. I am grateful to the judiciary for waiting to hear exactly what we intended to do before they carried those cases through. In addition, those cases—and any that have currently not been concluded—will have commenced prior to Barker, so the expectation of both claimants and defendants will have been that joint and several liability would apply. We are therefore not interfering with the settled expectations of the parties to any of those proceedings.

17:00:00

I believe that it would be unacceptable to provide assistance to future claimants but to leave a small group whose claims are unresolved, or have been concluded on the basis of Barker, to suffer the real disadvantages arising from that judgment—and I therefore believe that the provisions on retrospectivity are therefore proportionate and justifiable. We are talking about barely seven or eight weeks.

Mr. Michael Clapham (Barnsley, West and Penistone) (Lab)
Has my hon. Friend any idea of the number of cases that may have gone through the courts in the period since 3 May following the Barker decision? As she will recall, I referred a case to her following a question that had been put to me by the Liverpool asbestos group, which cited a case that the judge had refused to defer, and with which he insisted on proceeding. As a result, the compensation was supposedly less than it would have been. Under the Government amendment, that case could be heard again, but it would be good to have an idea of the number of cases that have gone through the courts in that time.

Bridget Prentice
My hon. Friend has raised that case with me before. We have tried to find out how many cases there are, and as far as we are aware, the vast majority have been stayed pending the decisions of this House and the other place on the Bill. I am grateful for that, as it means that everyone is in the pre-Barker position. I do not know exactly how many cases have gone through. However, we are allowing this tiny amount of retrospectivity to ensure that people do not end up unjustly penalised because their cases were unfortunate enough to fall within the two months between Barker and the time when the Bill will, I hope, receive Royal Assent.

The Scottish Parliament recently passed a legislative consent motion, and amendment No. 9 therefore ensures that these provisions will apply across the United Kingdom. Colleagues in Northern Ireland have also signalled a wish for the provisions to apply there.

To ensure that claimants receive the benefit of the provisions as soon as possible, amendment No. 7 provides for them to come into effect, together with the provisions in part 1 of the Bill, on Royal Assent. Amendment No. 10 makes the necessary consequential change to the title of the Bill.

New clause 6 would give the Secretary of State the power by regulation to establish a mesothelioma compensation board and to define its functions and powers. As I said to the hon. Member for North Southwark and Bermondsey (Simon Hughes), it would be premature to create a statutory power of that nature.

As I said in introducing new clause 13, the legislative action that we are taking to reverse the effects of the House of Lords decision in Barker is just a first step, and we fully agree that more can be done to improve the system for dealing with these claims and to ensure that claimants receive the compensation to which they are entitled as quickly as possible.

With that in mind, officials in my Department and in the Department for Work and Pensions are working with stakeholders such as the ABI, the Association of Personal Injury Lawyers and the TUC to identify ways of speeding up claims. A number of suggestions have already been made about how that should operate, and we are discussing how to speed up the tracing of employers and insurers and how to make best use of specialism throughout the system by insurers, lawyers and the courts. We are also considering all the options and working with stakeholders to find a fair and workable solution. I believe that until that work is completed, it would be premature to take powers in legislation to adopt a particular approach that might not in practice turn out to be the most appropriate.

New clause 7 creates a cause of action in cases where a chemical or substance has lodged in the body as a result of negligence or breach of statutory duty; whether or not any symptoms have been caused at the time that the action is commenced or brought to trial. My hon. Friend the Member for Hendon (Mr. Dismore) raised the issue of pleural plaques on Second Reading, and the focus of this provision may be intended to create a cause of action in respect of pleural plaques.

As I said both on Second Reading and in answer to parliamentary questions, pleural plaques are small localised areas of fibrosis found within the pleura of the lung caused by asbestos exposure, which do not impair lung function. They are an indicator that a person has been exposed to asbestos in the past and may have a slightly increased risk of going on to develop a more serious asbestos-related illness in the future.

The question of whether pleural plaques should be a compensatable disease in respect of which a cause of action can be brought is currently the subject of an appeal to the House of Lords, so I do not believe that it is right for the Government to pre-empt the Law Lords’ consideration of those cases by legislating in that way at this time.

Chris Bryant
But if the judges get it wrong, which they seem to do quite often, what legislative remedy would be available in the fairly near future?

Bridget Prentice
I hope that, with the debates going on here and in the other place and with the careful consideration of the judges, they do not get it wrong. However, I can tell my hon. Friend that the Department for Work and Pensions will be launching a Bill in the not too distant future. It is not for me to say at this stage, but if such a Bill were to be introduced, my hon. Friend and others would be able to lobby my colleagues in the DWP to establish whether further legislation was appropriate.

To return to the new clause, it is undesirable in itself. It is worded in very general terms and could potentially extend to a range of other situations where no actual damage is apparent at the time an action is commenced or brought to trial. That could create confusion and uncertainty in the law and lead to extensive and costly litigation over the possible circumstances in which it applied.

On new clause 8, prior to May 1987 service personnel were prevented from pursuing claims for compensation from the Ministry of Defence by section 10 of the Crown Proceedings Act 1947. Crown immunity prevented claims from being made prior to 1947, but section 10 was repealed by the Crown Proceedings (Armed Forces) Act 1987. Since the change in the law, which was not made retrospective, service personnel who suffer loss or injury as a result of negligence by the Ministry of Defence have been entitled to make common law claims for compensation. When compensation claims are submitted, they are considered on the basis of whether the Ministry of Defence has a legal liability to pay compensation. Where there is a legal liability to pay, compensation is paid.

At the time of the passage of the 1987 Bill, the question of retrospection was debated and motions to allow members of the armed forces, past and present, to pursue claims for injury or death suffered in incidents since 1947 were moved, but either defeated or withdrawn. The prevailing view at the time was that, short of trying to cover all incidents and all types of injury going back to 1947, there was no logical point at which to draw a line, and that making the Act retrospective would create many new examples of unfairness and injustice.

That clearly shows the difference between the retrospectivity that we are introducing in specific cases and more general retrospectivity, which is not the way forward. The perceived unfairness in the way in which claims for compensation from former service personnel suffering from an asbestos-related disease were handled was the subject of a review, the outcome of which was announced in 2001.

Careful consideration was given to this apparent unfairness in compensation arrangements, and to the scope for providing additional help. However, the review demonstrated that compensation through war pensions and allowances or under the common law can be shown to be broadly comparable over time, and that there was therefore no general unfairness in the way in which these claims were handled. As it would be inequitable to treat this group in isolation in terms of common-law compensation, thereby creating many examples of unfairness and injustice, Ministers at the Ministry of Defence decided not to make any changes to the current arrangements, and that remains the Government’s view.

On that basis, I hope that the House will support new clause 13 and attendant amendments, which will ensure that mesothelioma sufferers can get the compensation that they need and deserve. I also hope that other amendments will be withdrawn at the appropriate time.

Mr. Heald 
We welcome new clause 13, which will overturn the recent judgment in Barker v. Corus. We are dealing here with a matter of public interest. It is important to recognise that the Government took the case to the House of Lords as a test case. It is more than odd, therefore, that although the judgment was delivered in May 2006 the Government are now introducing emergency legislation to overturn what they argued for in court as recently as six weeks ago.

The Minister rightly says that Miss Barker brought one of the cases and that another applicant—plaintiff—brought another case against companies that are now under the umbrella of British Shipbuilders, a statutory corporation that is owned entirely by the Government and sponsored by the Department of Trade and Industry. Therefore, a Minister in that Department agreed to the Government taking the case all the way up to the House of Lords to establish something that now—just a few weeks later—they think is so unpalatable that they must introduce emergency legislation.

The solicitor who acted for British Shipbuilders has written to me making the point that this is a matter of public interest. The public are entitled to know the identity of the DTI Minister who made that decision, how much the Government have spent on these cases that have gone through all the courts up to the House of Lords, and whether the decision made in the House of Lords will now be overturned. Will Miss Barker get her costs, and what exactly was going on, because this is not an advert for joined-up government?

Mr. Redwood
I am grateful to my hon. Friend for bringing this conundrum before the House. He might be right that the fact that people did not talk to each other was a result of a lack of joined-up government, but if that were the case I would be surprised, as the civil service is usually very good at clearing such matters. Could it not be that people thought that they could get away with this, then discovered how embarrassing it was and, having seen the strength of representations, have now had second thoughts?

Mr. Heald
Ministers suggested in meetings that this was all to do with the insurance industry, but in fact the industry funded none of the cases that went to the House of Lords under the Barker v. Corus umbrella: the Government funded two of the cases and one was funded privately. Those test cases were pursued because a lot of former Government employees, who worked in the Ministry of Defence and other Departments, were exposed to asbestos. This will be expensive for the Government in the long term, and I guess that they were attempting to ensure a smaller bill than they might otherwise have.

There must have been a moment—I imagine that it occurred in the Department for Constitutional Affairs—when someone suddenly said, “What have we done?” It was at that point that the decision was made to reverse this, and to do so quickly. I welcome that.

Simon Hughes
I share the hon. Gentleman’s view of the strange history of these matters. One of his colleagues asked the Under-Secretary whether she could provide an estimate of the cost of the proposal. Has he, from his contacts or work, been able to come up with an immediate estimate for the first set of claims or an annual estimate thereafter?

17:15:00

Mr. Heald
That is extraordinarily difficult to do because the cases will not peak until 2020 and the disease is unpleasant and difficult. The insurance industry has provided an informal estimate of up to £15 billion.

Mr. Greenway
The all-party insurance and financial services group was briefed on the matter only last Tuesday. There are some 2,000 asbestosis-related deaths per annum. Average life expectancy after diagnosis of mesothelioma is one to one-and-a-half years. The average settlement is £150,000. We are therefore considering probably £15 billion over five years and perhaps as much as £30 billion over 10 or 15 years.

Mr. Heald
I heard a similar figure. The Government will doubtless be considering their liability, Department by Department, on the new basis. However, I know from previously asking the question that Ministers do not have an estimate in mind.

Mr. Frank Doran (Aberdeen, North) (Lab)
The hon. Gentleman makes a mountain out of a molehill. He knows that, before Barker, the Fairchild case dramatically altered the way in which liability is assessed. Any Minister worth his or her salt who was given legal advice about the implications of that would be duty bound to follow it and do what was done in the Barker case. When the Conservative party was in government, similar things happened. It is great fun to develop conspiracy theories, but they have no basis in fact.

Mr. Heald
The hon. Gentleman should not talk in terms of conspiracy theories. That always worries me. Let us consider the position of Miss Barker. Her case could have been settled on the Fairchild basis of joint and several liability. There was no reason not to do that. However, the Government decided to make it a test case, take it all the way to the highest court in the land—the House of Lords—and see what the judgment would be. Given the Under-Secretary’s position today that Fairchild is correct and the right law for our country, it is odd to have gone all the way to the House of Lords, arguing something completely different, barely six weeks ago.

Bridget Prentice
Let me clear up the matter once and for all and add to the comments of my hon. Friend the Member for Aberdeen, North (Mr. Doran). The hon. Gentleman suggests that the Government tried to avoid paying compensation. Our ability to introduce amendments so quickly shows that every member of the Government who is involved in the matter recognised the importance of reversing Barker. There was no shilly-shallying about that. It is nonsense to suggest otherwise.

Mr. Heald
The Under-Secretary knows that I have the highest opinion of her kindness and consideration. I am sure that, if she were faced with the difficult position post-Barker, especially with all her colleagues making representations to her, she would do the right thing. However, can she name the Department of Trade and Industry Minister who gave the go-ahead for the case to be pursued all the way to the House of Lords? Was it the current European Trade Commissioner? We are entitled to know.

Mr. Andrew Dismore (Hendon) (Lab)
Will the hon. Gentleman give way?

Mr. Heald
I must make some progress. The hon. Gentleman has much on the selection list and we will hear from him later.

As I said earlier, what we are considering is hardly an example of joined-up government. However, we support the Government’s decision to reverse the court decision. It is important to be sure that it goes as far as necessary.

Nick Starling, director of general insurance at the Association of British Insurers, said that the organisation remains concerned that the new clause still does not tackle some of the problems that the ABI identified. He said that, in particular, analysis of several scenarios revealed a danger that some claimants will not receive full compensation. That is likely to occur when all the defendants are insolvent and there are gaps in insurance cover. I would be grateful if the Minister gave a fuller response than the one that she gave earlier about that, because it would be good to get this matter sorted out at this stage.

Mesothelioma is a dreadful disease. It is caused by asbestos fibres and can lie dormant for 30 to 40 years. Following diagnosis, it is incredibly aggressive and often leads to death in one to two years. It is a very painful and distressing condition, and it is often the result of a failure to provide a safe system of work. Not every sufferer will have a legal case, but some of those who do cannot trace their former employer or his insurer. The problem with doing no more than reversing the Barker judgment is that it will do nothing to speed up compensation, to make the process less adversarial or to give those who cannot trace their former employers or their insurers access to justice. Such a move would also require expenditure on legal costs that might not be strictly necessary.

There is a case for establishing a scheme to compensate those who have a case and to provide for later recovery and apportionment of damage, and I am pleased that the Minister is having discussions on this matter. My new clause 6 would enable her to take legislative powers now. She has told the House that the Department for Work and Pensions will make a statement on mesothelioma. Is a separate body part of the solution that is being considered?

Mr. Dismore
The hon. Gentleman has not made it clear who would foot the bill for the scheme that he proposes. Is he suggesting that it should be the Government, or perhaps the insurance industry, through a pool system such as that used for motor accidents involving uninsured drivers?

Mr. Heald
As the hon. Gentleman will know, discussions are continuing. I understand that one of the suggestions on the table is for a system similar to that in Holland. I recently attended the Insurance Times conference, at which representatives of the Association of British Insurers were giving their ideas on this matter. They felt that it would not be necessary to go as far as the hon. Gentleman suggests, but that if we were able to take the liability of the compensation scheme, of the Government and of the insurers, and to apportion claims on that basis, no additional funding would be required from the Government.

That would have to be fully discussed. I think that the hon. Gentleman would agree, however, that it would be good if we could take a large proportion of the legal costs out of the equation. I realise that he might find that difficult, given his background of 15 years with Thompsons and several years with other solicitors working in the claims field. One of the most important aspects of the claims is that of legal costs, and of how much money is being taken out of the system by claimants’ solicitors and others.

Does the Minister agree that it will be necessary to have appropriate rules of court to underpin the workings of new clause 13, and particularly of subsection (4)? Can she give us an assurance that Ministers will do all that they can to ensure that such rules are agreed and adopted as soon as possible? In particular, claimants will have to give enough information about their work history at an early stage to allow a fair apportionment of contributions to be made or agreed between defendants. The Minister said that that might be covered by secondary legislation, but does she agree that it will also be necessary for the rules committee of the High Court to make a decision on this matter? I believe that it will also be necessary for the committee to make a decision on the mechanisms necessary to effect the proposed simple system of apportionment taking into account the length of the period of exposure, but with a court discretion to adopt a different measure in exceptional cases. It would be helpful if Ministers were prepared to use their good offices to help with that process and to encourage a speedy outcome on the rules.

While on technical matters, I also wonder whether it might be wise to explain, in proposed new subsection (5) to amendment No. 8, that only a claim affected by the section dealing with mesothelioma damages may be reopened. I also wonder whether the word “only” should appear after “settlement” in proposed new subsection (5)(c) and after “determination” in proposed new subsection (6)(c). The Minister might wish to consider these technical drafting points before the Bill is considered in the other place.

I am sorry to tell the hon. Member for Hendon (Mr. Dismore) that I do not support his new clause 7. I believe that it would be premature to accept such a proposal when the case of Rothwell v. Chemical & Insulating Co. Ltd is about to go to the House of Lords. I also wonder how confident he is that the decision is the right one, as he must recognise that if every risk became a cause of action, with damages attached, that would mean a lot more work for claimants’ lawyers. In the case of Rothwell, the Lord Chief Justice, Lord Phillips, said:

“Litigation is expensive and under our system the costs fall to be borne by the unsuccessful party. We consider it plainly desirable that claimants should not be permitted to pursue claims for trivial injuries. The fact that negligence has produced a physiological change that is neither visible nor symptomatic and which in no way impairs the bodily functions should not attract legal liability.”

He went on to say that the costs of litigation in cases such as those before us tend to be disproportionate to the damages recoverable.

When the hon. Gentleman speaks to his new clause, which he has registered an interest in doing, I would be grateful to know whether he really believes that the mere risk of damage, which might be tiny, should be actionable. If so, why does he say that? I accept the Minister’s view that the wording of his new clause is loose and unambiguous, and that it could allow a range of cases that do not currently attract liability to do so—for instance, those of pedestrians who have inhaled exhaust fumes, people who have eaten fatty food, home owners who have inhaled paint fumes while decorating, or those who have drunk a hot drink from a machine. All those people have taken risks. Is the hon. Gentleman seriously saying that they should all attract compensation, regardless of whether they have suffered any injury, simply on the basis that they are worried about it?

Mr. Dismore
Of course not, but my amendment refers to the lodging of a substance, whereas the hon. Gentleman’s examples are purely transitory and do not lodge in the body.

Mr. Heald
The hon. Gentleman will correct me if I am wrong, but it will take the courts many a long year to work out what “lodging” means. Does he accept that a range of issues relating to time limitation will be raised? [Interruption.] I hear the Cambridge law faculty agreeing. If “lodging” is the triggering factor, it seems to me that there will be plenty of work for those whom the hon. Gentleman knows well.

I agree with the Minister that the hon. Gentleman’s new clause would be a fundamental change to the legal framework and principles of common law, with wider ramifications. Those are the main points about the first group of amendments. We will certainly support the Minister on new clause 13.

Mr. Clapham
I thank my hon. Friend the Minister for introducing the new clause, which will restore fairness where there was unfairness following the Barker decision on 3 May. Put succinctly, it would say that where a person develops mesothelioma as a result of being subject to a risk, the person who exposed them to the risk is liable severally and jointly. That is how it should be. As the law stood, enormous unfairness was created, and the Minister explained how it could impact to reduce damages. For example, a widow who might have been able to trace only two of her husband’s 10 employers would have received just 20 per cent. of the damages. Clearly, that was unfair.

There will be a very large number of such cases, as there are 2,000 diagnoses a year. The hon. Member for North-East Hertfordshire (Mr. Heald) referred to costs running to perhaps £30 billion. Looking to the future, however, means that there can be some certainty about the bills that the insurance industry, as well as Government, will face, and some preparation can be made.

17:30:00

We know that the number of claims will be significant. It has been suggested that over 50 years there could be more than 180,000, because people have been exposed to asbestos since the 1950s. I think it fair to say that no employer could argue that he or she was not aware of the effects of asbestos from 1965 onwards. Clearly we must deal with the issue, and I believe that my hon. Friend the Minister has tackled it very fairly.

In summing up the debate, my hon. Friend may tell us whether people will still be able to claim under the Pneumoconiosis Etc. (Workers’ Compensation) Act 1979 once the position before 3 May has been restored. The Government made it possible for them to do so at the time of the Fairchild case. People were queuing up behind that case, waiting to get their own cases into court. Given the seriousness of the disease from which they were suffering, the then Secretary of State introduced the potential for them to claim under the Act.

The hon. Member for North-East Hertfordshire said that my hon. Friend the Minister was thinking kindly. The Labour Government at that time were much more compassionate than, for instance, earlier Tory Governments. One example is the Tory Government’s refusal in the early 1990s to implement a scheme for miners, although it would have saved the taxpayer an enormous amount of money.

Mr. Heald
The hon. Gentleman knows as well as I do that the Government set up the compensation scheme following a court ruling. In effect, they had to set it up because of the ruling.

Mr. Clapham
The hon. Gentleman will be aware that when we were arguing for such a scheme, his party in government took the view that the medical knowledge of the day could not distinguish damage done to the lungs by dust from damage done to them by smoking. That was what led to the unions taking the case to court. We found that medical evidence had been available to the Government, including the findings of a longitudinal study of miners in Belgium. The Government used it when they introduced the industrial injuries disablement scheme for chronic obstructive pulmonary disease, but it was left to the present Government to implement this scheme. I agree that it might have been devised in a different way, but it was introduced in its present form, and it has brought a great deal of help to elderly miners suffering from COPD.

My hon. Friend the Minister should also be congratulated on the retrospectivity in the new clause. Some cases will have been trapped between 3 May and the date of Royal Assent, and we need a mechanism for dealing with them. I believe that the Bill provides such a mechanism. As the hon. Member for North-East Hertfordshire said, there may well be cases in which the employer or the insurance company cannot be traced and a claim must be made under the Financial Services and Markets Act 2000. Perhaps we can try to ensure that almost the full value of a claim can be obtained.

The hon. Gentleman referred to the Minister’s discussions about the type of scheme that would be introduced. I have always been a scheme man for these kinds of cases. I hope that we will look at embracing the total number of mesothelioma cases and include in the scheme, for example, members of households who have been exposed to the fibre brought home on a worker's clothes. People in that position cannot claim industrial injuries disablement benefit. That may be another area that we need to look at when we get the Green Paper on industrial injuries. However, overall, the new clause is good. It makes the Bill a substantial measure and I congratulate the Minister on it.

Simon Hughes 
May I first pay warm tribute to the hon. Member for Barnsley, West and Penistone (Mr. Clapham)? He, naturally, because of his constituency and background—but not necessarily because of that—made it clear that the issue would not go away from our deliberations in Parliament and I unreservedly pay tribute to him for that.

I thank the Minister for her commitment to ensure that, if it were humanly possible, the new clause and the other new clauses and amendments would be included in the Bill during its passage through this House. In the debate on Second Reading, the issues were well and truly aired. She made a commitment to do what she could. At the beginning in Committee, we said that we were happy to take the new clause in Committee if it were possible. It just was not. I do not blame anyone for that and the Minister has kept us all well informed at all stages. I am pleased that we have the opportunity to include the new clause before the Bill leaves the Commons, which is the right place for the matter to be discussed, and where people who represent past, present and prospective sufferers of this terrible disease can express their strong views on behalf of their constituents.

One or two of my colleagues have raised the matter before. I mention them because they, like colleagues on both sides of the House, have, perfectly properly, a constituency interest in these issues. My hon. Friend the Member for Inverness, Nairn, Badenoch and Strathspey (Danny Alexander) was supportive the other day on the basis that there should be a scheme, which should be moulded to look after the people who are suffering. My hon. Friend the Member for Dunfermline and West Fife (Willie Rennie) has in his short time in the House already expressed an interest, as has my hon. Friend the Member for Rochdale (Paul Rowen), who again has an obvious constituency commitment. I made it clear from the Front Bench on Second Reading that the Liberal Democrats would do all we could to facilitate the speedy passage of the legislation.

There is one technical point. Perhaps there is more than one, but there is one important technical point that my hon. Friend the Member for Cambridge (David Howarth) will want to raise about the specific implications of these proposals for the law and about the importance of getting all this right. It is important that we do not go back to the position of the law before the Barker v. Corus case and discover that people who want to be included are excluded. I will leave my hon. Friend to make that case, if he catches your eye, Madam Deputy Speaker. We must ensure that we do not lose opportunities to adjust the scheme if there is anything we need to do to catch everyone we need to catch.

I will make some quick points because many other colleagues want to speak. This disease is serious and sudden in its manifestation and consequences. It affects people who have worked away, often in dangerous and hard jobs, in all sorts of industries— mining, shipping, industrial warehousing, as laggers, painters, doing all sorts of jobs—and discovered, after what could be a long lead time, that they are suffering from mesothelioma and that the asbestos fibres may eventually have fatal effects. The hon. Member for Barnsley, West and Penistone made the other point that it is not just the workers; it is people who have come into contact with them, normally wives, but even other family members, too. This is about trying to find a scheme that covers the significant number of people who have been affected.

We have heard the figures and I think we agree about them: 2,000 a year, peaking only in about 14 or 15 years and then continuing. So a lot of families are affected, and sometimes more than one family member is affected. In some cases, the father or husband has died or become ill, and other family members are affected later. It is right that we should seek to address the issue.

I only ever had one major concern and, from conversations with the Minister and colleagues, I believe that it has been addressed. I was concerned that Parliament should not legislate retrospectively if that adversely affected the rights of anyone who had not agreed with the change. That is an important principle of law. It was therefore sensible that the courts stayed almost all the cases under consideration—the hon. Member for Barnsley, West and Penistone raised one case that might have slipped through the net—once they realised what the Government were doing. It is important that the legislation covers those cases that will be the subject of litigation in the future, but the Minister has been able to assure me and others that, because the insurers have agreed, retrospective change is not a problem. In recent years, the House has only once legislated to change the law retrospectively, on war crimes. It was controversial, but was regarded as so important that, after great difficulty in reaching agreement, Parliament decided to do that. It is an important principle that individuals and companies know what the law is, so we should not normally change it retrospectively. In this case, my understanding is that those whom the retrospective change will adversely affect have all signed up to it, because natural justice demands that people are not left suffering without a scheme to help them.

I asked the Minister how we can ensure the law is implemented as quickly as possible. Hon. Members said on Second Reading, in their lobbying and in Committee, that once the legislation had been sorted—with the help of the draftsmen and women—and the Lords had agreed it, we wanted to be able to move quickly. I accept the Minister’s comments about it being quicker to use the process that she has described for working out the compensation than to have a separate independent board, which was my initial preference. It was also suggested by the insurance industry initially and by the hon. Member for North-East Hertfordshire (Mr. Heald).

I am slightly troubled by one remaining issue. The Bill will, I hope, be put into its final form today and pass through its stages in the Lords before the summer recess. However, from what the Minister said, it sounded as if we will have to wait until after the recess for the regulations to be laid and agreed, and only then will it come into force. That could be another six months wait. I hope that the Minister will clarify whether that is a fair assessment when she winds up. I do not wish to be unreasonable, but I would remind her that one of the reasons for the new clause is the need for speed to help people who are ill and suffering today or are the bereaved relatives of those who have suffered in the past. The life expectancy after diagnosis can be very limited—months or perhaps not much more than a year—so time is of the essence. I hope that we can work together to get the regulations on the statute book by agreement of both Houses, so that people may receive the compensation they need for an illness that was an unexpected consequence of working in this country’s interest in all sorts of places over many years.

17:45:00

Mr. Dismore
Having been foreshadowed by the hon. Member for North-East Hertfordshire (Mr. Heald), I remind the House that I have been a personal injury lawyer for many years—indeed, for rather longer than he indicated. I retain a practising certificate and am a consultant to my law firm, although I do not practise. I am also a member of the Association of Personal Injury Lawyers.

I congratulate the Government on new clause 13. It is a realistic response to an urgent problem and the hon. Gentleman was somewhat churlish about it. No matter who appealed the case, sooner or later, given the aggressive approach that the insurance industry is increasingly adopting towards personal injury cases, someone—an insurance company—would have taken it to the House of Lords. It is serendipitous that the decision taken in the House of Lords happened when there was still sufficient space to decide what should be done and to let the Government table amendments today to put matters right in the Bill. Had that not been the case, it might have been a long time before an opportunity arose to put right the problems created by the Barker judgment. On the same serendipitous note, and for similar reasons, I hope that the Minister might think again on my new clause about pleural plaques.

The hon. Member for North-East Hertfordshire keeps going on about legal costs. The answer on that is in the hands of the insurance industry. If it does not fight cases so aggressively and admits liability where appropriate in good time, legal costs do not mount up. Frankly, in most asbestos cases, the legal costs are not the huge proportion that he seemed to suggest of the £150,000 awarded in mesothelioma cases. I suggested many years ago, and it is even more relevant now, that we should set up a register of employers’ liability insurance, so that if a company goes broke or ceases to trade, or if an insurance company ceases to trade, there is a record for 10, 15 or 20 years later of who carried insurance risks at a particular time. That would be a helpful way forward.

I shall talk about my two new clauses. New clause 7, as my hon. Friend the Minister anticipated, is about pleural plaques. She referred to the fact that the half-dozen test cases known as the pleural plaques cases are going to the House of Lords and questioned whether my new clause was framed in rather general terms that could incorporate other situations. It is indeed a general amendment; I would like to try to anticipate what may happen in future. However, it is primarily focused on pleural plaques and I cannot think of any other case at present that it would incorporate, and nor, I think, can anyone else.

There has been a problem on pleural plaques only for the past few months. For 20 years, the principle of compensating for the injury of pleural plaques has been well established in the courts. Compensation, until one particular case came up in the Court of Appeal, was usually in the region of £6,000 to £7,000, linked to provisional damages. Provisional damages are important in this respect for reasons I shall come to later. In the pleural plaques case—sometimes known as Grieves, sometimes as Rothwell—the six claimants were all negligently exposed by the defendant employer to asbestos dust. That exposure had three foreseeable consequences. The claimants developed pleural plaques; they are at risk of developing one or more long-term asbestos-related disease; and they are at risk of developing anxiety. In fact, Mr. Grieves developed a recognised psychiatric injury.

Generally speaking, the view developed in the courts up until that case was that aggregating the three elements meant that sufficient damage to found a cause of action could be established. The Court of Appeal, in a majority decision, decided that that was not so and that the three had to be looked at disjointedly. In those circumstances, compensation would not follow. I prefer the dissenting judgment of Lady Justice Smith, who took the round approach adopted in the courts for the previous 20 years, when the question was simply a question of fact to be determined in the individual case.

This issue is important. In the judgment of the Court of Appeal, the word “policy” appears in the words of the Lord Chief Justice. Policy, in my view, is a matter for this House as much as, if not more than, one for the courts. It is for this House to decide whether people who suffer from pleural plaques ought to be compensated, as they have been for the past 20 years. The Lord Chief Justice said that it was important that claims be brought within reasonable time, and I agree. He said litigation should be finite, and I agree with that, too. My concern is that the very fact of bringing a claim for pleural plaques means that liability is determined in relation to the claimant’s exposure to asbestos in a timely fashion, early on when the diagnosis of pleural plaques was made. If, 10 or 15 years later, the victim happens to contract one of the more serious diseases—asbestosis or mesothelioma—the issues of liability have already been determined and decided through an award of provisional damages and the victim can come back to the court quickly, if the case cannot be settled, to obtain the compensation needed for the substantial sum. That is why the question of pleural plaques is important when one is considering timely consideration.

We need to look at the effect on the victim, too. In the Grieves case, the victim developed a recognised psychiatric injury but, because the Court of Appeal had concluded that pleural plaques was in itself insufficiently significant, he could not claim for the psychiatric injury because, as we know from other precedents, it has to be linked to a physical injury in the first place.

Mr. Heald
I have already set out one or two examples, but I should like to give another—the measles, mumps and rubella vaccine. If somebody was worried about the risk from the MMR vaccine, could they not bring a claim under new clause 7? The situation would be similar with almost anything else, such as exhaust fumes or particulates. If there was anything that a person was worried about, they could bring a claim under that provision. Does the hon. Gentleman really think that that is sensible?

Mr. Dismore
I do not agree that my new clause would have that effect. The hon. Gentleman will be aware that MMR cases have been litigated ad extenso for some considerable time without great success. I dealt with his other points in my earlier intervention.

The provision is important because many cases result in fatality, as has been said, so if we can resolve the pleural plaques issue early, those fatal cases could be resolved quickly, too. As a consequence of the cases I mentioned, there has been a huge windfall for the insurance industry but a great loss for those who suffered from the negligence of their employers.

The proper basis for an award in respect of pleural plaques is straightforward. We should have to show initial exposure to asbestos, coupled with ingestion, followed by permanent penetration of the chest by asbestos fibres—as happens with pleural plaques—that remained as a catalyst for future harm causing physiological damage, creating the risk of a future disease that can be assessed and engendering suffering in the form of anxiety. Putting all those things together gives us something that is rather more than an insignificant injury, and it should be compensatable.

All the policy issues point in the same direction, too. The existence of pleural plaques requires that a person is exposed to asbestos in the first place. The large number of potential victims indicates that a significant section of society was unprotected, notwithstanding the legislation that was supposed to help at the time. This is not a case of employers being retrospectively made responsible for something for which they could not plan. The economic needs of employers have to be placed in the context of their obligations to society as a whole. There are no floodgates to be opened, because, until January this year, such claims had existed for more than 20 years without the courts being overwhelmed by litigation. The insurance industry has known of the problem—as has industry itself—for a long while and has had plenty of time to make provision for the potential cost of claims.

To accept that organic change—which is what pleural plaques amounts to—is actionable is not to lower the burden of proof, because it will still be for the claimant to show that exposure was the fault of the employer. To accept the defendants’ arguments sends out the wrong signals: to employers about the need to take care; to the insurers about their tactical use of the justice system, as in the Grieves and Barker cases; and, more important, to the general public about the ability of the courts to deal with problems that they have been handling for 20 years without ever having been doubted. If we are concerned about certainty in the law, could there be a more important example than this one? We have to find the right balance between claimants and defendants and, as a consequence of that Court of Appeal judgment, the present balance in relation to pleural plaques is woefully wrong.

My second new clause deals with the Crown Proceedings Act 1947. When my hon. Friend the Minister opened the debate, she gave the arguments that I was expecting. She referred to the debates in 1987 about retrospectivity. I remember them well, because I was lobbying for retrospectivity at the time, although not so much in the context of today’s debate. In 1987, the explosion of asbestos litigation had not really occurred; cases were just starting to come through, but not in the great volume that we see at present, and certainly not in relation to the problems of service personnel.

The argument about limitation was primarily to do with ordinary accident claims where the limitation period would have been three years. If my new clause were accepted and implemented, it would not affect those cases, because they would be caught by the limitation period, which has long expired, post-1987. Furthermore, the provision does not deal with accidents; it is limited to disease, with particular reference to asbestos.

My hon. Friend referred to the 2001 review. I remember lobbying the Ministry of Defence about that and listening to its rather spurious arguments that the benefits available through the war pensions scheme were equivalent to common law benefits if calculated over time. I am sorry to say that the MOD was not prepared to put those calculations to an actuarial assessment to find out who was right—it or me. I am pretty sure that I was right.

My hon. Friend was correct in saying that the problem arises from section 10 of the Crown Proceedings Act 1947 and its replacement by the provisions of the Crown Proceedings (Armed Forces) Act 1987, which repealed it in large part. The best illustration of the problem is the 1998 case of Quinn v. the Ministry of Defence, where the claimant, during his service in the Royal Navy, had stripped asbestos insulation from boilers and pipes that caused both pleural thickening and mesothelioma. The Court of Appeal held that the Crown had immunity from litigation due to the 1947 Act, because the exposure to asbestos took place before 1987, even though the symptoms did not manifest themselves until long after. That is the basic problem with which we are grappling in relation to asbestos. We are trying to put right problems created by the law as it stood in the past and by exposure to diseases and hazards long ago.

The difficulty is that that serviceman, like many others, was exposed during his service—for some of them it was during their national service—especially in the Royal Navy but in other branches of the forces, too, long before the 1987 Act was amended. Years later, they find that they have a medical condition, yet they have no legal redress whatever. That is a manifest injustice, which is made even more unjust by the sort of cases that I used to deal with on behalf of civilians who had worked in MOD dockyards side by side with servicemen stripping, repairing or refurbishing ships. The civilian was entitled to bring a claim for damages and obtain £150,000, or whatever the amount happened to be, as compensation for mesothelioma, yet the person at his side, who had done exactly the same job but happened to be wearing the Queen’s uniform, could not receive compensation. That is not fair or right, which is why I passionately believe that we must accept the proposals that I have promoted today.

I hope that my hon. Friend will ask the MOD to reconsider its position. It is grossly unfair that people exposed to exactly the same hazard are treated so differently due to a mistake made in 1987 when people did not realise the problems that would occur 20 years later.

David Howarth
I remind the House of the interest I declared on Second Reading, which is that I occasionally receive a royalty or two from books I wrote or to which I contributed on these subjects.

Like my hon. Friend the Member for North Southwark and Bermondsey (Simon Hughes), I want to raise a point about the drafting of new clause 13 that may have effects that the Government do not intend. I ask them to consider my points before the Bill goes back to the House of Lords.

The problem is that the Barker case was about two different issues. The first related to the Fairchild rule, which was a relaxation of the rules of causation in favour of claimants, and whether it would extend to cases where part of the exposure to asbestos had come not from an employer but from a period of self-employment by the claimant. The second issue has caused the most difficulty: whether the apportionment of damages should be made on the basis of the traditional rule of joint and several liability or a new rule of proportionate several liability.

The problem in Barker was that three of the Law Lords decided the first issue, the extension of the Fairchild rule, in favour of the claimant, but the second issue—switching to proportionate several liability—in favour of the defendant. More to the point, the Law Lords linked those two decisions; they come as a package deal. I will read from the speech by Baroness Hale of Richmond in the House of Lords, which makes the point very clearly. In paragraph 128, she says:

“One way of explaining Fairchild is that all were in breach of duty and one of them must be guilty, so that it made sense that all should be liable. That rationale does not apply, or certainly not with the same force, if there are other, non-tortious causers in the frame. But if the tortious exposers are only liable in proportion to their own contribution to the claimant’s overall exposure to the risk of harm, then the problem does not arise.”

18:00:00

Why is that a problem? It is a problem because, given that those two issues were decided together as a package deal, if one of them is reversed, that raises the question of what the courts will do about the other. If we simply go back to joint and several liability, overturning the decision of the Law Lords on the issue of apportionment, the danger is that the Law Lords will say, “In that case, the claimant in Barker can’t win at all. In fact, there is no liability to the claimant in Barker.” If that happened, that claimant would be in a worse position after the Bill than before it. At present, under the Barker decision, at least they can get some damages if they can find one of the various employers who will pay—who is in a position to pay. However, after the Bill goes through, there will be no liability at all and they will get nothing.

The question is whether the drafting of new clause 13 overcomes that problem. I fear that it does not. One argument might be that subsection (2)(a) of new clause 13 states:

“irrespective of whether the victim was also exposed to asbestos—

(i) other than by the responsible person, whether or not in circumstances in which another person has liability in tort”.

One could say that that covers the problem and that what is intended is to reverse only the pro-defendant aspect of Barker, not the pro-claimant aspect. The trouble with that interpretation of the new clause is the way in which subsection (1) is written. I hope that the Minister will take this point on board. Subsection (1) states, “This section applies where” and then it lists four conditions. The fourth condition is:

“the responsible person is liable in tort, by virtue of the exposure mentioned in paragraph (a)”.

In other words, not by virtue of the exposure mentioned in subsection (2). That means that subsection (1) comes first and one has to decide whether the claimant was liable in tort on the basis of the old law, or the law as the courts put it, not on the basis of the rest of the new clause. That gives rise to a serious problem in relation to what the effect of the new clause will be.

There are two points for the Government to clear up. First, what exactly do they intend in relation to Barker? Do they intend to reverse only the aspect of Barker to do with joint and several liability and to leave alone the case’s extension of the Fairchild rule, or do they intend to allow the courts to decide what to do about that other aspect? Secondly, if they do intend that both aspects of Barker should be decided in favour of the claimant, are they confident that the present drafting of the new clause achieves that aim? All I ask them to do is to consider those questions.

Mr. Doran
I add my congratulations to those already given to the Minister by my colleagues. I draw attention to my entry in the Register of Members’ Interests and declare an interest as a member of the GMB union and an interest in relation to Thompsons solicitors, who were both involved in representing Mrs. Barker. The point made by the hon. Member for Cambridge (David Howarth) is certainly of interest and needs to be studied, but I am not sure that the mechanics of the procedure in this House and the other place will allow it to be examined properly in the time scale available. However, I would be interested to hear the Minister’s comments.

I want to be brief, because we have had a full discussion and there has been full consideration. It is important that the Government responded so speedily and compassionately to the problems thrown up by the Barker case. Many previous speakers have mentioned the aspects of mesothelioma that create difficulties—the lack of warning and the speed with which the illness has fatal consequences. The speed is extremely important.

My major point is that none of these matters would have come before the House had it not been for the work of the trade unions, who supported Mrs. Barker and the other pursuers who were involved in the cases being decided by the House of Lords. We are talking about ordinary people doing ordinary jobs who have been subjected to the various elements that caused their illnesses, but who are not in a position, because of the complexity of the issues that they face and the expense, to pursue such matters on their own behalf. The legal aid system is not as helpful as it once was in that respect. Trade unions support their members in this way not just in run-of-the-mill cases, but in difficult cases such as the Barker case and, previously the Fairchild case. People are supported by the trade union movement to open up the law, to probe it and to deal with these difficult issues. In this particular case, that has led to some difficulty for claimants.

I raised an issue with the hon. Member for North-East Hertfordshire (Mr. Heald) in relation to the problem that the Government face when, on the one hand, they represent the employer in many of these cases––as they do in the case that we are discussing, through the inheritance of the responsibilities of the British shipbuilding company—and, on the other hand, they have to respond quickly to the consequences of the decision. I am sure that he makes the point in all seriousness, but it is important that we on this side do not take it too seriously. If a Minister were faced with legal advice to say that the Fairchild decision makes the Government potentially liable for massive damages because it has fundamentally changed some of the principles of liability, it would be negligent of Government in those circumstances not to have tested the situation. I am sure that any Minister faced with that legal advice would be left with virtually no alternative but to follow it. From the outside, it looks daft and a waste of public resources, but, in any circumstances, anyone with any knowledge of what happens in government would know that that is not the case. It is a course that had to be pursued.

I welcome the extension of the legislation to Scotland. The Scottish Parliament is in recess and has been for the past 10 days or so, so it would not have been possible to legislate there. It is important that, as part of the devolution settlement, we have the process known as the Sewel motion to allow those important decisions to be taken for the whole of the UK. In Scotland, the senior court in civil cases is the court of the House of Lords, so the judgment in Barker will apply in Scotland as much as it applies in England and Wales. That aspect is extremely important.

New clause 6, which was tabled by the hon. Member for North-East Hertfordshire, is a distraction. The immediate priority is dealing with the consequences of the Barker case. Discussions are going on that might lead to a scheme for arbitration, but we will have time to reflect on that in the future. The urgent priority is the Barker decision, so I hope that the Government will not be distracted from that.

Mr. John McFall (West Dunbartonshire) (Lab/Co-op)
I support new clause 13 and endorse the actions that have been taken since the House of Lords judgment in the Barker case, which caused a lot of turmoil in my constituency, as it no doubt did in others. Clydebank, which is in my constituency, is the proud home of shipbuilding, with the Queens and other ships being built there. However, a consequence of that is that we have the highest incidence of mesothelioma and asbestos-related diseases in the United Kingdom. The judgment is thus crucial to the best interests of many of my constituents.

We have come a long way since Tuesday 13 June, when a Westminster Hall debate was secured under the auspices of my hon. Friend the Member for Paisley and Renfrewshire, North (Jim Sheridan). At that time, we asked the Government what they were going to do. Since then, there has been pressure from my hon. Friend the Member for Barnsley, West and Penistone (Mr. Clapham), who has done a tremendous job. The Prime Minister himself received a delegation of Members of Parliament to ensure that there could be a coherent Government approach.

The Minister has also been involved. On Thursday 29 June, which was the day on which the Scottish Parliament got up, it was not clear that there would be co-ordination between the Scottish Parliament and the UK Parliament. If an agreement had not been secured, the Scottish Parliament would have needed to legislate in September and Scotland would have been a year behind the rest of the United Kingdom. During Prime Minister’s questions that week, I was told that there was only a forlorn hope. I also spoke to the Minister, and I must put it on record that she did a tremendous job, along with the staff in her Department, to ensure that we achieved co-ordination. The Scottish Parliament thus gave this Parliament the right to legislate on its behalf about mesothelioma.

I mentioned the fact that Clydebank has the highest incidence of the disease. As several hon. Members have said, there were about 153 incidences of the disease in 1965, but we are now getting to the stage at which there are nearly 2,000 incidences a year. The number will peak at between 2,000 and 2,050 a year by 2015. The disease will be with us for a long time yet, so it is important that we get the situation right.

The Clydebank asbestos group, under the chairmanship of Bob Dickie, West Dunbartonshire council, under its leader, Councillor Andy White, and my colleague Des McNulty MSP are working along with us in my constituency. Indeed, Des McNulty put a Bill before the Scottish Parliament in case things did not go so well between the Scottish and UK Parliaments. However, I know that he and his colleagues in the Scottish Parliament are delighted that an agreement has been secured.

One or two issues remain to be addressed. The situation in which a wife contracts the disease because of washing her husband’s apparel has been mentioned. A woman who was one of my close friends died several months ago as a result of asbestosis. The question of retrospectivity is thus important.

We must also consider legal fees. A constituent who visited my surgery on Friday said that although he had been granted compensation of £10,000, his lawyers had written to him to say that they were deducting £1,450 at the moment from an interim award, which would leave him with £235. The lawyers said that he would get the £10,000, but that that would require going back to court and would take a further year. As a result of going back to court, further moneys will come off my constituent’s compensation. He said to me, “The quality of my life is inadequate at the moment, so what will it be like in a year’s time?” Speed is of the essence, so I urge the Minister to take account of that.

My colleagues have mentioned a no-fault compensation scheme. I am happy for such a scheme to be considered. However, it has been put to me that compensation could be greater in several instances if people took their own cases to court through lawyers. If that is true and the no-fault compensation scheme has the rider that people can still take their cases to court, such a scheme would satisfy both those who want to pursue their cases individually and those who want speed.

18:15:00

May I mention to the Minister an issue that my constituents have brought to me? An individual who came to see me said, “John, I worked in the John Brown shipyard,”—a famous yard—“for many years in the 1960s and 1970s, but every few weeks I got a notice telling me that someone or other was my employer.” In other words, the work was subcontracted, so that an individual would not be able to say that he was working for John Brown’s when he contracted the disease. We must thus address the situation of workers who were nominally working in a yard for an employer who was responsible for them, but were, in fact, working for a subcontractor. I do not know whether such a situation has been raised with the Minister before, but if it has not, I would like it to be included as part of the deliberations.

I congratulated the Minister earlier, so I will not do so again. I want a good, efficient scheme.

Mr. David Anderson (Blaydon) (Lab)
May I add my thanks to the Minister and congratulate her on coming forward with a speedy response? I raised the issue on the day that the Barker result came out, when I asked the Prime Minister what he could do to give comfort to people suffering from the disease. He said that he was not quite aware of the decision, but that he would do anything in his power that he could. That is exactly what we are considering today.

The most common question that I have been asked since becoming a Member 14 months ago is, “Why on earth do you want to do that?” To be honest, events such as this make me know that I made the right decision in coming here. I am proud of what we are doing across the House to help people’s day-to-day living.

The people whom we are talking about should never have been exposed to asbestos in the first place. Although the disease became recognised in 1965, people had known for at least 70 years before that time that asbestos was a substance that should not be messed about with or worked with. That long history shows that asbestos should have stopped being used years ago.

Mesothelioma first came to my attention when a member of my trade union passed out in a bar. That is not uncommon in our area, but it is usually due to alcoholism, rather than mesothelioma. The guy did not know what was wrong with him. He had thought nothing of riding 50 miles a day on his bike and was much fitter than most of his colleagues. He had contracted the disease at least 30 years before while he was working in the shipyards. One fibre, which had probably lain there for those 30 years, came back to claim his life in nine months. Through the work of his widow and other supportive groups in the north-east as part of an organisation called the Chris Knighton mesothelioma research fund, we have managed to raise something like £100,000 to undertake research on trying to combat the disease. I suggest that we should support such groups and give them what help we can from the health service to try to combat the disease, or at least ameliorate its effects.

I want to be clear on my last point. I have read the explanatory note that the Minister has given us today—I thank her for that. It says that subsections (7) to (11) of new clause 13 will mean that responsible persons will be able to claim money back when a liable employer and insurer are both insolvent. Can the Minister help me with the case of my constituent, Mr. Siddoway? He cannot get recompense because his employer and insurer have not only become insolvent, but effectively disappeared off the face of the earth. Will I be able to tell him anything tonight to give him some reassurance that the Bill might help him?

Mr. Michael Wills (North Swindon) (Lab)
I am grateful to you, Mr. Deputy Speaker, for allowing me to contribute to the debate. I apologise for my temporary presence in the Chamber, which was due to parliamentary business elsewhere. I wanted to put on record my thanks, on behalf of the people of Swindon, to the Government for the speed with which they reacted to the problem.

I made the substantive case for action in my speech in the Westminster Hall debate a few weeks ago. The way in which the Government have reacted is a great tribute to them. They have brought enormous comfort to my constituents who have suffered directly, or as relatives of sufferers, from the terrible disease in Swindon. The disease is so prevalent in Swindon, mainly because of the railway works in the town, that it is known locally as the Swindon disease. The court decisions that have been the subject of discussion today have caused deep distress in Swindon and to many of my constituents. The sensitive and speedy response from the Government, which is embodied in new clause 13, is a great relief to my constituents. I put on record my thanks.

Bridget Prentice
This has been a very good, purposeful debate. I am grateful to all hon. Members for their support for new clause 13 and I thank in particular my hon. Friends for their positive, kind words, although I repeat that without their campaigning we would not be in this position. I am grateful to them for raising the issue not just recently but over a long period of time, and I am glad that this Government have been able to respond to them.

On the question whether the ABI scheme and creation of a board would offer a quicker solution, the whole point of the legislation is to tackle the effects of Barker as quickly as possible. That is why we and key stakeholders such as the ABI are looking at other ways to improve how cases are dealt with. Before the recess, my right hon. Friend the Secretary of State for Work and Pensions will make a statement in the House on certain relevant issues, and I am very conscious of the fact that we want to deal with the matter speedily.

The issue of costs has been raised tonight. As several hon. Members have pointed out, between 1,000 and 2,000 people a year are diagnosed, to whom average compensation of £100,000 is awarded. That is equivalent to between £100 million and £200 million in compensation. We estimate that the number of cases will rise to about 2,500 by 2015 and then gradually reduce until 2050. It might reassure Opposition Members if I said that, because people expected Fairchild to be in some ways reinforced by the Barker decision, the money is not new money. Barker affected not the level of damages but simply how they should be paid and apportioned. Therefore, we should not be too concerned about any changes.

In the Barker case, the House of Lords did not make any ruling on costs—possibly because such costs had not been decided. The cases were to be sent back to the law courts for apportionment. Therefore, we do not really know what the costs would have been. As my hon. Friend the Member for Aberdeen, North (Mr. Doran) said, Miss Barker’s case was supported by the GMB and therefore the fact that it was brought in her name does not necessarily mean that costs would be paid by her. However, if she were to pay costs, she would be able to apply to vary the order and how damages should be apportioned, although that might not go back to court anyway because it is very likely that the parties would settle on the basis of the legislation that I hope we shall shortly pass.

I was asked whether the rules of court would have to underpin subsection (4). The civil procedure rule committee will be asked to consider the employment exposure history of a claimant. I hope that that reassures the hon. Member for North-East Hertfordshire (Mr. Heald). However, as I have said, the apportionment of contributions is already established in the presumption in the clause, and that should enable insurers to resolve those issues without further court involvement.

Mr. Heald
That is a helpful assurance. Is the Minister able to give any indication of the time scale for the civil procedure rule?

Bridget Prentice
I am afraid that I cannot do so, although it has been put to the committee that the matter must be dealt with urgently and I hope that the rule will be in place very shortly.

My hon. Friend the Member for Barnsley, West and Penistone (Mr. Clapham) asked about pneumoconiosis. The issue relates to the way in which Fairchild is interpreted by the Department for Work and Pensions. Barker has already shed some doubt on that. We do not yet have a definitive view of how that will progress, but I suspect that my right hon. Friend the Secretary of State for Work and Pensions will deal with that when he makes his statement to the House. However, I will ensure that we write to my hon. Friend.

In my opening remarks I made the case on retrospectivity, and I do not want to go over that again. 

The hon. Member for Ryedale (Mr. Greenway) asked whether individuals would receive full compensation. I should make it clear that changes in the financial services compensation scheme will help to improve the speed with which claimants can receive compensation, but will not alter the liability of the scheme. Again, I suspect that my right hon. Friend the Secretary of State will be looking for further ways to settle claims and will no doubt mention that in his statement to the House.

The hon. Member for Cambridge (David Howarth) raised an important legal point. I read the relevant subsection as he was speaking and I could see why he came to the conclusion that he did. I am not absolutely convinced that that is the conclusion to which we should come, but I will take the matter away and bear in mind the note that he has passed to me, and see whether the provision can be improved in order that we do not allow anybody eligible to fall outside the scheme.

The hon. Member for North Southwark and Bermondsey (Simon Hughes) was concerned about waiting for months for the Bill to come into effect, but the new clause will come into effect immediately on Royal Assent. The regulations affect only insurers’ liability to recover their contributions, so the right of claimants to compensation will not be affected. They will get compensation straight away and the insurers will be able to claim that back later on under the regulations. It is the ability to recover contributions that will be dealt with retrospectively.

Simon Hughes
That is very helpful. If any last-minute drafting amendments were needed, either on the point put to the Minister by my hon. Friend the Member for Cambridge (David Howarth) or otherwise, we on the Liberal Democrat Benches and, I am sure, everybody present would want her and her colleagues to facilitate the Bill’s completion of any necessary stages between now and the summer recess.

Bridget Prentice
I am grateful for that suggestion. If we need to do anything else to be absolutely convinced that on receipt of Royal Assent the Bill will do what we want it to do, we will of course seek help and take advice, certainly in terms of helping it to complete its passage through the other place. In the short period before the recess, we do not want any further delay.

I trust that I have responded to all the major issues that were raised. My hon. Friend the Member for Blaydon (Mr. Anderson) raised a particular constituency issue and I am happy to discuss that with him at the end of the debate to see whether there is anything we can do to reassure him and his constituent. I am grateful to my right hon. Friend the Member for West Dunbartonshire (Mr. McFall) for outlining cases of mesothelioma, which is a tragedy for the victim and their families, who are sometimes innocent recipients of the dreadful disease, either personally or by having to cope with the difficulty of seeing their loved ones deal with it.

I commend the new clause to the House.

Question put and agreed to.

Clause read a Second time, and added to the Bill.

New Clause 1

Specified conditions for exemption

‘The Secretary of State shall make regulations about the specified conditions for exemption in section 5 and any Code of Conduct issued in connection with such conditions.’.—[Mr. Heald.]

Brought up, and read the First time.

Mr. Heald
I beg to move, That the clause be read a Second time.

Mr. Deputy Speaker (Sir Michael Lord)
With this it will be convenient to discuss the following: New clause 2—Offence of contravening specified conditions—

‘(1) A person commits an offence if he contravenes the specified conditions in section 5 and any Code of Conduct issued in connection with such conditions.

(2) A person who is guilty of an offence under subsection (1) shall be liable—

(a) on conviction on indictment—

(i) to imprisonment for a term not exceeding two years,

(ii) to a fine, or

(iii) to both; or

(b) on summary conviction—

(i) to imprisonment of a term not exceeding 51 weeks,

(ii) to a fine not exceeding level 5 on the standard scale, or

(iii) to both,

(3) An offence under this section is “an offence committed under this Part” for the purposes of section 7.’.

New clause 5—Injunction restraining exempt person—

‘(1) The Regulator may apply to the court for an injunction restraining an exempt person from providing regulated claims management services if he is in contravention of the specified conditions in section 5 or any connected Code of Conduct.

(2) In subsection (1) “the court” means the High Court or a county court.’.

New clause 10—Disapplication of Part 2—

‘The provisions of Part 2 of this Act shall not apply to legal services offered or arranged by Trades Unions for the benefit of their members or members’ families.’.

New clause 11—Compensation for coalminers—

‘(1) Where costs have been paid by the Government under the schedules of any prescribed claims handling agreement, any additional monies levied from individual claimants shall be repaid immediately by the receiving agent to the claimant.

(2) For the purposes of this section—

“claims handling agreement” means—

(a) the 1999 agreement between the Union of Democratic Mineworkers (UDM) and the Government on chronic obstructive pulmonary disease,

(b) the 1999 agreement between Vendside Ltd and the Government on vibration white finger, and

(c) the 1999 agreements on vibration white finger and chronic obstructive pulmonary disease between the claimants’ solicitors group and the Government;

“additional monies” includes membership fees, money in lieu of membership fees, marketing fees or other related charges;

“receiving agent” means the solicitor or claims handler who received monies from the individual claimant.’.

Government amendments Nos. 11 and 12.

Amendment No. 15, in clause 14, page 9, line 8, at end insert—

‘(6) The first order made under section 5 may not be made unless a draft has been laid before, and approved by resolution of, each House of Parliament.

(6A) An order under section 5 which has the effect of removing or restricting an exemption from section 3(1) may not be made unless a draft has been laid before, and approved by resolution of, each House of Parliament.’.

Amendment No. 16, in page 9, line 9, in clause 14, leave out ‘an’ and insert ‘any other’.

Amendment No. 5, in the schedule, page 12, line 13, at end insert—

‘(1A) A code of practice issued under subsection (1) shall include details of the advertising standards for providers of claims management services.’.

Mr. Heald
New clause 1 would ensure a statutory basis for the conditions in clause 5, so that a decision to exempt an individual or body from the regulation to which claims farmers are subject would have statutory form. The amendments give teeth to the code of conduct that the Minister proposes for those who are exempt from regulation.

18:30:00

I agree that some bodies need to be exempted from part 2, and it is right that organisations that are covered by other regulators—for example, insurance companies, insurance brokers and their agents are covered by the Financial Services Authority—should be exempted, because there is no point in having duplicate regulations for one body. However, we should ensure that everyone plays by the same rules and is subject to similar standards. We need a clear set of conditions to follow when deciding on the issue of exemption; it should not just be the say-so of the Secretary of State.

In January, in a written answer, the Under-Secretary confirmed—and Baroness Ashton said the same—that the Government intend to exempt trade unions by means of secondary legislation. The Constitutional Affairs Committee criticised that decision in its report, “Compensation culture”. It said that it did not “see any benefit” in exempting trade unions, and I agree, but the Minister has said that the Government will not go down the route of regulating trade unions. There will be a different system for them—a code of conduct, which will be voluntary.

I accept that trade unions play an important part in society and that they have, like many who manage claims, helped numerous people to obtain the justice that they deserve. However, like some claims management organisations, some trade unions have abused their clients’ trust for their personal gain. I am not alone in thinking that. The hon. Member for Bassetlaw (John Mann) has referred to his constituent, Mrs. Beckett, who approached Raleys, a firm of solicitors. She was told:

“‘NUM funding is available only through this firm’”.

Mrs. Beckett had nothing to do with the National Union of Mineworkers. She had not gone through the NUM; she just contacted Raleys using the Yellow Pages. As we heard from the hon. Gentleman, 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’”—

to which the hon. Gentleman said, “Not true!” He referred to another of his constituents, Mr. Dunstan, who 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.’”—[Official Report, 8 June 2006; Vol. 447, c.482.]

We should not forget the other examples provided by the hon. Gentleman, who concluded that they showed that the scandal of the miners’ compensation continues.

The hon. Member for North Durham (Mr. Jones) was explicit about the problem. He agreed with me:

“The hon. Member for North-East Hertfordshire (Mr. Heald) asked whether trade unions should be covered by the Bill if they act as claims handlers. I believe wholeheartedly that they should be.” —[Official Report, 8 June 2006; Vol. 447, c.495.]

Last November, The Times published an article that exposed the deceptive and disingenuous actions of the NUM and stated that

“elderly men suffering from chest diseases and a crippling hand condition were advised to allow the National Union of Mineworkers to fund their legal claims in return for paying part of their eventual compensation to the Union. But what the miners were never told was that in reality, the Government—and not the union—was paying the legal bills for successful claims.”

Mr. John Gummer (Suffolk, Coastal) (Con)
The regulations from which the trade unions are exempt are not onerous, but they are necessary to protect the public and the individuals concerned. Why should the regulations not apply to trade unions, if they are suitable for everyone else?

Mr. Heald
I fully accept what my right hon. Friend says. The Select Committee took the view that everybody who acts as a claims handler should be treated in exactly the same way. However, we argued about the subject in Committee, and I lost the vote. The Government said, “No, we are not prepared to do that; we will exempt trade unions, on conditions.” That is what clause 5 allows: exemptions on conditions.

The Minister has told us that a code of conduct—of which I have seen a draft—will apply to trade unions, but the problem is that there is absolutely no method of enforcement, whereas under the regulation, criminal offences are created. The police could intervene, and there are powers of investigation, search and seizure, which are necessary to investigate a case in which money is taken from the most vulnerable people in our society. However, the code of conduct for trade unions, we have been told, is simply to be administered by the Trades Union Congress. If an allegation is made, it appears that Brendan Barber will investigate it. Whatever one thinks about Brendan Barber—I believe that he is a fine servant of the union movement—the fact is that he is not a skilled investigator, and he will not have any powers of investigation.

By all means let us have a code of conduct, but let us make it statutory. If there is a breach of the code, let us make it an offence. The Bill should say that an injunction can be passed to stop a union continuing to handle claims if it treats its claimants in an inappropriate or improper way. I believe that that is a fair response to the Minister’s point of view.

Mr. Kevan Jones (North Durham) (Lab)
I agree with some of the hon. Gentleman’s points, and I have some criticisms to make of the draft code of conduct, because it is full of holes; I shall refer to that later. As I said to the hon. Gentleman in Committee, it will not just be left to Brendan Barber to enforce the code of conduct, because if people fall foul of the code of conduct to which they have signed up, they will be subject to regulation and the full force of the Bill. I agree with the hon. Gentleman that the code of conduct should say that specifically, because it does not do that at the moment.

Mr. Heald
Yes, the penalty on which the Minister relied was the notion that if there were breaches of the code of conduct, Ministers could act and subject the trade unions to regulation. Of course, the problem is: how does one uncover the breaches if there are no teeth and no regulatory powers? May I ask the hon. Member for Bassetlaw how easy he found it to obtain information, documents and things that he needed when he was investigating Vendside and the Union of Democratic Mineworkers?

John Mann (Bassetlaw) (Lab)
When reading the code of conduct, it is always good to put in the words “Union of Democratic Mineworkers/Vendside” instead of “union” and see how it reads. The hon. Gentleman said that the regulator would be the TUC and Mr. Brendan Barber. In the draft code that I have seen, far from the TUC regulating, unions such as the Union of Democratic Mineworkers would appoint or even pay their own self-regulator.

Mr. Heald
The hon. Gentleman is right. I was simply quoting what the Minister told us about the TUC in Committee. It is not even as good as that, as the hon. Gentleman says. Inspector Barber is not the answer. If one looks at the sort of cases that have come before the Solicitors Disciplinary Tribunal, where we have seen the NUM banking £10 million from the compensation scheme on the basis that solicitors had been representing that it was funding actions which it was not, one can see that there is a real problem that needs addressing.

Geoffrey Williams QC, who represented the Law Society, told the tribunal:

“It is not accepted that the only way in which these men could be represented as they were was by union agreement. They may have chosen to do so, but I say that was not an informed decision.”

He went on to say:

“The claims documents triggered the retainer and there was complete failure to explain at the outset why the arrangement with the union was either necessary, which I say it was not, or for their benefit, in which case the benefits were not explained.”

The right hon. Member for Rother Valley (Mr. Barron) has described that as

“a scam from day one.”

He is a former senior NUM official, and he said:

“The NUM has not put a penny into fighting these cases”.

There is no justification for unions not to be properly regulated. The Minister acknowledged that trade unions have abused their position. She said:

“I know of and agree with the genuine concerns about the activities of a small number of trade unions”—[Official Report, 8 June 2006; Vol. 447, c. 428.]

If that is the case, is it satisfactory to have an unenforceable code of conduct with the arrangements left to the trade unions, when others who are in exactly the same position will be faced with the full panoply of the law, proper investigators, the police, charges, powers of entry—all the things that I have mentioned?

New clause 2, the second of my new clauses in the group, would make it a criminal offence to breach the conditions for exemption, or the code of conduct, for an exempted body. If a body breaches the code of conduct, those involved would face penalties similar to those faced by a regulated claims management company. In Committee the hon. Member for Sherwood (Paddy Tipping) admitted that the trade unions had acted immorally. He said:

“I make no apology for UDM/Vendside, or for some sections of the NUM. I think that other trade unions have acted irresponsibly as well.”—[Official Report, Standing Committee E, 27 June 2006; c. 118.]

As I mentioned, the Minister acknowledged that the trade unions had acted irregularly. The hon. Member for North Durham made a passionate and persuasive speech outlining the numerous cases of abuse. Many Members from all parts of the House accepted that the manner in which the trade unions had conducted themselves was, at least, disappointing.

It is wrong to refuse to face the facts and to argue that the trade unions should be exempted simply because there are a small number involved. If I, as a lawyer, said, “Very few firms of solicitors misbehave. They should not be regulated at all, and we would not have any of the disciplinary powers that the Minister is pressing upon the legal profession in her draft Legal Services Bill”, I would be laughed out of court. It is risible. Are we to be able to say one thing of lawyers and another of trade unions? If these are responsible organisations, surely they ought to be regulated in a responsible and sensible way.

Mr. Kevan Jones
Some would suggest that the Law Society has been the best trade union in history in terms of looking after its members and avoiding people being brought to book when they should be. Does the hon. Gentleman agree that the scandal that has gone on in Durham and other places could not have gone on had it not been for the collusion of the people in his profession to whom he is referring?

18:45:00

Mr. Heald
It is true. To its credit, the Solicitors Disciplinary Tribunal has heard those cases and made those findings, and there are more to come. Given that that system exists for solicitors and is to be tightened up, which we all accept is necessary, is it right to argue that nothing of that sort should apply to the trade unions? One union has trousered £10 million through just one firm of solicitors.

John Mann
The hon. Gentleman mentioned decisions of the Solicitors Disciplinary Tribunal. Does that not highlight the need to strengthen the law whereby a consumer complaint can go through a caseworker, to an adjudication panel, to a solicitors disciplinary tribunal, as is the case with Raleys—and now it has the option of appealing to the High Court—whereas the consumer has no option but to appeal to the legal ombudsman at the very first stage? Should there not be more powers to allow the Law Society immediately to strike off solicitors such as Raleys, who refuse to abide by the Solicitors Disciplinary Tribunal’s decisions?

Mr. Heald
The hon. Gentleman and I do not have much of a dispute. We agree that there should be firm punishment, but I think it needs to apply to everybody who is involved in the business of claims management services.

Mr. Gummer
Does my hon. Friend take the point made by the hon. Member for Bassetlaw (John Mann), which is a good one? If one substituted something else for the words “trade union”, what light would that throw on the legislation? If one put in the word “solicitors” or the names of particular trade unions, such as the NUM or the UDM, the whole sense becomes clear: a particular group is being exempted from even cursory coverage by the law when there is no reason or rationale for that. It is not because they are subject to some other regulation; it is simply because the Government do not want to upset them. That worries me, and many other people, a great deal.

Mr. Heald
My hon. Friend and the hon. Gentleman make an important point. If we put any other class or category of organisation in that bracket, it would look extraordinary.

New clause 5 gives power to the regulator to apply to the court for an injunction against any exempted individual or body to stop it providing claims management services where it has broken the exemption conditions or the code of conduct. That would ensure speedy protection for the consumer and fits in with what would apply to a regulated body. I believe the approach that I am adopting fits in with the concept of rights and responsibilities that the Prime Minister so often talks about. If a body abuses its exempted position, it has clearly failed to act responsibly towards its consumers. If that is the case, the regulator should have the power to ask courts to issue an injunction.

Mr. David Hamilton
I have listened carefully to the hon. Gentleman. Can he give me an example of any other panhandlers or lawyers who raise cases on behalf of the work force that they represent? For example, it took a lot of money for the NUM to go to law on industrial deafness and vibration white finger cases. The NUM has raised £1.2 million in certain areas—remember, it is a federation of unions—and requires £2.4 million for new litigation. What organisations other than unions do that?

Mr. Heald
The hon. Gentleman should come with me to the annual awards for the Legal Aid Lawyer of the Year. There he would see some very inspiring, passionate lawyers who have taken on cases, often for free, to help people. That is a fine thing. Insofar as the trade unions help people, that is an excellent thing and nobody would dispute it. Many people do excellent things, but they are still regulated. That is what is wrong with the Bill—the idea that the unions are being let off.

The hon. Member for Hendon (Mr. Dismore) has suggested in new clause 10 that there should be a complete exemption for

“legal services offered or arranged by Trades Unions for the benefit of their members”.

Perhaps he did not realise that the Bill already contains such an exemption. He has worked for claimants’ solicitors for many years and knows about the matter. I understand that he worked for many years for one of the firms that has been most heavily criticised.

If one examines what has happened to those firms of solicitors, it is a sad story. A trade union solicitor in league with Durham NUM has argued in a briefing to Members of Parliament that such solicitors and trade unions should be exempt, but the hon. Member for North Durham, who knows the area and the circumstances, has explained that they are involved in worrying activities. Millions of pounds have been taken by unions and solicitors.

In an example provided by the hon. Member for North Durham, solicitors offered people the opportunity to pay £20 to become associate members of a union, which does not provide any of the rights of union membership and simply allows people to be known as associate members. People then signed a form saying that 7.5 per cent. of their final settlement would go to the union; the money is not kept by the solicitors but is passed on to the union, which received £10 million in one case. The form stated that that was done to indemnify the individual against any costs, but the Government pay all the costs. The situation is extraordinary.

Why would the Government do that? We know that they have close relationships with the trade unions and at least one of those firms of solicitors, because in recent years the Labour party has received £90,000 in funding from the NUM and £75,000 from a firm of solicitors, Thompsons. Against that background, it is worrying that such people are being exempted.

Mr. Kevan Jones
May I clarify what the hon. Gentleman has said about £10 million? I suspect that in the case of Durham, the figure is about £3 million. If his point about donations to the Labour party is correct, that is very bad business on the part of any party, because that firm may have given the Labour party £75,000, but the Government have given it nearly £100 million in fees.

Mr. Heald
Perhaps I am too suspicious. I accept that the figure of £10 million relates to Raleys and the example in The Times. The hon. Gentleman is right: £3 million is the figure that he put on what happened in Durham—but that is still a lot of money. The way in which the matter is working out is extremely worrying. 

I will be interested to hear the hon. Gentleman’s explanation for new clause 11, which is an important contribution. As I have said, it is not right to exempt anybody, but if one does so, it should involve a proper statutory scheme and proper enforcement—some teeth. The Government proposal does not include any enforcement, which I believe is quite deliberate.

Amendment No. 5 concerns the advertising code of practice. The Bill provides that there should be a code of practice to cover claims management services. Much of the advertising used by claims management companies is targeted at the less well-off, and the document, “Better Routes to Redress”, which was prepared by the Better Regulation Commission, includes examples. One advertisement featured a young women looking at a sports car and saying, “I’ve always wanted one of those, and now I’ve had an accident I can have one.” The document rightly concludes that such advertising is entirely inappropriate in personal injury cases, where damages are limited and aimed at putting clients back in the position in which they would have been if they had not suffered wrong. I can provide numerous other examples, and I hope that the Minister will assure us that the code of practice for claims management companies will cover the sort of appalling advertising to which I have referred.

John Mann
I shall start by rebutting the tongue in cheek but mischievous remarks made by the hon. Member for North-East Hertfordshire (Mr. Heald), who has tried to relate union money for the Labour party to this Bill and exemptions—good, bad or otherwise.

I am uniquely positioned to rebut the hon. Gentleman. In 1996, The Sunday Times described me as “the bagman” between the unions and the Labour party. The unions played a particularly valuable role in removing the hon. Gentleman’s party from office in 1997 by ensuring that union money, which is determined in statute by legislation on political levies and political ballots, was channelled into the choices of union members. I appreciate that he is sore about that, but it has nothing to do with the issues before us.

I want to refer to the draft regulations that the Minister has been considering. I appreciate that she has rightly spent her scarce but valuable time on new clause 13 on mesothelioma, which means that she has not had the opportunity to put time and effort into the draft. Hon. Members on both sides of the House are thankful that mesothelioma has been her priority, but it means that the draft contains some weaknesses.

There is one matter that the Minister can easily clarify, which would solve a core problem with the draft. The introduction discusses exempting trade unions in relation to services provided to their own members. If the definition of “members” is specified, many of the problems will disappear, because union members, as defined by law, have a series of forms of redress that are not available to other consumers. First, they have the certification officer, who is a regulator to whom they can go on matters that they are unhappy about. Secondly, they have the structures of their union and the ability to participate in decision making and democracy, which is unlike any other organisations that we have discussed and which, again, is covered by statute. Thirdly, they have a form of redress—the common law and an injunction—under the Employment Act 1992, if they feel that their union is acting outside its rules. The union member, as currently defined in statute, has a particular series of rights, which are not available to any other consumer. I put it to the House that the combination of those three factors is greater than any regulatory powers.

Mr. Kevan Jones
Does my hon. Friend agree that this is a crucial point, given that certain unions—for example, Durham NUM—have abused the system by inventing associate members, a category that has no legal definition in law, leaving people with no recourse under the trade union legislation?

John Mann
My hon. Friend is absolutely right. The scandal of what happened with miners’ compensation is that union members got the service for free but non-members, of whatever category, did not. UDM members, for example, got the service expressly for free. The people who had rights of redress got it for free, but the rest had to pay. The joining fee, under different guises, became the contribution that the UDM attempts to justify. By clarifying the question of membership, the Minister will make her life, the life of her Secretary of State, and the lives of their successors significantly easier. It is not true that there is a big problem with unions and union members in relation to the handling of industrial injury and industrial disease matters. There are not even small problems in relation to how other unions are handling it. We have to deal with this scandal and with another scandal—currently theoretical but potentially actual—that is important in this context.

19:00:00

Will the Minister clarify whether a regulator is to be appointed immediately? That would help us easily to define what falls inside self-regulation and what falls outside it. If that does not happen, the Minister will have a series of continuous problems.

We start, however, with the draft code. I am not sure who worded it, but paragraph 3(1) is interesting. It states:

“The involvement of any subsidiary companies in handling a member’s claims (whether owned wholly or partly by the Trade Union) should be disclosed.”

What use is that? I have here a sheet of paper from a subsidiary company called Vendside that is wholly owned by a trade union—the UDM. In other words, as drafted, the code would legitimise the practices of the UDM and Vendside, because it is disclosed that the member will be going through Vendside and paying their fee to it. Disclosure is an issue, but it is not the key issue. The key issue is whether the money should be deducted. Paragraph 3.2 says:

“The information given by a Trade Union to a member about arrangements with third parties should be as comprehensive and clear as possible, but need not involve the disclosure of commercially sensitive information.”

That creates a catch-all whereby all relationships with solicitors, even beyond scandalous organisations such as the UDM and Vendside, can be hidden away. Why should not the member know what is going on? The catch-all of commercially sensitive information creates an enormous loophole in the draft code.

Let me give one example to show how bad it could get—that of the UDM. A third party that was never disclosed to the members as commercially sensitive, one might say, was a firm called Indiclaim. Money belonging to a swathe of UDM claims victims—non-members who have gone through the UDM—has gone from the solicitor to a firm called Indiclaim, but the victims knew nothing about it. The money was paid by the solicitor, but they might want to question what the marketing and vetting fee was. They might wonder about this firm, Indiclaim, which was vetting their claim. If they were to probe deeper they would find that it is owned by one of the employers—the manager of Vendside. If they had happened to stumble on various minutes meetings involving the UDM, Beresfords—the precursor to Indiclaim—and a company called Walker and Co., they would see a swathe of financial arrangements between the solicitor and UDM Vendside of which they were unaware, with money going in six separate ways. Again, that could be described as commercially sensitive information. That loophole needs to be removed.

Mr. Kevan Jones
Does my hon. Friend agree that that could also extend to the relationship between trade unions and solicitors in terms of payment of referral fees and other inducements for a trade union to put work with a particular solicitor, thereby negating the whole idea of a code, which would be the openness, honesty and transparency of the relationship between a recognised trade union and a solicitor?

John Mann
My hon. Friend is correct. Indeed, transparency is in the interests of the trade union and the solicitor. The whole idea of a loophole as regards commercially sensitive information is a non-starter—there is no rationale for it whatsoever.

Paragraph 5 of the code refers to a third party. Who determines the identity of the third party, who appoints the third party, and who pays the third party? That would create a problem for any decent trade union, never mind a rogue trade union. Who would the UDM appoint as the third party to look after consumer complaints? One could come up with various suggestions. I suspect that if a union is doing something fundamentally wrong—in this case, ripping off tens of thousands of elderly miners and widows—it is unlikely to appoint a third party to handle complaints that is anything other than particularly well connected and sympathetic to it and to its aims. The ability to appoint a third party without further definition is a weakness.

I remind Members that, whether we like it or not, the UDM is a certificated trade union and falls within this definition. We therefore need to ensure that the Bill and the codes of practice that go with it will fit the bad apple as well as the other 98 per cent. with whom there is nothing wrong. That is the dilemma that we face. We cannot afford to allow a renegade union such as the UDM, which has systematically been robbing my constituents and others, to get away with it—and even potentially to be able to justify it, and to have their expensive solicitors justify it—because of a lack of tightness in the wording of the draft code.

The next problem with the code concerns redress. I have here the solicitors practice rules from 1990, with 38 pages of detail. Labour Members, and perhaps others, have been critical of the Law Society. I have seen a significant improvement in how it has handled complaints over the past year, particularly since I had to refer it and certain cases to the legal ombudsman, who produced a very critical special report. I made a whole series of complaints on behalf of my constituents about a firm of solicitors called Moss—one of the UDM solicitors. We not only need details about the regulations but about rights of redress. There is no point in having regulation without a clear right of redress. If, under the new regulatory regime, with self-regulation built in through the code, someone wants to challenge deductions that were wrongly made, it is essential, especially for people falling within self-regulation, that the regulations are watertight. That means having the right of redress, which is a basic consumer right. The Law Society learned that over the years and now specifies the amount of redress and how it should be funded.

These cases are unusual. The volume of cases going to the Law Society is, to be fair, very unusual and the sheer volume has caused great problems. There will not be a great volume, however, in respect of ordinary, decent trade unions, which do not have many such complaints. Few complaints are made to the certification officer in the first place, irrespective of whether they are listened to and acted on. Other than the scandal of miners’ compensation, we are not talking about a large volume. That should be borne in mind when we are deciding whether to go for self-regulation or to impose regulation. A consensus should emerge within the House that unnecessary regulation and too much Government regulation do not represent the way forward.

As I have argued on several occasions in the past and certainly in respect of an organisation such as the UDM, the definition of membership should provide the ability to ensure that claims handling is regulated by the regulator and that whatever is done for the real members defined by law is covered by self-regulation. I would be satisfied with that. My definition of claims handling for trade unions would arise where they go beyond their existing members and start to scout out, as the UDM and Vendside did, for further people—perhaps for ex-members or members of a former union or widows. Straightforward definitions help to solve many of the problems that lie within a code of conduct, however it is worded.

Mr. Heald
Is the hon. Gentleman arguing that where membership does not include associate members, all the abuses that we have heard about—including the £20 associate members—would be perfectly okay and would not require any regulation at all?

John Mann
No, the issue is very straightforward. The UDM charged a fee. Let me explain how it worked, as it is very interesting. As it was challenged, that union tried to twist its way into getting additional legal advice. I have with me a form from one of my constituents. It says that if the claim is successful,

“I will pay to Vendside Ltd, who administer these Claims, a fee, to cover the cost of pursuing this Claim on my behalf”,

and it then spells out the fee rates. Yet Vendside Ltd and the UDM were not paying anything towards the costs. They dealt with the cases under the claims handling agreement and registered automatically. For reasons that have never been explained to me, they even had their own claims handling agreements: one for vibration white finger from January 1999 and one for chronic obstructive pulmonary disease from September 1999. No one has ever explained at all—let alone to my satisfaction or even my dissatisfaction—why that union should have had separate claims handling agreements and why a Minister chose to sign them. I do not even know which Minister signed them. Nevertheless, I shall keep burrowing away with questions on the issue; who knows, one day I might get to the truth of the matter.

Mr. Clapham
Does my hon. Friend agree that the signing of that separate agreement was the basis of many of the problems that arose under the coal claims handling scheme?

John Mann
If one were always the optimist, one would say that signing that agreement led directly to the Compensation Bill, so there is some light at the end of the tunnel—except perhaps if one is running Vendside. I would certainly expect my constituents to bring in many claims. Just as a policy decision allowed the backdating to 1999 of complaints for double charging against solicitors under the miners’ scheme and made complaints admissible to the Law Society, so it is important to clarify whether the regulator, in setting a regime for claims handling, would be expected to take cognisance of comparable bodies—in this case, the Law Society. I would be grateful if the Minister clarified that.

19:15:00

The Vendside case is particularly important. About 15 to 20 per cent. of the people involved, because of the agreement that the Government signed, never went through a solicitor. Uniquely, the claims handler, Vendside, took the claims forward, so the only remedy has been civil law. There has been no Law Society remedy, even though it was beginning to work very satisfactorily for all other cases. I do not envisage further civil actions against anyone other than the UDM and Vendside, but 15 to 20 per cent. of people did not have access to justice or consumer rights.

The Bill becoming an Act is fundamental to allow those 20,000 to 30,000 people the same access to justice and consumer rights as would have applied if their cases had been handed to a solicitor. As far as cases dealt with by Moss, Ashton Morton Slack and Beresford solicitors are concerned, no one can move in my office for all the cheques arriving from companies to pay my constituents who had paid the Vendside fee in circumstances where it was wrongly and deliberately suggested to them in writing that the UDM was paying costs of their claims. Those people are now getting justice and I want the Bill to provide an exact parallel for the minority of people whose consumer rights have been denied and who have had only the remedy of civil action.

Where an organisation is more than happy to spend large amounts of money on expensive lawyers, it is important to remember the small man or woman. We may be talking about a retired miner in his 80s or a miner’s widow in her 90s who have wrongly had money deducted and who have to fight against the might of Vendside, with all the money it acquired. Vendside is quite happy to throw its money away to try to stop the individual. What Vendside actually did—following legal advice, I suspect, but who knows; perhaps it will write and tell us—is change the forms. In fact, the forms changed five times; I have seen five variations. At some stage, it became a fee in lieu of membership.

That is where the question of membership is fundamental. My constituents who were not members of the UDM, who worked in another trade or had retired or who were not classified legally as members got stung in different ways, but the principle is the same. The point was to put money into that organisation for nothing. The Bill must immediately resolve that sort of consumer complaint and allow people a remedy so that they can pursue justice for themselves.

Mining cases are not the only ones. We are talking theoreticals, but this is not an absolutely theoretical, because a political party—the British National party—has attempted to jump on the back of industrial injury claims. In this case, we are talking about ceramic industry claims from the Potteries. Other hon. Members may have more up-to-date information than I have, but I understand that there is an intention to form a trade union. Whether it gets certified is out of our hands, because it will be determined by a certification officer. It is probably theoretically possible for the BNP to set up a trade union that could be certified. The BNP attempted with Beresfords solicitors to take claims and act as a claims handler in order to recruit through the union rather than straightforwardly to the BNP, as it had tried before. That is a real danger and we need to ensure that we do not fall into it. That is particularly the case in respect of a letter from Beresfords about what had happened in Committee. Beresfords immediately wrote to me to spell out that it had

“formed no connection with the BNP at the time, we certainly had no intention of forming such connection in the future.”

That actually makes matters worse, because Beresfords had obviously been hoodwinked by the BNP: the BNP was advertising its name, and it did not even realise that that was happening, as it spells out in the letter. That could happen in the context of the BNP setting up a trade union and attempting to get it certified, so defining what are claims handlers and what are not is vital, as is defining membership.

I also want to make some remarks about all the people who had money deducted in miners’ compensation claims, because there are many of them. Tens of thousands of people have had money deducted—certainly more than 50,000 and, although it is hard to give an accurate estimate above that, there are probably many more. Let us take the example of my own constituents. I have already had money paid back by solicitors to more than 600 of them, and that number is increasing rapidly week in, week out. The list of solicitors who have been forced to pay back money—some, certain people would say, as a voluntary good-will gesture, others following Law Society adjudications—is phenomenally long. Almost 40 firms of solicitors have now had to pay back money.

Mr. Kevan Jones
I concur with my hon. Friend’s comments that the Law Society is getting better, but is not one of the problems with it that many firms of solicitors only pay back money to people who complain, and there are possibly tens of thousands of people who do not know that they have been hoodwinked—robbed, in my opinion—by a firm of solicitors? They will never get that money back unless someone forces those cowboys to pay it back.

John Mann
My hon. Friend is right. The reason for that is that many people fear that, when they sign a contract, it is legally binding. Some such people are taking on large firms of solicitors who directly deducted money for themselves—we are not talking about third parties. Let me give some examples of those who directly deducted money for themselves: Thompsons solicitors took £285 from one of my constituents, and Richmonds solicitors took £500 from another. There is a whole range of others: Irwin Mitchell deducted £289. Those are major firms of solicitors. Many smaller firms of solicitors also stumbled into this, such as Frank Allen Pennington, Donne Mileham and Haddock, and Colemans. They were also deducting moneys, some for themselves, some for a third party such as other claims handlers, including PR and Associates, Union and General Services—which quickly went into liquidation, so it could not be pursued through the civil courts—and IDC. There is a plethora of such claims handlers.

People have to go through a process to get their money back. I will give an example of how that works, because I have today responded on behalf of a constituent to the Law Society. The complaint was put in two years ago. No assessment is made of the literacy, illness or other vulnerabilities of such people. Some of the people I am representing are in their 90s. Some have good literacy, others have very limited literacy, and they get sent large wodges of documents. Some get visits at home from solicitors when they make a complaint; some had visits from the managing partner of solicitors. Some have been taken to hotels for meals to discuss their complaint with a managing partner. Some are rung up and told, “You are liable, because you have signed,” and others get letters saying that. Those are the kind of people who are complaining.

The vast majority of those people have had no previous contact with solicitors. Many of them tell me that they regarded solicitors as people whom they would need only if they were on the wrong side of the law, and they are therefore delighted to have had no contact with solicitors. They say to me time and again, “We have had no contact with solicitors before.” Many of them are dealt with by their solicitors over the telephone rather than face to face, even for industrial hearing loss claims. Many are dealt with over a great distance, and the solicitors never see them—or see them only once.

How are such people to know, other than by MPs campaigning on the matter, that they have a genuine complaint that can be addressed by the Law Society in getting their money back when it should never have been deducted in the first place because, in this great scheme, the Government paid the solicitors’ fees? If they are getting £8,000 or £10,000 in compensation and a solicitor says, “The charge to you is £1,000”, they might think that to pay £1,000 to get £10,000 sounds reasonable. It sounds reasonable to me, and I know that it sounds reasonable to my constituents, because no one told them that the Government, through the scheme, were paying all the costs. These are the sums in respect of some of the solicitors involved: for Thompsons, more than £100 million; for Rayleighs, more than £55 million. The total is more than £500 million and increasing. The sum in respect of Beresfords is £80 million, and more than £100 million in potential claims costs are still to come. Those are phenomenal sums of money, and only now are people realising that those solicitors were being so appropriately generously—so to speak—paid by the Government. That was the deal that was done, and I have no criticism, as things can go in different ways. What I criticise is the fact that my constituents have to go through me one at a time to get their money back. Even with the Law Society, things have to be done one at a time.

Today, I dealt with a firm of solicitors called Wake Smith—again, one of the UDM solicitors. It is one of a small handful of firms that have failed to agree to pay people back. Only a few are still resisting, and Wake Smith is one of the worst. It puts standard responses in the post—20-page legal documents full of legalese that my constituents are meant to read and understand—and it keeps getting things wrong. In a case I addressed today, it gave a 20-page document about the UDM—defending the UDM and its right to take money, and then claiming that it had virtually no relationship with the UDM. In fact, the money in question had been deducted to IDC, but it had obviously just hit the computer button and printed that off; it had not given any care and attention to the fact that this was an individual complaint from a former client of theirs—a real person who had a consumer complaint.

I shall give another example; it is a classic. In correspondence sent to one of my constituents, a paragraph has been added in bold. I read and responded to it this morning. This particular consumer complaint has been going on for two years. It is stated in bold that it should be dismissed because I had no appropriate authority from “him”—I stress that “him”—and that I had not provided any, but that the firm involved had a client satisfaction form from him that it claimed to enclose. It was not included in the papers, and although I have asked for a copy I suspect that I will not receive it, as this was a deceased claim from a widow; her husband died 20 years ago.

That highlights the kind of people we are dealing with. They not only wrongly take the money—in this case for the UDM, and also, if Wake Smith is the firm involved, probably for Indiclaim as a marketing fee as well. A fee of perhaps about £500 would be paid to Indiclaim, and there would also be a fee that it has helped the UDM and Vendside to get. But when my constituent has the temerity to complain, Wake Smith claims that it has a client satisfaction letter from her husband who died 20 years ago and who has—strangely—failed to sign an authority from me to represent him. When that sort of thing is going on, I have to ask whether the Government should not insist on automatic repayment to those people. Taxpayers’ money is going to the solicitors, so either the Government or my constituents and others have been fiddled. The double charging is straightforward—it is on top of Government fees. Either the Government should consider legal action to claw back the money from the solicitors and use it to recompense the individuals or the law should be changed so that the solicitors—and Vendside Ltd, which are claims handlers—are automatically forced to repay. That is natural justice.

19:30:00

David Taylor (North-West Leicestershire) (Lab/Co-op)
What my hon. Friend describes so vividly and helpfully is possibly legal but morally reprehensible and should be tackled. However, does he acknowledge that thousands of claims in constituencies such as mine have been handled not through the Union of Democratic Mineworkers but a large local firm of solicitors—I spent some hours with them last Friday—and through the local branch of the National Union of Mineworkers, and that the position there is not as sinister and unacceptable as the one that he describes?

John Mann
If my hon. Friend’s constituents are happy, that is all right. If the firm is Moss solicitors, I have received a prodigious number of complaints about it. Those complaints went to the legal ombudsman and led to the special report from that ombudsman. Every single case involved Moss solicitors, which is one of the most disgraceful firms in its handling of my constituents and my ability to represent them. It is the sort of company that is prepared to ring people at home. People who have never had dealings with a solicitor before making a complaint and who are rung up by solicitors feel highly intimidated. That is what my constituents tell me. It suggests that overall action should be taken against those solicitors. The Government have paid that firm many millions of pounds in fees for its work. Yet it wants to take other moneys to hand to people who have given it the claims—uniquely, it has worked for both the NUM and the UDM. The two unions allegedly do not talk to each other, but they clearly do with Moss solicitors.

Mr. Kevan Jones
Does my hon. Friend agree that it is not only a scandal of solicitors and specific unions that have deducted money from people’s claims but of some solicitors using the claims as if they were operating a sausage machine, and processing them without doing a great deal of work on them? In several cases, they have under-settled a claim when a competent solicitor would have pursued it and the claimants could have got more.

John Mann
My hon. Friend is right. However, a disparity exists. Some of the solicitors who charged have provided a good service compared with others, and some solicitors who did not charge have provided a bad service. We are therefore considering quality to ascertain if, for example, a services claim has been included. Some of my constituents are taking negligence cases against solicitors and winning significant sums of money from appalling solicitors.

Sometimes one finds a direct correlation between bad service and solicitors who charge. We have found that, when a firm of solicitors, the UDM or Vendside Ltd have handled many claims, the average settlement is well below that of the better companies. There is no good explanation for a significant variation in the average settlement when considering a large number of claims. If the number was small, statistical oddities might skew matters, thus making the sample statistically unreliable. However, in the case of tens of thousands of claims, it is straightforward and valid to make comparisons. Some firms have been taking money and performing poorly, though others have performed well and still wrongly taken money.

David Taylor
Does my hon. Friend see a parallel, in the links and good relations that apparently exist between the UDM and parts of Government—perhaps the civil service—between what we are discussing and the UDM’s negotiating poorer deals for the equal pay claims? When the NUM negotiated better deals, those of the UDM were retrospectively increased. That does not appear fair and open.

John Mann
I am not sure whether my hon. Friend made the point that he wanted to make because, in the case of the equal pay claims, the NUM left plenty in the filing cabinet and there are plenty more that the UDM under-settled. The canteen workers, the cleaners and the equal pay claims constitute a separate issue, into which I do not want to stray now.

I want to refer to some of the claims handlers and what they said. Union and General Services Ltd boldly stated that it would “assist” with

“the costs associated with the Claim”

and took a large cheque. Although Robinson King solicitors lost a week ago at the solicitors disciplinary tribunal, they still refuse to pay people back. Four out of the six cases that went to the solicitors disciplinary tribunal involved my constituents. We are considering sums of money that approach £4,000 which was wrongly deducted. There is some dispute about whether Union and General Services Ltd received the money that it was supposed to get for funding the claim. It did not fund the claim and the solicitors conspired with it. That is why the Bill is vital—it is also vital that we get it right.

P. R. and Associates is still in existence. I have an example of its “form of agreement” for “common law claims” for

“help, advice, instruction, representation, travelling costs, and administration… on pursuing my Common Law Claim.”

However, the claim to which it refers is not a common law claim. It went through the claims handling agreement. If it had been a common law claim, which entailed a risk, it would be perfectly fair for a union or non-union organisation to charge a percentage or a fee, provided that it was transparent, because it bore the risk. The scandal of the miners’ claim is that there was no risk.

We are not being irrational. We do not say that people—whoever they are—should bear risk for no reason or no reward when there is transparency. However, when people have been deceived, they should get justice and their money back.

Perhaps the most astonishing example is that of Industrial Diseases Compensation Ltd. Its agreement form states:

“The Company shall pay… all of the cost of The Claim to include legal fees and medical examination costs”.

It did not pay a penny. It went through a solicitor on its panel and through the claims handling agreement and did not pay a penny. Its form has a clause 6(i), which outlines what happens if the

“Claimant deliberately misled The Company”.

I shall end with that. The Bill and the law should deal with cases when the company has deliberately misled the claimant.

We must ensure that everyone has access to justice. That is crucial for that minority who did not go through solicitors with miners’ claims but went only through Vendside Ltd. They have no redress through consumer complaints to the Law Society and the system that I believe now works well, from evidence in the past three or four months. The minority who went only through Vendside Ltd should automatically and immediately have full consumer rights so that they can complain the moment the measure receives Royal Assent.

Simon Hughes
The speech of the hon. Member for Bassetlaw (John Mann) means that I do not need to comment on new clause 11. I guess that a further speech in support of it will be made—an excitement to anticipate.

Obviously, there is a serious point behind all the issues that have been raised. That militates in favour of new clause 1, which the hon. Member for North-East Hertfordshire (Mr. Heald) tabled and to which I added my name. The Government appear to be intent on exempting trade unions as a category and there must therefore be regulations to govern that. Like others, I have examined the draft code of practice and the rules, which the Under-Secretary kindly supplied. There are some weaknesses in it, which others have already pointed out. The early sight of the draft regulations for the rules of conduct does not reassure us sufficiently.

Lembit Öpik (Montgomeryshire) (LD)
I have been considering the arguments that have been put forward on exemptions, and I wonder whether my hon. Friend has a view on the matter of strategic importance raised by one of my constituents, Graham Owen, who is a chartered insurance practitioner. He has suggested that small suppliers of such services should be exempt because, with a turnover of, say, less than £5,000 a year, they are unlikely to be ripping people off on a large scale or indulging in the kind of scams that we have been hearing about. He has suggested that there should be a turnover threshold of, say, £5,000 a year in respect of the total of the five categories that the Minister has identified, below which a company should be exempt from the regulations. Does my hon. Friend have a view on that? Would he, like me, be interested to hear what the Minister has to say about that suggestion?

Simon Hughes
That is a perfectly proper question for my hon. Friend to ask. My view is always that there ought to be a threshold so that very small practitioners are not governed by regulations. That should also apply to VAT and other provisions. If we want to enable small business people to carry on their businesses, we ought to establish a lower threshold. I have not yet had an exchange with the Minister on that issue, but I hope that she will be able to give us a helpful reply at the end of the debate. My specific and formal answer to my hon. Friend is that there is nothing in the Bill that would prevent the establishment of an exemption for small traders, and the Minister could introduce an exemption for such a category.

Mr. David Hamilton
If there were an exemption for small companies whose turnover was below a certain threshold, what would happen to individuals, such as those involved in the cases cited by my hon. Friend the Member for Bassetlaw (John Mann), who have been screwed by their lawyers? There should surely be recourse for such individuals, no matter what the size of the company.

Simon Hughes
We need to discuss that balance. I understand the hon. Gentleman’s point. Looking at this from the point of view of the consumers of the service, if they have been conned, they have been conned; it does not matter whether they are the company’s only victim or not. This matter would depend on whether the definition involved the value of the service offered or the cost of the service, as they might be different. If the cost of the service were only 10 quid, there could be quite a lot of 10 quids, which would soon add up. I hope that the Minister will address this issue.

The other amendment to which I have added my name is amendment No. 5, which has also been tabled by the hon. Member for North-East Hertfordshire. This is a linked amendment, which the hon. Gentleman addressed in passing in his introductory speech. It proposes that

“A code of practice issued under subsection (1) shall include details of the advertising standards for providers of claims management services.”

One of the concerns that has been aired in the debate is the need for clear regulation of the advertising involved, whether it is advertising on hoardings or in the local paper, or the kind that comes through the letterbox or is given away outside shopping centres or railway stations to try to get people to buy the services on offer. I hope that the Minister will give us an assurance that our proposal will be accepted.

May I make a formal request, Mr. Deputy Speaker, that, if—as I hope and expect—the Government are willing to accept amendments Nos. 15 and 16, we might have a chance to vote on them before Third Reading at 9 o’clock? I want to flag up that request now, if I may. Those amendments come from amendments that I tabled in Committee, on which the Minister said that she would reflect, and they involve a simple proposal.

Clause 5 sets out the procedures for providing exemptions, and, at the moment, they allow only for the use of the negative resolution procedure in the House. So the Government could lay regulations, and only if we prayed against them would there be the opportunity for a debate and a vote on them. The procedures governing exemptions are controversial, in this House and elsewhere, and they are important, in that they could be used to exempt trade unions, either generally or in part, or any other group of organisations. For that reason, I proposed in Committee that there must be an automatic debate in both Houses of Parliament on any proposed exemptions. That would be the time to discuss whether trade unions should be included or excluded. We have had a long discussion on that issue tonight, to which the hon. Member for Bassetlaw has contributed at some length, as well as other hon. Members. The history has not been a glorious one, and the wise thing for us to do now would be to ensure that we had to return to the issue. If the Government were to go ahead with their proposal to exempt trade unions as claims management organisations as regulated by the Bill—the opposite of what the hon. Member for Hendon (Mr. Dismore) is proposing—the House should be able to debate and vote on the matter.

19:45:00

Mr. Heald
Will the hon. Gentleman accept my joining him in his plea that we be allowed to vote on these amendments, if necessary, at the appropriate time?

Simon Hughes
I am grateful to the hon. Gentleman for that intervention, which I am sure that you have heard, Mr. Deputy Speaker.

The proposition, which is a result of discussions with the Minister and her officials—for which I am grateful—is that the first time an order is made under clause 5, we should have a debate and vote on it in both Houses, and that we should also debate and vote on any subsequent order that would have the effect of removing or restricting an exemption.

Some very dubious practice has clearly been applied in relation to certain claims. Although trade unions may logically have a strong case for being exempt when acting for their members, the wider concern is that they should be included, so as to prevent similar abuses from recurring. In any event, I hope that the Minister will agree that we should have the opportunity to vote on the amendments later.

Mr. Dismore
I rise to speak to new clause 10, which stands in my name. I have no objection to claims handlers being regulated. Indeed, I first started campaigning for that almost 20 years ago, when handlers were first invented, as I recognised that this could be a growing problem. However, I approach the matter from a very different point of view from that of my hon. Friend the Member for Bassetlaw (John Mann). Perhaps he should come along to the Chamber on a Friday, given the way in which he set out his case in such detail earlier. I hope to be able to put my case, from a different point of view, rather more briefly.

Trade unions have had a rather bad deal out of this debate so far. There has been no problem with trade union legal schemes for decades. Most of them date back to before the second world war, and trade unions have historically played a major role in ensuring that people who were injured at work got justice and compensation—for example, under the old workmen’s compensation scheme, before they had common law claims.

My hon. Friend the Member for Bassetlaw has clearly had a very bad experience arising out of the administration of one particular scheme. However, we must not throw the baby out with the bathwater by losing sight of all the excellent work that the trade unions have done for hundreds of thousands, if not millions, of people over the years in which the trade union schemes have been in operation.

Historically, trade unions have fought difficult, ground-breaking cases, often with contributions from successful cases, in perfectly legitimate schemes. That kind of scheme was starting to die out when I was in practice; very few unions still operated them by then. However, the trade union schemes and the contributions involved were operated for the benefit of the members. They were not operated for profit. They were used to support difficult, complicated, and often expensive cases.

I ran many test cases myself when I was in practice, including some of the early cases involving post-traumatic stress disorder and pension loss. Some cases went to the House of Lords. I remember one in particular, against the Home Secretary in the then Conservative Government, which ended up in the House of Lords. It involved cuts in the criminal injuries compensation scheme, and it was backed by a consortium of about a dozen trade unions and involved several hundred thousand pounds worth of costs. Schemes covering vibration white finger, pneumoconiosis and deafness were all developed with the support of the trade unions, and I believe that we now run the risk of losing sight of the very good work that they have done.

Mr. Clapham
I take my hon. Friend’s view that trade unions have been agencies for the betterment of society. As he has heard in the discussion with my hon. Friend the Member for Bassetlaw (John Mann), much of the problem started with a separate agreement given to the Union of Democratic Mineworkers, which was not available to other unions in the mining industry. Does he agree that all the problems seem to have stemmed from that?

Mr. Dismore
I agree with my hon. Friend. The fact is that the UDM was a rogue union to start with, and has behaved like one ever since it was founded.

John Mann
Will my hon. Friend give way on that point?

Mr. Dismore
My hon. Friend has had plenty of time to make his point. I am going to try to make mine briefly.

Generally, since the Access to Justice Act 1999 and conditional fee agreements were introduced, it has been possible to do without deductions. Occasionally, however, they are required, especially in test cases involving group litigation, which are not party to parts of schemes but are often involved in major, complex and expensive litigation. Of course, deductions are nothing new. Under the civil legal aid scheme, before it was removed from personal injury cases, deductions were made, for instance, for disbursements not recovered or payments in. After-the-event insurance schemes that operate now still apply deductions in exactly the same way.

Regulating trade union schemes does not affect the dodgy law firms that we have heard about or the claims handling company, as those would be caught under the new arrangements anyway.

In relation to the definition of members, we should also take into account that many trade union schemes extend to members’ families. I remember the debate in my old law firm in the 1980s about whether we could afford to offer such a scheme to trade unions for the benefit of members’ families, as was eventually provided. Trade unions are already regulated under the Trade Union and Labour Relations (Consolidation) Act 1992, unlike claims handlers, who are not. The certification officer has a right and a duty to inspect trade unions’ accounts. Details of trade unions’ officers have to be filed, and any complaints over breach of rules, including over legal services, can be investigated by the certification officer.

Of course, the trade union rule book, of which union legal schemes form part, is a binding contract between the member and the trade union and can be independently enforced through the courts if necessary. Unlike claims handlers, trade unions have their own internal appeals and complaints systems, which can include whether cases are being turned down. Trade unions do not encourage their law firms to turn cases down but to fight on, unlike claims handlers. They also use specialist law firms, which generally know what they are doing.

The only beneficiary of regulation will be the insurance industry, because trade union legal systems will not operate as effectively as they have done over decades to provide justice for trade union members. I very much hope that the Government will see sense, as they seem to be doing, and accept that trade unions have generally provided an excellent service for a long time. We should not allow one bad experience, albeit involving a lot of people, to affect the whole system of trade union legal support.

Mr. Gummer
I declare an interest as the independent chairman of the Association of Independent Financial Advisers, which has an interest in the Bill but not this part of it. The first Bill that I tried to put through the House, nearly 30 years ago, was opposed by solicitors because they said that they needed none of the regulation that I was suggesting for them. The issue involved was that of fake directories where solicitors used to write letters to frighten people into paying bills that they had no duty to pay and had not incurred. I remember the anger and opprobrium cast at me by the right hon. Member for Manchester, Gorton (Sir Gerald Kaufman) and his then hon. Friend who is now in the other place, Lord Clinton-Davis, when I suggested that some solicitors might need such controls.

I therefore have a long history of not being entirely enthusiastic about solicitors and their being unregulated by people outside. I agree with many of the elements of the Bill and consider it a valuable contribution in many ways. I therefore hope that it will not be taken amiss if I suggest that there is a problem in relation to trade unions that has been misunderstood by many.

First, trade unions and their members, as defined in all our minds, come under a category that is already subject to regulation. We should not regulate—or try to do the same thing—twice, as that is both otiose and annoying. My hon. Friend the Member for North-East Hertfordshire (Mr. Heald) has made an important point. Some aspects of the way in which the exemption is to work do not give adequate protection to the consumer.

I say to the Minister that it is important for the Government to be seen to be even-handed when dealing with trade unions. I am sure that she is trying to be so, but perception is vital in relation to that issue. If she is not to be thought partial, she must be seen to treat trade unions in the same way as she might treat other organisations. Without straying outside the debate, the Government ought to strive not to be seen to be swayed in a partial manner. I therefore ask her to reconsider her approach so far.

We must protect even members of trade unions by ensuring that the code of practice is—at least in the limited way suggested by my hon. Friend—justiciable. If the Minister thinks that it is important to have a code of practice, it is manifestly true that it ought to be able to be enforced. To have a code of practice that cannot be enforced is merely a fig leaf and is subject to the likelihood that people outside here will feel that the Government are being partial.

Secondly, I thought that the hon. Member for Bassetlaw (John Mann) put the argument clearly, and the hon. Member for Hendon (Mr. Dismore) was a bit hard when he said that he went on. Actually, he did not repeat himself once, and everything that he said was of interest to this House, which was not the case with the shorter speech of the hon. Member for Hendon. The hon. Member for Bassetlaw’s point was not contrary to trade unions—he was saying that there are circumstances in which the protection of members, or those called members, of trade unions, was not sufficient, and that people were misled and dealt with unacceptably. It was right to bring that to the House’s attention. As it came from a Member who has such a history of support for the trade unions, it seemed to me that it was not properly treated by those who suggested that he was being antagonistic to trade unions. What he was saying, and what I am saying, is that good trade unions deserve the support and protection of a properly written law that enables them to feel properly defended against the activities of those who bring trade unions’ name into disrepute.

Not only do we want to be assured about the meaning of “member”, which is important, but that people who are embroiled in circumstances in which the trade union acts as a claims organiser—but not as a trade union—to someone who is not a trade unionist will not have their protection removed. That is all that we ask. As the Minister has refused to include trade unions within the definition—for reasons that, I think, are comprehensible—the easiest solution is to accept the amendments tabled by my hon. Friend the Member for North-East Hertfordshire. Those amendments are not meant in any way as antagonistic to trade unions but as protection for the customer. That is perfectly reasonable.

There seems to be a cross-party view on this matter. It arises from a desire to ensure that people outside perceive the Bill to be even-handed, a desire to protect every one of Her Majesty’s subjects so that they all have equal rights of protection, and above all a desire to make certain that decent trade unions are not besmirched by the activities of what have turned out to be two trade unions in particular circumstances. I should have thought that those were interests common to us all, and if the Minister is unable to move in our direction, I believe that the Government will lay themselves open to the charge of partiality even if, deep down, that was not their reason for behaving in this way.

20:00:00

Mr. Kevan Jones
As someone who was a full-time trade union officer for 13 years, I am fully aware of the vital work that trade unions have done—not just their daily representation of their members in the workplace, but their work in the context of test cases—and I am afraid that I will take no lectures from former solicitors about trade union principles.

The hon. Member for North-East Hertfordshire (Mr. Heald) quoted me as saying in Committee that if trade unions acted as claims handlers, they should be treated as such. My view on that has not changed, but I support the Government’s proposals relating to the code of conduct. Under those proposals trade unions will be exempt if they observe the code, but if they fail to do so they will be covered by regulation and subject to the same restrictions, penalties and scrutiny—and under the same spotlight—as rogue claims handlers.

As I have said, I fully recognise the value of the work done by trade unions. My hon. Friend the Member for Bassetlaw (John Mann) mentioned a case to which I too will refer. Some firms of solicitors, including Thompsons—for which the hon. Member for Hendon (Mr. Dismore) used to work—

Mr. Dismore
Will the hon. Gentleman give way?

Mr. Jones
No, I will not.

Mr. Dismore
On a point of order, Madam Deputy Speaker. As the hon. Gentleman has made that point, I want to explain to him that I never worked for Thompsons. I used to work for a firm that eventually became Thompsons.

Madam Deputy Speaker (Sylvia Heal)
That is not a point of order for the Chair, but at least the correct information is now on the record.

Mr. Jones
The hon. Gentleman has made the point for me. He has a clear connection with Thompsons, a company that has not acted in the best interest of its members, certainly in the case of the Durham branch of the National Union of Mineworkers.

Mr. Dismore
That was in 1995.

Mr. Jones
That may be so, but the hon. Gentleman has been a good advocate on the company’s behalf tonight. I am here as an advocate for my constituents, many of whom—poor and vulnerable individuals—have been ripped off by unscrupulous solicitors using sharp practices in a firm that should know better. If the hon. Gentleman wants to be associated with that firm of solicitors, he should feel free to be so, but I have no such wish.

I support what the Government are doing with the code of conduct. It is a sensible way of not overburdening trade unions with legislation. My hon. Friend the Member for Bassetlaw pointed out that trade unions are already regulated by the certification officer, and members can have redress following complaints to the certification officer about the way in which the organisation operates. I think that that is right, but I also think there are problems with the draft code. For instance, the definition of “members” should be tightened up. The Durham NUM’s scam was to enlist people as associate members. Those people have no legal right to complain to the certification officer, because they are not actually members—and let me point out to the hon. Member for Hendon that that was done with the connivance of Thompsons. “Members” must mean “members” as defined in the Act that covers the certification officer. That may close the loophole. But if “members” means associate members, that should be clarified in the code. Another issue that needs to be clarified is the status of retired members. They may not still be making contributions, but I think that they should still be covered because of their years of contribution and their association.

Mr. David Hamilton
In many cases throughout the United Kingdom, that will apply not only to retired members but to their widows and families. In my part of Scotland many retired members have passed on, but the union still deals with their widows and families, at low cost.

Mr. Jones
I have no problem with that. It is a good example of a trade union not just supporting its retired members, but doing sterling work in supporting widows and others in the community. Unions should be congratulated on that, but alas, it is not what has happened in Durham. That is why it is important for the code of conduct to include a definition enabling trade unions to do the great work that my hon. Friend has described.

There is also the issue of funding. Paragraph 2 of the draft code states:

“A Trade Union should give a member relevant information about the funding of their claim, including details of any fees payable by the member and any fees being received by the Trade Union in respect of the claim.”

That is fine, but if a fee is to be deducted, members should be told on what it will be spent. It is important to avoid misapprehension or, indeed, the lies that have been peddled in, for instance, the Durham NUM case. It was said that the fee was being deducted to fund the case when that was clearly not so.

As has been said, in nine cases out of 10 trade unions provide the cheapest way for people to obtain justice in court when accidents have befallen them, but if there is a cheaper way, it should be explained to people so that they can decide what to do. I realise that nowadays, given conditional fee agreements and insurance, there is no reason why any trade union should charge individuals anything, but I think it vital to make clear to clients how cases are to be funded and what alternatives may exist.

Paragraph 3 of the draft code of conduct deals with arrangements with third parties, and I must tell the Minister that I think it contains certain minefields. It seeks to deal with the relationship between a trade union and a third party, which may be a claims handling company. It also refers to solicitors. I think it important to explain to trade union members the exact relationship between a trade union member and a firm of solicitors, to avoid any misapprehension if a success fee, or other fee, is paid to the firm.

I am surprised that Members who are advocates of trade unions, and great champions such as the hon. Member for Hendon, have not homed in on paragraph 4 of the draft code, which I think is a bit draconian for unions. It refers to the competence of employees and volunteers. I do not agree with the sentiment, but paragraph 4.2 states:

“A Trade Union should have in place an appropriate quality assurance process to monitor the quality of advice given to members.”

I think that that will impose on many trade unions an additional burden that they will not welcome.

I accept that the volunteers to which the code refers should be trained, but people must recognise that a lot of people who give trade union advice, as lay members in workplaces elsewhere, may not be trained and their knowledge comes from many years of working in particular industries. Therefore, paragraph 4 needs to be tightened so that it is not too onerous for trade unions and does not debar some people who are doing very good jobs in workplaces from giving initial employment advice. In parts, the provision is quite draconian.

John Mann
My hon. Friend makes an excellent and pertinent point. Does he agree that, as a consequence of that particular provision, volunteers within trade unions such as shop stewards or branch secretaries may be unwilling to proffer even indicative advice about where people should go, for fear that complaints will be lodged against them under a regulated system? Therefore, it will be harder to get volunteers to do anything.

Mr. Jones
I agree totally with my hon. Friend. It is important that during the consultation trade unions think carefully about the consequences of that part of the code of conduct. It could put off branch secretaries and other trade union volunteers, who do a sterling job on behalf of their members, from giving “legal advice”. In the worst case scenario, shop stewards will refuse or be afraid to give advice, so that matter needs clarifying. 

The last point in the code again tries to deal with the issue but goes half way and does not answer a lot of the points. It is about complaints and redress. I am not clear, because there is no reference here, how the provision on complaints by trade union members links with the legislation in respect of certification officers. Clearly, as a trade union member—not an associate or other type of member such as I spoke about earlier—the individual member has the recourse of going to the certification officer. That needs to be welded into this part of the complaints and redress system. Otherwise, there could be a conflict between the code and existing trade union law that governs regulation of trade unions by the certification officer.

Paragraph 5.2 says:

“Where a complaint cannot be resolved to the satisfaction of the member within a reasonable time, it should be referred to a third party for termination.”

There is no reference to who the third party would be, and there are no explanatory notes. I would be very resistant if the third party were to be, for example, the union’s solicitors, if they were involved. It would have to be some independent body—perhaps the certification officer, as I have outlined.

This is a good first stab at the code of conduct, but it needs to be updated and refined and some of the points that my hon. Friend the Member for Bassetlaw and I have raised need to be taken on board. However, it is better than bringing trade unions into the Bill; there is existing law to protect trade union members. It is odd that it is Labour Members who are arguing for less regulation and the hon. Member for North-East Hertfordshire and other Conservative Front Benchers who are arguing for more regulation. No doubt I will use that as a good example when I am being lectured by Conservative Members to the effect that the Government are all about more regulation rather than less.

What has been put forward by the Government is a compromise that will protect people. More importantly, it will ensure that organisations that do not abide by the code of conduct will come under regulation. We had the discussion in Committee. The solicitors Thompsons, in their briefing to Committee members before the Committee stage, took the line that has been taken by the hon. Member for Hendon: all trade unions should be exempt. That would include the UDM and others. I pointed that out to a member of the Trades Union Congress, who said “No. We can just have TUC-affiliated organisations.” I was not sure how the Bill could exempt TUC affiliates alone. I think that what the Government have put forward will work if we can get a tougher version of the code to clarify the points that other hon. Members and I have raised.

20:15:00

I now turn to new clause 11 and the scandal that my hon. Friend the Member for Bassetlaw has already referred to in respect of the COPD scheme. The Government should be proud of bringing compensation to many tens of thousands of miners and their families, who were denied it for many years. However, that has been plundered by unscrupulous solicitors and, I have to say, certain trade unions. Is it a scandal? Yes it is. It has been given some attention by some national newspapers, but not a great deal. If the scandal had taken place in the leafy suburbs of Surrey, I am sure that it would have been on the front page of every national newspaper throughout the country. It is worth bearing in mind that it is because it has taken place mainly in poor former mining communities that it has not received a lot of attention, although I, and other hon. Members, have tried to publicise the issue.

There are two separate aspects of the scandal. The first is about the way in which certain solicitors have seen this as a quick way to make a lot of money. I first raised the case of Mark Gilbert Morse over three years ago. Those people were not content with getting their fees paid by the Government; they added 25 per cent. on top as a success fee, and they got people to sign agreements saying that they would have the money deducted. As my hon. Friend the Member for Bassetlaw said, the reaction of many constituents was, “I’ve signed the agreement so I have to pay that money.” Well, they did not have to pay it.

I am pleased to say that Mark Gilbert Morse quickly decided to pay the money back, but I am still not satisfied. That company and a number of other companies have said that they have paid it back. We have their word, but I suspect that unless someone has complained about the fee being deducted, the money will not have been returned. That is why the new clause is important. We should force solicitors to pay back all the money that has been deducted unlawfully.

I give credit to the Law Society individual case officers, because some are very good and work very hard in pursuing some of the rogue elements involved in those scandals, but as my hon. Friend said, that can be done only if someone makes an individual complaint; otherwise, people will not get justice. Some firms of solicitors have started paying money back, irrespective of whether complaints have been received. Obviously, they feel guilty and think that they will be exposed later, but we are not talking about small amounts of money; we are talking about millions and millions of pounds. That has been taken by firms of solicitors regulated by the Law Society. Clearly, self-regulation has not worked. That is why I have been one of the strongest advocates for independent regulation of solicitors. I am glad that the Government are taking that on board.

The Bill will cover two other consumer rights issues that need to be addressed. I am not afraid to say this about claims handling companies: I hope that the Bill kills off that industry altogether, because in my opinion there is no need for those companies. They are simply middlemen that have preyed on people and take a cut. If people want legal advice, they should go directly to their solicitors or their trade unions. That should be the best way forward.

To date, there are no ways of getting at claims handling companies, apart from going to their solicitors. The only way to get at the solicitors is through the Law Society, case by case, because many claims handling companies are still holding on to money that was deducted unlawfully. I took up the case of one of my constituents, Mr. Jobes, who had been contacted by Industrial Disease Compensation, now FreeClaim IDC. Ironically, it was one of the founder members of the Claims Standards Council, which was set up supposedly to regulate the sector. I am pleased that my hon. Friend the Minister has not fallen into the elephant trap and allowed the CSC to be the regulatory body for claims companies.

IDC took £3,600 from my constituent, but all it did was get him to sign a form—which purported to indemnify him against legal costs, when the company knew full well that he would not need to lay out any money at all under the COPD scheme—and pass it on  to a firm of solicitors in Liverpool, Silverbeck Rymer. The case went through the process, the money was paid out and the solicitors deducted £3,600 and passed it on to IDC. What did IDC do for that money? It did nothing except pass on the information. It had led Mr. Jobes to believe that he was being indemnified against legal costs.

Mr. Jobes and the other constituents who have come to see me are not, with no disrespect to them, used to dealing with solicitors. Some are widows, others are in very poor health—including Mr. Jobes—and do not know what to do with legal documents they get sent. Some have even been sent threatening letters saying that if they withdraw from the agreement they will end up with huge liabilities. That is a disgrace.

I pursued Silverbeck Rymer through the Law Society, which ruled that it had to repay the full amount. Silverbeck Rymer lost the appeal and had to pay the money back, but I hate to think how many other cases there have been in which money was deducted by solicitors and paid to IDC. How much money is sitting in the coffers of IDC for which it did nothing?

IDC knew that it was doing something wrong. Not long after the publicity on the issue, it changed its agreement so that all that was payable was an administration fee of £100. It was still doing nothing for that £100 except passing information on to solicitors.

Another scandal remaining to be unearthed is the collusion of former NUM officials and others who had access to membership lists. They prostituted any trade union principles that they had by going to work for IDC and helping it to make a quick buck out of the COPD scheme. The scandal of the £100 administration fee is that all IDC did for the money was pass on information to solicitors, who deducted sums from the final award to pay to IDC. I am pursuing several cases with the Law Society, questioning the role of the solicitors in acting as collection agents for claims companies. These scams have cost people tens of thousands of pounds, but they could not have happened without the collusion of solicitors’ firms, including some well known high street names. I would have thought better of those firms.

As well as acting as collection agents, the solicitors are failing to advise their clients that there is no need to pay the £100 administration fee. In fact, if people had gone direct to the solicitors, they would not have paid any fee. The solicitors were not acting independently. They saw IDC and the other claims handling companies as a way to gather hundreds of claims and paid the £100 fee with no questions asked.

Another issue is quality of service. IDC’s website talks of a panel of solicitors, as though they have been vetted or specialise in such claims. In fact, they are high street solicitors who are looking for work. That has meant that not only have some people been ripped off by the fees, but some of the solicitors have taken a sausage machine approach to the cases. They have put the claims through their administration system and, in many cases, accepted the first offer from the Department of Trade and Industry. The work has not been checked and so the firms have settled the cases for much less than other solicitors could have achieved. That is another scandal that the Law Society should address.

Mr. Philip Hollobone (Kettering) (Con)
I agree with the hon. Gentleman that the Bill would be successful if it drove unscrupulous claims management companies out of business. However, does he agree that there are some honourable exceptions, not least the National Accident Helpline, which is based in my constituency? I believe that he has been sent details of how it operates, and it has helped thousands of people successfully settle claims for compensation.

Mr. Jones
No, I do not. If people want legal advice, they should go directly to solicitors and cut out the middle man. There is no need for such organisations. Trade unions can be a good source of advice and support for people seeking access to justice, and most people have legal insurance through their home contents insurance. I look forward to the day when the Bill puts claims handlers out of business.

Another scandal involves the way in which some trade unions have acted. I know that 99 per cent. of trade unions do a fantastic job. They pioneer work and they secure access to justice for many thousands of people that they would not get if they were not members of a trade union. However, Durham NUM and Thompsons solicitors have acted as claims handlers. They are not providing support to existing or retired members but operating a scam in which people who have very little connection with the NUM—often widows of former members—but with a COPD case were asked to pay £20 a year to become an associate member of Durham NUM. I have asked what an associate member is, and it is clear that such members have no rights under the trade union legislation. Thompsons told me that it gives people access to the NUM’s legal aid scheme, but that does not seem to exist. It appears that people pay £20 a year to Thompsons solicitors, who deduct another 7.5 per cent. from their compensation, if their case is successful. People are never told that they could go elsewhere to pursue their case. Even worse, the NUM and Thompsons have sent out letters telling people that if they stop paying their £20 a year, their case will be withdrawn, and that is just not true.

20:30:00

I have been denounced in many quarters, some of which I shall refer to shortly, for feeling so strongly about all this. I feel so strongly, though, because the ladies and gentlemen who have come to me have no connection whatever with the NUM, are often very poor and are not used to dealing with solicitors. Yet the NUM has acted as a claims handler, joining people up for a success fee, which is all that that 7.5 per cent. is. The £20 a year is nothing other than an access point to justice.

I commend the work the NUM has done in some areas, and there is a contrast in the north-east between Durham and Northumberland, where the NUM does not charge anything. It does not matter there who anyone is—an existing member of the NUM or, as my hon. Friend the Member for Midlothian (Mr. Hamilton) said, a member of the community—because they can go to the NUM without it costing them a penny. If they want to make one, Northumberland NUM asks for a voluntary donation afterwards. That is fine: what people do with their compensation after they get it is up to them—they can give it to a cats home, give it to an individual or spend it, but if they want to make a contribution back to the NUM, that is laudable.

That is not what happens in Durham. There, 7.5 per cent. is taken off the compensation by Thompsons solicitors, then passed to the NUM. It is being suggested that that 7.5 per cent. will fund future litigation and keep the NUM going. I have no problem with that, but Thompsons, who seem to act differently in Durham as compared with other areas, has had nearly £100 million out of the Government in costs.

John Mann
More than that.

Mr. Jones
And more, as my hon. Friend says. I cannot see why Durham NUM could not have received a success fee or other fee from Thompsons. I think it totally wrong that poor individual claimants should have to fund Durham NUM.

I understand I have been denounced in several quarters, including in the upper House last week in a debate on miners’ compensation by Lord Sawyer, a former general secretary of the Labour party. To be fair to him, he says:

“Since standing down from my main roles in the labour movement, I have become the non-executive chair of the supervisory board for Thompsons Solicitors and I declare that interest.”

That is fine, and I have to say I agree with much of his speech, which attacks the way in which unscrupulous solicitors have deducted moneys. However, he went into the territory of the Durham NUM, on which he has certainly never spoken to me, making comments for which the evidence, I have to say, is weak to non-existent. He says that funds are being used in the Durham area to fight miners’ knee cases and possible surface worker cases that have not yet been funded. I am aware of only one case that Durham NUM has funded for surface workers, but the red herring about miners’ knee cases seems to have come up only since I began to raise these issues.

Lord Sawyer seems to condemn what has been said here:

“In reading the debates in another place on this issue and looking at some recent comments, it is possible to think that this is all about individual consumers in cases against big employers or insurers without trade union backing. That would be a big mistake. Let us condemn law firms and claims companies who exploit workers’ cases by all means, as we are doing tonight, but let us not in the process damage trade unions and their trusted lawyers who are, at the end of the day, the only ones with the commitment, capability or expertise to fight the major cases”.

It worries me that Lord Sawyer is an individual who is supposed to be on the supervisory board of Thompsons solicitors but who has not even taken the trouble to see how those solicitors are acting with the NUM in Durham. If he was doing his job properly, he would be asking the questions I am asking. That raises the question of what he is being paid for—I assume he is paid—as a member of the supervisory board; or is he just being paid to be an advocate for Thompsons solicitors in this place?

Mr. David Hamilton
For clarification, let me say that the issue of knee litigation has been on the cards for some years. The Scottish NUM, south Wales NACODS, Derbyshire NUM and, I think, Durham NUM are four unions that have combined to raise £1.2 million on that. I do not see Northumberland among them, and I do not see the other areas.

When we talk about the trade union movement, we mean more than 6 million trade unionists. Tonight, we are talking about the Compensation Bill, and it clouds the issue to talk about single areas within the NUM. We should talk, as my hon. Friend did, about 99 per cent. of the trade unions being extremely good. That was the correct thing to say.

Mr. Jones
I agree. I have no problem with that, but I challenge Durham NUM to publish a breakdown of what it has done with about £3.5 million, which it has had under the scheme. I also ask why, if Thompsons solicitors is so good and pioneering, it is not contributing, too. It has done very well out of the mining industry in the past 10 years.

I take exception to a point made by Lord Sawyer:

“If there is a dispute about deductions by the union in any mining community, it should be resolved within that community rather than be made into a political football, as it has been by some.” —[Official Report, House of Lords, 11 July 2006; Vol. 684, c. 662-64.]

I have tried to resolve this issue in the mining communities, as the noble Lord would know if he had taken the trouble to speak to me. I wrote to the general secretary of Durham NUM, David Hopper, on 3 February 2005; to date, I have had not a reply. In that letter, I finished by saying that if he wished, or his executive wished, for me to address them in any way, they should please contact me:

“I am more than willing to speak to either yourself or your committee.”

To this day, I have not heard anything.

What I have heard is many mutterings behind the scenes in the trade union movement about how Kevan Jones is selling out the movement and his past. I was also, apparently, condemned, by name, from the podium last week at the Durham miners’ gala. The gutless individuals who could do that there are not prepared to meet me or talk to me directly about the issues.

It is vital that we press the new clause. I want assurances from the Minister that if she cannot accept it, she will undertake on behalf of the Government to put the utmost pressure on the solicitors and claims handlers who have deducted moneys to pay it back. My great fear is that without pressure from the Government individual solicitors will hang on to the money and give it back only when complaints are made, and that claims handlers who have already deducted money will not be prepared to pay it back. At the end of the day, those who will suffer will be individual consumers, for whom my hon. Friend has been a strong advocate throughout the passage of the Bill, and who are the reason for its introduction.

Simon Hughes
On a point of order, Madam Deputy Speaker. I am conscious of the fact that we have had debates on two groups of amendments and that there are three groups to go. Would you be prepared to accept an amendment to the timetable motion to allow us to continue consideration and start Third Reading later if it had the agreement of all three parties represented in the House?

Madam Deputy Speaker
I understand the point that the hon. Gentleman is making, but it is not within the power of the occupant of the Chair. The timetable motion is not before the House this evening; it has already been decided.

Bridget Prentice
Concern about trade union exemptions has been a key issue in our debates on Second Reading, in Committee and again today. If we are to protect consumers it is vital that an effective and proportionate mechanism apply to those who provide claims management services. We believe that the best approach is to exempt independent trade unions that provide claims management services to their own members and their members’ families, but the exemption will be subject to the condition that trade unions comply with a code of practice that we will develop in consultation with the TUC.

We have taken a risk-related approach because we believe that full regulation is an unnecessary and disproportionate burden on both trade unions and the not-for-profit sector. Regulation is aimed at commercial claims management companies. The Better Regulation Task Force recommended that course of action and the regulator’s initial focus will be on authorising companies that provide a regulated claims management service and tackling companies that attempt to evade it.

The code outlines the key principles that would apply where a trade union deals with a claim on behalf of a member, and it covers the key issues raised in earlier debates. We have had constructive engagement with the TUC general secretary and his colleagues on the issue, but obviously there is much more work to do. Nevertheless, I hope that the draft gives Members some indication of the approach we are taking.

May I point out to the hon. Member for North-East Hertfordshire (Mr. Heald) that the code of practice will be issued by the Secretary of State? The Secretary of State will be the judge of the union’s behaviour in relation to the code; the TUC and the unions will have a vital role in policing union activities, but the ultimate decision about exemption will be for the Secretary of State. Those principles are fundamental to provide a good service to trade union members, and we shall hold consultations about the code later this year.

We believe that the enforcement provisions are effective. If an exempt trade union falls below the standards outlined in the code of practice, the Secretary of State will withdraw the exemption. Once the exemption is withdrawn, the trade union concerned will have to stop providing the services unless it successfully applies for authorisation by the regulator. If it carries on providing the services, or even offers to provide them, without authorisation, it will be committing an offence and will be liable to prosecution.

Once the exemption for an individual trade union or any other organisation has been withdrawn, the full range of enforcement powers in clause 7 will be available to the regulator. If the organisation is suspected of continuing to provide services, the regulator can require the provision of information and documents, seek a warrant to enter and search premises and apply for an injunction restraining the organisation from providing the services. I hope that reassures Members that the full force of the law will be available to the regulator if people fall below the standard required. The actions of a very few unions, which have been well described during the debate, should not detract from the excellent work of the overwhelming majority of trade unions on behalf of ordinary hard-working people.

Mr. Heald
As the Minister knows, if complaints are made against ordinary claims handling companies—not trade unions—a whole range of investigatory powers come into play, such as search and so on. Why does she think they are unnecessary for trade unions?

Bridget Prentice
I thought that I had just made it as patently clear as I possibly could that, if the trade union falls below the standard set out in the code and continues to offer the services, all the enforcement powers under clause 7 would apply to it, too.

New clause 1 is unnecessary because we do not need further definition of the criteria in legislation and it would militate against the purpose of exemption. It would be too rigid and might mean, for example, that an individual citizens advice bureau would have to be assessed against the criteria. That would be unnecessarily bureaucratic and disproportionate.

New clauses 2 and 5 are also unnecessary. As I have explained, if the behaviour of an exempt organisation falls below the required standard, the Secretary of State can withdraw the exemption. Once it is withdrawn, an exempt organisation that continues to provide the service without authorisation will be committing an offence under clause 6 and can be prosecuted. The separate offence that the hon. Member for North-East Hertfordshire proposes is superfluous, as is a separate power to seek an injunction—it is already contained in the Bill. What he proposes would also make the penalty for failing to comply with the code of practice attached to an exemption more stringent than the penalties for authorised persons who break the rules. That seems to be to be the wrong way round.

20:45:00

I agree with my hon. Friend the Member for Hendon (Mr. Dismore) that trade unions play an extremely valuable role in assisting ordinary hard-working people. They have a long history of championing the rights of workers in relation to health and safety at work and employment. They are also among the most regulated organisations in the country, which is another reason why it is unnecessary to make them immediately part of the regulatory issue in the Bill. However, we have to recognise the concerns that my hon. Friends the Members for North Durham (Mr. Jones) and for Bassetlaw (John Mann) raised about a small number of trade unions in relation to the coal health compensation scheme. I take those concerns very seriously and have been working with them and the Law Society to ensure that those issues are resolved. I hope that my hon. Friend the Member for Hendon understands the reasons for this approach. We want to do something that is proportionate for trade unions, but we also want the power to protect union members in the rare cases where the service that they receive is not up to scratch. On that basis, I hope that he will not press his new clause.

On amendment No. 5, the hon. Member for North-East Hertfordshire spoke of his concerns about inappropriate and misleading advertising. I agree with him that some of the advertising is outrageous and has to be condemned absolutely. An essential part of the claims management regulatory framework will be rules governing the conduct of authorised persons. Compliance with those rules will be a condition of authorisation and any authorised person who does not comply will face disciplinary action by the regulator. That can include attaching conditions to their authorisation—for example, preventing them from providing a particular type of service or from handling client money. It can also involve suspending their authorisation or cancelling it.

Advertising is a crucial area. The key issue is that it should not be misleading to consumers. That is covered by the codes of the Advertising Standards Authority and the authorised person’s responsibilities can be reinforced in the rules with explicit reference to the ASA codes. The rules will help to ensure that authorised persons adhere to high standards across all their marketing activities, which will be enforceable by the regulator. The rules that we have issued set out what we expect the standards applied to authorised persons to be. That includes not making misleading or exaggerated statements; not using expressions such as “no win, no fee” without qualification, unless there is no possibility of the client having to meet any costs that he may have incurred in connection with the claim; and not offering an immediate cash payment or similar payment as an inducement for making a claim. I hope that that reassures the hon. Gentleman.

On new clause 11, the Law Society has taken action to deal with complaints about solicitors who have taken costs in addition to those paid by the Government under the terms of the coal health compensation scheme. The Law Society has assured me that it takes complaints made to it about the scheme very seriously and many solicitors have already been referred to the solicitors disciplinary tribunal for disciplinary action. I empathise with Members who have first-hand experience of the disgraceful behaviour of some of those solicitors. I hope that they take some comfort from the knowledge that action is being taken against those who breach the rules. I understand that some £3.6 million that was made from additional charges has been repaid. But, of course, that is not enough. I know that colleagues in this House are working hard on behalf of their constituents to get additional fees returned, and I welcome the fact that they will continue to do so. I will continue to monitor the Law Society’s handling of these complaints.

I spoke in Committee about the requirement for claims management companies to provide the regulator with details about the information that they give to clients about fees. That is a key aspect of the authorisation criteria. The information that is given to clients should be clear and transparent. That is crucial and will be an important requirement of the rules.

It is our intention that the regulation should be effective and have teeth. The regulator will not tolerate attempts to mislead or misinform consumers, because that would be a clear breach of the rules with which all authorised persons will be expected to comply if they wish to provide a regulated claims management service. An authorised person who is found to be in breach of the rules will be severely reprimanded, and the sanctions will include the authorisation being suspended or cancelled. Given those stringent safeguards, I hope that my hon. Friends will not press new clause 11 to a Division.

Points were raised about the code of practice. We have an early draft of the code at present, and it is still being discussed in detail with unions, legal professionals and others. We can thus think about including a consideration of clarity about fees and funding in those discussions. I can tell my hon. Friend the Member for Bassetlaw that Vendside would not be subject to the exemption in the first place. As a separate company, it would have to be authorised if it wanted to continue to carry out claims management services. It is our intention that any subsidiary company, whether owned wholly or in part by a trade union, will not fall within the terms of the exemption. The only bodies covered by the exemption will be independent trade unions listed by the certification officer.

Let me turn to retrospection. Clause 8 will allow the Secretary of State to make transitional provision in regulations. For example, that will allow provision to be made for the regulator to use his discretion to investigate complaints relating to an authorised person in respect of conduct that began before the commencement of the Bill and continued after that commencement.

There will be a definition of a member in the exemption order. We have been absolutely clear that the exemption will be limited to members and their families. When trade unions act as claims farmers and pursue claims on behalf of non-members, they will have to be regulated. I have made it clear that we will ensure that there are no loopholes. Trade unions will not be able to sign up associate members only for the purpose of dealing with claims. However, retired members will be included in the exemption because they will clearly be part of a legitimate trade union activity.

The hon. Member for Montgomeryshire (Lembit Öpik) made an interesting point when he asked the hon. Member for North Southwark and Bermondsey (Simon Hughes) about minimum turnover requirements for smaller businesses. We are consulting on the fees payable by companies for their authorisation. However small a company’s turnover, it is the consumer who needs proper safeguards to ensure that there is adequate protection. We are examining the situation so that there is as much balance as possible.

Government amendments Nos. 11 and 12 will put beyond doubt the fact that the Secretary of State could bring claims management services that were provided in relation to industrial injuries disablement benefits within the regulatory net. As well as listening carefully to hon. Members’ concerns, we have continued to speak to many stakeholders about the introduction of the new regulatory regime. That has included discussions with Citizens Advice and Judge Michael Harris, the president of the social security and child support appeals tribunal, both of whom have raised concerns about claims management in relation to claims for industrial injuries disablement benefits and some other welfare benefits. Commercial intermediaries typically charge a flat fee for such a service, or take a percentage of the benefit payment if the claim is successful. Claims of that type would be made at a time when a person was already suffering from the trauma of the injury, which would make them more vulnerable. If consumers are being targeted, we want to be able to help by stepping in and providing appropriate protection.

We have considered further the definition in clause 3. Despite its breadth, there is sufficient doubt about whether claims management services for such claims would be covered to justify bringing forward the amendments. The amendments explicitly allow the Secretary of State to bring claims management services provided in relation to industrial injuries disablement benefits within the regulatory net by allowing an order to be made which defines these as claims for the purposes of part 2 of the Bill. The order will be subject to the affirmative procedure. That means that claims management services in relation to industrial injuries disablement benefits could be regulated by order under clause 3(2)(e).

The amendment is precisely targeted on industrial injuries disablement benefits, which are benefits of a compensatory nature. It does not extend to welfare benefits more generally, because that would be beyond the scope of the Bill. There is some limited evidence of organisations offering advice on claims for other social security benefits on a commercial basis, but they are most active in the area of industrial injuries benefits. Our debate will serve our consideration of the code of practice. All hon. Members should be assured that it will be taken into account.

I have reflected on the issues raised by the hon. Member for North Southwark and Bermondsey. Parliament should have the opportunity to debate the initial exemption order under clause 5 and any subsequent restriction or removal of exemption. We hope to capture almost everyone in the first order, but we are working with an unusually broad definition, so if a small number of organisations emerge that fall within the definition but on which it is not appropriate to regulate, subsequent orders can be used to tidy up anomalies. I would not want to take up valuable parliamentary time on those, but I am pleased to say to the hon. Gentleman that I am delighted to accept amendments Nos. 15 and 16.

Mr. Heald
I thank the Minister for her helpful assurances about advertising, which is an important issue. There have been some dreadful examples of advertising by claims handlers and it is welcome that she is to be so active on that issue.

I welcome the Minister’s announcement about industrial injuries benefits take-up campaigns by commercial claims handlers, and the amendment that deals with that. It is welcome that she has agreed to the affirmative resolution procedure for the exemption orders.

I listened to what the Minister said about associate membership of trade unions and the abuse about which we have heard from the hon. Member for North Durham (Mr. Jones). She responded by saying that cases of associate membership will be regulated, and that is also a welcome move.

There is a lot to welcome, but as the Minister knows I have said from the outset that there should be a level playing field for trade unions and other forms of claims handler. I concede that she has responded to the particular abuse of associate membership, but as we heard from the hon. Member for Bassetlaw (John Mann), there is still concern about organisations such as the BNP trying to convert to trade unions to benefit from the exemption. Over recent years, we have seen a certain desperation in particular sections of trade unions to get at the money in order to survive. Against that background, I am not as confident as the Minister that a purely voluntary arrangement for trade unions—exempting them specially—is the right way forward. I therefore ask my colleagues to join me in the Lobby in support of new clause 1, which is vital if we are to create a level playing field in this area.

Question put, That the clause be read a Second time:—

The House divided: Ayes 162, Noes 301.

Division 290
17/07/2006 20:58:00
The House divided:
Ayes: 0
Noes: 0
Question accordingly negatived.

Clause 14

Orders and regulations

Amendments made: No. 15, page 9, line 8, at end insert—

‘(6) The first order made under section 5 may not be made unless a draft has been laid before, and approved by resolution of, each House of Parliament.

(6A) An order under section 5 which has the effect of removing or restricting an exemption from section 3(1) may not be made unless a draft has been laid before, and approved by resolution of, each House of Parliament.’.

No. 16, page 9, line 9 , leave out ‘an’ and insert ‘any other’—[Simon Hughes.]

Clause 3

Provision of regulated claims management services

Amendment made: No. 11, page 2, line 38, at end insert—

‘(5) The Secretary of State may by order provide that a claim for a specified benefit shall be treated as a claim for the purposes of this Part.

(6) The Secretary of State may specify a benefit under subsection (5) only if it appears to him to be a United Kingdom social security benefit designed to provide compensation for industrial injury.’.—[Bridget Prentice.]

Clause 14

Orders and Regulations

Amendment made: No. 12, page 8, line 44, at end insert—

‘(3A) An order under section 3(5) may not be made unless a draft has been laid before, and approved by resolution of, each House of Parliament.’. .—[Bridget Prentice.]

Clause 15

Commencement

Amendments made: No. 7, page 9, line 16, leave out ‘section 1’ and insert ‘sections 1, 2 and [Mesothelioma: damages]’.

No. 8, page 9, line 22, at end insert—

‘(3) Section [Mesothelioma: damages] shall be treated as having always had effect.

(4) But the section shall have no effect in relation to—

(a) a claim which is settled before 3rd May 2006 (whether or not legal proceedings in relation to the claim have been instituted), or

(b) legal proceedings which are determined before that date.

(5) Where a claim is settled on or after that date and before the date on which this Act is passed, a party to the settlement may apply to a relevant court to have the settlement varied; and—

(a) a court is a relevant court for that purpose if it had, or would have had, jurisdiction to determine the claim by way of legal proceedings,

(b) an application shall be brought as an application in, or by way of, proceedings on the claim, and

(c) a court to which an application is made shall vary the settlement to such extent (if any) as appears appropriate to reflect the effect of section [Mesothelioma: damages].

(6) Where legal proceedings are determined on or after that date and before the date on which this Act is passed, a party to the proceedings may apply to the court to vary the determination; and—

(a) “the court” means the court which determined the proceedings,

(b) the application shall be treated as an application in the proceedings, and

(c) the court shall vary the determination to such extent (if any) as appears appropriate to reflect the effect of section [Mesothelioma: damages].’. .—[Bridget Prentice.]

Clause 16

Extent

Amendment made: No. 9, page 9, line 24, at end insert—

‘(2) But section [Mesothelioma: damages] (and section 15(3) to (6)) shall extend to—

(a) England and Wales,

(b) Scotland, and

(c) Northern Ireland.’. .—[Bridget Prentice.]

Title

Amendment made: No. 10, in title, line 2, after ‘duty;’, insert

‘to make provision about damages for mesothelioma;’.—[Bridget Prentice.]

Order for Third Reading read.

21:15:00

Bridget Prentice
I beg to move, That the Bill be now read the Third time.

As the House knows, the Bill is part of a much wider set of initiatives that have been taken across Government. We are determined to tackle practices that can stop normal activities taking place because people fear litigation or have become risk averse. We want to stop people being encouraged to bring frivolous or speculative claims for compensation. The provisions of the Bill help us to do that.

Clause 1 will provide reassurance to the many people and organisations anxious about possible litigation, such as those in the voluntary sector, about how the law works. It will serve a valuable purpose in improving awareness of this aspect of the law and in ensuring that normal activities are not prevented because of the fear of litigation and excessively risk-averse behaviour. I want to confirm for the avoidance of any doubt that clause 1 is not intended to change the law in relation to statutory duties that are not expressed in terms of a duty of care, and which thus do not depend on whether the employer should have taken particular steps to meet a standard of care.

Mr. Julian Brazier (Canterbury) (Con)
Conscious of the fact that Hansard is now usable by lawyers in a court, can the Minister confirm what she implicitly confirmed in Committee but has never said explicitly—that the court should take account of the clause where an activity is organised by a voluntary organisation or is perhaps a sporting or educational activity? The clause uses the word “may” because desirable activities can be wide-ranging. Should not the court take account of the clause where an activity is in a core area such as that which the Minister described?

Bridget Prentice
I can confirm to the hon. Gentleman that the court would be expected to take into account all the issues surrounding the activity. As I explained in notes that I sent to hon. Members, one of the reasons why we used the word “may” rather than the word “shall” is that all the different matters that the court must take into account should have equal status. 

Clause 2 will provide reassurance on how the law works and encourage the giving of apologies and offers of treatment and redress without reducing the protection which is currently available to claimants.

Lembit Öpik
The Minister will recall that in Committee we had a fairly extensive debate about whether we should change clause 2 so that instead of referring to

“An apology, an offer of treatment or other redress”

it would have referred to, “An apology, an offer of, or provision of, treatment or other redress”. At the time, I had the impression that she was going to accept that amendment on Report, yet the Government did not table it, nor was the matter discussed during the proceedings that we have just completed. Why did the Government take that decision? Can the Minister assure people who, for example, offer treatment in a situation where an accident victim is incapacitated that they will not automatically leave themselves open to some kind of litigation?

Bridget Prentice
I am grateful to the hon. Gentleman and sorry that we did not reach that part of the debate. In Committee, he cited the example of a car accident in which one of the people involved is unconscious and the other person is a doctor, and asked whether the doctor should not do what he can to look after the injured person. I considered that carefully in discussions with officials, parliamentary counsel and others and those discussions confirmed that that area is sufficiently covered by section 5 of the Mental Capacity Act 2005, which will come into effect next April. It provides that if a person acts in connection with the care or treatment of a person who lacks capacity in respect of the matter in question and it is in his or her best interest for that treatment to take place, the person providing the care or treatment does not incur any liability that he would not have incurred if the injured person had been able to consent. That does not prevent a claim from being made if the person has been negligent in providing the care or treatment, but in respect of the provision of that care or treatment, it is sufficiently covered under section 5 of the Mental Capacity Act 2005. I hope that that sufficiently reassures the hon. Member for Montgomeryshire (Lembit Öpik).

Lembit Öpik
I am grateful to the Minister and pleased that she has researched the matter. She knows that a number of organisations, including St. John Ambulance, are very concerned about the issue. For the avoidance of doubt, is she saying that the forthcoming implementation of the Mental Capacity Act 2005 will provide a degree of protection to individuals who offer some form of medical assistance to individuals who are too incapacitated formally to give their assent and that the risk of litigation when carrying out an act in good faith, which is believed to be in the best interests of the patient, will be minimised?

Bridget Prentice
I can confidently give the hon. Gentleman the assurance that the Mental Capacity Act 2005 will cover people in those circumstances—and rightly so.

Regarding part 2, all Members who contributed to our debates have been unanimous in their support for the regulation of claims management services. The Bill sets out a framework for such regulation and I hope that our debates on Second Reading, in Committee and again today have clarified a number of outstanding concerns. I am pleased to report that we now have a Bill that will deal appropriately with the inappropriate practices of some claims companies.

I have explained that the definition of claims management services is wide in order to avoid loopholes, but it will be targeted only at sectors with the greatest risk of consumer detriment. Those sectors will be brought into the regulatory net—and, of course, removed, if appropriate—by the order of the Secretary of State, subject to the affirmative resolution procedure, as agreed this evening. We published a draft order last week, seeking views on the sectors that we propose should be included, such as personal injury, housing disrepair, employment, criminal injuries compensation and claims for the mis-selling of financial products.

I am pleased that hon. Members agreed to the Government amendments, which will allow us to bring claims management services in respect of industrial injuries disablement benefit within the regulatory net. That represents a minor but none the less important addition to the Bill that will help to ensure that consumers do not suffer at the hands of claims management companies.

Mr. Hollobone
Does the Minister appreciate that companies with a good reputation in this field, such as the National Accident Helpline based in my Kettering constituency, genuinely welcome this part of Bill? In common with the Government and the Opposition, they want disreputable claims management companies to go out of business, but it is important to acknowledge that there is a legitimate need for claims management companies that provide a good service for people.

Bridget Prentice
I appreciate that the hon. Gentleman has been assiduous in his support for the company in his constituency, which sent me a letter asking for clarification on a number of issues. I am very happy to provide it and I will shortly reply to those points. I commend the hon. Gentleman’s work in looking after the company in his constituency.

Lembit Öpik
This will be my third and final intervention in the entire debate on the Bill. I am grateful for the Minister’s response to the issues I raised about the thresholds for regulation in respect of small companies. Sadly, I was not in my place, but I followed the debate from elsewhere. I am not asking the Minister to make any specific commitments, but my constituent, Graham Owen, raised a point that probably applies to many companies that consequentially end up doing work of the type that the Minister described. I hope that she will enter into a dialogue with some of the smaller companies to see what is reasonable and what will help them to stay in business without compromising the intent of the Bill.

Bridget Prentice
I can assure the hon. Gentleman that we will take into account the position of the smaller companies, so that the decision is a balanced one.

The new provisions on mesothelioma that we have added today will make a real difference to the claimants and their families who are suffering as a result of that horrible disease. This is one of those times in Parliament when Members in all parts of the House can be justly proud of the fact that we have made serious changes to a Bill that will directly affect people in a positive way. Politicians sometimes get a bad reputation—often through their own fault—but on this occasion I am pleased that Members in all parts of the House have been supportive in ensuring that these amendments have been added to the Bill, and I am proud that they have been included. We will continue to work with others on this area. My right hon. Friend the Secretary of State for Work and Pensions will shortly bring other matters relating to it before the House, and we will ensure that the victims obtain their compensation as quickly and as easily as possible.

I thank colleagues in all parts of the House for the constructive spirit in which they have debated the Bill. There are a number of hon. Friends to whom thanks are due, but I hope that they will not mind if I say that I thank in particular my hon. Friend the Member for Barnsley, West and Penistone (Mr. Clapham), who has worked assiduously on this issue. I am pleased that we have gone some way towards realising his demands on behalf of the victims of this terrible disease. I also thank both Chairmen of the Standing Committee and all its members, and Members from all parts of the House who have contributed to what has been a thorough and useful examination of this important Bill. I thank in particular the hon. Members for North-East Hertfordshire (Mr. Heald) and for North Southwark and Bermondsey (Simon Hughes), as well as the other Members who have made a valuable contribution to our debate.

I also thank the organisations that have helped us to put the Bill together, such as the Association of British Insurers, the TUC, the Association of Personal Injury Lawyers, the various voluntary and other organisations that have been helpful, and of course my right hon. and noble Friend Baroness Ashton, in whose name this Bill stands. I also thank the officials and parliamentary counsel, who deserve a particular vote of gratitude from the House for having been able, in the end, to get the mesothelioma amendments together in such a way that they were acceptable, so that we could debate them today, and so that we can make them law before the end of this parliamentary Session.

I commend the Bill to the House.

21:27:00

Mr. Heald
The Bill has been improved during in its passage through Parliament. I join in the thanks to the two Chairmen of the Committee, and I also thank the Minister, who has been courteous and has responded on many points, the hon. Member for North Southwark and Bermondsey (Simon Hughes), who spoke for the Liberal Democrats, and all the Members who have taken part in deliberations on the Bill. Perhaps I should also thank the usual channels for ensuring that we kept in order and got through what we had to get through in Committee.

We are pleased with the amendment obtained by my noble Friend Lord Hunt which adds clause 2 to the Bill. It allows offers of treatment, rehabilitation and apologies without admissions of liability. That builds on the principles that the Association of British Insurers and the Citizens Advice Bureaux set out in their initiative, “Care and Compensation”. That should mean that there will in the future be more focus on early settlement of claims and treatment to get victims healthy and back to work as soon as is practicable.

We are pleased that the Government have been able to listen to pleas to help the victims of mesothelioma, and with the Minister’s assurance that that will be underpinned with rules of court and that she will do what she can with her colleagues to speed that through. The lack of joined-up government on the case of Barker v. Corus was clearly unfortunate and I shall revert to the matter of how much money was spent. Matters were pursued in the wrong way.

However, in Committee, we supported clause 1, which restates the law of negligence. I hope that it will be possible to follow up the impetus that the amended clause 1 will give with some advertisement of exactly what the law of negligence means and an attempt to educate some of the public authorities—scouts, guides and others who take part in the desirable activities that we have spent much time discussing.

Landowners, occupiers and leisure park owners had hoped for some further discussion of what clause 1 means for them, because there has been a reasonably sensible and robust attitude to occupiers’ liability in the courts. They therefore hoped for some assurance from the Under-Secretary that clause 1 will not change that and that they will not be subject to further cost and burdens in dealing with an unpredictable liability. Much land has natural features and it should not be necessary to erect signs, fences and unsightly and expensive clutter around them. It was hoped that we would hold a little more debate about that to ensure that the law is not being changed. The Under-Secretary’s general comments suggest that it is not.

We hope that the voluntary code for unions will work, despite our reservations. We will watch closely to ensure that it does—the Under-Secretary need not worry about that. We still believe that it is a pity that the regulator will not be an established regulator such as the Financial Services Authority. However, the Government could reassure us by announcing the appointment of a senior figure, with knowledge of that world, to work with a major trading standards office. There has been speculation that someone of the calibre of Mr. Mark Boleat may be available for the role. That would be most welcome. When can we expect the announcement? Have I missed it?

Overall, the Bill has some useful provisions to help tackle the perceived compensation culture. It is a modest measure—and there is a big agenda to tackle—but it is greatly improved.

21:32:00

Simon Hughes
The Bill started as a measure of one part, grew to one of two parts and ended up as one of three parts. It is none the worse for that—indeed, the third addition is broadly welcome.

Like others, I am grateful for the constructive way in which everybody has participated. It is fair to say that, although part 1 was controversial, it probably reflects the broader majority view across the House. Although some have concerns about adding to lawyers’ opportunities, we must none the less hope that they will be restrained.

I say to the hon. Member for Canterbury (Mr. Brazier) that counsellors’ advice to Ministers, which I was kindly shown, on the “may” or “shall” option was persuasive. Perhaps he will be slightly reassured by that, although I am happy to try to persuade him outside later.

It is regrettable that, in your absence, Mr. Speaker, and through no fault of yours, we were unable to debate the last three groups of amendments on Report. One would have allowed us to raise the other definition issue that rightly took up time in Committee and the House of Lords—whether “desirable activity” was the right phrase. Again, I was encouraged to know that Treasury counsel and those who advise the Government and the draftsmen and women see the merit of a good argument. They nearly appeared to suggest that an alternative might be more acceptable. They just backed off that in the advice that the Under-Secretary shared with me.

Mr. Brazier
I am most grateful to the hon. Gentleman for giving way, and for his earlier back-handed tribute. The two points to which he has referred are, of course, inextricably linked. The case for having “may” rather than “shall” is that the Bill contains the enormously wide and rather vague term “desirable activities”. Had we had a narrower term—as I think the hon. Gentleman would have wanted, and as we certainly did—there would have been a case for “shall”.

Simon Hughes
I hope that we have not lost the watching millions as a result of our tightly argued case for the legal alternatives. The hon. Gentleman is quite right. I had hoped to persuade Parliament that phrases such as “an activity of social value” or “socially valuable”, which are to be found elsewhere in case law, would make a better argument, not least because they would not allow ambiguous interpretation. That is, they would not allow someone to ask to whom the activity was desirable. By definition, they would mean that it was valuable to the community, whereas “desirable” could mean that it was desirable merely to an individual. However, the opportunity to win that argument in the last round was counted out by the time constraints on our debate.

The second substantive issue on the provision of claims management services contained only one major controversial point, and it remained controversial to the end. That was the issue of whether trade unions should be included or excluded from the provisions. I am grateful to the Minister for accepting the amendments that will allow for the subsequent statutory instruments to be debated in both Houses as a matter of course. That means that the matter can be returned to and that we will have the debate that I, and the hon. Member for Hendon (Mr. Dismore) and some other Labour Members, want to have. There are arguments on both sides; this is not a cut and dried case. However, the consumers out there need the reassurance that they will have a good, properly regulated service, and that they will not be abused, as some people have been in the trade union context, along with many more outside that context. That is our objective.

When the Bill was first introduced, we were all keen to use it as an opportunity to deal with the great needs of mesothelioma sufferers. I pay tribute to the Minister, her civil servants and those who worked with them to ensure that we had the amendment on this issue. My hon. Friend the Member for Cambridge (David Howarth) raised a small matter, which could be corrected without any prejudice to anyone when the Bill goes to the Lords, to ensure that everyone is best protected. I would be very keen to work with colleagues across the House to ensure that the final drafting does not delay the Bill beyond the end of this Session, as it is the Minister’s wish and mine that that should not happen. I want us to make the Bill watertight, so that we do not restrict the opportunity of people with the disease, or their families, to get compensation. I am sure that, with that good will, we will be able to deliver. 

The thing that will be remembered about the Bill is that last change. It will be remembered as the Bill that gave a chance of being compensated to thousands of families—in as much as money can ever compensate them—for a serious disease that often remained undiagnosed for a long time but in the end took its toll very quickly. Up and down the land, people will now be able to get some compensation. That is a good bit of work done. As the Minister said, Parliament sometimes comes together across party boundaries to make sure that we look after the people who send us here.

21:38:00

Mr. Clapham
This is a small but significant Bill. Part 2 was obviously needed, as we have seen chaos develop after the miners’ coal health claims came into being, because of claims farmers. Those companies came in and cold-called people, collected claims together, and sold them on to solicitors. Sometimes, they would hold on to them before passing them on to solicitors later for a huge fee. We have heard from two colleagues about the kind of problems that those activities have caused in their constituencies. Part 2 is therefore very welcome, as it will bring regulation and order where there was none.

I thank the Minister for her hard work in bringing forward new clause 13, which will provide an opportunity for people suffering from mesothelioma to have their compensation paid fairly. It will reverse the Barker decision, which, in my estimation, involved a great deal of unfairness. The Minister gave a great deal of thought to the issue of retrospection. That retrospection will provide an opportunity for most of the cases caught between the Barker decision of 3 May and the current position to be reviewed. I thank the Minister for what she has done. She worked hard to bring forward new clause 13, which will be beneficial.

Overall, the Bill is significant. We will look back on it for two main reasons: first, for bringing regulation were there was none, to control the claims farmers; and secondly, for new clause 13 on mesothelioma.

21:40:00

Mr. Brazier
The experience of this Bill has been valuable, and we have produced a modest but worthwhile piece of legislation. I thank both the Minister and Baroness Ashton, the Minister in the other place, for opening their door to the all-party group on adventure and recreation in society in a series of meetings. I thank my hon. Friend the Member for North-East Hertfordshire (Mr. Heald)—

Mr. Heald
Unwittingly, I did not congratulate my hon. Friend in my Third Reading remarks, although I have done so many times before. This Bill is the culmination of a campaign for him, and something for which he has fought very hard, so I would like to congratulate him.

Mr. Brazier
I am most grateful to my hon. Friend.

I thank the hon. Member for North Southwark and Bermondsey (Simon Hughes) for his work in Committee and his support on a number of issues. I congratulate Lord Hunt on his terrific victory on clause 2 in the other place, and I also thank the Minister for the way in which she and Baroness Ashton swallowed their pride and ended up welcoming the provision, which is great.

In relation to the all-party campaign, I want to thank Ian Lewis, the director of the Campaign for Adventure, and Andrew Caplan, the legal adviser to the Scout Association, for their support. They made possible the contribution to the debate by the hon. Member for Montgomeryshire (Lembit Öpik), as well as that by the hon. Member for Sittingbourne and Sheppey (Derek Wyatt), who cannot be here tonight.

The only substantive point I want to make is that we have nearly got through the Hansard route what we would have liked to have seen on the face of the Bill—a slightly narrower definition of desirable activities and “shall” rather than “may”. Looking back over the record, I see that the Minister said in Committee that desirable activities must involve an element of collective value, not just the trivial, tautological individual desire to do them, which would apply in every case. We therefore have some limitation on desirable activities. Her answer to me tonight made it fairly clear that the court would normally be expected to take clause 1 into account. The examples given by her and the Minister in the other place of the kind of cases in which it would not be taken into account were a long way from the voluntary, sporting, educational and other activities that the all-party campaign exists to protect, so we have almost achieved what we wanted in that regard.

An awful lot of people are doing an awful lot of good in this country—the tens of thousands of scout masters and guide leaders, the huge numbers who work with young people in sports clubs, yacht clubs, canoeing clubs and more informal groups for hill walking, the teachers who take children out on school trips and so on. If the Bill stops the fatuous cases that we have seen in the lower courts over the past few years, including the one in Manchester, which I cited in my Second Reading speech, that took place during the Bill’s progress through the House of Lords—

Stephen Pound (Ealing, North) (Lab)
I apologise for interrupting the hon. Gentleman, and I realise that there is a certain element of mutual self-congratulation, but on behalf of my colleagues in the all-party scout group, may I tell him that his commitment and hard work, often unglamorous, from the early stages, has been greatly and widely appreciated throughout the voluntary movement, but especially in scouting? We are very grateful to him.

Mr. Brazier
I am really embarrassed by that. I thank the hon. Gentleman.

I must allow time for others to speak; I shall simply say that if the Bill puts a stop to the silly cases that come along every few months in the lower courts, Parliament will have done something worth while tonight.

21:44:00

Mr. Kevan Jones
This has been described as a small Bill, but I believe that it will have a dramatic effect outside the goldfish bowl of Westminster. Part 2 is vital to the cleaning up of the most disreputable part of the semi-legal profession, the claims handlers. My hon. Friend the Member for Bassetlaw (John Mann) and I have described the trauma and heartache that those organisations have caused in former coalmining communities. I congratulate the Government on their proposals to tighten up the claims handling industry, and I hope that the Bill will lead to its abolition and disappearance.

I also congratulate the Minister and her team. I agree with what the hon. Member for Canterbury (Mr. Brazier) said about her open-door policy: she has been prepared to listen to my representations and those of other Members. She has also pushed through a vital measure, new clause 13, which will have a dramatic effect on the lives of thousands of mesothelioma sufferers. Before I entered the House I was a full-time trade union official. I dealt with asbestos-related claims on a daily basis, and witnessed the heartache not just of individuals when they were diagnosed, but of their families afterwards. Some of them—mainly men—were only in their forties. No amount of compensation can make up for the misery and cruel deaths that those people suffer, or for the heartache that their families undergo, but I believe that the new clause will right a wrong. I congratulate my hon. Friend the Member for Barnsley, West and Penistone (Mr. Clapham), who chairs the all-party asbestos group, on his tremendous work in pursuing not just this issue but the general issue of asbestos victims.

This is a good Bill. When people ask what the difference between a Conservative and a Labour Government is, we can say that although the all-party support for new clause 13 was welcome, it would probably not have been there without a Labour Government. We should not forget that, when we ask how Labour can make a difference in constituencies.

21:47:00

Mr. Hollobone
I have approached the Bill from an unusual perspective. My constituency contains a company called National Accident Helpline—not to be confused with the Accident Group or Claims Direct—which has a very good reputation for helping people to win compensation. It has been right behind the Bill ever since it was suggested, and as its advocate I am proud to speak up on its behalf.

National Accident Helpline acts as the face, or the national brand, of a group of 100 solicitors around the country who specialise in winning compensation for many thousands of people. It exists because, whether we like it or not, a good many people are frightened of going to solicitors, and a good many others do not have the benefit of trade union representation or legal expenses insurance. They go to National Accident Helpline, which is able to assist them. It does not charge, it does not make cold calls, it does not sell insurance, it does not offer loans and it does not give legal advice. What it does is ensure that those with legitimate claims are put in touch with a solicitor in the National Accident Helpline Group, and receive the help that they deserve. It welcomes part 2 of the Bill, because it will bring proper regulation to the claims management industry.

Mr. Jim McGovern (Dundee, West) (Lab)
Surely the hon. Gentleman recognises that the reason why many of the solicitors have such an unsavoury reputation is the large slice they take of the compensation that they win on behalf of anyone they represent.

Mr. Hollobone
Absolutely. That point has been well made throughout the proceedings on the Bill—but the point is that not all solicitors have a bad reputation. National Accident Helpline is a very good national brand, and it is proud to be associated with the solicitors whom it represents.

National Accident Helpline has commented on the Bill. It wants to ensure that genuine accident victims are able to access justice and are protected from any unscrupulous players entering the claims sector. That is why it sees the Bill as a vital opportunity to provide effective regulation in the sector and genuinely protect consumer interests. On that note, I congratulate the Minister on her progress with the Bill.

21:50:00

Mr. Dismore
I think I have to pour a little rain on the parade, particularly in relation to clause 1. It is a pity we did not get to clause 1 on Report, as the hon. Member for North Southwark and Bermondsey (Simon Hughes) said. Despite what the Minister says, in my view it does create a new defence that companies will exploit, particularly in relation to accidents at work, because by definition, anyone who is at work should be, and probably is, performing a desirable activity. Therefore, their position will be weakened as a result of clause 1. I agree with the hon. Member for Canterbury (Mr. Brazier) that it changes the law but, in my view it changes it for the worse, not the better. On Second Reading I said that the clause stank, and I do not think that the smell has got any better in the debates we have had on it since then. It is a serious weakening of the rights of people who are injured, to the benefit of the big insurance companies.

I welcome the approach the Minister has adopted to mesothelioma claims. The Government have moved with commendable speed and vigour to come up with new clause 13. It is a pity that she could not go a little further and look at some of the outstanding issues around asbestos, but no doubt we will return to those debates.

I welcome part 2. I started campaigning on the issue of claims handlers when they were invented in the mid-1980s. My first meeting with the Minister’s predecessor in the Department in 1997 was on the need to regulate claims handlers, so I am pleased that the Government have caught up with that important need. However, some of the debates on the issue have been a little intemperate. There has been a risk of some of the babies being thrown out with the bathwater, particularly when it comes to trade union schemes.

David Taylor
Does my hon. Friend welcome, as I do, the qualified exemption that trade unions have? Would he state how important it is that the assertions that have been made about malpractice in certain county or regional parts of trade unions must not be read over to the whole group of trade unions, particularly the National Union of Mineworkers?

Mr. Dismore
My hon. Friend makes an important point. I am pleased that the Minister has come forward with an approach that offers a sensible way of sorting out trade unions. I was concerned about the amount of mud that was being thrown earlier, with the benefit of parliamentary privilege, at some trades unions and indeed some law firms. Perhaps I should correct my own position in relation to that matter. I was never a partner in Thompsons. I was a partner in Robin Thompson and Partners until 1995, when I resigned as I did not want to be part of the new Thompsons firm, for reasons that had nothing to do with the things we have been debating today.

I have no direct knowledge of the issues that the hon. Member for North Durham has raised, although I do know that that law firm has a long and proud tradition of representing workers, from the Poplar dispute in 1926 onwards, and has created a lot of important law, often on a pro bono basis. I am concerned because those who are not here to answer for themselves have been slagged off as they have—but any suggestion that I have an association with them, as the hon. Gentleman seemed to suggest, is wrong. I started my life as a trade union official, as he did, before I qualified as a solicitor, and I no longer work for that firm. I have no commercial relationship with it in any way, shape or form. I am concerned that a lot of very good firms have been traduced in the debate that we have had on the Bill.

What is important is that we recognise that trade unions are in a special position, and that they do a lot of extremely good work on legal issues on behalf of their members and their members’ families. We do not need to have the detailed regulation that the claims handlers, which are in large part very dodgy firms, need. I join my hon. Friend in the hope that those people will be drummed out of business as a consequence of part 2.

As I have said, I have grave reservations about part 1. If the Bill consisted of part 1 alone, I would not vote to give it a Third Reading. However, the downside of part 1 is balanced by the new provisions on mesothelioma and part 2, so I will reluctantly support the Bill—but I still think that clause 1 stinks.

Question put and agreed to.

Bill accordingly read the Third time, and passed, with amendments.

Mr. Speaker
With permission, I shall take motions 1 to 8 together.

DELEGATED LEGISLATION

Motion made, and Question put forthwith, pursuant to Standing Order No. 118(6) (Standing Committees on Delegated Legislation),

Merchant Shipping

That the draft General Lighthouse Authorities (Beacons: Automatic Identification System) Order 2006, which was laid before this House on 12th June, be approved.

Communications

That the draft Television Licensable Content Services Order 2006, which was laid before this House on 21st June, be approved.

That the draft Radio Multiplex Services (Required Percentage of Digital Capacity) Order 2006, which was laid before this House on 21st June, be approved.

Legal Services Commission

That the draft Criminal Defence Service (Representation Orders and Consequential Amendments) Regulations 2006, which were laid before this House on 22nd June, be approved.

That the draft Criminal Defence Service (Representation Orders: Appeals etc.) Regulations 2006, which were laid before this House on 22nd June, be approved.

That the draft Criminal Defence Service (Financial Eligibility) Regulations 2006, which were laid before this House on 22nd June, be approved.

Financial Services and Markets

That the Financial Services and Markets Act 2000 (Regulated Activities) (Amendment) Order 2006 (S.I., 2006, No. 1969), dated 28th June 2006, a copy of which was laid before this House on 29th June, be approved.—[Jonathan Shaw.]

Question agreed to.

BUSINESS OF THE HOUSE

Ordered,

That, at the sitting on Wednesday 19th July, paragraph (2) of Standing Order No. 31 (Questions on amendments) shall apply to the Motion in the name of Mr David Cameron as if the day were an Opposition Day; proceedings on the Motion may continue, though opposed, for three hours and shall then lapse if not previously disposed of; and Standing Order No. 41A (Deferred divisions) shall not apply.––[Jonathan Shaw.]

Ordered,

That, at the sitting on Tuesday 25th July, the Speaker shall not adjourn the House until he has notified the Royal Assent to Acts agreed upon by both Houses.––[Jonathan Shaw.]

COMMITTEES

constitutional Affairs

Ordered,

That Barbara Keeley be discharged from the Constitutional Affairs Committee and Siân James be added. ––[Rosemary McKenna, on behalf of the Committee of Selection].

Mr. Speaker
With permission, I shall take motions 12 to 16 together.

Education and Skills

Ordered,

That Dr Roberta Blackman-Woods be discharged from the Education and Skills Committee and Fiona Mactaggart be added.

Home Affairs

That Mr Shahid Malik be discharged from the Home Affairs Committee and Ms Karen Buck be added.

Scottish Affairs

That Gordon Banks be discharged from the Scottish Affairs Committee and Mr Jim Devine be added.

European Scrutiny

That Mrs Sharon Hodgson be discharged from the European Scrutiny Committee and Ms Katy Clark be added.

Human Rights (Joint Committee)

That Dan Norris be discharged from the Joint Committee on Human Rights and Nia Griffith be added. ––[Rosemary McKenna, on behalf of the Committee of Selection].